Turlock City Council
May 26, 2026

Water Shortage Contingency Plan

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10 Stanislaus Regional Water Authority
Adopted: 10-17-24

5.2 Communication for Unforeseeable Events
Water shortage may occur during unforeseeable events such as earthquakes, fires, infrastructure failures, civil unrest, and other catastrophic events. SRWA’s ERP will provide specific communication protocols and procedures to convey water shortage contingency planning actions during these events. SRWA may trigger any of these communication protocols at any water shortage level, depending on the event.

In general, communications and notifications should proceed along the chain of command. Notification decisions will be made under the direction of the General Manager. External communications will be managed by SRWA’s wholesale customers. The General Manag er will work with the Project Manager/Plant Supervisor to notify regulatory agencies. The ERP provides a list of relevant contacts to notify at the local, regional, and state level.

To maintain the security of SRWA’s water system, the ERP will be maintained as a confidential document and may not be incorporated in this WSCP.

6.0 COMPLIANCE AND ENFORCEMENT
When supplies are insufficient, SRWA can ask the Cities to reduce demands, but the specific compliance and enforcement mechanisms are at the discretion of the Cities. SRWA is committed to working with and supporting the Cities in implementing water shortage response actions.

7.0 LEGAL AUTHORITIES
SRWA has the legal authority to create, manage, and activate emergency plans and carry out the responsibilities of those plans under the California Emergency Services Act, which authorizes all political subdivisions of the state (i.e., special districts, cities, and counties) to conduct emergency operations.

When a water shortage is determined, SRWA will coordinate with SRWA’s wholesale customers and with Stanislaus County for the possible proclamation of a local emergency in accordance with California Government Code, California Emergency Services Act (Article 2, Section 8558).

In a duly noticed meeting, the SRWA Board will determine whether a water shortage emergency condition exists and, if so, the degree of the emergency and what regulations and restrictions should be enforced in response to the shortage. SRWA shall declare a water shortage emergency in accordance with CWC Chapter 3 Division 1.

Water Code Section Division 1, Section 350
…The governing body of a distributor of a public water supply…shall declare a water shortage emergency condition to prevail within the area served by such distributor whenever it finds and determines that the ordinary demands and requirements of water cons umers cannot be satisfied without depleting the water supply of the distributor to the extent that there would be insufficient water for human consumption, sanitation, and fire protection.

The water shortage emergency declaration triggers communication protocols described in Section 5 of this WSCP.

Water Shortage Contingency Plan

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11 Stanislaus Regional Water Authority
Adopted: 10-17-24

8.0 FINANCIAL CONSEQUENCES OF WSCP
The Cities anticipate revenue losses, and SRWA could experience increased expenses, during the potential water shortages described in this WSCP. Revenue losses could result from decreased water sales due to conservation. Increased expenses can include supplemental water supply purchases. SRWA maintains an operational reserve fund to protect against a temporary water shortage.

Water conservation directly affects the Cities’ revenue stability, as the Cities of Ceres and Turlock collect revenue for water system operating costs through volumetric or consumption -based rates. However, the majority of SRWA’s operation costs are fixed. The Cities prepare for these events through prudent financial planning, including water rate studies and the establishment of reserves to offset revenue losses. A water shortage surcharge could be enacted by the Cities’ Councils to address revenue impacts from conservation.

9.0 MONITORING AND REPORTING
In their UWMPs, SRWA’s wholesale customers, the Cities of Ceres and Turlock, will detail their monitoring and reporting requirements and procedures that ensure appropriate data is collected, tracked, and analyzed to evaluate customer compliance with conservation goals. As mentioned above, SRWA’s water system i s fully metered, including production at its water treatment facilities. SRWA can also track deliveries to the Cities through their respective turnouts.

SRWA will work collaboratively with the Cities to monitor water use and support their reporting.

10.0 WSCP REFINEMENT PROCEDURES
This WSCP is an adaptive management plan. It is subject to refinements as needed to ensure that SRWA’s shortage response actions and mitigation strategies are effective and produce the desired results. Based on monitoring described in Section 9 and the need for compliance and enforcement actions described in Section 6 of this WSCP, SRWA may adjust its response actions and may modify its WSCP. When a revised WSCP is proposed, the revised WSCP will undergo the process described in Section 12 for adoption by the SRWA Board and distribution to Stanislaus County, the Cities, and the general public.

11.0 SPECIAL WATER FEATURE DISTINCTION
SRWA is a water wholesaler and does not directly supply treated water to customers with water features.

As described in their respective WSCP, the Cities distinguish water features that are artificially supplied with water, including ponds, lakes, waterfalls, and fountains, separately from swimming pools and spas.

12.0 PLAN ADOPTION, SUBMITTAL, AND AVAILABILITY
This WSCP was adopted concurrently with SRWA’s 2020 UWMP, by separate resolution , on October 17, 2024. Prior to adoption, a 60 -day notice of preparation was issued and a draft WSCP was made available for public review at least 14 days prior to adoption. A duly noticed public hearing was conducted. An electronic copy of this WSCP will be submitted to DWR within 30 days of adoption.

No later than 30 days after submittal to DWR, a hard copy of this WSCP will be available at SRWA’s office.

A copy will also be provided to Stanislaus County and SRWA’s retailers. An electronic copy of this WSCP as well as the 2020 UWMP will also be available for public review and download on SRWA’s website.

UWMP and WSCP Adoption Resolutions

Not included with this submittal.

Appendix I

JOINTLY PREPARED BY

City of Turlock
Water Shortage Contingency Plan

DRAFT PLAN | MAY 2026

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Water Shortage Contingency Plan
Last Revised: May 2026

Table of Contents

1.0 Introduction ................................ ................................ ................................ ................................ . 1

2.0 Water Supply Reliability Analysis ................................ ................................ ................................ .. 1

3.0 Annual Water Supply and Demand Assessment Procedures ................................ ............................ 2

3.1 Decision-Making Process .................................................................................................................. 2

3.1.1 AWSDA Finding: Sufficient Water Supply to Meet Expected Demands ................................. 4

3.1.2 AWSDA Finding: Available Water Supply Will Not Meet Demands ........................................ 4

3.2 Key Data Inputs................................................................................................................................. 5

3.3 Assessment Methodology ................................................................................................................ 6

4.0 Standard Water Shortage Levels ................................ ................................ ................................ ... 6

5.0 Shortage Response Actions ................................ ................................ ................................ ........... 7

5.1 Demand Reduction Actions .............................................................................................................. 8

5.2 Additional Mandatory Restrictions ................................................................................................ 11

5.2.1 Water Features and Swimming Pools ................................................................................... 11

5.3 Supply Augmentation and Other Actions ....................................................................................... 11

5.4 Operational Changes ...................................................................................................................... 12

5.5 Emergency Response Plan .............................................................................................................. 12

6.0 Communication Protocols ................................ ................................ ................................ ........... 13

6.1 Communication for Foreseeable Events ........................................................................................ 13

6.2 Communication for Unforeseeable Events .................................................................................... 14

7.0 Compliance and Enforcement ................................ ................................ ................................ ..... 14

7.1 Shortage Level Enforcement and Penalties .................................................................................... 15

7.2 Appeal and Exemption Process ...................................................................................................... 15

8.0 Legal Authorities ................................ ................................ ................................ ........................ 15

9.0 Financial Consequences of WSCP ................................ ................................ ................................ 16

10.0 Monitoring and Reporting ................................ ................................ ................................ ........ 16

11.0 WSCP Refinement Procedures ................................ ................................ ................................ ... 16

12.0 Plan Adoption, Submittal, and Availability ................................ ................................ ................ 17

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Water Shortage Contingency Plan
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Table of Contents

LIST OF TABLES
Table 1. Schedule of Assessment Activities ............................................................................................ 3 Table 2. Schedule of Decision-Making Activities .................................................................................... 4 Table 3. Cross-reference for Standard vs Supplier Shortage Levels (DWR Table 8-1) ........................... 7 Table 4. Water Restrictions and Regulations by Water Shortage Level(a) ............................................ 9 Table 5. Water Shortage Contingency Plan Demand Reduction Actions (DWR Table 8-3) ................. 10 Table 6. Supply Augmentation and Other Actions (DWR Table 8-2) .................................................... 12

LIST OF ATTACHMENTS
Attachment A. Turlock Municipal Code Title 6 Chapter 7

LIST OF ACRONYMS AND ABBREVIATIONS
AB Assembly Bill 1
AWSDA Annual Water Supply and Demand Assessment 2
City City of Turlock 1
CWC California Water Code 2
DWR Department of Water Resources 2
ENP Emergency Notification Plan
ERP Emergency Response Plan
Legislature California State Legislature 1
RWQCF Regional Water Quality Control Facility
SB Senate Bill 1
SRWA Stanislaus Regional Water Authority 1
TID Turlock Irrigation District 1
TMC Turlock Municipal Code 1
UWMP Urban Water Management Plan 6
WSCP Water Shortage Contingency Plan 1
WTP Water Treatment Plant

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Water Shortage Contingency Plan

1.0 INTRODUCTION
This plan presents the City of Turlock’s (City’s) Water Shortage Contingency Plan (WSCP). The WSCP describes the City’s strategic plan in preparation for and responses to water shortages with a goal to proactively prevent catastrophic service disruptions. It includes water shortage stages and associated actions that will be implemented in the event of a water supply shortage. As part of the WSCP, the City’s legal authorities, communication protocols, compliance and enforcement, and monitoring and reporting are included. The Turlock Municipal Code (TMC) Chapter 6-7 (Water Conservation and Education) provides complementary text that supports the City’s WSCP. This text has been updated over time and is included as Attachment A.

A water shortage may occur due to a number of reasons, such as population growth, climate change, drought, and catastrophic events. Drought, regulatory action constraints, and natural and manmade disasters may occur at any time. A water shortage means that the water supply available is insufficient to meet the normally expected customer water use at a given point in time.

In 2018, the California State Legislature (Legislature) enacted two policy bills, (Senate Bill (SB) 606 (Hertzberg) and Assembly Bill (AB) 1668 (Friedman)) (2018 Water Conservation Legislation), to establish a new foundation for drought planning to adapt t o climate change and the resulting longer and more intense droughts in California. The 2018 Water Conservation Legislation set new requirements for water shortage contingency planning.

The City’s WSCP has been updated so that it is consistent with the 2018 Water Conservation Legislation requirements. The City has modified portions of TMC Chapter 6-7 to support these updates. The City intends for this WSCP to be dynamic, so that it may assess response action effectiveness and adapt to emergencies and catastrophic events. Refinement procedures and adoption requirements are provided in this plan to allow the City to modify this WSCP outside of the Urban Water Management Plan (UWMP) process.

2.0 WATER SUPPLY RELIABILITY ANALYSIS
The City’s water supply reliability analysis and drought risk assessment are included in Chapter 7 of the City’s most recently adopted UWMP. The City’s existing and projected water demands, and existing and planned water supplies are described in Chapter 4 and Chapter 6 of the UWMP, respectively.

The City’s water supplies consist of the following:
• Groundwater pumped from city-owned and operated wells • Treated surface water purchased from Stanislaus Regional Water Authority (SRWA) conveyed from the Tuolumne River through SRWA’s Water Treatment Plant (WTP) • Recycled water from Turlock’s Regional Water Quality Control Facility (RWQCF) During dry periods, SRWA’s surface water allocations from the Turlock Irrigation District (TID) may be reduced. As a result, the City would receive less surface water from SRWA during dry periods and would increase pumping from local groundwater wells to meet remaining demand. While potable supplies will remain reliable and continue to meet water quality standards, the consistency of aesthetic water quality may be affected as water from the City’s groundwater wells is generally less palatable than surface water.

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Findings from the water supply reliability analysis show that the City can reliably meet their projected demands through 20 50 in both normal and dry years. For a five -year drought (i.e., the drought risk assessment), no water supply shortfalls are anticipated for the City.

Statewide water supply conditions, changes in groundwater levels, subsidence, and actions by SRWA and TID, may impact the City’s available water supply. For the City, a water shortage condition occurs when the supply of potable water available cannot meet ordinary water demands for human consumption, sanitation, fire protection, and other beneficial uses. The City may be able to foresee its water shortage condition in some cases; however, in other cases, the water shortage may be caused by an unforeseen sudden or emergency event. In general, the City’s water supply conditions may be affected by the following issues:
• Reduction in SRWA surface water allocations from TID during dry years • SRWA WTP operational issues
• City well production and/or groundwater quality issues The City may experience unforeseen water shortage s when catastrophic interruption of water supplies occurs due to regional power outage, an earthquake, or other potential emergency events.

The City conduct s an annual water supply and demand assessment in accordance with Section 3. The analysis associated with this assessment was developed in the context of the City’s water supply sources and reliability.

3.0 ANNUAL WATER SUPPLY AND DEMAND ASSESSMENT PROCEDURES Beginning July 1, 2022, California Water Code ( CWC) §10632.1 requires water suppliers to submit an Annual Water Supply and Demand Assessment (AWSDA). Water suppliers were also required to submit an Annual Water Shortage Assessment Report beginning July 1, 2022. This WSCP provides the procedures for the City to conduct its AWSDA. The findings from that assessment will provide information for the City’s Annual Water Shortage Assessment Report.

The procedures provided in this section are intended to assist the City in planning for potential , foreseeable shortage in water supplies . These procedures provide the steps the City needs to take that may lead to declaring a water shortage emergency and associated water shortage level (see Section 4) and implementation of water shortage response actions (see Section 5).

3.1 Decision-Making Process
The decision-making process described below will be used by the City to determine its water supply reliability in a consistent manner annually. The City may adjust this process for improved decision-making during implementation.

The Municipal Services Director, or their designee, is responsible for the preparation of the City’s AWSDA and Annual Water Shortage Assessment Report , and submittal of the reports to Department of Water Resources (DWR) by July 1 of each year. The Municipal Services Director, or their designee, will gather key data inputs described in Section 3.2 and conduct the assessment in accordance with Section 3.3. In June, the Municipal Services Director , or their designee , will finalize the assessment based on the SRWA allocated water amount from TID.

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The City will follow the timeline of activities as shown in Table 1 for conducting the assessment, and Table 2 for its decision making. Due to variations in climate and hydrologic conditions, schedule shown in the table are approximate and may be adjusted as needed. The intent of the schedule is to allow shortage response actions to effectively address anticipated water shortage conditions in a timely manner, and to comply with the State’s reporting requirements.

Table 1. Schedule of Assessment Activities
Schedule Activities Responsible Party
Early November of
Prior Year Convene Team. Municipal Services
Department
Mid- to Late November
of Prior Year
Plan for water supply sources for current year and one
subsequent dry year. Describe sources and quantities
considering factors affecting supply as described in
Section 3.2.

Municipal Services
Department
Mid- to Late November
of Prior Year
Plan for water demands for current year and one
subsequent dry year. Describe demand types and quantities considering factors affecting supply as described in
Section 3.2.

Municipal Services
Department
Early December of
Prior Year
Using the methodology described in Section 3.3, calculate the City’s water supply reliability for the current year and one subsequent dry year.

Municipal Services
Department
Early March Finalize assessment based on expected purchased water from SRWA.

Municipal Services
Department
Mid to Late March Draft Annual Water Shortage Assessment Report for DWR submittal.

Municipal Services
Department
Early April Review Annual Assessment and Annual Water Shortage Assessment Report and provide comments as needed.

Municipal Services
Director or Designee
April - June Finalize and approve Annual Assessment and Annual Water Shortage Assessment Report.

Municipal Services
Department
Before July 1 Submit Annual Assessment and finalized Annual Water Shortage Assessment Report to DWR.

Municipal Services
Department

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Table 2. Schedule of Decision-Making Activities
Schedule Activities Responsible Party
April
Based on finalized determinations of AWSDA regarding
water shortage condition and recommended actions,
prepare recommendations on water shortage condition
determination and actions.

Municipal Services
Department
April - June Prepare ordinances or resolutions approving determinations and actions.

Municipal Services
Department
April - June If a water shortage emergency condition exists, activate WSCP protocols and follow Section 8.

Municipal Services
Department
April - June Coordinate interdepartmentally, with SRWA, and with County for the possible proclamation of a local emergency.

Municipal Services
Department
April - June
Present finalized determinations and recommendations,
along with ordinances or resolutions approving
determinations and actions.

Municipal Services
Department
April - June
Receive presentation of finalized determinations and
recommendations. Make determination of degree of
emergency and act on resolutions that declare a water shortage emergency condition. Authorize water shortage response
actions for implementation. Act on ordinances or resolutions.

City Council
April - June
If a water shortage emergency condition is declared,
implement the WSCP and the water shortage response
actions as approved by City Council.

Municipal Services
Department
April - June Finalize Annual Water Shortage Assessment Report. Municipal Services Department
Before July 1 Submit finalized AWSDA assessment and Annual Water Shortage Assessment Report to DWR.

Municipal Services
Department

3.1.1 AWSDA Finding: Sufficient Water Supply to Meet Expected Demands If the Annual Assessment finds that available water supply will be sufficient to meet expected demands for the current year and one subsequent dry year, no further action will be required. The City’s Annual Water Shortage Assessment Report will be finalized using the AWSDA. The final approved documents will be submitted to DWR by July 1 each year.

3.1.2 AWSDA Finding: Available Water Supply Will Not Meet Demands In the event that the AWSDA finds that available supply will not meet expected demands, the Municipal Services Director , or designee , will present the finalized assessment to the City Council, along with recommendations on water shortage condition determination and actions. Recommended actions may include declaration of a water shortage emergency, declaration of a water shortage level, and water shortage actions. The Municipal Services Director , or designee, will coordinate interdepartmentally and with SRWA and Stanislaus County, for the possible proclamation of a local emergency. The Municipal Services Director, or designee, will prepare the City’s Annual Water Shortage Assessment Report using the finalized AWSDA and incorporate City Council determinations and approved actions.

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Based on the findings of the assessment, the City Council will determine if a water shortage condition exists and, if needed, declare a water shortage emergency and water shortage level and authorize water shortage actions.

The Municipal Services Director , or designee , will then prepare the City’s Annual Water Shortage Assessment Report, incorporating the City Council determinations and approved actions, and submit the report to DWR by July 1.

3.2 Key Data Inputs
The AWSDA requires the evaluation of supply and demands for the current year and one dry year that is assumed to follow the current year. The following key data inputs will be used to evaluate the City's water supply reliability, as necessary and applicable.

Planned water supplies will be used as inputs to the AWSDA for the current year and a subsequent single dry year. The subsequent dry year may be similar to a single dry year as defined in Chapter 7 of the City’s most recently adopted UWMP. In planning for water supplies, the following factors are considered:

1. Hydrologic conditions (e.g., SRWA’s surface water allocations from TID)

2. Regulatory conditions

3. Contractual constraints

4. Surface water and groundwater quality conditions

5. Well production limitations

6. Infrastructure capacity constraints or changes

7. Capital improvement projects implementation
Planned water supply sources and quantities will be described and be reasonably consistent with the supply projections in the City’s most recently updated UWMP Chapter 6 ( Normal-Year Water Supply Characterization) and Chapter 7 (Water Service Reliability and Drought Risk Assessment) . Should the supply sources and projections deviate significantly from projections, an explanation for the difference will be provided.

Planned unconstrained water demands will be used as input to the AWSDA for the c urrent year and a subsequent single dry year. Unconstrained water demands are customer demands where no water conservation measures are in effect. In planning for water demands, the following factors are considered:

1. Weather conditions

2. Water year type

3. Population changes (for example, due to development projects)

4. Anticipated new demands (for example, changes to land use)

5. Pending policy changes that may impact demands

6. Infrastructure operations
Planned water demand types and quantities will be described and be reasonably consistent with the demand projections in the City’s most recently updated UWMP Chapter 4 (Water Use Characterization).

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Should the demand projections deviate significantly from projections, an explanation for the difference will be provided.

3.3 Assessment Methodology
In preparing the AWSDA, the City will follow the following assessment methodology and evaluation criteria will be used to evaluate the agency's water supply reliability for the current year and a subsequent single dry year.

The City uses a spreadsheet to plan for current year and future year demands. Planned supply and demand inputs described in Section 3.2 will be entered in the spreadsheet in monthly increments.

Supply and demand will be compared to determine the reliability of the City’s water supply in the current year and a subsequent single dry year. The City’s water supply for the current year and the following dry year will be determined to be reliable if water supply is sufficient to meet the planned water demands.

If water supply is insufficient to meet planned water demands in the current year and/or the following dry year, the extent of the water shortage condition will be determined, and the City will prepare response actions in accordance with this WSCP. As described in Section 3.1.1 and Section 3.1.2, if water supply is insufficient to meet planned wa ter demands, the AWSDA findings will be presented to the City Council, along with recommendations for action for City Council consideration . If water supply is suffi cient, the final approved documents will be submitted to DWR, and no further action will be required.

4.0 STANDARD WATER SHORTAGE LEVELS
To provide a consistent regional and statewide approach to conveying the relative severity of water supply shortage conditions, the 2018 Water Conservation Legislation mandates that water suppliers plan for six standard water shortage levels (or stages) that correspond to progressive ranges of up to 10, 20, 30, 40, 50 percent, and greater than 50 percent shortages from the normal reliability condition. Each shortage condition should correspond to additional actions water suppliers would implement to meet the severity of the impending shortages.

The City’s six water shortage levels align with the State’s standard levels as shown in Table 3 (DWR Table 8-1). The City’s water shortage levels apply to both foreseeable and unforeseeable water supply shortage conditions. Water shortage is the gap between available supply and projected demands.

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Table 3. Cross-reference for Standard vs Supplier Shortage Levels (DWR Table 8-1)

As described in Section 3, the City will conduct an AWSDA to determine its water supply condition for the current year and a subsequent single dry year. The preparation of AWSDA helps the City ascertain the need to declare a water shortage emergency and water shortage level. In other cases, the City may need to declare a water shortage emergency due to unforeseen water supply interruptions. When the City anticipates or identifies that water supplies may not be adequate to meet the normal water demand of its customers, the City Council may determine that a water shortage exists and consider a resolution to declare a water shortage emergency and associated level. The shortage level provides direction on which shortage response actions should be implemented.

5.0 SHORTAGE RESPONSE ACTIONS
CWC §10632 (a)(4) requires shortage response actions that align with the defined shortage levels. The City’s shortage response actions include a combination of:
• Demand reduction actions
• Supply augmentation strategies
• Operational changes
The response actions implemented are dependent on the event that precipitates a water shortage level, the time of the year the event occurs, the water supply sources available at that time, and the condition of the City’s water system infrastructure.

The City plans to use a balanced approach that combines demand reduction, supply augmentation, and operational changes to respond to water shortage events. Based on the City’s water supply and demand monitoring described in Section 10, the City will adapt its response actions as necessary to close the gap between water supplies and water demand and to achieve the water use reduction goals associated with the declared water shortage level.

The shortage response actions described below serve as tools that allow the City to respond effectively to water shortage conditions. Because the City is often implementing multiple shortage response actions simultaneously and is continuously adjusting actions as needed to meet water demand reduction goals, it Standard
Shortage
Levels
Percent
Shortage Range
Suppliers
Shortage
Levels
Percent
Shortage
Range
1 Up to 10%
2 Up to 20%
3 Up to 30%
4 Up to 40%
5 Up to 50%
6 >50%
Check the box if the Supplier uses the
Standard six levels of water shortage.

Proceed to the next table.

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is difficult to quantify how each action may reduce the supply-demand gap. Therefore, the effectiveness of each shortage response action is provided as an estimate. Certain response actions, such as public outreach and enforcement, support the effectiveness of other response actions but do not directly produce quantifiable water savings on their own.

5.1 Demand Reduction Actions
During water shortage conditions, the City plans to reduce demand by implementing the actions shown in Table 4 and Table 5 (DWR Table 8 -3). Table 4 presents the City’s demand reduction actions organized by the triggering water shortage level . These actions are based on the City’s Water Conservation and Education regulations contained in TMC Chapter 6-7 (Attachment A).

In general , d emand reduction actions are initiated at a specified shortage level and continue to be implemented at higher shortage levels, unless they are replaced by more stringent measures. The City may request that its customers reduce their water use in response to any water shortage level through TMC Chapter 6-7.

Table 5 (DWR Table 8-3) is consistent with Table 4, but also includes additional non-enforcement demand reduction actions, such as public information campaigns and water loss reduction strategies. In addition, Table 5 (DWR Table 8 -3) includes estimates of the potential reduction in the water shortage gap associated with each demand reduction action. For each action, Table 5 (DWR Table 8 -3) also indicates whether the City uses compliance actions such as penalties, charges, or other enforcement.

During the 2012 -2016 drought, the City was able to exceed its water conservation goals using a combination of public outreach and compliance actions. The City found that customers were very responsive to public outreach efforts. A mandatory watering schedule remained in place, although it was not significantly modified in recent years. Conservation efforts focused on continued public education, including promoting the removal of turf grass in landscaped medians, encouraging the use of non-potable water for irrigation where feasible, and maintaining strong messaging through outreach campaigns. The City also distributed home water survey kits and continued rebate programs for high -efficiency appliances. Compared to earlier drought r esponses, the key difference was a shift away from blanket restrictions toward policy-driven conservation triggers tied to local supply conditions, which allowed the City to target actions more effectively.

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Table 4. Water Restrictions and Regulations by Water Shortage Level(a) Category of
Demand Reduction
Method Level 1 Level 2 Level 3 Level 4 Level 5 Level 6
Commercial Industry and commercial
businesses shall be
required to curtail
consumption to maintain
adequate supplies of water
for health and safety.

Construction Construction water from City fire hydrants shall be banned but recycled water from the City of Turlock’s Regional Water Quality Control Facility may be made available for construction water purposes.

Landscape
Irrigation
Outdoor landscape
watering shall be limited
to three times per week
on an odd-even basis.

Outdoor landscape
watering. Outdoor
landscape watering shall
be limited to two times
per week.

Outdoor landscape
watering shall be limited
to one day per week.

Outdoor landscape watering shall be limited to one
day per week, for trees only.

Outdoor landscape
watering shall be
prohibited.

Outdoor landscape watering is prohibited between the hours of 9:00 a.m. and 9:00 p.m.

Large commercial
landscapes and City parks
may have individual
watering schedules
approved by the
Municipal Services
Department
Large commercial
landscapes and City parks
shall also be limited to
two days per week, as
scheduled by the
Municipal Services
Department
Large commercial landscaping and City parks shall be
limited to one day per week, as scheduled by the
Municipal Services Department
Large commercial
landscaping and City
parks shall be limited
to one day per month,
as scheduled by the
Municipal Services
Department
Vehicle Washing Residential vehicle washing requires a quick-acting automatic positive shut-off valve and is limited to one washing per week during designated watering times.

Washing of automobiles, trucks, trailers, boats, airplanes, and other types of mobile equipment not occurring upon the immediate premises of commercial car washes and commercial service stations and not in immediate interest of the public health, safety, and welfare shall be prohibited.

Water Features Further use of decorative fountains or reflection ponds shall be discontinued until further notice.

Filling newly constructed or
drained swimming pools
with City water shall be
prohibited.
(a) City of Turlock. Water Conservation Ordinance, TMC Chapter 6-7-405. Accessed at https://www.turlock.ca.us/government/municipalcode/ on April 9, 2026.

