Ukiah City Council
February 7, 2024

City Council
Special Meeting
AGENDA
Civic Center Council Chamber ♦ 300 Seminary Avenue ♦ Ukiah, CA 95482 To participate or view the virtual meeting, go to the following link: https://us06web.zoom.us/j/97199426600 Or you can call in using your telephone only:
• Call (toll free) 1-669-444-9171
• Enter the Access Code: 971 9942 6600
• To Raise Hand enter *9
• To Speak after being recognized: enter *6 to unmute yourself Alternatively, you may view the meeting (without participating) by clicking on the name of the meeting at www.cityofukiah.com/meetings.

February 7, 2024 - 4:30 PM

1. ROLL CALL AND PLEDGE OF ALLEGIANCE

2. AUDIENCE COMMENTS ON NON-AGENDA ITEMS
The City Council welcomes input from the audience. If there is a matter of business on the agenda that you are interested in, you may address the Council when this matter is considered. If you wish to speak on a matter that is not on this agenda that is within the subject matter jurisdiction of the City Council, you may do so at this time. In order for everyone to be heard, please limit your comments to three (3) minutes per person and not more than ten (10) minutes per subject. The Brown Act regulations do not allow action to be taken on audience comments in which the subject is not listed on the agenda.

3. BUDGET WORKSHOP

3.a. Presentation of City's Audited Annual Comprehensive Financial Report (ACFR) and Audit Reports for the Year Ended June 30, 2023.

Recommended Action: Receive and file ACFR.

Attachments:

1. ACFR 2023, City of Ukiah, CC copy

2. ACFR Presentation, 2023

3.b. Receive and File Second Quarter Financial Report.

Recommended Action: Receive and file report.

Attachments: None

3.c. Review and Update, if Warranted, the Ukiah City Council Strategic Plan.

Recommended Action: Review the Ukiah City Council Strategic Plan and provide direction as may be warranted to update the document.

Attachments:

1. Draft City Council Strategic Plan 24

4. ADJOURNMENT

Please be advised that the City needs to be notified 72 hours in advance of a meeting if any specific accommodations or interpreter services are needed in order for you to attend. The City complies with ADA requirements and will attempt to reasonably accommodate individuals with disabilities upon request. Materials related to an item on this Agenda submitted to the City Council after distribution of the agenda packet are available for public inspection at the front counter at the Ukiah Civic Center, 300 Seminary Avenue, Ukiah, CA 95482, during normal business hours, Monday through Friday, 8:00 am to 5:00 pm. Any handouts or presentation materials from the public must be submitted to the clerk 12 hours in advance of the meeting; for handouts, please include 10 copies.

I hereby certify under penalty of perjury under the laws of the State of California that the foregoing agenda was posted on the bulletin board at the main entrance of the City of Ukiah City Hall, located at 300 Seminary Avenue, Ukiah, California, not less than 24 hours prior to the meeting set forth on this agenda.

Kristine Lawler, CMC/CPMC
Dated: 2/2/24

Agenda Item No: 3.a.

MEETING DATE/TIME: 2/7/2024

ITEM NO: 2024-81

AGENDA SUMMARY REPORT
SUBJECT: Presentation of City's Audited Annual Comprehensive Financial Report (ACFR) and Audit Reports for the Year Ended June 30, 2023.

DEPARTMENT: Finance PREPARED BY:

Ginny Feth-Michel, Dan Buffalo, Finance Director,
Olga Keough, Controller, Mary Horger, Financial
Services Manager, Diana Ramos, Assistant
Accountant, SARAH BROWN, Financial Manager
PRESENTER: Dan Buffalo, Finance Director
ATTACHMENTS:

1. ACFR 2023, City of Ukiah, CC copy

2. ACFR Presentation, 2023

3. 3a Presentation Given at Meeting - ACFR Presentation, 2023 Summary: Finance Department will present to the City Council the audited Annual Comprehensive Financial Report (ACFR) for the year ended June 30, 2023.

Background: Pursuant to City policy and state law, the City has prepared financial statements for the year ended June 30, 2023, in accordance with generally accepted accounting principles (GAAP). Those statements were audited by an independent public accounting firm, Van Lant and Fankhanel, LLP, licensed by the State of California, and knowledgeable of governmental accounting and reporting.

Discussion: Management is pleased to submit the City of Ukiah’s Annual Comprehensive Financial Report (ACFR) for the fiscal year ended June 30, 2023. This report is prepared by the Accounting Division of the Finance Department in accordance with state law, generally accepted accounting principles (GAAP), and the best management practices for financial reporting as defined by the Government Finance Officers’ Association (GFOA). California law requires that a financial report be prepared annually and audited by a licensed certified public accountant within a reasonable period of time following the year-end. These financial statements are presented in conformity with GAAP and audited in accordance with generally accepted auditing standards.

Responsibility for the accuracy of the data and the fairness of presentation, including all footnotes and disclosures, rests with City management. We believe the data presented in this report is accurate in all material respects, and all statements and disclosures necessary for the reader to obtain a thorough understanding of the City’s financial activities have been included. 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). The City’s MD&A can be found immediately following the report of the independent auditor.

Management of the City has established an internal control framework that is designed both to 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 framework of internal controls has been designed to provide reasonable, rather than absolute, assurance that the financial statements will be free from material misstatements.

While traditionally addressed to the governing body of the City, this report is intended to provide relevant financial information to external users (non-management employees), who include the citizens of the City of Ukiah, City Staff, creditors, investors, and other concerned readers. We encourage all readers to contact the Finance Department with any questions or comments concerning this report.

The City’s financial statements have been audited by Van Lant & Fankhanel, LLP, a firm of certified public accountants. The goal of the independent audit is to provide reasonable assurance that the financial statements of the City for the fiscal year ended June 30, 2023, are free of material misstatements. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation.

Based upon the audit, the independent auditors concluded that there was reasonable basis for rendering an unqualified opinion, which states that the City’s financial statements for the fiscal year ended June 30, 2023, are presented fairly in conformity with GAAP. The independent auditor’s report is presented as the first component of the financial section of this report.

Management will present the 2023 ACFR (Attachment 1) to Council and highlight key elements of the report for its consideration, including how to navigate the document. A copy of the brief presentation, which provides brief guidance on how to navigate the document is included here as Attachment 2.

Recommended Action: Receive and file ACFR.

BUDGET AMENDMENT REQUIRED: N/A
CURRENT BUDGET AMOUNT: N/A
PROPOSED BUDGET AMOUNT: N/A
FINANCING SOURCE: N/A
PREVIOUS CONTRACT/PURCHASE ORDER NO.: N/A
COORDINATED WITH: N/A

CITY OF UKIAH,

CALIFORNIA

ANNUAL COMPREHENSIVE

FINANCIAL REPORT

FISCAL YEAR ENDED
JUNE 30, 2023
Attachment 1

ANNUAL COMPREHENSIVE FINANCIAL REPORT

CITY OF UKIAH, CALIFORNIA
FISCAL YEAR ENDED JUNE 30, 2023

PREPARED BY
CITY OF UKIAH FINANCE DEPARTMENT | ACCOUNTING DIVISION
TEAM MEMBERS:

DANIEL BUFFALO, MPA, CPA, CGMA | FINANCE DIRECTOR
GINNY FETH-MICHEL, CPA | ASSISTANT FINANCE DIRECTOR
MARY HORGER | FINANCIAL SERVICES MANAGER - PROCUREMENT, CAPITAL, AND SPECIAL PROJECTS OLGA KEOUGH, CPA | CONTROLLER
SARAH BROWN | FINANCIAL SERVICES MANAGER – DISBURSEMENTS DIANA RAMOS | ASSISTANT ACCOUNTANT
Attachment 1

THIS PAGE INTENTIONALLY LEFT BLANK
Attachment 1

TABLE OF CONTENTS

INTRODUCTORY SECTION
LETTER OF TRANSMITTAL ........................................................................................................................................................................i Profile of the City of Ukiah..............................................................................................................................................................ii The City of Ukiah Organization ...................................................................................................................................................iii City-Wide Sources and Uses of Resources................................................................................................................................iv Measure P ...........................................................................................................................................................................................ix Measure Y...........................................................................................................................................................................................xi Relevant Financial Policies........................................................................................................................................................... xii Acknowledgements ........................................................................................................................................................................ xii GFOA Certificate of Achievement......................................................................................................................................................ii List of Officials..................................................................................................................................................................................... xiv CITY ORGANIZATIONAL CHART ..........................................................................................................................................................xv

FINANCIAL SECTION
INDEPENDENT AUDITOR’S REPORT .....................................................................................................................................................1 MANAGEMENT DISCUSSION AND ANALYSIS (MD&A) .................................................................................................................4 Financial Highlights..........................................................................................................................................................................4 Overview of the Annual Comprehensive Financial Report.....................................................................................................4 Government-Wide Financial Analysis.........................................................................................................................................8 Net Position....................................................................................................................................................................................8 Activities.........................................................................................................................................................................................9 Governmental Activities.............................................................................................................................................................9 Business-type Activities............................................................................................................................................................14 Capital Assets and Debt Administration....................................................................................................................................17 Fund Financial Analysis................................................................................................................................................................. 19 Governmental Funds......................................................................................................................................................................19 Proprietary Funds............................................................................................................................................................................ 21 Budgetary Comparison...................................................................................................................................................................22 Economic Outlook...........................................................................................................................................................................23 Requests for Information...............................................................................................................................................................24 GOVERNMENT-WIDE FINANCIAL STATEMENTS...........................................................................................................................25 Statement of Net Position.........................................................................................................................................................26 Statement of Activities..............................................................................................................................................................27 Attachment 1

FUND FINANCIAL STATEMENTS ........................................................................................................................................................28 Governmental Funds......................................................................................................................................................................28 Balance Sheet ...............................................................................................................................................................................29 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position............................30 Statement of Revenues, Expenditures, and Changes in Fund Balances.........................................................................31 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities............................................................................................................................32 Proprietary Funds............................................................................................................................................................................33 Statement of Net Position.........................................................................................................................................................34 Statement of Revenues, Expenses, and Changes in Net Position ...................................................................................35 Statement of Cash Flows..........................................................................................................................................................36 Fiduciary Funds...............................................................................................................................................................................37 Statement of Fiduciary Net Position......................................................................................................................................38 Statement of Changes in Fiduciary Net Position................................................................................................................39 NOTES TO THE BASIC FINANCIAL STATEMENTS INDEX............................................................................................................... 40 Note 1 - Summary of Significant Accounting Policies............................................................................................................. 41 Note 2 - Stewardship, Compliance, and Accountability........................................................................................................ 51 Note 3 - Cash and Investments.....................................................................................................................................................52 Note 4 - Accounts Receivable.......................................................................................................................................................56 Note 5 – Notes and Loans Receivable.........................................................................................................................................57 Note 6 - Capital Assets...................................................................................................................................................................58 Note 7 - Long-Term Liabilities.....................................................................................................................................................60 Note 8 – Landfill Closure and Post Closure Costs..................................................................................................................66 Note 9 - Interfund Transactions ..................................................................................................................................................66 Note 10 - Risk Management..........................................................................................................................................................68 Note 11 - Public Employee Retirement Plan...............................................................................................................................71 Note 12 – Related Organizations.................................................................................................................................................82 Note 13 - Commitments and Contingencies.............................................................................................................................84 Note 14 – Successor Agency Trust, Former Ukiah Redevelopment Agency.....................................................................85 Note 15 – New Pronouncements..................................................................................................................................................87 Note 16 – Service Contracts..........................................................................................................................................................88 Required Supplementary Information (RSI)................................................................................................................................. 90 Schedules of Contributions and Proportionate Share of Total Pension Liability, Agent Multiple Employer (Miscellaneous), Last Ten Years.............................................................................................................................................90 Schedules of Contributions and Proportionate Share of Total Pension Liability, Cost Sharing Plan (Safety), Last Ten Years..............................................................................................................................................................................92 General Fund Budgetary Comparison Schedule .................................................................................................................94 Attachment 1

Notes to Required Supplemental Information ....................................................................................................................95 SUPPLEMENTARY INFORMATION ......................................................................................................................................................96 Streets Capital Improvement Budgetary Comparison Schedule.....................................................................................96 General Capital Projects...........................................................................................................................................................97 Pension Debt Service Budgetary Comparison Schedule ...................................................................................................98 Nonmajor Governmental Funds...................................................................................................................................................99 Combining Balance Sheet.......................................................................................................................................................104 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance..................................................109 Governmental Fund Budget Comparisons...............................................................................................................................114 Prop 172 ........................................................................................................................................................................................114 Opioid Settlement Fund...........................................................................................................................................................115 ARRC............................................................................................................................................................................................116 Downtown Business Improvement.......................................................................................................................................117 Low-Mod Income Housing Fund (LMIHF)........................................................................................................................118 Winter Special Events..............................................................................................................................................................119 Advanced Planning...................................................................................................................................................................120 Special Recreation Events........................................................................................................................................................121 Highway User Tax (Gas Tax)................................................................................................................................................122 Signalization ..............................................................................................................................................................................123 SB 325 Reimbursement............................................................................................................................................................124 S.T.P. ............................................................................................................................................................................................125 Trans-Traffic Congestion Relief............................................................................................................................................126 CDBG Program Income...........................................................................................................................................................127 HOME Program Income..........................................................................................................................................................128 CASP Certification and Training..........................................................................................................................................129 Asset Seizure..............................................................................................................................................................................130 Supplemental Law Enforcement (SLESF)...........................................................................................................................131 Community-Based Transitional Housing ...........................................................................................................................132 Asset Forfeiture 11470.2 H&S................................................................................................................................................ 133 Special Revenue - Police ..........................................................................................................................................................134 American Rescue Fund............................................................................................................................................................135 Transfer Station.........................................................................................................................................................................136 Solid Waste Mitigation Fund.................................................................................................................................................137 Equipment Reserve ..................................................................................................................................................................138 Special Projects Reserve..........................................................................................................................................................139 Park Development Fees...........................................................................................................................................................140 Attachment 1

Observatory Park .......................................................................................................................................................................141 Playground & Park Amenities...............................................................................................................................................142 Riverside Park............................................................................................................................................................................143 Rail Trail .....................................................................................................................................................................................144 Riparian Corridor Enhancement...........................................................................................................................................145 Combining Nonmajor Enterprise funds...................................................................................................................................146 Combining Statement of Net Position................................................................................................................................. 147 Combining Statement of Revenues, expenses, and Changes in Net Position............................................................148 Combining Statement of Cash Flows..................................................................................................................................149 Combining Internal Service Funds............................................................................................................................................150 Combining Statement of Net Position..................................................................................................................................151 Combining Statement of Revenues, Expenses, and Changes in Net Position...........................................................152 Combining Statement of Cash Flows..................................................................................................................................153 Combining Fiduciary Funds.......................................................................................................................................................154 Combining Fiduciary Net Position ......................................................................................................................................155 Combining Statement of Changes in Fiduciary Net Position........................................................................................156

STATISTICAL SECTION
STATISTICAL SECTION INDEX...........................................................................................................................................................158 Financial Trends............................................................................................................................................................................160 Net Position by Component...................................................................................................................................................160 Changes in Net Position...........................................................................................................................................................161 Fund Balances, Governmental Funds..................................................................................................................................163 Changes in Fund Balances, Governmental Funds ............................................................................................................164 Revenue Capacity ..........................................................................................................................................................................165 Tax Revenues by Source, Governmental Funds................................................................................................................165 Property Tax Rates...................................................................................................................................................................166 Electric Utility Rates............................................................................................................................................................... 167 Wastewater Utility Rates......................................................................................................................................................168 Water Utility Rates..................................................................................................................................................................169 Top Ten Electric Usage Customers......................................................................................................................................170 Debt Capacity..................................................................................................................................................................................171 Ratio of Outstanding Debt by Type ......................................................................................................................................171 Ratio of General Bonded Outstanding Debt......................................................................................................................172 Computation of Direct and Overlapping Debt...................................................................................................................173 Legal Debt Margin Information.............................................................................................................................................174 Attachment 1

Pledged Net Revenue Debt Coverage ..................................................................................................................................175 Demographic and Economic information................................................................................................................................176 Demographic and Economic Statistics................................................................................................................................176 Principal Employers..................................................................................................................................................................177 Operating Information ................................................................................................................................................................. 178 Full-time and Part-time City Employees by Function .................................................................................................... 178

OTHER COMPLIANCE REPORTS
Independent Auditor’s Report on Internal Control...................................................................................................................179 Independent Accountant’s Report on Agreed-upon Procedures Applied to Appropriations Limit...............................181 Attachment 1

INTRODUCTORY SECTION
Attachment 1

City of Ukiah, California i
Introductory Section

LETTER OF TRANSMITTAL
December 29, 2023
To the Honorable Mayor, members of the City Council and citizens of the City of Ukiah:

We are pleased to submit the City of Ukiah’s Annual Comprehensive Financial Report (ACFR) for the fiscal year ended June 30, 2023. This report is prepared in accordance with state law, generally accepted accounting principles (GAAP), and the best management practices for financial reporting as defined by the Government Finance Officers’ Association (GFOA). California law requires that a financial report be prepared annually and audited by a licensed certified public accountant within a reasonable period following the year end. These financial statements are presented in conformity with GAAP and audited in accordance with generally accepted auditing standards.

Responsibility for the accuracy of the data and the fairness of presentation, including all footnotes and disclosures, rests with City management. We believe the data presented in this report is accurate in all material respects, and all statements and disclosures necessary for the reader to obtain a thorough understanding of the City’s financial activities have been included. 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 MD&A and should be read in conjunction with it. The City’s MD&A can be found immediately following the report of the independent auditor.

Management of the City has established an internal control framework that is designed both to protect the City’s assets from loss, theft, or misuse and to compile enough, 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 framework of internal controls has been designed to provide reasonable, rather than absolute, assurance that the financial statements will be free from material misstatements.

While traditionally addressed to the governing body of the City, this report is intended to provide relevant financial information to external users who include the citizens of the City of Ukiah, City staff, creditors, investors, and other concerned readers. We encourage all readers to contact the Finance Department with any questions or comments concerning this report.

Letter of
Transmittal
Attachment 1

City of Ukiah, California ii
Introductory Section
The City’s financial statements have been audited by Van Lant & Fankhanel, LLP, a firm of certified public accountants. The goal of the independent audit is to provide reasonable assurance that the financial statements of the City for the fiscal year ended June 30, 2023, are free of material misstatements. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation.

Based upon the audit, the independent auditors concluded that there was reasonable basis for rendering an unmodified opinion, which states that the City’s financial statements for the fiscal year ended June 30, 2023, are presented fairly in conformity with GAAP. The independent auditor’s report is presented as the first component of the financial section of this report. This report includes all funds of the City and its blended component unit: The Successor Agency to the Ukiah Redevelopment Agency.

Profile of the City of Ukiah
The City of Ukiah is a full-service city in that it
provides most typical municipal functions,
including public safety (including police and fire
protection), public works, community
development and parks and recreation. In addition,
the City provides proprietary services, including
water, wastewater, electric, golf, and airport
services. It operates in a council-manager form of
government, whereby the council serves as the
legislative body and the City Manager its executive.

Incorporated on March 8, 1876 as a general law city,
Ukiah serves as the administrative seat for the
County of Mendocino, and with a residential
population of more than 15,9291 in a 4.7 square-mile
area, Ukiah is graced with a strong business base
and a well-established residential community.

Ukiah is a travel and recreation-oriented
destination and fortunate to serve as a hub for
Lake, Mendocino, southern Humboldt, and
northern Sonoma counties. The Ukiah business
environment is positive and well organized.

Driven by an active chamber of commerce, local
businesses are community-oriented and engaged in
City-business partnerships, including economic
development, job creation, tourism, and community
events. The City’s permanent retail trade area population is approximately 1 2023 California Department of Finance, Demographic Research Unit, E-1 Population Estimates for Cities, Counties, and the State, May 2023 Attachment 1

City of Ukiah, California iii
Introductory Section
104,000 people with 45,000 within a 10-mile radius. Ukiah’s historic downtown area is the center of commercial activity within the community. There are also commercial areas along Orchard/Perkins corridor, Airport Park Boulevard, Perkins Street, as well as much of State Street.

The City’s total labor force is approximately 6,9602
. Unemployment in Ukiah
was approximately 4.5 percent in June 2023, down from 5.5 percent in 2022.

Within ten miles, there is a diverse labor force specializing in such occupations as sales, technical and professional services, education, medical, agriculture, and government services, and other specialties. The largest employment sectors in the Ukiah area are: government (county and city); education; healthcare; light industry; and the service and hospitality trades. The agricultural and construction sectors are important, and the transportation/public utilities, wholesale trade, finance/insurance/real estate and manufacturing sectors round out the employment picture. Some of the larger employers in the primary trade area include the Ukiah Valley Medical Center, Ukiah Unified School District, County of Mendocino, City of Ukiah, and Savings Bank of Mendocino County.

Approximately 18.2 percent of all jobs in Mendocino County are located within the City of Ukiah.

The City of Ukiah Organization
The City is committed to providing its citizenry with high-quality services in an economical manner. In doing so, it establishes goals and objectives in line with the strategic plan of the City Council, which includes the following priorities:
• Enhancing our neighborhoods
• Developing quality infrastructure
• Planning for the future
• Growing our businesses
• Valuing our team.

All expenditures of the City support one or more of these priorities. Details on the Council’s strategic plan can be found here.
2 2023 California Employment Development Department, Labor Market Information Division, https://www.labormarketinfo.edd.ca.gov/data/interactive-labor-market-datatools.html Attachment 1

City of Ukiah, California iv
Introductory Section
The City is organized into 16 major operational units, categorized as departments and include:
• City Council
• City Manager's Office
• Finance
• City Attorney
• City Treasurer
• Human Resources & Risk
Management
• Redevelopment Successor
• Police
• Fire Authority
• Community Services
• Community Development
• Public Works
• Airport
• Electric
• Water Resources
• Non-departmental
They are further delineated by 52 divisions.

All departments and their divisions with direction from the City Council establish goals and objectives consistent with the strategic plan and community priorities.. A complete list by department and division can be found in the detail section by department and division of the City’s 2023-24 adopted budget here: https://stories.opengov.com/ukiahca/published/_3dOjPVjE City-Wide Sources and Uses of Resources
Expenditures. The City expends resources to provide a variety of services. It delineates these services categorically by governmental (police, fire, public works, recreation, etc.) and business-type (enterprise activities, such as water, wastewater, electric, airport, etc.).

The following chart illustrates where resources were spent by these major categories. Additional detail can be found in the MD&A preceding the basic financial statement.

Revenues. The City receives revenues from a wide variety of sources, but the majority of it comes from two primary sources: taxes and charges for service, predominantly utility fees. Despite the broad range of revenue sources, most are not discretionary, i.e. revenues from water rates can only be spent on water services. Taxes flowing to the general fund are by in large the only sources of Attachment 1

City of Ukiah, California v
Introductory Section
revenue that are discretionary and can be spent by the city council on what it determines to be beneficial and desirable to the residents of the city.

This chart illustrates the variety of revenue sources to the City.

Looking deeper into charges for service, the largest segment of revenue is generated from the electric enterprise, followed by wastewater and water services. Wastewater revenues also include amounts charged to the Ukiah Valley Sanitation District for service to District customers, including those inside and outside city limits.

Charges for Service
This chart further illustrates the services that generate revenue and their relative proportion to one another. Miscellaneous revenues include recreation program income, which is a significant source of inflows supporting youth summer and after school programs.

Attachment 1

City of Ukiah, California vi
Introductory Section
Taxes
Of the taxes collected by the City, the primary sources are sales; transient occupancy (TOT or bed taxes); and property taxes, specifically secured property taxes and what are known as property taxes in lieu of vehicle license fees (VLF).

Unlike charges for services, characterized as exchange transactions, where a dollar in revenue corresponds to a dollar worth of service, taxes are characterized as non-exchange transactions in that there is no direct connection to the imposition of the tax and what it is spent on. Taxes by definition are discretionary sources of income, although some taxes can be limited to their use.

Of the various tax sources to the City, none have such explicit restriction.

Measures P and Y, described in more detail below, are appropriated by the City Council through resolution to be used exclusively for public safety services and streets (including rights-of-way) respectively. However, this does not rise to the level of a restriction under generally accepted accounting principles.

This chart illustrates the variety of tax sources collected by the City, the majority of which are accounted for in the general fund.

Sales Tax. The City collects sales tax from three sources: normal Bradley-Burns sales taxes (1 percent of taxable transactions), a ½ cent transaction and use tax, commonly referred to as Measure P, and a ½ cent transaction and use tax, commonly referred to as Measure Y. All are devoted entirely to the City and are distinct and considered separate sources of revenue. Each behave slightly Attachment 1

City of Ukiah, California vii
Introductory Section
differently given their tax base. Combined they are the largest source of revenue to the general fund.

Bradley-Burns sales taxes are referred to as “sales and use” taxes, levied on transactions based geographically in the City. Measures P and Y are referred to as a “transaction and use” taxes and is applied to any taxable sale in the City as well as any sale where the use of the item is in the City. For instance, a car purchased outside the City but registered to, and therefore presumed to be used at, an address within would be levied the ½ cent on the purchase price for Measure P and the same amount for Measure Y. Both are general taxes and can be used for any regular, general governmental purpose; however, the City Council, through resolution, has assigned their use to public safety and streets, respectively.

As the hub of Mendocino County and beyond, Ukiah has a strong sales tax base.

This served the City well in providing sufficient revenues to maintain service levels at pre-pandemic levels with minimal interruption or disruption. BradleyBurns tax receipts failed to meet budgetary estimates for the year and were lower than the year prior. Receipts from Measures P and Y were lower than budgetary estimates and the year prior, contributing to an overall sales tax decline. The specific reasons for this are three-fold:

1. The local marijuana industry has declined significantly in the region, affecting several of the city’s businesses across sectors.

2. General economic conditions associated with early recessionary effects may be straining local household budgets, resulting in slower growth and reduced spending.

Attachment 1

City of Ukiah, California viii
Introductory Section

3. Pandemic-era stimulus funding has been depleted and less discretionary funding is available to individuals and households.

We expect the condition experienced in fiscal year 2023 to continue into 2024 but to a receding extent. Management may take steps during the budget year to adjust budgetary spending in line with impacted revenue sources, particularly in the general fund.

All sales tax due the City is administered by the California Department of Tax and Fee Administration (CDTFA).

Property Tax. Traditionally, revenue from property tax was viewed as a very stable source. The housing collapse of 2008 tested that assumption. Ukiah’s housing market has made a considerable recovery, and city revenues from secured property taxes flowed accordingly. Slightly less than 11 percent of property taxes paid by property owners within the City are allocated to the City. The majority is distributed to local schools and the County of Mendocino.

Receipts from this source were up 4.4 percent from the year prior due to assessed valuation growth from ownership change as well as the annual adjustment under Prop 13.

The chart here illustrates how property tax revenues overall have flowed to the City since 2007. Overall includes secured, unsecured, VLF in lieu and other property-related taxes. The blue bars represent the actual dollar amounts received by the City while the orange line indicates the rate of that change year over year. In FY 2023 the rate of change was higher than in the prior year at 4.4 percent. Based on historical experience, underlying property-related revenues in general are expected to increase modestly FY 2023-24 and beyond, likely to average 2.5-3.5 percent. This is challenging to estimate, however, due to difficulty obtaining information form the Mendocino County AuditorController’s Office.

