Agenda packet — Vallejo City Council, March 10, 2026 (part 2 of 5)

Date: March 10, 2026
Subject: PRESENT OPTIONS AND RECEIVE FEEDBACK TO ADDRESS THE FORECASTED FISCAL YEAR (FY) 2026-2027 GENERAL FUND BUDGET SHORTFALL AND PROVIDE NOTICE OF INTENT TO AMEND THE FY 2025-2026 BUDGET (STEP 1 OF 2)

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City Manager’s Office:
• This increase of $58,000 is requested due to the LAFCO invoice exceeding anticipated costs.

Original funds in this account were used to cover the bill, and this increase will reimburse the account.
• Additional funding of $15,000 is also needed to pay for the Roosevelt Group Consultants. • An increase of $56,000 is requested for Police Oversight & Accountability Commission.

Information Technology:
• This increase of $10,000 is requested to cover a rate adjustment associated with a Proofpoint license upgrade. Proofpoint is the City’s email security platform that protects against phishing, malware, and other email-based cyber threats, helping safeguard City systems and data. • An increase of $67,000 to Project IT000 will fund the following software implementation:
o AudioEye Accessibility Platform –$40,000
Funds implementation of an accessibility platform to support compliance with Web Content Accessibility Guidelines (WCAG) 2.1 across City-hosted websites. This investment improves digital accessibility, reduces legal exposure, and addresses multiple accessibility deficiencies identified on existing public-facing websites.
o DocAccess/PDF Document Remediation for WCAG Compliance – $27,000 Funds ongoing remediation of publicly accessible PDF documents to ensure compliance with WCAG

2.1 and ADA accessibility requirements. This effort addresses accessibility deficiencies in legacy and newly published documents, supports equitable access to information for individuals with disabilities, and reduces the City’s exposure to accessibility-related complaints and legal risk.

City Attorney:
• An increase of $200,000 in outside fees and costs due to investigations timing.

Finance:
• An increase of $51,000 in Other Professional Services is required to cover costs for several vendors, including for the Debt Book subscription for lease management, as well as the long-range financial planning.
• An increase of $50,000 is needed to cover annual audit fees.

City Wide:
• City-owned facilities have experienced an increase in water consumption due to expanded operational use and service demands. In the prior fiscal year, the water utility budget did not fully reflect actual usage levels, resulting in a variance between budgeted and actual expenditures. As part of this midyear review, staff is requesting an additional $300,000 to more accurately align historical consumption and current usage trends to ensure sufficient funding for ongoing operations and improved budget accuracy moving forward.

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• Technical Adjustment, during the FY 2025-2026 Annual Budget process, staff proposed $631,000 in salary savings associated with the freezing of positions within Planning & Development Services department. Council ultimately directed that no positions directing impacting the community should be frozen. As a result, the proposed budget was not implemented, and this item reflects a budget correction to address that error.

II. Other Funds: Changes of Note
Mare Island Base Reuse Fund #107:
• This request is to appropriate $80,000 for existing fund balance due to increases in Housing Appraisals and Financial Analysis, and IV Proforma Peer Reviews.

State Gas Tax Fund #133:
• This request for $60,000 is due to the need for traffic lighting retrofits on Sonoma Blvd.

Hazmat Revolving Fund #143:
• This request of $50,000 is due to an increased need for biohazardous removal at City-owned facilities this fiscal year and the allocated budget is nearly fully expended. Additional budget is required to be able to respond to hazardous or biohazardous waste incidents as they occur.

Supplemental Law Enforcement Grant Fund #151:
• This request is to appropriate $126,000 of existing fund balance to a new contract with Axon Enterprise, Inc. Axon has been providing important hardware, software, and services to the Vallejo Police Department, including body-worn and in- car camera systems, Taser equipment, and data storage solutions.

N/E Quadrant LMD Fund #178:
• This increase of $20,000 is to cover damage repair costs resulting from accidents on Columbus, Ascot and Redwood Parkways.

Garthe Ranch Fund #180:
• This increase of $500 is to cover the cost of tree removal in the Garthe Ranch LMD.

Town & Country II LMD Fund #184:
• This increase of $7,300 is to cover the cost of a replacement fence and gate on the Basalt Drive easement in the Town & Country II-V LMD.

Glen Cove III LMD Fund #185:

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• This increase of $30,000 is to cover the cost of vandalism repairs, vehicle accident repairs, and emergency/at-risk tree pruning in the Glen Cove LMD. • This increase of $6,000 is to cover increased irrigation costs in the Glen Cove LMD.

Garthe Estates Fund #188:
• This increase of $11,000 to cover the cost of vandalism repairs, vehicle accident repairs, and emergency/at- risk tree pruning in the Garthe Estates LMD.

Multiyear Operational Projects Fund #194 and Capital Outlay Fund #201 • Staff are recommending a transfer of $9,454,182 from the Capital Outlay Fund #201 to the Multi-Year Operational Fund #194. These projects have been identified as multi-year operational initiatives rather than traditional capital improvement projects. This adjustment ensures that both the associated revenue and expenditure are reflected in the appropriate fund, providing a more accurate accounting of the City’s financial activity and aligning budget reporting with the nature of the projects.

Hiddenbrook Overpass Fund #211
• This additional budget of $300,000 is needed to meet new project requirements, including expanded Caltrans traffic analysis, updated environmental compliance work, completion of permit coordination, and consultant support during bidding and construction.

Empress Theater Fund 225
• This increase of $25,000 is to attach
the expenditure required for the Transfer In revenue that was approved and appropriated during the FY 2025-2026 Annual Budget.

Water Funds (#401- #411)
Items to note in the Water Funds include:
• This increase of $450,000 is requested to reimburse the Street R/M Services account, which was previously used to fund maintenance of fire hydrants throughout the City. • An increase of $100,000 is needed to ensure there is sufficient funding for the remainder of the fiscal year. Budgeted contingency funds were utilized to cover unexpected equipment replacements, agency membership costs, and debt service- related expenditures.
• An increase of $50,000 is requested as the department has experienced higher-than-anticipated demand for computers and related equipment due to aging devices and increased operational needs.

Corporation Shop Fund #501

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• This increase of $210,000 is to cover fuel supplies for City fleet to meet operational demands of all departments through the end of the fiscal year.
• This increase of $207,000 is needed to address the repair needs of several units for Fire, Police and Water. Without the additional budget, these repairs will be delayed and the units that directly support public safety and public health will not be operational.

