Twentynine Palms City Council
November 12, 2024

TWENTYNINE PALMS CITY COUNCIL

REGULAR MEETING AGENDA
6136 Adobe Road
Twentynine Palms, CA 92277
www.29palms.org

Tuesday, November 12, 2024
NOTICE IS HEREBY GIVEN, that the City Council will hold a Regular Meeting on Tuesday, November 12, 2024, at City Hall, 6136 Adobe Road, Twentynine Palms, CA 92277 to consider the following:

REGULAR SESSION AGENDA
6:00 P.M.

CALL TO ORDER
Pledge of Allegiance.

Invocation - Rev. Casey Orndorf, First Assembly of God Church.

Roll Call.

Closed Session Announcements.

Changes to the Agenda.

ANNOUNCEMENTS
These proceedings may be viewed on demand on the City of Twentynine Palms website at www.29palms.org.

You may also Live Stream this meeting by going on our website and clicking on the "Meeting Agendas" link.

AWARDS, PRESENTATIONS, APPOINTMENTS AND PROCLAMATIONS

1. Presentation by Reach Out Yucca Valley on current projects.

2. Recap of "Dine in 29" and Restaurant Week by Terence Latimer, organizer.

3. Presentation on the Upcoming Creche Festival by Ms. Suzy Dick.

4. Presentation of the City's Annual Comprehensive Financial Report (ACFR) for FY 2023-

24. RECOMMENDATION: The City Council receive and file.

Presentation of the City's Annual Comprehensive Financial Report (ACFR) for FY 2023-

24. - Pdf
5 - 170

5. Single Audit Report on Federal Awards for Fiscal Year (FY) 2023-24.

RECOMMENDATION: The City Council receive and file.

Single Audit Report on Federal Awards for Fiscal Year (FY) 2023-24. - Pdf 171 - 186

6. Presentation by the San Bernardino County Sheriff's Department on the new Flock Camera System.

COUNCIL COMMENTS AND REPORTS OF MEETINGS ATTENDED

CONSENT CALENDAR
All matters listed under the Consent Calendar are to be considered routine by the City Council and will be enacted by one motion in the form listed. Any item may be removed from the Consent Calendar and considered separately by the City Council. The public will be given an opportunity to comment on Consent Calendar items prior to the City Council action

7. Waive the Reading of Ordinance and Approve the Reading by Title Only.

8. Approval of Minutes of the City Council Meeting Held on September 24, 2024, and October 22, 2024.

City Council - Regular Meeting - 24 Sep 2024 - Minutes - Pdf City Council - Regular Meeting with Closed Session - 22 Oct 2024 - Minutes - Pdf 187 - 195

9. Approval of Warrant Register Totaling $919,200.54
Approval of Warrant Register Totaling $919,200.54 - Pdf 197 - 200

10. Modify the Theatre 29 License Agreement to Allow the City to Assume Responsibility for Routine Maintenance and Minor Repairs of the Heating, Ventilation, and Air Conditioning Systems.

RECOMMENDATION: The City Council authorize the City Manager to Start Fragment work with the City Attorney to amend the Theatre facility licensing agreement transferring responsibility for the routine maintenance and minor repairs to the A/C system from the Theatre to the City and authorize the City Manager to execute the amended Theatre facility license agreement.

Modify the Theatre 29 License Agreement to Allow the City to Assume Responsibility for Routine Maintenance and Minor Repairs of the Heating, Ventilation, and Air Conditioning Systems. - Pdf
201 - 214

11. Award the Cholla Avenue Widening Project.

RECOMMENDATION: The City Council:

1. Adopt the project design represented by the Plans and Specifications for the Cholla Avenue Widening Project.

2. Award the contract for the “Cholla Avenue Project” to Universal Construction Inc, for the amount of $488,370 and authorize a 10% contingency of $48,837 for a total contract amount of $537,207.

3. Authorize the City Manager to execute all documents necessary to enter into the contract, including any necessary amendments thereto.

Award the Cholla Avenue Widening Project. - Pdf
215 - 262

12. Memorandum of Understanding (MOU) with the Community Leaning Equipping Project Inc. (CLEP)
RECOMMENDATION: The City Council approve the Memorandum of Understanding with the Community Learning Equipping Project Inc. (CLEP), otherwise known as the "the Hope Center". This organization is the non-profit branch of the Sanctuary Church.

Memorandum of Understanding (MOU) with the Community Leaning Equipping Project Inc. (CLEP) - Pdf
263 - 268

ITEMS REMOVED FROM CONSENT CALENDAR FOR DISCUSSION

PUBLIC HEARING

13. Adopt Resolution 24- __ Confirming the Costs of Abating a Vacant Parcel APN: 0624- 161-19-0000, Full of Trash, Debris, Abandoned Motorhome, an Illegal Dumping Ground that was Declared a Public Nuisance and Cleaned under the Direction of the Planning Commission.

RECOMMENDATION: The City Council confirm the cost of $17,976.68 for the abatement of the property. The City Council to direct the property owner to pay the confirmed cost of abatement within ten (10) days following the Public Hearing and/or the Code Enforcement Division would be directed to record the confirmed cost of abatement as a Special Assessment against the property.

Adopt Resolution 24- __ Confirming the Costs of Abating a Vacant Parcel APN: 0624- 161-19-0000, Full of Trash, Debris, Abandoned Motorhome, an Illegal Dumping Ground that was Declared a Public Nuisance and Cleaned under the Direction of the Planning Commission. - Pdf
269 - 285

DISCUSSION AND POTENTIAL ACTION ITEMS

14. Molding Hearts' Proposal to Provide Housing and Rehabilitative Services for Unhoused Twentynine Palms Residents.

RECOMMENDATION: The City Council authorize the City Manager to execute the Molding Hearts' proposal to provide housing and rehabilitative services for unhoused Twentynine Palms residents.

Molding Hearts' Proposal to Provide Housing and Rehabilitative Services for Unhoused Twentynine Palms Residents. - Pdf
287 - 322

15. Planning for a Brighter Future: Aligning Future Goals with Present Day Actions.

RECOMMENDATION: The City Council authorize the City Manager to negotiate and enter into a contract for professional services with Moore Iacofano Goltsman, Inc. (MIG) to conduct a comprehensive long-term strategic planning initiative for an amount not to exceed $36,360.00.

Planning for a Brighter Future: Aligning Future Goals with Present Day Actions. - Pdf 323 - 347

FUTURE COUNCIL INITIATED ITEMS

1. Revisit allocated funds for the portable showers and Navigation Center.

2. Discussion on the General Plan Update.

3. Discussion surrounding (i) costs to maintain dirt roads verses paved roads; (ii) what is a City maintained dirt road, a non-maintained dirt road, a road that has been accepted by the City, a road that is private and not accepted by the City; (iii) the City's ability and liability associated with the City periodically maintaining non-maintained roads, and (iv) ways residents can bring non-maintained and non-accepted dirt roads to paved-rural-road standards ready for acceptance into the City's accepted-and-maintained road list.

4. Shade structures around Freedom Plaza and a possible art fixture with "Freedom Plaza" announcing the location.

5. A review and discussion of fees as it relates to Site Plan Reviews for Barber Shops in existing buildings.

6. Discussion on increasing the City Council compensation.

PUBLIC COMMENTS
This is the time for the public to address the City Council on issues within the jurisdiction of the City Council that are NOT on this agenda. All comments are to be directed to the City Council and shall not consist of any personal attacks. Members of the public are expected to maintain a professional, courteous decorum during their comments. There is a time limitation of three minutes per person. If you haven’t already done so, please fill out name and address slips and give them to the City Clerk. The City Council is prohibited by State law from taking action or discussing items not included on the printed agenda. Public comments on specific agenda items will be deferred until consideration of the item on the agenda.

CITY MANAGER UPDATE

ADJOURNMENT
It is the intention of the City of Twentynine Palms to comply with the Americans with Disabilities Act in all respects. If you are a person with a disability who requires a disability-related modification or accommodation in order to participate in a meeting, including auxiliary aids or services, please request such modification or accommodation from the City Clerk at (760) 367- 4890 (facsimile). Notification at least 48 hours prior to the meeting will enable the City to make reasonable arrangements to assure accessibility to the meeting. Please advise us at the time whether you will require accommodations to participate in meetings on a regular basis. Any person affected by any application on this agenda may submit their concerns in writing prior to the meeting or appear in person and be heard in support or opposition to the proposal at the time the matter is considered on the agenda. The staff reports, applications and environmental documents may be viewed at either the office of Community Development or the office of the City Clerk, 6136 Adobe Road, from 7:00 a.m. until 6:00 p.m. Monday through Thursday, except legal holidays. The Invocation is given per Policy 10-01, and does not reflect the views of the City but rather is an expression of speech by a private citizen making the presentation. Telephone inquiries may be made at (760) 367-6799. If you challenge any agenda issue in court, you may be limited to raising only those issues that you or someone else raised at the public meeting described in this notice, or in written correspondence delivered to the City of Twentynine Palms at, or prior to, the public meeting.

This notice of agenda is hereby certified to have been posted on or before 6:00 p.m., November 7, 2024.

Cindy Villescas CMC, City Clerk Time/Date

STAFF REPORT
TO: City Council
FROM: Finance Director
FOR MEETING: Nov 12 2024
SUBJECT: Presentation of the City's Annual Comprehensive Financial Report (ACFR) for FY 2023-24.

RECOMMENDATION:

The City Council receive and file.

ORDER OF PROCEDURE:

Request Staff Report (City Manager Presenting)
Council Questions of Staff
Request Public Comment
Council Discussion
Motion/Second
Discussion of Motion
Call the Question
ATTACHMENTS:
• 2024 Final Annual
Comprehensive Financial
Report
• 2024 Final SAS (Statement of
Auditing Standards) 114 Letter
• 2024 Final GAGAS (Generally
Accepted Government Auditing
Standards) Letter
BACKGROUND:

The City’s Fiscal Year runs from July 1 through June 30. Rogers, Anderson, Malody, & Scott (RAMS), independent auditors who specialize in governmental audits, audited the City’s books for the Fiscal Year ending June 30, 2024. In addition to the audit, RAMS assisted City Staff in preparing the City’s Annual Comprehensive Financial Report (ACFR). The City has received an unmodified opinion from RAMS, which means the ACFR represents fairly the financial position of the City; it is the highest opinion given by an auditor.

The City’s ACFR is prepared in accordance with generally accepted accounting principles (GAAP) as promulgated by the Government Accounting Standards Board (GASB). The ACFR reports on the financial activities of the City and includes the Independent Auditors Report from RAMS, the City’s certified public accountants.

Financial Highlights
The General Fund is the chief operating fund of the City of Twentynine Palms. At the end of Fiscal Year 2023-24, the total unrestricted fund balance was $11,103,632 or 79% of total General Fund Expenditures, which is within the City's fund policy of 50-55% of operating expenditures. Page 5 of 347 The General Fund's fund balance increased by $416,134 primarily due to increased tax revenue and revenues from building permits. General Fund revenues for the Fiscal Year 2023-24 increased by $1,121,044, or 8%, over the prior year. The overall increase was due to the following factors:
 Property assessed values increased by 12.01%, which resulted in an increase of $399,467 in property tax revenue.
 Property taxes In lieu of Vehicle License Fee (VLF) also increased by $455,757 as a result of the increase in assessed valuations.
 Investment earnings increased by $510,728, or 518%, mainly due to City investing more of its idle cash in investments with higher rates of return compared to prior year.

General Fund expenditures for Fiscal Year 2023-24 increased by $2,438,168, or 17%, over the prior year. The overall increase was due to the following factors:
 General Government expenditures increased by $1,521,871 primarily due to the payoff and termination of the City’s two inactive safety plans in the amount of $1,689,685. The total payoff amount was $3,442,406; however, $1,752,721 was paid off with the assets held in the PARS trust. Other changes include higher employee-related costs such as cost of living adjustment (COLA) of 4.6%, CalPERS retirement system increases, merit increases, and employee reclassifications.  Public Safety expenditures, generally the City’s largest cost, increased by $821,755 due to increased contract costs with the County of San Bernardino Sherriff’s Department.  Community Services expenditures increased by $784,168 primarily due to the reopening of the City’s Luckie Park Pool in late May of 2023 as well as the reclassification of $565,703 in parks maintenance expenditures previously classified as Public Works Expenditures.

The City has been a recipient of the Government Finance Officers Association's (GFOA) Certificate of Achievement for Excellence in Financial Reporting for the past fifteen (15) Fiscal Years, including the Fiscal Year ended June 30, 2023. A copy of the award can be found on page vii of the attached ACFR. According to the GFOA, the certificate program was established in 1945 "to encourage and assist state and local governments to go beyond the minimum requirements of generally accepted accounting principles to prepare annual comprehensive financial reports that evidence the spirit of transparency and full disclosure and then to recognize individual governments that succeed in achieving that goal. The Certificate of Achievement is the highest form of recognition in governmental accounting and financial reporting." The City intends to continue its participation in the certificate program in future years.

ENVIRONMENTAL:

N/A
ALTERNATIVES:

The City Council could choose not to accept the Annual Comprehensive Financial Report.

FISCAL IMPACT:

None.

Twentynine Palms, California

Annual Comprehensive Financial Report
For the fiscal year ended June 30, 2024
Prepared by the Finance Department

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City of Twentynine Palms
Table of Contents
June 30, 2024
Page

INTRODUCTORY SECTION
Letter of Transmittal ................................................................................................................................ i Directory of City Officials ....................................................................................................................... v Organizational Chart .............................................................................................................................. vi Certificate of Achievement for Excellence in Financial Reporting ........................................................ vii

FINANCIAL SECTION
Independent Auditor’s Report ...................................................................................................................... 1 Management’s Discussion and Analysis ...................................................................................................... 4 Basic Financial Statements:

Government-wide Financial Statements:

Statement of Net Position .................................................................................................................... 13 Statement of Activities ......................................................................................................................... 14 Fund Financial Statements:

Governmental Funds
Balance Sheet ............................................................................................................................... 16 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position ................................................................................................. 18 Statement of Revenues, Expenditures and Changes in Fund Balances ...................................... 19 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities ............... 21 Proprietary Funds
Statement of Net Position ............................................................................................................. 22 Statement of Changes in Net Position .......................................................................................... 23 Statement of Cash Flows .............................................................................................................. 24 Fiduciary Funds - Private Purpose Trust Fund
Statement of Fiduciary Net Position .............................................................................................. 25 Statement of Changes in Fiduciary Net Position .......................................................................... 26 Notes to the Basic Financial Statements ............................................................................................... 27 Required Supplementary Information:

Budgetary Comparison Schedule - General Fund .............................................................................. 62 Budgetary Comparison Schedule – Tourism Business Improvement District Special Revenue Fund .................................................................................................................. 63 Schedule of the City’s Proportionate Share of the Plan’s Net Pension Liability and Related Ratios as of the Measurement Date ......................................................................... 64 Schedule of Plan Contributions ........................................................................................................... 65 Schedule of Changes in the Net OPEB Liability and Related Ratios .................................................. 66 Schedule of OPEB Contributions ........................................................................................................ 67 Notes to Required Supplementary Information ................................................................................... 68

City of Twentynine Palms
Table of Contents
June 30, 2024
Page
Other Supplementary Information:

Description of Funds ............................................................................................................................ 69 Nonmajor Funds
Combining Balance Sheet ............................................................................................................ 70 Combining Statement of Revenues, Expenditures and Changes in Fund Balances ................... 74 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual:

Traffic Safety Special Revenue Fund ..................................................................................... 78 Gas Tax Special Revenue Fund ............................................................................................ 79 Lighting and Landscape A.D. Special Revenue Fund ............................................................ 80 Public Access Programming Special Revenue Fund ............................................................. 81 Recycling Special Revenue Fund .......................................................................................... 82 Measure I 2011 Special Revenue Fund ................................................................................. 83 Article 8 Special Revenue Fund ............................................................................................. 84 Traffic Relief Special Revenue Fund ...................................................................................... 85 SB 1 - Road Maintenance Rehab Special Revenue Fund ..................................................... 86 Community Development Block Grant Special Revenue Fund ............................................... 87 Capital Improvements Capital Projects Fund - Major Fund ................................................... 88 Curb, Gutter, Sidewalk Impact Fee Capital Projects Fund ..................................................... 89 Streets Capital Projects Fund ................................................................................................. 90 City Bonds Proceeds Capital Projects Fund .......................................................................... 91

STATISTICAL SECTION
Net Position by Component - Last Ten Fiscal Years ................................................................................. 93 Changes in Net Position - Last Ten Fiscal Years ...................................................................................... 95 Governmental Activities - Tax Revenues by Source - Last Ten Fiscal Years ........................................... 99 Fund Balances of Governmental Funds - Last Ten Fiscal Years ............................................................ 100 Changes in Fund Balances of Governmental Funds - Last Ten Fiscal Years ......................................... 102 General Government Revenues by Source - Last Ten Fiscal Years ....................................................... 104 Assessed Value and Estimated Actual Value of Taxable Property - Last Ten Fiscal Years ................... 106 Direct and Overlapping Property Tax Rates - Last Ten Fiscal Years ...................................................... 107 Property Tax Levies and Collections - Last Ten Fiscal Years ................................................................. 108 Ratio of Outstanding Debt by Type - Last Ten Fiscal Years .................................................................... 109 Legal Debt Margin Information - Last Ten Fiscal Years .......................................................................... 110 Pledged Revenue Coverage - Last Ten Fiscal Years .............................................................................. 111 Demographic and Economic Statistics - Last Ten Calendar Years ......................................................... 112 Full-Time Equivalent City Government Employees by Function - Last Ten Fiscal Years ....................... 113 Capital Asset Statistics by Function - Last Ten Fiscal Years ................................................................... 114 Operating Indicators by Function - Last Ten Fiscal Years ....................................................................... 116 Memo - Statistical Section ........................................................................................................................ 117

INTRODUCTORY SECTION

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CITY OFFICES:
6136 ADOB E ROAD
TWENTYNINE PALMS, CA 92277
(760) 367-6799
Fax (760)367-4890
www.29palms.org
October 31, 2024
To the Honorable Mayor, City Council, and Fellow Citizens of the City of Twentynine Palms

COUNCILMEMBERS
Steven Bilderain, Mayor
Joel A. Klink, Mayor Pro Tern
Da niel L. Mintz, Sr
Octavious Scott
McArthur Wright

CITY MANAGER
Stone James, DPPD
We are pleased to present the annual comprehensive financial report (ACFR) of the City of Twentynine Palms (City) for the fiscal year ended June 30, 2024. It is submitted with this letter fulfilling the requirements of the State of California. The basic financial statements have been presented in conformity with generally accepted accounting principles (GAAP) and are audited in accordance with generally accepted auditing standards by an independent firm of licensed certified public accountants.

This report consists of management's representations concerning the finances of the City. Consequently, management assumes full responsibility for the completeness and reliability of all the information presented in this report. To provide a reasonable basis for making these representations, management has established a comprehensive system of internal controls that are designed to both protect the City's assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the City's financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the City's internal control systems have been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects.

The City's basic financial statements have been audited by Rogers, Anderson, Malady & Scott, LLP, a firm of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City for the fiscal year ended June 30, 2024, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures on the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall presentation of the financial statements. Based upon their audit, the independent auditor concluded that there was reasonable basis for rendering an unmodified opinion that the City's financial statements for the fiscal year ended June 30, 2024, are fairly presented in conformity with GAAP. The independent auditor's report is presented as the first component of the financial section of this report.

GAAP requires that management provide a narrative introduction, overview and analysis to accompany the basic financial statements in the form of Management's Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it.

The City of Twentynine Palms' MD&A can be found immediately following the report of the independent auditors.

City of Twentynine Palms
Directory of City Officials
June 30, 2024
-vSteven Bilderain Mayor
Joel A. Klink Mayor Pro Tem
Daniel L. Mintz, Sr. Council Member
Octavious Scott Council Member
McArthur Wright Council Member
Cindy Villescas City Clerk
Stone James, DPPD City Manager
Keith Gardner Community Development Director
Abigail Hernandez Conde Finance Director
Elijah Marshall Information Services Director
Kary Minatrea Community Services Director
Jacqueline Palmer Human Resources Manager
Craig Stacey Public Works Superintendent
Rick Boyd Animal Control Manager
Breanne Dusastre TBID Marking Director
Patrick Munoz City Attorney
Richard Pedersen City Engineer
Robert Warrick Chief of Police

CONTRACTORS

APPOINTED OFFICIALS

ELECTED OFFICIALS

MANAGEMENT

City of Twentynine Palms
Organizational Chart June 30, 2024
-viPage 18 of 347
-viiPage 19 of 347
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FINANCIAL SECTION

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Independent Auditor’s Report
The Honorable City Council
City of Twentynine Palms, California
Report on the Audit of the Financial Statements
Opinions
We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Twentynine Palms (the City), as of and for the year ended June 30, 2024, 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 accompanying financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City, as of June 30, 2024, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

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

Other Matters
As discussed in Note 1 to the financial statements, in the year ended June 30, 2024, the City adopted new accounting guidance under Governmental Accounting Standards Board (GASB) Statement No. 100, Accounting Changes and Error Corrections. Our opinions are not modified with respect to these matters.

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

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

Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

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

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

Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, and those schedules as listed in the table of contents be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries,

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the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The combining and individual nonmajor fund financial statements, and the budgetary comparison schedules are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and were derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information contain therein is fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Other Information
Management is responsible for the other information included in the annual report/annual comprehensive financial report (ACFR). The other information comprises the introductory and statistical sections but does not include the basic financial statements and our auditor's report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon.

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

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 31, 2024, on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters.

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

San Bernardino, California
October 31, 2024

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Management’s Discussion and Analysis
As management of the City of Twentynine Palms, we offer readers of the City of Twentynine Palms’ financial statements this narrative overview and analysis of the financial activities of the City of Twentynine Palms for the fiscal year ended June 30, 2024. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages i-iv of this report.

Financial highlights
 The assets and deferred outflows of resources of the City of Twentynine Palms exceeded its liabilities and deferred inflows of resources at the close of the most recent fiscal year by $70,141,814 (net position). Of this amount, $18,865,656 (unrestricted net position) may be used to meet the City’s ongoing obligations to citizens and creditors.  As of the close of the current fiscal year, the City of Twentynine Palms’ governmental funds reported combined ending fund balances of $20,043,244, a decrease of $700,328 in comparison with the prior year. Approximately 50%, or $10,108,364, of the ending fund balance is available for spending at the City’s discretion (unassigned fund balance).
 At the end of the current fiscal year, unassigned fund balance for the General Fund was $11,103,632, or 79% of the General Fund expenditures.
 The City of Twentynine Palms’ total long-term liabilities increased by $490,766 during the current fiscal year mainly as a result of a changes in the City’s net pension liability.

Overview of the financial statements
This discussion and analysis is intended to serve as an introduction to the City of Twentynine Palms’ basic financial statements. The City’s basic financial statements are comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves.

Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a private-sector business.

The Statement of Net Position presents information on all the City’s assets and deferred outflows of resources as well as liabilities and deferred inflows of resources, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating.

The Statement of Activities presents information showing how the government’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., earned but unused vacation leave).

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Both of the government-wide financial statements distinguish functions of the City of Twentynine Palms that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, public safety, highways and streets, community development, economic development, and culture and recreation. The business-type activities of the City of Twentynine Palms include the City’s Sewer.

The government-wide financial statements can be found on pages 13-15 of this report.

Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City of Twentynine Palms, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into three categories:
governmental funds, proprietary funds, and fiduciary funds.

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

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

The City of Twentynine Palms maintains sixteen individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General Fund, the Tourism Business Improvement District Fund, and the Capital Improvements Fund all of which are considered to be major funds. Data from the other thirteen governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements elsewhere in this report.

The City of Twentynine Palms adopts an annual appropriated budget for its General Fund. A budgetary comparison statement has been provided for the General Fund to demonstrate compliance with this budget.

The basic governmental fund financial statements can be found on pages 16-21 of this report.

Proprietary fund. The City of Twentynine Palms maintains one type of proprietary fund: enterprise fund.

Enterprise funds are used to report the same functions presented as business-type activities in the Government-wide Financial Statements. The City uses enterprise funds to account for its Sewer operations.

Proprietary funds provide the same type of information as the Government-wide Financial Statements, only in more detail.

The proprietary fund financial statements can be found on pages 22-24 of this report.

-6-
Fiduciary fund. The City of Twentynine Palms maintains one fiduciary fund. The private purpose trust fund accounts for the activities of the Successor Agency to the City of Twentynine Palms Redevelopment Agency. The fund’s primary purpose is to expedite the dissolution of the former Agency’s net position in accordance with California law as stated in ABx1 26 and AB 1484. These statements can be found on pages 25-26.

Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 27-61 of this report.

Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City’s budget versus actual results for the General Fund and any Special Revenue Major Fund, the City’s proportionate share of their pension plan’s liability and related ratios as of the measurement date, the City’s schedule of plan contribution, and the City’s schedule of changes in Net OPEB liability and the schedule of OPEB contributions. Required supplementary information can be found on pages 62-68 of this report.

The combining statements referred to earlier in connection with non-major governmental funds are presented immediately following the required supplementary information. Combining and individual fund statements and schedules can be found on pages 69-91 of this report.

Government-wide financial analysis
The government-wide financial statements provide information about the City’s overall financial picture from the perspective of all the City’s governmental and business-type funds combined together. This form of financial reporting is intended to provide a perspective similar to that found in the private sector with its basis in full accrual accounting and elimination or reclassification of internal activities. The governmentwide financial statements provide long-term and short-term information about the City’s overall financial condition. This analysis addresses the financial statements of the City as a whole.

Statement of Net Position. As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. In the case of the City of Twentynine Palms, assets and deferred outflows of resources exceeded liabilities and deferred inflows by $70,141,814 at the close of the most recent fiscal year.

A large portion of the City’s net position (66%) reflects its investment in capital assets (e.g., land, buildings, machinery, and equipment); less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.

-7-
2024 2023 2024 2023 2024 2023
Current and other assets 22,896,507 $ 21,925,143 $ 820,529 $ 592,948 $ 23,717,036 $ 22,518,091 $ Capital assets 46,063,347 45,821,035 1,359,128 2,748,343 47,422,475 48,569,378 Total assets 68,959,854 67,746,178 2,179,657 3,341,291 71,139,511 71,087,469 Deferred outflows of resources 6,183,630 3,762,501 - - 6,183,630 3,762,501 Other liabilities 768,165 813,895 17,628 148,920 785,793 962,815 Long-term liabilities 4,132,021 3,641,255 - - 4,132,021 3,641,255

Total liabilities 4,900,186 4,455,150 17,628 148,920 4,917,814 4,604,070 Deferred inflows of resources 2,263,513 2,377,855 - - 2,263,513 2,377,855 Net position:

Net investment in capital assets 44,861,792 44,406,583 1,359,128 2,748,343 46,220,920 47,154,926 Restricted 5,055,238 4,804,603 - - 5,055,238 4,804,603
Unrestricted 18,062,755 15,464,488 802,901 444,028 18,865,656 15,908,516 Total net position 67,979,785 $ 64,675,674 $ 2,162,029 $ 3,192,371 $ 70,141,814 $ 67,868,045 $ Statement of Net Position
Governmental Activities Business-Type Activities Total
An additional portion of the City of Twentynine Palms’ net position (7%) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position, $18,865,656 may be used to meet the government’s ongoing obligations to citizens and creditors.