Attachment 1

City of Ukiah, California ix
Introductory Section
Measure P
Measure P, passed by a simple majority (50 percent plus 1) of Ukiah voters in November of 2014, is a general (unrestricted) transaction and use tax. A general, unrestricted tax is one that can be used to fund any program, function, service, or project at the discretion of the City Council. It is not a special, restricted tax, which would require approval of two-thirds of the voting public.

It continued a sun-set transaction and use tax, known as Measure S (2005), accompanied by an advisory Measure T (2005). Measure P, however, was passed with no advisory measure. The purpose of Measure P is to augment public safety expenditures to provide a higher level of police and fire service to the community. Amounts collected from the tax are to be used in addition to the commitment of the General Fund and not in replacement of. The following graph demonstrates how the past revenue measure (S) and now Measure P have been employed with relation to the General Fund.

Attachment 1

City of Ukiah, California x
Introductory Section
2014-15 2022-23 Variance with
Baseline Actual Baseline

REVENUES
Measure P $ 2,465,521 $ 3,456,191 $ 990,670
Public safety revenues:

Police 1,001,861 791,156 (210,705)
Fire 37,235 3,666,830 3,629,595
Prop 172 53,471 119,215 65,744
General revenues (general fund) 7,922,006 11,261,332 3,339,326 Total revenues 11,480,094 19,294,724 7,814,630

EXPENDITURES
Current:

Police 8,709,693 10,409,204 (1,699,511)
Fire 2,553,407 8,107,907 (5,554,500)
Total current 11,263,100 18,517,111 (7,254,011)
Capital outlay:

Police 186,594 64,360 122,234
Fire 30,400 713,253 (682,853)
Total capital outlay 216,994 777,613 (560,619)
Total expenditures 11,480,094 19,294,724 (7,814,630)
Excess (deficiency) of revenues over expenditures $ - $ - $ -

PERSONNEL
Police:

Sworn 32 27 (5)
Miscellaneous 18 18 (0)
Total police 50 45 (5)
Fire:

City 11 21 10
Ambulance/Misc - 7 7
UVSD 6 - (6)
Total fire 17 28 11
Notes:
1) Excludes parking enforcement expenditures and associated revenue, dispatch services revenue, and fire prevention services revenue. 4) Ambulance services now included in 2022-23. Fiscal year 2021-22 have been updated here as well. 3) Beginning fiscal year 2021-22 the City changed its accounting of the UVFD and City shared cost. The District's contribution to personal and other operating expenditures are not recognized as revenues to the City. Conversely, the City's expenditures related to fire services now include those amounts previously reported as expenditures of UVFD.
2) Does not include Emergency Management services, which are included in Public Safety on the Statement of Revenues, Expenditures, and Changes in Fund Balance.

Measure P
Schedule of Revenues, Expenditures, and Changes in Fund Balances – Baseline to Current Actual For the Year Ended June 30, 2023
Attachment 1

City of Ukiah, California xi
Introductory Section
Measure Y
Measure Y, passed by a simple majority (50 percent plus 1) of Ukiah voters in November of 2016, is a general (unrestricted) transaction and use tax. A general, unrestricted tax is one that can be used to fund any program, function, service, or project at the discretion of the City Council. It is not a special, restricted tax, which would require approval of two-thirds of the voting public.

Measure Z, passed in conjunction with Measure Y, was a distinctly separate, advisory Measure Y, indicating the voting public's preference for the use of Measure Y proceeds for street repair and maintenance.
2023 2022 2021 2020 2019 2018 2017 Total

OPERATING REVENUES
Measure Y 1/2 % transaction and use tax $ 3,450,586 $ 3,620,957 $ 3,862,145 $ 3,368,450 $ 3,016,205 $ 2,729,797 $ 528,057 $ 20,576,197 Other financing sources 176,917 - - - - - - 176,917
Total revenues 3,627,503 3,620,957 3,862,145 3,368,450 3,016,205 2,729,797 528,057 13,504,654

OPERATING EXPENSES
General and administrative 37,088 80,857 10,251 17,733 10,150 5,444 9,134 170,657 Basic maintenance and operations 969,256 757,760 598,296 644,771 387,449 306,143 294,084 3,957,758 Enhanced capacity for maintenance and operations 471,827 156,370 158,500 154,479 60,260 1,979 - 1,003,414 Less: general fund maintenance of effort (see Note 1) (448,957) (406,477) (399,840) (385,086) (375,597) (373,870) (350,000) (2,739,827) Total operating expenditures 1,029,213 588,510 367,207 431,897 82,262 (60,304) (46,782) 774,279

DEBT SERVICE AND CAPITAL PROJECTS
Debt service:

I-Bank 75,329 75,435 75,538 75,638 75,638 75,638 - 453,216 Series 2022 Lease Revenue Bonds (Street Projects) 1,896,522 - - - - - - 1,896,522 Projects 815,762 3,616,594 2,688,687 2,689,759 4,526,294 1,841,113 38,460 16,216,669 Total debt service and capital projects 2,787,613 3,692,029 2,764,225 2,765,397 4,601,932 1,916,751 38,460 16,669,886 Total expenditures, Measure Y 3,816,826 4,280,540 3,131,432 3,197,294 4,684,194 1,856,446 (8,322) 17,444,164 Change in Measure Y resources (189,324) (659,583) 730,714 171,156 (1,667,989) 873,351 536,379 (205,296) Measure Y resources - beginning (15,972) 643,610 (87,103) (258,259) 1,409,729 536,379 - Measure Y resources - ending $ (205,296) $ (15,972) $ 643,610 $ (87,103) $ (258,259) $ 1,409,729 $ 536,379 PROJECTS IN PROCESS (see Note 2)
Reconstruction $ 4,365,651
Maintenance 22,369
Total projects in process $ 4,388,020
Measure Y
Notes:

1. This is the amount established by the City Council, per Resolution 2016-34, committing a minimum of $350,000 per year from the general fund on street maintenance and repair. That amount is to be adjusted annually by changes to the Construction Cost Index, as reported by the Engineering News-Record.

2. Projects in process are projects and activities that are in contract (encumbered) but which have not incurred expenditures as of June 30, 2023.

3. Measure Y resources for Public Works Engineering Services were enhanced in FY 2020 to support basic maintenance and operations due to increased focus on Measure Y activities.

Comparative Schedule of Resources and Uses
Measure Y
For the Years Ended June 30, 2023, 2022, 2021, 2020, 2019, 2018, and 2017 Attachment 1

City of Ukiah, California xii
Introductory Section
Relevant Financial Policies
City Management has adopted a series of financial policies meant to guide its use and reporting of revenues. Some of the more germane policies as related to this report include the following:
• All current operating expenditures will be paid for with current revenues, unless the use of reserves is approved by the City Council. • Revenues will be conservatively estimated.
• Intergovernmental assistance in the form of grants and loans will be used to finance only:
• Those capital improvements which can be maintained and operated over time; or
• Operating programs that can either be sustained over time or have a limited horizon.
• A minimum fund balance reserve in the General Fund will always be maintained. The minimal, optimal level required for this reserve will be 25 percent of the General Fund operating budget. The reserve will be drawn down as a funding source of last resort and used only after other reserve accounts have been accessed.
• The unrestricted fund balance in the General Fund will be maintained at a level enough to provide adequate working capital and to accommodate required adjustments to other reserve accounts, including the reserves for advances to other funds, deposits and prepaid items. • In general, one-time revenues will be used only to support capital or other non-recurring expenditures. One-time revenues may be used for operating programs only after an examination determines if they are subsidizing an imbalance between operating revenues and expenditures; and then only if a long-term forecast shows that the operating deficit will not continue.
• The City invests all idle cash as determined by analysis of anticipated cash flow needs. Specific emphasis will be placed on future cash requirements when selecting maturity dates to avoid forced liquidations and the potential corresponding loss of investment earnings. • When the City finances capital projects by issuing bonds or acquiring loans, it will pay back those obligations within a period that is consistent with the useful life of the project.
• The City requires an annual audit of the books of account, financial records, inventories and reports of all City officers and employees involved in the handling of financial matters by a qualified independent auditor.

Information concerning significant accounting policies affecting the finances of the City is summarized in the Notes to the Financial Statements.

Acknowledgements
The preparation of this Annual Comprehensive Financial Report could not be accomplished without the efficient and dedicated service of the entire staff of Attachment 1

City of Ukiah, California xiii
Introductory Section
the Finance Department, the City’s Management Team, and the auditing firm of Van Lant & Fankhanel, LLP. We would like to express our appreciation to Brett Van Lant, CPA; Greg Fankhanel, CPA; the staff of Van Lant & Fankhanel; and to the members of the Finance Department, City Manager’s Office, and other administrative divisions who assisted and contributed to its development.

We also would like to thank members of the City Council and all City departments for their cooperation and support in planning and conducting the financial operations of the City during the fiscal year.

Respectfully submitted,

SAGE SANGIACOMO, ICMA-CM
City Manager

DANIEL BUFFALO, MPA,CPA,CGMA
Finance Director
Attachment 1

GFOA Certificate of Achievement
Attachment 1

City of Ukiah, California xiv
Introductory Section
City of Ukiah, California
List of Officials
June 30, 2023

CITY COUNCIL

UKIAH REDEVELOPMENT SUCCESSOR AGENCY BOARD OF DIRECTORS Mari Rodin Mayor
Josefina Duenas Vice Mayor
Doug Crane Council Member
Juan Orozco Council Member
Susan Sher Council Member

EXECUTIVE MANAGEMENT TEAM
Sage Sangiacomo City Manager
Shannon Riley Deputy City Manager
David Rapport City Attorney
Kristine Lawler City Clerk
Cedric Crook Chief of Police
Doug Hutchison Fire Authority Chief
Daniel Buffalo Finance Director
Sheri Mannion Human Resources/Risk Management Director
Tim Eriksen Public Works Director/City Engineer
Craig Schlatter Community Development Director
Greg Owen Airport Manager
Cindy Sauers Electric Utility Director
Sean White Water Resources Director
Neil Davis Community Services Director
Attachment 1

City of Ukiah, California xv
Introductory Section

CITY ORGANIZATIONAL CHART
Attachment 1

FINANCIAL SECTION
Attachment 1

Independent Auditor’s Report
The Honorable City Council
City of Ukiah, California
Report on the Financial Statements
Opinions
We have audited the accompanying financial statements of the governmental activities, business-type activities, each major fund, and the aggregate remaining fund information of the City of Ukiah (City), as of and for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the governmental activities, business-type activities each major fund, and the aggregate remaining fund information of the City of Ukiah, as of June 30, 2023, and the respective changes in financial position, and, where applicable, cashflows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

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

Change in Accounting Principle
As described in Note 16 to the financial statements, in 2023, the City adopted new accounting guidance, GASB Statement No. 96, Subscription-Based Information Technology Arrangements. Our opinion is not modified with respect to this matter.

Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of these 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 error or fraud.

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.

Attachment 1

Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions.

Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

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

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

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

Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The accompanying combining statements and budget schedules, as listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has 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 Attachment 1

our opinion, the combining statements, as listed in the table of contents, are fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Other Information
Management is responsible for the other information included in the annual report. The other information comprises the introductory 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 a report dated December 28, 2023, on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the 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.

December 28, 2023
Murrieta, CA
Attachment 1

City of Ukiah, California
Financial Section: Required Supplementary Information | MD&A Page | 4

MANAGEMENT DISCUSSION AND ANALYSIS (MD&A)
(REQUIRED SUPPLEMENTARY INFORMATION)
The following discussion provides readers of the City of Ukiah’s financial statements a narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2023. We encourage readers to consider the information presented here in conjunction with the Independent Auditor’s Report, the basic financial statements, and the accompanying notes.

Financial Highlights
• City assets and deferred outflows exceeded its liabilities and deferred inflows by $171.4 million (net position) as of June 30, 2023.
• The City’s net position in total increased by $2.6 million. • The net position for governmental activities ended the year at $60.3 million, a 3.9 percent increase from the prior year, while the net position of business activities was $111.2 million, a 0.2 percent increase. • The governmental activities saw increased revenues from some major sources, notably charges for service and operating grants. Expenses were higher by $8.5 mil, a 34.1 percent change from the year prior primarily due to changes in net pension liabilities.
• Business activities saw revenues increase by 12.6 million, driven by increased electric revenues and capital grants, while expenses increased over $5.4 million, driven by increased electric operating costs (notably power purchases) and changes to net pension liabilities.

Overview of the Annual Comprehensive Financial Report
This Annual Comprehensive Financial Report is presented in three major parts:
1) Introductory section, which includes the Transmittal Letter and general information; and 2) Financial section, which includes the Management’s Discussion and Analysis (MD&A), the Basic Financial Statements, which include the Government-wide and the Fund Financial Statements, along with the notes to these financial statements and Combining and Individual Fund Financial Statements and Schedules; and 3) Statistical section, which includes financial, demographic and economic information on the City and surrounding community such as the value of taxable property, direct and overlapping tax rates, direct and overlapping debt, population and estimated per capita income.

This Management Discussion and Analysis is intended to serve as an introduction to the financial section. The statements of this section are comprised of components including financial highlights, government-wide financial statements, fund financial statements, a General Fund budgetary comparison and an economic outlook.

THE GOVERNMENT-WIDE FINANCIAL STATEMENTS
The government-wide financial analysis provides an overview of the City’s activities and is comprised of the Statement of Net Position and the Statement of Activities. The Statement of Net Position provides information about the financial position of the City as a whole, including all its assets, capital assets and liabilities on the full-accrual basis, like that used Attachment 1

City of Ukiah, California
Financial Section: Required Supplementary Information | MD&A Page | 5 by private sector entities. The Statement of Activities provides information about all the City’s revenues and expenses, also on the full-accrual basis, with the emphasis on measuring net revenues or expenses of each the City’s major functions, which have been categorized as follows:

Governmental Activities
• General government (e.g., City Council, administration, finance and accounting, human resources, legal, treasurer, etc.)
• Community development (planning and building)
• Roads and infrastructure (road maintenance, city engineer and public works,) • Housing and support programs (CDBG and HOME grants, etc.) • Redevelopment/Economic development
• Public safety (Police and Fire)
• Parks, buildings, and grounds (parks, building and grounds maintenance, etc.) • Culture and recreation (museum, pool, sports, etc.)
Business-type activities
• Airport
• Ambulance
• Conference Center
• Electric
• Golf Course
• Landfill
• Parking District
• Street lighting
• Wastewater
• Water
The Statement of Activities explains in detail the change in net position for the year. Changes to that net position include costs associated with depreciation and other full accrual, albeit non-budgeted items that may not influence cash or current (short-term) financial resources but do affect economic (long-term) resources. The statement presents expenses categorized by function or activity. This is done so that a direct connection can be made to the cost of providing that service or function for the year. The statement then presents how that activity was financed using funds other than those that can be used for any purpose (i.e. taxes, fines, investment earnings, etc.). This is an attempt to demonstrate how selfsufficient an activity was during the year. The remainder is the net expense covered by general revenues.

All the City’s activities are grouped into either governmental activities or business-type activities, as explained below. The amounts in the Statement of Net Position and the Statement of Activities are separated into governmental activities and business-type activities in order to provide a clear summary of the two.

Government-wide financial statements, prepared on the accrual basis, measure the flow of all economic resources of the City.

Attachment 1

City of Ukiah, California
Financial Section: Required Supplementary Information | MD&A Page | 6 The Statement of Net Position and the Statement of Activities present information about the following:
• Governmental activities—all the City’s basic services are governmental activities. These services are supported by general city revenues, such as taxes, and by specific program revenues such as user fees and charges. • Business-type activities—The City’s enterprise activities of electric, water, wastewater, recycled water, solid waste disposal site, parking, street lighting, airport, conference center and golf course are reported in this area.

Unlike governmental activities, these services are supported by charges paid by users based on the amount of the service they use.

The City’s governmental activities also include the housing activities of the (former) Ukiah Redevelopment Agency, a separate legal entity for which the City is financially responsible. As of February 1, 2012, the Ukiah Redevelopment Agency was dissolved, and a successor agency was established to handle the remaining affairs and obligations of the former agency. The City of Ukiah elected to be that successor agency. Upon dissolution, the assets and liabilities of the former agency were transferred to a private-purpose trust fund, which is not reported on the government-wide statements but is presented in the fund-based statements using the full accrual basis of accounting.

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

Because the focus of fund statements is narrower than that of the government-wide, it is useful to compare the information presented for the governmental funds with similar information presented for governmental activities in the governmentwide financial statements. By doing so, readers may better understand the long-term impacts of the City’s near-term financing decisions. Both the governmental activities Statement of Net Position and the governmental funds Statement of Revenues, Expenditures, and Changes in Net Position provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.

Major funds account for the largest portion of the financial activities of the City and are presented individually, while the activities of non-major funds are presented in summary, with supplementary schedules presenting the detail for each. Major funds are explained below.

The fund financial statements provide detailed information about each of the City’s most significant funds, termed major funds. The concept of major funds, and the determination of which are major, was established by GASB Statement 34 and replaces the concept of combining like funds and presenting them in total. Instead, each major fund is presented individually, with all non-major funds summarized and presented only in a single column. Supplementary Information present the detail of these non-major funds. Major funds present the major activities of the City for the year and may change from year to year as a result of changes in the pattern of City’s activities.

Attachment 1

City of Ukiah, California
Financial Section: Required Supplementary Information | MD&A Page | 7 For the fiscal year ended June 30, 2023, the City’s major funds were as follows:

GOVERNMENTAL FUNDS:
• General Fund
• Streets Capital Projects (accounts principally for Measure Y uses) • General Capital Projects
• Pension Debt Service
PROPRIETARY FUNDS:
• Landfill (closure and post-closure)
• Electric Enterprise
• Water Enterprise
• Wastewater Enterprise
The City’s enterprise funds are reported as proprietary funds. Enterprise fund financial statements are prepared on the fullaccrual basis, and include all their assets and liabilities, both current and long-term.

The City adopts an annual appropriated budget for all governmental and proprietary funds. Budgetary comparison statements for the General Fund and all major governmental funds are presented as required supplementary information (RSI), as required by GASB 34. Proprietary budget comparison statements are not required or presented.

Fiduciary Statements
The City’s fiduciary activities are reported in the separate Statement of Fiduciary Net Position. These activities are excluded from the City’s other financial statements because the City cannot use these assets to finance its own operations.

The City maintains two fund types in this category: custodial and private purpose trust funds. These funds include resources held by the City on behalf of the Ukiah Valley Sanitation District, The Russian River Watershed Association, the Mendocino Solids Waste Management Authority (MSWMA), and the Ukiah Valley Fire District and the Ukiah Redevelopment Successor Agency. They provide information about the cash balances and activities of these funds accounted for on an economic resources measurement focus and full accrual basis of accounting. In its presentation of these statements, the City has adopted the provisions of GASB 84: Fiduciary Activities.

Notes to the Financial Statements
The notes provide additional information that is essential to a full understanding of the data provided in the Governmentwide and Fund Financial Statements. The notes to the basic financial statements can be found following the basic financial statement presentation of this report.

Other Supplementary Information
In addition to the basic financial statements and the accompanying notes, this report also presents combined statements, which illustrate the condition and activities of all non-major funds. The combining statements referred to earlier in connection with non-major governmental funds are presented immediately following the notes to the financial statements.

Combining and individual fund statements can be found subsequent to the notes section of this report.

Attachment 1

City of Ukiah, California
Financial Section: Required Supplementary Information | MD&A Page | 8 Government-Wide Financial Analysis
Net Position
Net position may serve over time as a useful indicator of a government’s financial position. The following table reflects the condensed net position for both governmental and business-type activities.

The City’s net position increased from the year prior due in large part to a 14.7 million in grants and other contributions received. These additions to net position were offset by lower sales tax receipts and higher expenses, predominantly driven by power purchase costs and changes to the City’s net pension liability.

Restricted net position of $43.4 million is primarily comprised of cash and cash-equivalents for use as prescribed by an outside entity, such as a grantor, bond holder, covenant, or other restricting entity or instrument, or are in the form of longterm notes receivable and are unavailable for spending. In the case for FY 2023, $22.4 million is held for capital projects involving streets, water and sewer infrastructure, electric infrastructure, and a new corporation yard. The next largest restricted amount ($14 million) is for housing programs in the form of loans receivable. A smaller portion is restricted for public safety activities and streets. It is important to note that restricted cash and investments may be different than restricted net position, e.g., cash restricted by a bond indenture as part of a bond issue is offset by the corresponding liability on the statement of net position, which is part of net investment in capital assets.

Unrestricted net position of negative $55.3 million is due primarily due to the City’s long-term obligations related to net pension liabilities and estimated landfill closure costs, changes to the former being a significant portion of the $22.3 million increase from the prior year. The City’s working capital to meet current and other near-term operating and capital concerns was $79.3 million, which includes unspent bond proceeds of $41.2 million. 2023 2022 2023 2022 2023 2022
Current and other assets $ 67,782,084 $ 85,619,832 $ 38,259,828 $ 44,302,745 $ 106,041,912 $ 129,922,577 Capital assets(net) 71,542,525 61,581,082 181,824,010 181,668,949 253,366,535 243,250,031 Total assets 139,324,609 147,200,914 220,083,838 225,971,694 359,408,447 373,172,608 Deferred outflows of resources 18,804,317 12,715,862 5,023,335 785,130 23,827,652 13,500,992 Total assets and deferred outflows of resources 158,128,926 159,916,776 225,107,173 226,756,824 383,236,099 386,673,600 Current and other liabilities 8,622,182 6,827,070 6,291,551 8,643,356 14,913,733 15,470,426 Long-term liabilities 79,201,940 70,804,478 107,113,007 104,121,577 186,314,947 174,926,055 Total liabilities 87,824,122 77,631,548 113,404,558 112,764,933 201,228,680 190,396,481 Deferred inflows of resources 10,036,177 24,400,816 556,427 3,083,585 10,592,604 27,484,401 Total Liability and deferred inflows of resources 97,860,299 102,032,364 113,960,985 115,848,518 211,821,284 217,880,882

NET POSITION
Net investment in capital assets 57,015,033 56,905,670 126,323,676 128,557,177 183,338,709 185,462,847 Restricted 42,596,682 15,368,987 794,192 320,241 43,390,874 15,689,228 Unrestricted (39,343,088) (14,390,245) (15,971,680) (17,969,112) (55,314,768) (32,359,357) Total net position $ 60,268,627 $ 57,884,412 $ 111,146,188 $ 110,908,306 $ 171,414,815 $ 168,792,718 Governmental Activities Business-type Activities Total
Comparative Net Position
June 30, 2023 and 2022
Attachment 1

City of Ukiah, California
Financial Section: Required Supplementary Information | MD&A Page | 9 Activities
Expenses incurred by the City for FY 2023 year totaled $82.6 million, an increase from FY 2022 of $14 million. This section provides analysis and explanation for this change delineated by the two components of the City: governmental activities and business-type activities.

Governmental Activities
In the realm of governmental activities, the City witnessed a moderate increase in overall revenues, ascending from $34.2 million in 2022 to $36.3 million in 2023. This uptick was largely due to a rise in charges for services and operating grants and contributions, which offset the slight decrease in tax revenues and capital grants and contributions. On the expenditure front, the total expenses saw a significant escalation from $24.9 million in 2022 to $33.4 million in 2023, with the general government category almost doubling its previous year's figure. Public safety costs also saw an incremental rise.

The primary driver was changes to the net pension liability in which the City recognized lower than expected returns by CalPERS to its portfolio. The end result was a decrease in the change in net position before transfers, from a positive change of $9,4 million in 2022 to $2.4 million in 2023. Even with the augmented expenses, the total net position by the end of 2023 marked an increase, reaching $60.3 million, compared to $57.9 million in the previous year. 2023 2022 2023 2022 2023 2022

REVENUES
Program revenues:

Charges for Services $ 6,398,932 $ 4,759,875 $ 40,724,604 $ 34,699,279 $ 47,123,536 $ 39,459,154 Operating Grants and Contributions 6,040,597 4,947,892 1,659,916 1,572,005 7,700,513 6,519,897 Capital Grants and Contributions 1,884,763 2,424,991 5,077,674 201,152 6,962,437 2,626,143 General revenues:

Taxes 19,351,489 20,094,975 18,043 17,057 19,369,532 20,112,032 Franchise fees 2,197,540 1,846,594 - - 2,197,540 1,846,594 Use of money and property 227,389 (119,912) 287,566 (234,775) 514,955 (354,687) Other revenue 233,241 280,944 1,073,603 - 1,306,844 280,944 Total revenues 36,333,951 34,235,359 48,841,406 36,254,718 85,175,357 70,490,077

EXPENSES
Governmental activities:

General government 5,701,815 2,824,700 - - 5,701,815 2,824,700 Public safety 13,937,176 10,238,317 - - 13,937,176 10,238,317 Housing and community development 1,556,452 2,058,024 - - 1,556,452 2,058,024 Public works 3,728,734 2,357,684 - - 3,728,734 2,357,684 Parks, buildings, and grounds 2,073,670 2,377,907 - - 2,073,670 2,377,907 Recreation and culture 4,743,205 3,262,934 - - 4,743,205 3,262,934 Economic development and redevelopment 310,065 84,274 - - 310,065 84,274 Interest on long-term debt 1,321,028 1,674,767 - - 1,321,028 1,674,767 Business-type activities:

Parking District - - 117,417 148,354 117,417 148,354
Landfill - - 2,143,903 1,417,733 2,143,903 1,417,733
Ambulance Services - - 1,242,793 933,997 1,242,793 933,997 Golf - - 229,507 247,149 229,507 247,149
Conference Center - - 523,678 306,131 523,678 306,131
Airport - - 1,626,400 1,541,733 1,626,400 1,541,733
Electric - - 25,490,865 22,839,554 25,490,865 22,839,554 Street Lighting - - 189,463 146,475 189,463 146,475
Water - - 9,119,878 7,390,232 9,119,878 7,390,232
Wastewater - - 8,497,211 8,747,889 8,497,211 8,747,889
Total expenses 33,372,145 24,878,607 49,181,115 43,719,247 82,553,260 68,597,854 Change in net position before special items and transfers 2,961,806 9,356,752 (339,709) (7,464,529) 2,622,097 1,892,223 Transfers (577,591) 633,357 577,591 (633,357) - -
Change in net position 2,384,215 9,990,109 237,882 (8,097,886) 2,622,097 1,892,223 Total net position - beginning 57,884,412 47,894,303 110,908,306 119,006,192 168,792,718 166,900,495 Total net position - ending $ 60,268,627 $ 57,884,412 $ 111,146,188 $ 110,908,306 $ 171,414,815 $ 168,792,718 Comparative Changes in Net Position
June 30, 2022 and 2023
Governmental Activities Business-type Activities Total
Attachment 1

City of Ukiah, California
Financial Section: Required Supplementary Information | MD&A Page | 10 A notable uptick was observed in the General Government expenses, which more than doubled from the previous year, rising from $2.8 million in 2022 to $5.7 million in 2023. This significant increase reflects the bulk of changes to net pension liability, discussed earlier.

The Public Safety expenses also increased, climbing from $10.2 million to $13.9 million. This category, encompassing police, fire, and emergency services, often commands a substantial share of municipal budgets. The upward trend reflects incremental investments aimed at improving public safety infrastructure, such as acquiring advanced equipment or expanding services to better serve the community. Further, resources derived from Measure Y, are deployed in full to support police and fire services.

In contrast, Housing and Community Development saw a reduction in expenditures, from $2.1 million in 2022 to $1.6 million in 2023. The decline represents the conclusion of specific development initiatives that were active in the previous year.