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Table 5. Water Shortage Contingency Plan Demand Reduction Actions (DWR Table 8-3)

Yes
Volume or
Percentage
Drop down
Shortage Gap
Reduction Value
(May be a range)
(MG)
1-6 Expand Public Information
Campaign Percentage 5-20% Up to 5-20% water demand reduction anticipated depending on shortage level and extent of public information campaign. No
1-6 Reduce System Water Loss Percentage 5-10% The City is actively working to reduce water loss (real and apparent losses) as described in Chapter 9 of the City's Joint UWMP. No
1-6 Increase Water Waste Patrols Percentage 0-10% Up to 10% water demand reduction anticipated depending on shortage leve and amount of enforcement. Yes
1 Landscape - Limit landscape
irrigation to specific days Percentage 0-5%
Turlock Municipal Code: 6-7-405(a)(1); Outdoor landscape watering shall be limited to three (3) times per week on an odd-even basis. If the address ends in an even number, the water days shall be Tuesdays, Thursdays, and Saturdays. If the address ends in an odd number, the watering days shall be Wednesdays, Fridays, and Sundays. No outdoor landscape watering on Mondays. Drip irrigation systems shall be exempt.

Yes
1-5 Landscape - Limit landscape
irrigation to specific times Percentage 0-5% Turlock Municipal Code: 6-7-405(a)(2); Outdoor landscape watering is prohibited between the hours of 9:00 a.m. and 9:00 p.m. Yes
1-5 CII - Other CII restriction or
prohibition Percentage 0-10% Turlock Municipal Code: 6-7-405(a)(3); Large commercial landscapes and City parks may have individual watering schedules approved by the Municipal Services Department. Yes 1-2 Other - Require automatic shut of
hoses Percentage 0-5%
Turlock Municipal Code: 6-7-302(d); Residential vehicle washing requires a quick-acting automatic positive shut-off valve and is limited to one washing per week during designated watering times.

Yes
2 Landscape - Limit landscape
irrigation to specific days Percentage 5-10%
Turlock Municipal Code: 6-7-405(b)(1); Outdoor landscape watering shall be limited to two (2) times per week on an odd-even basis. If the address ends in an even number, the watering days shall be Tuesdays and Saturdays. If the address ends in an odd number, the watering days shall be Wednesdays and Sundays. No outdoor landscape watering on Monday, Thursday, and Friday. Drip irrigation systems shall be exempt.

Yes
2 CII - Other CII restriction or
prohibition Percentage 0-10% Turlock Municipal Code: 6-7-405(b)(2); Large commercial landscapes and City parks limited to irrigation two days per week. Yes
3 Landscape - Limit landscape
irrigation to specific days Percentage 5-15%
Turlock Municipal Code: 6-7-405(c)(1); Outdoor landscape watering shall be limited to one (1) day per week on an odd-even basis. If the address ends in an even number, the watering day shall be Saturdays. If the address ends in an odd number, the watering day shall be Sundays.

No outdoor landscape watering Monday through Friday. Drip irrigation systems shall be exempt.

Yes
3-4 CII - Other CII restriction or
prohibition Percentage 5-10% Turlock Municipal Code: 6-7-405(c)(2); Large commercial landscapes and City parks limited to irrigation one day per week. Yes
3-6
Other - Prohibit use of potable
water for construction and dust
control
Percentage 0-5%
Turlock Municipal Code: 6-7-405(c)(3); Construction water from City fire hydrants shall be banned but recycled water from the City’s Regional Water Quality Control Facility may be made available for construction water purposes.

Yes
3-6
Water Features - Restrict water use
for decorative water features, such
as fountains
Percentage 0-5% Turlock Municipal Code: 6-7-405(c)(5); Further use of decorative fountains or reflection ponds shall be discontinued until further notice. Yes
3-6
Other - Prohibit vehicle washing
except at facilities using recycled or
recirculating water
Percentage 0-5%
Turlock Municipal Code: 6-7-405(c)(4); Washing of automobiles, trucks, trailers, boats, airplanes, and other types of mobile equipment not occurring upon the immediate premises of commercial car washes and commercial service stations and not in immediate interest of the public health, safety, and welfare shall be prohibited.

Yes
4-5 Landscape - Prohibit certain types
of landscape irrigation Percentage 5-15%
Turlock Municipal Code: 6-7-405(d)(1); Outdoor landscape watering shall be limited to one (1) day per week, for trees only, only if a quick-acting automatic positive shut-off valve is used and in proper operating condition.

Yes
5 CII - Other CII restriction or
prohibition Percentage 5-10% Turlock Municipal Code: 6-7-405(e)(1); Large commercial landscapes and City parks limited to irrigation one day per month. Yes
6 Landscape - Prohibit all landscape
irrigation Percentage 10-25% Turlock Municipal Code: 6-7-405(f)(2); Outdoor landscape watering shall be prohibited. Yes 6 CII - Other CII restriction or
prohibition Percentage 15-20% Turlock Municipal Code: 6-7-405(f)(1); Industry and commercial businesses shall be required to curtail consumption in order to maintain adequate supplies of water for health and safety. Yes 6 Other water feature or swimming
pool restriction Percentage 0-5% Turlock Municipal Code: 6-7-405(f)(3); Filling newly constructed or drained swimming pools with City water shall be prohibited. Yes
DWR NOTES: Units of measure (AF, CCF, MG) must remain consistent throughout the UWMP as reported in Submittal Table 2-3.

Is the Supplier completing this table using the standard six levels? (yes/no) Shortage
Level
Demand Reduction Actions
Drop down list
These are the only categories that will
be accepted by the WUEdata online
submittal tool. Select those that apply.

How much is this going to reduce
the shortage gap?
Additional Explanation or Reference
(OPTIONAL)
Penalty,
Charge, or
Other
Enforcement?
For Retail
Suppliers Only
Drop Down List

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Water Shortage Contingency Plan
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5.2 Additional Mandatory Restrictions
In addition to demand reduction actions provided in Table 4 and Table 5 (DWR Table 8 -3), the City may impose additional water use restrictions on its customers and enforce the regulations and r estrictions provided in TMC Chapter 6 -7-405 to achieve the percent demand reduction required by the water shortage level.

These additional mandatory restrictions would be implemented alongside any State -mandated prohibitions. The City will enforce both State-mandated prohibitions and its own restrictions.

5.2.1 Water Features and Swimming Pools
Water shortage response would focus on providing sufficient supply to meet health and safety needs for residential customers. Tempering the uses for water features and swimming pools will be based on the severity of the water shortage condition. The relative tot al water use from these sources would be a consideration for how water features would be restricted during specific water shortage conditions.

Water features are a relatively small discretionary use and may be impacted at any time during a triggered water shortage condition.

The City distinguishes special water features, such as decorative fountains and ponds, differently from pools and spas. Special water features are regulated separately. Regulations under TMC 6-7-405 prohibit the use of water in fountains and reflective ponds in Level 3 and more restrictive stages.

5.3 Supply Augmentation and Other Actions
This section discusses the City’s supply augmentation strategies to increase available supply during water shortage conditions. As described in Section 2, t he City’s water supply portfolio includes treated surface water provided from SRWA, local groundwater, and recycled water. The City currently operates 15 active potable groundwater wells and 4 non-potable irrigation wells.

When surface water supplies are reduced, the City relies on its existing potable groundwater wells to meet remaining demands. Based on historical records, the local groundwater basin has proven to be reliable, and drought-related impacts on the City’s grou ndwater supply are not anticipated. As described in the UWMP, the City actively manages its groundwater resources to ensure that water demands can be met even during periods of significantly reduced surface water allocations. In addition, the City has mult iple planned groundwater supply projects intended to maintain existing well capacity.

Table 6 (DWR Table 8 -2) summarizes the City’s potential supply augmentation actions. During water shortage events that result in reduced surface water deliveries, the City may increase pumping from existing production wells and, if necessary, expedite the rehabilitation of existing wells and/or the construction of new production wells to meet demand. Given the City’s planned groundwater capital improvement efforts, the City does not expect to need to augment supplies beyond currently planned projects except under more severe water shortage conditions and/or unforeseen emergency conditions.

Supply augmentation actions related to surface water supply from SRWA are not provided in Table 6 (DWR Table 8-2), as these actions would generally be performed by SRWA and are listed in SRWA’s WSCP. As described in SRWA ’s WSCP, SRWA would notify the City in a timely manner during dry periods when surface water allocations are reduced regarding the timing and magnitude of any surface water supply

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reductions. In the event of more severe allocation reductions, SRWA may evaluate opportunities to secure supplemental surface water supplies through alternative water transfer agreements.1 The City does not currently plan to purchase or use water supplies other than local groundwater and surface water provided by SRWA to augment its water supply portfolio.

Table 6. Supply Augmentation and Other Actions (DWR Table 8-2)

5.4 Operational Changes
The City may modify its operations on a short-term or long-term basis in response to any water shortage conditions. The City may take any one or a combination of the following actions.

1. The City may expedite repairs of leaks in its water distribution system. All meter leaks and emergency breaks would be repaired immediately after being reported. Non-emergency service line and main breaks would be repaired within three business days after detection.

2. During the duration of the water shortage condition, the City may limit its regular maintenance water system flushing operations such that flushing is conducted only in areas with known water quality issues.

5.5 Emergency Response Plan
As stated in Section 4, the City’s water shortage levels outlined in TMC Section 6-7-405 apply to both foreseeable and unforeseeable water supply shortage conditions, including catastrophic water shortage conditions.

The City’s 2023 Water Distribution System Operations Plan includes an Emergency Response Plan (ERP) that addresses extreme weather emergencies such as droughts when catastrophic water shortage conditions may occur. Water shortage emergency response is coordinated with the County’s Office of Emergency Services. The ERP outlines response procedures associated with unforeseeable incidents such as water supply contamination, earthquake, infrastructure failure, and other events . The ERP includes

1 SRWA. October 2024. Water Shortage Contingency Plan.

Yes
Volume or
Percentage
Drop down
Shortage Gap
Reduction Value
(May be a range)
(MG)
3-6 Other Actions (describe) Volume 390-1,560
Rehabilitate existing wells, increase
pumping of existing production wells, or
install new production wells.

NOTES: Volume of supplemental groundwater assumes construction or rehabilitation of one to four potable groundwater wells, each with a capacity of 1,000 gallons per minute, and assuming a run time of 75 percent throughout the year.

Is the Supplier completing this table using the standard six levels? (yes/no) How much is this going to reduce the
shortage gap?
DWR NOTES: Units of measure (AF, CCF, MG) must remain consistent throughout the UWMP as reported in Submittal Table 2-3.

Shortage
Level
Supply Augmentation Methods and
Other Actions by Water Supplier
Drop down list
These are the only categories that will
be accepted by the WUEdata online
submittal tool
Additional Explanation or Reference
(OPTIONAL)

Water Shortage Contingency Plan

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actions to be taken in preparation for, during, and recovery from such events. To maintain the security of the City’s water system, the ERP is retained as a confidential document.

The City’s response planning for continued water service includes the use of standby generators, water purification supplies and equipment, emergency drinking water storage, and water trucks. Water storage, treatment, and pumping facilities have been const ructed to meet earthquake safety standards and are inspected regularly.

The City has access to surface water from the Tuolumne River through the SRWA WTP. This facility may supply emergency water to maintain normal distribution if the City’s groundwater supply is impacted by a catastrophic supply interruption. Alternatively, if the catastrophic interruption is related to the surface water supply, the City will use the existing groundwater wells to provide sufficient water for health, sanitation, and fire protection for the duration of the emergency. If there is a catastrophic s upply interruption that impacts both the City’s groundwater supply and the surface water supply from SRWA, then outside emergency water supply assistance would be needed.

6.0 COMMUNICATION PROTOCOLS
In the event of a water shortage, the City must inform its customers, the general public and interested parties, and local, regional, and state entities. Communication protocols for foreseeable and unforeseeable events are provided in this section. In any event, timely and effective communication must occur for ap propriate response to the event. C ity staff are provided with cell phones and City email accounts to communicate internally and externally.

6.1 Communication for Foreseeable Events
Water shortages may be foreseeable when the City conducts its AWSDA as described in Section 3. When the City determines the potential for a water shortage event, the City Council may find, determine and declare a water shortage emergency , and the associated water shortage level, in accordance with TMC Chapter 6-7-403.

The following communications protocol and procedures will be followed. The City may trigger any of these communication protocols at any water shortage level.

1. If a water shortage emergency is anticipated, the City will coordinate interdepartmentally and with Stanislaus County for the possible proclamation of a local emergency.

2. The City may hold a duly noticed City Council meeting in which the AWSDA findings and recommendations for a water shortage emergency and shortage response actions are presented.

3. The Municipal Services Director, or his or her designee, shall monitor the projected supply and demand for water by its customers, with heightened emphasis during the months of March through October.

4. The Municipal Services Director, or his or her designee, shall recommend to the City Manager and City Council the extent of the conservation compliance stage required in order for the City to prudently plan for and supply water to its customers.

5. The City Council may order that the appropriate stage of water conservation be implemented or terminated in accordance with the applicable provisions of this chapter.

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When implementing mandatory water conservation compliance Stages 2, 3, 4, 5 and 6, said order shall be made by public announcement and shall be published a minimum of one (1) time in a daily newspaper of general circulation and shall become effective immediately upon such publication. Other forms of communication to inform customers, the public, and government entities shall include social media postings, email to customers and businesses in Turlock and radio broadcast. Public entities and officials are informed of water shortage information via email.

6.2 Communication for Unforeseeable Events
Water shortage s may occur during unforeseeable events such as earthquakes, fires, infrastructure failures, civil unrest, and other catastrophic events. The C ity’s 2023 Water Distribution System Operations Plan includes an Emergency Notification Plan (ENP) and ERP that provide specific communication protocols and procedures to convey water shortage contingency planning actions during these events. The City may trigger any of these communication protocols at any water shortage level, depending on the event.

The ENP provides a list of relevant contacts to notify in the event of an emergency at the local, regional, and state level. The ERP lists the City’s emergency plans and procedures, resilience strategies, and mitigation actions. To maintain the security of the C ity water system , the Water Distribution System Operations Plan is maintained as a confidential document and may not be incorporated in this UWMP.

In general, communications and notifications should proceed along the chain of command. Notification decisions will be made under the direction of the Municipal Services Director or their designee. External communications will be managed by the Municipal Services Director or their designee. All City staff are provided their communication responsibilities. The Regulatory Compliance Officer and the Municipal Services Director will work with the Municipal Services Department staff to notify regulatory agencies.

7.0 COMPLIANCE AND ENFORCEMENT
TMC Chapter 6-7 supports the implementation of the City’s WSCP actions. This text includes provisions for compliance and enforcement of its water use regulations, restrictions, and prohibitions and is available on the City’s website. The City’s water conservation website (https://www.cityofturlock.org/watersewergarbageservice/waterconservation/ ) provides the most current regulations and water restrictions.

When a water shortage is anticipated, the City Council determines the degree of the water shortage emergency and makes a declaration of the water shortage stage. The City Council may also hold a duly noticed public meeting to discuss the water shortage emergency.

Since the City’s water service area is fully metered, customer water use can be quantified and compared to determine their extent of compliance to water reduction requirements. The City may also become aware of non -compliance through its water waste reporting outreach or throug h staff inspections.

Non-compliance is deemed as a violation and is classified as an infraction. Each day of continued violation is considered as a separate offense.

The Municipal Services Director or their designee and duly designated representatives are authorized to enforce provisions of TMC Chapter 6 -7 and make determinations with regard to the customer water

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Water Shortage Contingency Plan
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allocations provided in TMC Chapter 6-7. For these purposes, they have the power and discretion of a law enforcement office.

7.1 Shortage Level Enforcement and Penalties
Enforcement and penalties for non-compliance with restrictions associated with a water shortage level or stage are provided in TMC 6-7-410. When the City becomes aware of a customer violating, causing, or permitting a violation of the restrictions or prohibitions associated with the adopted water shortage level, the City will issue a notice that describes the nature of the violation and includes an order that the violation be corrected within a stated period. Upon occurrence of a second violation or failure to correct the initial violation, the City will issue a second notice ordering immediate correction and imposing a surcharge as provided in the TMC . Upon occurrence of a third violation or failure to correct the initial violation, the City will issue a third notice ordering immediate correction and imposing a surcharge as provided in the TMC. Upon occurrence of a fourth violation, and each subsequent violation, or failure to correct the initial violation, the City will issue an additional notice ordering immediate correct ion and imposing a surcharge as provided in the TMC. The Municipal Services Director, or designee, may issue an order to cease and desist until appropriate remedial actions are taken. For continued violation, the Municipal Services Director or designee may order discontinuance of service.

The thirty days after the effective date of the Council’s declaration of a water shortage emergency or the effective date stated in the resolution is considered as an adjustment period . During that period, no penalties will be imposed on violations to water use prohibitions and restrictions associated with the water shortage emergency.

After the initial thirty days after the effective date, customers are subject to enforcement and penalties associated with water use prohibitions and restrictions . For continued violation, the City may impose progressively stringent action, from issuance of a warning to increasing penalties and fines.

7.2 Appeal and Exemption Process
Per TMC Chapter 6-7-411 and 6-7-412, utility customers may appeal a Notice of Acts Constituting Water Wasting by submitting a written appeal to the Municipal Services Director within fifteen calendar days from the date of service of the Notice of Acts Constituting Water Wasting, or any water wasting penalty assessed to his or her account . The written appeal should include supporting facts and reasons. The hearing officer may hold an appeal hearing, where the appellant and the Municipal Services Director are heard. At the conclusion of hearing the appeal, the hearing officer may affirm, reverse or modify the Notice of Acts Constituting Water Wasting. The hearing officer’s action on the appeal is final.

8.0 LEGAL AUTHORITIES
Title 6, Chapter 7, Article 4 of the TMC includes provisions for the emergency water shortage plan. When a water shortage is determined, the City will coordinate interdepartmentally , with SRWA, and with Stanislaus County for the possible proclamation of a local emergency in accordance with California Government Code, California Emergency Services Act (Article 2, § 8558).

In accordance with TMC Chapter 6-7 and California Water Code Chapter 3, Division 1, § 350 et seq, the City Council is required, unless an immediate emergency exists, to conduct a duly noticed public meeting for the purpose of determining whether a water shortage emergency condition exists and, if so, the

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degree of the emergency and what regulations and restrictions should be enforced in response to the shortage. The City shall declare a water shortage emergency in accordance with CWC Chapter 3 Division 1.

Water Code Section Division 1, Section 350
…The governing body of a distributor of a public water supply…shall declare a water shortage emergency condition to prevail within the area served by such distributor whenever it finds and determines that the ordinary demands and requirements of water consumers cannot be satisfied without depleting the water supply of the distributor to the extent that there would be insufficient water for human consumption, sanitation, and fire protection.

The water shortage emergency declaration triggers communication protocols described in Section 6 of this WSCP and compliance and enforcement actions described in Section 7 of this WSCP.

9.0 FINANCIAL CONSEQUENCES OF WSCP
The City maintains an adequate operational reserve to protect against a temporary water shortage. The City anticipates reduced revenue due to decreased water use by its customers and additional costs associated with implementing water use restrictions and associated compliance actions. Reduced revenue and costs associated with compliance actions are considered in the City’s water rate study.

10.0 MONITORING AND REPORTING
The City’s water system is fully metered, from production facilities to individual customer connections, allowing for comprehensive monitoring of system supplies and demands. Water production data may be read on a daily basis. These meters may be used as monitoring tools for compliance and reporting purposes. The City regularly records its water meter readings, along with enforcement actions, to comply with State reporting requirements.

Meters can be read as frequently as needed to track the effectiveness of implemented response actions.

Water production and water use can be compared to historical periods, analyzed by customer sector or at the individual customer level. This continuous monitoring allows the City to assess water system demands and compare it with its water demand reduction goals.

Based on these assessments, t he City may adjust its shortage response actions to better align with its water demand reduction goals. For example, the City may intensify its public outreach or more rigorously enforce compliance with water use prohibitions if water demand reduction goals are not met for a specific shortage level.

11.0 WSCP REFINEMENT PROCEDURES
This WSCP is an adaptive management plan. It is subject to refinements as needed to ensure that the City’s shortage response actions and mitigation strategies are effective and produce the desired results. Based on monitoring described in Section 10 and the need for compliance and enforcement actions described in Section 7 of this WSCP/ TMC 6-7-410, the City may adjust its response actions and may modify its WSCP.

When a revised WSCP is proposed, the revised WSCP will undergo the process described in Section 12 for adoption by the City Council and distribution to the City, its customers, and the general public.

Feedback from City staff and the public is important in refining or incorporating new actions. The City seeks input from staff who interface with customers to gauge the effectiveness of its response actions

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and for response action ideas. The City seeks input from its customers and the general public through its website, through public hearings, and through regularly scheduled City Council meetings.

Customer water meter data may be evaluated for each customer sector or each individual customer. The City tracks water use violations and may evaluate their frequency to determine restrictions that customers may not be able to meet. This evaluation may also show water demand reduction actions that customers may effectively implement.

12.0 PLAN ADOPTION, SUBMITTAL, AND AVAILABILITY
This WSCP is adopted concurrently with the City’s Joint 2025 UWMP, by separate resolution. Prior to adoption, a duly noticed public hearing was conducted. An electronic copy of this WSCP will be submitted to the DWR within 30 days of adoption.

No later than 30 days after submittal to DWR, this WSCP will be available at the City’s offices. A copy will also be provided to Stanislaus County. An electronic copy of this WSCP as well as the Joint 2025 UWMP will also be available for public review and download on the City’s website.

Turlock Municipal Code Title 6 Chapter 7

Attachment A

City Council Staff Report
May 26, 2026

From: Christopher Fisher, Municipal Services Director
Prepared by: Julian Avila , Associate Civil Engineer
Agendized by: Christopher Fisher, Acting City Manager

1. ACTION RECOMMENDED:

Motion: Authorizing staff to proceed with advertising the City Project No. 25-057 “System Wide AMI and Water Meter Installation - Phase 1”

2. NARRATIVE:

On January 27, 2026, the City Council approved an agreement with Badger Meter, Inc. for the purchasing of water meters. These meters will be supplied as owner-provided material on future construction contracts to eventually replace all meters throughout the city. The first phase of water meter installation is planned to be completed as part of City Project No. 25- 057 "System Wide AMI and Water Meter Installation - Phase 1”. Plans and specifications have been prepared by an on-call consultant providing engineering services (QK, Inc.) and includes installation of approximately 4,293 water meters for residential customers. The existing water meters have indicated incorrect water consumption readings from the existing automated water meter reading (AMR) system which requires significant operational resources to maintain and is approaching obsolescence. Additionally, the existing water meters are nearing the end of their 20-year service life.

This project is necessary in order to prioritize replacement of failing meters in the City and to implement an Advanced Metering Infrastructure (AMI) system that will improve billing, enable faster leak detection, reduce water loss, and give residents more timely insight into their water use.

The project scope includes:
• Installation of approximately 4,293 water meters ranging in size from 3/4” to 1-1/2” • Installation of meter boxes, lids, and valves, where replacement or installation is necessary
• Installation of new adapters and new ORION Cellular Water Endpoints • Programming and integration of water meters into the AMI system with New World by Tyler Technologies

As the estimated project construction costs exceed one million dollars, Staff requests City Council authorization to advertise the project for construction bids pursuant to Resolution No. 2009-247.

3. FISCAL IMPACT / BUDGET AMENDMENT:

No General Fund money will be used for this project.

The total estimated project costs are displayed below:

Agenda Staff Report
5/26/2026

The costs listed above are estimates only and will be revised to reflect actual amounts at the time of the award of bid of the construction contract. All project costs are anticipated to be expensed in Fiscal Years 2025-2026 and 2026-2027.

The Municipal Services Department has identified funding from Fund 420 for project costs estimated to be incurred in Fiscal Year 2025-26. The Municipal Services Department has requested adequate funding as part of the normal Fiscal Year 2026-27 budget process. If additional funds are needed beyond what is approved in the Fiscal Year 2026-27 budget, an appropriation will be requested at the time of the award of the construction contract.

4. ENVIRONMENTAL DETERMINATION:

In accordance with Section 15302(c) (Replacement or Reconstruction) of the California Environmental Quality Act (CEQA), this project is categorically exempt from the provisions of CEQA due to the fact that this project consists of the replacement of existing water meters and related appurtenant utility components at existing service locations, involving negligible or no expansion of capacity.

5. ALTERNATIVES:

A. Council could choose to not authorize City staff to advertise the project. Staff does not recommend this alternative because the project is needed and project documents are complete and ready to be advertised.

6. ATTACHMENTS:

None

City Council Staff Report
May 26, 2026

From: Isaac Moreno, Finance Director
Prepared by: Michael Lenhardt, Principal Accountant
Agendized by: Christopher Fisher, Acting City Manager

1. ACTION RECOMMENDED:

Resolution: Accepting the City of Turlock’s audited Financial Statements and related reports for the Fiscal Year ended June 30, 2025

2. NARRATIVE:

This overview and analysis are provided by the Finance Department of the City of Turlock ("City") for the Fiscal Year 2024-2025 Financial Statements (with comparative information for 2023-2024).

FISCAL YEAR 2024-2025 FINANCIAL HIGHLIGHTS

Government-Wide Highlights
• The City’s net position (assets and deferred outflows in excess of liabilities and deferred inflows) at June 30, 2025, totaled $765.8 million. Governmental activities accounted for $421.3 million of the net position, while $344.5 million are in the business-type activities.
• Total City revenues, including program and general revenues, were $182.3 million, while total expenses were $141.5 million.
• Governmental program revenues were $32.3 million compared to governmental program expenses of $94.2 million.
• Program revenues from business-type activities were $65.9 million, while expenses for business-type activities were $47.3 million.

Fund Highlights
• Net General Fund revenues exceeded expenditures and other financing sources (uses) by $27.6 million as compared to the prior year when revenues exceeded expenditures and other financing sources (uses) by $4.6 million. For financial reporting purposes, the “General Fund” includes not only the City’s General Fund, but also the Parks, Arts and Recreation Commission, Special Public Safety, Tourism (2 funds), Cannabis, and Measure A funds.
• The fund balance of the General Fund is $84.0 million at June 30, 2025, compared to a projected $42.9 million when the 2024-2025 budget was originally adopted. This is due to the long-term debt proceeds from the Roads Bond debt issuance in the fiscal year.

Agenda Staff Report
5/26/2026

Additional discussion regarding the financial results for fiscal year 2024-2025 can be found in the “Financial Activities” section of the MD&A of the financial statements.

The City’s independent external auditors, Brown Armstrong Accountancy Corporation, have completed the City’s annual audit and issued the following financial reports for the Fiscal Year ended June 30, 2025:
• Basic Financial Statements for the City of Turlock
• Appropriations Limit Increment for the City of Turlock • Component Unit Financial Statements for the Turlock Public Financing Authority
• Component Unit Financial Statements for the Transportation Development Act Funds
• Component Unit Financial Statements for the Abandoned Vehicle Abatement Program

The above financial statements are prepared by the City’s Finance Department in accordance with Generally Accepted Accounting Principles (GAAP). Our external auditors have the responsibility to audit these statements in accordance with Generally Accepted Auditing Standards with the goal of determining whether the financial statements are free of material misstatement. If this goal can be supported by the results of their audit, the external auditors will issue an unqualified or “clean” opinion. All the above listed financial statements contain an unqualified opinion.