III. Staffing Changes Included in Mid-Year
The following items reflect the technical adjustments for salaries and benefits:
• A decrease of $7.44 million reflects additional salary savings attributable to vacant positions. In the FY 2025–2026 Adopted Budget, vacancy savings were allocated to departments but recorded in a separate line item. To more accurately present the City’s salary expenditure, these savings are now incorporated directly into the Salaries budget.
• Historically, overtime was not fully budgeted at the departmental level, and overages were offset by vacancy savings from other departments. As part of the mid-year review, staff are recommending that the budget be adjusted to more accurately allocate overtime funding to the appropriate departments and improve transparency and accountability.

An additional $200,000 is being requested to support the City’s Sex Trafficking Initiative. These funds will enhance enforcement efforts, victim support services, and interagency coordination aimed at addressing and preventing human trafficking activities within the community. This mid-year adjustment ensures sufficient resources are available to sustain ongoing operations and strengthen the City’s commitment to public safety and the protection of vulnerable individuals.

An additional $500,000 is being appropriated to the Leave Payouts budget to address higher-than- anticipated separation and leave cash-out costs. Leave payouts fluctuate based on employee retirements, resignations, and contractual obligations, and actual costs have exceeded original projections. This mid-year adjustment ensures sufficient funding is available to meet the City’s obligations.

Outlined below are the recommended updates to the Authorized FTE Listing. Many of the proposed staffing adjustments are intended to better align resources with evolving operational and business needs. The total fiscal impact for the remainder of FY 2025-2026 is $378,970 including the net fiscal impact of $1,709 in the current year for the new salary of the Public Works Director.

Police (General Fund #001)
• Add one Program Manager
The proposed changes will result in a net fiscal impact of $86,083 in the current budget and an annual cost of $281,490 in FY 2026-2027.

Economic Development (General Fund #001)
• Unfreeze one Secretary

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The proposed change will result in a net fiscal impact of $37,520 in the current budget and an annual cost of $122,689 in FY 2026-2027.

City Clerk (General Fund #001):
• Allocate part-time funding of $101,595 to support the Public Records Act (PRA) Coordinator position.

Finance (General Fund #001)
• Unfreeze one Administrative Analyst II
The proposed changes will result in a net fiscal impact of $ 61,145 on the current budget and annual cost of $199,945 in FY 2026-2027.

Human Resources (General Fund #001)
• Unfreeze one Employee and Labor Relations Officer
• Unfreeze one Personnel Analyst II
The proposed changes will result in a net fiscal impact of $90,918 in the current budget because funding for the Personnel Analyst II position was accidentally already included in the FY 2025- 2026 budget and an annual cost of $297,301 in FY 2026-2027.

Planning & Development Services (Fund #193)
• Add one Administrative Clerk
This change results in no net fiscal impact to the current budget or FY 2026-2027, as costs are fully offset by increased revenue associated with the position.

None of the positions listed above as mid-year requests are anticipated to be impacted by FY 2026-2027 structural balancing changes.

FISCAL IMPACT
The notice of intent does not have any fiscal impact. If the City Council approves tonight's recommendation of mid-year adjustments, the fiscal impact of the final action that is scheduled for City Council consideration on March 24, 2026, will be as follows:

1. The proposed mid-year changes increase the General Fund expenditures by $183,837 and transfer- out by $718,000 which will be funded from the fund balance.

2. The Water Fund expenditure budget will increase by $600,000.

3. For Midyear, all Other Funds expenditure and transfer-out budget will increase by $11,338,971.

These additional costs will be covered by a combination of increased revenues, transfer-in and fund balance.

Exhibit 1 summarizes the proposed financial impact on the overall City budget, including the General Fund and all other funds.

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GFOA recommends, at a minimum, that general-purpose governments, regardless of size, maintain an unrestricted budgetary fund balance in their general fund of no less than two months of regular general fund operating revenues or regular general fund operating expenditures. The City will maintain a General Fund Unassigned fund balance of 2 months of operating expenses per GFOA recommendation. This does not include Measure P revenue and expenditure.

ENVIRONMENTAL REVIEW
This action is exempt from the California Environmental Quality Act (CEQA) because it is not a project which has a potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment, pursuant to CEQA Guideline section 15378.

ATTACHMENTS

1. FY 25-26 Mid-Year Exhibit

CONTACT
[email protected]

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Exhibit 1
2025-2026 Midyear Budget Review
Proposed Budget Adjustments

SUMMARY
Revenue Transfer In Expenditure Transfer out Fund Balance 1 Ref # General Fund
Transfer out to General Fund and Unappropriated
Reserve Fund to match actual - - - - - Transfer from Measure B - - - - - - - - - - Increases (Decrease) in Projected Revenues:
1 Property-related taxes 1,039,687 - - - - 2 Sales tax (929,106) - - - - 3 Other unrestricted revenues (including offsets) (1,270,266) - - - - (1,159,685) - - - - 4 Program revenues 1,542,054 - - - - Total Revenue Adjustments 382,369 - - - - Increase (Decrease) in Projected Expenditures:

Salaries & Benefits, and related expenditures:
5 Fire - - 1,820,146 - - 6 Police - - (3,618,116) - - 7 Economic Development - - (110,054) - - 8 Public Works 1,709 -
9 Administration - - (302,299) - - 10 Citywide 500,000 -
Subtotal - - (1,708,613) - - Departmental expenditures:
11 Fire - - 125,000 - - 12 Police - - 360,950 - - 13 Economic Development - - 85,000 - - 14 Public Works - - 105,000 20,000 - 15 Administration - - 916,500 - - 16 Citywide - - 300,000 698,000 - Total Expenditure Adjustments - - 1,892,450 718,000 - Total Salaries & Expenditures - - 183,837 718,000 - Net Operational Change 382,369 - 183,837 718,000 - - - - - General Fund Measure B/V #003
2 Decrease in Projected Revenue (54,000) - - - - (54,000) - - - - General Fund Measure P #005
2 Decrease in Projected Revenue (44,000) - - - - (44,000) - - - - Total General Fund 284,369 - 183,837 718,000 - City of Vallejo