Functions/Programs Expenses % of Total
Program
Revenues % of Total
Net (Expense)
Revenue
General government $ 5,701,815 17.09% 1,089,818 $ 7.61% (4,611,997) $ Public safety 13,937,176 41.76% 3,409,852 23.80% (10,527,324) Housing and community development 1,556,452 4.66% 1,686,828 11.78% 130,376 Public works 3,728,734 11.17% 3,723,355 25.99% (5,379)
Parks, buildings, and grounds 2,073,670 6.21% 317,730 2.22% (1,755,940) Recreation and culture 4,743,205 14.21% 3,845,518 26.85% (897,687) Economic development and redevelopment 310,065 0.93% 251,191 1.75% (58,874) Interest on long-term debt 1,321,028 4.32% - 0.00% (1,321,028) Total $ 33,372,145 100.35% 14,324,292 $ 100.00% (19,047,853) $ Expenses and Program Revenues
Governmental Activities
June 30, 2023
Attachment 1

City of Ukiah, California
Financial Section: Required Supplementary Information | MD&A Page | 11 Public Works expenses witnessed a moderate rise, indicative of the city's commitment to maintaining and enhancing its critical infrastructure. The expenses grew from $2.4 million to $3.7 million, due to new or ongoing projects to improve streets, rights-of-ways, pedestrian and bicycle paths, and other vital public works.

Parks, Buildings, and Grounds, which deal with the stewardship of public spaces and city properties, had a slight decrease in expenses, resulting from cost-saving measures.

The Recreation and Culture category experienced a considerable boost in funding, from $3.3 million in 2022 to $4.7 million in 2023. This substantial increment aligns with an investment in enhancing the community's cultural and recreational life, notably after school programs, an area that significantly contributes to the residents' well-being.

Economic Development and Redevelopment saw a more than threefold increase, reflecting the city's intensified efforts to invigorate economic growth and revitalize urban spaces, with expenditures rising from $84,274 to $310,065.

Furthermore, the city managed to decrease its Interest on Long-term Debt, from $1.7 million to $1.3 million, due mainly to issuance costs incurred in 2022 but not in 2023.

The City’s increased total governmental expenses, which rose from $24.9 million in 2022 to $30.4 million in 2023, reflect its active approach to improving the city's operational capabilities, safety measures, and cultural offerings. This proactive fiscal stance, while enhancing current services and infrastructure, also underscores the importance of maintaining vigilance over the city's fiscal sustainability to ensure that these enhanced levels of service can be sustained in the long term without compromising financial health.

The pie chart underscores that Public Safety is the most significant expenditure, consuming 41.6 percent of the budget. This substantial share reflects the city’s strategic decision to prioritize resources towards ensuring the safety and security of its citizens. It's a clear indicator that services such as law enforcement, fire protection, and emergency response are considered fundamental to the community’s well-being.

Attachment 1

City of Ukiah, California
Financial Section: Required Supplementary Information | MD&A Page | 12 General Government follows as the second-largest expense at 18.78 percent, a testament to the city's investment in its administrative and legislative functions. This allocation supports the foundational public services that enable the effective governance of the city but, as stated earlier, includes significant expenses related to changes to the net pension liability.

Recreation and Culture receive a notable 15.62 percent of the expenses, highlighting the city's commitment to enhancing the community's quality of life. This investment supports a variety of programs and facilities, from parks to cultural events, which serve as key components of community engagement and well-being.

Public Works, with 12.28 percent of the expenses, indicates ongoing efforts to maintain and develop critical infrastructure.

These expenditures are vital for the city's functioning, ensuring that roads, bridges, and public buildings meet the needs of residents and businesses.

The allocation towards Parks, Buildings, and Grounds (6.83 percent) emphasizes maintenance and development of public spaces, an essential aspect of urban living that contributes to the aesthetic, environmental, and recreational value of the city's landscape.

Housing and Community Development commands a smaller but significant 5.12 percent slice of the budget. These funds likely support initiatives aimed at improving living conditions and fostering sustainable community growth, areas that are fundamental to the city’s long-term development plans.

Interest on Long-term Debt, at 4.32 percent, reflects the city's financial obligations related to borrowing. While it is a necessary aspect of financing large-scale projects and initiatives, the percentage indicates a managed approach to debt that does not overshadow the other critical areas of expenditure.

Lastly, Economic Development and Redevelopment, though receiving the smallest portion at 1.02 percent, is nonetheless a crucial investment. It shows the city’s focused yet prudent approach to stimulating economic growth and revitalizing areas that may benefit from redevelopment.

The revenue schedule and corresponding chart for the governmental activities of the fiscal year ending June 30, 2023, presents a diversified portfolio of income sources for the entity in question. From highest to lowest, revenues directly associated with governmental collections were as follows:

Attachment 1

City of Ukiah, California
Financial Section: Required Supplementary Information | MD&A Page | 13 Sales tax emerges as the predominant revenue stream, which included sales taxes (Bradley-Burns, Measure P and Measure Y transactions and use taxes), contributing a substantial 37.76 percent ($13.7 million) to the total revenue, indicating a significant reliance on retail and consumer sales within the jurisdiction. General revenues from taxes decreased slightly from $20.1 million in 2022 to $19.4 million in 2023, which could be due to a number of factors, but principally are the result of the decline in the local cannabis industry and the waning of stimulus resources from the COVID-19 pandemic.

Following closely, charges for services account for 17.61 percent ($6.4 million), reflecting the government's collection from public utilities or other chargeable services it provides to the residents and businesses. This revenue source increased from $4.8 million in 2022 to $6.4 million in 2023, a significant rise resulting from an expansion of services provided by the City related to after school programs, and an increase in user fees.

Revenues Source Revenue % of Total
Sales tax $ 13,719,396 37.76%
Charges for Services 6,398,932 17.61%
Operating Grants and Contributions 6,040,597 16.63%
Property tax 3,674,829 10.11%
Franchises 2,197,540 6.05%
Capital Grants and Contributions 1,884,763 5.19%
Transient occupancy 1,446,678 3.98%
Business license 509,805 1.40%
Other revenue 233,241 0.64%
Use of money and property 227,389 0.63%
Other taxes 781 0.00%
Total $ 36,333,951 100.00%
Revenues by Source
Governmental Activities
For the Year Ended June 30, 2023
Attachment 1

City of Ukiah, California
Financial Section: Required Supplementary Information | MD&A Page | 14 Operating grants and contributions also play a crucial role in funding governmental activities, comprising 16.63 percent ($6.0 million) of the revenue, signaling a dependency on external funding such as state or federal aid, which supports various operational needs. Here the City recognized an increase, from $4.9 million in 2022 to $6.0 million in 2023, indicative of successful efforts in securing more grants and an increase in contributions from external sources.

Property tax, a cornerstone of local government finance, adds 10.11 percent ($3.7 million) to the coffers, underscoring its importance in funding services closely tied to real estate and housing within the area. Changes to this revenue source from the prior year were nominal and historically have increased by 2-5 percent. Prop 8 adjustments processed by Mendocino County are still underway, which means the rate of change in future years should be more on the higher end of staff estimates.

Franchises generate 6.05 percent ($2.2 million) of the revenue, derived from exclusive rights granted to businesses operating within government-owned property, notably cable, gas utility, and electric utilities. Changes here as well have been nominal from the prior year.

Capital grants and contributions make up 5.19 percent ($1.9 million), funds which are generally allocated for the construction and maintenance of capital assets like roads, bridges, and buildings. The City recognized a decrease, moving from $2.4 million in 2022 to $1.9 million in 2023, reflecting the completion of capital projects and a reduction in funding for such initiatives associated with governmental activities.

Transient occupancy tax contributes 3.98 percent ($1.5 million), sourced from temporary lodging facilities, indicating the impact of tourism or business travel in the area. Receipts from this source are up from the prior year as visitation to the Ukiah area, including tourism return to pre-pandemic levels.

Revenue from business licenses is relatively small at 1.40 percent ($509,805), yet it is indicative of the government's regulatory role over commercial activities. Fiscal year 2022-23 saw a high point in receipts due to greater emphasis placed on business contact, processing of late payments, and new businesses opening in the city.

Other revenues and use of money and property, which include miscellaneous income and earnings from government-owned assets and investments, collectively add a minor 1.27 percent ($460,630) to the revenue.

Lastly, other taxes are almost negligible at $781, contributing less than 0.00 percent to the total, hinting at the presence of less significant tax categories.

In sum, the total revenue generated for governmental activities stands at $36.3 million, with the schedule reflecting a comprehensive fiscal structure where tax income, especially from sales, forms the backbone of government revenue, complemented by a blend of service charges and external funding sources.

Business-type Activities
Turning to business-type activities, these showed even more robust growth in revenues, soaring from $36.3 million in 2022 to $48.8 million in 2023. This revenue surge was powered by substantial increases in charges for services and an exceptional rise in capital grants and contributions. Expenses across various service categories such as electric, water, and wastewater experienced fluctuations, but the total expenses had a marginal decrement. Interestingly, the change in net position before transfers took an upturn to a negative $339,709 in 2023, contrasting with a negative change of $7.5 million in the previous year. However, after accounting for transfers and other adjustments, including expenses related to businessAttachment 1

City of Ukiah, California
Financial Section: Required Supplementary Information | MD&A Page | 15 type net pension liabilities, inflationary pressures, and increased power costs, the business-type activities' net position still showed an increment, concluding the year 2023 with a net position of $111.2 million, slightly up from $110.9 million in 2022.

The following chart illustrates where business-type expenses were incurred by activity.

Business-type Activities Expenses % of Total
Program
Revenues % of Total
Net (Expense)
Revenue
Parking District $ 117,417 0.24% $ 119,944 0.25% $ 2,527 Landfill 2,143,903 4.36% 606,118 1.28% (1,537,785)
Ambulance Services 1,242,793 2.53% 1,058,131 2.23% (184,662) Golf 229,507 0.47% 41,500 0.09% (188,007)
Conference Center 523,678 1.06% 348,221 0.73% (175,457) Airport 1,626,400 3.31% 1,363,015 2.87% (263,385)
Electric 25,490,865 51.83% 22,552,111 47.52% (2,938,754) Street Lighting 189,463 0.39% 188,215 0.40% (1,248)
Water 9,119,878 18.54% 11,147,798 23.49% 2,027,920
Wastewater 8,497,211 17.27% 10,037,141 21.14% 1,539,930 Total $ 49,181,115 100.00% 47,462,194 $ 100.00% (1,718,921) $ Expenses and Program Revenues
Business-Type Activities
June 30, 2023
Attachment 1

City of Ukiah, California
Financial Section: Required Supplementary Information | MD&A Page | 16 Revenues Source Revenue % of Total
Charges for Services $ 40,724,604 83.38%
Operating Grants and Contributions 1,659,916 3.40%
Capital Grants and Contributions 5,077,674 10.40%
Taxes 18,043 0.04%
Use of money and property 287,557 0.59%
Other revenue 1,073,603 2.19%
Total $ 48,841,397 100.00%
Revenues by Source
Business-Type Activities
For the Year Ended June 30, 2022
Attachment 1

City of Ukiah, California
Financial Section: Required Supplementary Information | MD&A Page | 17 Capital Assets and Debt Administration
Capital Assets
The comparative capital assets statement for the City of Ukiah, as of June 30, 2022 and 2023, provides a detailed view of the city's investments in long-term assets for both governmental and business-type activities.

In 2023, governmental activities show a significant investment in various asset categories, with an overall net capital assets total of $71.5 million. Notably, infrastructure and network and buildings and improvements represent the most substantial investments, with $71.1 million and $21.8 million, respectively. No land was purchased this fiscal year. Construction in progress increased to $6.4 million, resulting from ongoing development projects, and machinery, equipment and vehicles also saw an increase to $11.4 million. A new entry, technology subscriptions, a requirement under GASB Statement 96, appears in 2023 with $1.1 million, reflecting the city's investment in digital assets. However, the overall increase in capital assets is offset by a significant accumulated depreciation and amortization amounting to $44.8 million.

For business-type activities, the infrastructure and network category saw an increase from $174.3 million in 2022 to $176.8 million in 2023, and buildings and improvements also increased from $63.3 million to $63.3 million. There's a noteworthy rise in construction in progress from $7.4 million in 2022 to $10.5 million in 2023, highlighting ongoing capital projects.

Similarly, machinery equipment and vehicles increased from $14.1 million to $15.3 million. The addition of intangible assets at $270,000 in 2023 represents new assets that are non-physical in nature. The business-type activities show a substantial total net capital assets figure of $181.8 million, up from $181.7 million in 2022.

Across both categories, the total net capital assets have grown from $243.3 million in 2022 to $253.4 million in 2023, indicating the city's commitment to maintaining and expanding its capital infrastructure. The overall increase in capital assets for the city mirrors its development strategy and continued investment in significant infrastructure and capital projects.

Attachment 1

City of Ukiah, California
Financial Section: Required Supplementary Information | MD&A Page | 18 Despite these investments, there's an increase in accumulated depreciation and amortizations, from $126.9 million in 2022 to $136.2 million in 2023, which is a standard accounting practice that reflects the aging and usage of the assets over time.

The careful management of these assets and the associated depreciation is crucial for long-term financial sustainability and strategic capital planning.

Additional information on the City’s capital assets can be found in Note 6, along with the City’s capitalization policies in Note 1 in the notes to the basic financial statements. Reasons for the change in capital assets were engagement in major work on several construction projects, including work on the airport runway and several streets and rights-of-way.

Long-Term Liabilities
The provided data details the long-term obligations of the City of Ukiah for both governmental and business-type activities over two fiscal years, 2022 and 2023, offering a comparative view of the changes in financial liabilities.

In the governmental activities for 2023, the total long-term obligations are reported at $79.8 million, which marks an increase from $73.8 million in 2022. This rise can be attributed to several factors, including an increase in compensated absences, which grew from $1.1 million to $1.2 million, suggesting a higher liability for employee benefits over time. The return of net pension liability at $8.2 million in 2023 and loss of the corresponding pension asset reported in 2022, reflects poor investment performance by CalPERS, for which the City has to cover. Technology subscriptions at $845,509 points to new categories of financial reporting requirements that governments like the City have undertaken adopting the provisions GASB Statement 96. Leases payable saw a slight decrease from $4.8 million in 2022 to $4.5 million in 2023, reflecting a reduction in lease obligations. Notably, bonds remain the most substantial liability, although decreasing from $67.6 million in 2022 to $64.9 million in 2023, due to the City successfully paying down its bond debt.

For business-type activities, the long-term obligations for 2023 amount to $110,642,298, showing an increase from $108.2 million in 2022. The most significant liability is for estimated landfill closure costs, which increased from $19.9 million in 2022 to $21.2 million in 2023, indicating an upward adjustment in the estimated cost for this environmental obligation. The net pension liability and compensated absences also reflect a similar trend to the governmental activities, increasing to $5.2 million and $547,776 respectively. The decrease in notes payable from $17.9 million in 2022 to $17.3 million in 2023 suggests a reduction in short-term borrowing. Bonds have also decreased from $68.9 million in 2022 to $66.4 million in 2023, aligning with the trend in the governmental sector.

Overall, the total long-term obligations for both the governmental and business-type activities combined have risen from $182.1 million in 2022 to $190.5 million in 2023. This indicates that while the City of Ukiah is managing certain debts 2023 2022 2023 2022 2023 2022
Technology subscriptions $ 1,047,946 $ - $ - $ - $ 1,047,946 $ - Land 4,596,065 4,596,065 7,747,880 7,747,880 12,343,945 12,343,945 Infrastructure and network 71,127,396 64,604,249 176,187,960 174,295,038 247,315,356 238,899,287 Buildings and improvements 21,862,814 21,861,416 63,283,227 63,250,560 85,146,041 85,111,976 Construction in progress 6,353,352 2,029,535 10,497,502 7,368,291 16,850,854 9,397,826 Machinery equipment and vehicles 11,305,423 10,103,782 15,303,830 14,048,150 26,609,253 24,151,932 Intangible assets - - 270,000 270,000 270,000 270,000
116,292,996 103,195,047 273,290,399 266,979,919 389,583,395 370,174,966 Less: accumulated depreciation and amortizations (44,750,471) (41,613,965) (91,466,389) (85,310,970) (136,216,860) (126,924,935) Capital assets, net $ 71,542,525 $ 61,581,082 $ 181,824,010 $ 181,668,949 $ 253,366,535 $ 243,250,031 Governmental Activities Business-type Activities Total
Capital Assets, Comparative
June 30, 2022 and 2023
Attachment 1

City of Ukiah, California
Financial Section: Required Supplementary Information | MD&A Page | 19 effectively, as seen by the reduced bonds and notes payable, it also faces increased liabilities, particularly related to environmental responsibilities and pensions. The introduction of new liabilities in technology suggests investment in digital infrastructure. The city's financial planning will need to consider these increasing obligations and the impact they may have on future budgets and financial strategies.

Additional information on the City’s outstanding long-term liabilities can be found in Note 7.

Fund Financial Analysis
The City employs fund accounting to ensure and demonstrate compliance with finance-related legal requirements. As was mentioned earlier, fund financial statements present information based on current financial resources and expenditures.

Essentially, they are snapshots of the condition of major funds in the near-term; whereas, the government-wide statements present the entire picture of the reporting entity. The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. For comparison purposes, fund statements correlate well to the City’s adopted budget.

Governmental Funds
As of June 30, 2023, the City’s governmental fund balance was $43.9 million, which decreased $8.1 million from the year prior largely due to capital outlays, notably street and rights-of-way projects. GASB 54 established five new criteria for categorizing that balance based on its restricted and unrestricted use.

The five categories are the following:
• Non-spendable fund balance
• Restricted fund balance
• Committed fund balance
• Assigned fund balance
• Unassigned fund balance.

A more detailed discussion of these fund balance categories is presented in Note 1. 2023 2022 2023 2022 2023 2022
Landfill closure liability $ - $ - $ 21,145,540 $ 19,890,002 $ 21,145,540 $ 19,890,002 Compensated absences 1,226,352 1,118,763 547,776 533,518 1,774,128 1,652,281 Total pension liability 11,167,808 - 5,237,038 - 16,404,846 - Leases payable 4,544,125 4,800,950 - - 4,544,125 4,800,950 Technology subscriptions 845,509 - - - 845,509 -
Notes payable - - 17,321,721 17,862,160 17,321,721 17,862,160 Settlements - - - 1,000,000 - 1,000,000
Claims 143,486 286,972 - 49,583 143,486 336,555
Bonds 64,886,706 67,587,506 66,390,223 68,932,767 131,276,929 136,520,273 Total $ 82,813,986 $ 73,794,191 $ 110,642,298 $ 108,268,030 $ 193,456,284 $ 182,062,221 Activities Activities Total
Long-term Obligations
Two-Year Comparison
Governmental Business-type
Attachment 1

City of Ukiah, California
Financial Section: Required Supplementary Information | MD&A Page | 20 Governmental Funds Financial Condition
Governmental funds reported a decrease in fund balance from $51.9 million in 2022 to $43.1 million in 2023, indicating a significant use financial resources over the year, including cash and investments, which decreased from $17.8 million in 2022 to $15.8 million in 2023.

The non-spendable fund balance at the end of the fiscal year 2023 stands at $4.6 million, primarily comprising long-term interfund loans. This is a decrease of $162,923 from the previous year's balance of $4.7 million, which included other nonspendable items such as inventory and prepaids. The decrease was the result of loan payments received and inventory used.

The restricted fund balance shows a significant reduction from $33.3 million in 2022 to $25.7 million in 2023, with major allocations in capital projects, which have decreased notably from $15.6 million to $5.0 million, reflecting the city's ongoing capital expenditures or completion of certain bond-funded projects. These resources are earmarked for specific uses such as law enforcement, housing, and infrastructure projects and are often governed by legal restrictions or external requirements.

Committed fund balances, which are specific financial resources that the City Council has formally set aside for particular purposes, are reported at $461,610 for park development and other planning activities. This is a decrease from the previous year's committed balance which included solid waste management and other capital projects.

The assigned fund balance, designated by management for future projects and capital acquisitions, includes amounts for economic development, equipment reserves, park development, and pensions, with a significant assignment for project reserves totaling $5.9 million. This reflects a proactive approach to managing the city's financial planning for future needs.

Finally, the unassigned fund balance, which represents the amount available for new initiatives or unforeseen expenses, has decreased to $6.5 million in 2023 from $7.9 million in 2022. These funds are crucial for maintaining financial flexibility and ensuring that the government can respond to changing circumstances.

Additional information on deficit fund balances can be found in Note 2.

Specific to the major funds reported:

General Fund. The balance sheet for the fiscal year ending June 30, 2023, shows a decrease in total assets from $16.1 million in 2022 to $13.5 million in 2023, largely driven by a significant reduction in cash and investments, as the fund provided short-term interfund resources to various other governmental and enterprise funds. Conversely, accounts receivable and due from other funds have increased, indicating more outstanding receivables and inter-fund activities, respectively.

Liabilities have decreased, particularly in accounts payable and accrued payroll liabilities, leading to a reduction in total liabilities from $1.9 million in 2022 to $1.3 million in 2023. Deferred inflows of resources related to leases decreased, and there are no unavailable revenues reported in 2023.

The fund balance has also seen a decrease, with unassigned fund balances dropping from $8.7 million in 2022 to $7.7 million in 2023, reflecting a decrease in resources available for future use. Nonspendable fund balances saw a mixed change with an increase in interfund loans and a notable decrease in inventories and prepaids. The total fund balances have decreased from $13.2 million in 2022 to $12.1 million in 2023, primarily the result of lower sales tax receipts than the prior year.

Streets Capital Improvements. Resources transferred into this fund from the general fund, vis a vis Measure Y resources collected, among other intergovernmental sources and grants supported expenditure of $3.3 million. The Attachment 1

City of Ukiah, California
Financial Section: Required Supplementary Information | MD&A Page | 21 fund has been very active in capital projects and in the repayment of capital debt issued for large scale street rehabilitation projects.

General Capital Projects. This fund primarily is used to account for bond-funded capital projects, for which bond proceeds in the amount of $17 million were received in February of 2023. $5.6 million of unspent bond proceeds remain. A $600,000 grant from CalTrans’ local partnership program is accounted for in this fund as well.

Pension Debt Service. This fund is used to service bond debt related to lease revenue bonds issued by the City in 2020 that provided advances fund the unfunded accrued liability with CalPERS. The City contributes additional amounts to the fund beyond the annual debt service requirement to ensure it maintains resources to meet future payment obligations without difficulty and to prepare for potential calls on bonds when the option is available.

Proprietary Funds
Landfill. This fund is to account for activities of closure and post closure of the Ukiah landfill. There was an operating revenue of $597,239 but operating expenses were significantly higher at $2.1 million, resulting in a substantial operating loss of $1.5 million. Nonoperating revenues brought in an additional $15,097, but this was not enough to offset the operating loss, leading to a negative change in net position of $669,189. This downturn could reflect substantial maintenance and operations costs exceeding the revenues generated from the services.

Electric. Despite robust operating revenues of $23.0 million, even higher operating expenses totaling $24.3 million, driven by power purchases, lead to an operating loss of $1.3 million. The negative impact was exacerbated by nonoperating expenses, including interest and fiscal charges, further increased the loss before contributions and transfers to $1.8 million. Despite this, grants, contributions, and transfers in helped narrow the loss, but the fund still closed with a decrease in net position by $1.2 million.

Water. This fund's situation was more positive, with operating revenues of $7.5 million against operating expenses of $8.3 million, leading to an operating loss of $889,843. After accounting for nonoperating expenses and transfers, the fund experienced a positive change in net position of $2.4 million.

Wastewater. This fund was the most financially positive, with operating revenues of $9.7 million against expenses of $7.5 million, resulting in an operating income of $2.1 million. The fund's net position improved substantially by $1.3 million; however, current resources, notably working capital, have been depleted considerably, as the fund paid its final lawsuit settlement installment this year.

The total nonmajor funds category reported operating revenues of $3.0 million and operating expenses of $3.9 million, leading to an operating loss of $842,808 across various enterprise activities, including golf, conference center, airport, parking, ambulance services, and street lighting. However, this category ended the year with a decrease in net position of $940,332, after including nonoperating revenues and expenses, contributions, and transfers.

Attachment 1

City of Ukiah, California
Financial Section: Required Supplementary Information | MD&A Page | 22 Budgetary Comparison
A comparison of budget to actual for major governmental funds is presented in the fund financial statements. These statements and the notes are presented as additional information to show that appropriations are being spent as authorized by the City Council. Budgetary control for the City rests at the fund level.

General Fund
The City’s General Fund is its primary source of discretionary resources for the provision of service deemed necessary and desirable by the citizens of Ukiah and the City Council. General fund revenues were up over $2.2 million from the year prior, driven by intergovernmental sources and charges for service (primarily after school day camp activities). Similarly, total expenditures were higher by $5 million due to a variety of increased costs, the largest of which being personnel, insurance, supplies, internal services, and administration. After other financing sources and uses were accounted for, fund balance decreased by $1.2 million.

The original budget estimated $31.4 million in revenues. It was increased to $31.5 in anticipation of miscellaneous receipts and charges for service, among other reasons. Actual revenues in the General Fund were $681,009 thousand lower than was budgeted primarily due to decreased sales taxes.

Expenditures were $1.1 million lower than budget appropriations primarily due to various cost and budgetary savings, including delayed capital outlays. Recreation and culture expenditures were higher than budgeted due to the aforementioned day camp activities.

Policy Resolution No. 39 (2013), passed the Ukiah City Council and incorporated in the City’s financial management policies, established an unrestricted fund balance of at least 25 percent of annual operating expenditures in the General Fund. Its purpose is to serve as a strategic reserve, ensuring liquidity of the General Fund and to make certain adequate resources are available to manage economic uncertainties. The General Fund ended the year with a fund balance (consisting of nonspendable, committed, and unassigned amounts) of $12.1 million, representing 41.9 percent of total expenditures for the year.

Attachment 1

City of Ukiah, California
Financial Section: Required Supplementary Information | MD&A Page | 23 Economic Outlook
The City of Ukiah enjoys a diverse economic base serving as a hub for the greater geographic region around the city and Mendocino County. Consequently, the City’s revenues are tied strongly to the financial health and well-being of its residents and businesses. City management took a conservative approach to revenue estimation when preparing the City’s 2023 budget. Management continued that approach into the fiscal year 2024.

The following economic factors currently affect the City of Ukiah and were considered in developing the 2024 fiscal year budget.
• Sales tax revenue and transient occupancy taxes were estimated to increase by nominal amounts respectively from the prior year due. General fund appropriations were nonetheless adjusted to continue to generate a budgetary surplus as a hedge against unexpected revenue shortfalls. • Water and sewer rates are in the middle of a five-year adjustment schedule. This was in response to anticipated current and future expenditure increases in operating costs, capital outlays, and settlement payments to the Ukiah Valley Sanitation District. The adjustment to rates will continue each July 1 for the next 2 years. • Rate revenue in electric enterprise funds was estimated to increase as the most recent rate adjustment schedule is implemented. Additionally, power purchase surcharges have been enacted quarterly. Implementation of subsequent rate adjustment will occur for the next several years and may be implemented sooner than originally anticipated, due to rising costs.
• A property tax rate increase of 2 percent is expected in the general fund.