In addition to the financial statements, the auditors also issue reports on Required Communications and a Memorandum of Internal Control (MOIC). These MOIC reports detail items of significant concern to the financial well-being of the City. The MOIC identifies deficiencies in the City’s system of internal control and identifies the weaknesses as either “material weaknesses” or “significant deficiencies”. A Material Weakness is a deficiency that creates a reasonable possibility a material misstatement will occur in the financial statements and a Significant Deficiency is a deficiency that is less severe than a Material Weakness.

The City’s report for June 30, 2025, includes zero Material Weakness and zero Significant Deficiencies findings and Other Matters for fiscal 2025. The report also includes a section on the Status of Prior Year Material Weaknesses, Significant Deficiencies and an update of the same as shown in the attached complete report. The Auditors' report on Required Communications, in addition to addressing new accounting pronouncements, addresses the financial concern of the General Fund.

3. FISCAL IMPACT / BUDGET AMENDMENT:

Funds are budgeted for the independent audit services required. There is no additional fiscal impact.

4. ENVIRONMENTAL DETERMINATION:

This action is not subject to the provisions of the California Environmental Quality Act (CEQA) in accordance with Section 15378(b)(5) of the CEQA guidelines. This action consists

Agenda Staff Report
5/26/2026

of “organizational or administrative activities of governments that will not result in direct or indirect physical changes in the environment” and therefore is not considered a project.

5. ALTERNATIVES:

No alternatives are proposed, as staff is only asking for acceptance of these reports.

6. ATTACHMENTS:

1. Audit Acceptance Resolution

2. FY 2024-2025 City of Turlock Financial Statements

3. FY 2024-2025 City of Turlock Single Audit Report

4. FY 2024-2025 City of Turlock Memorandum On Internal Controls

5. FY 2024-2025 City of Turlock Required Communications Letter (AU-C 260))

6. FY 24-25 City of Turlock Proposition 111 Appropriations (GANN) Limit Report

7. FY 24-25 Public Financing Authority (PFA) Financial Statements

8. FY 24-25 Public Financing Authority (PFA) Required Communications Letter (AU-C 260)

9. FY 24-25 Transportation Development Act (TDA) Funds Financial Statements

10. FY 24-25 Transportation Development Act (TDA) Funds Required Communications Letter (AU-C 260)

11. FY 24-25 Abandoned Vehicle Abatement (AVA) Funds Financial Statements

12. FY 24-25 Abandoned Vehicle Abatement (AVA) Funds Required Communications Letter (AU-C 260)

BEFORE THE CITY COUNCIL OF THE CITY OF TURLOCK

IN THE MATTER OF ACCEPTING THE } RESOLUTION NO. 2026-XXX FINANCIAL STATEMENTS AND SINGLE }
AUDIT FROM BROWN ARMSTRONG }
ACCOUNTANTCY CORPORATION }
FOR FISCAL YEAR 2024-2025 }
}

WHEREAS, audited Financial Statements are necessary for all governmental entities; and

WHEREAS, on April 8, 2026, Brown Armstrong Accountancy Corporation issued their opinion on the City of Turlock’s Financial Statements, Single Audit; and

WHEREAS, on April 8, 2026, Brown Armstrong Accountancy Corporation issued the City of Turlock’s Memorandum on Internal Control, Required Communications; and

WHEREAS, on May 5, 2026, Brown Armstrong Accountancy Corporation issued their opinion on the Proposition 111 Appropriations Limit Increment; and

WHEREAS, on May 5, 2026, Brown Armstrong Accountancy Corporation issued their opinion on the Turlock Public Financing Authority Financial Statements, Required Communications; and

WHEREAS, on May 5, 2026, Brown Armstrong Accountancy Corporation issued their opinion on the Transportation Development Act Funds Financial Statements, Required Communications; and

WHEREAS, on May 15, 2026, Brown Armstrong Accountancy Corporation issued their opinion on the Abandoned Vehicle Abatement Funds Financial Statements, Required Communications; and

NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Turlock does hereby accept the above stated Financial Statements and Reports listed above.

PASSED AND ADOPTED at a regular meeting of the City Council of the City of Turlock this 26th day of May, 2026, by the following vote:

AYES:

NOES:

NOT PARTICIPATING:

ABSENT:

ATTEST:

___________________________
Nicole Fiez, City Clerk,
City of Turlock, County of Stanislaus,
State of California

CITY OF TURLOCK

ANNUAL FINANCIAL REPORT

FOR THE YEAR ENDED
JUNE 30, 2025

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CITY OF TURLOCK

ANNUAL FINANCIAL REPORT

FOR THE YEAR ENDED
JUNE 30, 2025

PREPARED BY

THE FINANCE DEPARTMENT

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CITY OF TURLOCK

ANNUAL FINANCIAL REPORT

FOR THE YEAR ENDED
JUNE 30, 2025

TABLE OF CONTENTS

Page

FINANCIAL SECTION

Independent Auditor’s Report ...................................................................................................................... 1

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

Basic Financial Statements:

Government-Wide Financial Statements:

Statement of N et Position ............................................................................................................ 21

Statement of Activities ........................................................................................................................... 22

Fund Financial Statements:

Balance Sheet – Go vernmental Funds ................................................................................................ 28

Reconciliation of the Governm ental Funds Balance Sheet to the Government-Wide Statement of Net Position – Governmen tal Activities ............................... 29

Statement of Revenues, Expenditures, and Changes in Fund Bala nces – Government al Funds ........................................................................................................................... 30

Reconciliation of the Governm ental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-Wide Statement of Activities – Governmental Activities .................................................................................................... 31

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

G eneral Fund ..................................................................................................................................... 32

F o r m e r L M I H o u s i n g F u n d ................................................................................................................ 33

G a s T a x / S t r e e t I m p r o v e m e n t F u n d .................................................................................................. 34

Statement of Net Positio n – Proprietary Funds ................................................................................... 36

Statement of Revenues, Expenses, and Changes in Fund Net Posi tion – Proprieta ry Funds ................................................................................................................................. 37

Statement of Cash Flows – Proprietary Funds .................................................................................... 38

Statement of Fiduciary Net Position – Fiduciary Funds ...................................................................... 40

Statement of Changes in Fiduciary Net Position − Fiduciary Funds .................................................. 41

Notes to Basic Financ ial Statements ....................................................................................................... 43

Page
Required Supplementary Information:

Schedule of Changes in the Net Pension Liability and Related Ratios – Miscellaneous Plan – Agent Multiple-Employer Defined Benefit Pension Plan ................................... 98

Schedule of Contributions – Miscellaneous Plan – Agent Multiple-Employer Defined Benefi t Pension Plan ................................................................................................................. 100

Schedule of the City’s Proportionate Share of the Net Pension Liability – Safety Plan – Cost-Sharing Multiple-Employer Defined Benefit Pension Plan .................................... 101

Schedule of Contributions – Safety Plan – Cost-Sharing Multiple-Employer Defined Benefi t Pension Plan ................................................................................................................. 103

Schedule of Changes in the Total Other Post-Employment Benefits (OPEB) Liability and R elated Ratios ..................................................................................................................... 104

Supplemental Information:

General Fund:

Combining Bal ance Sheet ........................................................................................................................ 108

Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances ......................................................................................................................................... 109

Nonmajor Governmental Funds:

Combining Bal ance Sheet ........................................................................................................................ 111

Combining Statement of Revenues, Expenditures, and Changes in Fund Balances .......................... 119

Internal Service Funds:

Combining Statement of Net Position ...................................................................................................... 128

Combining Statement of Revenues, Expenses, and Changes in Fund Net Position ........................... 129

Combining Stateme nt of Cash Flows ...................................................................................................... 130

Custodial Funds:

Combining Statement of Fiduciary Net Position ..................................................................................... 132

Combining Statement of Changes in Fiduciary Net Position ................................................................. 133

FINANCIAL SECTION

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1 INDEPENDENT AUDITOR’S REPORT

To the Honorable Members of the City Council
City of Turlock, California

Report on the Audit of the Financial Statements

Opinions

We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Turlock, California (the City), as of and for the y ear ended June 30, 2025, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.

In our opinion, the financial statements referred to above pres ent fairly, in all material respects, the respective financial position of the governmental activities, t he business-type activities, each major fund, and the aggregate remaining fund information of the City, as of June 30, 2025, and the respective changes in financial position, and, where applicable, cash flow s thereof and the respective budgetary comparisons for the General Fund, Former LMI Housing Fund, and Gas Tax/Street Improvement Fund for the year then ended in accordance with accounting principles ge nerally accepted in the United States of America.

Basis for Opinions

We conducted our audit in accordance with auditing standards ge nerally accepted in the United States of America and the standards applicable to financial audits contai ned in Government Auditing Standards , issued by the Comptroller General of the United States. Our res ponsibilities under t hose standards are further described in the Auditor’s Responsibilities for the Aud it of the Financial Statements section of our report. We are required to be independent of the City and to me et our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Responsibilities of Management for the Financial Statements

Management is responsible for the preparation and fair presenta tion of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and main tenance of internal control rel evant to the preparation and fair presentation of financial statements that are free from materia l misstatement, whether due to fraud or error.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial dou bt 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.

2 Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in acc ordance with auditing standards generally accepted in the United States of America and Government Auditing Standards will always detect a material misstatement when it e xists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal cont rol. Misstatements are considered material if there is a substantial likelihood that, individually or in t he 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 ge nerally accepted in the United States of America and Government Auditing Standards, we:

• Exercise professional judgment and maintain professional skept icism 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 respons ive to those risks. Such procedures include examining, on a test basis, evidence regardi ng the amounts and disclosures in the financial statements.
• Obtain an understanding of internal control relevant to the au dit in order to design audit procedures that are appropriate in the circumstances, but not f or the purpose of expressing an opinion on the effectiveness of the City’s internal control. Ac cordingly, no such opinion is expressed.
• Evaluate the appropriateness of accounting policies used and t he reasonableness of significant accounting estimates made by management, as well as evaluate th e overall presentation of the financial statements.
• Conclude whether, in our judgment, there are conditions or eve nts, considered in the aggregate, that raise substantial doubt about the City’s ability to contin ue as a going concern for a reasonable period of time.

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

Required Supplementary Information

Accounting principles generally accepted in the United States o f America require that the management’s discussion and analysis and the Required Supplementary Informat ion (RSI), as listed in the table of contents, be presented to supplement the basic financial statem ents. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate op erational, economic, or historical context.

We have applied certain limited procedures to the management’s discussion and analysis and the RSI in accordance with auditing standar ds generally accepted in the Un ited States of America, which consisted of inquiries of management about the methods of preparing the i nformation and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic f inancial 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.

Supplemental 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 accompanyin g supplemental information, as listed in the table of contents, is presen ted for purposes of additional analysis and is not a required part of the basic financial statements. Such information is the responsibil ity of management and was derived from

3 and relates directly to the underlying accounting and other rec ords used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, i ncluding comparing a nd reconciling such information directly to the underlying accounting and other rec ords used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standar ds generally accepted in the Un ited States of America. In our opinion, the supplemental information is fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated April 8, 2026, on our consideration of the City’s internal control over financ ial reporting and on our tests of its compliance with certain provisions of laws, regulations, contra cts, and grant agreements and other matters. The purpose of that report is solely to describe the s cope of our testing of internal control over financial reporting and compliance and the results of that test ing, and not to provide an opinion on the effectiveness of the City’s internal control over financial rep orting or on compliance. That report is an integral part of an audit pe rformed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.

BROWN ARMSTRONG

ACCOUNTANCY CORPORATION

Bakersfield, California
April 8, 2026

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5 CITY OF TURLOCK
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2025

This narrative overview and analysis are provided by the manage ment of the City of Turlock (City) for the fiscal year 2024-2025 financial statements (with comparative in formation for 2023-2024). We encourage our readers to consider this information in conjunction with th e information provided in the accompanying basic financial statements and notes thereto.

FISCAL YEAR 2024-2025 FINANCIAL HIGHLIGHTS

Government-Wide Highlights

• The City’s net position (assets and deferred outflows of resou rces in excess of liabilities and deferred inflows of resources) at June 30, 2025, totaled $765.8 million. Governmental activities accounted for $421.3 million of the net position, while $344.5 million are in the business-type activities.
• Total City revenues, includi ng program and general revenues, w ere $182.3 million, while total expenses were $141.5 million.
• Governmental program revenues were $32.3 million compared to g overnmental program expenses of $94.2 million.
• Program revenues from business-type activities were $65.9 mill ion, while expenses for business- type activities were $47.3 million.

Fund Highlights

• Net General Fund revenues exceeded expenditures and other fina ncing sources (uses) by $27.6 million as compared to the prior ye ar when revenues exceeded expenditures and other financing sources (uses) by $4.6 million. For financial reporting purpose s, the “General Fund” includes not only the City’s General Fund, but also the Parks, Arts and Recreation Commission, Special Public Safety, Tourism (2 funds), Cannabis, and Measure A Funds. • The fund balance of the General Fund is $84.0 million at June 30, 2025, compared to a projected $42.9 million when the 2024-2025 budget was originally adopted.

Additional discussion regarding the financial results for fisca l year 2024-2025 can be found in the “Financial Activities” section of this Management’s Discussion and Analysis.

OVERVIEW OF THESE FINANCIAL STATEMENTS

This discussion and analysis is intended to serve as an introdu ction to the City’s basic financial statements which are broken into the following four parts:

1) Management’s Discussion and Analysis (this part),
2) The Basic Financial Statements, which include the Government -Wide and the Fund Financial Statements, along with the Notes to these financial statements, 3) Required Supplementary Information, and
4) Supplemental Information.

THE BASIC FINANCIAL STATEMENTS

Government-Wide Financial Statements

The Government-Wide Financial Statements provide a longer-term, broader view of the City’s activities as a whole. These statements are more similar to private-sector fi nancial statements than the fund financial statements. The Government-Wide Financial Statements are compri sed of the Statement of Net Position and the Statement of Activities.

6 The Statement of Net Position provides information about the financial position of the City a s a whole, including all its capital assets and long-term liabilities on t he full accrual basis of accounting, similar to that used by the private sector. The difference between the Ci ty’s assets and deferred outflows of resources and liabilities and defer red inflows of resources is reported as “net position.” Over time, this statement may serve as an indicator of the City’s general healt h and whether its overall financial position is improving or deteriorating.

The Statement of Activities provides information about all the City’s revenues and all its expenses. This statement is also prepared using the full accrual basis of acco unting, with an emphasis on measuring net revenues or expenses for each of the City’s programs.

All of the City’s activities ar e grouped into either government al or business-type activities as explained below. All the amounts in the Statement of Net Position and the Statement of Activities are separated into governmental or business-type activities in order to provi de a summary of these two activities of the City as a whole.

• Governmental Activities – All of the City’s basic service s are considered to be governmen tal activities. These services include public safety (police and fire), parks and recreation, public ways and facilities/transportation, community development, and general a dministration. General City revenues such as taxes and program-specific revenues such as user and de veloper impact fees support and finance these services.

• Business-Type Activities – All the City’s enterprise activi ties are reported here includin g water, sewer, and transit operations. Un like governmental services, th ese services are supported by charges paid by the users of these services.

As noted above, the Government-W ide Financial Statements are pr epared on the full accrual basis of accounting, which means they measure the flow of all economic resources of the City as a whole.

Fund Financial Statements

The Fund Financial Statements report the City’s operations in m ore detail than the government-wide statements and focus primarily on the short-term activities of the City’s General Fund and other major funds. The Fund Financial Statem ents measure only current reve nues and expenditures and fund balances; they exclude capital assets, long-term debt, and other long-term amounts.

The Fund Financial Statements provide detailed information abou t each of the City’s most significant funds, called “major funds.” Major funds account for the most significant financial activities of the City and are presented individually, while the activities of nonmajor fu nds are presented in summary with subordinate schedules presenting the detail for each of these o ther funds. Since the City’s most significant fiscal activities may change from year to year, the funds designated as “major funds” may also change from year to year.

Fund Financial Statements include governmental, enterprise, int ernal service, and fiduciary funds as follows:

Governmental Funds Financial Statements are prepared on the mod ified accrual basis of accounting, which means they measure only current financial resources and u ses. Capital assets and other long- lived assets, along with long-term liabilities, are not present ed in the Governmental Fund Financial Statements.

The City has thirty-four (34) governmental funds, of which thre e (3) are considered major funds for presentation purposes – the General Fund, Former Low and Modera te Income (LMI) Housing Fund, and the Gas Tax/Street Improvement Fund. Each major fund is pr esented separately in the Governmental Funds Balance Sheet and the Governmental Funds Sta tement of Revenues, Expenditures, and Changes in Fund Balances. The financial infor mation for the remaining nonmajor governmental funds is combined into a single, aggregated presen tation. The basic Governmental Funds Financial Statements can be found starting on page 28 in this report.

7 Enterprise and Internal Service Funds Financial Statements are prepared on the full accrual basis of accounting and include all their assets, liabilities, and defer red outflows/inflows of resources, current and long-term. The City’s Enterprise Funds account for the financial activity of the City’s water, sewer, and transportation (fixed route and dial-a-ride) services. The Internal Service Funds account for the financial activity of the City’s equipment pool, self-insurance , and information technology activities.

Because these activities primarily benefit the governmental rat her than business-type activities, the resulting financial activities of the Internal Service Funds have been included within the governmental activities in the Government-Wide Financial Statements. The Ent erprise and Internal Service Funds Financial Statements can be found starting on page 36.

Fiduciary Funds Financial Statements are used to account for resources held for the benefit of parties outside the government. They are not included in the Governmen t-Wide Financial Statements because their resources are not available to support City progr ams. With the dissolution of the Redevelopment Agency, the activities of the Successor Agency to the former Turlock Redevelopment Agency are reported as a Private -Purpose Trust Fund in the Fidu ciary Funds Section. Additional information about the dissolution of the Redevelopment Agency c an be found in Note 14 on page 89 of the financial statements.

Notes to the Financial Statements. The notes to the financial s tatements provide additional information that is essential to a full understanding of the da ta provided in the Government-Wide and Fund Financial Statements. The notes can be found starting on page 43.

FINANCIAL ACTIVITIES OF THE CITY AS A WHOLE

Statement of Net Position

Over time, the City’s net position may serve as an indicator of its financial position. The City’s Statement of Net Position and Statement of Activities presented below and on a following page focus on the City’s net position and changes to net position for governmental and business-type activities.

STATEMENT OF NET POSITION
AS OF JUNE 30
(in thousands of dollars)

2025 2024 2025 2024 2025 2024
Cash and investments 215,446$ 180,263 $ 88,618 $ 74,984 $ 304,064 $ 255,247 $ Other assets 54,737 55,471 57,334 53,164 112,071 108,635 Capital assets, net 295,141 269,302 315,109 316,308 610,250 585,610 Total assets 565,324 505,036 461,061 444,456 1,026,385 949,492 Deferred outflows
of resources 25,931 33,695 4,805 5,884 30,736 39,579 Long-term liabilities 134,818 101,625 96,299 103,174 231,117 204,799 Other liabilities 19,835 19,803 22,816 20,051 42,651 39,854 Total liabilities 154,653 121,428 119,115 123,225 273,768 244,653 Deferred inflows
of resources 15,327 16,625 2,219 2,882 17,546 19,507 Net position:

Net investment
in capital assets 257,972 266,097 237,469 231,960 495,441 498,057 Restricted 140,669 131,801 - - 140,669 131,801 Unrestricted 22,634 2,780 107,063 92,273 129,697 95,053 Total net position 421,275$ 400,678 $ 344,532 $ 324,233 $ 765,807 $ 724,911 $ Governmental Activities Bus iness-Type Activities Total

8 As noted above, the City’s primary investment is in its Net Investment in Capital Assets. Capital assets, which account for approximately 64.7% of the City’s total net p osition, include all infrastructure such as the street/roadway system; sewer, water, and storm drain collec tion systems, as well as retention basins; the wastewater treatment plant, water wells, and pump stations; streetlights and traffic signals; and parks.

Capital assets also include all vehicles, equipment, and buildings used by City employees in the course of their daily activities. By their very nature and use, capital assets are not available for future spending and are, therefore, not assets available to fund future activities.

Approximately $140.7 million or 1 8.4% of the City’s non-capital net position is subject to external restrictions as to their use. The remaining $129.7 million is unrestricted and available to meet the City’s ongoing obligations to its citizens and creditors. Of this amo unt, $22.6 million is related to governmental activities and $107.1 million to business-type activities.

The City’s overall net position increased by $40.9 million during the 2024-2025 fiscal year. Governmental activities experienced a $20.6 million increase in net position while the City’s business-type activities – those intended to be self-sufficient – experienced a $20.3 mill ion increase in net position. More information regarding the results of operations for all the City’s funds can be found later in this report.

Summary of Changes in Net Position

As the below table shows, $98.1 million of the City’s $182.3 million in total revenues comes from program revenue sources. Program revenues are those derived directly from the program itself (user fees) or from parties outside the reporting government’s taxpayers or citizen ry. Program revenues reduce the need for the cost of the function to be financed by general government r evenues. The largest portion of the City’s program revenues is “Charges for Services,” which include user fees from the City’s water and sewer operations, building permit-related fees, developer impact fees, and special assessments.

Expenses are presented on a functi onal basis and represent only current year expenses. As such, they do not include capital outlay expenditures as capital outlay ex penditures are included in “Capital Assets” on the City’s Statement of Net Position.

Citywide expenses, which totaled $141.5 million, consisted of $ 94.2 million for governmental activities and $47.3 million for business-type activities. Of the $94.2 m illion in governmental a ctivities expenses, $54.4 million or 57.8% relate to the provision of public safety (police and fire) services. The next largest component was $13.0 million or 13. 8% for general government. T his component accounts for activities involved in the administration and financial activities of City.

9 SUMMARY OF CHANGES IN NET POSITION
FOR THE YEARS ENDED JUNE 30
(in thousands of dollars)

2025 2024 2025 2024 2025 2024
Program Revenues
Charges for services 16,258 $ 14,033 $ 54,368 $ 50,196 $ 70,626 $ 64,229 $ Operating grants and contributions 5,413 9,094 7,043 4,880 12,456 13,974 Capital grants and contributions 10,592 10,934 4,461 5,767 15,053 16,701 Total Program Revenues 32,263 34,061 65,872 60,843 98,135 94,904 General Revenues
Property taxes 10,096 9,303 - - 10,096 9,303 Sales taxes 37,356 37,664 - - 37,356 37,664 Property taxes - VLF in lieu 9,544 8,869 - - 9,544 8,869 Other taxes 13,424 14,385 - - 13,424 14,385 Interest and investment earnings 9,443 7,398 4,061 3,009 13,504 10,407 Other income 637 367 - - 637 367 Gain (loss) on disposal
of capital assets 3 11 (389) 9 (386) 20 Total General Revenues 80,503 77,997 3,672 3,018 84,175 81,015 Total Overall Revenues 112,766 112,058 69,544 63,861 182,310 175,919 Expenses
General government 13,005 10,328 - - 13,005 10,328 Public safety 54,443 48,733 - - 54,443 48,733 Public ways/facilities/transportation 10,572 13,787 - - 10,572 13,787 Parks and recreation 7,460 6,477 - - 7,460 6,477 Community development 7,672 7,004 - - 7,672 7,004 Interest on long-term debt 1,034 126 - - 1,034 126 Water - - 10,593 10,774 10,593 10,774 Sewer - - 24,142 20,616 24,142 20,616 Transportation - - 8,583 5,900 8,583 5,900 SRWA operations - - 3,989 5,074 3,989 5,074 Total Expenses 94,186 86,455 47,307 42,364 141,493 128,819 Increase in Net Position Before
Transfers and Contributions 18,580 25,603 22,237 21,497 40,817 47,100 Transfers 1,938 1,583 (1,938) (1,583) - - Contributions for capital assets - 1,159 - - - 1,159 Contribution from Private-Purpose Trust 79 93 - - 79 93 Change in Net Position 20,597 28,438 20,299 19,914 40,896 48,352 Net Position, Beginning of Year 400,678 372,240 324,233 304,319 724,911 676,559 Net Position, End of Year 421,275 $ 400,678 $ 344,532 $ 324,233 $ 765,807 $ 724,911 $ Governmental Activities Business-Type Activities Total

10 Governmental Activities Revenue Composition

Charges for
Serv ices
14%
Operating Grants
and Contributions
5%
Capital Grants
and Contributions
9%
Property Taxes
9%
Sales Taxes
33%
Property Taxes -
VLF in Lieu
9%
Interest and
Other Income
9%
Other Taxes
12%

Governmental activities revenu es totaling $112.8 million are co mprised of various non-dedicated tax revenues (General Revenues) as well as revenues received for specific purposes ( Program Revenues).

Revenues are categorized as follows:

• Charges for Services – Revenues for specialized City services, which are typically not demanded by the general population, totaled $16.3 million. Included in thi s revenue category are the special assessment revenues charged by the City’s Lighting and Landscape Maintenance Districts as well as charges for specialized services provided by departments throug hout the City and fees for participation in City-offered recreation programs.

• Operating Grants and Contributions – Revenues received from oth er governmental agencies, which are primarily used for operational needs, totaled $5.4 million. Operating grants include revenues received from the (1) U.S. Department of Housing and Urban Deve lopment (HUD) and the California Department of Housing and Community Development supporting the City’s affordable housing activities; (2) U.S. Department of Justice and California Offic e of Traffic Safety supporting various police activities; (3) Gas Tax and Local Transportation Funds u sed for street/road maintenance; and (4) revenues received by the City ’s recreation division to supp ort after school enrichment programs.

Since these types of revenues are generally received on a reimb ursement basis, annual amounts will vary from year-to-year depending on the activities in which the City is engaged.

• Capital Grants and Contributions – These are typically developm ent impact related revenues which are collected to finance the cost of new infrastructure as well as federal Department of Transportation revenues. Total revenues for 2024-2025 were $10.6 million. Th e Department of Transportation revenues are used for street/road reconstruction and other main tenance that is more extensive than pothole patching and slurry seals. Funds from Measure L, a locally approved sales tax measure to be used for transportation needs within Stanislaus County, are use d for street/road maintenance and rehabilitation.

11 • General revenues are all other revenues not classified as progr am revenues and are generally received for unrestricted uses. General revenues include prope rty taxes, sales tax, property tax – VLF in lieu, franchise fees, business license fees, transient o ccupancy taxes, and investment earnings. The City’s governmental activities general revenues totaled $80.5 million for fiscal 2024- 2025. Property tax assessed values increased 7.44% or $662.4 mi llion between 2023-2024 and 2024-2025 to a total of $9.6 billion in assessed value for parc els within the City. This resulted in a $0.8 million increase in assessed value related revenues. Sale s taxes decreased $0.3 million from 2023-2024. The decrease in sales tax can be primarily attribute d to the leveling off of sales in the region.

Governmental Activities Revenues and Expenses

Governmental activities revenues are primarily used to finance governmental activities such as public safety, park maintenance, culture and recreation programs, and general government administration. The tables below graphically depict the typical relationship betwee n program revenues and expenses for governmental activities for the past two years. In total, 2024 -2025 expenses for governmental activities exceeded program revenues by $61.9 million whereas in 2023-2024 expenses exceeded revenues by $52.4 million.