TRANSACTION TYPE
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Ref #Other Funds Revenue Transfer In Expenditure Transfer out Fund Balance 1 17 Mare Island Base Reuse Fund # 107 - - 80,000 - (80,000) 18 State Gas Tax # 133 - - 60,000 - (60,000) 19 Hazmat Revolving Fund # 143 - - 50,000 - (50,000) 20 Supplemental Law Enforcement Grant Fund # 151 - - 126,000 - (126,000) 21 N/E Quadrant LMD Fund # 178 - - 20,000 - (20,000) 22 Garthe Ranch Fund # 180 - - 500 - (500) 23 Town & Country II LMD Fund # 184 - - 7,300 - (7,300) 24 Glen Cove III LMD Fund # 185 - - 36,000 - (36,000) 25 Garthe Estates Fund #188 - - 11,000 - (11,000) 26 Planning & Development Services Fund #193 55,402 631,000 663,771 - 22,631 27 Multi-Year Operational Projects Fund #194 - 9,542,400 9,542,400 - - 28 Capital Outlay Fund # 201 - - (9,454,182) 9,454,182 - 29 Hiddenbrooke/S.V. Fund #211 - - 300,000 - (300,000) 30 Empress Theater Fund #225 - - 25,000 - (25,000) 31 Water Fund # 401 - - 550,000 50,000 (600,000) 32 Water Fac Tax/Connect Fee Fund #404 - 50,000 50,000 - - 33 Corporation Shop Fund # 501 - - 417,000 - (417,000) Total, 2025-2026 Other Funds Adjustments 55,402 10,223,400 2,484,789 9,504,182 (1,710,169) - - - - Note: 1 Draw from assigned reserves (continued) -
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Proposed Budget Adjustments - Supporting Detail
Revenue Transfer In Expenditure Transfer out Fund Balance 1 Ref #General Fund
Revenues
General Tax and Other Unrestricted Revenues:

To update general tax/unrestricted revenues to match current projections:

Property-related taxes:
1 Property Tax 775,149 - - - - 1 SB 1096 Vehicle License Fee 264,538 - - - - Sales Tax
2 Sales Tax (929,106) - - - - Other unrestricted revenues:
3 Transient Occupancy Tax (81,981) - - - - 3 Real Prop Excise Tax (274,400) - - - - 3 Franchise Tax 393,360 - - - - 3 Utility User Tax (322,972) - - - - 3 Cannabis Tax (578,174) - - - - 3 Business License Tax (57,845) - - - - 3 Discovery Kingdom/Park Fee (348,254) - - - - Subtotal others (1,270,266) - - - - Subtotal General tax and others (1,159,685) - - - - Program Revenues
To update department revenue projections:

Fire
4 Prop 172 - Sales Tax 7,490 - - - - 4 Federal Grant (SAFER) 807,578 - - - - 4 Misc. Reimbursements (CALOES) 652,827 - - - - Subtotal - Fire 1,467,895 - - - - Police
4 Prop 172 - Sales Tax 7,490 - - - - 4 POST Reimbursements (15,000) - - - - 4 Overtime Reimbursement (25,000) - - - - 4 False Alarm Fees (75,000) - - - - 4 Federal COPS Grant 160,000 - - - - 4 Misc Revenues (5,000) - - - - Subtotal - Police 47,490 - - - - Public Works
4 Misc Public Works Revenue 26,669 - - - - Subtotal - Public Works 26,669 - - - - Subtotal - Program Revenues 1,542,054 - - - - Total Revenue Adjustments: 382,369 382,369
2 Transaction and Use Tax Measure B (54,000) - - - (54,000) 2 Transaction and Use Tax Measure P (44,000) - - - (44,000) Total General Fund Revenue Adjustments 284,369 - - - 284,369 (continued)
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Proposed Budget Adjustments - Supporting Detail, Continued Ref#General Fund Revenue Transfer In Expenditure Transfer out Fund Balance 1 Expenditures
Salaries & Benefits, and related expenditures
Salaries & Benefits:

Increase Overtime Budget
5 Fire - - 2,724,085 - - 6 Police - - 2,126,736 - - Subtotal of Overtime Budget - - 4,850,821 - Allocate additional Salaries Savings to Departments:
5 Fire - - (903,939) - - 6 Police - - (5,830,934) - - 7 Economic Development - - (147,574) - - 9 Finance - - (74,572) - - 9 Human Resources - - (144,878) - - 9 Information Technology - - (83,034) - - 9 City Attorney - - (156,262) - - 9 City Manager - - (97,211) - - - - (7,438,404) - - Police
6 Adding one (1) Program Manager - - 86,083 - - Subtotal 86,083 - - Economic Development
7 Unfreeze one (1) Secretary - - 37,520 - - Subtotal - - 37,520 - - Public Works
8 Increase budget for the new salary for Public Works Director - - 1,709 - Subtotal - - 1,709 - - City Clerk's Office
9 Add Part-time budget funding for the PRA Coordinator - - 101,595 - - Subtotal - - 101,595 - - Finance
9 Unfreeze one (1) Administrative Analyst II - - 61,145 - - Subtotal - - 61,145 - - Human Resources
9 Unfreeze one (1) Employee and Labor Relationship - - 90,918 - - 9 Unfreeze one (1) Personnel Analyst II - - - - - Subtotal - - 90,918 - - Citywide
10 Increase for Leave Payouts - 500,000 Subtotal 500,000 - - Subtotal -Salaries & Benefits, and related expenditures - - (1,708,613) - - (continued)
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Ref# Departmental expenditures Revenue Transfer In Expenditure Transfer out Fund Balance 1 Fire
11 - - 85,000 - - 11 - - 40,000 - - Subtotal Fire - - 125,000 - - Police
12 - - 225,000 - - 12 - - 80,000 - - 12 - - 55,950 - - Subtotal Police - - 360,950 - - (continued)
Increase Computer Equipment
This funding is necessary to replace a portion of the department’s computers and laptops. The proposed replacements will bring the department into alignment with the City’s equipment replacement policy, which provides for the annual replacement of 20 percent of this equipment, resulting in the replacement of approximately 50 devices. This approach helps ensure that equipment does not become obsolete and remains compliant with current security standards supported by the Information Technology Department.

Increase Field Equipment Acquisition
This increase is related to the VirTra simulator, a training tool used to support critical-incident preparation. The training provided through the simulator aligns with California Department of Justice mandates related to use-of-force and de-escalation. In addition, the simulator serves as an important resource for community engagement and is used regularly for programs such as the Citizens’ Academy and Leadership Vallejo. Given its dual role in meeting mandated training requirements and strengthening community understanding, this item should be considered an essential resource.