Original Final Actual
Variance with Final
Budget

REVENUES
Taxes $ 20,853,954 $ 20,853,954 $ 19,326,520 $ (1,527,434) Fees, charges, licenses, and permits 7,624,504 7,716,504 7,464,544 (251,960) Use of money, property, interest and concessions 270,603 270,603 304,865 34,262 Intergovernmental 182,946 182,946 217,014 34,068
Other 2,478,105 2,531,610 3,561,665 1,030,055
Total revenues 31,410,112 31,555,617 30,874,608 (681,009)

EXPENDITURES
Current:

General government 54,896 82,151 58,195 23,956
Public safety 15,460,261 16,626,707 16,047,659 579,048
Housing and community development 1,323,840 1,393,840 1,339,854 53,986 Public works 1,798,601 1,958,628 1,939,767 18,861
Parks, buildings, and grounds 1,697,810 1,749,660 1,906,273 (156,613) Recreation and culture 4,640,417 4,669,774 5,044,001 (374,227) Economic development and redevelopment 153,650 153,650 316,477 (162,827) Total current 25,129,475 26,634,410 26,652,226 (17,816) Debt service 1,593,171 1,593,171 1,593,171 -
Capital outlay 528,410 1,759,156 635,629 1,123,527
Total expenditures 27,251,056 29,986,737 28,881,026 1,105,711 Excess (deficiency) of revenues over expenditures 4,159,056 1,568,880 1,993,582 424,702

OTHER FINANCING SOURCES (USES)
Transfers (2,963,358) (2,989,608) (3,144,035) (154,427) Net change in fund balances 1,195,698 (1,420,728) (1,150,453) 270,275 Fund balances - beginning 13,239,953 13,239,953 13,239,953 - alances - ending $ 14,435,651 $ 11,819,225 $ 12,089,500 $ 270,275 Budgeted Amounts
General Fund
For the Year Ended June 30, 2022
Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Attachment 1

City of Ukiah, California
Financial Section: Required Supplementary Information | MD&A Page | 24 • Implementation of increased rates on the City of Ukiah’s current fee schedule is anticipated. • Regular increases are expected in health insurance premiums, as well as pension costs. • Personnel costs related to current bargaining agreements will result in a 3 percent increase in the fall of 2023.

Maintaining and growing revenue streams to the City remains a high priority for staff. Existing sources – predominately sales and property taxes – are stable, and our estimates for the future will continue to be conservative. Expenses related to personnel (primarily in health premium and pension costs) are increasing at a substantial, though manageable, pace. We continue to look to find cost saving measures to help offset these expenses. The challenge remains providing the highest level and quality of service that the community needs, expects and deserves with the resources available.

Requests for Information
This Annual Comprehensive Financial Report is intended to provide citizens, taxpayers, investors, and creditors with a general overview of the City’s finances. Questions regarding this report, or request for additional information, should be made to the Finance Department, City of Ukiah, CA, 95482.

Attachment 1

City of Ukiah, California
Financial Section: Basic Financial Statements Page | 25

GOVERNMENT-WIDE FINANCIAL STATEMENTS
The Statement of Net Position reports the difference between the City’s total assets and the City’s total liabilities, including all the City’s capital assets and all its long-term debt. The Statement of Net Position summarizes the financial position of all City Governmental Activities in a single column, and the financial position of all the City’s Business-Type Activities in a single column; these are followed by a total column which presents the financial position of the entire City.

The City’s Governmental Activities include the activities of its General Fund, along with all its Special Revenue, Capital Projects and Debt Service Funds. The City’s Business-Type Activities include all its Enterprise Fund activities.

The Statement of Activities reports increases and decreases in the City’s net position. It presents the City’s expenses first, listed by program, and follows these with the expenses of its business-type activities. Program revenues—that is, revenues which are generated directly by these programs—are then deducted from program expenses to arrive at the net expense of each governmental and business-type program. The City’s general revenues are then listed in the Governmental Activities or Business-type Activities column, as appropriate, and the Change in Net Position is computed and reconciled with the Statement of Net Position.

Both these Statements include the financial activities of the City, the Ukiah Redevelopment Agency and the City of Ukiah Municipal Sewer District, which are legally separate but are component units of the City because they are controlled by the City, which is financially accountable for their activities.

Attachment 1

City of Ukiah, California
Financial Section: Basic Financial Statements Page | 26 City of Ukiah, California
Statement of Net Position
June 30, 2023
Governmental Activities Business-type Activities Total
ASSETS
Current assets:

Cash and investments $ 15,639,851 $ 8,048,188 $ 23,688,039 Restricted cash and investments 26,619,999 14,552,650 41,172,649 Investment in NCPA reserves - 4,840,316 4,840,316
Receivables (net allowance for uncollectibles) 5,488,244 9,295,851 14,784,095 Grants and intergovernmental receivable 991,238 3,931,005 4,922,243 Lease receivable 141,273 122,710 263,983
Internal balances 4,493,093 (4,493,093) -
Inventories and prepaids 138,939 1,962,201 2,101,140
Land held for resale 2,435,114 - 2,435,114
Total current assets 55,947,751 38,259,828 94,207,579
Noncurrent assets:

Notes and loans receivable 11,834,333 - 11,834,333
Technology subscription 859,476 - 859,476
Capacity rights - 270,000 270,000
Land 4,596,065 7,747,880 12,343,945
Construction in progress 6,353,352 10,497,502 16,850,854 Buildings and improvements 11,780,022 26,564,923 38,344,945 Machinery equipment and vehicles 4,520,976 5,938,726 10,459,702 Infrastructure and network 43,432,634 130,804,979 174,237,613 Total noncurrent assets 83,376,858 181,824,010 265,200,868 Total assets 139,324,609 220,083,838 359,408,447

DEFERRED OUTFLOWS OF RESOURCES
Pension related 18,804,317 5,023,335 23,827,652
Total deferred outflows of resources 18,804,317 5,023,335 23,827,652 Total assets and deferred outflows of resources 158,128,926 225,107,173 383,236,099

LIABILITIES
Current liabilities:

Accounts payable $ 3,606,006 $ 1,798,158 $ 5,404,164
Accrued payroll liabilities 788,809 177,110 965,919
Interest payable 615,321 780,768 1,396,089
Deposits payable - 6,224 6,224
Due within one year 3,612,046 3,529,291 7,141,337
Total current liabilities 8,622,182 6,291,551 14,913,733 Noncurrent liabilities:

Due in more than one year 79,201,940 107,113,007 186,314,947 Total noncurrent liabilities 79,201,940 107,113,007 186,314,947 Total liabilities 87,824,122 113,404,558 201,228,680

DEFERRED INFLOWS OF RESOURCES
Lease related 141,273 122,710 263,983
Pension related 9,894,904 433,717 10,328,621
Total deferred inflows of resources 10,036,177 556,427 10,592,604 Total liabilities and deferred inflows of resources 97,860,299 113,960,985 211,821,284

NET POSITION
Net investment in capital assets 57,015,033 126,323,676 183,338,709 Restricted for:

Capital projects 22,395,404 - 22,395,404
Certifications and training 50,840 - 50,840
Community events 45,800 - 45,800
Debt service 2,449,504 - 2,449,504
Debt service reserve - 706,668 706,668
Governmental services 1,487,815 - 1,487,815
Housing and community development 14,016,250 - 14,016,250 NCPA Projects - 87,524 87,524
Public health services 61,185 - 61,185
Public safety 629,818 - 629,818
Public works 1,279,894 - 1,279,894
Solid waste abatement 35,564 - 35,564
Parks and recreation:

Expendable 7,032 - 7,032
Nonexpendable 137,576 - 137,576
Unrestricted (39,343,088) (15,971,680) (55,314,768)
Total net position $ 60,268,627 $ 111,146,188 $ 171,414,815 The accompanying notes are an integral part of these financial statements.

Primary Government
Attachment 1

City of Ukiah, California
Financial Section: Basic Financial Statements Page | 27 City of Ukiah, California
Statement of Activities
Year Ended June 30, 2023
Functions/Programs Expenses Charges for Services
Operating Grants and
Contributions
Capital Grants and
Contributions Governmental Activities Business-type Activities Total Primary government:

Governmental activities:

General government $ 5,701,815 $ 115,137 $ 974,681 $ - $ (4,611,997) $ - $ (4,611,997) Public safety 13,937,176 592,944 2,371,482 445,426 (10,527,324) - (10,527,324) Housing and community development 1,556,452 902,296 784,532 - 130,376 - 130,376 Public works 3,728,734 721,741 1,745,111 1,256,503 (5,379) - (5,379) Parks, buildings, and grounds 2,073,670 132,311 3,776 181,643 (1,755,940) - (1,755,940) Recreation and culture 4,743,205 3,684,503 161,015 - (897,687) - (897,687) Economic development and redevelopment 310,065 250,000 - 1,191 (58,874) - (58,874) Interest on long-term debt 1,321,028 - - - (1,321,028) - (1,321,028) Total governmental activities 33,372,145 6,398,932 6,040,597 1,884,763 (19,047,853) - (19,047,853) Business-type activities:

Parking District 117,417 119,944 - - - 2,527 2,527
Landfill 2,143,903 606,118 - - - (1,537,785) (1,537,785) Ambulance Services 1,242,793 976,712 - 81,419 - (184,662) (184,662) Golf 229,507 41,500 - - - (188,007) (188,007)
Conference Center 523,678 348,221 - - - (175,457) (175,457) Airport 1,626,400 1,358,665 - 4,350 - (263,385) (263,385) Electric 25,490,865 20,841,212 1,659,916 50,983 - (2,938,754) (2,938,754) Street Lighting 189,463 188,215 - - - (1,248) (1,248)
Water 9,119,878 7,459,767 - 3,688,031 - 2,027,920 2,027,920 Wastewater 8,497,211 8,784,250 - 1,252,891 - 1,539,930 1,539,930 Total business-type activities 49,181,115 40,724,604 1,659,916 5,077,674 - (1,718,921) (1,718,921) Total primary government $ 82,553,260 $ 47,123,536 $ 7,700,513 $ 6,962,437 $ (19,047,853) $ (1,718,921) $ (20,766,774) $ 3,674,829 $ 18,043 $ 3,692,872
13,719,396 - 13,719,396
2,197,540 - 2,197,540
1,446,678 - 1,446,678
509,805 - 509,805
781 - 781
227,389 287,566 514,955
233,241 1,073,603 1,306,844
(577,591) 577,591 -
21,432,068 1,956,803 23,388,871
2,384,215 237,882 2,622,097
57,884,412 110,908,306 168,792,718
$ 60,268,627 $ 111,146,188 $ 171,414,815
The accompanying notes are an integral part of these financial statements.

Change in net position
Net position - beginning
Use of money and property
Other revenue
Transfers
Total general revenues, special items, and transfers
Net position - ending
Sales tax
Franchises
Transient occupancy
Business license
Other taxes
Net (Expense) Revenue and Changes in Net Position
Program Revenues Primary Government
General revenues:

Property tax
Attachment 1

City of Ukiah, California
Financial Section: Basic Financial Statements Page | 28

FUND FINANCIAL STATEMENTS
Major funds are defined generally as having significant activities or balances in the current year. The funds described below were determined to be Major Governmental Funds by the City for fiscal 2023. Individual nonmajor funds may be found in the Supplemental section.

Governmental Funds
General Fund
The General Fund is used for all the general revenues of the City not specifically levied or collected for other City funds, and the related expenditures. The major revenue sources for this Fund are property taxes, sales taxes, franchise fees, business licenses, unrestricted revenues from the state, fines and forfeitures and interest income. Expenditures are made for community development, public safety, public works, and other services.

Streets Capital Improvement
This capital project fund accounts for street and right-of-way capital projects supported primarily by Measure Y resources, committed by the City Council through resolution.

General Capital Projects
This general capital projects fund was created in 2023 to account for bond proceeds and other resources for street and rights-of-way projects.

Pension Debt Service
This debt service fund was created in 2023 to account for resources accumulated, used, and reserved for the retirement of lease revenue bonds.

Attachment 1

City of Ukiah, California
Financial Section: Basic Financial Statements Page | 29 City of Ukiah, California
Balance Sheet
Governmental Funds
June 30, 2023
General Fund
Streets Capital
Improvements
General Capital
Projects
Pension Debt
Service
Total
Nonmajor
Funds
Total
Governmental
Funds
ASSETS
Cash and investments $ 733,910 $ 16,311 $ 319,105 $ 4,186,657 $ 10,584,165 $ 15,840,148 Restricted cash and investments - - 7,485,987 - - 7,485,987 Accounts receivable 5,068,238 - - - 196,847 5,265,085
Lease receivable 141,273 - - - - 141,273
Notes receivable 1,176 - - - 10,526,843 10,528,019
Interest receivable 9,439 - 449 5,806 12,794 28,488
Grants and subventions receivable 33,497 131,132 - - 815,275 979,904 Inventories and prepaids 138,939 - - - - 138,939
Due from other funds 3,119,854 - - - - 3,119,854
Advances to other funds 2,996,359 - - - - 2,996,359
Land held for resale - - - - 2,435,114 2,435,114
Grants, contributions, and donations - - - - 11,334 11,334 Due from other agencies 1,306,314 - - - - 1,306,314
Total assets 13,548,999 147,443 7,805,541 4,192,463 24,582,372 50,276,818

LIABILITIES
Accounts payable 616,855 1,463 1,996,341 - 279,671 2,894,330 Accrued payroll liabilities 701,371 2,108 - - 6,606 710,085 Unearned revenues - - - - 8,750 8,750
Due to other funds - 349,168 169,241 - 250,161 768,570
Advance from other funds - - - - 514,550 514,550
Total liabilities 1,318,226 352,739 2,165,582 - 1,059,738 4,896,285

DEFERRED INFLOWS OF RESOURCES
Lease related 141,273 - - - - 141,273
Unavailable revenues - grants and subventions - - - - 2,136,075 2,136,075 Total deferred inflows of resources 141,273 - - - 2,136,075 2,277,348 Total liabilities and deferred inflows of resources 1,459,499 352,739 2,165,582 - 3,195,813 7,173,633

FUND BALANCES (DEFICITS)
Nonspendable:

Interfund loans 2,996,359 - - - - 2,996,359
Inventories and prepaids 138,939 - - - - 138,939
Notes and interagency receivables 1,307,490 - - - - 1,307,490 Riparian corridor management - - - - 137,576 137,576
Restricted:

Capital projects - - 5,639,959 - 4,362 5,644,321
CDBG activities - - - - 618,671 618,671
Certifications and training - - - - 50,840 50,840
Clean-up and solid waste remdediation - - - - 35,564 35,564 Debt service reserve - - - - 2,449,504 2,449,504
Downtown business improvements - - - - 14 14
Governmental services - - - - 1,487,815 1,487,815
Housing activities - - - - 13,321,188 13,321,188
Opioid settlement - - - - 61,185 61,185
Project reserve - - - - 14,287 14,287
Public safety - - - - 629,818 629,818
Riparian corridor management - - - - 7,032 7,032
Special recreation events - - - - 45,800 45,800
Streets and rights-of-way - - - - 1,279,894 1,279,894
Committed:

Park development - - - - 168,313 168,313
Planning activities - - - - 256,813 256,813
Solid waste management - - - - 36,484 36,484
Assigned:

Capital projects - - - - 55,613 55,613
Equipment reserve - - - - 375,705 375,705
Park development - - - - 20,278 20,278
Pension reserve - - - 4,192,463 - 4,192,463
Project reserve - - - - 1,228,890 1,228,890
Unassigned 7,646,712 (205,296) - - (899,087) 6,542,329
Total fund balances (deficits) 12,089,500 (205,296) 5,639,959 4,192,463 21,386,559 43,103,185 Total liabilities and fund balances (deficits) $ 13,548,999 $ 147,443 $ 7,805,541 $ 4,192,463 $ 24,582,372 $ 50,276,818 The accompanying notes are an integral part of these financial statements.

Attachment 1

City of Ukiah, California
Financial Section: Basic Financial Statements Page | 30 City of Ukiah, California
Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position June 30, 2023
$ 43,103,185
Capital assets 111,739,547
Accumulated depreciation (43,566,721)
68,172,826
Compensated absences (817,967)
Net pension liability (11,167,808)
2017 fire engine lease (540,505)
2017 I-Bank financing lease (3,572,341)
2020 Fire brush truck (164,943)
Fire aparatus (265,369)
2020B CalPERS Taxable Lease Revenue Bonds (31,175,043)
2022 Lease Revenue Bonds (15,446,893)
(63,150,869)
Deferred outflows - pension related items 18,804,317
Deferred inflows - pension related items (9,894,904)
8,909,413
1,552,176
1,552,176
(464,329)
(464,329)
Amounts are unavailable under the modified accrual basis of accounting. 2,146,225 2,146,225

$ 60,268,627
Accrued interest on long-term debt is not due and payable in the current period and is not reported in the funds.

Net position of governmental activities
Internal service funds are used by management to charge the costs of certain activities, such as insurance and vehicle maintenance, to individual funds.

The assets and liabilities of the internal service funds are included in governmental activities in the statement of net position.

Long-term liabilities are not due and payable in the current period and therefore are not reported in the funds:

Amounts for deferred inflows and deferred outflows related to the City's Net Pension Liability are not reported in the funds:

Fund balances of governmental funds
Amounts reported for governmental activities in the statement of net position are different because:

Capital assets used in governmental activities are not financial resources and therefore, are not reported in the funds:

Attachment 1

City of Ukiah, California
Financial Section: Basic Financial Statements Page | 31 City of Ukiah, California
Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds
For the Fiscal Year Ended June 30, 2023
General Fund
Streets Capital
Improvements
General Capital
Projects
Pension Debt
Service
Total Nonmajor
Funds
Total
Governmental
Funds

REVENUES
Property tax $ 3,674,829 $ - $ - $ - $ - $ 3,674,829
Sales tax 13,719,396 - - - - 13,719,396
Transient occupancy 1,443,140 - - - - 1,443,140
Business license tax 488,374 - - - 21,431 509,805
Other taxes 781 - - - - 781
Franchise fees 2,197,540 - - - - 2,197,540
Charges for service 4,835,549 - - - 340,702 5,176,251
Licenses and permits 431,455 - - - - 431,455
Grants, contributions, and donations 268,634 99,990 - - 46,657 415,281 Use of money and property 217,014 - (874) 15,443 596,543 828,126 Intergovernmental 3,440,933 76,927 600,000 - 3,843,058 7,960,918 Fines penalties and forfeitures 36,231 - - - - 36,231
Interest, rent, and concessions - - - - 1 1
Miscellaneous 120,732 - - - 20,004 140,736
Total revenues 30,874,608 176,917 599,126 15,443 4,868,396 36,534,490

EXPENDITURES
Current:

General government 58,195 - - 11,145 6,780 76,120
Public safety 16,047,659 - - - 374,686 16,422,345
Housing and community development 1,339,854 - - - 414,764 1,754,618 Public works 1,939,767 1,103,380 - - 80,094 3,123,241
Parks, buildings, and grounds 1,906,273 - - - 1,474 1,907,747 Recreation and culture 5,044,001 - - - 306,748 5,350,749 Economic development and redevelopment 316,477 - - - 23,289 339,766 Debt service:

Interest 857,467 703,069 - - 19,334 1,579,870
Principal 582,000 1,280,881 - - 40,290 1,903,171
Lease principal 133,727 - - - - 133,727
Lease interest 19,977 - - - - 19,977
Capital outlay:

Public safety 573,326 - - - - 573,326
Public works 11,459 206,839 10,532,518 - 177,184 10,928,000 Parks, buildings, and grounds 50,844 - - - 1,833 52,677 Recreation and culture - - - - 247,538 247,538
Total expenditures 28,881,026 3,294,169 10,532,518 11,145 1,694,014 44,412,872 Excess (deficiency) of revenues over expenditu 1,993,582 (3,117,252) (9,933,392) 4,298 3,174,382 (7,878,382)

OTHER FINANCING SOURCES (USES)
Transfers in 622,500 2,930,287 - 259,772 628,517 4,441,076 Transfers out (3,766,535) (2,359) - - (1,615,803) (5,384,697) Total other financing sources (uses) (3,144,035) 2,927,928 - 259,772 (987,286) (943,621) Net change in fund balances (1,150,453) (189,324) (9,933,392) 264,070 2,187,096 (8,822,003) Fund balances - beginning 13,239,953 (15,972) 15,573,351 3,928,393 19,199,463 51,925,188 Fund balances - ending $ 12,089,500 $ (205,296) $ 5,639,959 $ 4,192,463 $ 21,386,559 $ 43,103,185 The accompanying notes are an integral part of these financial statements.

Attachment 1

City of Ukiah, California
Financial Section: Basic Financial Statements Page | 32 City of Ukiah, California
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities
For the Fiscal Year Ended June 30, 2023
$ (8,822,003)
Capital outlay 10,966,421
Depreciation expense (2,079,036)
8,887,385
Change to net pension liability (11,167,808)
Compensated absence expense (86,814)
(11,254,622)
Changes to deferred outflows: pension-related items 6,088,455 Changes to deferred inflows: pension-related items 14,299,081 20,387,536
Principal paid on loans and leases 2,167,164
Amortization of debt premium 297,117
2,464,281
(200,540)
13,623
1,533,740
Change to net pension asset (10,625,185)
(10,625,185)
Change in net position of governmental activities $ 2,384,215 Amounts reported for governmental activities in the statement of activities are different because:

Governmental funds report capital outlays as expenditures. However, in the Statement of Activities the cost of these assets is allocated over their estimated useful lives as depreciation expense.

Net change in fund balances - total government funds
The amounts below included in the Statement of Activities do not provide (require) the use of current financial resources and, therefore, are not reported as revenues or expenditures in governmental funds (net change):

The amounts below included in the Statement of Activities do not provide (require) the use of current financial resources and, therefore, are not reported as revenues or expenditures in governmental funds (net change):

Amounts for deferred inflows and deferred outflows related to the City's Net Pension Liability are not reported in the funds. This is the net change in deferred inflows and deferred outflows related to the net pension liability:

The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of principal of long-term debt consumes the current financial resources of governmnetal funds. Neither transaction, however, has any effect on net position. Also, government funds report the effect of premiums, discounts and similar items when debt is first issued, whereas these amounts are deferred and amortized in the Statement of Activities. The effect of these differences are as follows:

Some revenues reported in the Statement of Activities are not considered available to finance current expenditures and, therefore, are not reported as revenues in the governmental funds.

Accrued interest for long-term debt. This is the net change in accrued interest for the current period.

Internal service funds are used by management to charge the costs of certain activities, such as insurance and vehicle maintenance, to individual funds. The net revenue (expense) of the internal services funds is reported with governmental activities.

Attachment 1

City of Ukiah, California
Financial Section: Basic Financial Statements Page | 33 Proprietary Funds
Proprietary funds account for City operations financed and operated in a manner like a private business enterprise. The intent of the City is that the cost of providing goods and services be financed primarily through user charges.

The City maintains four primary enterprise funds: electric, water, sewer, and landfill.

Landfill
This is the fund used to account for activities related to the closure, post-closure, and corrective action plan of the City of Ukiah landfill.

Electric Enterprise Fund
The Electric Utility provides electrical services to the citizens of Ukiah, including 24-hour, 365-day response to emergency service calls for customer power problems, and outages. Additionally, the enterprise is responsible for making high voltage power lines safe for Fire & Police personnel at structure fires, automobile accidents and to make other situations where electric lines are near emergency crews.

Water Enterprise Fund
Chapter 13.04 of the Ukiah Municipal Code provides the authority for City to operate water system. Revenues (fees and charges) are collected to pay for service (water) received.

Wastewater Enterprise Fund
Chapter 13.20 of the Ukiah Municipal Code provides the authority for the City to operate sewer system. Revenues (fees and charges) are collected to pay for availability of collection, transportation, treatment, and disposal system. In addition, grazing lease payments, LACOSAN payments for flows, tax revenues, FEMA storm damage reimbursement, OES storm damage reimbursement, and insurance rebates have been credited to this fund.

The City also employs the use of internal service funds.

Internal Service Funds
Established to account for the costs of activities primarily serving multiple department and funds. Such funds may also provide services to external users, such as other governmental entities.

Attachment 1

City of Ukiah, California
Financial Section: Basic Financial Statements Page | 34 City of Ukiah, California
Statement of Net Position
Proprietary Funds
June 30, 2023
Governmental
Activities
Landfill Electric Water Wastewater
Total Nonmajor
Funds
Total Enterprise
Funds
Internal Service
Funds
ASSETS
Current assets:

Cash and investments $ 10,213,311 $ 450,115 $ 1,427,470 $ 338,801 $ 236,662 $ 12,666,359 $ 2,428,915 Restricted cash and investments - 6,935,639 5,076,944 2,530,217 - 14,542,800 16,736,796 Accounts receivable 47,073 4,940,318 1,755,719 1,985,853 533,395 9,262,358 32,653 Lease receivable - - - - 122,710 122,710 -
Interest receivable 13,475 8,513 5,155 3,510 734 31,387 1,308 Grants and subventions receivable - 49,568 3,423,431 395,166 62,840 3,931,005 162,816 Inventories and prepaids - 1,807,100 131,973 23,128 - 1,962,201 - Due from other funds - - 293,243 - - 293,243 -
Total current assets 10,273,859 14,191,253 12,113,935 5,276,675 956,341 42,812,063 19,362,488 Noncurrent assets:

Advances to other funds - 289,121 - - 576,223 865,344 - Intangible assets - - 270,000 - - 270,000 -
Land 699,654 2,316,013 2,267,920 670,431 1,793,862 7,747,880 762,562 Construction in progress - 4,227,295 3,839,948 1,673,085 757,174 10,497,502 792,843 Infrastructure and network - 27,535,975 49,989,739 91,942,959 6,719,287 176,187,960 - Buildings and improvements 26,700 26,270,859 22,271,536 10,328,621 4,385,511 63,283,227 516,596 Machinery equipment and vehicles 516,075 5,663,927 3,656,939 4,448,623 1,018,266 15,303,830 1,584,138 Less accumulated depreciation (443,302) (34,177,631) (18,821,809) (32,919,996) (5,103,651) (91,466,389) (1,131,949) Total noncurrent assets 799,127 32,125,559 63,474,273 76,143,723 10,146,672 182,689,354 2,524,190 Total assets 11,072,986 46,316,812 75,588,208 81,420,398 11,103,013 225,501,417 21,886,678

DEFERRED OUTFLOWS OF RESOURCES
Pension related 150,565 1,973,198 1,162,523 1,278,221 458,828 5,023,335 - Total deferred outflows of resources 150,565 1,973,198 1,162,523 1,278,221 458,828 5,023,335 - Total assets and deferred outflows of resources $ 11,223,551 $ 48,290,010 $ 76,750,731 $ 82,698,619 $ 11,561,841 $ 230,524,752 $ 21,886,678

LIABILITIES
Current liabilities:

Accounts payable 96,071 198,522 567,381 705,445 220,961 1,788,380 695,240 Accrued payroll liabilities 3,415 60,961 38,552 33,848 24,615 161,391 121,621 Unearned revenues - - - - - - 1,400
Due to other funds - - 2,049,808 293,243 301,478 2,644,529 - Deposits payable - - - - 6,224 6,224 -
Interest payable 4,459 181,215 340,077 241,804 13,213 780,768 150,993 Claims payable - current - - - - - - 143,486
Compensated absences - current 1,090 21,150 12,371 10,265 5,365 50,241 45,375 Capital project installment obligations - current - - 534,421 - 11,157 545,578 - Capital project bonds - current - 365,200 562,610 1,534,099 - 2,461,909 424,510 Pension-related bonds - current 13,803 176,950 112,103 126,998 37,173 467,027 - Total current liabilities 118,838 1,003,998 4,217,323 2,945,702 620,186 8,906,047 1,582,625 Noncurrent liabilities:

Advance from other funds - - 576,223 - 2,430,930 3,007,153 340,000 Compensated absences 9,806 190,346 111,337 92,385 48,287 452,161 408,385 Capital project installment obligations - - 16,649,223 - 126,920 16,776,143 - Capital project bonds - 9,818,409 13,673,035 23,661,913 - 47,153,357 17,840,261 Pension-related bonds 481,981 6,178,830 3,914,464 4,434,610 1,298,045 16,307,930 - Net pension liability 156,971 2,057,142 1,211,979 1,332,599 478,347 5,237,038 - Landfill closure/post-closure 21,145,540 - - - - 21,145,540 - Total noncurrent liabilities 21,794,298 18,244,727 36,136,261 29,521,507 4,382,529 110,079,322 18,588,646 Total liabilities 21,913,136 19,248,725 40,353,584 32,467,209 5,002,715 118,985,369 20,171,271

DEFERRED INFLOWS OF RESOURCES
Lease related - - - - 122,710 122,710 -
Pension related 13,000 170,367 100,373 110,362 39,615 433,717 - Total deferred inflows of resources 13,000 170,367 100,373 110,362 162,325 556,427 - Total liabilities and deferred inflows of resources 21,926,136 19,419,092 40,453,957 32,577,571 5,165,040 119,541,796 20,171,271

NET POSITION
Net investment in capital assets 799,127 28,407,253 34,742,043 52,942,881 9,432,372 126,323,676 996,215 Restricted for:

Debt service reserve - - 706,668 - - 706,668 -
NCPA Projects - 87,524 - - - 87,524 -
Unrestricted (11,501,712) 376,141 848,063 (2,821,833) (3,035,571) (16,134,912) 719,192 Total net position $ (10,702,585) $ 28,870,918 $ 36,296,774 $ 50,121,048 $ 6,396,801 110,982,956 $ 1,715,407 163,232
$ 111,146,188
Business-type Activities
Difference between business-type adjustments to assets and liabilities.