$-
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
General
Government
Public
Safety
Public
Ways/Facilities/
Transportation
Parks and
Recreation
Community
Development
2024-2025 Program Revenues and Expenses
Governmental Activities
Expenses Revenues

12 $-
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
General
Government
Public
Safety
Public
Ways/Facilities/
Transportation
Parks and
Recreation
Community
Development
2023-2024 Program Revenues and Expenses
Governmental Activities
Expenses Revenues

Business-Type Activities

Business-Type Activities
Revenues by Service Sector

Water
42%
Sewer
41%
Transit
11%
SRWA
Operations
6%

Revenues for business-type activities totaled $69.4 million and related expenses totaled $47.3 million, of which $24.1 million or 51.0% are related to the maintenance and operations of the City’s wastewater treatment plant and the City’s storm drain collection system. Potable water maintenance and operations accounted for $10.6 million or 22.4% of business-type activitie s expenses. Other business-type activities include the operation of both fi xed route and dial-a-ride trans it systems which provide service in the City as well as connecting those in need with County-wide transporta tion services. The City’s Building Division assists all residents and developers in their pursuits of property development and improvements within the City limits.

13 The pie chart above and the graphs below present the compositio n of revenue for the City’s business- type activities by functional area as well as a comparison for both fiscal years 2024-2025 and 2023-2024 of the program revenues vs. expenses for each of the four functional areas.

$-
$4,000
$8,000
$12,000
$16,000
$20,000
$24,000
$28,000
$32,000
Water Sewer Transit SRWA Operations
2024-2025 Program Revenues and Expenses
Business-Type Activities
Expenses Revenues

$-
$4,000
$8,000
$12,000
$16,000
$20,000
$24,000
$28,000
$32,000
Water Sewer Transit SRWA Operations
2023-2024 Program Revenues and Expenses
Busine ss-Type Activitie s
Expenses Revenues

THE CITY’S FUND FINANCIAL STATEMENTS

Governmental Funds

As noted earlier, the focus of the City’s governmental funds (G eneral, Special Revenue, and Capital Projects) is to provide information related to resources (mainly cash), near-term inflows and outflows, and spendable balances. This focus does not include capital assets or long-term debt.

At June 30, 2025, the City’s governmental funds reported combin ed fund balances of $196.9 million, a $37.3 million increase over the prior year. The General Fund’s fund balance is $84.0 million at June 30, 2025. Governmental fund revenues (including transfers in) were $117.7 million this year, of which General Fund revenues totaled $8 4.5 million or 71.7%. Governme ntal fund expenditures (including transfers out) totaled $114.3 m illion with the General Fund rep resenting 79.3% of the total or $90.6 million. The following provides additional information for select governmental funds.

14 General Fund – As previously mentioned, for financial reporting purposes, the “General Fund” includes not only the City’s General Fund, but also the Parks, Arts and Recreation Commission, Special Public Safety, Tourism (2 funds), Cannabis, and Measure A Funds. At J une 30, 2025, the General Fund had a fund balance of $84.0 million with $41.5 million in the unassig ned category. As noted in footnote 8, fund balances in governmental funds can fall into one of five categories – nonspendable, restricted, committed, assigned, or unassigned. Balances falling in the nonspendable through assigned categories are there by virtue of (1) legal restrictions, (2) City Council action to co mmit resources for specific activities, and/or (3) action taken by management which signals the City’s intended us e of resources. All other balances are categorized as unassigned.

General Fund expendi tures exceeded revenue s by $5.6 million for 2024-2025. Ongoing General Fund revenues increased from $78.7 million in 2023-2024 to $80.1 million in 2024-2025.

The City continues to work balancing the economic vs. service d emand challenges associated with the activities funded by the General Fund. The primary reason the General Fund was able to generate increases to the fund balance in 2024-2025 was primarily due to increases in taxes and assessments revenue of $0.3 million, intergo vernmental revenue of $0.7 mill ion, charges for curre nt services of $0.4 million, and issuance of debt of $33.6 million.

Former LMI Housing Fund – This fund serves as the successor to the former Housing Set-Aside Fund and was formed after the dissolution of the City’s Redevelopmen t Agency. The purpose of this fund is to account for housing related activities and assets the City elected to retain from the former Redevelopment Agency. For fiscal year 2024-2 025, the fund’s expenditures inc luded $24,837 in support of a Mobile Home Rental Subsidy program for income eligible senior citizens . This program is an enforceable obligation of the Successor Agency to the Turlock Redevelopment Agency.

Gas Tax/Street Improvement Fund – This fund comprises the reven ues and related expenditures the City receives from the Gas Tax, the Local Transportation Fund (LTF), Stanislaus County Measure L, State of California Senate Bill (SB) 1, and Federal Department of Transp ortation (DOT) sources. Revenues (including transfers in) for 2024-2025 totaled $11.8 million wh ile expenditures (including transfers out) totaled $8.4 million. Federally-funded projects typically take 3-4 years from beginning to end. The funding is received on a reimbursement basis, meaning that the City spends the money first in accordance with the grant documents and is then reimbursed. Th e City uses Gas Tax Section 2103 dollars for the local match portion for many federally-funded projects. Major projects for which there were expenditures in 2024-2025 include: active transportation progra m improvements for the Southwest Quadrant Rd rehabilitation; reha bilitation of Ped ras Rd between Geer Rd and Golden State Blvd; intersection improvements at Countryside Dr; construction and d esign for construction in progress (CIP) Roads; and signal coordination on Lander and Christoffersen Parkway.

The Gas Tax and LTF dollars are used for general street mainten ance (pothole repairs, crack sealing, slurry seals, and striping) as well as the operational costs of the City’s street lights which are not in an assessment district, traffic si gnals, leaf pick-up, and street tree trimming. LTF dollars are also used for bicycle and pedestrian related-improvements contiguous to the C ity’s street/road system. The Gas Tax and LTF revenues are based on taxes paid when gasoline is purchased, which is a revenue source that is not growing due to more fuel-efficient vehicles on the road. E xpenditures funded by these revenue sources were at a level consistent with the prior year.

Enterprise Funds

The City’s enterprise funds provide the same information found in the Government-Wide Financial Statements for Business-Type Activities only in a little more d etail. The net position for the City’s enterprise funds increased $20.3 million during fiscal year 202 4-2025, which compares to a $19.9 million increase for fiscal year 2023-2024. Overall operating revenues were approximately $ 4.2 million higher than the prior year while operating expenses increased by $5.1 million. An increase of $4.1 million from charges for services in operating revenues was offset by an inc rease in contractual of $2.2 million and in supplies and maintenance of $2.5 million. The City is a member of the Stanislaus Regional Water

15 Authority (SRWA) which is a joint powers authority developing a surface water supply project to supply additional drinking water to the customers within SRWA members’ service area. More information related to this project can be found at www.stanrwa.org/ and in Note 13 to the financial statements. Net operating income at the City’s wastewater facility was $1.2 million compared to $2.3 million in 2023-2024.

It should be noted that for both the water and wastewater syste ms, new development pays – via development impact fees – for the construction of infrastructur e in the newly developing areas of town.

The monthly user fees pay for the ongoing delivery of water and sewer services as well as for the cost of replacing infrastructure either due to age or increasing regulatory requirements.

CAPITAL ASSETS

At June 30, 2025, the City had $610.3 million, net of depreciat ion/amortization, invested in a broad range of capital assets used in governmental and business-type activi ties. This investment includes land and improvements, buildings, machinery, equipment, vehicles, infras tructure, and construction in progress.

Infrastructure assets include items which are not moveable and are normally of use only to the City such as streets/roads, bridges, sidewalks, street lighting and traff ic signals, parks, drainage systems, sewer collection and treatment systems, and water distribution systems. Net additions to the City’s capital asset investment (including construction in progress but excluding cu rrent year depreciation/amortization) during fiscal year 2024-2025 was approximately $40.6 million. Capital expenditures include construction for the roads program as well as road rehabilitation, water and sewer mains extension at Golden State Blvd, Americans with Disabilitie s Act (ADA) pedes trian improvem ents, City-wide drinking water chlorination project, transit shelter upgrades, water main/wate rline replacements, as well as the purchase of vehicles and equipment by various departments which are used in their daily operations. Additional information regarding the City’s capital assets can be found in Note 6 to the financial statements starting on page 62.

DEBT ADMINISTRATION

At June 30, 2025, the City had $114.8 million in debt outstandi ng as compared to $90.2 million for the prior year.

The City’s principal debt service obligations for 2024-2025, to taling approximately $7.0 million, are made up of the following:

Debt Service
2017 Water Revenue Bonds 880,000 $
2022 Sewer Loan 3,063,000
SRF - WQC Upgrade 1,214,036
SRF - Harding Drain By-Pass 754,198
SRF - North Valley Water Program 551,288
PNC Lease/Fire Trucks 97,916
Motorola Equipment Lease/IBM 287,859
Leases 144,890
SBITA 33,554
7,026,741$

Additional information regarding each of the City’s debt issues as well as debt service requirements is discussed in greater detail in Note 7 to the financial statements starting on page 64.

NEXT YEAR’S BUDGET AND THE ECONOMY

In June 2025, the City Council adopted the budget for fiscal ye ar 2025-2026. The 2025-2026 General Fund (Fund 110) budget projected a budget with revenues exceedi ng expenses by just under $175,000 for a total of $64.37 million in revenue and $64.2 million in e xpenses. The 2025-2026 budget included

16 personnel cost increases budgeted based on existing Memoranda o f Understanding (MOUs) and/or Schedules of Benefits and projected increases for retirement ex penses as well as increases for property tax revenues and some franchise fee revenues, with a slight projected decrease for sales tax revenue.

More information regarding the City’s budget can be obtained by going to the Finance Division section under Administrative Services on the City website at www.ci.turlock.ca.us.

REQUESTS FOR INFORMATION

This Basic Financial Report is intended to provide citizens, ta xpayers, investors, and creditors with a general overview of the City’s finances. Questions about this report should be directed to the City’s Finance Department, at 156 South Broadway, Suite 110, Turlock, CA 95380.

17 BASIC FINANCIAL STATEMENTS

GOVERNMENT-WIDE FINANCIAL STATEMENTS

18 This page intentionally left blank.

19 STATEMENT OF NET POSITION AND STATEMENT OF ACTIVITIES

The Statement of Net Position and the Statement of Activities s ummarize the entire City’s financial activities and financial position.

The Statement of Net Position reports the difference between the City’s total assets and deferred outflows of resources and the City’s total liabilities and deferred inflows of resources, including all the City’s capital assets and all its long-term debt. The Statement of Net Position summarizes the financial position of all of the City’s governmental activities in a single column, and the financial position of all of the City’s business-type activities in a single column; these columns are followed by a Total column that presents the financial position of the entire City.

The City’s governmental activities include the activities of it s General Fund, along with all its Special Revenue and Capital Projects Funds. Since the City’s Internal S ervice Funds service these funds, their activities are consolidated with governmental activities, after eliminating interfund transactions and balances. The City’s business-type activities include all its Enterprise Fund activities.

The Statement of Activities repo rts increases and decreases in the City’s net position. It is also prepared on the full accrual basis of accounting, which means it include s all the City’s revenues and all its expenses, regardless of when cash changes hands. This differs f rom the “modified accrual” basis of accounting used in the governmental fund financial statements, which reflect only current assets, current liabilities, available revenues, and measurable expenditures.

The Statement of Activities pres ents the City’s expenses first, listed by program, followed by the expenses of its business-type activities. Program revenues—that is, revenues which are generated directly by these programs—are then deducted from program expen ses to arrive at the net expense of each governmental and business-type program. The City’s general revenues are then listed in the governmental activities or business-type activities column, as appropriate, and the Change in Net Position is computed and reconciled with the Statement of Net Position.

Both of these statements include the financial activities of th e City and the Turlock Public Financing Authority, which is legally separate but is a component unit of the City because it is controlled by the City, which is financially accountable for the activities of this entity.

20 This page intentionally left blank.

See accompanying notes to basic financial statements.
21 CITY OF TURLOCK

STATEMENT OF NET POSITION
JUNE 30, 2025

Governmental Business-Type
Activities Activities Total
ASSETS
Cash and investments (Note 3) 183,560,761 $ 85,251,843 $ 268,812,604 $ Restricted cash and investments and
cash and investments with fiscal agent (Note 3) 31,885,283 3,365,688 35,250,971 Accounts receivable, net (Note 5C) 14,580,645 18,594,500 33,175,145 Interest receivable 1,312,416 448,462 1,760,878 Prepaids 442,832 35,415 478,247 Due from developers (Note 5A) 287,284 157,663 444,947 Long-term loans receivable (Note 5B) 37,120,585 - 37,120,585 Investment in affordable housing property (Note 1K) 327,184 - 327,184 Investment in joint venture (Note 13D) - 38,098,181 38,098,181 Leases receivable (Note 15) 666,852 - 666,852 Capital assets:

Capital assets, not being depreciated (Note 6) 72,109,914 60,570,946 132,680,860 Capital assets, being depreciated (net) (Note 6) 219,591,262 254,338,210 473,929,472 Right-to-use lease assets (net) (Note 6) 1,423,061 93,564 1,516,625 Right-to-use subscription assets (net) (Note 6) 2,016,296 106,549 2,122,845 Total Assets 565,324,375 461,061,021 1,026,385,396

DEFERRED OUTFLOWS OF RESOURCES
Related to pensions (Note 9) 24,662,388 4,516,201 29,178,589 Related to OPEB (Note 10) 1,268,141 288,789 1,556,930 Total Deferred Outflows of Resources 25,930,529 4,804,990 30,735,519

LIABILITIES
Accounts payable 8,431,285 3,714,291 12,145,576 Payroll payable 1,791,586 320,483 2,112,069 Interest payable 639,190 521,539 1,160,729 Unearned revenue 4,539,547 11,287,881 15,827,428 Deposits payable 942,046 555,920 1,497,966 Compensated absences (Note 1I):

Due within one year 829,535 191,985
1,021,520
Due in more than one year 3,318,140 767,942 4,086,082 Estimated claims liability (Note 12):

Due within one year 808,862 - 808,862 Due in more than one year 4,246,536 - 4,246,536 Long-term debt (Note 7):

Due within one year 1,055,974 6,106,746 7,162,720 Due in more than one year 32,898,658 74,729,163 107,627,821 Lease lability (Note 15):

Due within one year 318,515 52,032 370,547 Due in more than one year 1,027,118 44,263 1,071,381 IT subscription liability (Note 16):

Due within one year 478,583 38,195 516,778 Due in more than one year 1,390,203 36,081 1,426,284 Net pension liability (Note 9):

Due in more than one year 85,194,584 19,213,204 104,407,788 Total OPEB liability (Note 10):

Due in more than one year 6,742,992 1,535,555 8,278,547 Total Liabilities 154,653,354 119,115,280 273,768,634

DEFERRED INFLOWS OF RESOURCES
Related to pensions (Note 9) 4,959,870 - 4,959,870 Related to OPEB (Note 10) 9,744,757 2,219,132 11,963,889 Related to leases (Note 15) 622,782 - 622,782 Total Deferred Inflows of Resources 15,327,409 2,219,132 17,546,541 NET POSITION (Note 8)
Net investment in capital assets 257,971,482 237,468,477 495,439,959 Restricted for:

Capital projects 31,822,593 - 31,822,593 Special projects and programs 108,845,825 - 108,845,825 Unrestricted 22,634,241 107,063,122 129,697,363 Total Net Position 421,274,141 $ 344,531,599 $ 765,805,740 $

See accompanying notes to basic financial statements.
22 CITY OF TURLOCK

STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2025

Operating Capital
Charges for Grants and Grants and
Functions/Programs Expenses Services Contributions Contributions Tot al Governmental Activities:

General government 13,004,567 $ 3,322,213 $ 1,834,905 $ 30,000 $ 5,187,118 $ Public safety 54,443,116 831,341 1,211,125 - 2,042,466 Public ways and facilities/transportation 10,572,090 2,704,712 18,073 10,562,276 13,285,061 Parks and recreation 7,459,789 3,104,347 603,866 - 3,708,213 Community development 7,672,425 6,295,256 1,744,340 - 8,039,596 Interest and fiscal charges 1,034,347 - - - - Total Governmental Activities 94,186,334 16,257,869 5,412,309 10,592,276 32,262,454 Business-Type Activities:

Water 10,592,898 26,377,279 131,264 1,087,381 27,595,924 Sewer 24,141,719 23,748,335 - 3,373,724 27,122,059 Transportation 8,583,305 256,789 6,912,099 - 7,168,888 SRWA Operations 3,989,044 3,985,014 - - 3,985,014 Total Business-Type Activities 47,306,966 54,367,417 7,043,363 4,461,105 65,871,885 Total 141,493,300 $ 70,625,286 $ 12,455,672 $ 15,053,381 $ 98,134,339 $ General Revenues:

Taxes:

Property taxes
Sales taxes
Property tax - VLF in lieu
Other tax
Total taxes
Other revenue
Interest income
Contributions for capital assets
Contributions from private-purpose trust
Gain (loss) from sale of capital assets
Transfers (Note 4)
Total General Revenues and Transfers
Change in Net Position
Net Position - Beginning
Net Position - Ending
Program Revenues

See accompanying notes to basic financial statements.
23 CITY OF TURLOCK
STATEMENT OF ACTIVITIES (Continued)
FOR THE YEAR ENDED JUNE 30, 2025

Governmental Business-Type
Functions/Programs Activities Activities Total
Governmental Activities:

General government (7,817,449) $ - $ (7,817,449)$ Public safety (52,400,650) - (52,400,650) Public ways and facilities/transportation 2,712,971 - 2,712,971 Parks and recreation (3,751,576) - (3,751,576) Community development 367,171 - 367,171 Interest and fiscal charges (1,034,347) - (1,034,347) Total Governmental Activities (61,923,880) - (61,923,880) Business-Type Activities:

Water - 17,003,026 17,003,026 Sewer - 2,980,340 2,980,340 Transportation - (1,414,417) (1,414,417) SRWA Operations - (4,030) (4,030) Total Business-Type Activities - 18,564,919 18,564,919 Total (61,923,880) 18,564,919 (43,358,961)
General Revenues:

Taxes:

Property taxes 10,095,669 - 10,095,669 Sales taxes 37,356,265 - 37,356,265 Property tax - VLF in lieu 9,543,781 - 9,543,781 Other tax 13,424,108 - 13,424,108 Total taxes 70,419,823 - 70,419,823 Other revenue 637,059 - 637,059 Interest income 9,442,894 4,061,106 13,504,000 Contributions for capital assets - - - Contributions from private-purpose trust 78,851 - 78,851 Gain (loss) from sale of capital assets 3,135 (389,863) (386,728) Transfers (Note 4) 1,937,804 (1,937,804) - Total General Revenues and Transfers 82,519,566 1,733,439 84,253,005 Change in Net Position 20,595,686 20,298,358 40,894,044 Net Position - Beginning 400,678,455 324,233,241 724,911,696 Net Position - Ending 421,274,141 $ 344,531,599 $ 765,805,740 $ Net (Expense) Revenue and
Changes in Net Position

24 This page intentionally left blank.

25 BASIC FINANCIAL STATEMENTS

FUND FINANCIAL STATEMENTS

26 This page intentionally left blank.

27 MAJOR GOVERNMENTAL FUNDS

The funds described below were determined to be Major Funds by the City in fiscal year 2025. Individual nonmajor funds may be found in the Supplemental Section.

GENERAL FUND

The General Fund is used for all the general revenues of the Ci ty not specifically levied or collected for other City funds. Expenditure activities within the General Fun d include public safety (police and fire), park maintenance, general City administration (includes City Cl erk, payroll/personnel, accounts receivable, accounts payable, accounting), planning, and the Ci ty attorney. For financial reporting purposes, the General Fund for the City also includes Parks, Ar ts and Recreation Commission, Special Public Safety, Cannabis, Measure A, and Tourism (2 funds).

FORMER LOW AND MODERATE INCOME (LMI) HOUSING FUND

This fund accounts for the activity of the Housing Set-Aside fu nds post Turlock Redevelopment Agency dissolution.

GAS TAX/STREET IMPROVEMENT FUND

The Gas Tax/Street Improvement Fund accounts for the City’s Gas T a x ( H i g h w a y U s e r ’ s T a x ) , L o c a l Transportation Fund, and Measure L (Stanislaus County Sales Tax Transportation Measure) revenues as well as federal/state/local grants received for street improvem ent purposes. These revenue sources are used in the maintenance of the City’s street/road system includ ing street sweeping, pothole repairs, streetlight/traffic signal lighting and maintenance, and various street reconstruction projects which are the result of wear and tear. Expenditures in this fund do not include street construction projects which are due to development.

See accompanying notes to basic financial statements.
28 CITY OF TURLOCK

BALANCE SHEET

GOVERNMENTAL FUNDS
JUNE 30, 2025

Gas Tax/ Nonmajor Total
Former LMI Street Governmental Governmental
General Housing Improvement Funds Funds
ASSETS
Cash and investments (Note 3) 47,444,002 $ 2,090,320 $ 28,643,467 $ 85,510,478 $ 163,688,267 $ Restricted cash and investments and
cash and investments with fiscal agent (Note 3) 31,885,283 - - - 31,885,283 Accounts receivable (Note 5C) 10,543,089 462 2,480,907 1,329,327 14,353,785 Interest receivable 692,341 11,502 149,376 389,024 1,242,243 Due from developers (Note 5A) 20,041 - - 267,243 287,284 Due from other funds (Note 4B) 568,203 - - - 568,203 Loans receivable (Note 5B) 7,819 18,473,509 - 18,639,257 37,120,585 Prepaids 41,767 - - 239,680 281,447 Investment in affordable
housing property (Note 1K) - 327,184 - - 327,184 Leases receivable (Note 15) 474,393 - - 192,459 666,852 Total Assets 91,676,938 $ 20,902,977 $ 31,273,750 $ 106,567,468 $ 250,421,133 $

LIABILITIES
Accounts payable 4,256,953 $ - $ 2,665,370$ 857,978 $ 7,780,301 $ Payroll payable 1,640,501 - 27,711 66,541 1,734,753 Due to other funds (Note 4B) - - - 568,203 568,203 Unearned revenue 185,331 - - 4,354,216 4,539,547 Deposits payable 935,732 -
64 6,250 942,046
Total Liabilities 7,018,517 - 2,693,145 5,853,188 15,564,850

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue (Notes 1F and 5B) 193,863 18,473,509 - 18,639,257 37,306,629 Related to leases (Note 15) 446,094 - - 176,688 622,782 Total Deferred Inflows of Resources 639,957 18,473,509 - 18,815,945 37,929,411 FUND BALANCES (Note 8)
Nonspendable 1,112,223 - - 506,923 1,619,146 Restricted - 2,429,468 28,580,605 53,956,118 84,966,191 Committed 40,651,057 - - 27,437,161 68,088,218 Assigned 770,391 - - - 770,391 Unassigned 41,484,793 - - (1,867) 41,482,926 Total Fund Balances 84,018,464 2,429,468 28,580,605 81,898,335 196,926,872 Total Liabilities, Deferred Inflows of
Resources, and Fund Balances 91,676,938 $ 20,902,977 $ 31,273,750 $ 106,567,468 $ 250,421,133 $

See accompanying notes to basic financial statements.
29 CITY OF TURLOCK

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE GOVERNMENT-WIDE STATEMENT OF NET POSITION –

GOVERNMENTAL ACTIVITIES
JUNE 30, 2025

Total fund balances reported on the Governmental Funds Balance Sheet 196,926,872 $ Amounts reported for Governmental Activities in the Statement of Net Position are different from those reported in the Governmental Funds above because of the following:

CAPITAL ASSETS
Capital assets used in Governmental Activities are not current assets or financial resources and therefore are not reported in the Governmental Funds. 288,331,161

ALLOCATION OF INTERNAL SERVICE FUND NET POSITION
Internal service funds are not Governmental Funds. However, they are used by management to charge the costs of certain activities, such as insurance, central services, and maintenance, to individual Governmental Funds. The net current assets of the Internal Service Funds are therefore included in Governmental Activities in the following line items in the Statement of Net Position.

Cash and investments 19,872,494
Accounts receivable 420,723
Interest receivable 70,173
Prepaids 161,385
Capital assets (net of accumulated depreciation) 6,574,386 Right-to-use subscription assets (net of accumulated amortization) 234,986 Accounts payable (650,984)
Payroll payable (56,833)
Compensated absences (140,124)
Estimated claims liability (5,055,398)
IT subscription liability (166,667)
Net pension liability and related deferred outflows and inflows of resources (2,445,291) Total OPEB liability and related deferred outflows and inflows of resources (670,709)

ACCRUAL OF NONCURRENT REVENUES AND EXPENSES
Revenues that are unavailable on the Governmental Funds Balance Sheet because they are not available currently are taken into revenue in the Statement of Activities. 37,306,629

LONG-TERM ASSETS AND LIABILITIES
The assets and liabilities below are not due and payable in the current period and therefore are not reported in the Governmental Funds:

Accounts receivable (193,863)
Long-term debt (33,954,632)
Lease liability (3,047,752)
Interest payable (639,190)
Compensated absences (4,007,551)
Net pension liability and related deferred outflows and inflows of resources (63,046,775) Total OPEB liability and related deferred outflows and inflows of resources (14,548,899) NET POSITION OF GOVERNMENTAL ACTIVITIES 421,274,141 $

See accompanying notes to basic financial statements.
30 CITY OF TURLOCK

STATEMENT OF REVENUES, EXPENDITURES, AND

CHANGES IN FUND BALANCES

GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2025

Gas Tax/ Nonmajor Total
Former LMI Street Governmental Governmental
General Housing Improvement Funds Funds

REVENUES
Taxes and assessments 34,913,724 $ - $ - $ 4,989,078$ 39,902,802 $ Measure A sales tax 14,914,510 - - - 14,914,510 Licenses and permits 5,593,670 - - 16,830 5,610,500 Fines, forfeitures, and penalties 448,230 - - - 448,230 Use of money and property 3,514,859 102,537 1,361,517 3,706,762 8,685,675 Intergovernmental 10,033,849 - 10,365,012 5,149,505 25,548,366 Charges for current services 10,387,149 - 98,933 4,397,729 14,883,811 Other revenue 306,876 16,403 13,031 429,974 766,284 Total Revenues 80,112,867 118,940 11,838,493 18,689,878 110,760,178

EXPENDITURES
Current:

General government 13,185,571 - - 1,957,605 15,143,176 Public safety 46,635,050 - - 657,995 47,293,045 Public ways and facilities/transportation 729,331 - 2,906,415 2,378,766 6,014,512 Parks and recreation 3,619,308 - - 1,647,830 5,267,138 Community development 5,550,737 25,837 - 2,000,192 7,576,766 Capital outlay 15,055,817 - 4,749,277 4,872,489 24,677,583 Debt service:

Principal 532,791 - - 79,575 612,366 Interest and fiscal charges 415,205 - - 3,530 418,735 Total Expenditures 85,723,810 25,837 7,655,692 13,597,982 107,003,321

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (5,610,943) 93,103 4,182,801 5,091,896 3,756,857

OTHER FINANCING SOURCES (USES)
Issuance of debt 33,632,553 - - 117,549 33,750,102 Contributions of capital assets - - - - - Contributions from private-purpose trust 65,051 13,800 - - 78,851 Proceeds from sale of property 3,135 - - - 3,135 Transfers in (Note 4A) 4,339,130 - - 2,639,002 6,978,132 Transfers (out) (Note 4A) (4,871,405) - (754,830) (1,685,470) (7,311,705) Total Other Financing Sources (Uses) 33,168,464 13,800 (754,830) 1,071,081 33,498,515 NET CHANGE IN FUND BALANCES 27,557,521 106,903 3,427,971 6,162,977 37,255,372 BEGINNING FUND BALANCES 56,460,943 2,322,565 25,152,634 75,735,358 159,671,500 ENDING FUND BALANCES 84,018,464 $ 2,429,468 $ 28,580,605 $ 81,898,335 $ 196,926,872 $

See accompanying notes to basic financial statements.
31 CITY OF TURLOCK

RECONCILIATION OF THE GOVERNMENTAL FUNDS

STATEMENT OF REVENUES, EXPENDITURES, AND

CHANGES IN FUND BALANCES TO THE
GOVERNMENT-WIDE STATEMENT OF ACTIVITIES –

GOVERNMENTAL ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2025

NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS 37,255,3 72$ Amounts reported for Governmental Activities in the Statement of Activities are different because of the following:

CAPITAL ASSETS TRANSACTIONS
Governmental Funds report capital outlays as expenditures. However, in the Statement of Activities, the cost of those assets is capitalized and allocated over their estimated useful lives and reported as depreciation expense.