Increase Gas & Electricity
Increasing the gas and electricity budget to align with prior-year actual expenditures and current year-to-date spending trends.

Increase Software
Funding is required to support a variety of mission-critical software that meets multiple operational needs. This software includes tools for EMS reporting (field site data, mapping, visual information, and Telestaff integration), incident management (CAD interface, agency licensing, TC Mobile, etc.), and other applications essential for managing and responding to emergencies effectively.

Increase Space Rental Charges (Towing)
The increase is attributable to a contractually authorized rate adjustment implemented by the vendor for per-vehicle impound storage. Vehicles are required to remain in storage pending completion of the associated legal proceedings.
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Ref# Departmental expenditures Revenue Transfer In Expenditure Transfer out Fund Balance 1 Economic Development Department
13 - - 85,000 - - Subtotal Economic Development - - 85,000 - - Public Works
14 - - 19,000 - - 14 - - 86,000 - - Subtotal Public Works - - 105,000 - - Administration
City Council
15 - - 2,500 - - Human Resources
15 - - 123,000 - - 15 - - 301,000 - - (continued)
Increase R/M Rehabilitation
This increase is required to cover irrigation costs for the remainder of the fiscal year, as well as additional funding needed to address tree repairs and other storm-related damage.

Increase Other Professional Services
This increase is requested to support multiple contracts, including broker services, property management services, and agreements that facilitate pop-up events throughout the City.

Increase Security Services
This increase reflects unanticipated security costs resulting from the library fire system becoming inoperable. As required by the Vallejo Fire Department, a fire watch was implemented in August 2025.

These are actual costs that have already been incurred and paid by the department and are included in this request.

Increase Misc Expenses
This increase is requested to cover City Council meeting meal costs for the Mayor and City Council Members for the remainder of the fiscal year.

Increase Recruitment Cost
This request addresses increased recruitment activities in FY2025- 2026, covering costs for executive recruitments, public safety promotional assessments, and recruitment tests for various positions. It includes expenses for supplies, meals for raters and panels, career fair supplies, and venue usage. These funds ensure the successful recruitment and assessment of essential personnel to support the city's operations.

Increase Other Professional Services
This increase is requested due to unexpected cost increases with vendors, including operational assessments and Human Resources consulting services related to position development and compliance with Fair Employment and Housing Act and American with
Disabilities Act requirements as well as benefit management consulting support.
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Ref# Departmental expenditures Revenue Transfer In Expenditure Transfer out Fund Balance 1 Administration (Continued)
City Manager
15 - - 73,000 - - 56,000
Information Technology
15 - - 10,000 - - City Attorney
15 - - 200,000 - - Finance
15 - - 101,000 - - 15 - - 50,000 - - Subtotal Administration - - 916,500 - - (continued)
Increase Police Oversight & Accountability Commision
Increase Dues & Publication
This increase is requested to cover a rate adjustment associated with a Proofpoint license upgrade. Proofpoint is the City’s email security platform that protects against phishing, malware, and other email-based cyber threats, helping safeguard City systems and data.

Increase Legal Fees - Investigations
There is an ongoing need for funds to cover outside independent, city-wide investigations.

Increase Other Professional Services
This increase is requested due to the LAFCO invoice exceeding anticipated costs. Original funds in this account were used to cover the bill, and this increase will reimburse the account. Additional funding is also required for necessary consultant services to support preparation for the federal government’s SHIPS Act, including planning efforts related to potential shipbuilding activities at the Mare Island's dry dock facilities.

Increase Other Professional Services
An increase in Other Professional Services is required to cover costs for several vendors, including $26,000 for the Debt Book subscription for lease management, as well as increased expenses related to performance audits and $50,000 for the long-range financial planning.

Increase Audit Fees
An additional $50,000 is needed to cover annual audit fees. 7 of 13

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Ref# Departmental expenditures Revenue Transfer In Expenditure Transfer out Fund Balance 1 Citywide
16 - - 300,000 - - 16 - - - 67,000 - 16 - - - 20,000 - 16 - - - 631,000 - Subtotal Citywide - - 300,000 718,000 - Subtotal, General Fund Expenditures - - 183,837 718,000 - Total, 2025-2026 General Fund Adjustments - - 183,837 718,000 - Transfer to Fund #194, IT000 - Software Cost
This increase will fund website compliance software, SharePoint fees, and cybersecurity micro segmentation. In accordance with the ADA, jurisdictions with populations of 50,000 or more must meet accessibility standards by April 24, 2026.

Transfer to Fund #194, IT000 - Public Works Software
An increase is needed in the IT000 account to support the Public Works Department’s IT and software needs. Actual annual software expenditures for Public Works consistently exceed the ongoing budget allocation. Public Works typically spends approximately $125,000 annually, and this increase aligns the budget with historical actual expenditures.

Transfer to Fund #193
During the FY 2025-2026 Annual Budget process, staff proposed $631,000 in salary savings associated with the freezing of positions within Planning & Development Services department. Council ultimately directed that no positions directing impacting the community should be frozen. As a result, the proposed budget was not implemented and this item reflects a budget correction to address that error.

Increase Water Expenses Account
City-owned facilities have experienced an increase in water consumption due to expanded operational use and service demands. In the prior fiscal year, the water utility budget did not fully reflect actual usage levels, resulting in a variance between budgeted and actual expenditures. As part of this midyear review, staff is adjusting the budget to more accurately align with historical consumption and current usage trends to ensure sufficient funding for ongoing operations and improved budget accuracy moving forward.
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Ref# Other Funds Revenue Transfer In Expenditure Transfer out Fund Balance 1 Mare Island Base Reuse Fund # 107
17 - - 80,000 - (80,000) Subtotal - - 80,000 - (80,000) State Gas Tax # 133 -
18 - - 60,000 - (60,000) Subtotal - - 60,000 - (60,000) -
Hazmat Revolving Fund # 143
19 - - 50,000 - (50,000) Subtotal - - 50,000 - (50,000) Supplemental Law Enforcement Grant Fund # 151
20 - - 126,000 - (126,000) Subtotal Supplemental Law Enforcement Grant Fund - - 126,000 - (126,000) N/E Quadrant LMD Fund # 178
21 - - 20,000 - (20,000) Subtotal - - 20,000 - (20,000) Garthe Ranch Fund # 180
22 - - 500 - (500) Subtotal - - 500 - (500) Town & Country II LMD Fund # 184
23 - - 7,300 - (7,300) Subtotal - - 7,300 - (7,300) (continued)
Increase Safety Services AXON
This request is due to a new contract with Axon Enterprise, Inc. Axon has been providing important hardware, software, and services to the Vallejo Police Department, including body-worn and in-car camera systems, Taser equipment, and data storage solutions.