At the end of the current fiscal year, the City of Twentynine Palms is able to report positive balances in all three categories of net position. The same situation held true for the prior fiscal year. 2024 2023 2024 2023 2024 2023
Revenues:

Program revenues:

Charges for services 1,329,179 $ 1,097,595 $ 13,004 $ 14,349 $ 1,342,183 $ 1,111,944 $ Operating grants and contributions 1,892,715 6,401,746 - - 1,892,715 6,401,746 Capital grants and contributions 1,257,332 2,773,636 548,285 803,021 1,805,617 3,576,657 Property taxes 3,270,749 2,871,282 - - 3,270,749 2,871,282 Other taxes 9,689,490 9,375,666 - - 9,689,490 9,375,666 Investment earnings 859,954 204,344 - - 859,954 204,344 Other 729,082 725,631 - - 729,082 725,631
Total revenues 19,028,501 23,449,900 561,289 817,370 19,589,790 24,267,270 Expenses:

General government 4,020,632 3,799,677 - - 4,020,632 3,799,677 Public safety 6,327,475 8,095,690 - - 6,327,475 8,095,690 Public works 1,998,577 2,893,664 1,656,631 131,211 3,655,208 3,024,875 Community development 1,073,208 1,912,890 - - 1,073,208 1,912,890 Economic development 436,403 280,282 - - 436,403 280,282 Community services 1,763,923 1,997,479 - - 1,763,923 1,997,479 Interest on long-term debt 39,172 38,360 - - 39,172 38,360 Total expenses 15,659,390 19,018,042 1,656,631 131,211 17,316,021 19,149,253 Change in net position before transfers 3,369,111 4,431,858 (1,095,342) 686,159 2,273,769 5,118,017 Transfers in (out) (65,000) (934,950) 65,000 934,950 - - Change in net position 3,304,111 3,496,908 (1,030,342) 1,621,109 2,273,769 5,118,017 Net position, beginning of year, as restated 64,675,674 61,178,766 3,192,371 1,571,262 67,868,045 62,750,028 Net position, end of year 67,979,785 $ 64,675,674 $ 2,162,029 $ 3,192,371 $ 70,141,814 $ 67,868,045 $ Change in Net Position
Governmental Activities Business-Type Activities Total

-8-
The City’s net position increased by $2,273,769 during the current fiscal year. The increase is mainly attributed to increases in tax revenue and investment earnings. Tax revenues for the year increased primarily due to increased property taxes, property tax in lieu, and investment earnings, which grew by 14%, 12%, and 321% respectively, as a result of increases in property tax values and higher investment interest rates compared to prior year. Operating grants and contributions decreased by 70%, this is mainly due to City receiving less grants compared to the prior year. For instance, in the prior fiscal year, the City received one grant from the State of California Natural Resources Agency in the amount of $1.3M for the reconstruction of the City’s Luckie Park Pool. Furthermore, the City received its second and last Coronavirus State and Local Fiscal Recovery Funds allocation from the Department of Treasury in the prior fiscal year. No grants for a similar amount were received in fiscal year 2024. Capital grants and contributions also decreased significantly by 50%. The main reason for the change is due to the City completing the majority of the grant related projects during the prior fiscal year, which included the Neighborhood Safety Project and the Median Highway 62.

Expenses and program revenues - Governmental Activities Revenue by source - Governmental Activities
7%
10%
7%
40%
11%
25%
Charges for services
Operating grants and contributions
Capital grants and contributions
Property taxes
Salestaxes
Other taxes and revenues
Financial analysis of the government’s funds
As noted earlier, the City of Twentynine Palms uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.

Governmental funds. The focus of the City of Twentynine Palms’ governmental funds is to provide information on near term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City of Twentynine Palms’ financing requirements. Unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year.

As of the end of the current fiscal year, the City of Twentynine Palms governmental funds reported combined ending fund balances of $20,043,244, a decrease of $700,328 in comparison with the prior year.

Approximately 50%, or $10,108,364, of the ending fund balance constitutes unassigned fund balance, which is available for spending at the government’s discretion. The remainder of fund balance is not available for new spending because it has either already been 1) restricted for a variety of purposes by outside sources, $5,055,238; 2) assigned by the government to a specific purpose, $4,785,679 or 3) in a non-spendable form $93,963.

-9-
Major Funds
The General Fund is the chief operating fund of the City of Twentynine Palms. At the end of the current fiscal year, the unassigned fund balance of the General Fund was $11,103,632 while total fund balance was $12,026,306. As a measure of the General Fund’s liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. Unassigned fund balance represents 79% of total General Fund expenditures, while total fund balance represents 86% of that same amount. The 79% of unassigned General Fund balance complies with the City’s Fund Balance policy.

The fund balance of the City’s General Fund increased by $416,134 during the current fiscal year, primarily due to increased tax revenue and revenues from building permits.

General Fund revenues for the fiscal year ended June 30, 2024, increased by $1,121,044, or 8%, over the prior year. The overall increase was due to the following factors:
 Tax revenues increased by $747,122 from the prior year, largely due to the continued rise in inflation and higher property tax values. Property assessed values increased by 12.01%, which resulted in an increase of $399,467 in property tax revenue. Property taxes In lieu of Vehicle License Fee (VLF) also increased by $455,757 as a result of the increase in assessed valuations.

Investment earnings increased by $510,728, or 518%, mainly due to City investing more of its idle cash in investments with higher rates of return compared to prior year.

General Fund expenditures for the fiscal year ended June 30, 2024, increased by $2,438,168, or 17%, over the prior year. The overall increase was due to the following factors:
 General Government expenditures increased by $1,521,871 primarily due to the payoff and termination of the City’s two safety plans in the amount of $1,689,685. The total payoff amount was $3,442,406; however, $1,752,721 was paid off with the assets held in the PARS trust. Other increases are due to increases in employee-related costs such as cost of living adjustment (COLA) of 4.6%, CalPERS retirement system increases, merit increases, and employee reclassifications.  Public Safety expenditures, generally the City’s largest cost, increased by $821,755 due to increased contract costs with the County of San Bernardino Sherriff’s Department.  Community Services expenditures increased by $784,168 due to the reopening of the City’s Luckie Park Pool in late May of 2023 as well as the reclassification of $565,703 in parks maintenance expenditures previously classified as Public Works Expenditures.

The General Fund transferred out $399,298 to the Capital Projects Fund to assist in funding several capital projects, including the acquisition of an Animal Control vehicle and the construction of the Sullivan Bike path. The General Fund also transferred out $7,838 to a non-major fund to cover costs incurred in the normal course of business, and $65,000 to the Sewer Fund to subsidize the operating activities of this fund.

Various nonmajor funds transferred out a total of $20,000 to the General Fund for reimbursement of administrative costs based on approved cost allocations.

-10-
The Tourism Business Improvement District (TBID) is a special revenue fund established to account for the assessment levied on all existing and future hotels and short-time vacation rentals within the City at a rate of 1.5% per occupied room night rate. The revenues collected through this assessment are designated for marketing the City as a tourism destination. Current year revenues totaled $403,269 and current year expenditures totaled $434,556, resulting in a decrease in fund balance of $31,287 for the current year. The main decrease is due to the increase in community event expenditures to promote the City and attract more tourism to the City. This fund ended the current fiscal year with a fund balance of $608,269.

The Capital Improvements Fund was established to account for financial resources, other than Community Development Block Grants, used for the planning, construction, repair and rehabilitation of the City’s major capital facilities and infrastructure. Current year revenues and transfers in totaled $136,755 and $399,298, respectively, and current year expenditures totaled $809,241, resulting in a decrease in fund balance of $273,188 for the current year. This decrease is due to timing of grant reimbursements for various capital projects and current year expenditures funded with prior year transfers. At the end of the current fiscal year, the fund balance totaled $3,604,426, which is assigned for specific capital projects as approved by Council. Transfers into the fund are appropriated from the unassigned fund balance of the General Fund as directed by Council from prior year excess fund balances.

Business-type Activities. Revenues and contributions of the City’s business-type activities were $13,004 and $548,285, respectively for the fiscal year ending June 30, 2024. Transfers in to subsidize the Sewer fund totaled $65,000. Expenses for the City’s business-type activities were $1,656,631 for the year, resulting in a net decrease in net position of $1,030,342.

Fiduciary fund. The private-purpose trust fund accounts for the assets and liabilities transferred from the former Redevelopment Agency to the City as Successor Agency. The net deficit held for RDA dissolution is $8,602,856.

General fund budgetary highlights
Revenue was more than budgeted by $1,485,551 as a result of, the City receiving more tax revenues and investment earnings during the year than was projected.

The total expenditure was under budget by 5%, or $776,558. During the current fiscal year, none of the General Fund functions had expenditures over budget.

Capital asset and debt administration
Capital assets
The City’s investment in capital assets for its governmental activities and business-type activities as of June 30, 2024, amounts to $47,422,475 (net of accumulated depreciation). This investment in capital assets includes land, buildings and improvements, machinery and equipment, park facilities, roads, and related facilities. The total decrease in the City’s investment in capital assets for the current fiscal year was 2%.

The decrease was primarily due to the deletion of the City-wide sewer and wastewater project, which was abandoned due to insufficient funding.

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2024 2023 2024 2023 2024 2023
Land and improvements 5,304,219 $ 5,304,219 $ - $ - $ 5,304,219 $ 5,304,219 $ Right-of-ways 17,686 17,686 - - 17,686 17,686
Construction in progress 4,621,791 3,876,867 486,428 1,844,475 5,108,219 5,721,342 Building and improvements 20,614,114 21,216,651 - - 20,614,114 21,216,651 Machinery and equipment 1,077,657 1,198,819 - - 1,077,657 1,198,819 Office equipment 68,530 68,611 - - 68,530 68,611
Vehicles 56,591 85,212 - - 56,591 85,212
Infrastructure 14,231,526 13,944,470 872,700 903,868 15,104,226 14,848,338 Right-to-use - leases 21,724 28,035 - - 21,724 28,035
Right-to-use - subscriptions 49,509 80,465 - - 49,509 80,465 Total capital assets 46,063,347 $ 45,821,035 $ 1,359,128 $ 2,748,343 $ 47,422,475 $ 48,569,378 $ Capital Assets
Governmental Activities Total
(Net of depreciation)
Business-Type Activities
Additional information on the City’s capital assets can be found in Note 6 of this report.

Long-term liabilities
At the end of the current fiscal year, the City had no bonded debt because of the dissolution of the Redevelopment Agency and the transfer of its debt to the Successor Agency. 2024 2023 2024 2023 2024 2023
Net pension liability 2,436,537 $ 1,881,330 $ - $ - $ 2,436,537 $ 1,881,330 $ Lease liability 22,121 28,231 - - 22,121 28,231
Subscription liability 34,471 62,149 - - 34,471 62,149
Facility improvements loan 1,144,963 1,185,555 - - 1,144,963 1,185,555 Compensated absences 493,929 483,990 - - 493,929 483,990 Total long-term liabilities 4,132,021 $ 3,641,255 $ - $ - $ 4,132,021 $ 3,641,255 $ Governmental Activities Business-Type Activities
Non-Current Liabilities
Total
The City’s total long-term liabilities increased by $490,766, or 13%, during the current fiscal year mainly due to changes in the City’s CalPERS net pension liability.

Additional information on the City’s long-term liabilities can be found in Notes 7, 11, and 12 of this report.

Economic factors and next year’s budgets and rates
The unemployment rate for the City of Twentynine Palms on June 30, 2024 was 6.10%. The unemployment rate for San Bernardino County was 5.2% and the unemployment rate for the State of California was 5.2%.

Property tax collections for FY 2024-2025 will rise from the 2023-2024 collections because of the increase in property valuations. Property valuations rose by 12.01% from $1,137,526,790 in FY 2022- 2023 to $1,274,157,898 in FY 2023-2024.

Housing prices in Twentynine Palms rose slightly. The median home price increased by 0.83% from $270,000 in 2023 to $272,250 in 2024.

Construction activity in the community has remained steady. The City issued nine single-family building permits during FY 2023-2024, which is seven permits compared to prior year. The City also issued eight new multi-family building permits, which is five more compared to prior year The high point for the City was FY 2005- 2006 when 330 single-family residence permits were issued.

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Sales tax collections decreased from $2,200,338 in FY 2022-2023 to $2,138,428 in FY 2023-2024.

Taxable sales are expected to continue to decline slightly in the coming fiscal years due to the continued high inflation, labor shortages, supply chain issues, and rising interest rates.

All of these factors were considered in preparing the budget for the 2024-2025 fiscal year.

Requests for information
This financial report is designed to provide a general overview of the City of Twentynine Palms’ finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Office of the Finance Director, 6136 Adobe Road, Twentynine Palms, CA 92277 or phone (760) 367-6799.

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BASIC FINANCIAL STATEMENTS

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City of Twentynine Palms
Statement of Net Position
June 30, 2024
The accompanying notes are an integral part of these financial statements. -13-
Governmental Business-Type
Activities Activities Total
Assets
Cash and investments 18,387,888 $ 820,529 $ 19,208,417 $ Cash and investments with fiscal agent - restricted 654,517 - 654,517 Receivables:

Intergovernmental 54,074 - 54,074
Taxes 1,122,076 - 1,122,076
Interest 124,949 - 124,949
Grants 1,223,473 - 1,223,473
Leases 823,765 - 823,765
Other - 94,330 94,330
Prepaid expense 32,000 - 32,000
Land held for resale 93,963 - 93,963
Net OPEB Asset 285,472 - 285,472
Capital assets, not being depreciated 9,943,696 486,428 10,430,124 Capital assets, depreciated, net 36,119,651 872,700 36,992,351 Total assets 68,959,854 2,179,657 71,139,511
Deferred outflows of resources
Pension related 6,085,006 - 6,085,006
OPEB related 98,624 - 98,624
Total deferred outflows of resources 6,183,630 - 6,183,630 Liabilities
Accounts payable and accrued liabilities 507,893 17,430 525,323 Deposits payable 185,031 - 185,031
Unearned revenue 75,241 198 75,439
Noncurrent liabilities:

Due within one year
Compensated absences 98,786 - 98,786
Long term liabilities 68,439 - 68,439
Due beyond one year
Compensated absences 395,143 - 395,143
Long term liabilities 1,133,116 - 1,133,116
Net pension liability 2,436,537 - 2,436,537
Total liabilities 4,900,186 17,628 4,917,814
Deferred inflows of resources
Pension related 992,580 - 992,580
OPEB related 470,837 - 470,837
Leases - 800,096 800,096
Total deferred inflows of resources 2,263,513 - 2,263,513 Net position
Net investment in capital assets 44,861,792 1,359,128 46,220,920 Restricted for:

Public safety 663,896 - 663,896
Streets, highways, bikeways, public transit and
other related purposes 2,613,276 - 2,613,276
Community development 1,169,797 - 1,169,797
Economic development 608,269 - 608,269
Unrestricted 18,062,755 802,901 18,865,656
Total net position 67,979,785 $ 2,162,029 $ 70,141,814 $

City of Twentynine Palms
Statement of Activities
For the year ended June 30, 2024
The accompanying notes are an integral part of these financial statements. -14-
Charges Operating Capital
for grants and grants and
Expenses services contributions contributions
Governmental activities:

General government 4,020,632 $ 105,232 $ 45,473 $ - $
Public safety 6,327,475 98,533 186,305 -
Public works / streets 1,998,577 65,304 1,584,890 1,160,867 Community development 1,073,208 842,012 38,585 -
Economic development 436,403 - - -
Community services 1,763,923 218,098 37,462 96,465
Interest on long-term debt 39,172 - - -
Total governmental activities 15,659,390 1,329,179 1,892,715 1,257,332 Business-type activities:

Sewer 1,656,631 13,004 - 548,285
Total business-type activities 1,656,631 13,004 - 548,285 Total Primary Government 17,316,021 $ 1,342,183 $ 1,892,715 $ 1,805,617 $ General revenues:

Property taxes
Sales and use taxes
Property tax in lieu
Franchise taxes
Transient occupancy taxes
Real property transfer taxes
Motor vehicle in lieu tax
Use of money and property
Other
Transfers in (out)
Total general revenues
Change in net position
Net position, beginning of year
Net position, end of year
Functions/Programs
Program Revenues

The accompanying notes are an integral part of these financial statements. -15-
Governmental Business-type
Activities Activities Total
$ - (3,869,927) $ (3,869,927) $
- (6,042,637) (6,042,637)
- 812,484 812,484
- (192,611) (192,611)
- (436,403) (436,403)
- (1,411,898) (1,411,898)
- (39,172) (39,172)
- (11,180,164) (11,180,164)
(1,095,342) - (1,095,342)
(1,095,342) - (1,095,342)
(1,095,342) (11,180,164) (12,275,506)
3,270,749 - 3,270,749
2,138,428 - 2,138,428
4,250,176 - 4,250,176
- 969,861 969,861
2,237,285 - 2,237,285
61,222 - 61,222
32,518 - 32,518
- 859,954 859,954
729,082 - 729,082
65,000 (65,000) -
65,000 14,484,275 14,549,275
(1,030,342) 3,304,111 2,273,769
3,192,371 64,675,674 67,868,045
$ 2,162,029 67,979,785 $ 70,141,814 $

City of Twentynine Palms
Balance Sheet
Governmental Funds
June 30, 2024
The accompanying notes are an integral part of these financial statements. ‐16-
General
Tourism
Business
Improvement
District
Community
Development
Block Grant
(formerly
major)
ARPA
(formerly
major)
Assets
Cash and investments 10,380,774 $ 536,678 $
Cash and investments with
fiscal agents - restricted - -
Receivables:

Intergovernmental - -
Taxes 832,006 -
Interest 79,626 6,186
Grants 2,400 -
Leases 823,765 -
Other - 89,196
Prepaid items 32,000 -
Land held for resale 93,963 -
Due from other funds 1,112,390 -
Total assets 13,356,924 $ 632,060 $
Liabilities, Deferred Inflows of
Resources and Fund Balances
Liabilities:

Accounts payable and accrued liabilities 341,228 $ 23,791 $ Deposits payable 185,031 -
Due to other funds - -
Unearned revenue - -
Total liabilities 526,259 23,791
Deferred Inflows of Resources
Unavailable revenues 4,263 -
Leases 800,096 -
Total deferred inflows of resources 804,359 -
Fund balances:

Nonspendable 93,963 -
Restricted 431,729 608,269
Assigned 396,982 -
Unassigned 11,103,632 -
Total fund balances (deficit) 12,026,306 608,269
Total liabilities, deferred inflows of
resources and fund balances 13,356,924 $ 632,060 $ - $ - $ Special Revenue Funds

-17-
Capital Projects
Capital
Improvements
Total Nonmajor
Governmental
Funds
Total
Governmental
Funds
$ 3,940,082 3,530,354 $ 18,387,888 $
654,517 - 654,517
54,074 - 54,074
290,070 - 1,122,076
39,137 - 124,949
1,144,866 76,207 1,223,473
- - 823,765
5,134 - 94,330
- - 32,000
- - 93,963
- - 1,112,390
$ 6,127,880 3,606,561 $ 23,723,425 $
$ 140,739 2,135 $ 507,893 $
- - 185,031
1,112,390 - 1,112,390
75,241 - 75,241
1,328,370 2,135 1,880,555
995,267 - 999,530
- - 800,096
995,267 - 1,799,626
- - 93,963
4,015,240 - 5,055,238
784,271 3,604,426 4,785,679
(995,268) - 10,108,364
3,804,243 3,604,426 20,043,244
$ 6,127,880 3,606,561 $ 23,723,425 $

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City of Twentynine Palms
Reconciliation of the Balance Sheet of
Governmental Funds to the Statement of Net Position
June 30, 2024
The accompanying notes are an integral part of these financial statements. -18-
$ 20,043,244
64,487,983
(18,495,869)
126,307
(55,074)
285,472
(2,436,537)
Long-term liabilities (1,201,555)
(493,929)
6,085,006
98,624
(992,580)
(470,837)
999,530
$ 67,979,785
Accumulated depreciation
Capital assets and right to used asset used in governmental activities are not current financial resources and, therefore, are not reported in the governmental funds:

Statement of Net Position, any excesses or deficiencies in contributions in relation to the Deferred outflows and inflows of resources related to pension and OPEB are not reported in the governmental funds:

Pension related deferred outflows of resources
Capital assets
Compensated absences
Amounts reported for governmental activities in the Statement of Net Position are different because:

Fund balances of governmental funds
Net position of governmental activities
Deferred inflows of resources related to revenues are not reported in the Statement of Net Position:

Unavailable revenues
Pension related deferred inflows of resources
OPEB related deferred outflows of resources
OPEB related deferred inflows of resources
Intangible asset
Non current liabilities are not due and payable in the current period and, therefore, are not reported in the governmental funds:

Net OPEB asset
Net pension liability
Accumulated amortization

City of Twentynine Palms
Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds
For the year ended June 30, 2024
The accompanying notes are an integral part of these financial statements. -19-
General
Tourism Business
Improvement
District
Community
Development
Block Grant
(formerly major
fund)
ARPA
(formerly major
fund)
Revenues
Taxes 12,327,631 $ - $
Licenses, permits and fees 837,545 372,895
Intergovernmental 347,613 -
Charges for services 543,801 -
Fines, forfeitures and penalties 27,108 -
Use of money and property 609,363 29,225
Other 178,099 1,149
Total revenues 14,871,160 403,269
Expenditures
Current:

General government 4,160,955 -
Public safety 6,547,218 -
Public works 317,543 -
Community development 1,052,892 -
Economic development 1,847 434,556
Community services 1,813,683 -
Debt service:

Principal 70,018 -
Interest 38,734 -
Capital outlay - -
Total expenditures 14,002,890 434,556
Excess/(deficiency)
of revenues under expenditures 868,270 (31,287)
Other financing sources (uses)
Transfers in 20,000 -
Transfers out (472,136) -
Total other financing sources (uses) (452,136) -
Net change in fund balances 416,134 (31,287)
Fund balance, beginning of year, previously reported 11,610,172 639,556 77 - Change within financial reporting entity (major to nonmajor) - - (77) - Fund balances, beginning of year, as restated 11,610,172 639,556 - - Fund balances, end of year 12,026,306 $ 608,269 $
Special Revenue Funds

-20-
Capital Projects
Capital
Improvements
Total Nonmajor
Governmental
Funds
Total
Governmental
Funds
$ 2,005,150 - $ 14,332,781 $
34,711 - 1,245,151
136,755 387,899 872,267
21,059 - 564,860
606 - 27,714
221,366 - 859,954
19,303 - 198,551
2,690,094 136,755 18,101,278
19,378 - 4,180,333
93,131 - 6,640,349
1,779,859 - 2,097,402
73,384 - 1,126,276
- - 436,403
37,462 - 1,851,145
4,362 - 74,380
438 - 39,172
809,241 1,481,905 2,291,146
3,489,919 809,241 18,736,606
(799,825) (672,486) (635,328)
399,298 7,838 427,136
(20,000) - (492,136)
(12,162) 399,298 (65,000)
(811,987) (273,188) (700,328)
4,616,153 3,877,614 20,743,572
77 - -
4,616,230 3,877,614 20,743,572
$ 3,804,243 3,604,426 $ 20,043,244 $

City of Twentynine Palms
Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities For the year ended June 30, 2024
The accompanying notes are an integral part of these financial statements. ‐21-
Net changes in fund balances - total governmental funds $ (700,328) 1,979,364
(1,737,052)
927,223
74,380
(9,939)
2,147,166
623,297
Change in net position of governmental activities $ 3,304,111 Net OPEB asset related net adjustments
Depreciation/Amortization expense
Cost of assets capitalized, less the net book value of disposals Some expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental funds:

Deferred inflows of resources that are not recognized in the Governmental Funds are recognized in the Statement of Activities:

Governmental funds report all contributions for pensions and OPEB as expenditures; however, in the Statement of Activities, pension expense is actuarially determined:

Loan repayments
Change in compensated absences payable
Unavailable revenues
The issuance of long term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes current financial resources. These amounts are the net effect of the difference in treatment of long -term debt and related items in the statement of activities:

Net Pension liability related net adjustments
Governmental funds report capital outlays as expenditures. However, in the Statement of Activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense or are allocated to the appropriate functional expense when the cost is below the capitalization threshold. This activity is reconciled as follows:

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

City of Twentynine Palms
Statement of Net Position
Proprietary Funds
June 30, 2024
The accompanying notes are an integral part of these financial statements. ‐22-
Enterprise Fund
Sewer
Assets
Current assets:

Cash and investments 820,529 $
Total current assets 820,529
Non-current assets:

Capital assets, not being depreciated 486,428
Capital assets, depreciated, net 872,700
Total non-current assets 1,359,128
Total assets 2,179,657
Liabilities
Current liabilities:

Accounts payable 17,430
Unearned revenue 198
Total current liabilities 17,628
Net position
Investment in capital assets 1,359,128
Unrestricted 802,901
Total net position 2,162,029 $

City of Twentynine Palms
Statement of Changes in Net Position
Proprietary Funds
For the year ended June 30, 2024
The accompanying notes are an integral part of these financial statements. ‐23-
Enterprise Fund
Sewer
Operating revenues
Charges for services 13,004 $
Total operating revenues 13,004
Operating expenses
Other operating expenses 1,625,463
Depreciation expense 31,168
Total operating expenses 1,656,631
Operating income (loss) (1,643,627)
Transfers and contributions
Contributions 548,285
Transfers in 65,000
Total transfers and contributions 613,285
Change in net position (1,030,342)
Net position, beginning of year 3,192,371
Net position, end of year 2,162,029 $

City of Twentynine Palms
Statement of Cash Flows
Proprietary Funds
For the year ended June 30, 2024
The accompanying notes are an integral part of these financial statements. ‐24-
Enterprise Fund
Sewer
Cash flows from operating activities
Cash received for services provided 13,348 $
Cash paid to suppliers for goods and services (181,994) Net cash used for operating activities (168,646)
Cash flows from noncapital financing activities
Transfers from other funds 65,000
Due to other funds (149,988)
Net cash used for noncapital
financing activities (84,988)
Cash flows from capital financing activities
Cash received from capital grant 1,291,075
Acquisition of capital assets (216,912)
Net cash provided by capital financing activities 1,074,163 Net change in cash and cash equivalents 820,529
Cash and cash equivalents, beginning of year -
Cash and cash equivalents, end of year 820,529 $
Reconciliation of operating income (loss) to
net cash used for operating activities
Operating income (loss) (1,643,627) $
Adjustments to reconcile operating income (loss) to
net cash used for operating activities:

Abandoned CIP 1,574,959
Depreciation expense 31,168
Decrease (Increase) in grants receivables 146
Increase (Decrease) in accounts payable (131,490)
Increase (Decrease) in unearned revenue 198
Net cash provided by (used for) operating activities (168,646) $

City of Twentynine Palms
Statement of Fiduciary Net Position
Fiduciary Fund – Private-Purpose Trust Fund
June 30, 2024
The accompanying notes are an integral part of these financial statements. ‐25-
Successor Agency
to the Twentynine
Palms Redevelopment
Agency
Assets
Current assets:

Cash and investments 649,530 $
Prepaid bond insurance 116,339
Total assets 765,869
Deferred outflows of resources
Deferred loss on refunding 1,539,676
Liabilities
Current liabilities:

Accounts payable and accrued expenses 3,630
Interest payable 150,467
Noncurrent liabilities:

Long-term liabilities, due within one year 400,000
Long-term liabilities, due beyond one year 10,354,304
Total liabilities 10,908,401
Net position
Net position (deficit) (8,602,856)
Total net position (deficit) (8,602,856) $

City of Twentynine Palms
Statement of Changes in Fiduciary Net Position
Fiduciary Fund – Private-Purpose Trust Fund
For the year ended June 30, 2024
The accompanying notes are an integral part of these financial statements. ‐26-
Successor Agency
to the Twentynine
Palms Redevelopment
Agency
Additions
Property taxes $ 915,800
Total additions 915,800
Deductions
Administrative expenses 100,013
Interest expense 550,679
Total deductions 650,692
Change in net position 265,108
Net position (deficit), beginning of year (8,867,964)
Net position (deficit), end of year (8,602,856) $

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City of Twentynine Palms
Notes to the Basic Financial Statements
For the year ended June 30, 2024
-27-
Note 1: Summary of significant accounting policies
The accounting policies of the City of Twentynine Palms (the City) conform to accounting principles generally accepted in the United States of America as applicable to governments. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for governmental accounting and financial reporting principles. The following is a summary of the significant accounting policies. (a) Reporting entity
The City was incorporated November 23, 1987, under the general laws of the State of California and enjoys all the rights and privileges pertaining to such "General Law" cities. The City is governed by a five member governing council with the mayor appointed by the council.