The capital outlay and other capitalized expenditures are therefore added back to fund balance. 31,563,890
Depreciation expense is deducted from the fund balance. (Depreciation expense is net of internal service fund depreciation of $914,355, which has already been allocated to serviced funds.) (8,623,447)

LONG-TERM DEBT PROCEEDS AND PAYMENTS
Bond proceeds provide current financial resources to Governmental Funds, but issuing debt increases long-term liabilities in the Statement of Net Position.

Repayment of bond principal is an expenditure in the Governmental Funds, but in the Statement of Net Position the repayment reduces long-term liabilities.

Issuance of debt is deducted from fund balance. (33,750,102) Repayment of debt principal is added back to fund balance. 612,3 66 Other debt reconciling items (659,774)

ACCRUAL OF NONCURRENT ITEMS
The amounts below included in the Statement of Activities do not provide (or require) the use of current financial resources and therefore are not reported as revenue or expenditures in the Governmental Funds (net change):

Unavailable revenue 1,244,833
Interest payable (615,612)
Compensated absences (244,404)
Net pension liability and related deferred outflows and inflows of resources (5,426,939) Total OPEB liability and related deferred outflows and inflows of resources 208,008

ALLOCATION OF INTERNAL SERVICE FUND ACTIVITY
Internal Service Funds are used by management to charge the costs of certain activities, such as equipment acquisition, maintenance, and insurance, to individual funds. The portion of the net revenue (expense) of these Internal Service Funds arising out of their transactions with Governmental Funds is reported with Governmental Activities because they service those activities.

Change in Net Position - All Internal Service Funds (968,505) CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES 20,595,686 $ The schedule below reconciles the Net Change in Fund Balances reported on the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances, which measures only changes in current assets and current liabilities on the modified accrual basis of accounting, with the Change in the full accrual basis of accounting.

Net Position of Governmental Activities reported in the Statement of Activities, which is prepared on

See accompanying notes to basic financial statements.
32 CITY OF TURLOCK

STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE – BUDGET AND ACTUAL

GENERAL FUND
FOR THE YEAR ENDED JUNE 30, 2025

Variance with
Original Final Actual Amounts Final Budget

REVENUES
Taxes and assessments 35,318,042 $ 35,318,042 $ 34,913,724 $ (404,318) $ Measure A sales tax 14,620,842 14,620,842 14,914,510 293,668 Licenses and permits 5,302,830 5,302,830 5,593,670 290,840 Fines, forfeitures, and penalties 104,300 104,300 448,230 343,930 Use of money and property 2,847,500 2,847,500 3,514,859 667,359 Intergovernmental 10,913,500 11,601,000 10,033,849 (1,567,151) Charges for current services 7,907,350 7,907,350 10,387,149 2,479,799 Other revenue 131,627 131,627 306,876 175,249 Total Revenues 77,145,991 77,833,491 80,112,867 2,279,376

EXPENDITURES
Current:

General government 13,310,387 14,844,379 13,185,571 1,658,808 Public safety 44,721,274 47,299,258 46,635,050 664,208 Public ways and facilities/transportation 687,308 717,759 729,331 (11,572) Parks and recreation 3,310,856 3,901,186 3,619,308 281,878 Community development 7,309,741 7,549,505 5,550,737 1,998,768 Capital outlay 15,626,000 15,626,000 15,055,817 570,183 Debt service:

Principal 385,776 385,776 532,791 (147,015) Interest and fiscal charges 103,952 103,952 415,205 (311,253) Total Expenditures 85,455,294 90,427,815 85,723,810 4,704,005

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (8,309,303) (12,594,324) (5,610,943) 6,983,381

OTHER FINANCING SOURCES (USES)
Issuance of debt - - 33,632,553 33,632,553 Contributions of capital assets - - - - Contributions from private-purpose trust 66,363 66,363 65,051 (1,312) Proceeds from sale of property - - 3,135 3,135 Transfers in 6,070,155 4,608,071 4,339,130 (268,941) Transfers (out) (5,876,628) (5,602,094) (4,871,405) 730,689 Total Other Financing Sources (Uses) 259,890 (927,660) 33,168,464 34,096,124 NET CHANGE IN FUND BALANCE (8,049,413)$ (13,521,984) $ 27,557,521 41,079,505 $ BEGINNING FUND BALANCE 56,460,943
ENDING FUND BALANCE 84,018,464 $
Budgeted Amounts

See accompanying notes to basic financial statements.
33 CITY OF TURLOCK

STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE – BUDGET AND ACTUAL

FORMER LMI HOUSING FUND
FOR THE YEAR ENDED JUNE 30, 2025

Variance with
Original Final Actual Amounts Final Budget

REVENUES
Use of money and property 56,300 $ 56,300 $ 102,537 $ 46,237 $ Other revenue 35,000 35,000 16,403 (18,597) Total Revenues 91,300 91,300 118,940 27,640

EXPENDITURES
Current:

Community development 311,500 311,500 25,837 285,663 Total Expenditures 311,500 311,500 25,837 285,663

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (220,200) (220,200) 93,103 313,303

OTHER FINANCING SOURCES (USES)
Contributions from private-purpose trust 41,500 41,500 13,800 (27,700) Transfers in - - - - Transfers (out) - - - - Total Other Financing Sources (Uses) 41,500 41,500 13,800 (27,700) NET CHANGE IN FUND BALANCE (178,700) $ (178,700) $ 106,903 285,603 $ BEGINNING FUND BALANCE 2,322,565
ENDING FUND BALANCE 2,429,468 $
Budgeted Amounts

See accompanying notes to basic financial statements.
34 CITY OF TURLOCK

STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE – BUDGET AND ACTUAL

GAS TAX/STREET IMPROVEMENT FUND
FOR THE YEAR ENDED JUNE 30, 2025

Variance with
Original Final Actual Amounts Final Budget

REVENUES
Use of money and property 532,200 $ 532,200 $ 1,361,517 $ 829,317 $ Intergovernmental 15,238,487 15,238,487 10,365,012 (4,873,475) Charges for current services 50,200 50,200 98,933 48,733 Other revenue 2,500 2,500 13,031 10,531 Total Revenues 15,823,387 15,823,387 11,838,493 (3,984,894)

EXPENDITURES
Current:

Public ways and facilities/transportation 3,445,209 3,481,444 2,906,415 575,029 Capital outlay 12,653,210 12,878,210 4,749,277 8,128,933 Total Expenditures 16,098,419 16,359,654 7,655,692 8,703,962

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (275,032) (536,267) 4,182,801 4,719,068

OTHER FINANCING SOURCES (USES)
Transfers in 1,343,657 1,568,657 - (1,568,657) Transfers (out) (1,526,110) (1,751,110) (754,830) 996,280 Total Other Financing Sources (Uses) (182,453) (182,453) (754,830) (572,377) NET CHANGE IN FUND BALANCE (457,485) $ (718,720) $ 3,427,971 4,146,691 $ BEGINNING FUND BALANCE 25,152,634
ENDING FUND BALANCE 28,580,605 $
Budgeted Amounts

35 MAJOR PROPRIETARY FUNDS

Proprietary funds account for City operations financed and oper ated in a manner similar to a private business enterprise. The intent of the City is that the cost of providing goods and services be financed primarily through user charges. The City has identified the funds below as major proprietary funds in fiscal year 2025, and the remaining enterprise funds are considered nonmajor funds.

WATER

The Water Fund accounts for the revenues collected and expenses incurred in providing potable water to residents throughout the City. All activities necessary to prov ide this service, including administration, operations/maintenance, capital improvements, billing/collections, and any financing costs, are accounted for in this fund.

SEWER

The Sewer Fund accounts for the revenues collected and expenses incurred in conjunction with the operation and maintenance of the City’s sewer and storm drainag e systems throughout the City. All activities necessary to provide this service, including adminis tration, operations/maintenance, capital improvements, billing/collections, and any financing costs, are accounted for in this fund.

TRANSPORTATION

The Transportation Fund accounts for the activities of the City ’s fixed-route and Dial-a-Ride bus systems, which are in part funded with Local Transportation and Federal Transportation funds.

NONMAJOR ENTERPRISE FUNDS

SRWA Operations

The Stanislaus Regional Water Aut hority (SRWA) operations fund accounts for the activities associated with operation and maintenance of the SRWA Surface Water Treatm ent Plant (WTP), which provides potable drinking water for the City of Turlock and the City of C e r e s . T h e W T P u s e s a c o n v e n t i o n a l treatment process using ozone as a primary disinfectant with so dium hypochlorite as the secondary disinfectant. The WTP treatment processes are designed and moni tored with stringent health standards to ensure compliance with the water quality standards establish ed by the California State Water Resources Control Board.

See accompanying notes to basic financial statements.
36 CITY OF TURLOCK

STATEMENT OF NET POSITION

PROPRIETARY FUNDS
JUNE 30, 2025

Governmental
Nonmajor Fund Activities -
SRWA Internal Service
Water Sewer Transportation Operations Total Funds
ASSETS
Current assets:

Cash and investments (Note 3) 46,325,129 $ 37,169,129 $ 1,581,957 $ 175,628 $ 85,251,843$ 19,872,494 $ Restricted cash and investments and
cash and investments with fiscal agent (Note 3) 9,090 3,356,598 - - 3,365,688 - Accounts receivable (Note 5C) 3,353,753 3,414,172 11,826,553 22 18,594,500 420,723 Interest receivable 226,036 210,732 10,708 986 448,462 70,173 Due from developers (Note 5A) - 157,663 - - 157,663 - Due from other funds (Note 4B) - - - - - - Prepaids - - 35,415 - 35,415 161,385 Total current assets 49,914,008 44,308,294 13,454,633 176,636 107,853,571 20,524,775 Noncurrent assets:

Investment in Joint Venture (Note 12D) 38,098,181 - - - 38,098,181 - Capital assets not being depreciated (Note 6) 48,423,195 8,459,909 3,687,842 - 60,570,946 - Capital assets being depreciated (net) (Note 6) 51,289,213 189,300,271 13,384,259 364,467 254,338,210 6,574,386 Right-to-use lease assets (net) (Note 6) - - - 93,564 93,564 - Right-to-use subscription assets (net) (Note 6) - - 106,549 - 106,549 234,986 Total noncurrent assets 137,810,589 197,760,180 17,178,650 458,031 353,207,450 6,809,372 Total Assets 187,724,597 242,068,474 30,633,283 634,667 461,061,021 27,334,147

DEFERRED OUTFLOWS OF RESOURCES
Related to pensions (Note 9) 1,421,108 2,075,569 364,808 654,716 4,516,201 751,406 Related to OPEB (Note 10) 87,657 128,088 26,342 46,702 288,789 55,883 Total Deferred Outflows of Resources 1,508,765 2,203,657 391,150 701,418 4,804,990 807,289

LIABILITIES
Current liabilities:

Accounts payable 1,226,198 1,147,251 1,259,695 81,147 3,714,291 650,984 Payroll payable 95,394 146,280 29,441 49,368 320,483 56,833 Interest payable 235,239 286,300 - - 521,539 - Claims liability (Note 12) - - - - - 808,862 Compensated absences (Note 1I) 53,161 96,413 19,517 22,894 191,985 28,025 Bonds and loans payable (Note 7) 920,000 5,186,746 - - 6,106,746 - Unearned revenue - - 11,287,881 - 11,287,881 - Deposits payable 555,920 - - - 555,920 - Lease liability (Note 15) - - - 52,032 52,032 - IT subscription liability (Note 16) - - 38,195 - 38,195 51,980 Total current liabilities 3,085,912 6,862,990 12,634,729 205,441 22,789,072 1,596,684 Long-term liabilities:

Claims liability (Note 12) - - - - - 4,246,536 Compensated absences (Note 1I) 212,643 385,654 78,067 91,578 767,942 112,099 Total OPEB liability (Note 10) 466,096 681,070 140,064 248,325 1,535,555 297,152 Net pension liability (Note 9) 6,045,799 8,830,062 1,551,995 2,785,348 19,213,204 3,196,697 Bonds and loans payable (Note 7) 17,185,488 57,543,675 - - 74,729,163 - Lease liability (Note 15) - - - 44,263 44,263 - IT subscription liability (Note 16) - - 36,081 - 36,081 114,687 Total long-term liabilities 23,910,026 67,440,461 1,806,207 3,169,514 96,326,208 7,967,171 Total Liabilities 26,995,938 74,303,451 14,440,936 3,374,955 119,115,280 9,563,855

DEFERRED INFLOWS OF RESOURCES
Related to pensions (Note 9) - - - - - - Related to OPEB (Note 10) 673,586 984,259 202,416 358,871 2,219,132 429,440 Total Deferred Inflows of Resources 673,586 984,259 202,416 358,871 2,219,132 429,440 NET POSITION (Note 8)
Net investment in capital assets 81,616,010 138,386,357 17,104,374 361,736 237,468,477 6,642,705 Unrestricted 79,947,828 30,598,064 (723,293) (2,759,477) 107,063,122 11,505,436 Total Net Position 161,563,838 $ 168,984,421 $ 16,381,081 $ (2,397,741) $ 344,531,599 $ 18,148,141 $ Business-Type Activities - Enterprise Funds

See accompanying notes to basic financial statements.
37 CITY OF TURLOCK

STATEMENT OF REVENUES, EXPENSES, AND

CHANGES IN FUND NET POSITION

PROPRIETARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2025

Governmental
Nonmajor Fund Activities -
SRWA Internal Service
Water Sewer Transportation Operations Total Funds

OPERATING REVENUES
Charges for services 26,273,100 $ 23,723,056 $ 174,669 $ 3,985,014 $ 54,155,839 $ 12,948,170 $ Other income 104,179 25,279 82,120 - 211,578 965,053 Total Operating Revenues 26,377,279 23,748,335 256,789 3,985,014 54,367,417 13,913,223

OPERATING EXPENSES
Salaries, benefits, and insurance 3,839,467 6,092,687 1,279,341 2,392,813 13,604,308 16,134,543 Contractual 1,541,595 2,786,020 5,147,162 368,400 9,843,177 838,269 Supplies and maintenance 1,061,092 4,131,531 121,698 1,086,025 6,400,346 141,981 Utilities 1,046,320 2,096,963 28,833 13,733 3,185,849 57,528 Fleet expense 300,406 526,365 300,730 22,750 1,150,251 55,154 Depreciation and amortization 1,565,717 5,667,829 1,154,945 73,880 8,462,371 1,047,420 Other expenses 493,331 1,267,408 543,339 21,963 2,326,041 99,735 Total Operating Expenses 9,847,928 22,568,803 8,576,048 3,979,564 44,972,343 18,374,630 Operating Income (Loss) 16,529,351 1,179,532 (8,319,259) 5,450 9,395,074 (4,461,407)

NONOPERATING REVENUES (EXPENSES)
Operating grants 131,264 - 6,912,099 - 7,043,363 - Interest income 2,080,817 1,879,266 92,576 8,447 4,061,106 757,219 Interest (expense) (744,970) (1,572,916) (7,257) (9,480) (2,334,623) (9,093) Gain (loss) on disposal of capital assets (209,565) (160,161) (20,137) - (389,863) 473,399 Total Nonoperating Revenues (Expenses) 1,257,546 146,189 6,977,281 (1,033) 8,379,983 1,221,525 Income (Loss) Before
Contributions and Transfers 17,786,897 1,325,721 (1,341,978) 4,417 17,775,057 (3,239,882) Capital contributions - connection/impact fees 1,087,381 3,373,724 - - 4,461,105 - Transfers in (Note 4A) - - 585,106 - 585,106 2,273,232 Transfers (out) (Note 4A) (1,095,436) (1,281,540) (145,934) - (2,522,910) (1,855) Total Contributions and Transfers (8,055) 2,092,184 439,172 - 2,523,301 2,271,377 Change in Net Position 17,778,842 3,417,905 (902,806) 4,417 20,298,358 (968,505) NET POSITION - BEGINNING 143,784,996 165,566,516 17,283,887 (2,402,158) 324,233,241 19,116,646 NET POSITION - ENDING 161,563,838 $ 168,984,421 $ 16,381,081 $ (2,397,741) $ 344,531,599 $ 18,148,141 $ Business-Type Activities - Enterprise Funds

See accompanying notes to basic financial statements.
38 CITY OF TURLOCK

STATEMENT OF CASH FLOWS

PROPRIETARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2025

Governmental
Nonmajor Fund Activities -
SRWA Internal Service
Water Sewer Transportation Operations Total Funds

CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 26,162,171 $ 23,191,192 $ (5,049,100) $ 3,984,996 $ 48,289,259 $ 13,269,157 $ Payments to suppliers (4,699,601) (10,907,807) (5,223,990) (1,500,440) (22,331,838) (47,186) Payments to employees and benefits (3,982,576) (6,252,498) (1,188,875) (2,187,128) (13,611,077) (15,886,354) Other 104,179 25,279 82,120 - 211,578 965,053 Net Cash Flows from Operating Activities 17,584,173 6,056,166 (11,379,845) 297,428 12,557,922 (1,699,330)

CASH FLOWS FROM NONCAPITAL

FINANCING ACTIVITIES
Intergovernmental receipts - operations 131,264 - 9,547,565 - 9,678,829 - Interfund receipts (payments) - - - - - - Transfers in - - 585,106 - 585,106 2,273,232 Transfers (out) (1,095,436) (1,281,540) (145,934) - (2,522,910) (1,855) Net Cash Flows from Noncapital Financing Activities (964,172) (1,281,540) 9,986,737 - 7,741,025 2,271,377

CASH FLOWS FROM CAPITAL AND RELATED

FINANCING ACTIVITIES
Acquisition of capital assets, net (5,942,300) (1,082,537) (265,159) (130,524) (7,420,520) (3,658,247) Proceeds from sale of capital assets (209,565) (160,161) (20,137) - (389,863) 473,399 Charges for joint project contributions 1,491,247 - - - 1,491,247 - Long-term debt payment - principal (1,036,901) (5,582,523) - - (6,619,424) - Long-term debt payment - interest (759,437) (1,597,926) - - (2,357,363) - Right-to-use lease assets - principal - - - (48,169) (48,169) - Right-to-use lease assets - interest - - - (9,480) (9,480) - IT subscription assets - principal - - (33,554) - (33,554) (121,071) IT subscription assets - interest - - (7,257) - (7,257) (9,093) Connection/impact fees 1,087,381 3,373,724 - - 4,461,105 - Net Cash Flows from Capital and Related
Financing Activities (5,369,575) (5,049,423) (326,107) (188,173) (10,933,278) (3,315,012)

CASH FLOWS FROM INVESTING ACTIVITIES
Interest 2,145,051 2,010,016 104,540 8,489 4,268,096 788,602 Net Cash Flows from Investing Activities 2,145,051 2,010,016 104,540 8,489 4,268,096 788,602 Total Net Cash Flows 13,395,477 1,735,219 (1,614,675) 117,744 13,633,765 (1,954,363) Cash and Investments at Beginning of Period 32,938,742 38,790,508 3,196,632 57,884 74,983,766 21,826,857 Cash and Investments at End of Period 46,334,219 $ 40,525,727 $ 1,581,957 $ 175,628 $ 88,617,531$ 19,872,494 $ Displayed in the Statement of Net Position as:

Cash and investments 46,325,129 $ 37,169,129 $ 1,581,957 $ 175,628 $ 85,251,843$ 19,872,494 $ Restricted cash and investments and
cash and investments with fiscal agent 9,090 3,356,598 - - 3,365,688 - Total 46,334,219 $ 40,525,727 $ 1,581,957 $ 175,628 $ 88,617,531$ 19,872,494 $ Reconciliation of Operating Income (Loss) to Net Cash Flows from Operating Activities:

Operating income (loss) 16,529,351 $ 1,179,532 $ (8,319,259) $ 5,450 $ 9,395,074$ (4,461,407) $ Adjustments to reconcile operating income (loss) to net cash flows from operating activities:

Depreciation and amortization 1,722,619 5,667,829 1,154,945 73,880 8,619,273 1,047,420 Change in assets and liabilities:

Accounts receivable (110,929) (531,864) (5,223,769) (18) (5,866,580) 320,987 Prepaids - - (1,687) - (1,687) (161,385) Accounts payable (501,354) (99,520) 919,459 12,431 331,016 (667,160) Payroll payable 16,176 24,950 1,955 11,459 54,540 5,543 Compensated absences 4,014 43,402 11,119 22,555 81,090 2,156 Claims liability - - - - - 1,974,026 Deferred outflows/inflows and total OPEB liability (161,598) (197,730) (16,085) 31,407 (344,006) 6,608 Deferred outflows/inflows and net pension liability (1,701) (30,433) 93,477 140,264 201,607 233,882 Deposits payable 87,595 - - - 87,595 - Net Cash Flows from Operating Activities 17,584,173 $ 6,056,166 $ (11,379,845) $ 297,428 $ 12,557,922$ (1,699,330) $ NONCASH INVESTING, CAPITAL, AND FINANCIAL ACTIVITIES:

Amortization of bond premium 156,901 $ - $ - $ - $ 156,901$ - $ Acquisition of right-to-use lease assets - - - - - - Acquisition of right-to-use subscription assets - - - - - 287,738 Retirement of capital assets 102,159 78,562 - - 180,721 - Total noncash investing, capital, and financing activities 259,0 60$ 78,562 $ - $ - $ 337,622$ 287,738 $ Business-Type Activities - Enterprise Funds

39 FIDUCIARY FUNDS

These funds are used to account for assets held by the City as an agent for individuals, private organizations, and other governments. The financial activities of these funds are excluded from the City- wide financial statements, but are presented in separate Fiduciary Fund financial statements.

SUCCESSOR AGENCY PRIVATE-PURPOSE TRUST FUND

The Successor Agency to the Turlock Redevelopment Agency (SA) w as established as a result of the passage of Assembly Bill 1x 26, w hich dissolved all redevelopme nt agencies in the State of California effective February 1, 2012. By Resolution No. 2012-009 adopted on January 10, 2012, pursuant to Health and Safety Code Section 34173, the Turlock City Council declare d that the City of Turlock would act in a special limited capacity as Successor Agency for the dissolved Turlock Redevelopment Agency, effective February 1, 2012. The SA is responsible for day-to-day administ ration of the former Turlock Redevelopment Agency, including identification and payment of e nforceable and recognized obligations of the former Turlock Redevelopment Agency, and disbursement of available assets. An Oversight Board, consisting of seven members appointed by various taxing entitie s within Stanislaus County as delineated in the dissolution law, supervises the SA’s activities in the w inding down of the former Turlock Redevelopment Agency’s projects and programs.

CUSTODIAL FUNDS

Custodial Funds are used to report resources, not in a trust, t hat are held by the City for other parties outside of the City’s reporting entity.

See accompanying notes to basic financial statements.
40 CITY OF TURLOCK

STATEMENT OF FIDUCIARY NET POSITION

FIDUCIARY FUNDS
JUNE 30, 2025

Successor
Agency Other External
Private-Purpose Custodial Investment
Trust Fund Funds Pool Fund
ASSETS
Cash and investments (Note 3) 1,992,794 $ 336,955 $ 24,988,697 $ Cash and investments with fiscal agent (Note 3) 710,679 - - Accounts receivable - 4,340 - Interest receivable 7,397 502 - Total Assets 2,710,870 341,797 24,988,697

LIABILITIES
Accounts payable 3,720 65,275 - Interest payable 355,851 - - Long-term debt (Note 14B):

Due within one year 1,400,000 - - Due in more than one year 27,837,082 - - Total Liabilities 29,596,653 65,275 -

NET POSITION (DEFICIT)
Restricted for:

Other organizations - 276,522 - Pool participants - - 24,988,697 Net deficit held in trust for other governments (26,885,783) - - Total Net Position (Deficit) (26,885,783) $ 276,522 $ 24,988,697 $ Custodial Funds

See accompanying notes to basic financial statements.
41 CITY OF TURLOCK

STATEMENT OF CHANGES IN FIDUCIARY NET POSITION

FIDUCIARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2025

Successor
Agency Other External
Private-Purpose Custodial Investment
Trust Fund Funds Pool Fund

ADDITIONS
Property taxes 2,511,188 $ - $ - $ Assessments - 238,086 - Net investment income 95,569 10,172 1,435,619 Other receipts - - 22,460,984 Total Additions 2,606,757 248,258 23,896,603

DEDUCTIONS
Community development 7,962 - - Contributions to the City of Turlock 78,852 - - Administration expense - 26,763 8,976 Recipient payments - 213,274 35,969,912 Interest and fiscal charges 948,575 259,513 - Total Deductions 1,035,389 499,550 35,978,888 NET CHANGE IN NET POSITION 1,571,368 (251,292) (12,082,285)

NET POSITION (DEFICIT)
Beginning of year (28,457,151) 527,814 37,070,982 End of year (26,885,783) $ 276,522 $ 24,988,697 $ Custodial Funds

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43 CITY OF TURLOCK

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The City of Turlock (the City) was incorporated in 1908. The Ci ty operates under a Council-Manager form of government and provides the following services: police and f ire, streets and highways, sanitation, water, sewer, parks and recreation, public improvements, planni ng and zoning, and general administrative services.

The financial statements and accounting policies of the City co nform with accounting principles generally accepted in the United States of America applicable to governme nts. The Governmental Accounting Standards Board (GASB) is the ac cepted standard- setting body fo r governmental accounting and financial reporting principles. Significant accounting policies are summarized below:

A. Reporting Entity

The accompanying basic financia l statements present the financi al activity of the City, which is the primary government presented, along with the financial activiti es of the Turlock Public Financing Authority (the Authority) which is controlled by and dependent on the City. Although the City and the Authority are separat e legal entities, blended component units are in substance part of the City’s operations and are reported as an integral part of the City’s financial statements.