Increase R/M Rehabilitation Budget
This increase is to cover damage repair costs resulting from accidents on Columbus, Ascot and Redwood Parkways.

Increase R/M Rehabilitation Budget
This increase is to cover the cost of a replacement fence and gate on the Basalt Drive easement in the Town & Country II-V LMD.

Increase R/M Rehabilitation Budget
This increase is to cover the cost of tree removal in the Garthe Ranch LMD.

Increase Other Professional Services
This request is due for increases in Housing Appraisals and Financial Analysis, and IV Proforma Peer Reviews.

Increase Electrical Supplies
This request is due the need for traffic lighting retrofits on Sonoma Blvd.

Increase Recycling Program/Fire Dept-Hazard
This request is due to an increased need for biohazardous removal at City- owned facilities this fiscal year and the allocated budget is nearly fully expended. Additional budget is required to be able to respond to hazardous or biohazardous waste incidents as they occur.
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Ref# Other Funds Revenue Transfer In Expenditure Transfer out Fund Balance 1 Glen Cove III LMD Fund # 185
24 - - 30,000 - (30,000) 24 - - 6,000 - (6,000) Subtotal - - 36,000 - (36,000) Garthe Estates Fund #188
25 - - 11,000 - (11,000) Subtotal - - 11,000 - (11,000) Planning & Development Services Fund # 193
26 55,402 - - - 55,402 26 Add one Administrative Clerk II - - 32,771 - (32,771) 26 - 631,000 631,000 - - Subtotal Planning & Development Services Fund 55,402 631,000 663,771 - 22,631 Multi-Year Operational Projects Fund #194
-
27 - 68,218 68,218 - - 27 - 20,000 20,000 - - (continued)
Increase for IT000 for ADA Web compliance
This increase will fund website compliance software, SharePoint fees, and cybersecurity micro segmentation. In accordance with the ADA, jurisdictions with populations of 50,000 or more must meet accessibility standards by April 24, 2026. (Reference #16)
Salaries & Benefits
Transfer from General fund to cover the following expenditure:

Transfer from General Fund
During the FY 2025-2026 Annual Budget process, staff proposed $631,000 in salary savings associated with the freezing of positions within Planning & Development Services department. Council ultimately directed that no positions directing impacting the community should be frozen. As a result, the proposed budget was not implemented and this item reflects a budget correction to address that error. (Reference # 16)
Increase Revenue
Additional revenue will earned from the addition of one Administrative Clerk II who can adequately manage the vacant lot program and will generate additional revenues.

Increase R/M Rehabilitation Budget
This increase is to cover the cost of vandalism repairs, vehicle accident repairs, and emergency/at-risk tree pruning in the Garthe Estates LMD.

Increase Water Budget
This increase is to cover increased irrigation costs in the Glen Cost LMD.

Increase R/M Rehabilitation Budget
This increase is to cover the cost of vandalism repairs, vehicle accident repairs, and emergency/at-risk tree pruning in the Glen Cove LMD.

Increase for IT000 - Public Works Software
An increase is needed in the IT000 account to cover IT needs for the Public Works Department. (Reference #16)
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Ref# Other Funds Revenue Transfer In Expenditure Transfer out Fund Balance 1 Multi-Year Operational Projects Fund #194 (Continued)
- - - - -
27 - 926,320 926,320 - - 27 - 147,000 147,000 - - 27 - 2,449,151 2,449,151 - - 27 - 653,840 653,840 - - 27 - 40,113 40,113 - - 27 - 1,849,493 1,849,493 - - 27 - 314,934 314,934 - - 27 - 31,576 31,576 - - 27 - 45,311 45,311 - - 27 - 1,500,000 1,500,000 - - 27 - 142 142 - - 27 - 14,869 14,869 - - 27 - 90,830 90,830 - - 27 - 293,419 293,419 - - 27 - 6,609 6,609 - - 27 - 801 801 - - 27 - 109 109 - - 27 - 47 47 - - 27 - 563,788 563,788 - - 27 - 204,956 204,956 - - 27 - 320,874 320,874 - - Subtotal Multi-Year Operational Projects - 9,542,400 9,542,400 - - (continued)
Transfer From Capital Outlay Fund #201 to Multi-year Fund #194 The following projects have been identified as multi-year operational projects and are appropriately funded through Fund #194. These projects support ongoing City operations and generally do not include capital improvement components such as road repair and other infrastructure projects. This is an accounting adjustment to ensure that both the associated revenue and expenditures are reflected in the appropriate fund, providing a more accurate accounting of the City’s financial activity and aligning budget reporting with the nature of the projects. (Reference #30) Transfer from Fund #201, EDVGPU - General Plan Update
Transfer from Fund #201, FIN006 - Timekeeping Project
Transfer from Fund #201, FIN007 - ERP
Transfer from Fund #201, IT000 - IT Improvements
Transfer from Fund #201, ITORA - Oracle Project
Transfer from Fund #201, ITPEG - Public Edu & Gov
Transfer from Fund #201, MY2101 - MI Building
Transfer from Fund #201, MY2102 - Pre-Disaster Mit
Transfer from Fund #201, MY2406 - Grants for Small Businesses Transfer from Fund #201, MY2209 - Planning Support
Transfer from Fund #201, MY2220 - Social Services
Transfer from Fund #201, MY2221 - Neogov
Transfer from Fund #201, MY2222 - Youth Engagement
Transfer from Fund #201, MY2302 - Annual Green Inf
Transfer from Fund #201, MY2303 - Real Property Ma
Transfer from Fund #201, MY2304 - Street Sweeping
Transfer from Fund #201, MY2401 - Naval and Historical Museum Transfer from Fund #201, MY2404 - Empress Theatre
Transfer from Fund #201, MY2407 - CALDOJ Evaluator
Transfer from Fund #201, TECHNO - Development Tech
Transfer from Fund #201, PDRAD - PD Radio Repeaters
11 of 13