The Successor Agency of the Twentynine Palms Redevelopment Agency (Successor Agency) is considered a private purpose trust fund; it cannot be considered a component unit of the City. The Successor Agency took over all assets and liabilities of the former redevelopment agency. It is not included in the government-wide financial statements.

Upon dissolution of the former redevelopment agency, the City elected to serve as the successor Housing Agency and chose to retain the housing assets and functions previously performed by the low and moderate income housing fund of the former redevelopment agency. (b) Measurement focus and basis of accounting
Basis of presentation
The basic financial statements of the City have been prepared in conformity with accounting principles generally accepted in the United States of America. GASB is the accepted standard setting body for governmental accounting and financial reporting principles. These statements require that the financial statements described below be presented:

Government-wide financial statements
The government-wide financial statements (i.e., the Statement of Net Position and the Statement of Activities) report information on all of the nonfiduciary activities of the primary government (the City).

For the most part, the effect of inter-fund activity has been removed from these statements.

Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support.

The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the fiduciary fund (the private purpose trust fund) financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the providers have been met.

The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are expenses that are clearly identifiable with a specific program, project, function or segment. Program revenues of the City include: 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items that are properly not included among program revenues are reported instead as general revenues.

City of Twentynine Palms
Notes to the Basic Financial Statements
For the year ended June 30, 2024
-28-
Note 1: Summary of significant accounting policies (continued) (b) Measurement focus and basis of accounting (continued) Amounts paid to acquire capital assets are capitalized as assets in the government-wide financial statements, rather than reported as expenditures. Proceeds of long-term debt are recorded as a liability in the government-wide financial statements, rather than as other financing sources. Amounts paid to reduce long-term indebtedness of the reporting government are reported as a reduction of the related liability, rather than as expenditures.

Fund financial statements
Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary fund, even though the latter is excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. All remaining government funds are aggregated and reported as nonmajor funds.

Operating revenues in the proprietary funds are those revenues that are generated from the primary operations of the fund. All other revenues are reported as non-operating revenues. Operating expenses are those expenses that are essential to the primary operations of the fund. All other expenses are reported as non-operating expenses.

Governmental funds
Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collected within the current period or soon enough thereafter to pay liabilities of the current period, for this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. However, grant revenues are considered available within 6 months of the end of the current fiscal year. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due.

Property taxes, franchise taxes, intergovernmental revenues, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual, and are therefore recognized as revenues of the current fiscal period. Only the portion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the City.
(c) Fund classifications
The City reports the following major governmental funds:

General Fund - This fund is the government’s primary operating fund. It accounts for all financial resources of the City, except those required to be accounted for in another fund.

Tourism Business Improvement District Fund (TBID) - this fund was established in 2017 to levy and collect assessments on all businesses that are subject to the City’s Transient Occupancy Tax to raise funds for marketing the City as a tourism destination. The TBID is funded by 1.5% Visit 29! Tourism Fee and is managed by a TBID Advisory Board.

City of Twentynine Palms
Notes to the Basic Financial Statements
For the year ended June 30, 2024
-29-
Note 1: Summary of significant accounting policies (continued) (c) Fund classifications (continued)
Capital Improvements Capital Projects Fund - This fund accounts for all capital grants for the acquisition or construction of major capital items, other than CDBG monies.

The City’s fund structure also includes the following non-major fund types:

Special Revenue Funds - These funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditure for specific purposes.

Capital Projects Funds - Established to maintain capital projects reserves for the purpose of providing funding for the planning, construction, repair and rehabilitation of the City’s capital assets and to track the progress and expenditures in other capital projects of the City.

The City reports the following proprietary fund:

Sewer Fund - This fund accounts for the operation of the City’s sewer services.

Additionally, the City reports the following fiduciary fund types:

Private-Purpose Trust Fund - This fund accounts for the activities of the Successor Agency to the Twentynine Palms Redevelopment Agency. The fund’s primary purpose is to expedite the dissolution of the former Agency’s net position (except for the low and moderate housing funds net position) in accordance with ABx 1 26 and AB 1454.

As a general rule, the effect of inter-fund activity has been eliminated from the government-wide financial statements. Direct expenses have not been eliminated from the functional categories; indirect expenses and internal payments have been eliminated.

Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. (d) Cash and investments
The City pools cash and investments of all funds, except assets held by fiscal agents. Each fund’s share in this pool is displayed in the accompanying financial statements as cash and investments. Cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturity of three months or less from the date of acquisition. Investment income earned by the pooled investments is allocated to the various funds on each fund’s average cash and investment balance. Investments are reported in the accompanying financial statements at fair value. Changes in fair value that occur during a fiscal year are recognized as investment earnings reported for that fiscal year. Investment income includes interest earnings, changes in fair value, and any gains or losses realized upon the liquidation, maturity, or sale of an investment.

City of Twentynine Palms
Notes to the Basic Financial Statements
For the year ended June 30, 2024
-30-
Note 1: Summary of significant accounting policies (continued) (e) Receivables and payables
Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either "due to/from other funds" (i.e., the current portion of interfund loans) or "advances to/from other funds" (i.e., the noncurrent portion of inter-fund loans). All other outstanding balances between funds are reported as "due to/from other funds." Noncurrent portions of long-term inter-fund loan receivables are reported as advances and such amounts are offset equally by a fund balance classification which indicates that they do not constitute expendable available financial resources and therefore are not available for appropriation.

All trade and tax receivables are shown net of an allowance for uncollectible accounts if applicable, and estimated refunds due.
(f) Property taxes
Under California law, property taxes are assessed and collected by the counties up to one percent of assessed value plus other increases approved by the voters. The property taxes go into a pool, and are then allocated to the cities based on complex formulas. Accordingly, the City accrues only those taxes, which are received from the county within sixty days after year-end.

The following are the important dates relating to the City’s property taxes:

Lien date March 1
Levy date June 30
Due date November 1 and February 1
Collection dates December 10 and April 10
(g) Inventories
Inventories of material and supplies are carried at cost on an average cost basis. The City uses the consumption method of accounting for inventories.
(h) Prepaid items
Payments made to vendors for services that will benefit periods beyond June 30, 2024 are recorded as prepaid items and are offset equally by a fund balance reserve account which indicates that they do not constitute expendable available resources and therefore are not available for appropriation. (i) Capital assets
Capital assets, which include land, machinery and equipment (furniture, vehicles, computers, etc.), buildings and improvements, and infrastructure assets (street systems, storm drains, bridges, etc.), are reported in governmental activities column of the government-wide financial statements. Capital assets are defined by the City as non-infrastructure assets with an initial, individual cost of more than $5,000 and infrastructure assets with a total project cost of more than $50,000 with a useful life of at least three years. Such assets are capitalized at historical cost or estimated historical cost if purchased or constructed. Donated or annexed capital assets are recorded at acquisition value at the date acquired or annexed.

City of Twentynine Palms
Notes to the Basic Financial Statements
For the year ended June 30, 2024
-31-
Note 1: Summary of significant accounting policies (continued) (i) Capital assets (continued)
The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets’ lives are not capitalized. Depreciation is recorded in the government-wide financial statements on a straight-line basis over the useful life of the assets as follows:

Assets Years
Structures and improvements 40
Public domain infrastructure 50
System infrastructure 30
Vehicles 3 to 15
Other equipment and furnishings 3 to 20
Computer equipment 3 to 10
Periodic restoration and maintenance costs on particular items are charged to expense as incurred. (j) Claims and judgments
The City records a liability for litigation, judgments, and claims when it is probable that an asset has been impaired or a liability has been incurred prior to fiscal year end and the probable amount of loss (net of any insurance coverage) can be reasonably estimated. (k) Unearned revenue
In the government-wide financial statements and the fund financial statements, unearned revenue, represents cash advances by various entities that have not been spent; therefore, no revenue has been recognized.
(l) Net position and fund equity
In the government-wide financial statements and the fiduciary fund financial statements, net position is reported in three categories: net investment in capital assets, restricted net position; and unrestricted.

The restricted portion of net position represents net position restricted by parties outside of the City (such as creditors, grantors, contributors, and laws and regulations of other governments) and includes unspent proceeds of bonds issued to acquire or construct capital assets.

The City’s other restricted net position is temporarily restricted (ultimately expendable assets). All other net position is considered unrestricted.
(m) Estimates
The preparation of basic financial statements in conformity with accounting principles generally accepted in the United States of America require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses/expenditures during the reporting period. Actual results could differ from those estimates.

City of Twentynine Palms
Notes to the Basic Financial Statements
For the year ended June 30, 2024
-32-
Note 1: Summary of significant accounting policies (continued) (n) Deferred inflows and deferred outflows of resources Deferred outflows of resources represent a consumption of net assets that applies to future periods and are not considered assets as described by the statement. Deferred outflows of resources are required to be presented separately after assets on the statement of net position. Deferred inflows of resources represent an acquisition of net assets that applies to future periods and are not considered to be liabilities as described by the statement. Deferred inflows of resources are required to be presented separately after liabilities on the statement of net position. (o) Net position flow assumption
Sometimes the City will fund outlays for a particular purpose from both restricted (e.g., restricted bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted net position and unrestricted net position in the government-wide and proprietary fund financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the government’s policy to consider restricted net position to have been depleted before unrestricted net position is applied.
(p) Fund balance
Generally Accepted Accounting Principles (GAAP) require the following classifications of fund balance which describe the relative strength of the spending constraints placed on the purposes for which resources can be used:
 Non-spendable – amounts that are not in a spendable form (such as inventory) or are required to be maintained intact.
 Restricted – amounts constrained to specific purposes by their providers (such as grantors, bondholders and higher levels of government), through constitutional provisions or by enabling legislation.
 Committed – amounts constrained to specific purposes by a government itself, using the highest level of decision-making authority; to be reported as committed, amounts cannot be used for any other purpose unless the government takes the same highest level action to remove or change the constraint.
 Assigned – amounts a government intends to use for a specific purpose; intent can be expressed by the governing body or by an official or body to which the governing body delegates the authority.  Unassigned – amounts that are for any purpose; positive amounts are reported only in a general fund.

The City Council establishes (and modifies or rescinds) fund balance commitments by passage of a resolution. The City Manager has the authority, granted by the Council, to assign City resources. When both restricted and unrestricted resources are available for use when expenditure is incurred, it is the City’s policy to use restricted resources first, then unrestricted resources as they are needed. It is also the City’s policy to consider committed amounts as being reduced first, followed by assigned amounts and then unassigned amounts when expenditures are incurred for which amounts in any of those unrestricted fund balance classifications could be used.

City of Twentynine Palms
Notes to the Basic Financial Statements
For the year ended June 30, 2024
-33-
Note 1: Summary of significant accounting policies (continued) (q) Fund balance flow assumption
Sometimes the City will fund outlays for a particular purpose from both restricted and unrestricted resources (the total of committed, assigned, and unassigned fund balance). In order to calculate the amounts to report as restricted, committed, assigned, and unassigned fund balance in the governmental fund financial statements a flow assumption must be made about the order in which the resources are considered to be applied. It is the City’s policy to consider restricted fund balance to have been depleted before using any of the components of unrestricted fund balance. Further, when the components of unrestricted fund balance can be used for the same purpose, committed fund balance is depleted first, followed by assigned fund balance. Unassigned fund balance is applied last. (r) Pension plan
For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Plan and additions to/deductions from the Plan’s fiduciary net position have been determined on the same basis. For this purpose, benefit payments (including refunds of employee contributions) are recognized when currently due and payable in accordance with the benefit terms. Investments are reported at fair value.

GASB 68 requires that the reported results must pertain to liability and asset information within certain defined timeframes. For this report, the following timeframes are used.

Valuation Date June 30, 2022
Measurement Date June 30, 2023
Measurement Period July 1, 2022 to June 30, 2023
(s) Other Postemployment Benefits (OPEB)
For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the City’s plan (OPEB Plan) and additions to/deductions from the OPEB Plan’s fiduciary net position have been determined on the same basis. For this purpose, benefit payments (including refunds of employee contributions) are recognized when currently due and payable in accordance with the benefit terms.

Investments are reported at fair value.

GASB 75 requires that the reported results must pertain to liability and asset information within certain defined timeframes. For this report, the following time frames are used:

Valuation date June 30, 2023
Measurement date June 30, 2024
Measurement period July 1, 2023 to June 30, 2024
(t) Implementation of new pronouncement
For the year ended June 30, 2024, the financial statements include the adoption of GASB Statement No. 100 – Accounting Changes and Error Corrections. This Statement defines accounting changes as changes in accounting principles, changes in accounting estimates, and changes to or within the financial reporting entity and describes the transactions or other events that constitute those changes.

For additional information, refer to Note 17.

City of Twentynine Palms
Notes to the Basic Financial Statements
For the year ended June 30, 2024
-34-
Note 2: Stewardship, compliance and accountability
Appropriations limit
Under Article XIIIB of the California Constitution (the GANN Spending Limitation Initiative), the City is restricted as to the amount of annual appropriations from the proceeds of taxes, and if proceeds of taxes exceed allowed appropriations, the excess must either be refunded to the State Controller or returned to the taxpayers through revised tax rates, revised fee schedules or other refund arrangements. For the fiscal year ended June 30, 2024, proceeds of taxes did not exceed appropriations.

Continuing appropriations
The unexpected and unencumbered appropriations that are available and recommended for continuation are approved by the City Council for carryover to the following fiscal year. These commitments are reported as a reservation of fund balance.

Deficit fund balance
The following funds contained deficit fund balances:

Amount
Non Major Funds:

Community Development Block Grant Special Revenue Fund (14,000) $ Streets Capital Projects Fund (981,268)
Fund
Note 3: Cash and investments
Cash and investments as of June 30, 2024 are classified in the accompanying financial statements as follows:

Statement of Net Position
Cash and investments 19,208,417 $
Cash and investments with fiscal agent - restricted 654,517 Statement of Fiduciary Net Position
Cash and investments 649,530
Total cash and investments 20,512,464 $
Cash and investments as of June 30, 2024 consist of the following:

Deposits with financial institutions 2,148,310 $
Petty cash 950
Investments 18,363,204
Total cash and investments 20,512,464 $

City of Twentynine Palms
Notes to the Basic Financial Statements
For the year ended June 30, 2024
-35-
Note 3: Cash and investments (continued)
Investments authorized by the California Government Code and the City’s investment policy The table below identifies the investment types that are authorized for the City by the City’s investment policy. The table also identifies certain provisions of the California Government Code (or the City’s investment policy, where more restrictive) that address interest rate risk, credit risk, and concentration of credit risk.

Maximum Maximum
Maximum percentage investment
Authorized investments maturity of portfolio in issuer
U.S. Treasury obligations 5 years None None
U.S. Agency obligations 5 years None None
Negotiable certificates of deposit 5 years 30% 250,000 $ Certificates of deposit 5 years None 250,000 $
Checking or passbook savings N/A None None
Local Agency Investment Fund (LAIF) N/A None 75,000,000 $ Investments authorized by debt agreements
Investment of debt proceeds held by bond trustees are governed by provisions of the debt agreements, rather than the general provisions of the California Government Code or the City’s investment policy. The table below identifies the investment types that are authorized for investments held by the bond trustee.

The table also identifies certain provisions of these debt agreements that address interest rate risk, credit risk, and concentration of credit risk.

Maximum Maximum
Maximum percentage investment
Authorized investments maturity of portfolio in issuer
U.S. Treasury obligations None None None
U.S. Treasury securities None None None
Commercial paper None None None
Bankers' acceptances None None None
Municipal bonds or notes None None None
Investment agreements None None None
Obligations under IRS Section 103(a) None None None
Regulated investment companies None None None
Interest-bearing deposit accounts None None None
Corporate obligations None None None
Money market funds None None None
Local Agency Investment Fund (LAIF) None None 75,000,000 $ Interest rate risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the City manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations.

City of Twentynine Palms
Notes to the Basic Financial Statements
For the year ended June 30, 2024
-36-
Note 3: Cash and investments (continued)
Information about the sensitivity of the fair values of the City’s investments (including investments held by bond trustee) to market interest rate fluctuations is provided by the following table that shows the distribution of the City’s investments by maturity:

Amount 12 or less 13 to 24 25 to 60 More than 60
State investment pool 10,904,337 $ 10,904,337 $ - $ - $ - $ Certificates of deposit 5,275,274 499,674 726,701 4,048,899 - U.S. Treasury Securities 1,529,076 1,529,076 - - -
Held by bond trustee:

Federated institutional
tax-free cash trust 654,517 654,517 - - -
Total investments 18,363,204 $ 13,587,604 $ 726,701 $ 4,048,899 $ - $ Remaining maturity (in months)
Investment type
Investments with fair values highly sensitive to interest rate fluctuations The City has no investments (including investments held by bond trustees) that are highly sensitive to interest rate fluctuations (to a greater degree than already indicated in the information provided above).

Concentration of credit risk
The investment policy of the City contains no limitation on the amount that can be invested in any one issuer beyond that stipulated by the California Government Code. The City had no investments in any one issuer (other than U.S. Treasury securities, mutual funds, and external investment pools) that represent 5% or more of total City’s investments by reporting unit (primary government, governmental activities, business type activities, fiduciary funds, major funds, non-major funds in the aggregate, etc.).

Fair value measurements
Generally accepted accounting principles (GAAP), provides the framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurements).

City of Twentynine Palms
Notes to the Basic Financial Statements
For the year ended June 30, 2024
-37-
Note 3: Cash and investments (continued)
Fair value measurements (continued)
The three levels of the fair value hierarchy under GAAP are described as follows:

Level 1 Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the plan has the ability to access.

Level 2 Inputs to the valuation methodology include:
 quoted prices for similar assets or liabilities in active markets;  quoted prices for identical or similar assets or liabilities in inactive markets;
 inputs other than quoted prices that are observable for the asset or liability;
 inputs that are derived principally from or corroborated by observable market data by correlation or other means.
 If the asset or liability has a specified (contractual) term, the level 2 input must be observable for substantially the full term of the asset or liability.

Level 3 Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

The following is a description of the valuation methodologies used for assets measured at fair value.

Certificates of Deposits: These investments have a specified contractual term and value and a significant loss of principal could result if the investments are sold prior to maturity. These investments are priced using a matrix formula. Prices are estimates and the actual value you may obtain for the investments may be different if sold in the secondary market. These investments are classified as Level 2 in the hierarchy.

The preceding methods described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the City believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. There have been no changes in the methodologies used at June 30, 2024.

City of Twentynine Palms
Notes to the Basic Financial Statements
For the year ended June 30, 2024
-38-
Note 3: Cash and investments (continued)
Fair value measurements (continued)
The City has the following recurring fair value measurements as of June 30, 2024:

Total Level 1 Level 2 Level 3
Investments at fair value:

Certificates of deposit 5,275,274 $ - $ 5,275,274 $ - $ U.S. Treasury Securities 1,529,076 1,529,076 - -
Held by bond trustee:

Federated institutional
tax-free cash trust 654,517 654,517 - -
Total investments at fair value 2,183,593 $ 5,275,274 $ - $ Investments not subject to the fair value hierarchy:

State investment pool 10,904,337
Total investments 18,363,204 $
Investment type
Credit risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the minimum rating required by (where applicable) the California Government Code, the City’s investment policy, or debt agreement, and the actual rating as of the fiscal year end for each investment type.

Minimum
legal
Amount rating AA+ Not rated
State investment pool 10,904,337 $ N/A - $ 10,904,337 $ Certificates of deposit 5,275,274 N/A - 5,275,274
U.S. Treasury Securities 1,529,076 N/A - 1,529,076
Held by bond trustee:

Federated institutional
tax-free cash trust 654,517 Aaa 654,517 -
Total investments 18,363,204 $ 654,517 $ 17,708,687 $
Investment type
Rating as of year end

City of Twentynine Palms
Notes to the Basic Financial Statements
For the year ended June 30, 2024
-39-
Note 3: Cash and investments (continued)
Custodial credit risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party.

The California Government Code and the City’s investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits: The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The fair value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits.

As of June 30, 2024, none of the City’s deposits with financial institutions in excess of federal depository insurance limits were held in uncollateralized accounts. As of June 30, 2024, City’s investments in the following investment types were held by the same broker-dealer (counterparty) that was used by the City to buy the securities:

Amount
Federated institutional tax-free cash trust 654,517 $
Investment type
Investment in State investment pool
The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by the California Government Code under the oversight of the Treasurer of the State of California. The fair value of the City’s investment in this pool is reported in the accompanying financial statements at amounts based upon the City’s pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis.

City of Twentynine Palms
Notes to the Basic Financial Statements
For the year ended June 30, 2024
-40-
Note 4: Inter-fund activity
The following represents the inter-fund activity of the City for the fiscal year ended June 30, 2024:

Transfers
Amount
General Fund Nonmajor funds a 20,000
Capital Improvements - Major Capital Projects Fund General Fund b 399,298 Nonmajor funds General Fund c 7,838
Sewer Fund General Fund d 65,000
Total interfund transfers $ 492,136
Transfers in Transfers out
Significant transfers included in the accompanying financial statements are described as follows:
a. Transfer to the General Fund is for administrative costs incurred for administering the disbursing funds (e.g., Measure I, and Gas Tax). Disbursing funds receive money which are to be used to fund the activities in those funds, as well as admin costs. b. Transfer from the General Fund to Capital Projects Funds to assist with the funding of several capital projects.
c. Transfer from the General Fund to assist the receiving fund in covering costs incurred in the normal course of business.
d. Transfer to Sewer fund to subsidize the operating activities of the Sewer fund.

Due to/from other funds
Amount
General Nonmajor fund:

CDBG 48,504 $
SB-1 - Road Maintenance Rehab 22,137
Streets 1,041,749
Total interfund borrowing 1,112,390 $
Receivable fund Payable fund
Amounts due to/from other funds represent short-term borrowings to cover cash deficits on June 30, 2024.

Note 5: Lease receivable
As of June 30, 2024, the City had 4 active leases. The leases have receipts that range from $2,443 to $29,340 and interest rates that range from 0.3800% to 3.6790%. As of June 30, 2024, the total combined value of the lease receivable is $823,765, the total combined value of the short-term lease receivable is $25,314, and the combined value of the deferred inflow of resources is $800,096.

City of Twentynine Palms
Notes to the Basic Financial Statements
For the year ended June 30, 2024
-41-
Note 6: Capital assets
Capital assets for governmental activities for the fiscal year ended June 30, 2024 were as follows:

Beginning Ending
balance Additions Deletions balance
Governmental activities:

Capital assets, not being depreciated:

Land and improvements 5,304,219 $ - $ - $ 5,304,219 $
Right-of-Way 17,686 - - 17,686
Construction in progress 3,876,867 2,169,802 (1,424,878) 4,621,791 Total capital assets, not being
depreciated 9,198,772 2,169,802 (1,424,878) 9,943,696
Capital assets, being depreciated:

Building and improvements 24,735,960 96,237 (10,206) 24,821,991 Machinery and equipment 3,341,985 80,399 - 3,422,384
Office equipment 257,887 14,993 - 272,880
Vehicles 1,293,014 - - 1,293,014
Infrastructure 23,684,969 1,049,049 - 24,734,018
Right-to-use - leases for equipment 32,093 - - 32,093
Right-to-use - subscriptions 94,214 - - 94,214
Total capital assets, being
depreciated 53,440,122 1,240,678 (10,206) 54,670,594
Less accumulated depreciation for:

Building and improvements (3,519,309) (692,536) 3,968 (4,207,877) Machinery and equipment (2,143,166) (201,561) - (2,344,727) Office equipment (189,276) (15,074) - (204,350)
Vehicles (1,207,802) (28,621) - (1,236,423)
Infrastructure (9,740,499) (761,993) - (10,502,492)
Right-to-use - leases for equipment (4,058) (6,311) - (10,369) Right-to-use - subscriptions (13,749) (30,956) - (44,705) Total accumulated depreciation (16,817,859) (1,737,052) 3,968 (18,550,943) Total capital assets being depreciated, net 36,622,263 (496,374) (6,238) 36,119,651 Total capital assets, governmental activities 45,821,035 $ 1,673,428 $ (1,431,116) $ 46,063,347 $ Current year capital outlay accounts included certain project costs related to repairs, maintenance, and improvements that were not capitalized.

City of Twentynine Palms
Notes to the Basic Financial Statements
For the year ended June 30, 2024
-42-
Note 6: Capital assets (continued)
Capital assets for business-type activities for the fiscal year ended June 30, 2024, were as follows:

Beginning Ending
balance Additions Deletions balance
Business-type activities:

Capital assets, not being depreciated:

Construction in progress 1,844,475 $ 216,912 $ (1,574,959) $ 486,428 $ Total capital assets, not being
depreciated 1,844,475 216,912 (1,574,959) 486,428
Capital assets, being depreciated:

Infrastructure 935,035 - - 935,035
Total capital assets, being
depreciated 935,035 - - 935,035
Less accumulated depreciation for:

Infrastructure (31,167) (31,168) - (62,335)
Total accumulated depreciation (31,167) (31,168) - (62,335) Total capital assets being depreciated, net 903,868 (31,168) - 872,700 Total capital assets, business-type activities 2,748,343 $ 185,744 $ (1,574,959) $ 1,359,128 $ Construction in progress of $1,574,959 was abandoned and expensed for the year ended June 30, 2024, as the project was no longer viable.