Net position of business-type activities
The accompanying notes are an integral part of these financial statements.

Attachment 1

City of Ukiah, California
Financial Section: Basic Financial Statements Page | 35 City of Ukiah, California
Statement of Revenues, Expenses, and Changes in Net Position Proprietary Funds
Year Ended June 30, 2023
Governmental
Activities
Landfill Electric Water Wastewater
Total Nonmajor
Funds
Total Enterprise
Funds
Internal Service
Funds

OPERATING REVENUES
Charges for service $ 597,239 $ 20,827,124 $ 7,459,767 $ 8,814,483 $ 1,263,998 $ 38,962,611 $ 18,265,789 Licenses and permits - - - - 20 20 -
Intergovernmental - 428,742 - - - 428,742 -
Cap and trade - 783,096 - - - 783,096 -
Fines penalties and forfeitures - - - - 48,895 48,895 - Facility rental 8,879 - - - 801,771 810,650 -
Fuel sales - - - - 909,296 909,296 -
Connection fees - - - 827,492 - 827,492 -
Miscellaneous - 962,900 - 5,159 9,277 977,336 102,374
Total operating revenues 606,118 23,001,862 7,459,767 9,647,134 3,033,257 43,748,138 18,368,163

OPERATING EXPENSES
General and administrative 128,605 3,036,127 1,449,796 1,728,325 669,378 7,012,231 2,506,052 Maintenance and operations 1,982,118 19,872,868 5,021,129 3,618,425 2,368,604 32,863,144 13,991,049 Fuel - - - - 560,939 560,939 -
Depreciation 14,681 1,430,914 1,878,685 2,206,884 277,144 5,808,308 133,868 Total operating expenses 2,125,404 24,339,909 8,349,610 7,553,634 3,876,065 46,244,622 16,630,969 Operating income (loss) (1,519,286) (1,338,047) (889,843) 2,093,500 (842,808) (2,496,484) 1,737,194

NONOPERATING REVENUES (EXPENSES)
Property tax - - - - 18,043 18,043 -
Grants, contributions, and donations - 447,508 264,600 - - 712,108 179,077 Interest, rent, and concessions 33,593 139,634 3,247 (2,213) 113,283 287,544 5,013 Interest expense and fiscal charges (18,496) (552,392) (716,196) (849,909) (53,194) (2,190,187) (1,003,098) Sale of property - - - - 10 10 -
Total nonoperating revenues (expenses) 15,097 34,750 (448,349) (852,122) 78,142 (1,172,482) (819,008) Income (loss) before contributions and transfers (1,504,189) (1,303,297) (1,338,192) 1,241,378 (764,666) (3,668,966) 918,186 Capital grants, contributions, and donations - (396,525) 3,423,431 365,166 205,401 3,597,473 17,726 Intergovernmental - 570 - - - 570 -
Transfers in 835,000 489,688 293,243 - 108,621 1,726,552 - Transfers out - - - (293,243) (489,688) (782,931) -
Change in net position (669,189) (1,209,564) 2,378,482 1,313,301 (940,332) 872,698 935,912 Total net position - beginning (10,033,396) 30,080,482 33,918,292 48,807,747 7,337,133 110,110,258 779,495 Total net position - ending $ (10,702,585) $ 28,870,918 $ 36,296,774 $ 50,121,048 $ 6,396,801 $ 110,982,956 $ 1,715,407 (634,816)
$ 237,882
Business-type Activities
The accompanying notes are an integral part of these financial statements.

Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds Changes in net position of business-type activities
Attachment 1

City of Ukiah, California
Financial Section: Basic Financial Statements Page | 36 City of Ukiah, California
Statement of Cash Flows
Proprietary Funds
Year Ended June 30, 2023
Governmental
Activities
Landfill Electric Water Wastewater
Total
Nonmajor
Enterprise
Funds
Total
Enterprise
Funds
Internal Service
Funds

CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from customers $ 692,584 $ 20,120,099 $ 7,323,946 $ 8,868,832 $ 2,698,167 $ 39,703,628 $ 105,867 Receipts from interfund services provided - - - - - - 11,796,959 Payments to employees (200,255) (3,285,997) (2,182,613) (2,293,065) (1,393,709) (9,355,639) (8,009,555) Payments to suppliers (439,119) (15,473,265) (3,185,561) (1,454,529) (1,581,183) (22,133,657) (5,970,684) Payments for interfund services used (128,605) (3,036,127) (1,449,796) (1,728,325) (669,378) (7,012,231) 3,466,200 Receipts from other governmental agencies - 277,028 - - - 277,028 395,662 Other payments - - - - - - (10,000)
Other operating cash receipts (payments) - 4,526 - - - 4,526 - Net cash provided (used) by operating activities (75,395) (1,393,736) 505,976 3,392,913 (946,103) 1,483,655 1,774,449

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Principal paid on lease revenue bonds (12,614) (161,711) (98,529) (232,124) (33,972) (538,950) - Cash received (paid) to other funds 835,000 24,312 1,978,404 - 725,760 3,563,476 (300,000) Property taxes received - - - - 18,043 18,043 -
Lawsuit settlement payments - - - (1,030,000) - (1,030,000) - Grants and contributions - 570 - (30,000) 230,730 201,300 3,987 Net cash provided (used) by noncapital financing activities 822,386 (136,829) 1,879,875 (1,292,124) 940,561 2,213,869 (296,013)

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Capital grants and contributions - 52,172 264,600 - 308,431 625,203 30,000 Interest paid (18,648) (602,599) (892,804) (871,784) (53,692) (2,439,527) (1,074,007) Principal paid on capital and related debt - - (948,456) (1,354,938) (10,903) (2,314,297) (325,000) Acquisition and construction of capital assets - (1,332,410) (2,308,577) (2,960,051) (265,068) (6,866,106) (261,413) Proceeds from sale of property - - - - 10 10 -
Net cash provided (used) by capital and related financing activities (18,648) (1,882,837) (3,885,237) (5,186,773) (21,222) (10,994,717) (1,630,420)

CASH FLOWS FROM INVESTING ACTIVITIES
Interest received 22,786 132,565 116 (3,963) 22,704 174,208 4,154 Net cash provided (used) by investing activities 22,786 132,565 116 (3,963) 22,704 174,208 4,154 Net increase (decrease) in cash and cash equivalents 751,129 (3,280,837) (1,499,270) (3,089,947) (4,060) (7,122,985) (147,830) Balances - beginning of year 9,462,182 10,666,591 8,003,684 5,958,965 240,722 34,332,144 19,313,541 Balances - end of the year $ 10,213,311 $ 7,385,754 $ 6,504,414 $ 2,869,018 $ 236,662 $ 27,209,159 $ 19,165,711 Reconciliation of operating income (loss) to net cash provided (used) by operating activities:

Operating Income $ (1,519,286) $ (1,338,047) $ (889,843) $ 2,093,500 $ (842,808) $ (2,496,484) $ 1,737,194 Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities:

Depreciation 14,681 1,430,914 1,878,685 2,206,884 277,144 5,808,308 133,868 Changes in assets and liabilities:

Decrease (increase) in accounts receivable 86,466 (1,553,777) (135,821) (778,302) (300,313) (2,681,747) 368 Decrease (increase) in prepaids - - - - - - 1,500
Decrease (increase) in inventory - (192,829) (25,824) (1,551) - (220,204) - Decrease (increase) in deferred outflows (128,299) (1,677,553) (966,209) (1,089,824) (411,816) (4,273,701) - Increase (decrease) in accounts payable 78,676 110,257 (398,055) (186,403) (61,060) (456,585) 335,637 Increase (decrease) in accrued salaries and benefits (6,684) (100,004) (61,546) (70,483) (41,291) (280,008) (264,804) Increase (decrease) in compensated absences (2,254) 21,185 5,646 (19,066) 5,773 11,284 23,755 Increase (decrease) in deferrred inflows (69,963) (931,201) (631,087) (591,600) (267,810) (2,491,661) - Increase (decrease) in net pension liability/(asset) 215,729 2,837,319 1,730,030 1,829,758 696,078 7,308,914 - Increase (decrease) in landfill liability 1,255,539 - - - - 1,255,539 - Increase (decrease) in claims payable - - - - - - (193,069) Net cash provided (used) by operating activities $ (75,395) $ (1,393,736) $ 505,976 $ 3,392,913 $ (946,103) $ 1,483,655 $ 1,774,449 Noncash investing, capital and financing activities
Contributions of capital assets $ - $ 489,688 $ - $ - $ (489,688) $ - $ - Amortization related to long-term debt - (55,200) (138,406) (36,132) - (229,738) (58,047) Acquistion of capital assets on account - (631,140) (154,581) (183,950) (7,857) (977,528) - Total noncash investing, capital and financing activities - (196,652) (292,987) (220,082) (497,545) (1,207,266) (58,047) Business-type Activities - Enterprise Funds
Attachment 1

City of Ukiah, California
Financial Section: Basic Financial Statements Page | 37 Fiduciary Funds
These funds account for assets held by the City as an agent for individuals, private organizations, and other governments.

The financial activities of these funds are excluded from the Government-wide financial statements but are presented in the separate Fiduciary Fund financial statements.

PRIVATE PURPOSE TRUST FUND
Redevelopment Non-Housing Housing Successor Private Purpose Trust Fund Resources held for the benefit of the state from the dissolution of the Ukiah Redevelopment Agency’s non-housing functions.

CUSTODIAL FUNDS
The City accounts for activities on behalf of external entities, including other governments.

Attachment 1

City of Ukiah, California
Financial Section: Basic Financial Statements Page | 38 City of Ukiah, California
Statement of Fiduciary Net Position
Fiduciary Funds
June 30, 2023
Private-Purpose Trust
Funds Custodial Funds
ASSETS
Cash and investments $ 6,043,193 $ 1,706,338
Accounts receivable - 513,163
Interest receivable 8,323 2,484
Land held for resale 5,443 -
Total Cash 6,056,959 2,221,985

LIABILITIES
Accounts payable - 192,403
Accrued payroll liabilities 46 25,161
Deposits payable - 597,690
Interest payable 7,371 5,697
Due to other agencies - 139,798
Intergovernmental payable - 24,744
Due to City of Ukiah - 1,532,055
Due in more than one year 3,535,882 -
Total liabilities 3,543,299 2,517,548

NET POSITION
Restricted for:

Held for the benefit of the state 2,513,660 -
Individuals, organizations, and other governments - (295,563) Total net position $ 2,513,660 $ (295,563)
The accompanying notes are an integral part of these financial statements.

Attachment 1

City of Ukiah, California
Financial Section: Basic Financial Statements Page | 39 City of Ukiah, California
Statement of Changes in Fiduciary Net Position
Fiduciary Activities
Year Ended June 30, 2023
Private-Purpose Trust
Funds Custodial Funds

ADDITIONS
Contributions:

Addition to agency assets $ - $ 131,124
Taxes and assessments collected for other governments 1,700,221 2,224,809 Service charges collected for other governments - 219,291 Service charges collected for other agencies - 2,139,012 Intergovernmental - 233,476
Miscellaneous - 3,131
Members - 513,880
Total contributions 1,700,221 5,464,723
Investment earnings:

Interest, rent, and concessions 19,740 9,423
Total investment earnings 19,740 9,423
Total additions 1,719,961 5,474,146

DEDUCTIONS
General and administrative 250,000 64,122
Maintenance and operations 22,126 588,703
Interest expense and fiscal charges 109,485 72,382
Distributions to other governments - 583,640
Payments to other agencies for service charges collected - 628,020 Payments to City for services provided - 3,279,625
Total deductions 381,611 5,216,492
Net increase (decrease) in fiduciary net position 1,338,350 257,654 Net Position -- beginning of the year 1,175,310 (553,217) Net Position -- end of the year $ 2,513,660 $ (295,563) The accompanying notes are an integral part of these financial statements.

Attachment 1

Notes to the Basic Financial Statements

CITY OF UKIAH,CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS INDEX
June 30, 2023
The notes to the financial statements include a summary of significant accounting policies and other notes considered essential to fully disclose and fairly present the transactions and financial position of the City as follows:

Note 1 - Summary of Significant Accounting Policies............................................................................................................. 41 Note 2 - Stewardship, Compliance, and Accountability........................................................................................................ 51 Note 3 - Cash and Investments.....................................................................................................................................................52 Note 4 - Accounts Receivable.......................................................................................................................................................56 Note 5 – Notes and Loans Receivable.........................................................................................................................................57 Note 6 - Capital Assets...................................................................................................................................................................58 Note 7 - Long-Term Liabilities.....................................................................................................................................................60 Note 8 – Landfill Closure and Post Closure Costs..................................................................................................................66 Note 9 - Interfund Transactions ..................................................................................................................................................66 Note 10 - Risk Management..........................................................................................................................................................68 Note 11 - Public Employee Retirement Plan...............................................................................................................................71 Note 12 – Related Organizations.................................................................................................................................................82 Note 13 - Commitments and Contingencies.............................................................................................................................84 Note 14 – Successor Agency Trust, Former Ukiah Redevelopment Agency.....................................................................85 Note 15 – New Pronouncements..................................................................................................................................................87 Note 16 – Service Contracts..........................................................................................................................................................88 Attachment 1

Notes to the Basic Financial Statements
City of Ukiah, California
Financial Section: Basic Financial Statements Page | 41 Note 1 - Summary of Significant Accounting Policies
The accounting policies of the City conform to accounting principles generally accepted in the United States of America as applied to government agencies. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The accompanying financial statements present the City of Ukiah and its component units, entities for which the City is considered to be financially accountable. Blended component units, although legally separate entities, are, in substance, part of the City’s operations.

The more significant accounting policies of the City are described below:

A. Defining the reporting entity
The City of Ukiah was incorporated March 8, 1876 under the laws of the State of California. Ukiah operates under a Council-Manager form of government. The City Manager serves as the chief executive for day-to-day operations and long-term planning, including executing the policies and directives of the City Council. Department heads report directly to the City Manager and serve at his or her pleasure.

The City provides a range of municipal services to its citizens including public safety (fire and police), public works; planning and building regulation; recreation and parks; airport, golf; and water, sewer, and electric utilities.

The Redevelopment Agency of the City of Ukiah (the Agency) was established by the City as a separate legal entity in accordance with state law. The purpose of the Agency was to encourage new investment and reinvestment within legally designated redevelopment areas in partnership with property owners. The Agency was dissolved on February 1, 2012 by the State Legislature and California Governor, Jerry Brown.

Blended Component Unit
The City of Ukiah Public Financing Authority is a Joint Exercise of Powers Authority organized and existing under and by virtue of the Joint Exercise of Power Act of the Government Code of the State of California. The City and the Industrial Development Authority of the City of Ukiah form the Authority by the execution of a Joint Exercise of Powers Agreement. The primary purpose of the Authority is to issue bonds and make lease agreements with the City of Ukiah and the Industrial Development Authority of the City of Ukiah. The City appoints the voting majority of the board and is able to impose its will on this component unit. There are no separate financial statements prepared for the authority.

B. Government-wide and Fund Financial Statement
The government-wide financial statements report information on all the non-fiduciary activities of the primary government. For the most part, the effect of interfund 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 statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues 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) grant and contributors that are restricted to meeting the operational or capital requirements of a function. Taxes, and other items not properly included among program revenues are reported instead as general revenues.

The accounts of the City are organized based on funds. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenue, and expenditures or expenses, as appropriate. Government resources are allocated to, and accounted for, in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled.

Attachment 1

Notes to the Basic Financial Statements
City of Ukiah, California
Financial Section: Basic Financial Statements Page | 42 Note 1 - Summary of Significant Accounting Policies (Continued) In the fund financial statement in the report, the various funds are grouped into generic funds within three broad fund types. They are as follows:

The City reports four major governmental funds:

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

The Streets Capital Improvements fund accounts for resources and activities related to streets and rights-ofway improvements, funded primarily with resources derived from Measure Y, a half-cent district transaction and use tax.

The General Capital Projects fund is used to account for the accumulation of financial resources for certain capital projects, notably streets and rights-of-way, funded by various sources, including the general fund.

The Pension Debt Service fund is used to account for the accumulation of financial resources to meet the City’s lease revenue bonds. The reserve accumulated is to be used to ensure the City has resources to meet debt service in future periods.

The City reports the following major proprietary funds:

The Landfill Fund accounts for the activities of the City’s solid waste landfill operations.

The Electric Fund accounts for the activities of the City’s electric generation and distribution operations.

The Water Fund accounts for the activities of the City’s water treatment and distribution operations.

The Sewer Fund accounts for the activities of the City’s sewage collection and treatment operations.

Additionally, the City reports the following fund types:

Internal Service Funds - account for garage (vehicle maintenance), stores (purchasing), public safety dispatch, utility billing, workers’ compensation and liability insurance services provided to other departments or agencies of the City, or to other governments, on a cost reimbursement basis.

Private-Purpose Trust Funds - account for resources legally held in trust for use by other organizations. All resources of the fund, including any earnings on the invested resources, may be used to support the organization’s or department’s activities. There is no requirement that any portion of these resources be preserved as capital.

Custodial Funds - used by the City to report resources held by the City in a custodial capacity for the Ukiah Valley Sanitation District, Ukiah Waste Solutions, and Russian River Watershed. These funds are used to record receipt, temporary investment and remittance of fiduciary resources to individuals, private organizations or other governments.

Attachment 1

Notes to the Basic Financial Statements
City of Ukiah, California
Financial Section: Basic Financial Statements Page | 43 Note 1 - Summary of Significant Accounting Policies (Continued) Generally, the effect of interfund activity has been eliminated from the government-wide financial statements.

Exceptions to this general rule are payments-in-lieu of taxes and other charges between the City’s proprietary fund functions and various other functions of the City. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned.

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. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes.

Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. Principal operating revenues of the City’s electric, water, wastewater, golf and street lighting funds and the City’s internal service funds are charges to customers for sales and services. Principal operating revenues of the City’s airport, disposal site and conference center funds include charges to customers for sales and services and rental fees. The parking district fund’s principal operating revenues include the sale of parking permits to customers and parking fines. The City also recognizes as operating revenue tap fees intended to recover the cost of connecting new customers to the City’s utilities. Operating expenses for the enterprise funds and internal service funds include cost of power purchases, fuels and lubricants, operations, maintenance, utilities, insurance premiums and deductibles, general and administration, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.

An emphasis is placed on major funds within the governmental and proprietary categories. A fund is considered major if it is the primary operating fund of the City or meets the following criteria:

1. Total assets, liabilities, revenues, or expenditures/expenses of that individual governmental fund are at least 10 percent of the corresponding total for all funds of that category or type; and,

2. Total assets, liabilities, revenues, or expenditures/expenses of the individual governmental fund are at least 5 percent of the corresponding total for all governmental funds combined.

The City reports the following major funds:
• General Fund
• Streets Capital Projects
• Pension Stabilization
• General Capital Projects
• Landfill
• Electric
• Water
• Wastewater
C. Basis of Accounting and Measurement focus
Basis of accounting refers to when revenue and expenditures (or expenses) are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of measurements made, regardless of the measurement focus applied.

Attachment 1

Notes to the Basic Financial Statements
City of Ukiah, California
Financial Section: Basic Financial Statements Page | 44 Note 1 - Summary of Significant Accounting Policies (Continued) Measurement focus is the determination of (1) which assets and which liabilities are included on a government's balance sheet and where they are reported, and (2) whether an operating statement presents information on the flow of financial resources (revenues and expenditures) or information on the flow of economic resources (revenues and expenses).

The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenue is recorded when earned and expenses are recorded when liabilities are incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenue in the year for which they are received. Grants and similar items are recognized as revenue as soon as all eligibility requirements have been met.

In the fund financial statements, all governmental funds are accounted for using the modified accrual basis of accounting. Revenue is recognized when they become both measurable and available to finance the expenditures of the current period (susceptible to accrual). For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current period. Major revenue sources susceptible to accrual include substantially all property taxes, taxpayer-assessed taxes (such as sales and use, utility users, business license, transient occupancy, franchise fees and gas taxes), interest, special assessments levied, state and federal grants and charges for current services. Revenue from licenses, permits, fines and forfeits are recorded as received.

Expenditures are recorded when the related fund liability is incurred.

Fiduciary fund revenue and expenditures (as appropriate) are accounted for using the economic resources measurement focus.

All governmental funds are accounted for using a current financial resources measurement focus. This means that only current assets and current liabilities are generally included on their balance sheets. Their reported fund balance (net current assets) is considered a measure of “available spendable resources.” Governmental fund operating statements present increases (revenue and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Accordingly, they present a summary of sources and uses of “available spendable resources” during a period.

The government-wide financial statements, as well as the proprietary funds financial statements, are accounted for on a flow of economic resources measurement focus. This means that all assets and all liabilities (whether current or noncurrent) associated with their activity are included on their balance sheets. Proprietary fund operating statements present increases (revenues) in net total assets.

D. Use of Estimates
Financial statement preparation, in conformity with accounting principles generally accepted in the United States of America, requires the use of estimates and assumptions that affect the reported amount 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 expenditures/expenses during the reporting period. Actual results could differ from those estimates.

Attachment 1

Notes to the Basic Financial Statements
City of Ukiah, California
Financial Section: Basic Financial Statements Page | 45 Note 1 - Summary of Significant Accounting Policies (Continued) E. Cash and Investments
For purposes of the statement of cash flows the City’s cash and cash equivalents are cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition.

The City pools cash and investments from all funds for the purpose of increasing income through investment activities. Highly liquid money market investments with maturities of one year or less at time of purchase are stated at amortized cost. All other investments are stated at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. Market value is used as fair value for those securities for which market quotations are readily available.

F. Receivable and Payables
Balances representing lending/borrowing transactions between funds outstanding at the end of the fiscal year are reported as either “due to/due from other funds” (amounts due within one year), “advances to/from other funds” (non-current portions of interfund lending/borrowing transactions), or “loans to/from other funds” (long-term lending/borrowing transactions as evidenced by loan agreements). Advances and loans to other funds are offset by a fund balance reserve in applicable governmental funds to indicate they are not available for appropriation and are not expendable available financial resources.

Property, sales, use, and utility user taxes related to the current fiscal year are accrued as revenue and accounts receivable and considered available if received within 60 days of year end. Federal and state grants are considered receivable and accrued as revenue when reimbursable costs are incurred under the accrual basis of accounting in the government-wide statement of net position. The amount recognized as revenue under the modified accrual basis of accounting is limited to the amount that is deemed measurable and available. The City considers these taxes available if they are received during the period when settlement of prior fiscal year accounts payable and payroll charges normally occurs.

Grants, entitlements or shared revenue is recorded as receivables and revenue in the general, special revenue and capital project funds when they are received or susceptible to accrual. Notes receivables represent individual loans, secured by property liens in favor of the City and the Redevelopment Successor Agency, made through various sources, including the Community Development Block Grant (CDBG) and federal HOME housing programs. When repaid, these amounts are designated for purposes allowed under the reuse guidelines.

G. Allowance for Doubtful Accounts
Management has elected to record bad debts using the allowance method.

H. Prepaid Items and Inventory
The City utilizes the consumption method for recoding inventories and prepaid items in governmental funds. All inventories are valued at cost using the first-in/first-out (FIFO) method. An annual charge is made to various City funds to assist in the financing of warehouse operations in addition to being billed as inventory is issued. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements.

Attachment 1

Notes to the Basic Financial Statements
City of Ukiah, California
Financial Section: Basic Financial Statements Page | 46 Note 1 - Summary of Significant Accounting Policies (Continued) I. Capital Assets
Government-Wide Statements
Public domain (infrastructure) capital assets include roads, bridges, curbs and gutters, streets, sidewalks, drainage systems, and lighting systems. The accounting treatment of property, plant and equipment (capital assets) depends on whether the assets are used in governmental fund operations or proprietary fund operations and whether they are reported in the government-wide or fund financial statements. Prior to July 1, 2003, governmental funds’ infrastructure assets were not capitalized, since then these assets have been valued at estimated historical cost.

Depreciation of all exhaustible capital assets is recorded as an allocated expense in the Statement of Activities, with accumulated depreciation reflected in the Statement of Net Position. Depreciation is provided over the assets’ estimated useful lives using the straight-line method of depreciation. The City capitalizes assets with an original cost greater than $10,000 and with a useful lifespan longer than two years. No depreciation is recorded in the year of acquisition or in the year of disposition.

The range of estimated useful lives by type of asset is as follows:

Buildings and improvements 30 – 60 years
Roadway improvements 50 years
Sidewalks, curbs and gutters 50 years
Storm drain pipes/structures 50 years
Traffic signal devices 5 – 40 years
Landscaping 30 years
Signage 25 years
Leasehold improvements 5 years
Machinery and equipment 5 – 20 years
Vehicles 5 – 10 years
Fund Financial Statements
In the fund financial statements, capital assets used in governmental fund operations are accounted for as capital outlay expenditures of the governmental fund upon acquisition. Capital assets used in proprietary fund operations are accounted for the same way as in the government-wide statements.

J. Compensated Absences
Compensated absences represent the vested portion of accumulated vacation and sick leave. In governmental funds, the cost of vacation and sick leave benefits is recognized when payments are made to employees. Upon separation, 100 of accrued vacation and accrued comp time is paid and in proprietary funds, a long-term liability for such benefits has been recorded.

K. Deferred Outflows/Inflows of Resources
In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents consumption of net assets that applies to future period(s) and so will not be recognized as an outflow of resources (expense) until then. The City currently has one item that qualifies for reporting in this category, the result of the City’s implementation of GASB Statement No. 68, Accounting and Financial Reporting for Pensions. See Note 11 – Public Employee Retirement Plan for more information.