Turlock Public Financing Authority

The Authority is a separate government entity whose purpose is to assist with the financing or refinancing of certain public capital improvements within the C ity. The Authority has the power to purchase bonds issued by any local agency at a public or negotiated sale and may sell such bonds to public or private purchasers at a public or negotiated sale. Th e Authority is controlled by the City and has the same governing body as the City, which also performs al l accounting and administrative functions for the Authority. The Authority was established Dece mber 15, 1998, pursuant to Article 1, Chapter 5 of Division 7 of Title 1 of the Government Code of th e State of California. The City authorized the formation of a joint powers authority with the former Turlock Redevelopment Agency.

B. Basis of Presentation

The City’s Basic Financial Statements are prepared in conformity with accounting principles generally accepted in the United States of America. GASB is the acknowled ged standard setting body for establishing accounting and financial reporting standards follo wed by governmental entities in the United States of America.

These standards require that the financial statements described below be presented.

Government-Wide Statements: The Statement of Net Position and the Statement of Activities display information about the primary government, the City, and its blended component unit. These statements include the financial activities of the overall City government, except for fiduciary activities.

Eliminations have been made to minimize the double counting of internal activities. These statements distinguish between the governmental and business-type activities of the City. Governmental activities generally are financed through taxes, intergovernmen tal revenues, and other nonexchange transactions. Business-type activities are financed in whole or in part by fees charged to external parties.

44 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

B. Basis of Presentation (Continued)

The Statement of Activities presents a comparison between direc t expenses and program revenues for each segment of the business-type activities of the City an d for each function of the City’s governmental activities. Direct expenses are those that are spe cifically associated with a program or function and, therefore, are clearly identifiable to a particul ar function. Program revenues include (a) charges paid by the recipients of goods or services offered by the programs, (b) grants and contributions that are restrict ed to meeting the operational ne eds of a particular program, and (c) fees, grants, and contributions that are restricted to financing the acquisition or construction of capital assets. Revenues that are not classified as program revenues, i ncluding all taxes and franchise fees that are based on gross receipts, are presented as general revenues.

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

Proprietary fund operating revenues and expenses, such as charges for services and the rel ated costs, result from exchange tran sactions associated with the pr incipal activity of the fund. Exchange transactions are those in which each party receives and gives u p essentially equal values.

Nonoperating revenues and expenses, such as s ubsidies, investment earnings, and any related costs, result from nonexchange transactions or ancillary activities.

C. Major Funds

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

The City reports the following major governmental funds in the accompanying financial statements:

General Fund – The General Fund is used for all the general revenues of the Ci ty not specifically levied or collected for other City funds. Expenditure activitie s within the General Fund include public safety (police and fire), park maintenance, general City admini stration (includes City Clerk, payroll/personnel, accounts receivable, accounts payable, accou nting), planning, and the City attorney. For financial reporting purposes, the General Fund fo r the City of Turlock also includes Parks, Arts and Recreation Commi ssion, Special Public Safety, C annabis, Measure A, and Tourism (2 funds).

Former Low and Moderate Income (LMI) Housing Fund – This fund accounts for the activity of the Housing Set-Aside funds post redevelopment agency dissolution.

Gas Tax/Street Improvement Fund – The Gas Tax/Street Improvement Fund accounts for the City’s Gas Tax (Highway User’s Tax), Local Transportation Fund, and Me asure L (Stanislaus County Sales Tax Transportation Measure) revenues as well as federal/state/l ocal grants received for street improvement purposes. These revenue sources are used in the mai ntenance of the City’s street/road system including street sweepi ng, pothole repairs, streetlight/ traffic signal lighting and maintenance, and various street reconstructi on projects that are the result of wear and tear. Expenditures in this fund do not include street construction projects that are due to development.

45 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

C. Major Funds (Continued)

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

Water Fund – Accounts for the revenues collected and expenses incurred in providing potable water to residents throughout the City. All activities necessary to p rovide this service, including administration, operations/maintenance, capital improvements, b illing/collections, and any financing costs are accounted for in this fund.

Sewer Fund – Accounts for the revenues colle cted and expenses incurred in conjunction with the operation and maintenance of the City’s sewer and storm drainag e systems throughout the City. All activities necessary to provide this service including administ ration, operations/maintenance, capital improvements, billing/collections, and any financing costs are accounted for in this fund.

Transportation Fund – The Transportation Fund accounts for the activities of the City ’s fixed-route and Dial-a-Ride bus systems which are in part funded with Local Transportation and Federal Transportation funds.

The City also reports the following fund types:

Internal Service Funds – The funds account for equipment pool, self-insurance, and inf ormation technology activities, all of whi ch provide services to other d epartments on a cost-reimbursement basis.

Trust Fund – Trust funds account for asset s held by the City as an agent f or various functions. The Successor Agency to the Turlock Redevelopment Agency (the Succe ssor Agency) Private-Purpose Trust Fund accounts for the accumulation of resources to be use d for payments at appropriate amounts and times in the future. This fund accounts for winding down the affairs of the former Turlock Redevelopment Agency, makes payments on the Recognized Obligati on Payment Schedule, and disposes of assets and property of the former Turlock Redevelopment Agency for the benefit of taxing agencies. The financial activities of this fund are excluded from the City-wide financial statements, but are presented in separate Fiduciary Fund financial statements.

Custodial Funds are used to account for assets held by the City for the Northwe st Triangle Mello Roos Assessment District, Turlock Property and Business Improve ment District (PBID) #2, and monies held for an external investment pool for the Stanislaus Regional Water Authority (SRWA), none of which are held in trust. The financial activities of th ese funds are excluded from the City-wide financial statements because they are not directly or indirectly governed by the City Council.

D. Basis of Accounting

The government-wide, proprietary, and fiduciary (trust and cust odial funds) fund financial statements are reported using the economic resources measurement focus and the full accrual basis of accounting. Revenues are recor ded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place.

Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this me thod, revenues are recognized when measurable and available. The City considers all revenues reported in the governmental funds to be available if the revenues are collected within ninety days after year-end. E xpenditures are recorded when the related fund liability is incurred, except for principal and in terest on general long-term debt, including lease liabilities, claims and judgments, and accumulated unpaid vacation, sick pay, and other employee benefit amounts, which are recognized as expenditures to the extent they have matured.

General capital asset acquisitions, including entering into con tracts giving the City the right to use leased assets, are reported as expenditures in governmental funds. Proceeds of general long-term debt and financing through leases are reported as other financing sources.

46 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

D. Basis of Accounting (Continued)

Non-exchange transactions, in which the City gives or receives value without directly receiving or giving equal value in exchange, include property taxes, grants, entitlements, and donations. On the accrual basis of accounting, rev enue from taxes is recognized i n the fiscal year for which the taxes are levied or assessed. Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.

Other revenues susceptible to accrual are sales taxes and inter est revenue. Forfeitures, licenses, other permits, and miscellaneous revenue are not susceptible to accrual because they are not measurable until received in cash. Grant funding received in ad vance of the related expenditure is accounted for as unearned revenue.

Grant revenues are recognized in the fiscal year in which all e ligibility requirements are met. Under the terms of grant agreements, the City may fund certain progra ms with a combination of cost- reimbursement grants, categorical block grants, and general rev enues. Thus, both restricted and unrestricted net position may be available to finance program expenditures. The City’s policy is to first apply restricted grant resources to such programs, followed by unrestricted resources if necessary.

E. Prepaids, Materials, Supplies, and Deposits

Certain payments to vendors refl ect costs applicable to future fiscal years and are recorded as prepaid items in both government-wide and fund financial statem ents. The cost of prepaid items is recorded as an expenditure/expense when consumed, rather than when purchased.

Materials and supplies are valued at cost on a first-in first-o ut basis. Supplies in the enterprise and internal funds consist principally of materials and supplies fo r utility and internal operations. Materials and supplies of the governmental funds consist of expendable su pplies and materials held for consumption. The cost is recorded as an expense or expenditure in the funds at the time individual inventory items are consumed, rather than when purchased.

Prepaids, materials, supplies, and deposits in governmental funds are equally offset by nonspendable fund balance which indicates that they do not constitute availa ble spendable resources even though they are a component of net current assets.

F. Deferred Inflows of Resource s and Deferred Outflows of Resources

In addition to assets, the Statement of Net Position or Balance Sheet reports a separate section for deferred outflows of resources. The City has deferred outflows of resources related to pensions and other post-employment benefits (O PEB) as discussed in Notes 9 a nd 10. This separate financial statement element, deferred outfl ows of resources, represents a consumption of net assets or fund balance that applies to a future period(s) and so will not be r ecognized as an outflow of resources (expense/expenditure) until then.

In addition to liabilities, the Statement of Net Position or Ba lance Sheet reports a separate section for deferred inflows of resources. Th is separate financial statemen t element, deferred inflows of resources, represents an acquisition of net assets or fund bala nce that applies to a future period(s) and so will not be recognized as an inflow of resources (revenu e) until that time. The City has one item which arises only under a modified accrual basis of accoun ting that qualifies for reporting in this category. Accordingly, the item, unavailable revenue, is report ed only in the governmental funds Balance Sheet. The governmental funds report unavailable revenu es from loans receivable and accounts receivable. The City als o has deferred inflows of reso urces related to pensions and OPEB as discussed in Notes 9 and 10 and leases receivable as discuss ed in Note 15. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available.

47 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

G. Property Tax Revenue

All property taxes are collected and allocated by the County of Stanislaus (the County) to the various taxing entities. Secured property taxes are determined annually as of January 1, and attach as an enforceable lien on real property as of July 1. Taxes are due N ovember 1 and February 1, and are delinquent if not paid by December 10 and April 10, respectively.

In November 1993, the City adopted the “Teeter Plan” method of property tax distribution. Under the Teeter Plan, the County remits property taxes to the City based on assessments, not on collections, according to the following schedule: 55% in December, 40% in Ap ril, and 5% at the end of the fiscal year. Under this plan, a need for an allowance for uncollectible taxes is eliminated.

Property tax is recognized when it is available and measurable. The City considers property tax as available if it is received within 60 days after the fiscal year end. Unsecured property taxes are due on July 1, and become delinquent if not paid by August 31.

H. Revenue Recognition for Water and Sewer

All receivables are shown net of an allowance for doubtful accounts. Service charge revenues (water, sewer, and refuse collection) are recorded as billed to custome rs on a cyclical basis. All utility customers are billed monthly, in arrears. The amounts billed in July for June services are accrued as accounts receivable as of June 30.

I. Compensated Absences

The City reports compensated absences in accordance with GASB Statement No. 101, Compensated Absences. For governmental and business-type activities, compensated ab sences are recorded as earned (vested) and the related expenses and liabilities are reported in the government-wide financial statements.

In governmental funds, compensated absences are recorded as exp enditures in the year paid as it is the City’s policy to liquidate any unpaid compensated absences at June 30 from future resources, rather than currently available financial funds. In proprietary funds, compensated absences are expensed to the various funds as earned (vested) and each propr ietary fund’s share of the unpaid liability is recorded as a liability of the fund.

The City accrues vacation and sick time payable based on negoti ated Memoranda of Understanding (MOU) and Schedules of Benefits with the City’s various bargain ing units. The agreements indicate the methodology for accruing time and the maximum accrual limits.

The changes of the compensated ab sences during the fiscal year ended June 30, 2025, were as follows:

Governmental
Activities
Business-Type
Activities Total
Beginning Balance 3,901,115 $ 878,836 $ 4,779,951 $ Net Change 246,560 81,091 327,651 Ending Balance 4,147,675 $ 959,927 $ 5,107,602 $ Current Portion 829,535 $ 191,985 $ 1,021,520 $

Compensated absences are liquidated by the fund that has record ed the liability. The long-term portion of governmental activities compensated absences is liquidated primarily by the General Fund.

48 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

J. Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The City categorizes its fair value measurements within the fair value hierarchy established by accounting principles generally accepted in the United States of America. The fair value hierar chy categorizes the inputs to valuation techniques used to measure fair value into three levels based o n the extent to which inputs used in measuring fair value are observable in the market.

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

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

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

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

K. Investment in Affordable Housing Property

The former Turlock Redevelopment Agency purchased parcels that are to be used for affordable housing purposes. The Successor Agency transferred affordable h ousing property with a total carrying value of $327,184 to the City as Housing Successor dur ing fiscal year 2017. Such land parcels are accounted for at the lower of cost or net realizabl e value or agreed-upon sales price if a disposition agreement has been made with a developer.

The balance of the investment in affordable housing property in the Former LMI Housing Special Revenue Fund at June 30, 2025, was $327,184.

L. Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estima tes and assumptions that affect the reported amounts of assets and liabilities, disclosure of c ontingent assets and liabilities at the date of the financial statements, and the reported amounts of r evenues and expenses during the reporting period. Actual results could differ from those estimates.

NOTE 2 – BUDGETS AND BUDGETARY ACCOUNTING

A. Budgetary Control and Accounting

The City follows these procedures in establishing the budgetary data reflected in the basic financial statements:

1. The City Manager submits to the City Council a proposed budg et for the fiscal year beginning July 1. The budget includes proposed expenditures and the means of financing them.

2. The City Council reviews the proposed budget at meetings whi ch are open to the public. The Council also conducts a public hearing on the proposed budget t o obtain comments from interested citizens.

3. Prior to July 1, the budget is legally adopted through a pas sage of a resolution.

4. The City Manager is authorized to transfer funds within depa rtmental budgets between major object classifications and between capital projects in the same fund. The City Council must authorize transfers between fund s, between departments, and fro m the fund balances reserved for specific purposes.

49 NOTE 2 – BUDGETS AND BUDGETARY ACCOUNTING (Continued)

A. Budgetary Control and Accounting (Continued)

5. Formal budgetary accounting is employed as a management tool for all funds, except the Custodial Funds. Annual budgets are legally adopted and amended as required for the General Fund, Special Revenue Funds, Capital Projects Funds, Enterprise Funds, and Internal Service Funds. All budgets are prepared on a basis consistent with acco unting principles generally accepted in the United States.

6. Budgeted amounts are reflect ed after all applicable amendments and revisions.

7. For each legally adopted operating budget, expenditures may not exceed budgeted appropriations at the department level. Departments can realloc ate spending within an object (e.g., supplies or utilities) with the exception of personnel or capital outlay. The total expenditures for that object cannot be increased without the approval of the City Manager or City Council. Any reallocations between objects must be approved by the City Mana ger. Only the City Council can approve increases in the total appropriation for a department w ithin the General Fund or a fund, other than the General Fund. A “department” for legal appropria tion purposes may be a single organization (e.g., City Attorney) or an entire department havi ng multiple divisions (e.g., Parks and Recreation).

NOTE 3 – CASH AND INVESTMENTS

The City pools cash resources from all funds, except cash and i nvestments with fiscal agents, in order to facilitate the management of cash. The balance in the pooled ca sh account is available to meet current operating requirements. Cash in e xcess of current requirements is invested in various interest-bearing accounts and other investments for varying terms.

A. Policies

The City invests in individual investments and in investment po ols. Individual investments are evidenced by specific identifiable securities instruments , or by an electronic entry registering the owner in the records of the institution issuing the security, c alled the book entry system. In order to increase security, the City employs the Trust Department of a b ank as the custodian of certain City managed investments, regardless of their form.

Cash equivalents are considered amounts in demand deposits and short-term investments with a maturity date within three months of the date acquired by the C ity and are presented as “Cash and Investments” in the accompanying Basic Financial Statements.

California law requires banks and savings and loan institutions to pledge government securities with a market value of 110% of the City’s cash on deposit, or first tr ust deed mortgage notes with a market value of 150% of the deposit, as collateral for these deposits. Under California law, this collateral is held in a separate investment pool by another institution in the City’s name and places the City ahead of general creditors of the institution.

The City’s investments are carried at fair value, as required b y accounting principles generally accepted in the United States of America. The City adjusts the carrying value of its investments to reflect their fair value at each fiscal year end, and it includ es the effects of these adjustments in income for that fiscal year.

50 NOTE 3 – CASH AND INVESTMENTS (Continued)

B. Classification

Cash and investments are classified in the financial statements as shown below, based on whether or not their use is restricted under the terms of City debt instruments or other agreements.

City cash and investments:

Cash and investments available for operations 268,812,604 $ Restricted cash and investments and cash and investments with fiscal agent 35,250,971
Total City Cash and Investments 304,063,575
Cash and investments in Fiduciary Funds (Separate Statement):

Successor Agency to the Redevelopment Agency
Private-Purpose Trust Fund:

Cash available for operations 1,992,794
Cash and investments with fiscal agent 710,679
Custodial Funds:

Cash and investments available for operations 336,955
Cash and investments with fiscal agent -
Custodial Fund - External investment pool 24,988,697
Total Cash and Investments 332,092,700 $

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

Cash on hand 7,880$
Deposits with financial institutions 15,525,603
Investments 316,559,217
Total Cash and Investments 332,092,700 $

For purposes of the Statement of Cash Flows, cash equivalents a re defined as investments with original maturities of 90 days or less, which are readily conve rtible to known amounts of cash. The City considers all pooled cash and investments (consisting of c ash and investments and restricted cash and investments) held by the City as cash and cash equival ents because the pool is used essentially as a demand deposit account from the standpoint of the funds. The City also considers all non-pooled cash and investments (c onsisting of funds with fisca l agents) as cash and cash equivalents because investments meet the criteria for cash equivalents defined above.

51 NOTE 3 – CASH AND INVESTMENTS (Continued)

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

The City’s Investment Policy and the California Government Code a l l o w t h e C i t y t o i n v e s t i n t h e following, provided the credit ratings of the issuers are accep table to the City, and approved percentages and maturities are not exceeded. The table below also identifies certain provisions of the California Government Code or the City’s Investment Policy where it is more restrictive:

Minimum Maximum Maximum
Maximum Credit Percentage Investment
Authorized Investment Type Maturity Quality of Portfolio in One Iss uer U.S. Treasury Notes, Bonds, and/or Bills 5 years A Unlimited N/A U.S. Government Agency Securities 5 years A Unlimited 0.25 Negotiable Certificates of Deposit 5 years N/A 0.3 N/A
Certificates of Deposit 5 years A Unlimited N/A
Bankers' Acceptances 180 days A 0.4 0.3
Commercial Paper 270 days A-1 or Higher 0.25 0.1
State of California Local Agency
Investment Fund
(LAIF)
N/A N/A Equal to maximum
limit set by LAIF
N/A
Repurchase Agreements 1 year N/A Unlimited N/A
Money Market and Mutual Funds N/A A 0.2 N/A
Corporate Notes 5 years AA 0.3 N/A

D. Investments Authorized by Debt Agreements

The City must maintain required amounts of cash and investments with trustees or fiscal agents under the terms of certain debt i ssues. These funds are unexpen ded bond proceeds or are pledged reserves to be used if the City fails to meet its obligations u nder these debt issues. The California Government Code requires these funds to be invested in accordan ce with City resolutions, bond indentures, or State statutes. The table below identifies the i nvestment types that are authorized for investments held by fiscal agents. The table also identifies ce rtain provisions of these debt agreements:

Minimum Maximum
Maximum Credit Percentage
Authorized Investment Type Maturity Quality of Portfolio U.S. Treasury Notes, Bonds, and/or Bills 5 years N/A No maximum U.S. Government Sponsored Securities 5 years N/A No maximum State Obligations N/A A No maximum
Pre-Refunded Municipal Obligations N/A AAA No maximum
Certificates of Deposit 30 days A-1 No maximum
Bankers' Acceptances 30 days A-1 No maximum
Commercial Paper 270 days A-1+ No maximum
State of California Local Agency
Investment Fund (LAIF)
N/A N/A LAIF limits
Repurchase Agreements 270 days A No maximum
Guaranteed Investment Contracts N/A AA No maximum
Money Market Funds N/A Aam or Aam-G No maximum
Corporate Notes N/A Two highest
rating categories
No maximum
Negotiable Certificates of Deposit N/A N/A No maximum

52 NOTE 3 – CASH AND INVESTMENTS (Continued)

E. Interest Rate Risk

Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Normally, the longer the maturity of an investme nt, the greater the sensitivity of its fair value to changes in market interest rates. The City generally m anages its interest rate risk by holding investments to maturity.

Information about the sensitivity of the fair values of the Cit y’s investments (including investments held by bond trustees) to market interest rate fluctuations is provided by the following table that shows the distribution of the City’s investments by maturity or earliest call date:

12 Months 13 to 24 25 to 60
Investment Type or Less Months Months Total
Held by City:

U.S. Treasury Notes 17,794,609 $ 16,693,242 $ 87,638,161 $ 122,126,012 $ U.S. Government Agency Securities 15,933,840 19,265,767 26,595,340 61,794,947 California Asset Management Program 57,600,397 - - 57,600,397 Certificates of Deposit 6,302,856 246,866 502,346 7,052,068 Money Market Mutual Funds 10,654,958 - - 10,654,958 State of California Local Agency
Investment Fund 10,041,054 - - 10,041,054 Held by Trustee:

Money Market Mutual Funds 32,352,653 - - 32,352,653 Corporate Notes/Bonds - 1,980,114 12,957,014 14,937,128 Total Investments 150,680,367 $ 38,185,989 $ 127,692,861 $ 316,559,217 $

The City is a participant in the Local Agency Investment Fund ( LAIF) that is regulated by California Government Code Section 16429 un der the oversight of the Treasu rer of the State of California. The City reports its investment in LAIF at the fair value amount pr ovided by LAIF, which is the same as the value of the pool share. The balance is available for withd rawal on demand, and is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis. Included in LAIF’s investment portfolio are collateralized mortgage obligations, mortgage-backed securities, other asset-backed securities, loans to certain state funds, and floa ting rate securities issued by federal agencies, government-sponsored enterprises, United States Treas ury Notes and Bills, and corporations. At June 30, 2025, these investments matured in an average of 248 days.

53 NOTE 3 – CASH AND INVESTMENTS (Continued)

F. Credit Risk

Credit risk is the risk that an issuer of an investment will no t fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the actual rating as of June 30, 2025, for each investment type as provided by Standard and Poor’s (S&P) investment rating system:

Investment Type AAA/AAAm AA+ AA AA- Total
Held by City:

U.S. Government Agency Securities - $ 61,794,947$ - $ - $ 61,794,947$ Held by Trustee:

Money Market Mutual Funds 719,769 - - 31,632,884 32,352,653 Corporate Notes/Bonds 6,284,011 4,923,877 1,897,140 1,832,100 14,937,128 Total Rated Investments 7,003,780 $ 66,718,824 $ 1,897,140 $ 33,464,984 $ 109,084,728 Not Rated:

California Asset Management Program 57,600,397
Certificates of Deposit 7,052,068
Money Market Mutual Funds 10,654,958
State of California Local Agency
Investment Fund 10,041,054
Exempt from Credit Rating Disclosure:

U.S. Treasury Notes 122,126,012
Total Investments 316,559,217$

G. Fair Value Hierarchy

The City categorizes its fair value measurements within the fai r value hierarchy established by accounting principles generally accepted in the United States o f America. The hierarchy is based on the valuation inputs used to meas ure fair value of the assets. Level 1 inputs are quoted prices in an active market for identical assets; Level 2 inputs are signific ant other observable inputs; and Level 3 inputs are significant unobservable inputs.

54 NOTE 3 – CASH AND INVESTMENTS (Continued)

G. Fair Value Hierarchy (Continued)

The following is a summary of the fair value hierarchy of the f air value of investments of the City as of June 30, 2025:

Level 1 Level 2 Total
Investments by Fair Value Level:

Held by City:

U.S. Treasury Notes - $ 122,126,012$ 122,126,012 $ U.S. Government Agency Securities - 61,794,947 61,794,947 Certificates of Deposit - 1,740,409 1,740,409 Subtotal - $ 185,661,368$ 185,661,368 Investments Measured at Amortized Cost:

Held by Trustee:

Money Market Mutual Funds 32,352,653
Corporate Notes/Bonds 14,937,128
Investment Exempt from Fair Value Hierarchy:

California Asset Management Program 57,600,397
Certificates of Deposit 5,311,659
Money Market Mutual Funds 10,654,958
State of California Local Agency
Investment Fund 10,041,054
Total Investments 316,559,217 $

U.S. Treasury Notes and U.S. Gov ernment Agency Securities class ified in Level 2 of the fair value hierarchy are valued using matrix pricing or Interactive Date P ricing and Reference Data (IDC).

Certificates of Deposit classified in the Level 2 of the fair v alue hierarchy are valued using Bloomberg or IDC pricing. These prices are obtained from various pricing sources by the City’s custodian bank.

Fair value is defined as the quoted market value on the last trading day of the period.

NOTE 4 – INTERFUND TRANSACTIONS

A. Transfers Between Funds

With City Council approval, resources may be transferred from o ne City fund to another. The City uses interfund transfers for two main purposes. First, to appor tion costs initially accounted for in one fund to other funds that benefit f rom the goods and/or services acquired. Secondly, to account for shared funding of capital improvement projects. The City accounts for capital improvement projects in one fund and the funds that are p roviding funding assistance tr ansfer monies representing their contribution to the project fund.

55 NOTE 4 – INTERFUND TRANSACTIONS (Continued)

A. Transfers Between Funds (Continued)

Transfers between funds during the fiscal year ended June 30, 2025, were as follows:

Amount
Fund Making Transfer Fund Receiving Transfer Transferred General Fund Nonmajor Governmental Funds 3,066,405 $ (A), (B), (C) Internal Service Funds 1,805,000 (A)
Gas Tax/Street Improvement Fund Nonmajor Governmental Funds 39,7 24 (A), (B) Transportation Enterprise Fund 585,106 (D)
Internal Service Funds 130,000 (A)
Nonmajor Governmental Funds General Fund 1,616,670 (B) Nonmajor Governmental Funds 800 (A), (B) Water Enterprise Fund - (B)
Sewer Enterprise Fund - (B)
Internal Service Funds 68,000 (A)
Water Enterprise Fund General Fund 958,919 (B), (E) Nonmajor Governmental Funds 1,517 (B)
Internal Service Funds 135,000 (A)
Sewer Enterprise Fund General Fund 1,181,573 (B), (E) Nonmajor Governmental Funds 19,232 (A), (B) Internal Service Funds 80,735 (A)
Transportation Enterprise Fund General Fund 91,437 (E) Internal Service Funds 54,497 (A)
Internal Service Funds Nonmajor Governmental Funds 1,855 (B) 9,836,470$
(A) To fund capital improvements or equipment.
(B) To fund operations, including computer replacement. (C) To fund the Internal Service Equipment Pool for future vehicle purchases. (D) To fund transportation operations from Measure L.
(E) To fund administrative expenses.

56 NOTE 4 – INTERFUND TRANSACTIONS (Continued)

B. Current Interfund Balances

Current interfund balances arise mainly due to the time lag between the dates that (1) interfund goods and services are provided or reimbursable expenditures occur, ( 2) transactions are recorded in the accounting system, and (3) paymen ts between funds are made. The se balances are expected to be repaid shortly after the end of the fiscal year. Current amount s due to the General Fund from the funds listed below at June 30, 2025, were as follows:

Amount Due to
General Fund
Nonmajor Special Revenue Funds:

Grant Funds 368,373 $
Sports Facilities 58,954
Home ARP 128,105
Housing Stimulus 12,771
Total 568,203 $

C. Internal Balances

Internal balances are presented in the entity-wide financial st atements only. They represent the net interfund receivables and payables remaining after the eliminat ion of all such balances within governmental and business-type activities.