Depreciation and amortization expense was charged to functions/programs of the primary government as follows:

Governmental
activities
General government 484,291 $
Public safety 710,085
Public works 224,286
Community development 120,438
Community services 197,952
Total depreciation and amortization expense 1,737,052 $

City of Twentynine Palms
Notes to the Basic Financial Statements
For the year ended June 30, 2024
-43-
Note 7: Long-term liabilities
Long-term liability activity of the City for the fiscal year ended June 30, 2024, was as follows:

Beginning Ending Due within
balance Additions Deletions balance one year
Direct borrowings:

Facility improvements loan $ - 1,185,555 $ (40,592) $ 1,144,963 $ 41,879 $ Lease liability - 28,231 (6,110) 22,121 6,231
Subscription liability - 62,149 (27,678) 34,471 20,329
Total long-term liabilities 1,275,935 $ - $ (74,380) $ 1,201,555 $ 68,439 $ Direct Borrowings - Facility improvements loan
On April 1, 2019, the City entered into an agreement to finance certain Energy Efficiency Projects under the Infrastructure State Revolving Fund Program (ISRF Program) in an amount not to exceed $1,300,000.

The proceeds of such obligation will be used to reimburse the City for expenditures incurred or paid prior to incurring the obligation (reimbursement basis). The loan has a term not to exceed 25 years, with an interest rate of 3.17%. The City financed the origination fee of 1.00% or $13,000 upon loan closing. In addition, the loan calls for additional annual payments in an amount equal to 0.3% of the outstanding principal, totaling $54,528 over the life of the loan. The remaining balance of the additional payments is presented in the table below. As of June 30, 2024, the outstanding principal balance of the loan was $1,144,963.

Estimated future debt service requirements are as follows:

Year ending
June 30, Principal
Additional
payments Interest
2025 41,879 $ 3,435 $ 35,632 $
2026 43,206 3,309 34,283
2027 44,576 3,180 32,892
2028 45,989 3,046 31,456
2029 47,447 2,908 29,975
2030-2034 260,772 12,312 125,965
2035-2039 304,810 8,145 81,230
2040-2044 356,284 3,273 28,940
Totals 1,144,963 $ 39,608 $ 400,372 $
Facility improvements loan

City of Twentynine Palms
Notes to the Basic Financial Statements
For the year ended June 30, 2024
-44-
Note 7: Long-term liabilities (continued)
Upon default, the Lessor or its assignee, in addition to all other rights and remedies it may have at law or in equity, shall have the option to terminate the Financing Lease on account of default by the City, notwithstanding any retaking of possession or re-letting of the leased asset. In the event of such termination, the City agreed to surrender immediately possession of the leased asset, without let or hindrance, and to pay the Lessor or its assignee all damages recoverable at law that the Lessor or its assignee may incur by reason of default by the City, including, without limitation, any costs, loss or damage whatsoever arising out of, in connection with, or incident to any such retaking possession of the leased asset. The City Hall was pledged as collateral for this loan. The Financing Lease and the interest of the City in the leased asset may not be assigned or encumbered by the City except as permitted by Section 2.04 of the Financing Lease.

Failure to comply with this provision constitutes an event of default.

Lease Liability
As of June 30, 2024, the City had 2 active leases. The leases have payments that range from $2,212 to $4,407 and interest rates that range from 1.0820% to 2.3100%. As of June 30, 2024, the total combined value of the lease liability is $22,121, the total combined value of the short-term lease liability is $6,231.

The combined value of the right to use asset, as of June 30, 2024 of $32,093 with accumulated amortization of $10,369 is included within the right-to-use – leases for equipment classification of capital assets, detailed at Note 6. Estimated future debt service requirements are as follows:

Year ending
June 30, Principal Interest Total
2025 6,231 $ 388 $ 6,619 $
2026 6,349 270 6,619
2027 5,547 150 5,697
2028 3,994 46 4,040
Totals 22,121 $ 854 $ 22,975 $
Lease liability
Subscription Liability
As of June 30, 2024, the City had 4 active subscriptions. The subscriptions have payments that range from $4,800 to $9,800 and interest rates that range from 2.4700% to 3.2380%. As of June 30, 2024, the total combined value of the subscription liability is $34,471, and the total combined value of the short-term subscription liability is $20,329. The combined value of the right to use asset, as of June 30, 2024 of $94,214 with accumulated amortization of $44,705 is included within the right-to-use – subscriptions classification of capital assets, detailed at Note 6. Estimated future debt service requirements are as follows:

Year ending
June 30, Principal Interest Total
2025 20,329 $ 1,071 $ 21,400 $
2026 14,142 458 14,600
Totals 34,471 $ 1,529 $ 36,000 $
Subscription liability
Long-term liabilities are generally liquidated by the General Fund.

City of Twentynine Palms
Notes to the Basic Financial Statements
For the year ended June 30, 2024
-45-
Note 8: Compensated absences
For governmental funds, accumulated vacation and sick leave benefits payable in future years when used by the City employees amounted to $493,929 at June 30, 2024. These amounts are payable from future resources and therefore have been recorded in long-term liabilities in the government-wide financial statements. Vacation benefits and sick leave are recorded as expenditures in the related governmental fund financial statements when used. Upon retirement or termination, the expenditures are recorded in the fund which incurred the original obligation. Compensated absences liabilities are generally liquidated by the General Fund. The following is a summary of changes in compensated absences for the year ended June 30, 2024:

Beginning Ending Due within
balance Net Change balance one year
Compensated absences:

Governmental funds 483,990 $ 9,939 $ 493,929 $ 98,786 $ Total compensated absences 483,990 $ 9,939 $ 493,929 $ 98,786 $ Note 9: Property held for resale
The City’s Redevelopment Agency had acquired property from the City as part of its primary purpose to develop unimproved properties. The Redevelopment Agency’s Capital Improvements Fund had carried the land at the lower of cost or estimated net realizable value which was $126,850 at June 30, 2012. As of February 1, 2012, the Agency ceased to exist, and the property was transferred to the Successor Agency.

The Successor Agency sold these four properties to the City.

The General Fund purchased the land for $93,963 as a part of the Lear traffic signal installation. The City intends to eventually sell the land.

Note 10: Successor Agency long-term debt
The debt of the Successor Agency as of June 30, 2024 is as follows:

Beginning Ending Due within
balance Additions Deletions balance one year
Tax Allocation Bonds:

Direct placements:
2018 Tax Allocation Refunding 11,375,000 $ - $ (390,000) $ 10,985,000 $ 400,000 $ Less deferred amounts:
2018 TARB (243,511) - 12,815 (230,696) -
Total bonds payable 11,131,489 $ - $ (377,185) $ 10,754,304 $ 400,000 $ Description

City of Twentynine Palms
Notes to the Basic Financial Statements
For the year ended June 30, 2024
-46-
Note 10: Successor Agency long-term debt (continued)
Future debt service requirements are as follows:

Year ending
June 30, Principal Interest
2025 400,000 $ 444,400 $
2026 410,000 429,969
2027 435,000 414,653
2028 450,000 398,613
2029 455,000 381,356
2030-2034 2,585,000 1,603,572
2035-2039 3,175,000 1,002,044
2040-2043 3,075,000 267,856
Totals 10,985,000 $ 4,942,463 $
2018 Tax Allocation Refunding Bonds
On April 19, 2011, the Twentynine Palms Redevelopment Agency (the Redevelopment Agency) issued its 2011 Tax Allocation Bonds, Series A and B (the Bonds) in order to fund the Redevelopment Agency’s Project Phoenix. Subsequently, on December 29, 2011, the California Supreme Court upheld Assembly Bill X1 26 that provided for the dissolution of all redevelopment agencies in the State of California as of February 1, 2012. Subsequent to December 29, 2011, the City and the Successor Agency to the Twentynine Palms Redevelopment Agency (the Successor Agency) entered into an agreement in which the City was to take over the responsibilities of overseeing the completion of Project Phoenix. Therefore, on June 29, 2012, the Successor Agency, in accordance with the above-mentioned agreement, transferred to the City the remaining proceeds of the Bonds in the amount of $11,034,138 in order for the City to commence with the project. The outstanding balance of the bonds was transferred to the Successor Agency on February 1, 2012, as part of the former Agency’s dissolution in accordance with AB X1 26 and AB 1484.

In accordance with the provisions of ABX 1 26 (Bill) and the California Supreme Court’s decision to uphold the Bill, the obligations of the former redevelopment agency became vested with the funds established for the successor agency upon the date of dissolution, February 1, 2012. Former tax increment revenues pledged to fund the debts of the former redevelopment agency will be distributed to the Successor Agency subject to the reapportionment of such revenues as provided by the Bill.

On June 6, 2018, the Successor Agency to the Redevelopment Agency issued its Tax Allocation Refunding Bonds, Series 2018 (Federally Taxable) to fully refund the former Redevelopment Agency’s 2011 Tax Allocation Bonds, Series A & B. The refunding resulted in significant annual savings by lowering the annual debt service payments. The balance of the refunding debt as of June 30, 2024, is $10,985,000.

The payments due under the indenture are secured primarily by a pledge of, security interest in and lien on Tax Revenues (as defined in the Indenture) allocated as described therein and payable on a parity with certain other obligations described in the indenture.

In the event of default, the Trustee may, or if requested in writing by the Owners of the majority in aggregate principal amount of the bonds then outstating, the Trustee shall, by written notice to the Successor Agency, (a) declare the principal of the bonds then outstanding, and the interest accrued thereon, to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable, and (b) upon receipt of indemnity to its satisfaction exercise any other remedies available to the Trustee and the Owners in law or at equity.

City of Twentynine Palms
Notes to the Basic Financial Statements
For the year ended June 30, 2024
-47-
Note 10: Successor Agency long-term debt (continued)
Under the indenture, the principal due on the bonds is subject to acceleration upon the occurrence of an Event of Default. If an Event of Default occurs under the Indenture, as practical matter, bond owners will be limited to enforcing the obligation of the Successor Agency to repay the bonds on an annual basis to the extent of the Tax Revenues. No real or personal property in the Project Area is pledged to secure the bonds, and it is not anticipated that the Successor Agency will have available monies sufficient to redeem all of the bonds upon occurrence of an Event of Default.

The Successor Agency submitted its so-called "Last and Final Recognized Obligation Payment Schedule" to its Oversight Board, which approved the submission on March 21, 2023. This alters the nature of the approval process for how the Successor Agency receives Tax Revenues to pay its financial obligations, including debt service on the Bonds. Essentially, the Successor Agency's currently Recognized Obligations, including debt service on the Bonds, will now be preapproved and the Successor Agency will no longer have to submit a ROPS on an annual basis as previously described herein. This process is expected to reduce costs and enable the Successor Agency to continue to receive Tax Revenues to pay its obligations in a timely manner. Please refer to California Department of Finance's website at https://dof.ca.gov/ for additional information.

Note 11: Pension Plan
A. General information about the Pension Plan
Plan description
All qualified permanent and probationary employees are eligible to participate in the Public Agency CostSharing Multiple-Employer Defined Benefit Pension Plan (Plan or PERF C) administered by the California Public Employees’ Retirement System (CalPERS.) The Plan consists of a miscellaneous pool and an inactive safety pool (also referred to as “risk pools”), which are comprised of individual employer miscellaneous and safety rate plans, respectively. Plan assets may be used to pay benefits for any employer rate plan of the safety and miscellaneous pools. Accordingly, rate plans within the safety or miscellaneous pools are not separate plans under generally accepted accounting principles. Individual employers may sponsor more than one rate plan in the miscellaneous or safety risk pools.

The City sponsors four rate plans (two miscellaneous and two inactive safety). In 2016, the City of Twentynine Palms accepted the Twentynine Palms Water District (Water District) PERS Pension Liability within the LAFCO (Local Agency Formation Commission) proceedings that transferred the fire responsibility from the Water District to the County of San Bernardino Fire District. As part of the financial obligation, the Water District not only obligated the Pension Liability but also transferred cash to offset the Liability held in a PARS (Public Agency Retirement System) account. This represents the two safety rates of the inactive plan (PEPRA and Miscellaneous Safety) provided by the City. Benefit provisions under the Plan are established by State statute and City’s resolution. CalPERS issues publicly available reports that include a full description of the pension plan regarding benefit provisions, assumptions and membership information that can be found on the CalPERS’ website, at www.calpers.ca.gov.

Benefits provided
CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full-time employment. Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for non-duty disability benefits after 5 years of service. The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost-of-living adjustments for each plan are applied as specified by the Public Employees’ Retirement Law.

City of Twentynine Palms
Notes to the Basic Financial Statements
For the year ended June 30, 2024
-48-
Note 11: Pension Plan
A. General information about the Pension Plan (continued) The Plan operates under the provisions of the California Public Employees’ Retirement Law (PERL), the California Public Employees’ Pension Reform Act of 2013 (PEPRA), and the regulations, procedures and policies adopted by the CalPERS Board of Administration. The Plan’s authority to establish and amend the benefit terms are set by the PERL and PEPRA, and may be amended by the California state legislature and in some cases require approval by the CalPERS Board.

The Plan’s provisions and benefits in effect at June 30, 2024 are summarized as follows:

Hire date
Prior to
January 1,
2013
On or after
January 1,
2013
Benefit formula 2.5 % @ 55 2% @ 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 % of eligible compensation 2.0% to 2.5% 1.0% to 2.5% Required employer contribution rates 14.06% 7.68%
Hire date
Prior to
January 1,
2013
Benefit formula 3% @55
Benefit vesting schedule 5 years service
Benefit payments monthly for life
Retirement age 50
Monthly benefits, as a % of eligible compensation 2.4% to 3.0% Required employer contribution rates 0.000%
Miscellaneous
Safety
Contributions
Section 20814(c) of the California Public Employees’ Retirement Law (PERL) requires that the employer contribution rates for all public employers are determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through CalPERS’ annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The employer is required to contribute the difference between 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 are classified as plan member contributions. Employer Contributions to the Plan for the fiscal year ended June 30, 2024, were $297,891 for the two miscellaneous plans and $3,442,406 for the payoff and termination of the two safety plans. The actual employer payments of $376,725 made to CalPERS by the City during the measurement period ended June 30, 2023, differed from the City’s proportionate share of the employer’s contributions of $946,371 by $569,646, which is being amortized over the expected average remaining service lifetime in the Public Agency Cost-Sharing Multiple Employer Plan.

City of Twentynine Palms
Notes to the Basic Financial Statements
For the year ended June 30, 2024
-49-
Note 11: Pension Plan (continued)
B. Net Pension Liability
The City’s net pension liability for the 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, 2023, using an annual actuarial valuation as of June 30, 2022 rolled forward to June 30, 2023 using standard update procedures.

A summary of principal assumptions and methods used to determine the net pension liability is as follows.

Actuarial Methods and Assumptions Used to Determine Total Pension Liability The collective total pension liability for the June 30, 2023 measurement period was determined by an actuarial valuation as of June 30, 2022, with update procedures used to roll forward the total pension liability to June 30, 2023. The collective total pension liability was based on the following assumptions:

Valuation Date June 30, 2022
Measurement Date June 30, 2023
Actuarial Cost Method Entry Age Actuarial Cost Method
Asset Valuation Method Fair Value of Assets
Actuarial Assumptions:

Discount Rate 6.90%
Inflation 2.30%
Salary Increases Varies by Entry Age and Service
Mortality Rate Table (1)
Post Retirement Benefit Increase
Derived using CALPERS' membership data for all funds
The lesser of contract COLA or 2.30% until Purchasing Power Protection Allowance floor on purchasing power applies, 2.30% thereafter.
(1) The mortality table used w as developed based on CalPERS-specific data. The probabilities of mortality are based on the 2021 CalPERS Experience Study and Review of Actuarial Assumptions. Mortality rates incorporate full generational mortality improvement using 80% of Scale MP-2020 published by the Society of Actuaries. For more details on this table, please refer to the 2021 experience study report from November 2021 that can be found on the CalPERS w ebsite.

The General Fund typically has been used in prior years to liquidate net pension liabilities.

Long-term expected rate of return
The long-term expected rate of return on pension plan investments was determined using a building-block method in which expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class.

In determining the long-term expected rate of return, CalPERS took into account both short-term and longterm market return expectations. Using historical returns of all of the funds’ asset classes, expected compound (geometric) returns were calculated over the next 20 years using a building-block approach. The expected rate of return was then adjusted to account for assumed administrative expenses of 10 Basis points.

City of Twentynine Palms
Notes to the Basic Financial Statements
For the year ended June 30, 2024
-50-
Note 11: Pension Plan (continued)
B. Net Pension Liability (continued)
The expected real rates of return by asset class are as follows:

Asset Class
Assumed
Asset
Allocation Real Return1,2
Global equity - cap-weighted 30.00% 4.54%
Global equity - non-cap-weighted 12.00% 3.84%
Private equity 13.00% 7.28%
Treasury 5.00% 0.27%
Mortgage-backed securities 5.00% 0.50%
Investment grade corporates 10.00% 1.56%
High yield 5.00% 2.27%
Emerging market debt 5.00% 2.48%
Private debt 5.00% 3.57%
Real assets 15.00% 3.21%
Leverage (5.00%) (0.59%)
2 Figures are based on the 2021 Asset Liability Management study. 1 An expected inflation of 2.30% used for this period.

Change of assumptions
There were no assumption changes in 2023. Effective with the June 30, 2021 valuation date (June 30, 2022 measurement date), the accounting discount rate was reduced from 7.15% to 6.90%. In determining the long-term expected rate of return, CalPERS took into account long-term market return expectations as well as the expected pension fund cash flows. In addition, demographic assumptions and the price inflation assumption were changed in accordance with the 2021 CalPERS Experience Study and Review of Actuarial Assumptions. The accounting discount rate was 7.15% for measurement dates June 30, 2017 through June 30, 2021, 7.65% for measurement dates June 30, 2015 through June 30, 2016, and 7.50% for measurement date June 30, 2014.

Discount rate
The discount rate used to measure the total pension liability for PERF C was 6.90%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

Subsequent events
There were no subsequent events that would materially affect the results presented in this disclosure.

City of Twentynine Palms
Notes to the Basic Financial Statements
For the year ended June 30, 2024
-51-
Note 11: Pension Plan (continued)
B. Net Pension Liability (continued)
Pension plan fiduciary net position
Information about the pension plan’s assets, deferred outflows of resources, liabilities, deferred inflows of resources, and fiduciary net position are presented in CalPERS’ audited financial statements, which are publicly available reports that can be obtained at CalPERS’ website, at www.calpers.ca.gov. The plan’s fiduciary net position and additions to/deductions from the plan’s fiduciary net position have been determined on the same basis used by the pension plan, which is the economic resources measurement focus and the accrual basis of accounting. Benefits and refunds are recognized when due and payable in accordance with the terms of the plan. Investments are reported at fair value.

C. Proportionate Share of Net Pension Liability
The following table shows the City’s proportionate share of the net pension liability over the measurement period.

Increase (Decrease)
Plan Total Pension
Liability
(a)
Plan Fiduciary Net
Position
(b)
Plan Net Pension
Liability (Asset)
(c ) = (a) - (b)
Balance at: 6/30/2022 (VD) 24,046,583 $ 22,165,253 $ 1,881,330 $ Balance at: 6/30/2023 (MD) 25,354,164 22,917,627 2,436,537 Net changes during 2022-23 1,307,581 752,374 555,207
Valuation Date (VD), Measurement Date (MD).

The City’s proportion of the net pension liability was determined by CalPERS using the output from the Actuarial Valuation System and the fiduciary net position, as provided in the CalPERS Public Agency CostSharing Allocation Methodology Report, which is a publicly available report that can be obtained at CalPERS’ website, at www.calpers.ca.gov. The City’s proportionate share of the net pension liability for the total Plan as of the June 30, 2022 and 2023 measurement dates was as follows:

Proportionate share of NPL - June 30, 2023 0.01629 %
Proportion share of NPL - June 30, 2024 0.01953 %
Change - Increase (Decrease) 0.00324 %
Sensitivity of the proportionate share of the net pension liability to changes in the discount rate The following presents the City’s proportionate share of the net pension liability of the Plan as of the measurement date, calculated using the discount rate of 6.9 percent, as well as what the net pension liability would be if it were calculated using a discount rate that is 1 percentage-point lower (5.9 percent) or 1 percentage-point higher (7.9 percent) than the current rate:

Discount Rate - 1%
(5.90%)
Current Discount
Rate (6.90%)
Discount Rate + 1%
(7.90%)
Plan's Net Pension
Liability/(Asset) - Misc. 4,466,889 $ 1,644,171 $ (679,170) $ Plan's Net Pension
Liability/(Asset) - Safety 1,407,371 792,366 289,556
Total $ 2,436,537 5,874,260 $ (389,614) $

City of Twentynine Palms
Notes to the Basic Financial Statements
For the year ended June 30, 2024
-52-
Note 11: Pension Plan (continued)
C. Proportionate Share of Net Pension Liability (continued) Amortization of deferred outflows and deferred inflows of resources Under GASB 68, gains and losses related to changes in total pension liability and fiduciary net position are recognized in pension expense systematically over time.

The first amortized amounts are recognized in pension expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to pensions and are to be recognized in future pension expense.

The amortization period differs depending on the source of the gain or loss:

Net difference between projected
and actual earnings on pension
plan investments
5 year straight-line amortization
All other amounts Straight-line amortization over the expected average remaining service lives (EARSL) of all members that are provided with benefits (active, inactive and retired) as of the beginning of the measurement period.

The expected average remaining service lifetime (EARSL) is calculated by dividing the total future service years by the total number of plan participants (active, inactive, and retired) in the Public Agency CostSharing Multiple-Employer Plan (PERF C).

The EARSL for PERF C for the measurement period ending June 30, 2023 is 3.8 years, which was obtained by dividing the total service years of 600,538 (the sum of remaining service lifetimes of the active employees) by 160,073 (the total number of participants: active, inactive, and retired) in PERF C. Inactive employees and retirees have remaining service lifetimes equal to 0. Total future service is based on the members’ probability of decrementing due to an event other than receiving a cash refund.

D. Pension Expense and Deferred Outflows and Deferred Inflows of Resources Related to Pensions
As of the start of the measurement period (July 1, 2022), the City’s net pension liability/(asset) was $1,881,330. For the measurement period ending June 30, 2023 (the measurement date), the City incurred a pension expense of $1,593,129.

City of Twentynine Palms
Notes to the Basic Financial Statements
For the year ended June 30, 2024
-53-
Note 11: Pension Plan (continued)
D. Pension Expense and Deferred Outflows and Deferred Inflows of Resources Related to Pensions (continued)
As of June 30, 2024, the City has deferred outflows and deferred inflows of resources related to pensions as follows:

Miscellaneous Deferred Outflows Deferred Inflows
of Resources of Resources
Changes of assumptions 99,266 $ - $
Differences between expected and actual experience 83,993 13,029 Differences between projected and actual investment earnings 266,206 - Differences between employer's contributions
and proportionate share of contributions - 778,577
Change in employer's proportion 1,515,361 -
Pension contributions made subsequent to measurement date 297,891 - Totals 2,262,717 $ 791,606 $
Safety Deferred Outflows Deferred Inflows
of Resources of Resources
Changes of assumptions 46,244 $ - $
Differences between expected and actual experience 58,174 4,980 Differences between projected and actual investment earnings 108,435 - Differences between employer's contributions
and proportionate share of contributions - 195,994
Change in employer's proportion 167,030 -
Pension contributions made subsequent to measurement date 3,442,406 - Totals 3,822,289 $ 200,974 $
The amounts above are net of outflows and inflows recognized in the 2022-23 measurement period expense. Contributions subsequent to the measurement date of $3,740,297 reported with deferred outflows of resources will be recognized as a reduction of the net pension liability in the upcoming fiscal year. Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in future pension expense as follows:

Fiscal year ending
June 30: Miscellaneous Safety Total
2025 629,806 $ 64,292 $ 694,098 $
2026 389,739 41,651 431,390
2027 146,038 69,939 215,977
2028 7,637 3,027 10,664
2029 - - -
Thereafter - - -
$ 178,909 1,173,220 $ 1,352,129 $
E. Payable to the Pension Plan
At June 30, 2024, the City reported a payable of $-0- for the outstanding amount of contributions to the pension plan required for the year then ended.

City of Twentynine Palms
Notes to the Basic Financial Statements
For the year ended June 30, 2024
-54-
Note 12: Other post-employment benefits (OPEB)
Plan description
The City has established a Retiree Healthcare Plan (OPEB Plan), and participates in an agent multipleemployer defined benefit retiree healthcare plan. The City pays the first $500 per month for each current employee hired before 9/1/2017; employees hired on or after 9/1/17 receive only the PEMHCA minimum.

Retired employees are eligible for the same plans as active employees, subject to Medicare supplement for those who qualify. The City currently pays 500 per month toward each retiree’s premiums for those hired before 9/1/17. The City does not issue a financial report for the plan. A separate financial report is not prepared for the OPEB Plan.

Employees covered
As of the June 30, 2023 actuarial valuation, the following current and former employees were covered by the benefit terms under the OPEB Plan:

Active employees 39
Inactive employees or beneficiaries currently receiving benefits 25 Total 64
Contributions
The contribution requirements of plan members and the City are established and may be amended by the City. The City contributes 100% of the retiree and dependent up to the maximum of cost of $500 per month.

For the fiscal year ended June 30, 2024, the City’s did not make any cash contributions to the trust. In Fiscal Year 2010, the City created a California Employer’s Retiree Benefit Trust (CERBT) with California Public Employees Retirement System (CalPERS) for the purpose of prefunding obligations for past services. The City terminated the contract with CalPERS in November 2021 and transferred assets to an OPEB trust held with PARS.

Net OPEB Liability
The City’s net OPEB liability was based on an actuarial valuation as of June 30, 2023, and a measurement date of June 30, 2024. The Total OPEB Liability was determined using an actuarial valuation as of June 30, 2023, using the following actuarial assumptions:

Discount Rate 5.75%
Inflation 2.50%
Salary Increases 2.75%
Investment Rate of Return 5.75%
Mortality Rate Pre-retirement mortality rates were based on the 2021 CalPERS Retiree Mortality for All Employees table created by CalPERS Healthcare Trend Rate 4.00%
Actuarial Assumptions:

City of Twentynine Palms
Notes to the Basic Financial Statements
For the year ended June 30, 2024
-55-
Note 12: Other post-employment benefits (OPEB) (continued) Net OPEB Liability (continued)
The long-term expected rate of return (LTROR) on OPEB plan investments was determined by CERBT using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of OPEB plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The table below provides the long-term expected real rates of return by asset class (based on published capital market assumptions):

Asset Class
Percentage of
Portfolio
Assumed Gross
Return
All Domestic Equities 50% 7.25%
All Fixed Income 45% 4.25%
Short-Term Gov't Fixed 5% 3.00%
Total 100%
The General Fund typically has been used in prior years to liquidate net OPEB liabilities.

Discount rate
The discount rate reflects a 5.75% per year net of expenses. This is based on assumed long-term return on employer assets using the “Building Block Method”. The assessment of long-term returns for employer assets is based on long-term historical returns for surplus funds invested pursuant to California Government Code Sections 53601 et seq.

Change of assumptions
There were no changes in assumptions in the current valuation.