Attachment 1

Notes to the Basic Financial Statements
City of Ukiah, California
Financial Section: Basic Financial Statements Page | 47 Note 1 - Summary of Significant Accounting Policies (Continued) In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net assets that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The City has one item, which arises only under the modified accrual basis of accounting, and another, which is a result of the City’s implementation of GASB Statement No. 68, Accounting and Financial Reporting for Pensions, which qualify for reporting in this category. Under the modified accrual basis of accounting, the item, unavailable revenue, is reported in the governmental funds balance sheet. The governmental funds report unavailable revenues from property taxes, special assessments, grant receivables, and other miscellaneous receivables. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available.

L. Net Position Flow Assumptions
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 statement of net position, a flow assumption must be made about the order in which the resources are applied.

It is the City’s policy to consider restricted net position to have been depleted before unrestricted net position.

M. Long-term Liabilities
In both the governmental-wide financial statements and proprietary fund financial statements, long-term debt and other long-term liabilities are reported as liabilities in the applicable statement of net position. Bond premiums and discounts are deferred and amortized over the life of the bond.

In the fund financial statements, governmental fund types recognized bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources.

N. Equity Classification
Government-Wide Statements
Equity is classified as net position and is displayed in three components:

Net investment in capital assets – consists of capital assets, including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets.

Restricted net position – consists of net position with constraints placed on the use by external groups such as creditors, grantors, contributors, or by laws or regulations of other governments or law through constitutional provisions or enabling legislation.

Unrestricted net position – all other net position that do not meet the definition of “restricted” or “net investment in capital assets debt.”
Attachment 1

Notes to the Basic Financial Statements
City of Ukiah, California
Financial Section: Basic Financial Statements Page | 48 Note 1 - Summary of Significant Accounting Policies (Continued) Fund Financial Statements
Governmental fund equity is classified as fund balance. Fund balance is classified as nonspendable, restricted, committed, assigned or unassigned. Proprietary fund equity is classified the same as in the government-wide statements.

The classifications for governmental funds are defined as follows for the City:

Nonspendable Fund Balance –
• Assets that will never convert to cash (prepaid items, inventory). • Assets that will not convert to cash soon enough to affect the current period (long-term notes or loans receivable). These are not in spendable form.
• Resources that must be maintained intact pursuant to legal or contractual requirements (the principal of an endowment).

Restricted Fund Balance –
• Resources that are subject to externally enforceable legal restrictions imposed by parties altogether outside the government (Creditors, Grantors, Contributors and Other Governments). • Resources that are subject to limitations imposed by law through constitutional provisions or enabling legislation (Gas Tax).

Committed Fund Balance –
• Self-imposed limitations set in place prior to the end of the period. (Encumbrances, economic contingencies and uncertainties).
• Limitation at the highest level of decision-making (Council) that requires formal action at the same level to remove, done typically through resolution during the budget process.

Assigned Fund Balance –
• Amounts in excess of nonspendable, restricted, and committed fund balance in funds other than the General Fund are reported as assigned fund balance and are done so by the City Council.

Unassigned Fund Balance –
• Residual net resources
• Total fund balance in the General Fund in excess of nonspendable, restricted, committed and assigned fund balance (surplus).
• Excess of nonspendable, restricted, and committed fund balance over total fund balance (deficit).

The General Fund is the only fund that reports a positive unassigned fund balance. In other governmental funds it is not appropriate to report a positive unassigned fund balance amount. However, in governmental funds other than the General Fund, if expenditures incurred for specific purposes exceed the amounts that are restricted, committed, or assigned to those purposes, it may be necessary to report a negative unassigned fund balance in that fund.

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.

Attachment 1

Notes to the Basic Financial Statements
City of Ukiah, California
Financial Section: Basic Financial Statements Page | 49 Note 1 - Summary of Significant Accounting Policies (Continued) An additional safeguard to the City’s fiscal sustainability lies in the General Fund’s strategic reserve. The Council created this reserve in FY 2013 at 25 percent of operating expenditures for the year. The reserve is to be used to ensure adequate resources are available to manage cash flow and economic uncertainties, minimizing the impact to our employees and the Ukiah citizenry to the greatest extent possible.

O. Property Taxes
Property taxes in the State of California are administered for all local agencies at the county level and consist of secured, unsecured and utility tax rolls. The following is a summary of major policies and practices relating to property taxes:

Property Valuations are established by the Mendocino County Assessor for the secured and unsecured property tax rolls; the utility property tax roll is valued by the State Board of Equalization. Under the provision of Article XIII-A of the State Constitution (Proposition 13, adopted by the voters on June 6, 1978), properties are assessed at 100 percent of full value. From this base assessment, subsequent annual increases in valuation are limited to a maximum of two percent. However, an increase to full value is allowed for property improvements or upon change in ownership. Personal property is excluded from these limitations and is subject to annual reappraisal.

Tax Levies are limited to one percent of full assessed value which results in a tax rate of one percent assessed valuation under the provisions of Proposition 13. Tax rates for voter-approved indebtedness are excluded from this limitation.

Tax Levy Dates are attached annually on January 1, preceding the fiscal year for which the taxes are levied. The fiscal year begins July 1 and ends June 30 of the following year. Taxes are levied on both real and unsecured personal property as it exists at that time. Liens against real estate, as well as the tax on personal property are not relieved by subsequent renewal or change in ownership.

Tax Collections are the responsibility of the Mendocino County Treasurer-Tax Collector. Taxes and assessments on secured and utility rolls, which constitute a lien against the property, may be paid in two installments.

The First is due on November 1 of the fiscal year and is delinquent if not paid by December 10; The second is due on March 1 of the fiscal year and is delinquent if not paid by April 10.

Unsecured personal property taxes do not constitute a lien against property unless the taxes become delinquent.

Payments must be made in one installment, which is delinquent if not paid by August 31 of the fiscal year.

Significant penalties are imposed by the county for late payments. The City has elected to receive the City’s portion of the property taxes from the county under the county Teeter Bill program. Under this program, the City receives 100 percent of the City’s share of the levied property taxes in periodic payments with the county assuming the responsibility for the delinquencies.

Property Tax Administration Fees – the state of California FY 90-91 Budget Act authorized counties to collect an administrative fee for collection and distribution of property taxes.

Attachment 1

Notes to the Basic Financial Statements
City of Ukiah, California
Financial Section: Basic Financial Statements Page | 50 Note 1 - Summary of Significant Accounting Policies (Continued) Tax Levy Apportionments – due to the nature of the City-wide maximum levy, it is not possible to identify generalpurpose tax rates for specific entities. Under State legislation adopted subsequent to the passage of Proposition 13, apportionments to local agencies are made by the county’s auditor-controller based primarily on the ratio that each agency represented of the total City-wide levy for the three fiscal years prior to fiscal year 1979.

P. Interfund Transfers
Resources are reallocated between funds by reporting them as interfund transfers. For the purposes of the Statement of Activities, all interfund transfers between individual governmental funds have been eliminated.

Q. Pensions
For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the City of Ukiah can be found in the following notes and with the City’s pension administrator, CalPERS. California Public Employees' Retirement System (CaIPERS) plans (Plans) and additions to/deductions from the Plans' fiduciary net position have been determined on the same basis as they are reported by CaIPERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms.

Investments are reported at fair value.

R. New or Closed Funds
The City opened a new fund, Opioid Settlement Fund, to account for the sources, uses, and balances of settlement funds.

S. Leases
Lessor: The City is a lessor for noncancellable leases of land owned by the City. The City recognizes a lease receivable and a deferred inflow of resources in the government-wide and governmental fund financial statements.

At the commencement of a lease, the City initially measures the lease receivable at the present value of payments expected to be received during the lease term. Subsequently, the lease receivable is reduced by the principal portion of lease payments received. The deferred inflow of resources is initially measured as the initial amount of the lease receivable, adjusted for lease payments received at or before the lease commencement date. Subsequently, the deferred inflow of resources is recognized as revenue over the life of the lease term.

Key estimates and judgments include how the City determines (1) the discount rate it uses to discount the expected lease receipts to present value, (2) lease term, and (3) lease receipts. • The City uses its estimated incremental borrowing rate as the discount rate for leases. • The lease term includes the noncancellable period of the lease. Lease receipts included in the measurement of the lease receivable is composed of fixed payments from the lessee. • The City monitors changes in circumstances that would require a remeasurement of its lease and will remeasure the lease receivable and deferred inflows of resources if certain changes occur that expected to significantly affect the amount of the lease receivable.

Attachment 1

Notes to the Basic Financial Statements
City of Ukiah, California
Financial Section: Basic Financial Statements Page | 51 Note 2 - Stewardship, Compliance, and Accountability
The following major and non-major funds had deficit fund balances as of June 30, 2023, Deficit Fund Equity
Major and Non-major Governmental Funds
Fund Name
Deficit
Amount Discussion/Explanation
Streets Capital Improvement Fund $ (205,296) Deficit amount is the result of capital projected funded by a specific general revenue source (Measure Y) and will be eliminated with revenues received in 2024.

ARRC (29,574) Deficit amount is the result of prior capital projects and operational deficiencies. The deficit is being eliminated with future revenues generated by ARRC operations.

Winter Special Events (195,646) Deficit amount is the result of a capital acquisition using an interfund loan with the general fund and losses in the reporting year. The loan will be repaid with current available revenues annually, with full payoff expected in five years.

Playground & Park Amenities (168,408) Deficit amount resulted from capital projects funded by expendiure driven grants. Will be eliminated when grant revenues are collected in FY 2024.

Rail Trail (505,459) Deficit amount is the result of capital projected funded by a specific revenue sources and will be eliminated when future and unavailable revenues are recognized.

This area intentionally left blank.

Attachment 1

Notes to the Basic Financial Statements
City of Ukiah, California
Financial Section: Basic Financial Statements Page | 52 Note 3 - Cash and Investments
The City follows the practice of pooling cash and investments of all funds except for the restricted funds required to be held by outside custodians, fiscal agents or trustees under the provisions of bond indentures. Cash and investments as of June 30, 2023 are classified in the accompanying financial statements as follows:

Cash and Investments
Total
Cash equivalents and investments
Pooled cash and investments, at fair value
Cash in bank $ 6,090,217
Cash in investment portfolio, excluding LAIF 22,687,944 Cash with LAIF 593,548
Total pooled investment balances 23,281,492
Non pooled cash and investments, at fair value
Petty cash 7,167
Deposits 196,807
Total non pooled cash, at fair value 203,974
Cash with fiscal agent 43,034,537
Total non pooled investments, at fair value 43,034,537
Total cash equivalents and investments $ 72,610,220
Investment Portfolio Analysis
PAR % of Portfolio
Permitted by
Policy
In compliance
with investment
policy <1 1 to 2 >2
$ 9,325,000 US treasury obligations 38.77% 100% Yes $ - $ 3,934,969 $ 5,047,754 $ 8,982,723 Federal agency: $ -
500,000 Bond / Note 2.08% 100% Yes $ 493,103 $ - $ - $ 493,103 2,139,312 Commercial Mortgage-Backed Security 8.90% 100% Yes $ - $ 933,399 $ 1,117,693 $ 2,051,092 610,000 Municipal obligations 2.54% 100% Yes $ 359,182 $ 231,679 $ - $ 590,861 420,000 Supra-National agency 1.75% 30% Yes $ 161,698 $ 240,313 $ - $ 402,011 5,620,000 Corporate notes 23.37% 30% Yes $ 753,896 $ 2,147,221 $ 2,552,658 $ 5,453,775 475,000 Certificates of deposit 1.98% 30% Yes $ - $ - $ 472,872 $ 472,872 4,352,024 Asset-backed securities 18.10% 20% Yes $ 11,054 $ 86,260 $ 4,129,093 $ 4,226,407 593,548 Local agency investment fund 2.47% $75M Yes $ 593,548 $ - $ - $ 593,548 15,100 Money market 0.06% 20% Yes $ 15,100 $ - $ - $ 15,100 $ 24,049,984 Total pooled investments 100.00% $ 2,387,581 $ 7,573,841 $ 13,320,070 $ 23,281,492 42,890,488 Money market 99.67% 20% Yes 42,890,488 - - 42,890,488 144,049 County of Mendocino treasury 0.33% 100% Yes 144,049 144,049 Total non-pooled investments 100.00% $ 43,034,537 $ - $ - $ 43,034,537 Maturities (in years)
Attachment 1

Notes to the Basic Financial Statements
City of Ukiah, California
Financial Section: Basic Financial Statements Page | 53 Note 3 - Cash and Investments (continued)
Collateral and Categorization Requirements
At the fiscal year end, the City’s carrying amount of demand deposits was $6,090,217 and the bank account balance was $6,536,544. The difference of $446,327 represented outstanding checks and deposits in transit. All deposits not insured by Federal Depository Insurance Corporation (FDIC) would be covered by collateralized securities in accordance with California Government Code Section 53600-53609.

Investment Policy
The table below identifies the investment types that are authorized under provisions of the City’s investment policy adopted August 16, 2005 (subsequently updated July 5, 2017), and in accordance with Section 53601 of the California Government Code. The table also identifies certain provisions of the investment policy that address interest rate risk, credit risk, and concentration of credit risk. The City’s investment policy also limits the weighted average of the City’s investment portfolio to 2.5 years and except for obligations of the U.S. government and its agencies, no more than 10 percent of the portfolio may be invested in the securities of any single issuer.

Authorized Investment Type Maximum
Maturity
Maximum
Percentage of
Portfolio
Maximum
Investment in One
Issuer
City of Ukiah Bonds 5 Years None 10%
U.S. treasury obligations 5 Years Unlimited None
State of California obligations 5 Years None 10%
Non-California state obligations 5 Years None 10%
Local agency obligations 5 Years None 10%
Federal agency or government
sponsored enterprise obligations
5 Years None 10%
Bankers' acceptances 180 Days 40% 5%
U.S. Commercial paper (highest rating) 270 Days 25% 5%
Negotiable certificates of deposit 5 Years 30% 5%
Repurchase agreements (1) 365 Days None 10%
Reverse repurchase agreements (2) 92 Days 20% 10%
Medium-term notes-corporate or
depository institutions (3) 5 Years 30% 5%
Money market funds (highest rating) n/a 20% 10%
Local Agency Investment Fund (LAIF) N/A $75m $75m
Time deposits 5 Years 25% 10%
Mortgage-backed and Asset-backed
Securities (rated "AA" or better) 5 Years 20% 10%
(1) Market value of collateral shall be valued at 102 percent and monitored daily. (2) Requires prior City Council approval.
(3) Five years or less.

Attachment 1

Notes to the Basic Financial Statements
City of Ukiah, California
Financial Section: Basic Financial Statements Page | 54 Note 3 - Cash and Investments (continued)
Disclosures Relating to 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 of Ukiah manages its exposure to interest rate risk is by investing in the State of California’s Local Agency Investment Fund (LAIF), whose underlying securities have staggered maturities and are generally due on demand, which provides cash flow and liquidity needed for operations.

Disclosures Relating to 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 nationally recognized statistical rating organization. The City’s investment policy limits credit risk by requiring compliance with the California Government Code for investment of public funds, as described in detail above.

Concentration of Credit Risk
Except for securities of the U.S. Government and its agencies, the investment policy of the City limits the amount that can be invested in any one issuer to no more than 10 percent of the total portfolio. As of June 30, 2023, holdings in any one issuer did not exceed 5 percent of the total portfolio.

Custodial Credit Risk
The credit risk for deposits is the risk that, in the event of failure of a depository financial institution, a government will not be able recover its deposits or will not be able to recover collateral securities that are in the possession on an outside party.

The California government code and the City’s investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits, 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 market value of the pledged securities in the collateral pool must be equal at least 110 percent 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 percent of the secured public deposits.

At June 30, 2023, the City had $5,536,544 in financial institutions that were not covered by the FDIC but were covered by collateralized securities of the financial institutions where the deposits were maintained.

The credit risk for investments is the risk that, in the event of the failure of counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of 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 risk for investments. With respect to investments, custodial credit risk generally applies only to direct investments in marketable securities. Custodial credit risk does not apply to a local government’s indirect investment in securities using mutual funds or government investment pools (such as LAIF).

Attachment 1

Notes to the Basic Financial Statements
City of Ukiah, California
Financial Section: Basic Financial Statements Page | 55 Note 3 - Cash and Investments (continued)
Credit Risk Schedule
Investment Type AAA AA+ to A- BBB+ Unrated
US Treasury obligations $ 8,982,723 N/A $ - $ 8,982,723 $ - $ - Federal agency/GSE 493,103 N/A - 493,103 - -
Federal agency/CMO 2,051,092 N/A - 2,051,092 - -
Municipal obligations 590,861 N/A 48,977 111,799 - 430,085 Supra-National agency 402,011 N/A 402,011 - - -
Corporate notes 5,453,775 N/A - 4,969,506 484,269 -
Negotiable certificates of deposit 472,872 N/A - 472,872 - - Asset-backed securities 4,226,407 N/A - 3,641,482 - 584,925 LAIF 593,548 N/A - - - 593,548
Money market 15,100 N/A - - - 15,100
County of Mendocino treasury 144,049 N/A - - - 144,049
Held by fiscal agent:

Money market 42,890,488 N/A - - - 42,890,488
Total $ 66,316,029 $ 450,988 $ 20,722,577 $ 484,269 $ 44,658,195 Total Investment
Minimum
Legal Rating
Rating as of Fiscal Year End
Fair Value
The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are other than quoted process included in Level 1 and are valued using a matrix pricing model using either directly or indirectly observable inputs; Level 3 inputs are significant unobservable inputs.

Fair Value Schedule
Investment Type 1 2
US Treasury obligations $ 8,982,723 $ - $ - $ 8,982,723 Federal agency/GSE 493,103 - - 493,103
Federal agency/CMO 2,051,092 - - 2,051,092
Municipal obligations 590,861 - - 590,861
Supra-National agency 402,011 - - 402,011
Corporate notes 5,453,775 - - 5,453,775
Negotiable certificates of deposit 472,872 - - 472,872
Asset-backed securities 4,226,407 - - 4,226,407
LAIF 593,548 593,548 - -
Money market 15,100 15,100 - -
County of Mendocino treasury 144,049 144,049 - -
Held by fiscal agent:

Money market 42,890,488 42,890,488 - -
Total $ 66,316,029 $ 43,643,185 $ - $ 22,672,844
Total
Investment
Investments
Not Measured
at Fair Value
Level
Attachment 1

Notes to the Basic Financial Statements
City of Ukiah, California
Financial Section: Basic Financial Statements Page | 56 Note 3 - Cash and Investments (continued)
Participation in an External Investment Pool
The City is a voluntary participant in the California Local Agency Investment Fund (LAIF), which is regulated by California Government Code Section under the oversight of the Local Investment Advisory Board (Board). The Board consists of five members as designated by state statue and is chaired by the State Treasurer who is responsible for the day to day administration of LAIF. The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis, which is different from the fair value of the City’s position in the LAIF pool. The State Treasurer determines fair value on its investment portfolio based on market quotations for those securities where market quotations are readily available. As of June 30, 2023, the City’s investment in LAIF was $593,548. The total amount invested by all public agencies at that date was $25.67 billion. LAIF is part of the California Pooled Money Investment Account (PMIA), which at June 30, 2023 has a balance of $178.4 billion. Financial Statements of LAIF and PMIA may be obtained from the California Treasurer’s web site at www.treasurer.ca.gov.

Note 4 - Accounts Receivable
Accounts receivable consisted of the following at June 30, 2023:

Amounts do not indicate a significant concentration (greater than 25 percent of the total receivable balance) with any single individual, business or agency.

Accounts Receivable
Receivables Allowance Net
Governmental activities
Interest $ 28,490 $ - $ 28,490
Taxes 3,496,544 - 3,496,544
Grants and subventions 334,178 - 334,178
Due from other governments 23,555 - 23,555
Accounts receivable:

Customers 1,605,477 - 1,605,477
Total Governmental activities 5,488,244 - 5,488,244
Business-type activities
Interest 31,388 - 31,388
Accounts receivable:

Customers 9,385,037 (120,574) 9,264,463
Total Business-type activities 9,416,425 (120,574) 9,295,851 Total receivables $ 14,904,669 $ (120,574) $ 14,784,095 Concentration of Receivables
Other governments 25.9%
Individuals/businesses 73.9%
Attachment 1

Notes to the Basic Financial Statements
City of Ukiah, California
Financial Section: Basic Financial Statements Page | 57 Note 5 – Notes and Loans Receivable
Through the City’s various housing rehabilitation funds, first-time homebuyer’s funds, and business/economic development loan funds, the City has loaned funds to qualifying individuals and businesses. Interest rates vary depending on the terms of the loan. Interest accrues on the loans that bear interest.

Loans and notes receivable for the year ended June 30, 2023, consisted of the following:

Loans and Notes Receivable
Beginning Ending
7/1/2022 Additions Deletions 6/30/2023
Major governmental funds:

Successor Agency Note $ 1,500,000 $ - $ (1,500,000) $ - Other Agencies 708,098 598,216 - 1,306,314
Miscellaneous 1,052 124 - 1,176
Nonmajor governmental funds:

Special revenue funds:

LMIHF Housing Asset Fund 1,490,765 7,292 - 1,498,057
CDBG Program Income 294,902 154,281 - 449,183
Home Program Income 8,373,573 206,030 - 8,579,603
Total governmental funds 12,368,390 965,943 (1,500,000) 11,834,333 Total loans/notes receivable $ 12,368,390 $ 965,943 $ (1,500,000) $ 11,834,333 This area intentionally left blank.

Attachment 1

Notes to the Basic Financial Statements
City of Ukiah, California
Financial Section: Basic Financial Statements Page | 58 Note 6 - Capital Assets
Governmental capital asset activity for the year ended June 30, 2023, was as follows:

Capital Assets - Governmental
Balance Balance
July 1, 2022 Additions Deletions Transfers June 30, 2023 Governmental activities:

Nondepreciable assets:

Land $ 4,596,065 $ - $ - $ - $ 4,596,065
Construction in progress 2,029,535 8,082,357 - (3,758,540) 6,353,352 Total nondepreciable assets 6,625,600 8,082,357 - (3,758,540) 10,949,417 Depreciable assets:

Buildings and improvements 21,861,416 - (771,219) - 21,090,197 Technology subscriptions - 1,047,946 - - 1,047,946
Machinery, equipment, and vehicles 10,103,782 929,853 - 309,271 11,342,906 Infrastructure and network 64,604,249 3,073,879 - 3,449,269 71,127,397 Total depreciable assets 96,569,447 5,051,678 (771,219) 3,758,540 104,608,446 Total 103,195,047 13,134,035 (771,219) - 115,557,863
Accumulated depreciation and amortization:

Buildings and improvements (8,579,620) (730,555) - - (9,310,175) Technology subscriptions - (188,470) - - (188,470)
Machinery, equipment, and vehicles (6,290,563) (531,367) - - (6,821,930) Infrastructure and network (26,743,782) (950,981) - - (27,694,763) Total accumulated depreciation (41,613,965) (2,401,373) - - (44,015,338) Net depreciable assets 54,955,482 2,650,305 (771,219) 3,758,540 60,593,108 Total governmental capital assets, net $ 61,581,082 $ 10,732,662 $ (771,219) $ - $ 71,542,525 Allocation of Depreciation and Amortization Expense
Governmental Activities:

General government $ 457,631
Public works 1,275,179
Public safety 171,740
Recreation and culture 123,590
Parks, buildings, and grounds 373,233
Total Depreciation Expense $ 2,401,373
Attachment 1

Notes to the Basic Financial Statements
City of Ukiah, California
Financial Section: Basic Financial Statements Page | 59 Note 6 – Capital Assets (Continued)
Business-type capital asset activity for the year ended June 30, 2023, was as follows:

Capital Assets - Business-type
Balance Balance
July 1, 2022 Additions Deletions Transfers June 30, 2023 Business-type activities:

Nondepreciable assets:

Land $ 7,747,880 $ - $ - $ - $ 7,747,880
Capacity rights 270,000 - - - 270,000
Construction in progress 7,368,291 5,333,732 (182,258) (2,022,263) 10,497,502 Total nondepreciable assets 15,386,171 5,333,732 (182,258) (2,022,263) 18,515,382 Depreciable assets:

Buildings and improvements 63,250,559 - - - 63,250,559
Machinery, equipment, and vehicles 14,048,151 648,894 (3,998) 296,342 14,989,389 Infrastructure and network 174,295,039 166,997 - 1,725,921 176,187,957 Total depreciable assets 251,593,749 815,891 (3,998) 2,022,263 254,427,905 Total 266,979,920 6,149,623 (186,256) - 272,943,287
Accumulated depreciation:

Buildings and improvements (35,303,976) (1,381,660) - - (36,685,636) Machinery, equipment, and vehicles (8,304,837) (745,826) - - (9,050,663) Infrastructure and network (41,702,157) (3,680,821) - - (45,382,978) Total accumulated depreciation (85,310,970) (5,808,307) - - (91,119,277) Net depreciable assets 166,282,779 (4,992,416) (3,998) 2,022,263 163,308,628 Total governmental capital assets, net $ 181,668,950 $ 341,316 $ (186,256) $ - $ 181,824,010 Business-type Activities:

Water $ 1,878,685
Sewer 2,206,884
Electric 1,430,914
Landfill 14,681
Parking 1,195
Airport 193,137
Conference Center 45,889
Golf 6,456
Ambulance 30,467
Total Depreciation Expense $ 5,808,307
Attachment 1

Notes to the Basic Financial Statements
City of Ukiah, California
Financial Section: Basic Financial Statements Page | 60 Note 7 - Long-Term Liabilities
The following is a summary of changes in long-term liabilities for the year ended June 30, 2023.

Long-term Obligations
Beginning
Balance Ending Balance
Governmental Activities July 1, 2022 Additions Reductions June 30, 2023 2017 fire engine lease (direct borrowing) $ 653,810 $ - $ 113,305 $ 540,505 $ 115,159 2017 I-Bank financing lease (direct borrowing) 3,663,515 - 91,174 3,572,341 94,182 Technology subscription liability - 845,509 - 845,509 318,226 2020 fire brush truck equipment lease (direct borrowing) 186,332 - 21,389 164,943 21,907 2020 fire self-contained breathing apparatus equipment lease (direct borrowing) 297,290 - 31,921 265,369 32,694 Series 2020A Community Facilities Lease Revenue Bonds 2,290,000 - 90,000 2,200,000 95,000 2020A unamortized premium 333,572 - 17,556 316,016 17,556 Series 2020B CalPERS Taxable Lease Revenue Bonds 31,968,235 - 793,192 31,175,043 827,973 Series 2022 Lease Revenue Bonds (Street Projects) 15,350,000 - 1,245,000 14,105,000 1,335,000 2022 unamortized premium- Streets Projects 1,621,453 - 279,560 1,341,893 167,737 Series 2022 Lease Revenue Bonds (Corporation Yard Projects) 14,850,000 - 235,000 14,615,000 280,000 2022 unamortized premium-Corp Yard Projects 1,174,246 - 40,491 1,133,755 40,491 Claims payable 286,972 - 143,486 143,486 143,486
Net pension liability - 8,167,808 - 11,167,808 -
Compensated absences 1,118,763 111,931 3,376 1,227,318 122,635 Total $ 73,794,188 $ 9,125,248 $ 3,105,450 $ 82,813,986 $ 3,612,046 Business-Type Activities
2017 CalTrans Aeronautics Loan - Airport (direct borrowing) $ 148,980 $ - $ 10,903 $ 138,077 $ 11,157 2016 Water Revenue Refunding Bonds 8,055,000 - 415,000 7,640,000 435,000 2016 unamortized premium 1,333,122 - 95,223 1,237,899 95,223 Lawsuit settlement liability 1,000,000 - 1,000,000 - -
Landfill closure and post-closure 19,890,002 1,255,538 - 21,145,540 - 2017 SWRCB recycled water loan (direct borrowing) 17,713,180 - 529,536 17,183,644 534,421 Series 2020 Wastewater Refunding Bonds 22,184,000 - 1,471,000 20,713,000 1,507,000 Series 2020B CalPERS Taxable Lease Revenue Bonds 17,201,765 - 426,808 16,774,957 467,027 Series 2022 Lease Revenue Bonds (Utilities Projects) 8,770,000 - - 8,770,000 - 2022 Utilities unamortized premium - Utilities Projects 1,150,071 - 79,315 1,070,758 59,486 Series 2022 Electric Revenue Bonds 9,190,000 - - 9,190,000 310,000 2022 Electric unamortized premium 1,048,809 - 55,200 993,609 55,200 Claims payable 49,583 - 49,583 - -
Net pension liability - 5,237,038 - 5,237,038 -
Compensated absences 533,518 479,802 465,537 547,776 54,777 Total $ 108,268,030 $ 6,972,378 $ 4,598,105 $ 110,642,298 $ 3,529,291 Due within One
Year
The general fund is primarily responsible for liquidating the net pension liability and compensated absences of governmental activities.