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Ref# Other Funds Revenue Transfer In Expenditure Transfer out Fund Balance 1 Capital Outlay Fund # 201
- - - - - 28 - - (926,320) 926,320 - 28 - - (147,000) 147,000 - 28 - - (2,449,151) 2,449,151 - 28 - - (653,840) 653,840 - 28 - - (40,113) 40,113 - 28 - - (1,849,493) 1,849,493 - 28 - - (314,934) 314,934 - 28 - - (31,576) 31,576 - 28 - - (45,311) 45,311 - 28 - - (1,500,000) 1,500,000 - 28 - - (142) 142 - 28 - - (14,869) 14,869 - 28 - - (90,830) 90,830 - 28 - - (293,419) 293,419 - 28 - - (6,609) 6,609 - 28 - - (801) 801 - 28 - - (109) 109 - 28 - - (47) 47 - 28 - - (563,788) 563,788 - 28 - - (204,956) 204,956 - 28 - - (320,874) 320,874 - Subtotal Capital Outlay - - (9,454,182) 9,454,182 - Hiddenbrooke/S.V. Fund #211
29 - - 300,000 - (300,000) Subtotal - - 300,000 - (300,000) Empress Theater Fund # 225
30 - - 25,000 - (25,000) Subtotal - - 25,000 - (25,000) (continued)
Transfer from Fund #201, MY2407 - CALDOJ Evaluator
Transfer from Fund #201, TECHNO - Development Tech
Transfer from Fund #201, PDRAD - PD Radio Repeaters
Increase Other Professional Services
This increase is to attach the expenditure required for the Transfer In revenue that was approved and appropriated during the FY 2025-2026 Annual Budget.

Increase to Project PW9446 - Hiddenbrooke Interchange Improvements This additional budget is needed to meet new project requirements, including expanded Caltrans traffic analysis, updated environmental compliance work, completion of permit coordination, and consultant support during bidding and construction.

Transfer from Fund #201, MY2406 - Grants for Small Businesses Transfer from Fund #201, MY2209 - Planning Support
Transfer from Fund #201, MY2220 - Social Services
Transfer from Fund #201, MY2221 - Neogov
Transfer from Fund #201, MY2222 - Youth Engagement
Transfer from Fund #201, MY2302 - Annual Green Inf
Transfer from Fund #201, MY2303 - Real Property Ma
Transfer from Fund #201, MY2304 - Street Sweeping
Transfer from Fund #201, MY2401 - Naval and Historical Museum Transfer from Fund #201, MY2404 - Empress Theatre
Transfer from Fund #201, MY2102 - Pre-Disaster Mit
Transfer From 201 to Multi-year Operating Fund#194
This is an accounting adjustment to transfer the following projects from Capital Outlay Fund (201) to the Multi-Year Operational Fund (194). These projects have been identified as multi-year operational initiatives rather than traditional capital improvement projects.

Transfer from Fund #201, EDVGPU - General Plan Update
Transfer from Fund #201, FIN006 - Timekeeping Project
Transfer from Fund #201, FIN007 - ERP
Transfer from Fund #201, IT000 - IT Improvements
Transfer from Fund #201, ITORA - Oracle Project
Transfer from Fund #201, ITPEG - Public Edu & Gov
Transfer from Fund #201, MY2101 - MI Building
12 of 13

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Ref# Other Funds Revenue Transfer In Expenditure Transfer out Fund Balance 1 Water Fund # 401
Increase Budget for the Following:
31 - - 450,000 - - 31 - - 100,000 - - 31 50,000
Subtotal - - 550,000 50,000 (600,000) Water Fac Tax/Connect Fee Fund # 404
32 - 50,000 50,000 - - Subtotal Water Funds - 50,000 50,000 - - Subtotal, Water Funds - 50,000 600,000 50,000 (600,000) Corporation Shop Fund # 501 -
33 - - 210,000 - (210,000) 33 - - 207,000 - (207,000) Subtotal - - 417,000 - (417,000) Total, Other Funds Adjustments 55,402 10,223,400 2,484,789 9,504,182 (1,710,169) -
Summary:

Water Funds - 50,000 600,000 50,000 (600,000) All Other Funds 55,402 10,173,400 1,884,789 9,454,182 (1,110,169) Total 55,402 10,223,400 2,484,789 9,504,182 (1,710,169) Increase in Auto R/M Services
The increase is needed to address the repair needs of several units for Fire, Police and Water. Without the additional budget, these repairs will be delayed and the units that directly support public safety and public health will not be operational.

Increase in Fuel & Lube Supplies
This increase is to cover fuel supplies for City fleet to meet operational demands of all departments through the end of the fiscal year.

Increase in IT000 - Computer Equipment
The Water Department experienced higher-than-anticipated demand for computers and related equipment due to aging devices and increased operational needs.

Increase Contingency
Budgeted contingency funds were utilized to cover unexpected equipment replacements, agency membership costs, and debt service-related expenditures. An increase is needed to ensure sufficient funding for the remainder of the fiscal year
Increase Street R/M Services
This increase is requested to reimburse the Street R/M Services account, which was previously used to fund maintenance of fire hydrants throughout the City.

Transfer Out from Fund #401 to #404
To cover increase in Computer Equipment
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ACTION ITEM 9.B.

DATE: March 10, 2026
TO: Mayor and Members of the City Council
FROM: Nalungo Conley, Assistant City Manager
Natalie Peterson, Assistant to the City Manager
SUBJECT: RECEIVE UPDATE ON THE CITY OF VALLEJO’S UNHOUSED STRATEGIC PLAN AND

PROVIDE DIRECTION ON NEXT STEPS, RECIEVE AN UPDATE ON THE WHITE SLOUGH SITUATION, AND APPROVE ALLOCATING UP TO $1,000 TOTAL FOR A

LIVED EXPERIENCE STIPEND PROGRAM

RECOMMENDATION
Receive an update on the City of Vallejo’s Unhoused Strategic Plan, receive an update on the White Slough situation, and approve allocating up to $1,000 total for a lived experience stipend program.