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City of Twentynine Palms
Notes to the Basic Financial Statements
For the year ended June 30, 2024
-56-
Note 12: Other post-employment benefits (OPEB) (continued) Changes in the OPEB Liability
The changes in the net OPEB liability for the OPEB Plan are as follows:

Total OPEB
Liability (a)
Plan Fiduciary
Net Position (b)
Net OPEB
Liability/(Asset)
(c)= (a) - (b)
Balance at June 30, 2023
(Measurement Date June 30, 2023) 2,364,929 $ 2,382,786 $ (17,857) $ Changes recognized for the
measurement period:

Service Cost 53,508 - 53,508
Interest on the total OPEB
liability/return on FNP 132,136 280,291 (148,155)
Adjustments - - -
Changes in assumptions - - -
Differences between projected
and actual investments - - -
Plan experience differences 1,021 - 1,021
Contributions - employer - 188,338 (188,338)
Benefit payments (188,338) (188,338) -
Investment expense - - -
Administrative expenses - (14,349) 14,349
Net Changes 265,942 (1,673) (267,615)
Balance at June 30, 2024
(Measurement Date June 30, 2024) 2,363,256 $ 2,648,728 $ (285,472) $ Sensitivity of the Net OPEB Liability to changes in the discount rate The following presents the net OPEB liability of the City if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate, for measurement period ended June 30, 2024:

Current
1% Decrease Discount Rate 1% Increase

4.75% 5.75% 6.75%
Net OPEB Liability/(Asset) (55,530) $ (285,472) $ (481,073) $ Sensitivity of the Net OPEB Liability to changes in the health care cost trend rates The following presents the net OPEB liability of the City if it were calculated using health care cost trend rates that are one percentage point lower or one percentage point higher than the current rate, for measurement period ended June 30, 2024:

Current Healthcare
1% Decrease Cost Trend Rates 1% Increase
Net OPEB Liability/(Asset) (362,612) $ (285,472) $ (195,877) $

City of Twentynine Palms
Notes to the Basic Financial Statements
For the year ended June 30, 2024
-57-
Note 12: Other post-employment benefits (OPEB) (continued) Sensitivity of the Net OPEB Liability to changes in the health care cost trend rates (continued) Gains and losses related to changes in total OPEB liability and fiduciary net position are recognized in OPEB expense systematically over time. Amounts are first recognized in OPEB expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to OPEB and are to be recognized in future OPEB expense. The recognition period differs depending on the source of the gain or loss.

Recognition of deferred outflows and deferred inflows of resources Net difference between projected and 5 years
actual earnings on OPEB plan
investments
All other amounts Expected average remaining service
lifetime (EARSL) (7.4 Years at June 30, 2024)
OPEB plan fiduciary net position
PARS issues a publicly available financial report that may be obtained from the Public Agency Retirement Services, 4350 Von Karman Ave, Newport Beach, CA 92660.

OPEB expense related to OPEB
For the fiscal year ended June 30, 2024, the City recognized OPEB credit of $434,959. As of fiscal year, ended June 30, 2024, the City reported deferred outflows of resources related to OPEB from the following sources:

Deferred Deferred
Outflows Inflows
of Resources of Resources
Changes of assumptions 72,195 $ 411,389 $
Differences between expected
and actual experience 26,429 25,285
Net difference between projected and actual earnings on OPEB plan investments - 34,163
Total 98,624 $ 470,837 $
Other amounts reported as deferred outflows and inflows of resources related to OPEB will be recognized as expense as follows:

Fiscal Year Ended
June 30:

Deferred (Inflows) of
Resources
2025 (373,545) $
2026 43,632
2027 (28,179)
2028 (20,152)
2029 9,153
Thereafter: (3,122)
$ (372,213)

City of Twentynine Palms
Notes to the Basic Financial Statements
For the year ended June 30, 2024
-58-
Note 13: Jointly controlled government
On October 16, 1989, the Morongo Basin Transit Authority (the Authority) was created as a joint powers agency by the County of San Bernardino, the City of Twentynine Palms, and the Town of Yucca Valley.

The system will provide transit services in the City and certain surrounding areas of the Morongo Basin as a means of meeting the transit needs of various transit-dependent groups within the area. The system is primarily funded by Article 8 funds. The City has an ongoing responsibility for providing funding on an annual basis for operating costs of the Authority, but the City has no equity interest in, or claim to the assets of, the Authority.

Summarized audited financial information of the Morongo Basin Transit Authority for the year ended June 30, 2023, is as follows:

Current assets 9,396,670 $
Noncurrent assets 4,808,955
Total assets 14,205,625
Deferred outflows of resources 1,291,910
Total liabilities 7,258,634
Deferred inflows of resources 2,252,409
Total net position $ 5,986,492
Operating revenue 452,126 $
Operating expenses (6,139,374)
Operating loss (5,687,248)
Non-operating revenue 4,217,513
Net loss before contributed capital (1,469,735)
Contributed capital 597,388
Change in net position $ (872,347)
The financial statements can be obtained from the Authority at 62405 Verbena Road, Joshua Tree, CA 92252.

City of Twentynine Palms
Notes to the Basic Financial Statements
For the year ended June 30, 2024
-59-
Note 14: Risk management
The City of Twentynine Palms (the City) is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters for which the Member Entity obtains insurance coverage.

The City is a member of the Public Agency Risk Sharing Authority of California-PARSAC (Authority), a joint powers authority, which provides joint protection programs for public entities covering automobile, general liability, errors and omission losses, workers’ compensation, and property claims. Under the program, the City has a $10,000 retention limit similar to a deductible with the Authority being responsible for losses above that amount up to $1 million. The Authority has additional coverage of $49 million in excess of its $1 million retention limit through affiliated risk management authorities. The Authority also provides one billion dollars aggregate per occurrence property coverage to its members with such coverage provided by purchased insurance.

Liabilities of the City are reported when it is probable that a loss has occurred, and the amount of the loss can be reasonably estimated. Liabilities include an amount for claims that have been incurred but not reported (IBNRs). The result of the process to estimate the claims liability is not an exact amount as it depends on many complex factors, such as inflation, changes in legal doctrines, and damage awards.

Accordingly, claims are reevaluated periodically to consider the effects of economic and social factors. The estimate of the claims liability also includes amounts for incremental claim adjustment expenses related to specific claims and other claim adjustment expenses regardless of whether allocated to specific claims.

Estimated recoveries, for example from salvage or subrogation, are another component of the claim’s liability estimate.

The Authority covers workers’ compensation claims up to its self-insurance limit of $500,000. The Local Agency Workers Compensation Excess Pool provides excess coverage to statutory limits. The City pays an annual premium to the Authority and may share in any surplus revenues or may be required to pay additional assessments based upon the Authority’s operating results. Financial statements of the Public Agency Risk Sharing Authority of California (PARSAC) may be obtained from its administrative office located at 2330 E. Bidwell Street, Suite 150, Folsom, California, 95630; www.cira-jpa.org or by calling (916) 927 - 7727.

Liability for uninsured claims
The City estimates its liability for the uninsured portion of claims, including a provision for claims incurred but not reported, based on claims experience. Estimated incurred but not reported claims liabilities in the following table are not material to the City and are therefore not accrued in the financial statements. Claims activity for the year ended June 30, 2024 and the two previous years was as follows:

Current year
claims and
Fiscal year Beginning changes in Actual claim End of
ended June 30, of year estimates payments year
2022 18,779 $ 39,774 $ (27,110) $ 31,443 $
2023 31,443 22,300 (5,211) 48,532
2024 48,532 100,787 (26,366) 122,953

City of Twentynine Palms
Notes to the Basic Financial Statements
For the year ended June 30, 2024
-60-
Note 14: Risk management (continued)
At June 30, 2024, total estimated claims payable is held in unassigned fund balances in the General Fund with an amount equal to $122,953. The City retains a risk of loss due to the fact there is a deductible per occurrence and that actual losses may exceed estimated claims or coverage amounts. The City pays an annual premium to the PARSAC and may share in any surplus revenues or may be required to pay additional assessments based upon the PARSAC operating results.

There was no significant reduction in insurance coverage by major categories of risk from the fiscal year ended June 30, 2023 to the fiscal year ended June 30, 2024. Furthermore, there was no settlement which exceeded the insurance coverage for the past three fiscal years.

Note 15: Commitments and contingencies
Litigation
The City is involved as a defendant in various legal proceedings. While it is not feasible to predict or determine the outcome in these cases, it is the opinion of the City that the outcome will have no material adverse effect on the financial position of the City.

Grants
The City has received State and Federal funds for specific purposes that are subject to audit by the grantor agencies. Although such audits could generate expenditure disallowances under the terms of the grants, it is believed that any required reimbursements will not be material.

Note 16: Governmental fund balances
The specific purposes/functions for fund balances classified as non-spendable, restricted, committed, assigned, and unassigned, as of June 30, 2024, are displayed below:

Special Revenue Capital Projects Total
Tourism Business Nonmajor Total
Improvement Capital Governmental Governmental
General District Improvements Funds Funds
Nonspendable:

Land held for resale 93,963 $ - $ - $ - $ 93,963 $
Restricted for:

Public safety 431,729 - - 232,167 663,896
Public works - - - 2,613,276 2,613,276
Community development - - - 1,169,797 1,169,797
Economic development - 608,269 - - 608,269
Assigned:

Navigation center 32,010 - - - 32,010
Portable showers 15,000 - - - 15,000
Risk Management Activities 49,972 - - - 49,972
Community Event Activities 50,000 - - - 50,000
Animal control shelter project 250,000 - - - 250,000
Public works - - 3,604,426 784,271 4,388,697
Unassigned 11,103,632 - - (995,268) 10,108,364
Total fund balances (deficit) 12,026,306 $ 608,269 $ 3,604,426 $ 3,804,243 $ 20,043,244 $

City of Twentynine Palms
Notes to the Basic Financial Statements
For the year ended June 30, 2024
-61-
Note 17: Prior period restatement
As a result of the implementation of GASB 100, as described in Note 1, the City is required to restate its June 30, 2023 governmental funds’ fund balance, as well as governmental activities net position. The Community Development Block Grant Fund and ARPA Fund were previously reported as major funds, and qualified as nonmajor for the year ending June 30, 2024. This qualifies as a change to or within the financial reporting entity, under the guidance of GASB 100.

Community
Development Block
Grant ARPA
Total Nonmajor
Governmental
Funds
Fund balance, beginning of year, as previously reported 77 $ - $ 4,616,153 $ Change from major to nonmajor fund (77) - 77
Fund balance, beginning of year, as restated - $ - $ 4,616,230 $ In addition, various accounts changed classification in the current year. Reclassifications include $565,703 in current year Community Service expenditures that were previously classified as $530,139 in Public Works; and $1,847 in Economic Development expenditures that were previously classified as $11,894 in Community Development. The Recycling nonmajor special revenue fund previously reported $58,054 of health and sanitation expenditures; however, this classification has been eliminated in the current year and consolidated with public safety. Note that the amounts of these classification changes may differ slightly at the government-wide expense function due to allocations of items such as depreciation expense.

Lastly, $27,713 of other revenues in the government-wide Statement of Activities were previously classified as $27,241 charges for services within the public safety function. Fund balance, changes in fund balance, net position and changes in net position were not affected by these reclassifications.

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REQUIRED SUPPLEMENTARY INFORMATION

This page left blank intentionally.

City of Twentynine Palms
Required Supplementary Information
Budgetary Comparison Schedule
General Fund
For the year ended June 30, 2024
-62-
Actual Variance with
Original Final amounts final budget
Revenues
Taxes 11,187,025 $ 11,369,846 $ 12,327,631 $ 957,785 $
Licenses, permits and fees 885,575 885,575 837,545 (48,030) Intergovernmental 328,908 358,908 347,613 (11,295)
Charges for services 437,145 453,285 543,801 90,516
Fines, forfeitures and penalties 16,000 16,000 27,108 11,108 Use of money and property 70,000 120,000 609,363 489,363 Other 146,690 181,995 178,099 (3,896)
Total revenues 13,071,343 13,385,609 14,871,160 1,485,551 Expenditures
Current:

General government 4,667,781 4,572,753 4,160,955 411,798 Public safety 6,538,405 6,565,474 6,547,218 18,256
Public works 325,016 393,715 317,543 76,172
Community development 1,176,448 1,206,118 1,052,892 153,226 Economic development 15,625 14,625 1,847 12,778
Community services 1,846,516 1,910,675 1,813,683 96,992 Debt service
Principal 90,147 79,149 70,018 9,131
Interest 52,602 36,939 38,734 (1,795)
Total expenditures 14,712,540 14,779,448 14,002,890 776,558 Excess (deficiency) of revenues
over (under) expenditures (1,641,197) (1,393,839) 868,270 2,262,109 Other financing sources (uses)
Transfers in 20,000 20,000 20,000 -
Transfers out (334,089) (467,556) (472,136) (4,580)
Total other financing sources (uses) (314,089) (447,556) (452,136) (4,580) Net change in fund balance (1,955,286) $ (1,841,395) $ 416,134 2,257,529 $ Fund balance, beginning of year 11,610,172
Fund balance, end of year 12,026,306 $
Budgeted amounts

City of Twentynine Palms
Required Supplementary Information
Budgetary Comparison Schedule
Tourism Business Improvement District Special Revenue Fund For the year ended June 30, 2024
-63-
Actual Variance with
Original Final amounts final budget
Revenues
Licenses, permits and fees 315,000 $ 350,000 $ 372,895 $ 22,895 $ Use of money and property 500 1,000 29,225 28,225
Other 4,000 4,000 1,149 (2,851)
Total revenues 319,500 355,000 403,269 48,269
Expenditures
Current:

Economic development 366,784 503,430 434,556 68,874
Total expenditures 366,784 503,430 434,556 68,874
Net change in fund balance (47,284) $ (148,430) $ (31,287) 117,143 $ Fund balance, beginning of year 639,556
Fund balance, end of year 608,269 $
Budgeted amounts

City of Twentynine Palms
Required Supplementary Information Schedule of the City’s Proportionate Share of the Plan’s Net Pension Liability and Related Ratios as of the Measurement Date Last 10 Years -64-
Measurement Date
Employer's
Proportion of the
Collective Net
Pension
Liability/(Asset)1
Employer's
Proportionate
Share of the
Collective Net
Pension
Liability/(Asset) Covered Payroll
Employer's
Proportionate
Share of the
Collective Net
Pension
Liability/(Asset) as
a percentage of the
Covered Payroll
Pension Plan's
Fiduciary Net Position as a
percentage of the
Total Pension
Liability/(Asset)
6/30/2014 0.102% 2,530,753 $ 1,829,632 $ 138.32% 77.53%6/30/2015 0.074% 2,515,772 1,882,894 133.61% 82.58%6/30/2016 0.081% 2,904,210 1,948,280 149.07% 81.00%6/30/2017 0.085% 3,474,126 2,006,275 173.16% 80.10%6/30/2018 0.001% 70,807 2,191,491 3.23% 99.62%6/30/2019 0.005% 506,204 2,310,926 21.90% 97.46%6/30/2020 0.007% 793,186 2,342,734 33.86% 96.23%6/30/2021 0.003% (2,192,059) 2,239,339 -97.89% 109.75%6/30/2022 0.057% 1,881,330 2,533,623 74.25% 92.18%6/30/2023 0.003% 2,436,537 2,802,498 86.94% 90.39% 1 Proportion of the net pension liability represents the plan's proportion of PERF C, which includes both the Miscellaneous and Safety Risk Pools excluding the 1959 Survivors Risk Pool.

City of Twentynine Palms
Required Supplementary Information Schedule of Plan Contributions Last 10 Years -65-
Fiscal Year
Actuarially
Determined
Contribution
Contributions in Relation
to the Actuarially
Determined Contribution
Contribution
Deficiency
(Excess) Covered Payroll
Contributions as a
Percentage of
Covered Payroll
6/30/2015 327,005 $ (1,327,005) $ (1,000,000) $ 1,882,894 $ 17.37% 6/30/2016 278,084 (278,084) - 1,948,280 14.27%
6/30/2017 302,837 (302,837) - 2,006,275 15.09%
6/30/2018 331,853 (3,434,678) (3,102,825) 2,191,491 15.14% 6/30/2019 388,590 (388,590) - 2,310,926 16.82%
6/30/2020 317,991 (317,991) - 2,342,734 13.57%
6/30/2021 262,161 (262,161) - 2,239,339 11.71%
6/30/2022 311,225 (311,225) - 2,533,623 12.28%
6/30/2023 376,725 (376,725) - 2,802,498 13.44%
6/30/2024 297,891 (3,740,297) (3,442,406) 3,092,715 9.63% * Measurement date 6/30/2014 (fiscal year 2015) was the first year of implementation. Additional years will be presented as information becomes available.

Notes to Schedule:Changes in Benefit Terms: There were no changes to benefit terms that applied to all members of the Public Agency Pool. Additionally, the figuresabove do not include any liability impact that may have resulted from Golden Handshakes that occurred after the June 30, 2021 valuation date,unless the liability impact is deemed to be material to the Public Agency Pool.Changes in Assumptions: Effective with the June 30, 2021 valuation date (2022 measurement date), the accounting discount rate was reduced from7.15% to 6.90%. In determining the long-term expected rate of return, CalPERS took into account long-term market return expectations as well asthe expected pension fund cash flows. Projected returns for all asset classes are estimated, combined with risk estimates, and are used to projectcompound (geometric) returns over the long term. The discount rate used to discount liabilities was informed by the long-term projected portfolioreturn. In addition, demographic assumptions and the inflation rate assumption were changed in accordance with the 2021 CalPERS ExperienceStudy and Review of Actuarial Assumptions.There were no assumption changes for 2021. For 2020, the Plan adopted a new amortization policyeffective with the 2019 actuarial valuation. The new amortization policy shortens the period over which actuarial gains and losses are amortized fro m
30 years to 20 years with the payments computed as a level dollar amount. In addition, the new policy does not utilize a five-year ramp-up and rampdown on UAL bases attributable to assumption changes and non-investment gains/losses. The new policy also does not utilize a five-year rampdown on investment gains/losses. These changes apply only to new UAL bases established on or after June 30, 2019. There were no changes in assumptions in 2019. In 2018, demographic assumptions and inflation rate were changed in accordance to the CalPERS Experience Study andReview of Actuarial Assumptions December 2017. There were no changes in the discount rate in 2019. In 2017, the accounting discount rate wasreduced from 7.65 percent to 7.15 percent. In 2016, there were no changes in the discount rate. In 2015, amounts reported reflect an adjustment ofthe discount rate from 7.5 percent (net of administrative expense) to 7.65 percent (without a reduction for pension plan administrative expense). In

City of Twentynine Palms
Required Supplementary Information Schedule of Changes in the Net OPEB Liability and Related Ratios Last Ten Years* -66-
2017 2018 2020 (1) 2021 2022 2023 2024
Total OPEB LiabilityService Cost $ 326,274 313,725 $ 57,138 $ 58,852 $ 47,520 $ 53,743 $ 53,508 $ Interest on the Total OPEB Liability 162,816 178,572 237,641 132,377 138,014 133,281 132,136Adjustments - - 190,379 - - - -Actual and expected experience difference - - 12,104 49,018 (2,215) (31,507) 1,021Changes in assumptions - (1,142,700) (1,879,505) (65,346) 104,420 9,789 -Benefit payments (72,988) (92,484) (145,291) (150,740) (181,613) (182,885) (188,338)Net change in Total OPEB Liability (730,338) 403,553 (1,527,534) 24,161 106,126 (17,579) (1,673)Total OPEB Liability - beginning 4,510,093 4,106,540 3,779,755 2,252,221 2,276,382 2,382,508 2,364,929Total OPEB Liability - ending (a) 3,779,755 4,510,093 2,252,221 2,276,382 2,382,508 2,364,929 2,363,256Plan Fiduciary Net PositionContributions - employer 197,988 217,484 270,291 150,740 67,584 182,885 188,338Net investment income 96,920 96,935 120,137 297,985 (250,791) 166,880 280,291Adjustments - - 250,431 - - - - Differences between projected and actual investments - - (8,018) 130,475 - - -Benefit payments (72,988) (92,484) (145,291) (150,740) (181,613) (182,885) (188,338)Investment expenses - - (756) - - - -Administrative expenses (1,189) (1,406) (1,034) (2,040) (8,068) (13,231) (14,349)Net change in Plan Fiduciary Net Position 220,529 220,731 485,760 426,420 (372,888) 153,649 265,942Plan Fiduciary Net Position - beginning 1,469,316 1,248,585 1,689,845 2,175,605 2,602,025 2,229,137 2,382,786Plan Fiduciary Net Position - ending (b) 1,689,845 1,469,316 2,175,605 2,602,025 2,229,137 2,382,786 2,648,728Net OPEB Liability (Asset) - ending (a) - (b) $ 2,089,910 3,040,777 $ 76,616 $ (325,643) $ 153,371 $ (17,857) $ (285,472) $ Plan fiduciary net position as a percentage of the total OPEB liability 32.58% 44.71% 96.60% 87.49% 93.56% 100.76% 112.08%Covered-employee payroll 2,006,275 $ 2,191,491 $ 2,342,733 $ 2,239,339 $ 2,533,623 $ 2,802,498 $ 3,092,715 $ Net OPEB liability (asset) as a percentage of covered-employee payroll 151.56% 95.36% 3.27% -14.54% 6.05% -0.64% -9.23%Notes to Schedule:Contributions are fixed and not based on a measure of pay, therefore covered-employee payroll is used in the schedule. * Measurement date 6/30/2017 (fiscal year 2018) was the first year of implementation. Additional years will be presented as information becomes available.(1) This reconciliation covers the one-year period from the June 30, 2019 reporting date to the June 30, 2020 reporting date. This was a one-time change concurrent with the change in actuarial firms from one reporting period to the next. As a result of this change, the plan's measurement period will henceforth coincide with its reporting period.

Measurement Date

City of Twentynine Palms
Required Supplementary Information Schedule of OPEB Contributions Last Ten Years* -67-
2017 2018 2019 2020 2021 2022 2023 2024
Statutorily Required Contributions (SRC) 197,988 $ 217,484 $ 217,484 $ 270,291 $ 150,740 $ 67,584 $ 182,885 $ 188,338 $ Contributions in relation to the SRC (197,988) (217,484) (217,484) (270,291) (150,740) (67,584) (182,885) (188,338)Contribution deficiency/(excess) - $ - $ - $ - $ - $ - $ - $ - $ Covered-employee payroll 2,006,275 $ 2,191,491 $ 2,310,926 $ 2,342,733 $ 2,239,339 $ 2,533,623 $ 2,802,498 $ 3,092,715 $ Contribution as a percentage of covered-employee payroll 9.87% 9.92% 9.41% 11.54% 6.73% 2.67% 6.53% 6.09%Notes to schedule:Changes in assumptions: NoneMethods and assumptions used to determine contributions:Valuation Date: June 30, 2023Actuarial Cost MethodAsset Valuation Method5 Year Assets SmoothingSalary Increases2.75%Investment Rate of Return5.75%Retirement AgeThe retirement assumptions are based on the 2021 CalPERS 2.0%@62 and 2.5%@55 Rates for Miscellaneous Employees table created by CalPERS.MortalityThe mortality assumptions are based on the 2021 CalPERS Retiree Mortality for All Employees table created by CalPERS * Measurement date 6/30/2017 (fiscal year 2018) was the first year of implementation. Additional years will be presented as information becomes available.Entry Age Normal Fiscal Year

City of Twentynine Palms
Notes to Required Supplementary Information
For the year ended June 30, 2024
-68-
Note 1: Budgetary data
Revenues and expenditures accounted for in the governmental funds are controlled by a formal integrated budgetary accounting system in accordance with various legal requirements which govern the City’s operations.

Each year, the City Council adopts a budget, which provides for the general operations of the City. Budgets have been adopted on a basis consistent with accounting principles generally accepted in the United States of America (GAAP) for nearly all governmental funds. The City Manager is required to prepare and submit to the City Council the annual budget of the City and administer it after adoption.

The legal level of budgetary control is at the fund level. Once the budget has been adopted, the City Manager or his/her designee is authorized to transfer appropriations between accounts within each fund as long as the total adopted budget allocation of that fund is not exceeded. Transfers from fund to fund require approval of the City Council, if not approved in the budget. Budgeted amounts are as originally adopted and as further amended by City Council, on a basis consistent with accounting principles generally accepted in the United States of America (GAAP).

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OTHER SUPPLEMENTARY INFORMATION

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City of Twentynine Palms
Description of Funds
‐69-
Special revenue funds:

Special revenue funds are used to account for special revenues and the related expenditures, which are legally required to be kept in a separate fund.

Traffic Safety Fund - this fund accounts for the portion of traffic fines allocated to the City. Periodically, transfers are made to the General Fund to be used for safety-related programs.

Gas Tax - this fund accounts for monies received from the state that are earmarked for street repairs.

Lighting and Landscape A.D. Fund - this fund accounts for funds received for the maintenance of the perimeter landscaping from all houses in a new subdivision.

Public Access Programming Fund - this fund accounts for 1% of the Fee Base per the agreement from Charter Communication to provide public access programming.

Recycling Fund - this fund accounts for funds received for the recycling, waste management, and abatement programs.

Measure I 2011 Fund - this fund was created in fiscal year 2010-2011 to account for the City’s portion of funds designated for various transportation and street repair needs.

Article 8 Fund - this fund accounts for the City’s portion of funds designated for various transportation and street repair needs. Starting in FY 2021-22, the City will no longer receive Article 8 funding.

Traffic Relief Fund - this fund accounts for the City’s portion of funds designated for various transportation and street repair needs.

SB1 - Road Maintenance Rehab - this fund accounts for monies received from the state that are earmarked for street repairs.

Community Development Block Grant – this fund is used to track the activities of the funding provided by the U.S. Department of Housing and Urban Development under the Community Development Block Grant for projects within the City.

Capital Project Funds:

Capital project funds are used to account for the improvements undertaken by the City, funded by loans from other funds of the City, grants, or bond proceeds.

Curb, Gutter, & Sidewalks Impact Fee Fund – this fund accounts for the collection of impact fees related to the construction of curbs, gutters and sidewalks.

Streets Fund – this fund accounts for streets projects funded by Major Local Highway Funds received from SBCTA, Cal-Trans, or other State Funds.

City Bond Proceeds - This fund accounts for the 2018 TARB bond proceeds to be used for certain development projects within the City.

City of Twentynine Palms
Combining Balance Sheet
Nonmajor Funds
June 30, 2024
‐70-
Traffic Safety Gas Tax
Lighting and
Landscape
A.D.