Governmental Activities
2017 Fire Engine Lease (direct borrowing)
In October 2017, the City entered into a finance purchase agreement with Umpqua Bank for the purchase of two Type-1 fire engines totaling $1,125,731. Principal and interest payments are due semi-annually on May 1 and November 1 of each year with an interest rate of 2.45 percent. Lease payments are made by the General Fund. The total combined amount of accumulated depreciation on both fire engines is $352,705. The agreement contains a provision that when a default occurs then the City shall pay to the lessor the entire outstanding balance of all progress payments advanced by lessor plus all interim rent due through the commitment termination date. Interest shall accrue on the total amount due hereunder at the Attachment 1

Notes to the Basic Financial Statements
City of Ukiah, California
Financial Section: Basic Financial Statements Page | 61 Note 7 – Long-Term Liabilities (Continued)
lesser of eighteen percent (18 percent) per annum or the maximum rate permitted by law from the commitment termination date to the date of actual payment.
2017 I-Bank Financing Lease (direct borrowing)
In August 2017, the City entered into an agreement for $4,000,000 with the California Infrastructure and Economic Development Bank (I-Bank) to finance roadway and other right-of-way improvements related to the Redwood Business Park. Principal is paid annually commencing on August 1,2018, and interest payments are made semi-annually on August 1 and February 1 at an interest rate of 3.30 percent. Lease payments are made primarily by the General Fund. The total combined amount of accumulated depreciation on the roadway improvements is $320,000. The funds are secured with collateral of a leased asset located at 300 Seminary Avenue, Ukiah. The note contains a provision that in the event of default, and to terminate the financing lease, the City will surrender the possession of the leased asset. The City may elect not to terminate the lease, and to continue to pay each installment. There contain no acceleration clauses.
2020 Fire Brush Truck Lease (direct borrowing)
In February 2020, the City entered into a finance purchase agreement with Umpqua Bank for the purchase of one Skeeter fire brush truck totaling $227,606. Principal and interest payments are due semi-annually on March 1 and September 1 of each year with an interest rate of 2.8 percent. Lease payments are made by the General Fund. The total combined amount of accumulated depreciation on this truck is $22,761. The agreement contains a provision that when a default occurs then the City shall pay to the lessor the entire outstanding balance of all progress payments advanced by lessor plus all interim rent due through the commitment termination date. Interest shall accrue on the total amount due hereunder at the lesser of eighteen percent (18 percent) per annum or the maximum rate permitted by law from the commitment termination date to the date of actual payment.
2020 Self-Contained Breathing Apparatus Lease (direct borrowing) In November 2020, the City entered an equipment lease with Umpqua Bank for the purchase of one self-contained breathing apparatus system totaling $343,762.85. Principal and interest payments are due on June 1 and December 1 of each year with an interest rate of 2.39 percent. Lease payments are made by both the General Fund and the Ukiah Valley Fire District at an even 50 percent split. The agreement contains a provision that when a default occurs then the City shall pay to the lessor the entire outstanding balance of all progress payments advanced by lessor plus all interim rent due through the commitment termination date. Interest shall accrue on the total amount due hereunder at the lesser of eighteen percent (18 percent) per annum or the maximum rate permitted by law from the commitment termination date to the date of actual payment
Series 2020A Lease Revenue Bonds (Community Facilities Improvement Project) Dated December 1, 2020 the original amount of the obligation was $2,530,000 and is secured with a pledge consisting primarily of base rental payments to be made by the City as rental for certain City-owned property. The obligation principal is payable in annual installments beginning April 1, 2022 ranging from $150,000 to $175,000 through year 2040. Interest is payable semi-annually on April 1 and October 1 of each year, commencing April 1, 2023, with an interest rate ranging from 3.00 percent to 4.00 percent. The Series 2020A Lease Revenue Bonds were issued to reimburse the City for the cost to purchase the Bank of America building, and to pay the costs associated with renovating the new customer service center and roof replacement project for the museum. In the event of a default, there is no remedy of acceleration of the total base rental payments due over the term of the lease and neither the Ukiah Public Financing Authority nor the Trustee are empowered to sell or relet the leased facilities and use the proceeds of such sale or relenting to redeem the bonds or pay debt service with respect thereto.

Attachment 1

Notes to the Basic Financial Statements
City of Ukiah, California
Financial Section: Basic Financial Statements Page | 62 Note 7 – Long-Term Liabilities (Continued)
Series 2020B Taxable Lease Revenue Bonds (CalPERS Prepayment Project) Dated December 1, 2020 the original amount of the obligation was $49,875,000 and is secured with a pledge consisting primarily of base rental payments to be made by the City as rental for certain City-owned property. This obligation is shared with business-type funds, with the governmental fund’s share being 65 percent. The obligation principal is payable in annual installments beginning April 1, 2022 ranging from $705,000 to $3,015,000 through year 2049.

Interest is payable semi-annually on April 1 and October 1 of each year, commencing October 1, 2023, with an interest rate ranging from 1.37 percent to 3.706 percent. The Series 2020B Taxable Lease Revenue Bonds were issued to refinance a portion of the UAL of the City’s Miscellaneous, Safety Fire, and Safety Police pension plans with CalPERS.

In the event of a default, there is no remedy of acceleration of the total base rental payments due over the term of the lease and neither the Ukiah Public Financing Authority nor the Trustee are empowered to sell or relet the leased facilities and use the proceeds of such sale or reletting to redeem the bonds or pay debt service with respect thereto.

Series 2022 Lease Revenue Bonds (Street Projects)
Dated March 9, 2022 the original amount of the obligation was $15,350,000 and is secured with a pledge consisting primarily of base rental payments made for the use of all the city’s street. The obligation principal is payable in annual installments beginning April 1, 2022 ranging from $1,245,000 to $1,825,000. Interest on the Bonds are payable semiannually on April 1 and October 1 of each year, commencing October 1, 2022, and bear an interest rate of 4.0 percent. The Series 2022 Lease Revenue Bonds (Street Projects) were issued to finance various street improvement projects. In the event of a default, there is no remedy of acceleration of the total base rental payments due over the term of the lease and neither the Ukiah Public Financing Authority nor the Trustee are empowered to sell or relet the leased facilities and use the proceeds of such sale or reletting to redeem the bonds or pay debt service with respect thereto.

Series 2022 Lease Revenue Bonds (Corporation Yard Projects) Dated March 9, 2022 the original amount of the obligation was $14,850,000 and is secured with a pledge consisting primarily of base rental payments made for the use of all the city’s street. The obligation principal is payable in annual installments beginning April 1, 2023 ranging from $235,000 to $815,000. Interest on the Bonds are payable semiannually on April 1 and October 1 of each year, commencing October 1, 2022, and bear an interest rate of 4.0 percent. The Series 2022 Lease Revenue Bonds (Corporation Yard Projects) were issued to finance the renovation of the city’s Corporation Yard facilities. In the event of a default, there is no remedy of acceleration of the total base rental payments due over the term of the lease and neither the Ukiah Public Financing Authority nor the Trustee are empowered to sell or relet the leased facilities and use the proceeds of such sale or reletting to redeem the bonds or pay debt service with respect thereto.

Attachment 1

Notes to the Basic Financial Statements
City of Ukiah, California
Financial Section: Basic Financial Statements Page | 63 Note 7 – Long-Term Liabilities (Continued)
The annual debt service of these obligations to maturity are as follows:

Business-Type Activities
2017 Caltrans Aeronautics Loan – Airport (direct borrowing) Loan issued to the City for the design, purchase, and installation of a 12,000-gallon service aviation gas fuel tank at the Ukiah Municipal Airport. Annual principal and interest payments are made at an annual interest rate of 2.33 percent, are due February each year. Revenues generated by airport operations secure payments. In the event of default, the State may take one or more of the following actions: (i) declare the entire outstanding principal amount of the loan and all accrued interest immediately due and payable; (ii) notify the City that they may be ineligible for future financing under the program.
2016 Water Revenue Refunding Bonds
Dated March 1, 2016 the original amount of the obligation was $11,155,000 and is secured with a pledge of net revenues from the City’s Water system. The obligation principal is payable in annual installments beginning September 1, 2016 ranging from $475,000 to $740,000 through September 1, 2035. Interest payments commence September 1, 2016 and are payable semiannually on September 1st and March 1st and pay interest ranging from 2.00 percent to 3.125 percent. The bonds contain a provision that, in an event of default, outstanding amounts may become immediately due. The 2016 Water Revenue Refunding Bonds were issued to refund the 2005 ABAG Bonds (Water Treatment Plant Installment Loan) and the SWRCB Water Treatment Loan. The two debt obligations were used to acquire and construct capital improvements to the City’s water treatment plant.

Debt Service Schedule
Governmental
Year Ending
June 30,
Principal Interest Principal Interest Principal Interest Principal Interest Principal Interest 2024 $ 115,159 $ 12,800 $ 94,182 $ 127,050 $ 318,226 $ 15,337 $ 21,907 $ 3,837 $ 32,694 $ 6,188 2025 118,051 9,908 97,290 123,609 315,108 18,455 22,437 3,307 33,485 5,397 2026 121,016 6,943 100,501 120,053 173,287 7,426 22,980 2,764 34,295 4,587 2027 124,055 3,904 103,817 116,381 38,889 1,361 23,536 2,208 35,125 3,757 2028 62,224 789 107,243 112,587 - - 24,106 1,638 35,975 2,907 2029-2033 - - 591,697 501,491 - - 49,977 1,512 93,795 3,411 2034-2038 - - 695,987 385,999 - - - - - -
2039-2043 - - 818,658 250,153 - - - - - -
2044-2048 - - 962,966 124,425 - - - - - -
2049-2053 - - - - - - - - - -
Total $ 540,505 $ 34,344 $ 3,572,341 $ 1,861,748 $ 845,510 $ 42,579 $ 164,943 $ 15,266 $ 265,369 $ 26,247 Due within one year $ 115,159 $ 12,800 $ 94,182 $ 127,050 $ 318,226 $ 15,337 $ 21,907 $ 3,837 $ 32,694 $ 6,188 Due after one year 425,346 21,544 3,478,159 1,734,698 527,284 27,242 143,036 11,429 232,675 20,059 Total $ 540,505 $ 34,344 $ 3,572,341 $ 1,861,748 $ 845,510 $ 42,579 $ 164,943 $ 15,266 $ 265,369 $ 26,247 Year Ending
June 30,
Principal Interest Principal Interest Principal Interest Principal Interest Principal Interest 2024 $ 95,000 $ 87,050 $ 841,750 $ 1,159,843 $ 1,335,000 $ 564,200 $ 280,000 $ 560,063 $ 3,133,918 $ 2,536,368 2025 95,000 84,200 864,500 1,144,675 1,385,000 510,800 290,000 548,863 3,220,871 2,449,214 2026 100,000 80,400 897,000 1,127,367 1,440,000 455,400 305,000 537,263 3,194,079 2,342,203 2027 105,000 76,400 916,500 1,105,489 1,500,000 397,800 315,000 525,063 3,161,922 2,232,363 2028 110,000 72,200 952,250 1,081,303 1,560,000 337,800 325,000 512,463 3,176,798 2,121,687 2029-2033 610,000 291,600 5,391,750 4,949,606 6,885,000 702,200 1,850,000 2,355,313 15,472,219 8,805,133 2034-2038 745,000 159,800 6,698,250 3,911,952 - - 2,260,000 1,937,313 10,399,237 6,395,064 2039-2043 340,000 20,600 8,485,750 2,403,209 - - 2,715,000 1,442,363 12,359,408 4,116,325 2044-2048 - - 5,768,750 719,754 - - 3,165,000 871,563 9,896,716 1,715,742 2049-2053 - - 358,543 14,963 - - 3,110,000 256,750 3,468,543 271,713 Total $ 2,200,000 $ 872,250 $ 31,175,043 $ 17,618,161 $ 14,105,000 $ 2,968,200 $ 14,615,000 $ 9,547,017 $ 67,483,711 $ 32,985,812 Due within one year $ 95,000 $ 87,050 $ 841,750 $ 1,159,843 $ 1,335,000 $ 564,200 $ 280,000 $ 560,063 $ 3,133,918 $ 2,536,368 Due after one year 2,105,000 785,200 30,333,293 16,458,318 12,770,000 2,404,000 14,335,000 8,986,954 64,349,793 30,449,444 Total $ 2,200,000 $ 872,250 $ 31,175,043 $ 17,618,161 $ 14,105,000 $ 2,968,200 $ 14,615,000 $ 9,547,017 $ 67,483,711 $ 32,985,812 Capital Lease, Fire Brush Truck (2020)
Governmental Activities
Series 2020B CalPERS Taxable
Lease Revenue Bonds
Series 2022 Lease Revenue Bonds
(Street Projects)
Capital Lease, Fire Engines (2017) I-Bank Financing Lease (2017) Equipment Lease, Self-Contained
Breathing Apparatus (2020)
Series 2020A Community Facilities
Lease Revenue Bonds
Technology Subscription Liability
Series 2022 Lease Revenue Bonds
(Corporation Yard Projects) Total
Attachment 1

Notes to the Basic Financial Statements
City of Ukiah, California
Financial Section: Basic Financial Statements Page | 64 Note 7 – Long-Term Liabilities (Continued)
Series 2020 Wastewater Revenue Refunding Obligations (2020 Wastewater Refunding Project) Dated February 24, 2020 the original amount of the obligation was $25,010,000 and is secured with a pledge of net revenues from the City’s wastewater system. Proceeds were used to refund the ABAG 2006 Water & Wastewater Revenue Bonds, Series A. The obligation principal and interest payments at an annual interest rate of 2.42 percent are payable in annual installments beginning March 1, 2023 ranging from $1,998,772 to $1,999,719 through March 1, 2035.

The bonds contain a provision that, in an event of default, outstanding amounts may become immediately due.

Lawsuit Settlement Liability
In October 2018 the City entered into a settlement agreement as part of the ongoing lawsuit with the Ukiah Valley Sanitation District. As part of the settlement agreement, the City agreed to pay $4,984,310 to the District over a 5-year period. The first payment of $984,310 was made in October 2018, with annual installments of $1,000,000 to be made each year for year four years beginning in October 2020. 2017 SWRCB Recycled Water Loan (direct borrowing)
In July 2017, the City entered into an agreement with the California State Water Resource Control Board (SWRCB) to finance the development and construction of a recycled water system. Construction was completed in September 2019.

The loan balance as of June 30, 2023 was $16,778,411. Subsequent to fiscal year end June 30, 2023, the last drawdown was made in September 2020. The final total amount funded by the loan, including accrued interest, is $18,224,756.

Annual principal and interest payments will be made for a thirty-year term beginning in July 2023 at an interest rate of

1.00 percent. The loan will be repaid with revenues from the Water Enterprise Fund. In the event of a breach of contract, the City will immediately repay any amount equal to the project funds disbursed, accrued interest, penalty assessments and additional payments.

Series 2020B Taxable Lease Revenue Bonds (CalPERS Prepayment Project) Dated December 1, 2020 the original amount of the obligation was $49,875,000 and is secured with a pledge consisting primarily of base rental payments to be made by the City as rental for certain City-owned property. This obligation is shared with governmental funds, with the business-type fund’s share being 35 percent. The obligation principal is payable in annual installments beginning April 1, 2023 ranging from $705,000 to $3,015,000 through year 2049. Interest is payable semi-annually on April 1 and October 1 of each year, commencing October 1, 2023, with an interest rate ranging from 1.37 percent to 3.706 percent. The Series 2020B Taxable Lease Revenue Bonds were issued to refinance a portion of the UAL of the City’s Miscellaneous, Safety Fire, and Safety Police pension plans with CalPERS. In the event of a default, there is no remedy of acceleration of the total base rental payments due over the term of the lease and neither the Ukiah Public Financing Authority nor the Trustee are empowered to sell or relet the leased facilities and use the proceeds of such sale or reletting to redeem the bonds or pay debt service with respect thereto.

Series 2022 Lease Revenue Bonds (Utilities Projects)
Dated March 9, 2022 the original amount of the obligation was $8,770,000 and is secured with a pledge consisting primarily of base rental payments made for the use of all the city’s street. The obligation principal is payable in annual installments beginning April 1, 2023 ranging from $435,000 to $760,000. Interest on the Bonds are payable semiannually on April 1 and October 1 of each year, commencing October 1, 2022, and bear an interest rate of 4.0 percent. The Series 2022 Lease Revenue Bonds (Corporation Yard Projects) were issued to finance various utility projects. In the event of a default, there is no remedy of acceleration of the total base rental payments due over the term of the lease and neither the Ukiah Public Financing Authority nor the Trustee are empowered to sell or relet the leased facilities and use the proceeds of such sale or reletting to redeem the bonds or pay debt service with respect thereto.

Attachment 1

Notes to the Basic Financial Statements
City of Ukiah, California
Financial Section: Basic Financial Statements Page | 65 Note 7 – Long-Term Liabilities (Continued)
Series 2022 Electric Revenue Bonds
Dated March 3, 2022 the original amount of the obligation was $9,190,000. The obligation is payable solely from the revenues and from certain other amounts of deposit in funds and accounts. The obligation principal is payable in annual installments beginning March 1, 2024 ranging from $310,000 to $680,000. Interest on the Bonds are payable in annual installments commencing on March 1, 2023, and bear interest rates of 3.0 to 5.0 percent. The Series 2022 Bonds are being issued to (i) finance improvements to the Electric System of the City, and (ii) pay certain costs incurred in connection with the issuance of the Bonds. In the event of default, the Trustee has the right to accelerate the total unpaid principal amount of the unpaid payments under the Installment Sale Agreement, including the Installment Payments. However, due to events outside the control of the City, there is no assurance that the City would have sufficient funds to pay the accelerated payments.

The annual debt service of these obligations to maturity are as follows:

Debt Service Schedule
Business-type
Year Ending
June 30, 2017 SWRCB Recycled Water Loan
Principal Interest Principal Interest Principal Interest Principal Interest 2024 $ 11,157 $ 3,217 $ 435,000 $ 316,444 $ 534,831 $ 171,836 $ 1,507,000 $ 492,192 2025 11,417 2,957 460,000 294,069 540,180 166,488 1,543,000 455,505 2026 11,683 2,691 480,000 270,569 545,581 161,086 1,581,000 417,934 2027 11,956 2,419 505,000 245,943 551,037 155,631 1,620,000 379,444 2028 12,234 2,140 530,000 220,069 556,548 150,120 1,659,000 339,998 2029-2033 65,581 6,291 3,080,000 670,343 2,867,341 665,997 8,922,000 1,074,044 2034-2038 14,049 329 2,150,000 101,754 3,013,604 519,734 3,881,000 118,108 2039-2043 - - - - 3,167,328 366,010 - -
2044-2048 - - - - 3,328,894 204,444 - -
2049-2053 - - - - 2,078,299 41,704 - -
Total $ 138,077 $ 20,044 $ 7,640,000 $ 2,119,191 17,183,643 2,603,050 $ 20,713,000 $ 3,277,225 Due within one year $ 11,157 $ 3,217 $ 435,000 $ 316,444 $ 534,831 $ 171,836 $ 1,507,000 $ 492,192 Due after one year 126,920 16,827 7,205,000 1,802,747 16,648,812 2,431,214 19,206,000 2,785,033 Total $ 138,077 $ 20,044 $ 7,640,000 $ 2,119,191 17,183,644 2,603,049 $ 20,713,000 $ 3,277,225 Year Ending
June 30,
Principal Interest Principal Interest Principal Interest Principal Interest 2024 $ 453,250 $ 624,531 $ - $ 356,300 $ 310,000 $ 388,350 $ 3,251,238 $ 2,352,870 2025 465,500 616,363 - 356,300 330,000 372,850 3,350,097 2,264,532 2026 483,000 607,044 - 356,300 345,000 356,350 3,446,264 2,171,974 2027 493,500 595,264 - 356,300 360,000 339,100 3,541,493 2,074,101 2028 512,750 582,240 435,000 356,300 360,000 321,100 4,065,532 1,971,967 2029-2033 2,903,250 2,665,172 2,455,000 1,505,700 2,190,000 1,311,850 22,483,172 7,899,397 2034-2038 3,606,750 2,106,435 3,005,000 950,900 2,700,000 792,250 18,370,403 4,589,510 2039-2043 4,569,250 1,294,035 2,875,000 293,200 2,595,000 204,000 13,206,578 2,157,245 2044-2048 3,106,250 387,560 - - - - 6,435,144 592,004
2049-2053 181,457 8,057 - - - - 2,259,756 49,761
Total $ 16,774,957 $ 9,486,702 $ 8,770,000 $ 4,531,300 $ 9,190,000 $ 4,085,850 $ 80,409,677 $ 26,123,362 Due within one year $ 453,250 $ 624,531 $ - $ 356,300 $ 310,000 $ 388,350 $ 3,251,238 $ 2,352,870 Due after one year 16,321,707 8,862,171 8,770,000 4,175,000 8,880,000 3,697,500 77,158,439 23,770,492 Total $ 16,774,957 $ 9,486,702 $ 8,770,000 $ 4,531,300 $ 9,190,000 $ 4,085,850 $ 80,409,677 $ 26,123,362 Series 2022 Electric Revenue Bonds
Business-type Activities
Series 2020B CalPERS Taxable
Lease Revenue Bonds
Series 2022 Lease Revenue Bonds
(Utilities Projects) Total
2017 CalTrans Aeronautics Loan -
Airport
2016 Water Revenue Refunding
Bonds
Series 2020 Wastewater Refunding
Bonds
Attachment 1

Notes to the Basic Financial Statements
City of Ukiah, California
Financial Section: Basic Financial Statements Page | 66 Note 8 – Landfill Closure and Post Closure Costs
State and federal laws and regulations require that the City place a final cover on its landfill when closed and perform certain maintenance and monitoring functions at the landfill site for thirty years after closure. In addition to operating expenses related to current activities of the landfill, an expense provision and related liability are being recognized based on the future closure and post closure care costs that will be incurred near or after the landfill no longer accepts waste. The recognition of these landfill closure and post closure care costs is based on the amount of landfill used during the year. The estimated liability for landfill closure and post closure care costs has a balance of $21,145,540 (including $1,115,945 for corrective action liability) as of June 30, 2023, which is based on 100.0 percent usage (filled) of the landfill.

This estimated total current cost of the landfill closure and post closure care is based on the amount that would be paid if all equipment, facilities, and services required to close, monitor, and maintain the landfill were acquired as of June 30, 2023, as determined by the last engineering study performed. However, the actual cost of closure and post closure care may change due to inflation, changes in technology, or changes in landfill laws and regulations.

The City is required by state and federal laws and regulations to make annual contributions to finance closure and post closure care. The City follows these requirements, and at June 30, 2023, held $10,273,859 in cash and receivables designated for these purposes, $10,213,311 of which within its pooled investments. The City has made a pledge of future service revenues for anticipated remaining expected costs, future inflation costs, and any additional costs that might arise from changes in post closure requirements (due to changes in technology or more rigorous environmental regulations, for example).

Note 9 - Interfund Transactions
With City Council approval through the budget process, resources may be transferred from one City fund to another. One of the primary purposes of transfers is to provide a subsidy from one fund to another. Transfers may also be used to provide resources from one fund to another for significant capital projects or to accumulate resources for debt service. Transfers between funds during the fiscal year 2023 were as follows:

Interfund Transfers
Transfers Out General Fund
Streets Capital
Improvement
Pension Debt
Service Fund
Non-major
Governmental
Funds
Non-major
Enterprise
Funds Landfill Water Electric Total
General fund $ - $ 2,930,287 $ 259,772 $ 572,085 $ 4,391 $ - $ - $ - $ 3,766,535 Streets capital improvement - - - 2,359 - - - - 2,359
Non-major governmental funds 622,500 - - 54,073 104,230 835,000 - - 1,615,803 Wastewater - - - - - - 293,243 - 293,243
Non-major Enterprise Funds - - - - - - - 489,688 489,688 Total $ 622,500 $ 2,930,287 $ 259,772 $ 628,517 $ 108,621 $ 835,000 $ 293,243 $ 489,688 $ 6,167,628 Transfers In
Attachment 1

Notes to the Basic Financial Statements
City of Ukiah, California
Financial Section: Basic Financial Statements Page | 67 Note 9 - Interfund Transactions and Interfund Borrowing (Continued) Significant transfers included $835,000 transferred to the landfill fund from the transfer station special revenue fund, which included two years’ worth of collections; $2.9 million from the general fund to the Streets Capital Improvement fund representing Measure Y proceeds committed by the City Council dedicated to specific capital projects; $402,400 to the special project reserve for pending land acquisition; $293,243 from the wastewater fund to the water for fund for annual operating costs of the recycled water facility; and $400,000 from the American Rescue fund for revenue loss in the general fund related to the COVID-19 pandemic. The remaining transfers represent one-time amounts related to special projects.

Pursuant to the City’s debt management policy, interfund loans are recorded for the purposes of financing operations, grant activities, or capital projects on a temporary basis.

Amounts recorded as due to/from are for the purposes of providing temporary cash flow to funds, most notably between operating periods. Examples of this include cash provided by the General Fund to a grant fund to financing expenditure driven grant activities. When the grantor reimburses the City for those activities, the interfund borrowing is revered, i.e. the General Fund is paid back. This type of transaction is approved and executed by the Finance Director when needed per the City’s debt management policy.

Amounts recorded as advances from/to are longer-term interfund borrowing for the purposes of providing cash flow for activities with operational conditions requiring a longer repayment period. This type of transaction is approved and executed by the Finance Director when needed per the City’s debt management policy.