REASONS FOR RECOMMENDATION
On February 10, 2026 the City Council received an update on the City's unhoused situation and programs, received an overview of the current situation at the White Slough, and received a staff request to approve allocating up to $1,000 total for a lived experience stipend program. Council requested that the item come back with the Unhoused Strategic Plan update, parameters for the lived experience stipends, and additional information regarding potential clean-up of the White Slough.

BACKGROUND AND DISCUSSION
This information is coming back before Council as an update, as the draft Unhoused Strategic Plan itself is not yet fully complete. City staff began drafting an Unhoused Strategic Plan in 2024, at which point City Council requested that staff release a Request for Proposals (RFP) for a consultant to work on an Unhoused Strategic Plan. The RFP was released in December 2024. The RFP responses were reviewed by a panel, and a potential consultant was selected by the panel. A consultant agreement was negotiated, and the item was brought before City Council on December 16, 2025 to amend the Fiscal Year 2025-2026 Budget to appropriate $120,000 for the City’s Unhoused Strategic Plan. Council did not approve the request to amend the FY 2025-2026 budget. Since the Unhoused Strategic Plan consultant agreement was not approved, staff will be working to update the previous draft plan.

The in-process Unhoused Strategic Plan contains five sections, as follows:

1. Plan Development. An overview of the plan’s development and the considerations taken during the development.

2. Vallejo’s Unhoused Statistics. A majority of the information comes from the 2024 Point In Time (PIT) Count and will be updated once the 2026 PIT Count information is released. This section touches briefly on Countywide statistics but predominately dives into the information relevant to the unhoused community in Vallejo.

3. Overview of current programs and projects. This section includes information on Emergency Shelters (Vallejo Homeless Navigation Center); Permanente Supportive Housing Programs (Blue Oak Landing and Broadway Village); Extreme Weather Centers; and Encampment Clean-ups/Removals.

4. Strategies for Reducing and Addressing Homelessness. This is broken into three distinct strategy sections.

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Date: March 10, 2026
Subject: RECEIVE UPDATE ON THE CITY OF VALLEJO’S UNHOUSED STRATEGIC PLAN AND

PROVIDE DIRECTION ON NEXT STEPS, RECIEVE AN UPDATE ON THE WHITE SLOUGH SITUATION, AND APPROVE ALLOCATING UP TO $1,000 TOTAL FOR A

LIVED EXPERIENCE STIPEND PROGRAM

Page 2 ends

o Strategy 1: Improve Responses to Encampments Citywide o Strategy 2: Increase Local and Regional partnerships with CAP Solano JPA/CoC, non-profits, and the Community to leverage assistance in providing housing, sheltering, and service opportunities
o Strategy 3: Monitor and Measure Outcomes/Adjust Strategies

5. Resources. This section outlines the resources used during the drafting of the plan.

City staff seek Council's input and direction on next steps on developing the Unhoused Strategic Plan.

Lived Experience Stipends

As the City of Vallejo continues to establish its Unhoused Strategic Plan, staff would like to include a stipend program for individuals with lived experience. The stipend program would be established to ensure that the City is compensating individuals with lived experience for their input and expertise on potential future programs and policies. Staff have drafted a compensation procedure for people with lived experience of homelessness (attached). The procedure is based off the Community Action Partnership of Solano Joint Powers Authority (CAP Solano JPA) and the Vallejo-Solano Continuum of Care (CoC) compensation procedure. The stipends and their associated procedure would be incorporated into the City’s Unhoused Strategic Plan.

The compensation procedure outlines that meetings or events will be approved as compensation eligible for people with lived experience of homelessness. The meetings or events will include items such as requests for proposals/qualification review panels, policy review/development meetings, focus groups, listening sessions and other activities deemed appropriate by the City Manager or their designee. It establishes that individuals will be compensated $25 per hour, to be calculated to the nearest half hour. Individuals will fill out a compensation form that will be reviewed and verified for attendance before getting processed through the City’s finance department for payment. Compensation will come via check with the City’s current payment procedures, however staff will review to see if there are future possibilities to expand payment options. Staff will work with individuals on the best way to ensure they receive their checks.

White Slough

The location referred to as the White Slough is the wetlands located between Redwood Street and Highway 37 and Sonoma Boulevard and Sacramento Street. The area is made up of several parcels, some of which are publicly owned by Vallejo Flood and Wastewater District (VFWD) and the California Department of Transportation (Caltrans), and the others are privately owned by several different private entities. There is a continued growing concern regarding an unhoused encampment located across four of the privately owned parcels. The area of most concern presently is commonly referred to as “the spit,” which is the peninsula portion made up of two privately owned parcels.

At their February 10, 2026 meeting, the City Council requested that the City create an estimate of what the cost would be for the City to conduct a clean-up of the private properties the spit. Staff from the Public Works Department reviewed the current state of the location and estimated that cleaning up the location would cost approximately $146,000, as listed below, not including fees related to tow and/or storage of the inoperable vehicles on the spit. The estimate below is based off a three-week timeline to clear the site and assumes donated dumpsters from Recology’s dumpster program. Based on observation, there are approximately 110 vehicles and 30 RVs on site that will likely need to be towed. The estimate does not include costs associated

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Date: March 10, 2026
Subject: RECEIVE UPDATE ON THE CITY OF VALLEJO’S UNHOUSED STRATEGIC PLAN AND

PROVIDE DIRECTION ON NEXT STEPS, RECIEVE AN UPDATE ON THE WHITE SLOUGH SITUATION, AND APPROVE ALLOCATING UP TO $1,000 TOTAL FOR A

LIVED EXPERIENCE STIPEND PROGRAM

Page 3 ends

with staff from the City Manager’s Office, City Attorney’s Office, Code Enforcement, or Police Department that would support these efforts leading up to and during the clean-up.