Assets
Cash and investments - $ 135,397 $ 86,407 $
Cash and investments with
fiscal agents - restricted - - -
Receivables:

Intergovernmental - - -
Taxes - 62,443 -
Interest - 1,370 897
Grants - - -
Other - - 455
Total assets - $ 199,210 $ 87,759 $
Liabilities and fund balances
Liabilities:
accrued liabilities - $ 8,731 $ 942 $
Due to other funds - - -
Unearned revenue - - -
Total liabilities - 8,731 942
Deferred inflows of resources:

Unavailable revenue - - -
Total deferred inflows of resources - - -
Fund balances:

Restricted for:

Public safety - - -
Public works - 190,479 86,817
Community development - - -
Assigned - - -
Unassigned - - -
Total fund balances (deficit) - 190,479 86,817
Total liabilities and fund balances - $ 199,210 $ 87,759 $ Accounts payable and
Special Revenue

(Continued)
‐71-
Public Access
Programming Recycling
Measure I
2011 Article 8
$ 286,406 71,401 $ 2,122,374 $ - $
- - - -
54,074 - - -
- - 109,228 -
1,937 725 21,422 -
- - - -
- 4,679 - -
$ 342,417 76,805 $ 2,253,024 $ - $
$ 35,009 - $ 13,627 $ - $
- - - -
75,241 - - -
110,250 - 13,627 -
- - - -
- - - -
232,167 - - -
- - 2,239,397 -
- 76,805 - -
- - - -
- - - -
232,167 76,805 2,239,397 -
$ 342,417 76,805 $ 2,253,024 - $
Special Revenue

City of Twentynine Palms
Combining Balance Sheet
Nonmajor Funds
June 30, 2024
‐72-
Traffic Relief
SB 1 - Road
Maintenance
Rehab
Community
Development
Block Grant
(Formerly major)
Assets
Cash and investments - $ - $ - $
Cash and investments with
fiscal agents - restricted - - -
Receivables:

Intergovernmental - - -
Taxes - 118,399 -
Interest - 321 -
Grants - - 48,504
Other - - -
Total assets - $ 118,720 $ 48,504 $
Liabilities and fund balances
Liabilities:
accrued liabilities - $ - $ - $
Due to other funds - 22,137 48,504
Unearned revenue - - -
Total liabilities - 22,137 48,504
Deferred inflows of resources:

Unavailable revenue - - 14,000
Total deferred inflows of resources - - 14,000
Fund balances:

Restricted for:

Public safety - - -
Public works - 96,583 -
Community development - - -
Assigned - - -
Unassigned - - (14,000)
Total fund balances (deficit) - 96,583 (14,000)
Total liabilities and fund balances - $ 118,720 $ 48,504 $ Accounts payable and
Special Revenue

‐73-
Curb, Gutter &
Sidewalks Impact
Fee Streets
City Bond
Proceeds
Total
Nonmajor
Governmental
Funds
$ - 802,363 $ 435,734 $ 3,940,082 $
- - 654,517 654,517
- - - 54,074
- - - 290,070
- 8,030 4,435 39,137
1,096,362 - - 1,144,866
- - - 5,134
$ 1,096,362 810,393 $ 1,094,686 $ 6,127,880 $
$ 54,614 26,122 $ 1,694 $ 140,739 $
1,041,749 - - 1,112,390
- - - 75,241
1,096,363 26,122 1,694 1,328,370
981,267 - - 995,267
981,267 - - 995,267
- - - 232,167
- - - 2,613,276
- - 1,092,992 1,169,797
- 784,271 - 784,271
(981,268) - - (995,268)
(981,268) 784,271 1,092,992 3,804,243
$ 1,096,362 810,393 $ 1,094,686 $ 6,127,880 $
Capital Projects

City of Twentynine Palms
Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Funds
For the year ended June 30, 2024
‐74-
Traffic Safety Gas Tax
Lighting and
Landscape
A.D.

Revenues
Taxes - $ 725,690 $ - $
Licenses, permits and fees - - -
Intergovernmental - - -
Charges for services - - 21,059
Fines, forfeitures and penalties 606 - -
Use of money and property - 9,833 4,343
Other - - -
Total revenues 606 735,523 25,402
Expenditures
Current:

General government - - -
Public safety - - -
Public works - 782,453 27,360
Community development - - -
Community services - - -
Debt service
Principal - - -
Interest - - -
Capital outlay - - -
Total expenditures - 782,453 27,360
Excess (deficiency) of revenues
over (under) expenditures 606 (46,930) (1,958)
Other financing sources (uses)
Transfers in 7,838 - -
Transfers out - (10,000) -
Total other financing sources (uses) 7,838 (10,000) -
Net change in fund balances 8,444 (56,930) (1,958)
Fund balance (deficit) beginnin of year, as previously reported (8,444) 247,409 88,775 Change within financial reproting entity (major to nonmajor) - - - Fund balances (deficit), beginning of year, as restated 247,409 (8,444) 88,775 Fund balances (deficit), end of year - $ 190,479 $ 86,817 $ Special Revenue

(Continued)
‐75-
Public Access
Programming Recycling Measure I 2011 Article 8
$ - - $ 600,090 $ - $
- - - -
104,689 - - -
- - - -
- - - -
9,763 3,606 97,713 729
- 19,303 - -
114,452 22,909 697,803 729
- 19,378 - -
93,131 - - -
- - 265,166 24,827
- - - -
- - - -
4,362 - - -
438 - - -
- - 82,168 -
97,931 19,378 347,334 24,827
16,521 3,531 350,469 (24,098)
- - - -
- - (10,000) -
- - (10,000) -
16,521 3,531 340,469 (24,098)
215,646 73,274 1,898,928 24,098
- - - -
215,646 73,274 1,898,928 24,098
$ 232,167 76,805 $ 2,239,397 $ - $
Special Revenue

City of Twentynine Palms
Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Funds
For the year ended June 30, 2024
-76-
Traffic Relief
SB 1 - Road
Maintenance
Rehab
Community
Development
Block Grant
(Formerly major)
Revenues
Taxes - $ 679,370 $ - $
Licenses, permits and fees - - -
Intergovernmental - - 111,962
Charges for services - - -
Fines, forfeitures and penalties - - -
Use of money and property 6 9,279 -
Other - - -
Total revenues 6 688,649 111,962
Expenditures
Current:

General government - - -
Public safety - - -
Public works 323 679,730 -
Community development - - -
Community services - - 37,462
Debt service
Principal - - -
Interest - - -
Capital outlay - - 88,577
Total expenditures 323 679,730 126,039
Excess (deficiency) of revenues
over (under) expenditures (317) 8,919 (14,077)
Other financing sources (uses)
Transfers in - - -
Transfers out - - -
Total other financing sources (uses) - - -
Net change in fund balances (317) 8,919 (14,077)
Fund balance (deficit) beginnin of year, as previously reported 317 87,664 - Change within financial reproting entity (major to nonmajor) - - 77 Fund balances (deficit), beginning of year, as restated 87,664 317 77 Fund balances (deficit), end of year - $ 96,583 $ (14,000) $ Special Revenue

-77-
Curb, Gutter &
Sidewalks
Impact Fee Streets
City Bond
Proceeds
Total
Nonmajor
Governmental
Funds
$ - - $ - $ 2,005,150 $
- 34,711 - 34,711
171,248 - - 387,899
- - - 21,059
- - - 606
- 42,141 43,953 221,366
- - - 19,303
171,248 76,852 43,953 2,690,094
- - - 19,378
- - - 93,131
- - - 1,779,859
- - 73,384 73,384
- - - 37,462
- - - 4,362
- - - 438
1,140,099 171,051 10 1,481,905
1,140,099 171,051 73,394 3,489,919
(968,851) (94,199) (29,441) (799,825)
- - - 7,838
- - - (20,000)
- - - (12,162)
(968,851) (94,199) (29,441) (811,987)
(12,417) 878,470 1,122,433 4,616,153
- - - 77
(12,417) 878,470 1,122,433 4,616,230
$ (981,268) 784,271 $ 1,092,992 $ 3,804,243 $
Capital Projects

City of Twentynine Palms
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Traffic Safety Special Revenue Fund
For the year ended June 30, 2024
-78-
Actual Variance with
Original Final amounts final budget
Revenues
Fines, forfeitures and penalties - $ 605 $ 606 $ 1 $
Total revenues - 605 606 1
Expenditures
Total expenditures - - - -
Excess (deficiency) of revenues
over (under) expenditures - 605 606 1
Other financing sources (uses)
Transfers in - 8,000 7,838 (162)
Total other financing sources (uses) - 8,000 7,838 (162) Net change in fund balance - $ 8,605 $ 8,444 (161) $
Fund balance, (deficit) beginning of year (8,444)
Fund balance, (deficit) end of year - $
Budgeted amounts

City of Twentynine Palms
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Gas Tax Special Revenue Fund
For the year ended June 30, 2024
-79-
Actual Variance with
Original Final amounts final budget
Revenues
Taxes 754,114 $ 718,661 $ 725,690 $ 7,029 $
Use of money and property - 8,000 9,833 1,833
Total revenues 754,114 726,661 735,523 8,862
Expenditures
Current:

Public works 770,822 857,063 782,453 74,610
Total expenditures 770,822 857,063 782,453 74,610
Excess (deficiency) of revenues
over (under) expenditures (16,708) (130,402) (46,930) 83,472 Other financing sources (uses)
Transfers out (10,000) (10,000) (10,000) -
Total other financing sources (uses) (10,000) (10,000) (10,000) - Net change in fund balance (26,708) $ (140,402) $ (56,930) 83,472 $ Fund balance, beginning of year 247,409
Fund balance, end of year 190,479 $
Budgeted amounts
.

City of Twentynine Palms
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Lighting and Landscape A.D. Special Revenue Fund
For the year ended June 30, 2024
-80-
Actual Variance with
Original Final amounts final budget
Revenues
Charges for services 22,527 $ 22,527 $ 21,059 $ (1,468) $ Use of money and property - 1,820 4,343 2,523
Total revenues 22,527 24,347 25,402 1,055
Expenditures
Current:

Public works 33,030 33,280 27,360 5,920
Total expenditures 33,030 33,280 27,360 5,920
Net change in fund balance (10,503) $ (8,933) $ (1,958) 6,975 $ Fund balance, beginning of year 88,775
Fund balance, end of year 86,817 $
Budgeted amounts
.

City of Twentynine Palms
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Public Access Programming Special Revenue Fund
For the year ended June 30, 2024
-81-
Actual Variance with
Original Final amounts final budget
Revenues
Use of money and property - $ 1,500 $ 3,606 $ 2,106 $
Other 24,000 24,000 19,303 (4,697)
Total revenues 24,000 25,500 22,909 (2,591)
Expenditures
Current:

General government 49,438 52,088 19,378 32,710
Total expenditures 49,438 52,088 19,378 32,710
Net change in fund balance (25,438) $ (26,588) $ 3,531 30,119 $ Fund balance, beginning of year 73,274
Fund balance, end of year 76,805 $
Budgeted amounts

City of Twentynine Palms
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Recycling Special Revenue Fund
For the year ended June 30, 2024
-82-
Actual Variance with
Original Final amounts final budget
Revenues
Intergovernmental 94,037 $ 94,037 $ 104,689 $ 10,652 $
Use of money and property - 4,500 9,763 5,263
Total revenues 94,037 98,537 114,452 15,915
Expenditures
Current:

Public safety 146,564 146,564 93,131 53,433
Total expenditures 146,564 146,564 97,931 48,633
Net change in fund balance (52,527) $ (48,027) $ 16,521 64,548 $ Fund balance, beginning of year 215,646
Fund balance, end of year 232,167 $
Budgeted amounts

City of Twentynine Palms
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Measure I 2011 Special Revenue Fund
For the year ended June 30, 2024
-83-
Actual Variance with
Original Final amounts final budget
Revenues
Taxes 617,736 $ 617,736 $ 600,090 $ (17,646) $
Use of money and property - 40,000 97,713 57,713
Total revenues 617,736 657,736 697,803 40,067
Expenditures
Current:

Public works 406,000 398,500 265,166 133,334
Capital outlay 1,250,975 1,267,662 82,168 1,185,494
Total expenditures 1,656,975 1,666,162 347,334 1,318,828 Excess (deficiency) of revenues
over (under) expenditures (1,039,239) (1,008,426) 350,469 1,358,895 Other financing sources (uses)
Transfers out (10,000) (10,000) (10,000) -
Total other financing sources (uses) (10,000) (10,000) (10,000) - Net change in fund balance (1,049,239) $ (1,018,426) $ 340,469 1,358,895 $ Fund balance, beginning of year 1,898,928
Fund balance, end of year 2,239,397 $
Budgeted amounts

City of Twentynine Palms
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Article 8 Special Revenue Fund
For the year ended June 30, 2024
-84-
Actual Variance with
Original Final amounts final budget
Revenues
Use of money and property - $ 500 $ 729 $ 229 $
Total revenues - 500 729 229
Expenditures
Current:

Public works 21,000 28,000 24,827 3,173
Total expenditures 21,000 28,000 24,827 3,173
Net change in fund balance (21,000) $ (27,500) $ (24,098) 3,402 $ Fund balance, beginning of year 24,098
Fund balance, end of year $ -
Budgeted amounts

City of Twentynine Palms
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Traffic Relief Special Revenue Fund
For the year ended June 30, 2024
-85-
Actual Variance with
Original Final amounts final budget
Revenues
Use of money and property - $ 6 $ 6 $ - $
Total revenues - 6 6 -
Expenditures
Current:

Public works - 323 323 -
Total expenditures - 323 323 -
Net change in fund balance - $ (317) $ (317) - $
Fund balance, beginning of year 317
Fund balance, end of year $ -
Budgeted amounts

City of Twentynine Palms
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual SB 1 - Road Maintenance Rehab Special Revenue Fund
For the year ended June 30, 2024
-86-
Actual Variance with
Original Final amounts final budget
Revenues
Taxes 670,851 $ 630,288 $ 679,370 $ 49,082 $
Use of money and property - 4,500 9,279 4,779
Total revenues 670,851 634,788 688,649 53,861
Expenditures
Current:

Public works 681,750 670,851 679,730 (8,879)
Total expenditures 681,750 670,851 679,730 (8,879)
Net change in fund balance (10,899) $ (36,063) $ 8,919 44,982 $ Fund balance, beginning of year 87,664
Fund balance, end of year 96,583 $
Budgeted amounts

City of Twentynine Palms
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Community Development Block Grant Special Revenue Fund
For the year ended June 30, 2024
-87-
Actual Variance with
Original Final amounts final budget
Revenues
Intergovernmental 160,078 $ 160,078 $ 111,962 $ (48,116) $ Total revenues 160,078 160,078 111,962 (48,116)
Expenditures
Current:

Community services - - 37,462 (37,462)
Capital outlay 160,078 160,078 88,577 71,501
Total expenditures 160,078 160,078 126,039 34,039
Net change in fund balance - $ - $ (14,077) (14,077) $
Fund balance, beginning of year 77
Fund balance (deficit), end of year (14,000) $
Budgeted amounts

City of Twentynine Palms
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Capital Improvements Capital Projects Fund – Major Fund For the year ended June 30, 2024
-88-
Actual Variance with
Original Final amounts final budget
Revenues
Intergovernmental 3,479,926 $ 3,591,797 $ 136,755 $ (3,455,042) $ Other 350,000 - - -
Total revenues 3,829,926 3,591,797 136,755 (3,455,042)
Expenditures
Current:

Capital outlay 6,714,227 7,008,282 809,241 6,199,041
Total expenditures 6,714,227 7,008,282 809,241 6,199,041 Excess (deficiency) of revenues
over (under) expenditures (2,884,301) (3,416,485) (672,486) 2,743,999 Other financing sources (uses)
Transfers in 270,000 395,320 399,298 3,978
Total other financing sources (uses) 270,000 395,320 399,298 3,978 Net change in fund balance (2,614,301) $ (3,021,165) $ (273,188) 2,747,977 $ Fund balance, beginning of year, as restated 3,877,614
Fund balance, end of year 3,604,426 $
Budgeted amounts

City of Twentynine Palms
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Curb, Gutter, & Sidewalk Impact Fee Capital Projects Fund For the year ended June 30, 2024
-89-
Actual Variance with
Original Final amounts final budget
Revenues
Licenses, permits and fees 120,000 $ 120,000 $ 34,711 $ (85,289) $ Use of money and property 2,500 2,500 42,141 39,641
Total revenues 122,500 122,500 76,852 (45,648)
Expenditures
Current:

Capital outlay 400,962 400,962 171,051 229,911
Total expenditures 400,962 400,962 171,051 229,911
Net change in fund balance (278,462) $ (278,462) $ (94,199) 184,263 $ Fund balance, beginning of year 878,470
Fund balance, end of year 784,271 $
Budgeted amounts

City of Twentynine Palms
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Streets Capital Projects Fund
For the year ended June 30, 2024
-90-
Actual Variance with
Original Final amounts final budget
Revenues
Intergovernmental 7,063,350 $ 6,583,089 $ 171,248 $ (6,411,841) $ Total revenues 7,063,350 6,583,089 171,248 (6,411,841)
Expenditures
Current:

Capital outlay 7,063,350 6,583,089 1,140,099 5,442,990
Total expenditures 7,063,350 6,583,089 1,140,099 5,442,990 Net change in fund balance - $ - $ (968,851) (968,851) $ Fund balance (deficit), beginning of year (12,417)
Fund balance (deficit), end of year (981,268) $
Budgeted amounts

City of Twentynine Palms
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual City Bonds Proceeds Capital Projects Fund
For the year ended June 30, 2024
-91-
Actual Variance with
Original Final amounts final budget
Revenues
Use of money and property - $ 10 $ 43,953 $ 43,943 $
Total revenues - 10 43,953 43,943
Expenditures
Current:

Community development - 81,500 73,384 8,116
Capital outlay - 10 10 -
Total expenditures - 81,510 73,394 8,116
Net change in fund balance - $ (81,500) $ (29,441) 52,059 $ Fund balance, beginning of year, as restated 1,122,433
Fund balance, end of year 1,092,992 $
Budgeted amounts

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STATISTICAL SECTION

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City of Twentynine Palms

Statistical Section
For the year ended June 30, 2024
‐92‐
This part of the City’s comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City’s overall financial health.

PAGE
Financial trend information:

Intended to assist users in understanding and assessing how a government’s financial position has changed over time. 93
Revenue capacity information:

Intended to assist users in understanding and assessing the factors affecting a government’s ability to generate its own revenue.

Debt capacity information:

Intended to assist users in understanding and assessing a government’s debt burden and its ability to issue additional debt.

Demographic and economic information:

Intended to assist users in understanding the socioeconomic environment within which a government operates and to provide information that facilitates comparison of financial statement information over time and among governments.

Operating information:

Intended to provide information about a government’s operations and resources in order to assist readers in using financial information to understand and assess a government’s economic condition.

Statistical section memo:

This section includes miscellaneous information regarding the statistical information. 99 107
112
113
117

City of Twentynine Palms
Net Position by Component
Last Ten Fiscal Years
(accrual basis of accounting)
-93-
2015 2016 2017 2018 2019
Governmental activities:

Net investment in
capital assets 24,982,095 $ 25,289,476 $ 25,570,868 $ 25,182,407 $ 24,577,166 $ Restricted for:

Public safety 573,199 111,737 383,926 287,250 59,140
Streets, highways, etc. 4,391,078 2,879,535 1,737,290 1,348,879 3,295,513 Community development 10,939,744 10,475,971 9,159,551 7,796,791 7,355,824 Economic development - - - - -
Health and sanitation - - - - -
Community services - - - - -
Unrestricted 7,419,328 8,451,620 8,984,900 8,104,479 7,191,979 Total governmental activities
net position 48,305,444 $ 47,208,339 $ 45,836,535 $ 42,719,806 $ 42,479,622 $ Business-type activities:

Net investment in
capital assets - $ - $ - $ - $ - $
Unrestricted - - - - -
Total business-type activities:
net position - $ - $ - $ - $ - $
Primary Government:

Net investment in
capital assets 24,982,095 $ 25,289,476 $ 25,570,868 $ 25,182,407 $ 24,577,166 $ Restricted for:

Public safety 573,199 111,737 383,926 287,250 59,140
Streets, highways, etc. 4,391,078 2,879,535 1,737,290 1,348,879 3,295,513 Community development 10,939,744 10,475,971 9,159,551 7,796,791 7,355,824 Economic development - - - - -
Health and sanitation - - - - -
Community services - - - - -
Unrestricted 7,419,328 8,451,620 8,984,900 8,104,479 7,191,979 Total primary government
net position 48,305,444 $ 47,208,339 $ 45,836,535 $ 42,719,806 $ 42,479,622 $ Fiscal Year
Source: City of Twentynine Palms, Finance Department

-94-
2020 2021 2022 2023 2024
Governmental activities:

Net investment in
capital assets 25,593,799 $ 31,856,477 $ 38,345,205 $ 44,406,583 $ 44,861,792 $ Restricted for:

Public safety 59,704 21,925 - 406,426 663,896
Streets, highways, etc. 4,866,518 4,090,554 2,084,121 2,347,191 2,613,276 Community development 7,240,136 5,168,824 1,347,973 1,195,707 1,169,797 Economic development - - 504,591 639,556 608,269
Health and sanitation - - 223,527 215,646 -
Community services - - - 77 -
Unrestricted 5,801,220 5,638,921 17,339,463 15,464,488 18,062,755 Total governmental activities
net position 43,561,377 $ 46,776,701 $ 59,844,880 $ 64,675,674 $ 67,979,785 $ Business-type activities:

Net investment in
capital assets - $ 923,579 $ 1,478,017 $ 2,748,343 $ 1,359,128 $ Unrestricted 603,592 (194,125) 93,245 444,028 802,901
Total business-type activities:
net position 603,592 $ 729,454 $ 1,571,262 $ 3,192,371 $ 2,162,029 $ Primary Government:

Net investment in
capital assets 25,593,799 $ 32,780,056 $ 39,823,222 $ 47,154,926 $ 46,220,920 $ Restricted for:

Public safety 59,704 21,925 - 406,426 663,896
Streets, highways, etc. 4,866,518 4,090,554 2,084,121 2,347,191 2,613,276 Community development 7,240,136 5,168,824 1,347,973 1,195,707 1,169,797 Economic development - - 504,591 639,556 608,269
Health and sanitation - - 223,527 215,646 -
Community services - - - 77 -
Unrestricted 6,404,812 5,444,796 17,432,708 15,908,516 18,865,656 Total primary government
net position 44,164,969 $ 47,506,155 $ 61,416,142 $ 67,868,045 $ 70,141,814 $ Fiscal Year

City of Twentynine Palms
Changes in Net Position
Last Ten Fiscal Years
(accrual basis of accounting)
-95-
2015 2016 2017 2018 2019
Expenses
Governmental activities:

General government 2,708,000 $ 1,609,010 $ 2,162,115 $ 4,930,008 $ 2,915,204 $ Public safety 3,862,568 4,104,813 4,864,815 4,345,660 5,653,861 Public works 2,076,929 2,583,689 3,261,813 2,904,357 2,701,125 Community development 370,244 607,888 598,898 564,289 906,338 Economic development - - - - -
Health and sanitation 72,751 48,990 75,989 52,207 59,863 Community services 1,744,000 1,905,921 2,118,064 1,049,906 1,349,768 Interest on long-term debt - - - - -
Total governmental activities expenses 10,834,492 10,860,311 13,081,694 13,846,427 13,586,159 Business-type activities:

Sewer - - - - -
Total business-type activities expenses - - - - -
Total primary government expenses 10,834,492 10,860,311 13,081,694 13,846,427 13,586,159 Program revenues
Governmental activities:

Charges for services:

General government 58,182 75,375 130,574 135,646 322,903 Public safety 143,800 138,401 116,582 123,217 127,397
Public works 71,949 96,296 571,605 59,783 57,609
Community development 144,106 160,860 422,876 180,919 189,569 Health and sanitation 6,596 5,935 6,113 8,093 6,785
Community services 214,706 246,714 279,490 373,805 382,737 Operating grants and
contributions 943,002 748,743 1,046,376 1,304,672 1,423,950 Capital grants and
contributions 1,292,770 1,132,585 1,067,289 1,947,712 1,192,110 Total governmental activities program revenues 2,875,111 2,604,909 3,640,905 4,133,847 3,703,060 Business-type activities:

Sewer:

Charges for services - - - - -
Operating grants and
contributions - - - - -
Capital grants and
contributions - - - - -
Total business-type activities program revenues - - - - - Total primary government program revenues 2,875,111 2,604,909 3,640,905 4,133,847 3,703,060 Net revenue (expense):

Governmental activities (7,959,381) (8,255,402) (9,440,789) (9,712,580) (9,883,099) Business-type activities - - - - -
Total primary government net (expense)/revenues (8,255,402) (7,959,381) (9,440,789) (9,712,580) (9,883,099) Fiscal Year
Source: City of Twentynine Palms, Finance Department

(continued)
-96-
2020 2021 2022 2023 2024
Expenses
Governmental activities:

General government 2,602,747 $ 2,815,709 $ 1,811,690 $ 3,799,677 $ 4,020,632 $ Public safety 6,221,681 6,008,474 4,026,069 8,014,426 6,327,475 Public works 2,465,187 1,879,159 1,231,982 3,423,803 1,998,577 Community development 1,031,762 1,144,676 4,259,566 1,924,784 1,073,208 Economic development - - 223,036.00 268,388 436,403
Health and sanitation 79,151 124,465 41,618 81,264 -
Community services 1,464,616 593,713 696,557 1,467,340 1,763,923 Interest on long-term debt - 40,625 40,939 38,360 39,172 Total governmental activities expenses 13,865,144 12,606,821 12,331,457 19,018,042 15,659,390 Business-type activities:

Sewer - 83,356 262,334 131,211 1,656,631
Total business-type activities expenses - 83,356 262,334 131,211 1,656,631 Total primary government expenses 13,865,144 12,690,177 12,593,791 19,149,253 17,316,021 Program revenues
Governmental activities:

Charges for services:

General government 283,628 172,682 170,079 96,705 105,232 Public safety 113,590 90,944 118,975 108,726 98,533
Public works 73,857 169,822 155,458 184,109 65,304
Community development 339,357 598,084 883,279 534,853 842,012 Health and sanitation 5,129 9,595 7,752 - -
Community services 286,848 212,906 329,486 200,443 218,098 Operating grants and
contributions 1,515,075 2,791,174 5,474,903 6,401,746 1,892,715 Capital grants and
contributions 2,658,324 1,644,374 7,367,880 2,773,636 1,257,332 Total governmental activities program revenues 5,275,808 5,689,581 14,507,812 10,300,218 4,479,226 Business-type activities:

Sewer:

Charges for services - - 5,218 14,349 13,004
Operating grants and
contributions 603,592 - - - -
Capital grants and
contributions - 209,218 475,437 803,021 548,285
Total business-type activities program revenues 603,592 209,218 480,655 817,370 561,289 Total primary government program revenues 5,879,400 5,898,799 14,988,467 11,117,588 5,040,515 Net revenue (expense):

Governmental activities (8,589,336) (6,917,240) 2,176,355 (8,717,824) (11,180,164) Business-type activities 603,592 125,862 218,321 686,159 (1,095,342) Total primary government net (expense)/revenues (6,791,378) (7,985,744) 2,394,676 (8,031,665) (12,275,506) Fiscal Year

City of Twentynine Palms
Changes in Net Position
Last Ten Fiscal Years
(accrual basis of accounting)
-97-
2015 2016 2017 2018 2019
General revenues and
other changes in net position
Governmental activities:

Taxes
Property tax, levied for
general purpose 2,046,167 $ 2,057,945 $ 2,085,053 $ 2,188,281 $ 2,235,565 $ Sales and use taxes 860,948 902,439 1,156,390 1,156,390 1,156,390 Sales tax in lieu 264,288 204,050 - 97,927 246,094
Property tax in lieu 2,747,309 2,807,033 2,831,097 2,869,122 2,975,088 Franchise taxes 622,531 615,767 613,152 704,961 719,642 Transient occupancy tax 878,195 943,747 1,110,536 1,445,085 1,554,321 Real property transfer taxes 25,404 33,287 30,427 38,728 42,352 Motor vehicle in lieu tax 12,635 10,428 11,711 14,170 12,982 Total taxes 7,457,477 7,574,696 7,838,366 8,514,664 8,942,434 Use of money and property 27,429 29,548 132,600 29,613 223,370 Other 193,340 127,653 98,019 127,784 477,111
Special item - (573,600) - - -
Extraordinary item - - - - -
Transfers in(out) - - - - -
Total governmental activities 7,678,246 7,158,297 8,068,985 8,672,061 9,642,915 Business-type activities
Transfers in(out) - - - - -
Change in net position:

Governmental activities (281,135) (1,097,105) (1,371,804) (1,040,519) (240,184) Business-type activities - - - - -
Total primary government (281,135) $ (1,097,105) $ (1,371,804) $ (1,040,519) $ (240,184) $ Fiscal Year
Source: City of Twentynine Palms, Finance Department

-98-
2020 2021 2022 2023 2024
General revenues and
other changes in net position
Governmental activities:

Taxes
Property tax, levied for
general purpose 2,363,787 $ 2,480,111 $ 2,578,043 $ 2,871,282 $ 3,270,749 $ Sales and use taxes 1,226,377 1,445,428 1,586,033 2,200,338 2,138,428 Sales tax in lieu - - - - -
Property tax in lieu 3,095,032 3,228,065 3,413,408 3,794,419 4,250,176 Franchise taxes 666,066 766,859 844,290 930,375 969,861 Transient occupancy tax 1,288,869 1,927,425 2,481,175 2,346,125 2,237,285 Real property transfer taxes 47,868 90,417 126,323 76,031 61,222 Motor vehicle in lieu tax 22,919 21,454 103,369 28,378 32,518 Total taxes 8,710,918 9,959,759 11,132,641 12,246,948 12,960,239 Use of money and property 234,897 40,917 (179,141) 204,344 859,954 Other 129,549 131,888 145,565 698,390 729,082
Special item - - - - -
Extraordinary item - - - - -
Transfers in(out) - - - (934,950) (65,000)
Total governmental activities 9,075,364 10,132,564 11,099,065 12,214,732 14,484,275 Business-type activities
Transfers in(out) - - - 934,950 65,000
Change in net position:

Governmental activities 486,328 3,215,324 13,275,420 3,496,908 3,304,111 Business-type activities 603,592 125,862 218,321 1,621,109 (1,030,342) Total primary government 1,089,920 $ 3,341,186 $ 13,493,741 $ 5,118,017 $ 2,273,769 $ Fiscal Year

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City of Twentynine Palms
Governmental Activities - Tax Revenues by Source
Last Ten Fiscal Years
(accrual basis of accounting)
-99-
Property
Fiscal Transient Sales Sales tax Other
year Property occupancy Franchise and use in lieu in lieu taxes Total 2015 2,046,167 $ 878,195 $ 622,531 $ 860,948 $ 264,288 $ 2,747,309 $ 38,039 $ 7,457,477 $ 2016 2,057,945 943,747 615,767 902,439 204,050 2,807,033 43,715 7,574,696 2017 2,085,053 1,110,536 613,152 1,156,390 - 2,831,097 42,138 7,838,366 2018 2,188,281 1,445,085 704,961 1,254,317 97,927 2,869,122 52,898 8,612,591 2019 2,235,565 1,554,321 719,642 1,156,390 246,094 2,975,088 55,334 8,942,434 2020 2,363,787 1,288,869 666,066 1,226,377 - 3,095,032 70,787 8,710,918 2021 2,480,111 1,927,425 766,859 1,445,428 - 3,228,065 111,871 9,959,759 2022 2,578,043 2,481,175 844,290 1,586,033 - 3,413,408 229,692 11,132,641 2023 2,871,282 2,346,125 930,375 2,200,338 - 3,794,419 104,409 12,246,948 2024 3,270,749 2,237,285 969,861 2,138,428 - 4,250,176 93,740 12,960,239 Source: City of Twentynine Palms, Finance Department

City of Twentynine Palms
Fund Balances of Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
-100-
2015 2016 2017 2018 2019
General fund
Nonspendable 93,963 $ 93,963 $ 138,142 $ 120,329 $ 184,401 $ Restricted for:

Public safety 467,393 - 323,368 231,946 -
Public works 1,366,558 - - - -
Assigned 50,000 80,000 - - 1,300,000
Unassigned 8,837,625 10,750,067 11,305,480 9,190,062 6,528,376 $ 10,830,067 10,721,576 $ 11,766,990 $ 9,542,337 $ 8,012,777 $ All other governmental funds
Restricted for:

Public safety 105,806 111,737 60,558 55,304 59,140
Public works 3,024,520 2,879,535 1,200,717 791,939 841,749 Community development 10,939,744 10,475,971 9,159,551 7,796,791 7,355,824 Economic development - - - - -
Health and sanitation - - - - -
Community services - - - - -
Assigned 338,899 339,312 1,739,983 1,895,228 4,324,172
Unassigned (84,722) (37,597) (355,494) 61,088 (117,934) Total all other governmental funds 14,324,247 $ 13,768,958 $ 11,805,315 $ 10,600,350 $ 12,462,951 $ Fiscal Year
Source: City of Twentynine Palms, Finance Department

-101-
2020 2021 2022 2023 2024
General fund
Nonspendable 1,199,327 $ 1,848,527 $ 93,963 $ 93,963 $ 93,963 $ Restricted for:

Public safety - - - 406,426 431,729
Public works - - - - -
Assigned 1,300,000 1,300,000 3,599,844 2,011,441 396,982 Unassigned 5,596,053 6,804,533 6,948,162 9,098,342 11,103,632 $ 9,953,060 8,095,380 $ 10,641,969 $ 11,610,172 $ 12,026,306 $ All other governmental funds
Restricted for:

Public safety 59,704 21,925 - - 232,167
Public works 2,110,737 1,891,858 2,084,121 2,347,191 2,613,276 Community development 7,240,136 5,168,824 1,347,973 1,195,707 1,169,797 Economic development - - 504,591.00 639,556 608,269
Health and sanitation - - 223,527.00 215,646 -
Community services - - - 77 -
Assigned 3,314,664 2,872,561 5,425,636 4,756,084 4,388,697 Unassigned (231,808) (2,348,723) (528,013) (20,861) (995,268) Total all other governmental funds 12,493,433 $ 7,606,445 $ 9,057,835 $ 9,133,400 $ 8,016,938 $ Fiscal Year

City of Twentynine Palms
Changes in Fund Balances of Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
-102-
2015 2016 2017 2018 2019
Revenues
Taxes 7,458,034 $ 7,575,288 $ 7,839,267 $ 8,500,494 $ 9,425,427 $ Licenses, permits and fees 188,755 206,678 234,946 256,673 262,507 Intergovernmental 2,189,528 1,869,087 2,339,955 3,129,917 2,198,744 Charges for services 390,507 459,100 1,021,910 574,146 570,966 Fines, forfeitures, and penalties 53,192 49,439 28,302 22,343 31,023 Use of money and property 47,345 43,625 122,221 141,749 364,827 Other 145,351 133,588 116,432 180,586 207,865
Total revenues 10,472,712 10,336,805 11,703,033 12,805,908 13,061,359 Expenditures
Current:

General government 2,570,015 1,442,203 1,857,763 5,172,731 2,279,072 Public safety 3,854,540 4,038,181 4,247,967 4,446,864 4,534,322 Public w orks 1,414,470 1,624,365 2,137,014 2,971,995 2,166,267 Community development 360,708 370,474 519,306 577,433 726,871 Economic development - - - - -
Health and sanitation 72,751 48,990 66,555 53,424 48,008 Community services 1,651,970 1,641,196 1,703,505 1,074,549 1,082,497 Debt service:

Principal retirement - - - - -
Interest and fiscal charges - - - - -
Capital outlay 1,786,427 1,618,194 2,298,463 1,938,530 2,695,212 Total expenditures 11,710,881 10,783,603 12,830,573 16,235,526 13,532,249 Excess of revenues
over (under) expenditures (1,238,169) (446,798) (1,127,540) (3,429,618) (470,890) Other financing sources (uses)
Issuance of debt, lease and
subscription acquisition - - - - 569,315
Transfers in 64,549 728,669 202,000 255,493 3,039,076
Transfers out (64,549) (728,669) (202,000) (255,493) (3,089,076) Proceeds from sale of
capital assets 54,585 - 6,857 - 284,616
Total other financing sources (uses) 54,585 - 6,857 - 803,931 Net change in fund balances (1,183,584) $ (446,798) $ (1,120,683) $ (3,429,618) $ 333,041 $ Debt service as a percentage of
non-capital expenditures 0.00% 0.00% 0.00% 0.00% 0.00%
Fiscal Year
Source: City of Twentynine Palms, Finance Department

-103-
2020 2021 2022 2023 2024
Revenues
Taxes 9,222,044 $ 10,508,177 $ 11,265,424 $ 13,543,790 $ 14,332,781 $ Licenses, permits and fees 430,948 803,988 1,465,591 1,601,609 1,245,151 Intergovernmental 3,761,678 3,863,183 11,744,430 7,935,414 872,267 Charges for services 420,078 348,021 517,656 520,939 564,860 Fines, forfeitures, and penalties 23,921 13,894 28,505 27,241 27,714 Use of money and property 347,953 48,273 (179,141) 204,345 859,954 Other 87,218 186,034 145,857 177,053 198,551
Total revenues 14,293,840 15,771,570 24,988,322 24,010,391 18,101,278 Expenditures
Current:

General government 1,997,590 2,309,932 2,403,872 2,702,771 4,180,333 Public safety 4,803,036 4,999,233 5,342,058 5,725,463 6,640,349 Public w orks 1,903,083 1,563,517 1,634,676 2,445,946 2,097,402 Community development 796,503 952,405 1,121,463 1,375,056 1,126,276 Economic development - - 223,036.00 268,388 436,403
Health and sanitation 61,104 103,559 55,221 58,054 -
Community services 1,130,660 493,987 924,238 1,048,260 1,851,145 Debt service:

Principal retirement - 36,964 39,539 66,269 74,380
Interest and fiscal charges - 40,624 39,505 38,360 39,172 Capital outlay 4,172,514 8,290,657 10,955,905 8,410,522 2,291,146 Total expenditures 14,864,490 18,790,878 22,739,513 22,139,089 18,736,606 Excess of revenues
over (under) expenditures (570,650) (3,019,308) (3,019,308) 1,871,302 (635,328) Other financing sources (uses)
Issuance of debt, lease and
subscription acquisition 691,235 - 11,291 107,416 -
Transfers in 1,543,467 850,225 7,420,352 6,648,569 427,136 Transfers out (1,550,967) (860,225) (8,043,839) (7,583,519) (492,136) Proceeds from sale of
capital assets - - - - -
Total other financing sources (uses) 683,735 (10,000) (612,196) (827,534) (65,000) Net change in fund balances 113,085 $ (3,029,308) $ (3,631,504) $ 1,043,768 $ (700,328) $ Debt service as a percentage of
non-capital expenditures 0.00% 0.74% 0.67% 0.73% 0.68%
Fiscal Year

City of Twentynine Palms
General Government Revenues by Source
Last Ten Fiscal Years
(modified accrual basis of accounting)
-104-
Fiscal year
ended June 30
Property
taxes
Property tax
in lieu
Sales &
use taxes
Franchise
taxes
Business
Licenses
Room
taxes
2015 2,046,167 $ 2,747,309 $ 1,125,236 $ 622,531 $ 38,328 $ 878,195 $ 2016 2,057,945 2,807,033 1,016,489 615,767 42,560 943,747 2017 2,085,053 2,831,097 1,156,390 613,152 39,954 1,110,536 2018 2,188,281 2,869,122 1,156,390 704,961 24,519 1,445,085 2019 2,235,565 2,975,088 1,402,484 719,642 46,670 1,332,569 2020 2,363,787 3,095,032 1,226,377 666,066 48,029 1,288,869 2021 2,480,111 3,228,065 1,445,428 766,859 60,131 1,927,425 2022 2,578,043 3,413,408 1,586,033 844,290 89,617 2,481,175 2023 2,871,282 3,794,419 2,200,338 930,375 69,387 2,346,125 2024 3,270,749 4,250,176 2,138,428 969,861 74,185 2,237,285 Source: City of Twentynine Palms, Finance Department

-105-
Fiscal year
ended June 30
Other
taxes
Permits &
fees
Use of
money and
property
Intergovernmental
revenues &
charges for
services
Other
revenues Total
2015 115,377 $ 126,836 $ 47,345 $ 2,580,035 $ 145,351 $ 10,472,710 $ 2016 132,720 125,174 43,625 2,328,187 133,588 10,246,835 2017 123,935 142,388 122,221 3,361,865 116,432 11,703,023 2018 141,954 256,673 141,749 3,696,588 180,586 12,805,908 2019 522,680 262,507 364,827 2,742,814 456,513 13,061,359 2020 581,913 382,919 347,953 4,181,756 111,139 14,293,840 2021 660,294 743,857 48,273 4,211,204 199,923 15,771,570 2022 390,980 1,375,974 (179,141) 12,262,086 145,857 24,988,322 2023 1,401,251 1,532,222 204,344 8,456,354 204,294 24,010,391 2024 1,466,282 1,170,966 859,954 1,437,127 226,265 18,101,278

City of Twentynine Palms
Assessed Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years
-106-
Total taxable
Fiscal year Secured Unsecured SBE assessed
ended June 30 property property nonunitary value
2015 802,424,517 $ 20,937,193 $ 252,649 $ 823,614,359 $ 0.28055 % 2016 819,140,029 22,126,150 252,649 841,518,828 0.28055 % 2017 829,433,547 19,046,841 252,649 848,733,037 0.28056 % 2018 841,474,081 18,405,803 252,649 860,132,533 0.28057 % 2019 874,065,397 17,581,904 252,649 891,899,950 0.28057 % 2020 908,885,222 18,715,010 257,656 927,857,888 0.28506 % 2021 949,184,759 18,295,839 257,656 967,738,254 0.28472 % 2022 1,003,153,814 19,892,321 257,656 1,023,303,791 0.28493 % 2023 1,116,657,102 20,612,032 257,656 1,137,526,790 0.28539 % 2024 1,250,121,084 23,415,937 620,877 1,274,157,898 0.28407 % direct tax
rate
Total
$-
$200,000,000
$400,000,000
$600,000,000
$800,000,000
$1,000,000,000
$1,200,000,000
$1,400,000,000
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Secured property Unsecured property SBE nonunitary
Source: San Bernardino County Assessor Combined Tax Rolls Note 1:

In 1978, the voters of the State of California passed Proposition 13 which limited property taxes to a total maximum rate of 1% based upon the assessed value of the property being taxed. Each year, the assessed value of property may be increased by an “inflation factor” (limited to a maximum increase of 2%). With few exceptions, property is only re-assessed at the time that it is sold to a new owner. At that point, the new assessed value is reassessed at the purchase price of the property sold. The assessed valuation date shown above represents the only data currently available with respect to the actual market value of taxable property and is subject to the limitations described above.

City of Twentynine Palms
Direct and Overlapping Property Tax Rates
Last Ten Fiscal Years
-107-
2016 2017 2018 2019 2020 2021 2022 2023 2024
Basic Levy1 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 Copper Mountain Community
College Bond 0.02020 0.02600 0.02420 0.02420 0.02430 0.02350 0.02180 0.01930 0.01860 Morongo Unified School Bond 0.04660 0.05000 0.04970 0.04970 0.04360 0.04100 0.03910 0.03130 0.03310 Total Direct & Overlapping2
Tax Rates 1.06680 1.07600 1.07390 1.07390 1.06790 1.06450 1.06090 1.05060 1.05170 City's Share of 1% Levy
Per Prop 133 0.28073 0.28073 0.28073 0.28073 0.28073 0.28073 0.28073 0.28073 0.28073 Total Direct Rate5 0.28055 0.02056 0.28057 0.28057 0.28056 0.28472 0.28493 0.28539 0.28407 Direct Debt
Facility Improvement Loan - $ - $ - $ 569,315 $ $ 1,263,036 1,260,550 $ 1,224,900 $ 1,185,555 $ 1,144,963 $ Lease Liability6 - - - - - - 9,888 28,231 22,121
Subscription Liability7 - - - - - - - 62,149 34,471
Total Net Direct Debt $ - - $ - $ 569,315 $ 1,260,550 $ 1,263,036 $ 1,234,788 $ 1,275,935 $ 1,201,555 $ Agency Fiscal Year
Notes
¹In 1978, California voters passed Proposition 13 which set the property tax rate at a 1.00% fixed amount.

This 1.00% is shared by all taxing agencies for which the subject property resides within. In addition to the

1.00% fixed amount, property owners are charged taxes as a percentage of assessed property values for the payment of any voter approved bonds.
²Overlapping rates are those of local and county governments that apply to property owners within the City.

Not all overlapping rates apply to all property owners. ³City's Share of 1% Levy is based on the City's share of the general fund tax rate area with the largest net taxable value within the City. The ERAF portion of the City's Levy has been subtracted where known. ⁴Redevelopment Rate is based on the largest RDA tax rate area and only includes rate(s) from indebtedness adopted prior to 1989 per California State statute. RDA direct and overlapping rates are applied only to the incremental property values. The approval of ABX1 26 eliminated Redevelopment from the State of California for the fiscal year 2012/13 and years thereafter. ⁵Total Direct Rate is the weighted average of all individual direct rates applied by the City/Agency preparing the statistical section information and excludes revenues derived from aircraft. Beginning in 2013/14 the Total Direct Rate no longer includes revenue generated from the former redevelopment tax rate areas.

Challenges to recognized enforceable obligations are assumed to have been resolved during 2012/13. For the purposes of this report, residual revenue is assumed to be distributed to the City/Agency in the same proportions as general fund revenue.
6GASB 87 Leases
7GASB 96 Subscriptions
Source: San Bernardino County Assessor annual tax increment tables.

City of Twentynine Palms
Property Tax Levies and Collections
Last Ten Fiscal Years
-108-
Total tax Collections in
Fiscal year levy for Percentage subsequent Percentage
ended June 30 fiscal year Amount of levy years Amount of levy 2015 2,046,167 $ 2,046,167 $ 100.00% - 2,046,167 $ 100.00% 2016 2,057,945 2,057,945 100.00% - 2,057,945 100.00%
2017 2,085,053 2,085,053 100.00% - 2,085,053 100.00%
2018 2,188,281 2,188,281 100.00% - 2,188,281 100.00%
2019 2,235,565 2,235,565 100.00% - 2,235,565 100.00%
2020 2,363,787 2,363,787 100.00% - 2,363,787 100.00%
2021 2,480,111 2,480,111 100.00% - 2,480,111 100.00%
2022 2,578,043 2,578,043 100.00% - 2,578,043 100.00%
2023 2,871,282 2,871,282 100.00% - 2,871,282 100.00%
2024 3,270,749 3,270,749 100.00% - 3,270,749 100.00%
fiscal year of the levy Total collections to date
Collected within the
Source: City of Twentynine Palms, Finance Department

City of Twentynine Palms
Ratio of Outstanding Debt by Type
Last Ten Fiscal Years
-109-
Tax Total Percentage
Fiscal year allocation governmental of personal Per
ended June 30 bonds Leases Subscriptions Loans activities income (1) capita (1) 2015 - $ - $ - $ - $ - $ 0.0000% -
2016 - - - - - 0.0000% -
2017 - - - - - 0.0000% -
2018 - - - - - 0.0000% -
2019 - - - 569,315 569,315 0.1081% 18.19
2020 - - - 1,260,550 1,260,550 0.2323% 18.54
2021 - - - 1,263,036 1,263,036 0.2279% 18.49
2022 - 9,888 - 1,224,900 1,234,788 0.2201% 20.26
2023 - 28,231 62,149 1,185,555 1,275,935 0.2013% 24.44
2024 - 22,121 34,471 1,144,963 1,201,555 0.1605% 24.53
Source: (1) 2010 and later: US Census Bureau, most recent American Community Survey Note: Details regarding the City’s outstanding debt can be found in the notes to the basic financial statements.

City of Twentynine Palms
Legal Debt Margin Information
Last Ten Fiscal Years
-110-
Fiscal year 2023
Assessed value 1,274,157,898 $
Debt Limit (15% of assessed value) 191,123,685 $
Fiscal year Debt limit (in thousands)
2015 123,517 $
2016 126,228
2017 127,310
2018 129,020
2019 133,785
2020 139,179
2021 145,160
2022 153,496
2023 170,629
2024 191,124
Source: San Bernardino County Auditor/Controller
Note: The City has no applicable outstanding debt.

City of Twentynine Palms
Pledged Revenue Coverage
Last Ten Fiscal Years
-111-
Fiscal year Tax
ended June 30 increment Principal Interest Coverage
2015 - $ - $ - $ 0%
2016 - - - 0%
2017 - - - 0%
2018 - - - 0%
2019 - - - 0%
2020 - - - 0%
2021 - - - 0%
2022 - - - 0%
2023 - - - 0%
2024 - - - 0%
Debt service
Tax allocation bonds
Source: City of Twentynine Palms, Finance Department
Notes: Details regarding the City’s outstanding debt can be found in the notes to the basic financial statements.

City of Twentynine Palms
Demographic and Economic Statistics
Last Ten Calendar Years
-112-
Calendar
year Population (1)
Personal
income
(in thousands of
dollars) (2)
Per capita
personal
income (2)
Unemployment
rate (3)
2014 26,550 524,894.00 $ 19,770.00 $ 10.3%
2015 26,138 529,408 20,089 8.4%
2016 26,919 535,226 19,882 7.4%
2017 27,046 519,560 19,210 8.3%
2018 28,958 526,768 18,190 5.3%
2019 29,258 542,569 18,544 5.0%
2020 29,967 554,193 18,493 9.2%
2021 27,685 561,087 20,266 7.8%
2022 25,929 633,875 24,446 4.9%
2023 25,346 748,701 29,539 5.7%
0 0.02

0.04 0.06

0.08 0.1

0.12 18000
20000
22000
24000
26000
28000
30000
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Unemployment rate
Per Capita Personal Income
Per capita personal income (2) Unemployment rate (3)
Sources: (1) California State Department of Finance
(2) US Census Bureau, most recent American Community Survey (3) California Employment Development Department

City of Twentynine Palms
Full-time Equivalent City Government Employees by Function Last Ten Fiscal Years
-113-
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Function
General government 7 7 7 7 8 8 8 9 9 9
Animal control
Animal control officers 2 2 2 2 2 2 2 2 3 3
Kennel workers 2 2 2 2 1 1 2 2 2 2
Public works
Maintenance 10 10 11 11 11 11 10 11 12 12
Community development 2 3 3 4 4 4 5 5 6 6
Economic development - - - 1 1 1 1 1 1 1
Community services 6 6 6 6 6 6 5 7 7 6
Total 29 30 31 32 32 32 32 37 40 39
Fiscal Year
Source: City of Twentynine Palms, Finance Department

City of Twentynine Palms
Capital Asset Statistics by Function
Last Ten Fiscal Years
-114-
Function 2015 2016 2017 2018 2019
Public works
Streets (miles) 177 177 177 177 177
Streetlights 327 327 327 327 327
Traffic Signals 7 7 8 8 8
Community Services
Parks acreage 80 80 80 80 80
Parks 3 3 3 3 3
Swimming pools 2 2 2 2 2
Community Centers 2 2 2 2 2
EV Charger Stations - - - 1 1
Fiscal Year
Source: City of Twentynine Palms, Finance Department

City of Twentynine Palms
Capital Asset Statistics by Function (continued)
Last Ten Fiscal Years
-115-
Function 2020 2021 2022 2023 2024
Public works
Streets (miles) 177 177 178 178 178
Streetlights 327 325 325 325 325
Traffic Signals 9 9 9 10 10
Community Services
Parks acreage 80 80 80 80 80
Parks 3 3 3 3 3
Swimming pools 2 2 2 2 2
Community Centers 2 2 4 4 4
EV Charger Stations 1 1 5 5 4
Fiscal Year

City of Twentynine Palms
Operating Indicators by Function
Last Ten Fiscal Years
-116-
Function 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Animal Control:

Adopted 637 549 558 480 678 663 437 482 430 475
Animal licenses issued 539 401 573 423 491 461 433 409 252 299 Community Development:

Building permits, including Plan checks
Issued 703 741 804 697 999 1,193 1,462 1,488 1,248 841
New single family residential 11 1 9 2 3 3 8 16 16 9
New multi family residential - - - 8 - 4 2 - 3 8
Public Works:

Street resurfacing
In-house (miles) 6 1 3 2 3 4 1 1 5 5
Contract (miles) - 3 14 9 2 8 - 1 4 -
Berms in-house (miles) - 14.8 - - - - - - - -
Parks and Recreation:

Number of youth sports participants 944 1,000 1,096 893 917 889 193 709 821 782 Recreation classes participants 156 106 121 181 172 374 301 563 574 658 Fiscal Year
Source: City of Twentynine Palms, Finance Department

City of Twentynine Palms
Memo – Statistical Section
-117-
Revenue capacity
Property tax revenues and collections
The City receives property taxes under the “Teeter Plan.” The Teeter Plan allows cities to collect 100 percent of assessed taxes each year in lieu of receiving only those taxes collected by the County currently and receiving penalties and interest when delinquent taxes are collected in future years.

The City has entered such a contract with the County of San Bernardino, which allows the City to have a more reliable and predictable revenue stream. The County benefits by charging interest rates that are substantially higher than market rates when the delinquencies are collected.

Principal property taxpayers
The City does not provide this information due to privacy concerns.

Property tax rates for overlapping governments
California Law provides that general property taxes are assessed at one percent of assessed value. When the constitutional amendment enacting this provision commonly referred to as Proposition 13 or the “Jarvis Amendment,” went into effect, the taxing agencies within San Bernardino County agreed on a distribution of the one percent among them. The City was not incorporated at that time. Upon incorporation, the City negotiated with the County for a portion of the County allocation. That agreed upon allocation is 26.5 percent of the one percent, or a little more than one quarter of one percent of the assessed valuation. A chart showing the distribution of property taxes is included in the statistical section of this report.

Debt capacity
Direct and overlapping debt
There are no general obligation bonds outstanding by any of the taxing agencies within the City.

Ratio of general bonded debt
The City has no general bonded debt.

Demographic and economic information
Principal Employers
The City does not currently collect this information.

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-1-
October 31, 2024
To the Honorable City Council
City of Twentynine Palms
Twentynine Palms, California
We have audited the financial statements of the City of Twentynine Palms (the entity) as of and for the year ended June 30, 2024, and have issued our report thereon dated October 31, 2024. Professional standards require that we advise you of the following matters relating to our audit.

Our Responsibility in Relation to the Financial Statement Audit As communicated in our engagement letter dated April 3, 2024, our responsibility, as described by professional standards, is to form and express opinions about whether the financial statements that have been prepared by management with your oversight are presented fairly, in all material respects, in accordance with accounting principles generally accepted in the United States of America. Our audit of the financial statements does not relieve you or management of your respective responsibilities.