Interfund Borrowing and Internal Balances
Fund Name Amount Fund Name Amount
Streets Capital Improvements $ 349,168 General Fund $ 349,168 General Capital Projects 169,241 General Fund 169,241
Riverside Park 27,005 General Fund 27,005
Winter Special Events 18,056 General Fund 18,056
Rail Trail 205,100 General Fund 205,100
Conference Center Fund 101,476 General Fund 101,476
Airport Capital Improvement 200,002 General Fund 200,002 Recycled Water 2,049,808 General Fund 2,049,808
City Wastewater Operations 293,243 Recycled Water 293,243 Total Due To $ 3,413,099 Total Due From $ 3,413,099
Fund Name Amount Fund Name Amount
Building & Maintenance $ 340,000 General Fund $ 340,000 ARRC 36,601 General Fund 36,601
Winter Special Events 177,590 General Fund 177,590
Rail Trail 300,359 General Fund 300,359
Parking District #1 29,136 General Fund 29,136
Golf 930,200 General Fund 930,200
Conference Center Fund 109,702 General Fund 109,702
Ambulance Services Fund 1,072,771 General Fund 1,072,771 Water 576,223 Golf 576,223
Street Lighting 289,121 Electric 289,121
Total Advances To 3,861,703 3,861,703
Total Interfund Borrowing $ 7,274,802 $ 7,274,802
Borrowing Fund (Advances From) Lending Fund (Advances To) Borrowing Fund (Due To) Lending Fund (Due From)
Attachment 1

Notes to the Basic Financial Statements
City of Ukiah, California
Financial Section: Basic Financial Statements Page | 68 Note 10 - Risk Management
The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters for which the City participates The City is a member of the California Intergovernmental Risk Authority (CIRA), a public entity pool comprised of fifty statewide California charter and associate member cities (formerly the Redwood Empire Municipal Insurance Fund [REMIF], see Note 12 for additional information). CIRA is organized under a Joint Powers Agreement pursuant to the California Government Code. The purpose of CIRA is to arrange and administer programs of insurance for the pooling of self-insured losses and to purchase excess insurance coverage. The City pays an annual premium to CIRA for its workers’ compensation, general liability and property coverage.

The City of Ukiah participates in the following three CIRA programs:

General Liability Insurance
Annual premiums are paid by the member cities and are adjusted retrospectively to cover costs. The City of Ukiah selfinsures for the first $25,000 of each loss and pays 100 percent of all losses incurred under $25,000. The City does not share or pay for losses of other cities under $5,000, depending on the entity’s deductible amount. Participating cities then share in the next $5,000 to $1,000,000 per loss occurrence. Specific coverage includes comprehensive and general automotive liability, personal injury, contractual liability, professional liability, and certain other coverage. CIRA is a member of Public Risk, Innovation, Solutions, and Management (PRISM), which provides CIRA with an additional $39,000,000 liability insurance coverage over and above CIRA retention level of $1,000,000.

Worker’s Compensation
Periodic deposits are paid by member cities and are adjusted retrospectively to cover costs. The City of Ukiah is selfinsured for the first $50,000 of each loss and pays 100 percent of all losses incurred under $50,000. The City does not share or pay for losses of other cities under $5,000.

Property Insurance
The City participates in CIRA’s property insurance program. The annual deposits paid by participating member cities are based upon deductibility levels and are not subject to retroactive adjustments. The City of Ukiah has a deductible level of $10,000 for high-risk flood zones and $100,000 for all wildfire and property related claims, and a coverage limit of $600,000,000 declared value.

Separate internal service funds are maintained by the City for the City’s deductibles and allocated share of pooled costs noted above. The total cash and investments held in these funds at June 30, 2023, was $683,933.

On March 22, 2018, the REMIF Board approved assessment for the following programs to be collected beginning in the 2018/2019 fiscal year:

Workers’ Compensation - $6 million to be collected over 6 years.

Liability program - $2.5 million to be collected over 5 years.

Of those amounts the City of Ukiah was liable for $860,916 and $247,915 to be paid over 6 and 5 years, for the Workers’ Compensation and Liability program, respectively for a total of $1,108,831.

Attachment 1

Notes to the Basic Financial Statements
City of Ukiah, California
Financial Section: Basic Financial Statements Page | 69 Note 10 - Risk Management (Continued)
Changes in the Internal Service Funds claims liabilities amounts in fiscal year 2023 and 2021 were as follows:
2023 2022
Balance, beginning of the fiscal year $ 336,555 $ 529,624 Claims and adjustments - -
Claims payments (193,069) (193,069)
Balance, end of the fiscal year $ 143,486 $ 336,555
The amortization of the remaining balance of $336,555 as of June 30, 2023 is detailed in Note 7.

In the past three years, no claims for general liability or workers’ compensation have exceeded the City’s purchased insurance coverage.

In accordance with the CIRA governing documents, CIRA Board has the authority to levy a cash assessment for any pooled coverage program on the Participating member. CIRA’s overall equity balance was a minus $450,641 as of June 30, 2022.

Risks Management Coverage
Amount Coverage Provider Payment Source
General Liability Claims:
$0-25,000 Self-insured Retention City funds
25,001-40,000,000 PRISM Shared risk pool
Workers Compensation Claims:
$0-10,000 Self-insured Retention City funds
10,001-750,000 (Non-Safety)
1,000,000 (Safety)
Commercial Re-insurance Shared risk pool
1,000,001-20,000,000 Commercial Reinsurance Shared risk pool Property Liability Claims:

Claims other than High Risk Flood
Claims:
$0-100,000 Deductible City funds
100,001-600,000,000 PRISM Shared risk pool
High Risk Flood Claims:
$0-10,000 Deductible City funds
10,001-100,000,000 PRISM Shared risk pool
Attachment 1

Notes to the Basic Financial Statements
City of Ukiah, California
Financial Section: Basic Financial Statements Page | 70 Note 10 - Risk Management (Continued)
The following is a summary of the most recent audited financial statements of REMIF as of and for the fiscal year ended June 30, 2022. As of the date of this report, 2023 information was not yet available.

REMIF Equity, June 30, 2022
Total assets $ 38,006,670
Total deferred outflows of resources 200,103
Total liabilities 27,447,385
To deferred inflow of resources -
Members' equity $ 10,759,388
Net operating revenues $ 18,794,790
Total operating expenses 16,402,326
Operating income (loss) $ 2,392,464
The following is a summary of the most recent audited financial statements of CIRA as of and for the fiscal year ended June 30, 2022.

CIRA Equity, June 30, 2022
Total assets $ 38,255,300
Total deferred outflows of resources -
Total liabilities 38,705,941
To deferred inflow of resources -
Members' equity $ (450,641)
Net operating revenues $ 11,090,825
Total operating expenses 10,160,757
Operating income (loss) $ 930,068
REMIF and CIRA issues separate audited financial reports, which for June 30, 2023 were not available at the time of publication of the City’s Annual Comprehensive Report. Copies of those reports may be obtained from REMIF and CIRA at 2330 East Bidwell Suite 150, Folsom, CA 95630.

This area intentionally left blank.

Attachment 1

Notes to the Basic Financial Statements
City of Ukiah, California
Financial Section: Basic Financial Statements Page | 71 Note 11 - Public Employee Retirement Plan
Plan Description
All qualified permanent and probationary employees are eligible to participate in the Public Agency Cost-Sharing Multiple-Employer Defined Benefit Pension Plan (the Plan), administered by the California Public Employees’ Retirement System (CalPERS). The Plan’s benefit provisions are established by statute. The Plan is included as a pension trust fund in the CalPERS Annual Comprehensive Financial Report, which is available online at www.calpers.ca.gov.

The Plan consists of a miscellaneous pool and a safety pool (referred to as “risk pools”), which are comprised of individual employer miscellaneous and safety rate plans, respectively, including those of the City of Ukiah. The City of Ukiah does not have any rate plans in the miscellaneous risk pool. The City of Ukiah's employer rate plans in the safety risk pool include the Safety Fire plan (Fire), the Safety Police plan (Police), the PEPRA Safety Fire plan (PEPRA Safety Fire) and the PEPRA Safety Police plan (PEPRA Police).

Benefits Provided
The Plan 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. Classic members and PEPRA Safety members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. PEPRA Miscellaneous members with five years of total service are eligible to retire at age 52 with statutorily reduced benefits. All members are eligible for non-duty disability benefits after five years of service. The death benefit is the Basic Death Benefit. The cost-of-living adjustments for each plan are applied as specified by the Public Employees’ Retirement Law.

General Information about the Pension Plans - Safety
The Plans’ provisions and benefits in effect at June 30, 2023, are summarized as follows:

Employer Rate Plans in the Safety Risk Pool
Employer rate plan Fire Police PEPRA Fire PEPRA Police
Hire Date
Prior to January
01, 2013
Prior to January
01, 2013
On or after
January 01, 2013
On or after
January 01, 2013
Benefit formula 3.0 percent @ 55 3.0 percent @ 50 2.7 percent @ 57 2.7 percent @ 57 Benefit vesting schedule 5 years of service 5 years of service 5 years of service 5 years of service Benefit payments Monthly for life Monthly for life Monthly for life Monthly for life Retirement age 50 50 50 50
Monthly benefits, as of
percent of eligible
compensation

2.4 percent to 3.0
percent 3.0 percent

2.0 percent to 2.7
percent

2.0 percent to 2.7
percent
Required employee
contribution rates

8.99 percent 8.99 percent 13.75 percent 13.75 percent
Required employer
contribution rates

23.68 percent 25.64 percent 13.66 percent 13.66 percent Attachment 1

Notes to the Basic Financial Statements
City of Ukiah, California
Financial Section: Basic Financial Statements Page | 72 Note 11 – Public Employee Retirement Plan (Continued)
Contributions
Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the CalPERS actuary and shall be effective on the July 1 following notice of a change in the rate. Contribution rates for the employer rate plans are determined through the CalPERS’ annual actuarial valuation process. Each employer rate plan’s actuarially determined rate is based on the estimated amount necessary to pay the employer rate plan’s allocated share of the cost of benefits earned by employees during the year, and any unfunded accrued liability. The City of Ukiah is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. The City of Ukiah’s contributions to the risk pools in the Plan for the year ended June 30, 2023, were as follows:

Contributions
Miscellaneous Risk Pool $ -
Safety Risk Pool 1,212,500
Total contributions $ 1,212,500
Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions As of June 30, 2023, City of Ukiah reported net pension liabilities for its proportionate shares of the net pension liability of each risk pool as follows:

Proportionate
Share of Total Pension
Liability/(Asset)
Miscellaneous Risk Pool $ -
Safety Risk Pool (5,823,369)
Total pension liability/(asset) $ (5,823,369)
The City of Ukiah’s net pension liability/(asset) for each risk pool is measured as the proportionate share of each risk pool’s net pension liability. GASB 68 indicates that to the extent different contribution rates are assessed based on separate relationships that constitute the collective net pension liability, the determination of the employer’s proportionate share of the collective net pension liability should be made in a manner that reflects those relationships. The allocation method used by CalPERS to determine each employer’s proportionate share reflects those relationships through the employer rate plans they sponsor within the respective risk pools. An actuarial measurement of the employer’s rate plan liability and asset-related information are used where available, and proportional allocations of individual employer rate plan amounts as of the valuation date are used where not available.

Attachment 1

Notes to the Basic Financial Statements
City of Ukiah, California
Financial Section: Basic Financial Statements Page | 73 Note 11 – Public Employee Retirement Plan (Continued)
The City of Ukiah’s proportionate share percentage of the net pension liability/(asset) for each risk pool as of June 30, 2022, measurement date, was calculated as follows:

Each risk pool’s net pension liability was computed at the measurement date, June 30, 2022, by applying standard actuarial roll-forward methods to the net pension liability amounts as of the valuation date. The fiduciary net position for each risk pool at the measurement date was determined by CalPERS’ Financial Office. The net pension liability for each risk pool at June 30, 2022, was computed by subtracting the respective risk pool’s fiduciary net position from its net pension liability.

The individual employer risk pool’s proportionate share percentage of the net pension liability and fiduciary net position as of June 30, 2022, was calculated by applying City of Ukiah’s proportionate share percentage as of the valuation date (described above) to the respective risk pool’s net pension liability and fiduciary net position as of June 30, 2022, to obtain the net pension liability and fiduciary net position as of June 30, 2022.

The fiduciary net position was then subtracted from net pension liability to obtain the net pension liability as of the measurement date.

The City of Ukiah’s proportionate share percentage of the net pension liability for each risk pool as of June 30, 2021, and June 30, 2022, was as follows:

Safety
Risk Pool
Proportion at measurement date – June 30, 2021 (0.174647) percent Proportion at measurement date – June 30, 2022 0.084746 percent

0.259393 percent
This area intentionally left blank.

Attachment 1

Notes to the Basic Financial Statements
City of Ukiah, California
Financial Section: Basic Financial Statements Page | 74 Note 11 – Public Employee Retirement Plan (Continued)
For the year ended June 30, 2023, the City of Ukiah recognized pension expense of $2,105,624. At June 30, 2023, the City of Ukiah reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Outflows of
Resources
Deferred Inflows of
Resources
Differences between Expected and Actual Experience $775,254 $(203,399) Changes of Assumptions 1,888,606 -
Net Difference between Projected and Actual
Earnings on Pension Plan Investments 3,391,872 -
Adjustment due to Differences in Proportions 1,260,262 (6,535,281) Differences between Actual and Required
Contributions 5,149,469 (2,713,612)
Contributions after Measurement Date 1,212,500 -
Total $13,677,963 $(9,452,292)
Amounts other than contributions subsequent to the measurement date reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:

Deferred
Measurement Date Outflows/(Inflows)
June 30: of Resources
2023 $ 287,695
2024 200,595
2025 317,661
2026 2,207,223
2027 -
Thereafter -
Total $ 3,013,174
Attachment 1

Notes to the Basic Financial Statements
City of Ukiah, California
Financial Section: Basic Financial Statements Page | 75 Note 11 – Public Employee Retirement Plan (Continued)
Actuarial Assumptions
The net pension liabilities in the June 30, 2022 actuarial valuations were determined using the following actuarial assumptions:

Safety
Valuation Date June 30, 2021
Measurement Date June 30, 2022
Actuarial Cost Method Entry Age Normal
Actuarial Assumptions:

Discount Rate 6.90 percent
Inflation 2.50 percent
Payroll Growth 2.75 percent
Projected Salary Increase (1) Varies by Age &
Length of Service
Investment Rate of Return (2) 6.80 percent
Mortality Rate Table (3)
Derived Using
CalPERS’
Membership Data for all Funds
(1) Depending on age, service and type of employment
(2) Net of Pension Plan Investment and Administrative Expenses; includes Inflation (3) The mortality table was developed based on CalPERS-specific data. The rates incorporate Generational Mortality to capture ongoing morality improvement using 80 percent of Scale MP 2020 published by the Society of Actuaries. For more details, please refer to the 2021 experience study report that can be found on the CalPERS website.

Discount Rate
The discount rate used to measure the net pension liability was 6.90 percent. To determine whether the municipal bond rate should be used in the calculation of a discount rate for the Plan, CalPERS stress tested employer rate plans within the Plan that would most likely result in a discount rate that would be different from the actuarially assumed discount rate. Based on the testing, none of the tested employer rate plans run out of assets. Therefore, the current

6.90 percent discount rate is adequate and the use of the municipal bond rate calculation is not necessary. The stress test results are presented in a detailed report, GASB Statements 67 and 68 Crossover Testing Report for Measurement Date June 30, 2022 based on June 30, 2021 Valuations, that can be obtained from the CalPERS website.

According to Paragraph 30 of GASB 68, the long-term discount rate should be determined without reduction for pension plan administrative expense. For the CalPERS Plan, the 6.80 percent investment return assumption used in this accounting valuation is net of administrative expenses. Administrative expenses are assumed to be 15 basis points. An investment return excluding administrative expenses would have been 6.90 percent. Using this lower discount rate has resulted in a slightly higher net pension liability and net pension liability. CalPERS checked the materiality threshold for the difference in calculation and did not find it to be a material difference.

Attachment 1

Notes to the Basic Financial Statements
City of Ukiah, California
Financial Section: Basic Financial Statements Page | 76 Note 11 – Public Employee Retirement Plan (Continued)
The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class.

In determining the long-term expected rate of return, CalPERS took into account long-term market return expectations as well as the expected pension fund cash flows. Projected returns for all asset classes are estimated and, combined with risk estimates, are used to project compound (geometric) returns over the long term. The discount rate used to discount liabilities was informed by the long-term projected portfolio return.

The table below reflects the long-term expected real rate of return by asset class. The rate of return was calculated using the capital market assumptions applied to determine the discount rate and asset allocation. These geometric rates of return are net of administrative expenses.

Asset Class
Assumed
Asset
Allocation
Real
Return 1,2
Global Equity - Cap-weighted 30.00 percent 4.54 percent Global Equity - Non-Cap-weighted 12.00 percent 3.84 percent Private Equity 13.00 percent 7.28 percent
Treasury 5.00 percent 0.27 percent
Mortgage-backed Securities 5.00 percent 0.50 percent
Investment Grade Corporates 10.00 percent 1.56 percent
High Yield 5.00 percent 2.27 percent
Emerging Market Debt 5.00 percent 2.48 percent
Private Debt 5.00 percent 3.57 percent
Real Assets 15.00 percent 3.21 percent
Leverage (5.00 percent) (0.59 percent)
(1) An expected price inflation of 2.3 percent used for this period. (2) Figures are based on 2021-22 Asset Liability Management study.

Attachment 1

Notes to the Basic Financial Statements
City of Ukiah, California
Financial Section: Basic Financial Statements Page | 77 Note 11 – Public Employee Retirement Plan (Continued)
Sensitivity of the City of Ukiah’s Proportionate Share of the Total Pension Liability to Changes in the Discount Rate The following presents the City of Ukiah’s proportionate share of the net pension liability of each risk pool as of the measurement date, calculated using the discount rate, as well as what the City of Ukiah’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1 percentage-point lower or 1 percentage-point higher than the current rate:

Discount Rate
1 percent (5.90 perce
Current Discount
Rate (6.90 percent)
Discount Rate
+1 percent (7.90 percent
City of Ukiah’s proportionate share of
the Safety Risk Pool’s net pension liability

$16,392,010 $5,823,369 ($2,814,108)
General Information about the Pension Plans - Miscellaneous Plan Descriptions – All qualified permanent and probationary employees are eligible to participate in the City’s separate Miscellaneous Plan, an agent multiple-employer defined benefit pension plan administered by the California Public Employees’ Retirement System (CalPERS), which acts as a common investment and administrative agent for its participating member employers. Benefit provisions under the Plan are established by State statute and Local Government resolution. CalPERS issues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website.

Benefits Provided – The Plan is an agent multiple-employer defined benefit pension plan administered by the California Public Employees’ Retirement System (CalPERS). A full description of the pension plan regarding number of employees covered, benefit provisions, assumptions (for funding purposes but not accounting purposes), and membership information are listed in the plan’s June 30, 2022 Annual Actuarial Valuation Report. Details of the benefits provided can be obtained in Appendix B of the actuarial valuation report. This report is a publicly available valuation report that can be obtained at CalPERS’ website under Forms and Publications.

The Plan’s provisions and benefits in effect at June 30, 2023, are summarized as follows:

Employees Covered – At June 30, 2023, the following employees were covered by the benefit terms for the Plan:

Benefits Provided
Hire Date On or after January 1, 2013
Benefit formula
Benefit vesting schedule
Retirement age
Monthly benefits as a % of eligible compensation
Retired employee contribution rates
Required employer contribution rates
55 62
Miscellaneous
Prior to January 31, 2013

2.7% @ 55 2% @ 62
5 years service
Depending on years of service

8.00% 8.00%

12.040% 12.040%
Attachment 1

Notes to the Basic Financial Statements
City of Ukiah, California
Financial Section: Basic Financial Statements Page | 78 Note 11 – Public Employee Retirement Plan (Continued)
Employees Covered by Plan
Inactive employees of beneficiaries currently receiving benefits 194 Inactive employees entitled to but not yet receiving benefits 147 Active employees 148
Contributions – Section 20814(c) of the California Public Employees’ Retirement Law (PERL) requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. 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. It is the responsibility of the employer to make necessary accounting adjustments to reflect the impact due to any Employer-Paid Member Contributions or situations where members are paying a portion of the employer contribution.

Net Pension Liability
The City’s net pension liability for the Plan is measured as the net pension liability, less the pension plan’s fiduciary net position. The net pension liability of the Plan is measured as of June 30, 2021, using an annual actuarial valuation as of June 30, 2021 rolled forward to June 30, 2022 using standard update procedures. A summary of principal assumptions and methods used to determine the net pension liability is shown below.

Actuarial Assumptions – The net pension liabilities in the June 30, 2022 actuarial valuations were determined using the following actuarial assumptions:

Actuarial Assumptions
Miscellaneous
Valuation date 6/30/2021
Measurement 6/30/2022
Actuarial cost method Entry-age normal
Discount rate 6.90%
Inflation 2.50%
Projected salary increase Varies by age and length of service Mortality (1) Derived from CalPERS membership data for all funds The mortality table was developed based on CalPERS-specific data. The rates incorporate Generational Mortality to capture ongoing morality improvement using 80% of Scale MP 2020 published by the Society of Actuaries. For more details, please refer to the 2021 experience study report that can be found on the CalPERS website.

Discount Rate – The discount rate used to measure the net pension liability is 6.90 percent. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made at statutorily required rates, actuarially determined.

Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the net pension liability.

Attachment 1

Notes to the Basic Financial Statements
City of Ukiah, California
Financial Section: Basic Financial Statements Page | 79 Note 11 – Public Employee Retirement Plan (Continued)
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 considered both short-term and long-term market return expectations as well as the expected pension fund cash flows. Using historical returns of all the funds’ asset classes, expected compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term (11+ years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the rounded single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equal to the single equivalent rate calculated above and adjusted to account for assumed administrative expenses.

The expected real rates of return by asset class are as followed:
.

Asset Class
Assumed
Asset
Allocation
Real
Return 1,2
Global Equity - Cap-weighted 30.00 percent 4.54 percent Global Equity - Non-Cap-weighted 12.00 percent 3.84 percent Private Equity 13.00 percent 7.28 percent
Treasury 5.00 percent 0.27 percent
Mortgage-backed Securities 5.00 percent 0.50 percent
Investment Grade Corporates 10.00 percent 1.56 percent
High Yield 5.00 percent 2.27 percent
Emerging Market Debt 5.00 percent 2.48 percent
Private Debt 5.00 percent 3.57 percent
Real Assets 15.00 percent 3.21 percent
Leverage (5.00 percent) (0.59 percent)
(1) An expected price inflation of 2.3 percent used for this period. (2) Figures are based on 2021-22 Asset Liability Management study.

Attachment 1

Notes to the Basic Financial Statements
City of Ukiah, California
Financial Section: Basic Financial Statements Page | 80 Note 11 – Public Employee Retirement Plan (Continued)
Changes in Total Pension Liability
The changes in the Total pension Liability for the Miscellaneous Plan recognized over the measurement period.

Total Pension
Liability
(a)
Plan Fiduciary
Net Position
(b)
Net Pension
Liability/(Asset)
(a)-(b)
Balance at June 30, 2021 $ 104,200,343 $ 110,768,195 $ (6,567,852) Beginning of Year Adjustment - - -
Adjusted Balance at June 30, 2021 $ 104,200,343 $ 110,768,195 $ (6,567,852) Changes Recognized for the Measurement Period:

Service Cost 2,387,254 2,387,254
Interest on Total Pension Liability 7,222,763 7,222,763 Changes of Benefit Terms - -
Changes of Assumptions 3,214,497 3,214,497
Differences Between Expected and Actual Experience (1,257,342) (1,257,342) Net Plan to Plan Resource Movement - - -
Contribution - Employer - 1,837,864 (1,837,864)
Contribution - Employees - 916,632 (916,632)
Net Investment Income - (8,267,651) 8,267,651
Benefits Payments, Including Refunds of Employee
Contributions (5,346,787) (5,346,787) -
Administrative Expense - (69,002) 69,002
Other Miscellaneous Income (Expense) - - -
Net Changes During 2021-2022 6,220,385 (10,928,944) 17,149,329 Balance at June 30, 2022 $ 110,420,728 $ 99,839,251 $ 10,581,477 Sensitivity of the Total Pension Liability to Changes in the Discount Rate - The following presents the net pension liability of the Plan as of the measurement date, calculated using the discount rate of 6.90 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 (5.90 percent) or 1 percentage-point higher (7.90 percent) than the current rate:

Discount Rate -1% Discount Rate Discount Rate +1%

5.90% 6.90% 7.90%
Plan's Net Pens ion Liability/(As s et) $ 25,010,488 $ 10,581,477 $ (1,372,246) Pension Plan Fiduciary Net Position – Detailed information about each pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports.

Attachment 1

Notes to the Basic Financial Statements
City of Ukiah, California
Financial Section: Basic Financial Statements Page | 81 Note 11 – Public Employee Retirement Plan (Continued)
Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions For the year ended June 30, 2023, the City recognized pension expense for the Miscellaneous Plan of $3,074,770. At June 30, 2023, the City reported deferred outflows of resources and deferred inflows of resources for the Miscellaneous Plan from the following sources:

Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Pension contributions subsequent to measurement date $ 1,967,573 $ - Changes of assumptions 2,240,407 -
Difference between actual and expected experience 216,878 (876,329) Net differences between projected and actual earnings on plan investments 5,724,831 - Total $ 10,149,689 $ (876,329)
$2,240,407 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2023. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:

Measurement Periods
Ended June 30:

Deferred
Outflows/(Inflows)
of Resources
2023 $ 1,756,142
2024 1,540,050
2025 846,376
2026 3,163,219
2027 -
Therafter -
Payable to the Pension Plan
At June 30, 2023, the City reported a payable of $ -0- for the outstanding amount of contributions to the pension plan required for the year ended June 30, 2023.

Total pension expense for both plans was $2,105,625 for Safety and $3,074,770 for Miscellaneous.

Attachment 1

Notes to the Basic Financial Statements
City of Ukiah, California
Financial Section: Basic Financial Statements Page | 82 Note 12 – Related Organizations
The City is a member of various joint powers authorities that provide goods or services to the City and other authority members. Under the criteria established by GASB-14, the City does not have enough authority, influence or accountability over these entities to incorporate them in this annual report. Additionally, the City has determined that it has no ongoing financial interest or responsibility for any of these organizations as defined by GASB-14. The names and general functions of these joint powers are as follows:

Northern California Power Agency (NCPA)
NCPA has 14 members including municipal electric utilities, a port authority, an irrigation district, a public utility district, a transportation district; and one associate member entity. The NCPA is generally empowered to purchase, generate, transmit, distribute, and sell electrical energy. Members participate in the projects of the Agency on an elective basis. A Commission comprised of one representative for each member governs the NCPA.

The City is currently involved in several hydroelectric, geothermal and other energy related projects as a member of this agreement. The NCPA is financed by contributions from member cities, government grants and debt. The City is committed to provide substantial additional financial support for its portion of the actions and projects of the NCPA.

During the year ended June 30, 2023, the City paid $12,965,632 to the NCPA for power supplied by the agency.

The NCPA holds certain funds under a separate member custodial agreement - the general operating reserve. The purpose of the reserve is to allow members to fund all, or a portion, of the contingent liabilities that the NCPA faces at any given time, while providing the individual member with the flexibility to draw upon their part of the reserve, as each member individually deems appropriate. At June 30, 2023, the City's balance held in the reserve was $4,840,316, of which $232,717 is restricted for NCPA OPS/Security accounts. Due to the nature of the reserve held by NCPA, the reserve is recorded as an asset in the Electric Fund as Investment in NCPA reserve.

Mendocino Transit Authority
This Agency consists of four Mendocino County cities and the County of Mendocino. The Agency was created to apply for and receive Transportation Development Act, Urban Mass Transportation Act, and other funds as a public transportation operator and to provide public transportation services within Mendocino County. Its activities are primarily financed from fare box revenue and federal and state government grants. A Board of Directors comprised of one member from each city and three members that are appointed by the Mendocino County Board of Supervisors governs the Authority.

Redwood Empire Financing Authority (REFA)
This is an agreement between seven Northern California cities. The Authority is authorized to acquire, through lease purchase, installment sale agreements, or otherwise such property necessary or convenient for the operation of the member cities. A Commission comprised of one member appointed by each member city administers the Authority. As explained previously, the City has entered into various financing arrangements with REFA.

Attachment 1