NOTE 5 – DUE FROM DEVELOPERS, LOANS RECEIVABLE, AND ACCOUNTS RECEIVABLE

At June 30, 2025, the City had the following amounts due from d evelopers and loans receivable. These amounts are further described below the table.

Governmental Business-Type
Activities Activities Total
Due from developers 287,284 $ 157,663 $ 444,947 $ Loans receivable 37,120,585 - 37,120,585 Total 37,407,869 $ 157,663 $ 37,565,532 $

A. Due from Developers

These amounts represent funds expended by the City in the prepa ration of the master plan and related planning documents required for the development of the City’s Northwest Specific Triangle Plan Area, its Northeast Master Plan Area, and its Morgan Ranch Master Plan Area. The amounts expended by the City are being recovered as these plan areas de velop via a specific development impact fee. The Northwest Specific Triangle Plan receivable of $157,663 is recorded in the Sewer Enterprise Fund, the Northeast Master Plan receivable of $20,04 1 is recorded in the General Fund, and the Morgan Ranch Master Plan receivable of $267,243 is reco rded in the Facility Fees Capital Projects Fund.

57 NOTE 5 – DUE FROM DEVELOPERS, LOA NS RECEIVABLE, AND ACCOUNTS RE CEIVABLE (Continued)

B. Loans Receivable

Loans receivable at June 30, 2025, consist of the following:

Type of Loan/Borrower Amount
EAH, Inc. (Avena Bella) 14,286,771 $
Central Valley Coalition for Affordable Housing 11,263,497 First Time Homebuyer Loans 7,195,954
Owner-Occupied Rehabilitation Loans 2,201,284
1205 Lambert Way Loan 718,409
Housing Authority of the County of Stanislaus Loan 346,400 Turlock Gospel Mission Loans 318,375
Greater Modesto Interfaith Hospitality Network Loan 288,000 We Care Program Loan 242,000
Haven Women's Center Loan 168,000
Rehabilitation Forgivable Loans for Energy Improvements 78,576 Rental Rehabilitation Loans 5,500
Subtotal 37,112,766
Employee Computer Loans 7,819
Total Long-Term Notes Receivable 37,120,585 $

Central Valley Coalition for Affordable Housing

The Central Valley Coalition for Affordable Housing (CVCAH) is a Community Housing Development Organization (CHDO) participating in various projects in the Ci ty. A CHDO is a private, nonprofit, community-based service organization that has the capacity to d evelop affordable housing for the community it serves. The City, under the HOME Investment Partne rship Program (HOME), is required to reserve HOME funds for investment in housing to be developed, sponsored, or owned by CHDOs. The City must identify and certify qualifying nonprofit organizations as CHDOs through U.S.

Department of Housing and Urban Development (HUD) regulations.

CVCAH is currently participating in three types of projects within the City. The first is Crane Terrace, a 44-unit, three-story, low-income senior living apartment comple x. Using 20% Set-Aside monies, the former Turlock Redevelopment Agency loaned $4 million to this $ 10.5 million project under a Disposition and Development Agreement (DDA) dated April 26, 2005. The DDA calls for repayment of the 55-year note to begin in year 31 from residual rental receipts. The note carries 3% simple interest.

The total outstanding principal and interest at June 30, 2025, was $6,665,482.

The second type of project is the acquisition and rehabilitatio n of single-family residential units which will be rented out to HUD qualifying low/moderate income famili es. CVCAH currently has three of these properties for which the City holds promissory notes tota ling $1,017,529. The notes each carry a 5% annual interest rate and are due and payable, along with all accrued, unpaid interest at maturity, unless the underlying property is sold, at which time the note and all accrued, unpaid interest is due and payable. Total outstanding principal and interest at June 3 0, 2025, on these three properties was $1,962,586.

58 NOTE 5 – DUE FROM DEVELOPERS, LOA NS RECEIVABLE, AND ACCOUNTS RE CEIVABLE (Continued)

B. Loans Receivable (Continued)

Central Valley Coalition for Affordable Housing (Continued)

The third type of project is the acquisition of multi-family pr operties which will be rented to HUD qualifying, low-income families. CVCAH currently owns three multi-family properties for which the City holds promissory notes totaling $1,394,604. The notes each carry annual interest rates from 3% - 5% and are due and payable, along with all accrued, unpaid interes t at maturity, unless the underlying property is sold, at which time the note and all accrued, unpai d interest is due and payable. Total outstanding principal and interest at June 30, 2025, on these three properties was $2,635,429.

First Time Homebuyer Loans

The First Time Homebuyer Loan program, funded using Federal and /or State of California HOME funds, Federal Community Development Block Grant (CDBG) funds, and the former Turlock Redevelopment Agency low/moderate income housing funds, provide s eligible prospective homebuyers within the City wit h up to $80,000 in funding assist ance through a silent second deed of trust on their home. The loans are interest free for the first five years and accrue interest at 3% - 5% simple interest annually thereafter. The loans are due and paya ble should the homeowner refinance or sell the property. Proceeds from repaid loans are used to ex tend new loans. As of June 30, 2025, the City had 137 loans outstanding, totaling to $7,195,954.

EAH, Inc. (Avena Bella)

EAH, Inc., (EAH) is a nonprofit co rporation which develops and manages affordable housing projects in the western United States. The former Turlock Redevelopment Agency entered into two Disposition and Development Agreements (DDA) with EAH to assist in the deve lopment and help secure financing for the Avena Bella multi-family housing project on 6 .7 acres of property in the area of Linwood Avenue and Hwy 99. The site was initially owned by the City and will be conveyed to the developer (EAH) pursuant to the terms of the DDA. The proposed project is a two-phased, 140 unit, three-story, apartment complex for low and very low income fami lies with amenities that would complement the project and surrounding neighborhood.

The DDA for Phase I and construction of the first 80 units on 4 .3 acres contains funding of up to $5 million of former Turlock Redevelopment Agency low and moderate income funds divided into two separate funding horizons. The first is a pre-development loan of up to $1 million to reimburse the developer for certain pre-construction, design, and engineering costs. The second is a development cost loan of up to $4 million to be used for construction and d evelopment of the project, excluding development fees, management fees, or other similar fees.

The DDA for Phase II, which is projected to construct an additi onal 60 units on the remaining 2.4 acres, provides for up to $500,000 in advanced pre-development costs in the form of a loan. The balance of the $3,744,107 loan is for construction and final de velopment of the project, excluding development fees, management fees, or other similar fees. The California Department of Finance has concluded that the DDA for Phase II is an enforceable obligatio n and has issued a Letter of Final and Conclusive Determination related to this DDA.

Both DDAs contain conditions which must be achieved in order fo r the developer to be eligible to receive funding as well as conditions related to the developmen t of the project, additional funding sources which must be obtained, and conditions for the transfer of ownership of the property.

Each loan is memorialized with a Promissory Note and a recorded deed of trust against the property.

The combined loans carry a 3% annual simple interest rate and w ill be repaid using residual receipts over a 55 year period. As of June 30, 2021, EAH had drawn down all the funds associated with the DDAs for Phase I and Phase II of the project.

59 NOTE 5 – DUE FROM DEVELOPERS, LOA NS RECEIVABLE, AND ACCOUNTS RE CEIVABLE (Continued)

B. Loans Receivable (Continued)

EAH, Inc. (Avena Bella) (Continued)

In connection with Phase II of the apartment complex, the City issued two additional loans during fiscal year 2020. The first loan in the amount of $2,467,373 wa s funded with HOME funds to assist with the development and construction of the additional 60 mult i-family residential housing units. The loan accrues simple interest of 3%, will be repaid with residua l receipts. The second loan, in the amount of $885,000, was issued for the acquisition of the prope rty from the City. The loan accrues simple interest of 1% and no payments are due until the maturit y date. Principal and accrued interest on both the HOME loan and the acquisition loan are due October 1, 2074. Both loans were fully drawn down as of June 30, 2020.

Outstanding principal and accrued interest for all four loans f or this project totaled $14,286,771, as of June 30, 2025.

Owner-Occupied Rehabilitation Loans

The Owner-Occupied Rehabilitation Loan program, funded with eit her Federal CDBG or State of California HOME funds, provides eligible homeowners with fundin g for health, safety, and/or building code related improvements to t heir home. Eligibility is establi shed based on the age and income requirements for HUD funded programs. The loans are for a maxim um of 20 years and can be either fully amortizing or deferred, depending on the age and income l evel of the applicant. The fully amortizing loans carry a 5% simple interest rate for the entire term, while the deferred loans accrue simple interest at 5% for the first 10 years and then no intere st for the remaining 10 years. All loans are secured by a recorded silent second deed of trust on the property. The loans are due and payable should the homeowner refinance or sell the property. As of June 30, 2025, the City had 27 loans outstanding, totaling to $2,201,284.

Rehabilitation Forgivable Loans for Energy Improvements

Using CDBG Rural (CDBG-R) funding, the City has been able to pr ovide forgivable loans for energy improvements made as part of the rehabilitation process for qua lified low/moderate income homeowners. The forgivable loans can be used for structural (e. g., windows, weather stripping, insulation) and/or appliance (e.g., HVAC, refrigerator) improvements to the property which reduce the energy usage of the home. The forgivable loans are for up to $2 0,000, carry no interest, and are forgiven equally over a five-year period provided the home cont inues to be the primary residence of the qualified homeowner. At June 30, 2025, the City had six loa ns outstanding with principal and accrued interest of $78,576.

Rental Rehabilitation Loans

The Rental Rehabilitation Loan pr ogram, funded with CDBG funds, is similar to the owner-occupied program except it is for rental properties. To be eligible, the property must be occupied by a qualified low/moderate income tenant based on HUD requirements. These ful ly amortizing loans are for a maximum of 20 years and carry a 6.5% simple interest rate. The loans are due and payable should the homeowner refinance or sell the property or have a non-qual ifying tenant. As of June 30, 2025, the City had one loan outstanding totaling to $5,500.

60 NOTE 5 – DUE FROM DEVELOPERS, LOA NS RECEIVABLE, AND ACCOUNTS RE CEIVABLE (Continued)

B. Loans Receivable (Continued)

Turlock Gospel Mission Loans

In March 2016, the City, using CDBG funds, executed a loan agre ement and promissory note secured by a deed of trust with the Turlock Gospel Mission (a C alifornia nonprofit public benefit corporation) (TGM) to assist TGM with the purchase of property to be used as the home for TGM’s Homeless Assistance Ministry C enter (HAM Center). Since 2012, t he HAM Center serves as a homeless day center as well as provides case management service s to obtain identification, connection to mental health services and benefits, substance ab use programs, and other social service assistance. Its mission is to provide hope and assistan ce to those currently homeless in an effort to help them obtain jobs and essential services, and sec ure permanent housing opportunities.

The loan agreement provides for the note to be forgiven equally over a 10 year period provided TGM continues to use the property for its intended purpose. No inte rest accrues on the note as long as the borrower is not in default per terms of the loan agreement. As of June 30, 2025, the amount outstanding was $120,375.

In May 2021, the City, using Homeless Emergency Aid Program (HE AP) funds, executed a second loan agreement and promissory note secured by a deed of trust w ith TGM to assist with the renovation of a commercial building to provide shelter and inte nsive case management for homeless intervention. The building is loc ated at 432 South Broadway. Th e loan agreement in the amount of $330,000 provides for the promissory note to be forgiven at a r ate of 10% per year for a total of ten years provided that the property continues to be used as a home less shelter. As of June 30, 2025, the amount outstanding was $198,000.

We Care Program Loan

In September 2015, the City, using both CDBG and HOME funds, ex ecuted a loan agreement and two promissory notes, each secured by a deed of trust with the We Care Program Turlock (a California nonprofit public benefit corporation) (We Care) to a ssist We Care with the purchase a fourplex to be used as transitional housing for persons at or b elow sixty percent (60%) of the median income in the County as defined by HUD. The CDBG portion of the loan is for $240,000 and the HOME portion is $110,000. No interest accrues and no periodic p ayments are due on either note as long as the borrower is not in default and the property continues to be used for its intended purpose.

The HOME loan is equally forgivable over a 20 year period provi ded We Care continues to use the property for its intended purpose and is not otherwise in defau lt as defined by the loan agreement.

The CDBG loan is not forgivable and is repayable at the time the borrower ceases to use the property for its intended purpose. The CDBG loan also contains an equity sharing provision, which means that, if the borrower sells the proper ty for more than the repayment amount required under the CDBG and HOME loan notes, 50% of the excess proceeds will be paid to the City. As of June 30, 2025, the amounts outstanding on the CDBG and HOME notes were $132,000 and $110,000, respectively.

Haven Women’s Center Loan

In August 2016, using both CDBG and HOME funds, the City execut ed a loan agreement and two promissory notes, each secured by a deed of trust with Haven Wo men’s Center of Stanislaus (a California nonprofit public benefit corporation) (Haven Women’s Center) to assist the Haven Women’s Center with the purchase of a si ngle family residence to be ren ted to families or persons at or below sixty percent (60%) of the medi an income in the County, as defi ned by HUD. The CDBG portion of the loan is for $105,000 and the HOME portion is $105,000. No i nterest accrues and no periodic payments are due on either loan as long as the borrower is not in default and the property continues to be used for its intended purpose.

61 NOTE 5 – DUE FROM DEVELOPERS, LOA NS RECEIVABLE, AND ACCOUNTS RE CEIVABLE (Continued)

B. Loans Receivable (Continued)

Haven Women’s Center Loan (Continued)

The CDBG loan is equally forgivable over a 20 year period provi ded Haven Women’s Center is not otherwise in default as defined by the loan agreement. The HOME loan is not forgivable and is repayable at the time the borrower ceases to use the property f or its intended purpose. The HOME loan also contains an equity sharing provision, which means that, if the borrower sells the property for more than the repayment amount required under the CDBG and HOME loan notes, 50% of the excess proceeds will be paid to the City. As of June 30, 2025, the amounts outstanding on the CDBG and HOME loans were $63,000 and $105,000, respectively.

Housing Authority of the County of Stanislaus Loan

In November 2020, the City, using HOME funds, executed a loan a greement and promissory note secured by a deed of trust with the Housing Authority of the Co unty of Stanislaus (the Housing Authority) to assist the Housing Authority with the purchase a single family home and a triplex to be used as transitional housing for persons at or below sixty perc ent (60%) of the median income in the County as defined by HUD. The HOME loan is for $433,000. No int erest accrues and no periodic payments are due on the note as long as the borrower is not in default and the property continues to be used for its intended purpose. The HOME loan is forgivable a t a rate of 5% per year over twenty years. As of June 30, 2025, the amount outstanding on the HOME note was $346,400.

Greater Modesto Interfaith Hospitality Network Loan

In September 2020, the City, using CDBG funds, executed a loan agreement and promissory note secured by a deed of trust with the Greater Modesto Interfaith Hospitality Network (a California nonprofit public benefit corporatio n) (the Network) to assist t he Network with the purchase a single family home to be used as transitional housing for persons at o r below eighty percent (80%) of the median income in the City as defined by HUD. The CDBG loan is f or $288,000. No interest accrues and no periodic payments are due on the note as long as the bor rower is not in default and the property continues to be used for its intended purpose. The CDB G loan is not forgivable and is repayable at the time the borrower ceases to use the property f or its intended purpose. The CDBG loan also contains an equity sharing provision, which means that, if the borrower sells the property for more than the repayment amount required under the CDBG loan not es, 50% of the excess proceeds will be paid to the City. As of June 30, 2025, the amount outst anding on the CDBG note was $288,000.

1205 Lambert Way Loan

In September 2024, the City, using HOME and PLHA funds, execute d a loan agreement and promissory note secured by a deed of trust with the WE CARE PRO GRAM-TURLOCK, a California nonprofit public benefit corporation, which purchased a single family home. The Home loan is for $362,500 and the PLHA loan is for $362,500. No interest accrue s and no periodic payments are due on the notes as long as the borrower is not in default and the property continues to be used for its intended purpose. The HOME loan is forgivable at a rate of 1/5 5th of the principal over a 55 year period. The PLHA loan is a City Appreciation Share of 50% of t he sales price. As of June 30, 2025, the amount outstanding on the HO ME note was $355,909 and the am ount outstanding on the PLHA note was $362,500.

Employee Computer Loans

All full-time City employees who have completed their probation ary period are eligible to obtain an interest free loan of up to $2,500 to purchase a computer. All requests for loans are subject to review by the Service Area Director and must be approved by either the City Manager or Assistant City Manager. Repayment of these loans is handled through payroll de ductions which are spread out equally over a two year period. Employees must repay the outsta nding balance of their loans upon ending their employment with the City. As of June 30, 2025, sev en employees had loans due to the City totaling $7,819.

62 NOTE 5 – DUE FROM DEVELOPERS, LOA NS RECEIVABLE, AND ACCOUNTS RE CEIVABLE (Continued)

C. Accounts Receivable

The following table provides a detailed listing of the City’s a ccounts receivable by type as of June 30, 2025:

Due from Other Accounts
Governments Receivable Total
General Fund 6,861,653 $ 3,681,436 $ 10,543,089 $ Former LMI Housing Special Revenue Fund - 462 462 Gas Tax/Street Improvement Special Revenue Fund 2,466,992 13,915 2,480,907 Nonmajor Governmental Funds 1,170,923 158,404 1,329,327 Water Enterprise Fund 268,113 3,085,640 3,353,753 Sewer Enterprise Fund 586,161 2,828,011 3,414,172 Transportation Enterprise Fund 11,803,194 23,359 11,826,553 Nonmajor Enterprise Funds 22 - 22 Internal Service Fund - 420,723 420,723 Total 23,157,058 10,211,950 33,369,008
Less Allowance for Collectability (193,863) - (193,863) Total, Net 22,963,195 $ 10,211,950 $ 33,175,145 $

NOTE 6 – CAPITAL ASSETS

Capital assets, which include land, buildings, improvements, eq uipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business- type activities in the Government-Wide Financial Statements. Ca pital assets are recorded at historical cost or estimated historical cost if actual cost is not availab le. Donated assets are valued at their estimated fair value on the date donated. City policy has set t he capitalization thresholds for reporting capital assets at the following:

General Capital Assets 10,000 $
Infrastructure Capital Assets 50,000 $

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

Years
Land Improvements and Infrastructure 25-60
Buildings 30-50
Furniture and Equipment 5-10
Vehicles 5-10
Right-to-Use Lease Assets 4-5
Right-to-Use Subscription Assets 2-5

The City defines infrastructure as the basic physical assets th at allow the City to function. The assets include streets, sewer, parklands, and buildings. Each major in frastructure system can be divided into subsystems. For example, the street system can be subdivided in to pavement, curb and gutters, sidewalks, medians, streetli ghts, landscaping, and land. These subsystems were not delineated in the basic financial statements. The appropriate operating departmen t maintains information regarding the subsystems.

63 NOTE 6 – CAPITAL ASSETS (Continued)

Interest accrued during the construction of capital assets, if any, is capitalized for the business-type activities in the proprietary funds as part of the asset cost.

A. Capital Assets Additions and Retirements

At June 30, 2025, the City’s capital assets for governmental activities consisted of the following:

Balance Retirements/ Balance
June 30, 2024 Additions Adjustments Transfers June 30, 2025 Capital assets not being depreciated/amortized:

Land 17,574,358 $ - $ - $ 1,401,284$ 18,975,642 $ Construction in progress 52,488,626 26,423,094 (73,767) (25,703,681) 53,134,272 Total capital assets not being
depreciated/amortized 70,062,984 26,423,094 (73,767) (24,302,397) 72,109,914 Capital assets being depreciated/amortized:

Land improvements 38,179,737 - - - 38,179,737 Buildings 55,978,519 20,044 - - 55,998,563 Furniture and equipment 18,218,973 911,308 (1,099,858) 362,133 18,392,556 Vehicles 14,457,830 4,849,541 (1,155,521) 14,364 18,166,214 Infrastructure 226,050,200 - - 23,925,900 249,976,100 Right-to-use lease assets 590,508 1,049,072 - - 1,639,580 Right-to-use subscription assets - 2,388,513 - - 2,388,513 Total capital assets being
depreciated/amortized 353,475,767 9,218,478 (2,255,379) 24,302,397 384,741,263 Less accumulated depreciation/amortization for:

Land improvements (20,584,067) (731,490) - - (21,315,557) Buildings (20,293,722) (1,383,154) - - (21,676,876) Furniture and equipment (12,886,680) (595,666) 1,095,742 - (12,386,604) Vehicles (10,384,896) (1,118,052) 1,101,707 - (10,401,241) Infrastructure (89,989,443) (5,352,186) - - (95,341,629) Right-to-use lease assets (98,418) (118,102) - - (216,520) Right-to-use subscription assets - (372,217) - - (372,217) Total accumulated depreciation/amortization (154,237,226) (9,670,867) 2,197,449 - (161,710,644) Net capital assets being depreciated/amortized 199,238,541 (452,389) (57,930) 24,302,397 223,030,619 Governmental activities capital assets, net 269,301,525$ 25,970,705 $ (131,697) $ - $ 295,140,533$

Governmental activities depreciation/amortization expense for capital assets for the year ended June 30, 2025, was as follows:

Governmental Activities
General government 623,348 $
Public safety 1,793,678
Public ways and facilities/transportation 5,779,428
Culture and recreation 290,137
Community development 136,856
Internal service funds 1,047,420
Total Governmental Activities 9,670,867 $

64 NOTE 6 – CAPITAL ASSETS (Continued)

A. Capital Assets Additions and Retirements (Continued)

At June 30, 2025, the City’s capital assets for business-type activities consisted of the following:

Balance Retirements/ Balance
June 30, 2024 Additions Adjustments Transfers June 30, 2025 Capital assets not being depreciated/amortized:

Land 5,144,541 $ - $ - $ - $ 5,144,541$ Construction in progress 63,210,462 7,479,440 (444,445) (14,819,052) 55,426,405 Total capital assets not being
depreciated/amortized 68,355,003 7,479,440 (444,445) (14,819,052) 60,570,946 Capital assets being depreciated/amortized:

Land improvements 10,283,313 - - 34,982 10,318,295 Buildings and improvements 13,020,830 - - 594,329 13,615,159 Furniture and equipment 48,004,329 385,524 (85,133) - 48,304,720 Vehicles 10,467,347 - (95,588) 15,765 10,387,524 Infrastructure 378,371,250 - - 14,173,976 392,545,226 Right-to-use lease assets 189,060 - - - 189,060 Right-to-use subscription assets 166,773 - - - 166,773 Total capital assets being
depreciated/amortized 460,502,902 385,524 (180,721) 14,819,052 475,526,757 Less accumulated depreciation/amortization for:

Land improvements (4,092,342) (279,645) - - (4,371,987) Buildings and improvements (5,058,666) (428,520) - - (5,487,186) Furniture and equipment (22,785,222) (904,343) 85,133 - (23,604,432) Vehicles (4,544,414) (706,940) 95,588 - (5,155,766) Infrastructure (176,018,934) (6,194,409) - - (182,213,343) Right-to-use lease assets (45,672) (49,824) - - (95,496) Right-to-use subscription assets (4,633) (55,591) - - (60,224) Total accumulated depreciation/amortization (212,549,883) (8,619,272) 180,721 - (220,988,434) Net capital assets being depreciated/amortized 247,953,019 (8,233,748) - 14,819,052 254,538,323 Business-type activities capital assets, net 316,308,022$ (754,308) $ (444,445) $ - $ 315,109,269$

Business-type activities depreciation/amortization expense for capital assets for the year ended June 30, 2025, was as follows:

Business-Type Activities
Water 1,722,619 $
Sewer 5,667,829
Stanislaus Regional Water Authority (SRWA) Operations 73,880 Transportation 1,154,944
Total Business-Type Activities 8,619,272 $

NOTE 7 – LONG-TERM DEBT

The City generally incurs long-term debt to finance projects or purchase assets which will have useful lives equal to or greater than the related debt.

Government-Wide Financial Statements

Long-term debt and other financial obligations are reported as liabilities in the appropriate activities. Bond premiums and discounts are deferred and amortized over the life of the bonds using the straight-line method.

65 NOTE 7 – LONG-TERM DEBT (Continued)

Fund Financial Statements

The Governmental Fund Financial Statements do not include long- term debt, as this liability is not payable in the current period. The face amount of debt issued a nd any premiums received are reported as other financing sources, while discounts are reported as other financing uses.

Proprietary Fund Financial Statements use the same principles a s those used in the Government-Wide Financial Statements.

A. Current Year Governmental Act ivities Transactions and Balances

The City’s governmental debt issues and transactions are summar ized below and discussed in detail thereafter.

Due in
Original Issue Balance Balance Due Within More than
Amount June 30, 2024 Additions Retirements June 30, 2025 One Year One Year Governmental Activities:

Direct Borrowing:

Lease Financings:

Motorola Equipment Lease 2,727,690 $ 1,224,571 $ - $ 287,860$ 936,711 $ 299,719 $ 636,992 $ PNC Lease - Fire Trucks 1,755,110 1,568,859 - 97,916 1,470,943 101,255 1,369,688 Revenue Bonds:
2025 Lease Revenue Bonds 29,500,000 - 29,500,000 - 29,500,000 655,000 28,845,000 Add: Unamortized Bond Premium - - 2,149,327 102,349 2,046,978 - 2,046,978 Total Governmental Activities Debt 33,982,800$ 2,793,430 $ 31,649,327 $ 488,125 $ 33,954,632$ 1,055,974 $ 32,898,658 $

Lease Financing

Motorola Equipment Lease Purchase Agreement

On March 22, 2018, the City Council approved the lease financin g/purchase and installation of the Turlock Radio System with a $1 million down payment and the pur chase of a Public Safety Computer Aided Dispatch/Records Management System (CAD/RMS) and associat ed components, systems, and programs in a total amount not to exceed $5,727,690 for the project plus intere st from the lease of the radio system. The lease, totaling $2,727,690, carries an annual interest rate of 4.12% and requires monthly principal and interest payments due on the fir st of each month until April 2028 when the lease terminates. The City has pledged the radio system as collateral for the lease. Events of default under the lease agreement include failure to make any l ease payment within ten days of the due date or failure of other lease covenants or conditions incl uded in the lease agreement not cured within twenty days, which would accelerate repayment of the lea se. The City can terminate the lease at any time by paying the prescribed prepayment price as set forth in the lease payment schedule.

Fire Engine Lease Purchase Agreement

On April 15, 2022, the City entered into a lease financing/purchase agreement for the purchase of two new Pierce Velocity Pumpers. The lease, totaling $1,755,110, ca rries an annual interest rate of

3.41% and requires annual principal and interest payments due o n the 15th of each month until April 2037 when the lease terminates. The City has pledged the veloci ty pumpers as collateral for the lease. Events of default under the lease agreement include fail ure to make any lease payment within ten days of the due date or failure to comply with other lease covenants or conditions included in the lease agreement that are not cured within thirty days, which would accelerate repayment of the lease.

The City can terminate the lease at any time after April 15, 20 24, by paying the prescribed prepayment price as set forth in the lease payment schedule.