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

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

Planned Scope and Timing of the Audit
We conducted our audit consistent with the planned scope and timing we previously communicated to you

-2-
Compliance with All Ethics Requirements Regarding Independence The engagement team, others in our firm, as appropriate, and our firm have complied with all relevant ethical requirements regarding independence.

We have evaluated whether certain nonattest services performed by our firm during the audit have created a significant threat to our independence in relation to the entity. We have identified a threat to our independence (preparation of the entity’s financial statements, creating a self-review threat) that if not reduced to an acceptable level, would impair our independence. In order to reduce the threat to an acceptable level, we have applied the following safeguard:

Prior to the issuance of the entity’s financial statements, another partner or manager, independent of the engagement, will review the financial statements.

Significant Risks Identified
We have identified the possibility of the following significant risks:

Management's override of internal controls over financial reporting – Management override of internal controls is the intervention by management in handling financial information and making decisions contrary to internal control policy.

Revenue recognition – Revenue recognition is a generally accepted accounting principle that refers to the conditions under which an entity can recognize a transaction as revenue. Auditing standards indicate that recognizing revenue is a presumed fraud risk and usually classified as a significant risk in most audits.

These significant risks are presumptive in most audits and merit attention by the auditors due to the direct impact over financial reporting and internal control processes. Although identified as significant risks, we noted no matters of management override of controls or deviations from generally accepted accounting principles which caused us to modify our audit procedures or any related matters which are required to be communicated to those charged with governance due to these identified risks.

Qualitative Aspects of the Entity’s Significant Accounting Practices Significant Accounting Policies
Management has the responsibility to select and use appropriate accounting policies. A summary of the significant accounting policies adopted by the entity is included in Note 1 to the financial statements.

The City adopted GASB Statement No. 100, Accounting Changes and Error Corrections during 2024.

No matters have come to our attention that would require us, under professional standards, to inform you about (1) the methods used to account for significant unusual transactions and (2) the effect of significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus.

-3-
Significant Accounting Estimates and Related Disclosures Accounting estimates and related disclosures are an integral part of the financial statements prepared by management and are based on management’s current judgments. Those judgments are normally based on knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ markedly from management’s current judgments.

The most sensitive accounting estimates affecting the entity’s financial statements are:

Management’s estimate of the net pension liability and related deferred inflows and outflows of resources are based on actuarial reports by independent actuaries. We evaluated the key factors and assumptions used to develop the estimate in determining that it is reasonable in relation to the basic financial statements taken as a whole and in relation to the applicable opinion units.

Management’s estimate of the liability for other post-employment benefits (OPEB) and related deferred inflows and outflows of resources are based on actuarial reports provided by independent actuaries. We evaluated the key factors and assumptions used to develop the estimate in determining that it is reasonable in relation to the basic financial statements taken as a whole and in relation to the applicable opinion units.

Financial Statement Disclosures
Certain financial statement disclosures involve significant judgment and are particularly sensitive because of their significance to financial statement users.

The most sensitive disclosures affecting the entity’s financial statements relate to:

The disclosure of net pension liability and related deferred inflows and outflows of resources in the basic financial statements is based on actuarial assumptions. Actual future liabilities and actuarial deferred inflows and outflows may vary from disclosed estimates.

The disclosures of the other post-employment benefits (OPEB) liability and related deferred inflows and outflows of resources in the basic financial statements is based on actuarial assumptions.

Actual future liabilities and actuarial deferred inflows and outflows may vary from disclosed estimates.

Significant Difficulties Encountered during the Audit
We encountered no significant difficulties in dealing with management relating to the performance of the audit.

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

In addition, professional standards require us to communicate to you all material, corrected misstatements that were brought to the attention of management as a result of our audit procedures. “None of the misstatements identified by us as a result of our audit procedures and corrected by management were material, either individually or in the aggregate, to the financial statements taken as a whole or applicable opinion unit.”

-4-
Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter, which could be significant to the entity’s financial statements or the auditor’s report. No such disagreements arose during the course of the audit.

Representations Requested from Management
We have requested certain written representations from management, which are included in the attached letter dated October 31, 2024.

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

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

Other Information Included in Annual Reports
Pursuant to professional standards, our responsibility as auditors for other information, whether financial or nonfinancial, included in the entity’s annual reports, does not extend beyond the information identified in the audit report, and we are not required to perform any procedures to corroborate such other information.

However, in accordance with such standards, we have:

Read the transmittal letter and statistical section (or “other information”) and considered whether a material inconsistency existed between the other the information and the basic financial statements, or the other information otherwise appears to be materially misstated. Our opinion(s) on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon.

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

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

Very truly yours,


1 CITY OFFICES:
6136 ADOBE ROAD
TWENTYNINE PALMS, CA 92277
(760) 367-6799
Fax (760)367-4890
www.29palms.org

COUNCILMEMBERS
Steven Bilderain, Mayor
Joel A. Klink, Mayor Pro Tem
Daniel L. MIntz, Sr
Octavious Scott
McArthur Wright

CITY MANAGER
Stone James, DPPD
October 31, 2024
Rogers, Anderson, Malody & Scott, LLP
This representation letter is provided in connection with your audit of the basic financial statements of the City of Twentynine Palms (the entity) as of June 30, 2024 and for the year then ended, and the related notes to the financial statements, for the purpose of expressing opinions on whether the basic financial statements present fairly, in all material respects, the financial position, results of operations, and cash flows, where applicable, of the various opinion units of the entity in accordance with accounting principles generally accepted for governments in the United States of America (U.S. GAAP).

Certain representations in this letter are described as being limited to matters that are material. Items are considered material, regardless of size, if they involve an omission or misstatement of accounting information such that, in the light of surrounding circumstances, there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

We confirm that, to the best of our knowledge and belief, having made such inquiries as we considered necessary for the purpose of appropriately informing ourselves as of October 31, 2024:

Financial Statements
x We have fulfilled our responsibilities, as set out in the terms of the audit engagement letter dated April 3, 2024, for the preparation and fair presentation of the financial statements of the various opinion units referred to above in accordance with U.S. GAAP. x We acknowledge our responsibility for the design, implementation, and maintenance of the system of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. x We acknowledge our responsibility for the design, implementation, and maintenance of internal control to prevent and detect fraud.
x We acknowledge our responsibility for compliance with the laws, regulations, and provisions of contracts and grant agreements.
x We have reviewed, approved, and taken responsibility for the financial statements and related notes.
x We have a process to track the status of audit findings and recommendations. x We have identified and communicated to you all previous audits, attestation engagements, and other studies related to the audit objectives and whether related recommendations have been implemented.
x The methods, data and significant assumptions used by us in making accounting estimates and their related disclosures, are appropriate to achieve recognition, measurement, or disclosure that is reasonable in the context of the applicable financial reporting framework. x All related party relationships and transactions have been appropriately accounted for and disclosed in accordance with the requirements of U.S. GAAP. x All events subsequent to the date of the financial statements and for which U.S. GAAP requires adjustment or disclosure have been adjusted or disclosed.

Rogers, Anderson, Malody & Scott, LLP
2 x The effects of all known actual or possible litigation and claims have been accounted for and disclosed in accordance with U.S. GAAP.
x All component units, as well as joint ventures with an equity interest, if any, are included and other joint ventures and related organizations are properly disclosed. x All funds and activities are properly classified.
x All funds that meet the quantitative criteria in GASB Statement No. 34, Basic Financial Statements—and Management's Discussion and Analysis—for State and Local Governments, GASB Statement No. 37, Basic Financial Statements—and Management's Discussion and Analysis—for State and Local Governments: Omnibus as amended, and GASB Statement No. 65, Items Previously Reported as Assets and Liabilities, for presentation as major are identified and presented as such and all other funds that are presented as major are considered important to financial statement users.
x All components of net position, nonspendable fund balance, and restricted, committed, assigned, and unassigned fund balance are properly classified and, if applicable, approved. x Our policy regarding whether to first apply restricted or unrestricted resources when an expense is incurred for purposes for which both restricted and unrestricted net position/fund balance are available is appropriately disclosed and net position/fund balance is properly recognized under the policy.
x All revenues within the statement of activities have been properly classified as program revenues, general revenues, contributions to term or permanent endowments, or contributions to permanent fund principal.
x All expenses have been properly classified in or allocated to functions and programs in the statement of activities, and allocations, if any, have been made on a reasonable basis. x All interfund and intra-entity transactions and balances have been properly classified and reported. x Special items and extraordinary items have been properly classified and reported. x Deposit and investment risks have been properly and fully disclosed. x Capital assets, including infrastructure assets, are properly capitalized, reported, and if applicable, depreciated.
x All required supplementary information is measured and presented within the prescribed guidelines.
x We have evaluated all of our lease and subscription agreements and have given you our assessment as to whether each agreement is subject to GASB Statement No. 87, Leases and GASB Statement No. 96, Subscription Based Information Technology Arrangements. x With regard to investments and other instruments reported at fair value:
 The underlying assumptions are reasonable and they appropriately reflect management’s intent and ability to carry out its stated courses of action.  The measurement methods and related assumptions used in determining fair value are appropriate in the circumstances and have been consistently applied.  The disclosures related to fair values are complete, adequate, and in accordance with U.S.

GAAP.
 There are no subsequent events that require adjustments to the fair value measurements and disclosures included in the financial statements.
x With respect to preparation of the financial statements, we have performed the following:
 Made all management decisions and performed all management functions;  Assigned a competent individual to oversee the services;  Evaluated the adequacy of the services performed;
 Evaluated and accepted responsibility for the result of the service performed; and  Established and maintained internal controls, a process to monitor the system of internal controls.

Rogers, Anderson, Malody & Scott, LLP
3 Information Provided
x We have provided you with:
 Access to all information, of which we are aware that is relevant to the preparation and fair presentation of the financial statements of the various opinion units referred to above, such as records, documentation, meeting minutes, and other matters;  Additional information that you have requested from us for the purpose of the audit; and  Unrestricted access to persons within the entity from whom you determined it necessary to obtain audit evidence.
x The financial statements and any other information included in the annual report are consistent with one another, and the other information does not contain any material misstatements. x All information provided in electronic form are true representations of the original documents. x All transactions have been recorded in the accounting records and are reflected in the financial statements.
x We have disclosed to you the results of our assessment of the risk that the financial statements may be materially misstated as a result of fraud.
x We have provided to you our analysis of the entity’s ability to continue as a going concern, including significant conditions and events present, and we believe that our use of the going concern basis of accounting is appropriate.
x We have no knowledge of any fraud or suspected fraud that affects the entity and involves:
 Management;
 Employees who have significant roles in internal control; or  Others where the fraud could have a material effect on the financial statements. x We have no knowledge of any allegations of fraud, or suspected fraud, affecting the entity’s financial statements communicated by employees, former employees, vendors, regulators, or others.
x We are not aware of any pending or threatened litigation, claims, and assessments whose effects should be considered when preparing the financial statements. x We have disclosed to you the identity of the entity’s related parties and all the related party relationships and transactions of which we are aware.
x There have been no communications from regulatory agencies concerning noncompliance with or deficiencies in accounting, internal control, or financial reporting practices. x The entity has no plans or intentions that may materially affect the carrying value or classification of assets and liabilities.
x We have disclosed to you all guarantees, whether written or oral, under which the entity is contingently liable.
x We have disclosed to you all nonexchange financial guarantees, under which we are obligated and have declared liabilities and disclosed properly in accordance with GASB Statement No. 70, Accounting and Financial Reporting for Nonexchange Financial Guarantees, for those guarantees where it is more likely than not that the entity will make a payment on any guarantee. x For nonexchange financial guarantees where we have declared liabilities, the amount of the liability recognized is the discounted present value of the best estimate of the future outflows expected to be incurred as a result of the guarantee. Where there was no best estimate but a range of estimated future outflows has been established, we have recognized the minimum amount within the range. x We have disclosed to you all significant estimates and material concentrations known to management that are required to be disclosed in accordance with GASB Statement No. 62 (GASB62), Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements. Significant estimates are estimates at the balance sheet date that could change materially within the next year. Concentrations refer to volumes of business, revenues, available sources of supply, or markets or geographic areas for which events could occur that would significantly disrupt normal finances within the next year. x We have identified and disclosed to you the laws, regulations, and provisions of contracts and grant agreements that could have a direct and material effect on financial statement amounts, including legal and contractual provisions for reporting specific activities in separate funds.

Rogers, Anderson, Malody & Scott, LLP
4 x There are no:
 Violations or possible violations of laws or regulations, or provisions of contracts or grant agreements whose effects should be considered for disclosure in the financial statements or as a basis for recording a loss contingency, including applicable budget laws and regulations.  Unasserted claims or assessments that our lawyer has advised are probable of assertion and must be disclosed in accordance with GASB-62.
 Other liabilities or gain or loss contingencies that are required to be accrued or disclosed by GASB-62
 Continuing disclosure consent decree agreements or filings with the Securities and Exchange Commission and we have filed updates on a timely basis in accordance with the agreements (Rule 240, 15c2-12).
x The entity has satisfactory title to all owned assets, and there are no liens or encumbrances on such assets nor has any asset or future revenue been pledged as collateral, except as disclosed to you.
x We have complied with all aspects of grant agreements and other contractual agreements that would have a material effect on the financial statements in the event of noncompliance.

Use of a Specialist
x We agree with the findings of specialists in evaluating the entity’s net pension and net other postemployment benefit liabilities and related deferred amounts and have adequately considered the qualifications of the specialist in determining the amounts and disclosures used in the financial statements and underlying accounting records. We did not give or cause any instructions to be given to specialists with respect to the values or amounts derived in an attempt to bias their work, and we are not otherwise aware of any matters that have had an impact on the independence or objectivity of the specialists.
x We believe that the actuarial assumptions and methods used to measure pension and other postemployment benefit liabilities and costs for financial accounting purposes are appropriate in the circumstances
Cybersecurity
x There have been no cybersecurity breaches or other cyber events whose effects should be considered for disclosure in the financial statements, as a basis for recording a loss contingency, or otherwise considered when preparing the financial statements.

Supplementary Information in Relation to the Financial Statements as a Whole With respect to supplementary information accompanying the financial statements:
x We acknowledge our responsibility for the presentation of the supplementary information in accordance with accounting principles generally accepted in the United States of America. x We believe the supplementary information, including its form and content, is fairly presented in accordance with accounting principles generally accepted in the United States of America. x The methods of measurement or presentation have not changed from those used in the prior period.
x We believe any significant assumptions or interpretations underlying the measurement or presentation of the supplementary information, and the basis for our assumptions and interpretations, are reasonable and appropriate in the circumstances. x When the supplementary information is not presented with the audited financial statements, management will make the audited financial statements readily available to the intended users of the supplementary information no later than the date of issuance by the entity of the supplementary information and the auditor’s report thereon.

Rogers, Anderson, Malody & Scott, LLP
5 x We acknowledge our responsibility to include the auditor’s report on the supplementary information in any document containing the supplementary information and that indicates the auditor reported on such supplementary information.
x We acknowledge our responsibility to present the supplementary information with the audited financial statements or, if the supplementary information will not be presented with the audited financial statements, to make the audited financial statements readily available to the intended users of the supplementary information no later than the date of issuance by the entity of the supplementary information and the auditor’s report thereon.

Required Supplementary Information
With respect to the required supplementary information accompanying the financial statements:
x We acknowledge our responsibility for the presentation of the required supplementary information in accordance with U.S. GAAP.
x We believe the required supplementary information, including its form and content, is measured and fairly presented in accordance with U.S. GAAP.
x The methods of measurement or presentation have not changed from those used in the prior period.
x We believe the significant assumptions or interpretations underlying the measurement or presentation
x of the required supplementary information, and the basis for our assumptions and interpretations, are reasonable and appropriate in the circumstances.

Accounting Estimates and Related Disclosures
x The significant judgments made in making the accounting estimates have taken into account all relevant information of which we are aware.
x We have consistently and appropriately selected and applied methods, assumptions, and data when making accounting estimates.
x The assumptions we used in making and disclosing accounting estimates appropriately reflect our intent and ability to carry out specific courses of action on behalf of the entity, when relevant to the accounting estimates and disclosures.
x The disclosures related to accounting estimates, including those disclosures describing estimation uncertainty, are complete and are reasonable in the context of the applicable financial reporting framework.
x We have obtained and applied appropriate specialized skills and expertise in making accounting estimates.
x We are not aware of any events subsequent to the date of the financial statements that require adjustment to our accounting estimates and related disclosures included in the financial statements.

Single Audit
x We are responsible for understanding and complying with and have complied with the requirements of the Uniform Guidance.
x We are responsible for the preparation and presentation of the schedule of expenditures of federal awards in accordance with the Uniform Guidance.
x We believe the schedule of expenditures of federal awards, including its form and content, is fairly presented in accordance with the Uniform Guidance.
x As part of your audit, you prepared the draft financial statements and related notes and schedule of expenditures of federal awards. We have designated an individual with suitable skill, knowledge, or experience to oversee your services and have made all management decisions and performed all management functions. We have reviewed, approved, and accepted responsibility for those financial statements and related notes and schedule of expenditures of federal awards.

Rogers, Anderson, Malody & Scott, LLP
6 x The methods of measurement or presentation have not changed from those used in the prior period.
x We are responsible for including the auditor’s report on the schedule of expenditures of federal awards in any document that contains the schedule and that indicates that the auditor has reported on such information.
x We have identified and disclosed all of our government programs and related activities subject to the Uniform Guidance compliance audit.
x We have notified you of federal awards and funding increments that were received before December 26, 2014 (if any), and differentiated those awards from awards and funding increments received on or after December 26, 2014, and subject to the audit requirements of the Uniform Guidance.
x When the schedule of expenditures of federal awards is not presented with the audited financial statements, management will make the audited financial statements readily available to the intended users of the schedule of expenditures of federal awards no later than the date of issuance by the entity of the schedule of expenditures of federal awards and the auditor’s report thereon. x We have, in accordance the Uniform Guidance, identified in the schedule of expenditures of federal awards, expenditures made during the audit period for all awards provided by federal agencies in the form of grants, federal cost-reimbursement contracts, loans, loan guarantees, property (including donated surplus property), cooperative agreements, interest subsidies, food commodities, direct appropriations, and other assistance. x We have no knowledge of any instances, that have occurred or are likely to have occurred, of fraud and noncompliance with provisions of laws and regulations that have a material effect on the financial statements or other financial data significant to the audit objectives, and any other instances that warrant the attention of those charged with governance, whether communicated by employees, former employees, vendors, regulators, or others. x We have no knowledge of any instances that have occurred or are likely to have occurred, of noncompliance with provisions of contracts and grant agreements that has a material effect on the determination of financial statement amounts or other financial data significant to the audit objectives.
x We have no knowledge of any instances that have occurred or are likely to have occurred of abuse that could be quantitatively or qualitatively material to the financial statements or other financial data significant to the audit objectives.
x We have a process to track the status of audit findings and recommendations. x We have identified for you all previous audits, attestation engagements, and other studies related to the audit objectives and whether related recommendations have been implemented. x We have provided views on your reported audit findings, conclusions, and recommendations, as well as our planned corrective actions, for the report. x We have provided to you our interpretations of any compliance requirements that have varying interpretations.
x We have made available to you all federal awards (including amendments, if any) and any other correspondence relevant to federal programs and related activities that have taken place with federal agencies or pass-through entities.
x We have received no requests from a federal agency to audit one or more specific programs as a major program.
x We have identified and disclosed to you all amounts questioned and any known noncompliance with the requirements of federal awards, including the results of other audits or program reviews, or stated that there was no such noncompliance. We also know of no instances of noncompliance occurring subsequent to the period covered by this audit report. x We have disclosed to you any communications from federal awarding agencies and pass-through entities concerning possible noncompliance with direct and material compliance requirement, including communications received from the end of the period covered by the compliance audit to the date of the auditor’s report.
x We have made available to you all documentation related to the compliance with direct and material compliance requirements, including information related to federal program financial reports and claims for advances and reimbursements.

Rogers, Anderson, Malody & Scott, LLP
7 x Federal program financial reports and claims for advances and reimbursements are supported by the books and records from which the basic financial statements have been prepared (and are prepared on a basis consistent with the schedule of expenditures of federal awards). x The copies of federal program financial reports provided to you are true copies of the reports submitted, or electronically transmitted, to the respective federal agency or pass-through entity, as applicable.
x We have properly classified amount claimed or used for matching in accordance with related guidelines in the Uniform Guidance as applicable.
x We have charged costs to federal awards in accordance with applicable cost principles. x We are responsible for and have accurately prepared the summary schedule of prior audit findings to include all findings required to be included by the Uniform Guidance, and we have provided you with all information on the status of the follow-up on prior audit findings by federal awarding agencies and pass-through entities, including all management decisions. x We have disclosed to you the findings received and related corrective actions taken for previous audits, attestation engagements, and internal or external monitoring that directly relate to the objectives of the compliance audit, including findings received and corrective actions taken from the end of the period covered by the compliance audit to the date of the auditor’s report. x The reporting package does not contain personally identifiable information. x We have disclosed all contracts or other agreements with service organizations and disclosed to you all communications from these service organizations relating to noncompliance at the organizations.
x We have reviewed, approved, and taken responsibility for the schedule of expenditures of federal awards and related notes and an acknowledgment of the auditor’s role in the preparation of this information.
x We have reviewed, approved, and taken responsibility for accrual adjustments and an acknowledgment of the auditor’s role in the preparation of the adjustments. x We have disclosed to you the nature of any subsequent events that provide additional evidence with respect to conditions that existed at the end of the reporting period that affect noncompliance during the reporting period.

In addition:
o We are responsible for understanding and complying with the requirements of federal statutes, regulations, and the terms and conditions of federal awards related to each of our federal programs and have identified and disclosed to you the federal statutes, regulation, and the terms and conditions of federal awards that are considered to have a direct and material effect on each major federal program; and we have complied with these direct and material compliance requirements.
o We are responsible for establishing and maintaining, and have established and maintained, effective internal control over compliance requirements for federal programs that provide reasonable assurance that we are managing our federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal award that could have a material effect on our federal programs. Also, no changes have been made in the internal control over compliance or other factors that might significantly affect internal control, including any corrective action taken by management with regard to significant deficiencies and material weaknesses in internal control over compliance have occurred subsequent to the period covered by the auditor’s report.
o We are responsible for and have accurately completed the appropriate sections of the Data Collection Form and we are responsible for taking corrective action on audit findings of the compliance audit and have developed a corrective action plan that meets the requirements of the Uniform Guidance.

Rogers, Anderson, Malody & Scott, LLP
8 To the best of our knowledge and belief, no events have occurred subsequent to the date of the schedule of expenditures of federal awards and through the date of this letter that would require adjustment to or disclosure in the aforementioned schedule of expenditures of federal awards.

Abigail Hernandez Conde, Finance Director bigail Hernandez Conde, Fina

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REPORT ON INTERNAL CONTROL OVER FINANCIAL

REPORTING AND ON COMPLIANCE AND OTHER MATTERS

BASED ON AN AUDIT OF FINANCIAL STATEMENTS

PERFORMED IN ACCORDANCE WITH

GOVERNMENT AUDITING STANDARDS
Independent Auditor’s Report
To the Honorable City Council
City of Twentynine Palms, California
We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States (Government Auditing Standards), the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Twentynine Palms (the City) as of and for the year ended June 30, 2024, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated October 31, 2024.

Report on Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the City’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

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Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses.

However, material weaknesses may exist that have not been identified.

Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

San Bernardino, California
October 31, 2024

STAFF REPORT
TO: City Council
FROM: Finance Director
FOR MEETING: Nov 12 2024
SUBJECT: Single Audit Report on Federal Awards for Fiscal Year (FY) 2023-24.

RECOMMENDATION:

The City Council receive and file.

ORDER OF PROCEDURE:

Request Staff Report (City Manager Presenting)
Council Questions of Staff
Council Discussion
Motion/Second
Discussion of Motion
Call the Question
ATTACHMENTS:
• 2024 Single Audit Report
BACKGROUND:

In accordance with the Single Audit Act of 1984 (which was amended in 1996) and the OMB's Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), non-federal entities are required to track federal funds awarded to recipients and pass-through recipients each year. The Uniform Guidance requires grantees to establish and maintain effective internal control over compliance with federal awards. Non-federal entities that expend $750,000 or more in federal awards in a single year are required to undergo an annual audit to ensure the accountability of federal awards.

For FY 2023-24, the City expended over $750,000 in federal funds, and therefore, was required to have a single audit performed by an independent auditor. The single audit was conducted by Rogers, Anderson, Malody and Scott, LLP (RAMS), a firm of independent certified public accountants appointed by the City Council. The single audit was conducted in accordance with auditing standards generally accepted in the United States of America (GAAS); the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States (Government Auditing Standards); and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance).

Single Audit Highlights
On October 31, 2024, RAMS issued its Independent Auditor's Report and has expressed its opinion on the following matters: Compliance for each major Federal Program and Schedule of Expenditures of Federal Awards (SEFA) in Accordance with the Uniform Guidance. The City has received an "Unmodified" (Clean) opinion on compliance for each major federal program. This means that "the City complied, in all material respects, with the compliance requirements .... that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2024." With regards to the SEFA, the auditor's report states that it is "fairly stated in all material respects in relation to the basic financial statements as a whole."

The single audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance, however, internal controls were considered, tested and reported on in accordance with the Uniform Guidance. The auditor's report states that during the audit, RAMS did not identify any material weakness in internal control over compliance. The audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion was expressed.

For the purposes of the SEFA, federal awards include both federal financial assistance received directly from a federal agency, as well as federal funds received indirectly by the City from a non-federal agency or other organization. The following table is a summary of the City's federal expenditures subject to the Single Audit requirements for FY 2023-24:

Federal Grantor/Pass-through
Grantor Program Title Total
U.S. Department of Housing and
Urban Development
Direct CDBG $14,000
County of San Bernardino CDBG $111,962
U.S. Department of Treasury
County of San Bernardino COVID-19 CSLFRF $779,179
U.S. Department of Transportation
California Department of
Transportation Highway Planning & Construction $1,202,525 Total Expenditures of
Federal Awards* $2,107,666
*For more details of the City's SEFA, see pg. 7 of the attached Single Audit Report.

Per Section 200.512 of the Uniform Guidance, the City is required to submit a single audit report package to the State Controller's Office (SCO), Federal Audit Clearinghouse (FAC), and Caltrans (2 CFR 200.332), within the earlier of 30 calendar days after receipt of the auditor's report(s), or nine months after the entity's fiscal year end.

The City has complied with this requirement and has submitted the single audit report package to all agencies referenced above on October 31, 2024.

Due to the increase in federal funding sources awarded to the City for various projects, Staff anticipates that a single audit will be required for FY 2024-25.

ENVIRONMENTAL:

N/A
ALTERNATIVES:

The City Council could choose not to accept the Single Audit Report on Federal Awards for Fiscal Year (FY) 2023-24.

FISCAL IMPACT:

None. The cost of the Single Audit for FY 2024-25 will be $5,800 for the first major program, and $5,400 for each additional program.

City of Twentynine Palms, California
Single Audit Report on Federal Awards
Year Ended June 30, 2024