66 NOTE 7 – LONG-TERM DEBT (Continued)

A. Current Year Governmental Act ivities Transactions and Balances (Continued)

Revenue Bonds

2025 Lease Revenue Bonds

In January 2025, the Authority issued $29,500,000 in Lease Reve nue Bonds Series 2025 to finance public capital improvements of the City anticipated to consist of, but not limited to, certain City streets and related improvements, and to pay costs of issuance for the Bonds. The bonds, which carry a coupon interest rate of 5.0%, have semi-annual principal and in terest payments on the first of March and October through 2045. Events of default on the 2025 Bonds include failure to make any debt service payment by the due date or failure to perform the other agreements or covenants required in the Master Installment Purchase Agreement (MIPA) between the Au thority and the City not cured within thirty days of notice to the City, with limited recourse . The City can prepay the bonds at any time by paying the prescribed prepayment premium as set forth in the bond documents.

Pursuant to MIPA, the City covenants to all actions required to include the Lease Payments in each of its budgets during the Term of this Lease and to make the neces sary appropriations for all Lease Payments and Additional Rental Payments.

Debt Service Requirements

Annual debt service requirements for governmental activities debt are shown below:

For the Year
Ending June 30, Principal Interest
2026 1,055,974 $ 1,821,877 $
2027 1,361,775 1,515,200
2028 1,423,203 1,451,523
2029 1,151,970 1,384,944
2030 1,210,788 1,329,125
2031-2035 6,985,931 5,706,139
2036-2040 8,383,013 3,852,064
2041-2045 10,335,000 1,600,750
Total 31,907,654 18,661,622 $
Add: Unamortized
Bond Premium 2,046,978
Net Long-Term Debt 33,954,632$
Governmental Activities -
Lease Financing/Bonds Payable

67 NOTE 7 – LONG-TERM DEBT (Continued)

B. Current Year Business-Type Act ivities Transactions and Balances

The City’s business-type debt issues and transactions are summa rized below and discussed in detail thereafter:

Due in
Original Issue Balance Balance Due Within More than
Amount June 30, 2024 Additions Retirements June 30, 2025 One Year One Year Business-Type Activities:

General Obligation Revenue Bonds:
2017 Water Revenue Refunding 22,405,000 $ 16,985,000 $ - $ 880,000$ 16,105,000$ 920,000 $ 15,185,000$ Add: Unamortized Bond Premium - 2,157,389 - 156,901 2,000,488 - 2,000,488 Direct Borrowing - Loans Payable:

State Revolving Fund Loan - Harding Drain By-Pass 15,090,416 8,334,168 - 754,198 7,579,970 770,790 6,809,180 State Revolving Fund Loan - TRWQCF Upgrade 24,752,169 14,924,737 - 1,214,037 13,710,700 1,240,745 12,469,955 State Revolving Fund Loan - NVRRWP 28,907,112 18,075,039 - 551,288 17,523,751 561,211 16,962,540 2022 Sewer Loan (Webster Bank) 32,924,000 26,979,000 - 3,063,000 23,916,000 2,614,000 21,302,000 Total Business-Type Activities Debt 124,078,697 $ 87,455,333 $ - $ 6,619,424$ 80,835,909 $ 6,106,746 $ 74,729,163 $

Revenue Bonds

2017 Water Revenue Refunding Bonds

In June 2017, the Authority issued $22,405,000 in Water Revenue Bonds Series 2017 (2017 Bonds) to advance refund the series 2008 Water Revenue Bonds and to pa y costs of issuance of the 2017 Bonds. The bonds, which carry coupon interest rates ranging fro m 4.00% - 5.250%, have semi- annual principal and interest payments on the first of March th rough 2038. Events of default on the 2017 Bonds include failure to make any debt service payment by the due date or failure to perform the other agreements or covenants required in the Master Instal lment Purchase Agreement (MIPA) between the Authority and the City not cured within sixty days of notice to the City, which would accelerate repayment of the bonds. The City can prepay the bond s at any time by paying the prescribed prepayment premium as set forth in the bond documents.

Pursuant to the MIPA, the City h as pledged the net water system revenues (as defined in the MIPA) from the Water Enterprise Fund operations for repayment of the 2017 Bonds. Based on fiscal year 2024-2025 net system revenues of $18,095,068, annual principal and interest payments (totaling $1,639,438 in fiscal year 2024-2025) were 9.1% of net water system revenues.

Loans Payable

2022 Sewer Loan

On June 22, 2022, the City entered into a direct placement loan agreement in the amount of $32,924,000. The proceeds of the loan, secured by revenue from the City’s Wastewater Treatment operations as defined in the loan agreement, were used to refun d and defease the outstanding 2012 Sewer Revenue Bonds (2012 Bonds). The 2012 Bonds were repaid in their entirety on September 15, 2022. No new project monies were included in this loan agreemen t. The refunding resulted in an overall debt service savings of $1,440,968. The net present value of the debt service savings is called an economic gain and amounted to $1,231,964. The loan bears int erest of 2.99% and matures in September 2033. Payments of principal are due annually on Septe mber 15th and interest is due semi-annually on the September 15th and March 15th. Events of default on the loan include failure to make any loan repayment by the due date or failure to perform t he other agreements or covenants required in the loan agreement not cured within sixty days of n otice to the City, would make all principal and interest outstanding on the loan immediately due and payable. The City can prepay the loan after September 15, 2024, by paying the prescribed prepayment premium as set forth in the loan agreement.

68 NOTE 7 – LONG-TERM DEBT (Continued)

B. Current Year Business-Type Act ivities Transactions and Balances (Continued)

Loans Payable (Continued)

2022 Sewer Loan (Continued)

The City has pledged the net sewer system revenues (defined as total system revenues excluding certain revenues related to deposits, and proceeds from borrowi ngs less maintenance and operating costs) from the Sewer Enterprise Fund operations for repayment of the 2022 Sewer Loan and the State Revolving Fund Loans. Based on fiscal year 2024-2025 net system revenues of $6,847,361, annual principal and interest payments (totaling Debt Service $ 3,823,880 in fiscal year 2024-2025) were 55.8% of net system revenues.

State Revolving Fund Loans

The City entered into three agreements with the California Stat e Water Resources Control Board for State Revolving Fund (SRF) project financing. These loans are o n parity with the defeased 2012 Sewer Revenue Bonds. This means that the loans have equal right s to pledged revenues as the sewer bonds.

The first agreement was executed in December 2011 in the amount of $20 million to fund the Harding Drain By-Pass project. The agreement was amended in October 2012 to reduce the project funding to $15,811,425. The notice of completio n for the project was issue d on April 22, 2014. The City drew down all the funds on this loan, including capitalized interest , totaling $15,090,416. The loan bears annual interest of 2.2%, and annual principal and interest payments are due January 1, 2015, through January 1, 2034.

The second agreement was executed in April 2012 in the amount o f $24 million to fund the Turlock Regional Water Quality Control Facility (TRWQCF) upgrade and ex pansion project. The agreement was amended in January 2013 to increase the project funding to $26,187,900. The notice of completion for the project was issued May 26, 2015. The City dr ew down all the funds on this loan, including capitalized interest, totaling $24,752,169. The loan bears annual interest of 2.2%, and annual principal and interest payments are due December 1, 2015, through December 1, 2034.

For the third agreement, the City entered into a construction i nstallment sale agreement with the California State Water Resources Control Board (CSWRCB) for SRF project financing. This loan is on parity with the defeased 2012 Sewer Revenue Bonds and SRF Loans . This means that the loan has equal rights to pledged revenues as the sewer bonds and loans.

The loan and grant agreement was executed in August 2018 in the amount of $39,461,000 to fund the North Valley Regional Recycl ed Water Program (NVRRWP) proje ct. In December 2019, the loan and grant agreement was amended to adjust the loan amount to $3 3,907,112. $2.5 million of the project funding was forgiven during the fiscal year ended June 30, 2020; $2.5 million was given as a grant during fiscal year 2020; and the balance ($28,907,112) wa s expected to be in the form of two loans payable to the CSWRCB in the amounts of $14,453,556 each, funded from SRF and Proposition 1. The loans bear annual interest of 1.8% beginning with each disbursement and repayment of principal and interest will begin one year after t he completion of construction on the project. The loans will be amortized with equal annual payments over a period from that date to May 18, 2050.

After the loan documents were executed in August 2018, it took until December 2019 for the State to finally approve the Final Budget Document, which is a document required before the City could submit a reimbursement request on the loan funds. In December 2 019, the City submitted the first reimbursement request in the amount of $1,417,418 for pre-const ruction costs. The City submitted the second reimbursement request in the amount of $9,740,230 in November 2020 and the final reimbursement request in the amount of $13,816,579 in August 20 21. The full amount of the original

69 NOTE 7 – LONG-TERM DEBT (Continued)

B. Current Year Business-Type Act ivities Transactions and Balances (Continued)

Loans Payable (Continued)

State Revolving Fund Loans (Continued)

loan was not needed due to a combination of lower than expected design and construction costs and the loan forgiveness provisions that were added to the agreemen t after the original loan was approved. Principal and interest payments on the loan began in fiscal year 2022 and the outstanding balance of the loan is $17,523,751 as of June 30, 2025. The fun ding for this project comes from two primary sources (in addition to City Sewer Fund resources for costs which are not reimbursable under either the SRF Loan or the Department of the Interior grant). T he SRF reimbursement requests are coordinated with the funding received from the Department of the Interior grant.

Events of default on the loans include a revenue shortfall, uns cheduled draws on reserve funds, adverse water quality findings by the Regional Water Quality Co ntrol Board, litigation related to the system revenues or the project, or failure to make any debt ser vice payment by the due date, which would accelerate repayment of the loans. The City can prepay th e loans at any time by paying the principal and outstanding accrued interest through the date of prepayment.

Debt Service Requirements

Annual debt service requirements for business-type activities debt are shown below:

For the Year
Ending June 30, Principal Interest Principal Interest Principal Inter est 2026 920,000 $ 715,438 $ 5,186,746 $ 1,459,831 $ 6,106,746 $ 2,175,269 $ 2027 970,000 669,438 5,329,101 1,326,002 6,299,101 1,995,440 2028 1,015,000 620,938 5,472,612 1,188,385 6,487,612 1,809,323 2029 1,070,000 570,188 5,613,303 1,047,017 6,683,303 1,617,205 2030 1,125,000 514,013 5,760,200 901,858 6,885,200 1,415,871 2031-2035 6,465,000 1,720,150 23,933,918 2,333,271 30,398,918 4,053,421 2036-2040 4,540,000 368,000 3,477,023 906,169 8,017,023 1,274,169 2041-2045 - - 3,801,425 581,766 3,801,425 581,766 2046-2050 - - 4,156,093 227,098 4,156,093 227,098 Total 16,105,000 5,178,165 $ 62,730,421 9,971,397 $ 78,835,421 15,149,562 $ Add: Unamortized
Bond Premium 2,000,488 - 2,000,488 Net Long-Term Debt 18,105,488$ 62,730,421 $ 80,835,909 $ Revenue Bonds Direct Borrowing - Loans Payable Total

70 NOTE 8 – NET POSITION AND FUND BALANCES

Net position is measured on the full accrual basis of accountin g while fund balance is measured on the modified accrual basis of accounting, as explained in Note 1D.

A. Net Position

Net position is the excess of all assets and deferred outflows of resources over all liabilities and deferred inflows of resources. Net position is divided into three captions. These captions apply only to net position, which is determined only for proprietary funds and at the government-wide level, and are described below:

Net Investment in Capital Assets describes the portion of net pos ition that is represented by th e current net book value of the City’s capital assets, less the o utstanding balance of any debt issued to finance these assets.

Restricted describes the portion of net position that is restricted as to use by the terms and conditions of agreements with outside parties, governmental regulations, l aws, or other restrictions which the City cannot unilaterally alter.

Unrestricted describes the portion of net position that does not meet the de finition of “net investment in capital assets” or “restricted net position.”

B. Fund Balances

Governmental fund balances represent the net current assets of each fund. Net current assets generally represent a fund’s cash, receivables, and deferred ou tflows of resources, less its liabilities and deferred inflows of resources. Portions of a fund’s balance may be restricted, committed, or assigned for future expenditure.

The City’s fund balances are classified based on spending const raints imposed on the use of resources. For programs with multiple funding sources, the City prioritizes and expends funds in the following order: Restricted, Committed, Assigned, and Unassigne d. Each category in the following hierarchy is ranked according to the degree of spending constraint:

Nonspendable represents balances set aside to indicate items do not represen t available, spendable resources even though they are a component of assets. Assets not expected to be converted to cash, such as prepaids, notes receivable, and property held for resal e, are included. However, if proceeds realized from the sale or collection of nonspendable assets are restricted, committed, or assigned, then nonspendable amounts are required to be presented as a component of the applicable category.

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

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

Committed fund balances have constraints imposed by resolution of the Cit y Council that may be altered only by formal action of the City Council. Encumbrances and nonspendable amounts subject to council commitments are included along with spendable resources.

Assigned fund balances are amounts constrained by the City’s intent to b e used for a specific purpose, but are neither restricted nor committed. Intent is ex pressed by the City Council or its designee and may be changed at the discretion of the City Counc il or its designee, the City Manager.

This category includes encumbrances; nonspendables, when it is the City’s intent to use proceeds or collections for a specific purpose; and residual fund balances, if any, of Special Revenue and Capital Projects Funds that have not been restricted or committed.

Unassigned fund balance represents residual amounts that have not been res tricted, committed, or assigned. This includes the residual General Fund balance and r esidual fund deficits, if any, of other governmental funds.

71 NOTE 8 – NET POSITION AND FUND BALANCES (Continued)

B. Fund Balances (Continued)

Gas Tax/
Street Other
General LMI Housing Improvement Governmental
Fund Balance Classifications Fund Fund Fund Funds Total Nonspendable:

Items not in spendable form:

Prepaids 41,767 $ - $ - $ 239,680$ 281,447 $ Loans receivable 7,819 - - - 7,819 Interfund loans 568,203 - - - 568,203 Due from developers 20,041 - - 267,243 287,284 Leases receivable 474,393 - - - 474,393 Total Nonspendable Fund Balances 1,112,223 - - 506,923 1,619,146 Restricted for:

Low and moderate income housing - 2,429,468 - 6,138,985 8,568,453 Capital expenditures - - 28,580,605 20,398,241 48,978,846 Assessment districts - - - 25,120,384 25,120,384 Resource conservation - - - 1,238,524 1,238,524 Public safety - - - 202,271 202,271 Grant funds - - - 857,713 857,713 Total Restricted Fund Balances - 2,429,468 28,580,605 53,956,118 84,966,191 Committed to:

Roads projects 34,996,938 - - - 34,996,938 Public safety 2,039,994 - - 147,707 2,187,701 Tourism 1,414,125 - - - 1,414,125 Development impact fees - - - 7,077,681 7,077,681 Equipment replacement - - - 9,057,032 9,057,032 Capital expenditures 2,200,000 - - 11,154,741 13,354,741 Total Committed Fund Balances 40,651,057 - - 27,437,161 68,088,218 Assigned to:

Compensated absences 770,391 - - - 770,391 Total Assigned Fund Balances 770,391 - - - 770,391 Unassigned:

General Fund 41,484,793 - - - 41,484,793 Other governmental fund deficits - - - (1,867) (1,867) Total Unassigned Fund Balances 41,484,793 - - (1,867) 41,482,926 Total Fund Balances 84,018,464 $ 2,429,468 $ 28,580,605 $ 81,898,335 $ 196,926,872 $ Special Revenue Funds

C. Emergency/Contingency Reserve

The City established a General Fund Emergency/Contingency Reser ve with Resolution 2011-123.

The required balance of the Emergency/Contingency Reserve is $6 ,500,000, which is reported within the unassigned fund balance of the General Fund.

72 NOTE 8 – NET POSITION AND FUND BALANCES (Continued)

D. Fund Balance/Net Position Deficits

The following funds had deficit fund balances or net position as of June 30, 2025:

Amount
Nonmajor Governmental Fund:

Home ARP 1,867 $
Nonmajor Enterprise Fund:

SRWA Operations 2,379,168
Internal Service Fund:

Information Technology 832,952

The deficit in the Home ARP Special Revenue Fund will be eliminated by future revenues.

The deficit in SRWA Operations Enterprise Fund was primarily du e to the recognition of the net pension liability, total OPEB liability, and related deferred o utflows/inflows of resources. The City will fund the liabilities over time through annual contributions to cure the deficits.

The deficit in the Information Technology Internal Service Fund was primarily due to the recognition of the net pension liability, total OPEB liability, and related de ferred outflows/inflows of resources. The City will fund the liability over time through annual contributions to cure the deficit.

NOTE 9 – PENSION PLANS

A. Plan Descriptions and Su mmary of Balances by Plan

The City has two defined benefit pension plans, one Miscellaneo us Plan and one Safety Plan (Fire and Police) (the Plans). The Miscellaneous Plan is an Agent Mul tiple-Employer Plan and the Safety Plan is a Cost-Sharing Multiple-Employer Plan. Benefit provisio ns under the Plans are established by State statute and City Ordinance . All qualified permanent and p robationary employees are eligible to participate in the Plan for which they are an eligible member b ased on their employment position with the City.

Both Plans are administered by the California Public Employees’ Retirement System (CalPERS) which acts as a common investment and administrative agent for its participating member employers.

CalPERS issues publicly available reports that include a full d escription of the pension plans regarding benefit provisions, a ssumptions, and membership infor mation that can be found on the CalPERS website.

For purposes of measuring the net pension liability and deferre d outflows/inflows of resources related to pensions, and pension expense, information about the fiducia ry 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 CalPERS Financial Office. For this purpose, benefit payments (including refunds of employee contributions) are recognized wh en currently due and payable in accordance with the benefit terms. Investments are reported at fair value.

73 NOTE 9 – PENSION PLANS (Continued)

A. Plan Descriptions and Summar y of Balances by Plan (Continued)

Below is a summary of the deferred outflows of resources, net p ension liability, and deferred inflows of resources by Plan:

Net Pension
Liability/
Deferred Proportionate Deferred
Outflows of Share of Net Inflows of
Resources Pension Liability Resources
Miscellaneous 12,480,555 $ 53,095,857 $ - $
Safety (Fire and Police) 16,698,034 51,311,931 4,959,870 Total 29,178,589 $ 104,407,788 $ 4,959,870 $

Each Plan is discussed in detail below.

B. Miscellaneous Plan

Benefits Provided – CalPERS provides service ret irement and disab ility benefits, annual cost of living adjustments, and death benefits to Plan members, who mus t be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full time employment. Members with five years of total service are eligib le to retire at age 50 with statutorily reduced benefits. All members are eligible for non-duty disabil ity benefits after 10 years of service.

The death benefit is one of the following: the Basic Death Bene fit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost of living adjust ments for each plan are applied as specified by the Public Employees’ Retirement Law. The Public E mployees Pension Reform Act of 2013 (PEPRA), Assembly Bill 340, i s applicable to employees new to CalPERS and hired after December 31, 2012.

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

Tier 1 PEPRA
Prior to On or after
Hire Date January 1, 2013 January 1, 2013
Benefit Formula 2.7%@55 2.0%@62
Benefit Vesting Schedule 5 years service 5 years service Benefit Payments Monthly for life Monthly for life
Retirement Age 50-67 52-67
Monthly Benefits, as a Percentage
of Eligible Compensation 2 .0% to 2.7% 1.0% to 2.5%
Required Employee Contribution Rates 7.620% 7.250%
Required Employer Contribution Rates 10.430% 10.430%
Required UAL Contribution
Miscellaneous
$5,124,518

Beginning in fiscal year 2016, CalPERS collects employer contri butions for the Plan as a percentage of payroll for the normal cost portion as noted in the rates ab ove and as a dollar amount for contributions toward the unfunded accrued liability (UAL). The dollar amounts are billed on a monthly basis or the City can elect a lump sum payment option. The City’s required contribution for the UAL in the Miscellaneous Plan was $5,124,518 for the year-ended June 3 0, 2025, which was made under the lump sum payment option.

74 NOTE 9 – PENSION PLANS (Continued)

B. Miscellaneous Plan (Continued)

Employees Covered – As of the June 30, 2023 actuarial valuation date and the June 30, 2024 measurement date, the following employees were covered by the benefit terms for the Plan:

Miscellaneous
June 30, 2024
Inactive employees or beneficiaries currently receiving benefits 299 Inactive employees entitled to but not yet receiving benefits 3 61 Active employees 254
Total 914

Contributions – Section 20814(c) of the California Public Employees’ Retireme nt Law requires that the employer contribution rates for all public employers be det ermined on an annual basis by the actuary and shall be effective on the July 1 following notice o f a change in the rate. Funding contributions for the Plan are determined annually on an actuar ial basis as of June 30 by CalPERS.

The actuarially determined rate is the estimated amount necessa ry to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The City is required to contribute the difference be tween the actuarially determined rate and the contribution rate of employees. Employer contribution rates may change if plan contracts are amended. Payments made by the employer to satisfy contribution requirements that are identified by the pension plan terms as Plan member contribution requirements a r e c l a s s i f i e d a s P l a n m e m b e r contributions.

Net Pension Liability – The City’s net pension liability for the Miscellaneous Plan is measured 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, 2024, using an annual actuarial valuation as of June 30, 2023, rolled forward to June 30, 2024, using standard update procedures. A s ummary of principal assumptions and methods used to determine the net pension liability is shown in Note 9D below.

75 NOTE 9 – PENSION PLANS (Continued)

B. Miscellaneous Plan (Continued)

Changes in the Net Pension Liability – The changes in the net p ension liability for the Miscellaneous Plan were as follows:

Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability/(Asset)
Balance at June 30, 2024 181,105,483 $ 127,449,726 $ 53,655,757 $ Changes in the year:

Service cost 3,348,287 - 3,348,287 Interest on the total pension liability 12,566,103 - 12,566,103 Differences between actual and
expected experience 3,946,228 - 3,946,228 Changes in assumptions - - - Changes in benefit terms - - - Plan to Plan resource movement - - - Contribution - employer - 6,642,408 (6,642,408) Contribution - employee - 1,519,869 (1,519,869) Net investment income (loss) - 12,361,947 (12,361,947) Administrative expenses - (103,706) 103,706 Benefit payments, including refunds of
employee contributions (9,216,848) (9,216,848) - Other miscellaneous income/expense - - - Net changes 10,643,770 11,203,670 (559,900) Balance at June 30, 2025 191,749,253 $ 138,653,396 $ 53,095,857 $ Increase (Decrease)

Sensitivity of the Net Pension Liability to Changes in the Discount Rate – The following presents the net pension liability for the Plan, calculated using the di scount rate for the Plan, as well as what the City’s net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower or 1-percentage point higher than the current rate:

1% Decrease 5.90%
Net Pension Liability 79,547,279 $
Current Discount Rate 6.90%
Net Pension Liability 53,095,857 $
1% Increase 7.90%
Net Pension Liability 31,411,939 $

76 NOTE 9 – PENSION PLANS (Continued)

B. Miscellaneous Plan (Continued)

Pension Expense and Deferred Outflows/Inflows of Resources Related to Pensions – For the year ended June 30, 2025, the City recognized pension expense o f $962,196. At June 30, 2025, the City reported deferred outflows/inflows of resources related to pensions for the Plan from the following sources:

Deferred Outflows Deferred Inflows
of Resources of Resources
Pension contributions subsequent to measurement date 7,468,999$ - $ Differences between actual and expected experience 3,258,249 - Changes in assumptions - -
Net differences between projected and
actual earnings on Plan investments 1,753,307 - Total 12,480,555 $ - $

$7,468,999 reported as deferred ou tflows of resources related t o contributions subsequent to the measurement date will be recognize d as a reduction of the net p ension liability in the year ended June 30, 2026. Other amounts re ported as deferred outflows of r esources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:

Year Ended Annual
June 30 Amortization
2026 1,504,837 $
2027 4,445,450
2028 (215,675)
2029 (723,056)
Total 5,011,556 $

Actuarial assumptions and information regarding the discount rate are discussed in Note 9D below.

C. Safety Plan

The City’s Safety Plan is part of the public agency cost-sharin g multiple-employer defined benefit pension plan (PERF C), which is administered by CalPERS. PERF C consists of a miscellaneous pool and a safety pool (also referred to as “risk pools”), whic h are comprised of individual employer miscellaneous and safety rate pl ans, respectively. Individual e mployers may sponsor more than one miscellaneous and safety rate plan. The employer participates i n one cost-sharing multiple-employer defined benefit pension plan regardless of the number of rate p lans the employer sponsors. The City sponsors four rate plans (two fire and two police) within the safety risk pool.

Benefits Provided – CalPERS provides service ret irement and disab ility benefits, annual cost of living adjustments, and death benefits to Safety Plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full time employment. Members with five years of total service are eligib le to retire at age 50 with statutorily reduced benefits. All members are eligible for non-duty disabil ity benefits after 10 years of service.

The death benefit is one of the following: the Basic Death Bene fit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost of living adjust ments for each plan are applied as specified by the Public Employees’ Retirement Law. PEPRA, Assem bly Bill 340, is applicable to employees new to CalPERS and hired after December 31, 2012.

77 NOTE 9 – PENSION PLANS (Continued)

C. Safety Plan (Continued)

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

Tier 1 PEPRA
Prior to On or after
Hire Date January 1, 2013 January 1, 2013
Benefit Formula 3.0%@50 2.7%@57
Benefit Vesting Schedule 5 year s service 5 years service Benefit Payments Monthly for life Monthly for life
Retirement Age 50-55 50-57
Monthly Benefits, as a Percentage
of Eligible Compensation 3.0% 2.0% to 2.7%
Required Employee Contribution Rates 8.990% 13.750%
Required Employer Contribution Rates 27.320% 13.760%
Required UAL Contribution 1,568,533 $ 8,780 $
Safety - Fire

Tier 1 PEPRA
Prior to On or after
Hire Date January 1, 2013 January 1, 2013
Benefit Formula 3.0%@50 2.7%@57
Benefit Vesting Schedule 5 year s service 5 years service Benefit Payments Monthly for life Monthly for life
Retirement Age 50-55 50-57
Monthly Benefits, as a Percentage
of Eligible Compensation 3.0% 2.0% to 2.7%
Required Employee Contribution Rates 8.990% 13.750%
Required Employer Contribution Rates 27.320% 13.760%
Required UAL Contribution 2,361,038 $ 16,528 $
Safety - Police

Beginning in fiscal year 2016, CalPERS collects employer contributions for the cost-sharing plan as a percentage of payroll for the normal cost portion as noted in t he rates above and as a dollar amount for contributions toward the UAL. The dollar amounts are billed on a monthly basis or can be paid in a lump sum at a reduced amount. The City elected to make the lump sum contributions, and the required contribution for the UAL was $3,954,879 in fiscal year 2025, as shown in the table above.

Contributions – Section 20814(c) of the California Public Employees’ Retireme nt Law requires that the employer contribution rates for all public employers be det ermined on an annual basis by the actuary and shall be effective on the July 1 following notice o f a change in the rate. Funding contributions for the Safety Plan are determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined rate is the estimated amoun t necessary to finance the costs of benefits earned by employees during the year, with an additiona l amount to finance any unfunded accrued liability. The City is required to contribute the diffe rence between the actuarially determined rate and the contribution rate of employees.

For the year ended June 30, 2025, the employer contributions to the Safety Plan were $7,208,703.