Equipment Cost per hour Hours Total cost
Backhoes (1) $65.00 120 $7,800.00
Loader (1) $65.00 120 $7,800.00
Peterbuilt Truck (1) $61.92 120 $7,430.40
End Dump Trailer (1) $29.60 120 $3,552.00

Public Works Staff Cost per hour Hours
HEO's (2) $75.70 120 $9,084.00
Maintenance worker (4) $68.50 120 $16,440.00

Items to Remove
Cars 110 Unknown at present
Motorhomes/ Campers 30 Unknown at present
Dumpster loads (garbage) 50 In kind Recology
Dump fees $50,000.00
Dumpster loads (tires) 4 In kind Recology

Materials
Crushed rock loads (if necessary) 2 $1,200.00

Sub Contractor
House of Acts $18,240.00

Subtotal $121,546.40
Contingency $24,309.28
Total $145,855.68*
*plus any costs associated with towing

As noted above, staff estimates that there are approximately 110 vehicles and 30 RVs on site that will likely need to be towed. The City has tow agreements with several local tow vendors that can be utilized for this clean up. The amount of vehicles and RVs that would need to be removed would create capacity challenges for the tow yards. The City is looking into alterative options, such as working with additional tow companies outside of the City or a temporary additional location to store the towed vehicles and RVs. Both options would come with an additional cost, outside of the tow contract that the City currently has in place. It is also possible that the volume of towing could result in additional costs. For the sake of discussion, it may cost $200 per vehicle or RV to be towed off of the site, outside of the City’s current tow contact, for a total estimated cost of $28,000 in addition to the $146,000 listed above for other items.

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Date: March 10, 2026
Subject: RECEIVE UPDATE ON THE CITY OF VALLEJO’S UNHOUSED STRATEGIC PLAN AND

PROVIDE DIRECTION ON NEXT STEPS, RECIEVE AN UPDATE ON THE WHITE SLOUGH SITUATION, AND APPROVE ALLOCATING UP TO $1,000 TOTAL FOR A

LIVED EXPERIENCE STIPEND PROGRAM

Page 4 ends

City staff is currently seeking outside funding sources that may be able to cover some of the costs. Staff is also working with local, state, and federal partners to identify short term and long term strategies to address the issues that the encampment on White Slough is creating. As Council is aware, the City Attorney's Office has filed nuisance abatement cases on the four privately owned properties with encampment activity. Access to the property and an order of cleanup are being sought in the cases. If Council directs staff to move forward with taking the lead on conducting a clean-up of the location, it would take approximately two months to receive the court orders to abate the properties and an additional three weeks to conduct the clean-up. Even with the court order, the City will not have the right to inhibit access to the properties, so it may be challenging to prevent the reoccupation of the properties.

FISCAL IMPACT
Lived Experience Stipends
There is no impact on the general fund at this time. If Council approves allocating up to $1,000 total for unhoused stipends, there are currently funds available in the City’s unhoused account that could cover this expenditure.

White Slough
If at a future meeting Council directs staff to move forward with a clean-up of the White Slough, staff would come forward with potential funding sources to accomplish the efforts.

ATTACHMENTS

1. DRAFT Lived Experience Compensation Procedure

CONTACT
Natalie Peterson, Assistant to the City Manager
[email protected]

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Office of the City Manager

City of Vallejo Compensation Procedure for People with
Lived Experience of Homelessness

BACKGROUND
The City of Vallejo believe that all people in Solano County have a role to play in addressing homelessness in our community. People with lived experience of homelessness have particular expertise and are essential participants in these efforts. People who are currently experiencing or have experienced homelessness are uniquely positioned to contribute their expertise to policy-setting, program development, and system design for Vallejo’s process for addressing homelessness in our community.

The City of Vallejo may compensate People with Lived Experience of Homelessness (PWLEH) for their time and expertise for participation in meetings or events such as request for proposals/qualification review panels, policy review/development meetings, focus groups, listening sessions, etc., as preapproved and deemed appropriate by the City Manager or their designee. Individuals will be made aware of the preapproved meetings/events and their qualification for being compensated. Meetings or events where compensation is eligible will be reviewed and pre-approved based on available funding for the program.

Compensation will be provided upon request after participating in the preapproved activities.

If a participant with lived experience of homelessness is employed and participates as a duty associated with that employment, and is therefore compensated by their employer, they are not eligible for additional compensation.

AMOUNT
Compensation for time and expertise will be provided at $25 per hour and will be calculated at the nearest half-hour, rounding up to the nearest half-hour. Minimum compensation will be for an hour for meetings/participation lasting more than 30 minutes.

PROCESS
Eligible participants will be provided with a form to complete at the conclusion of each meeting/event coved by this procedure. The participant will complete and submit the form to the designated City of Vallejo staff for approval. If for any reason the form cannot be immediately completed during the meeting/event, it may be submitted by the 5th of the month following the activity.

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Within 15 days of the activity staff will verify attendance and forward the approved list of compensation to the finance department for processing. The City of Vallejo may contact the participant for additional information, if needed. No later than the 30th of the month following the activity the City will provide payment via check.

Designated City of Vallejo staff members will provide support to assist with the completion of the form if needed. If a form is not returned by a participant and there is no communication with the City of Vallejo staff to request assistance, it will be assumed that the participant does not wish to request compensation.

Compensation will be mailed to individuals no later than the 30th of the month following the activity. For individuals that do not have a mailing address, compensation stipends may be picked up at City Hall. Staff will coordinate with the individual on a date and time to retrieve the compensation stipend.

Note that this compensation counts as taxable income for income tax purposes. If participants are paid more than $599.99 per year, they will need to complete a W9 Form.

Benefits Counseling Resources
The City of Vallejo is not able to advise participants about how compensation payments could affect any benefits that members/participants receive, such as SSI or SSDI. People who receive SSI and SSDI and want to work can get free benefits counseling by contacting Social Security Administration’s Ticket to Work Help Line (1-866-968-7842) and asking to be referred to a benefits counselor.

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City of Vallejo Compensation Request for People with
Lived Experience of Homelessness Form

First Name:

Last Name:

Phone Number:

What activity are you seeking compensation for:

Date of Meeting/Activity:

How long was the meeting/activity: (30-60 minutes) (61-90 minutes) (90-120 minutes)

I am requesting reimbursement in the form of: (Mailed Check) (Pick-up Check)

If requesting mailed check, please provide full mailing address (street, city, zip code)

By signing I am verifying my attendance at the above named meeting/activity and that I am not otherwise being paid for my time at that
activity_________________________________

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ACTION ITEM 9.C.

DATE: March 10, 2026
TO: Mayor and Members of the City Council
FROM: Nalungo Conley, Acting Finance Director
SUBJECT: ADOPT A RESOLUTION TO RECEIVE AND FILE THE ANNUAL COMPREHENSIVE

FINANCIAL REPORT (ACFR) AND OTHER ANNUAL REPORTS FOR THE FISCAL YEAR ENDED JUNE 30, 2025

RECOMMENDATION
Adopt a resolution to receive and file the City's Annual Comprehensive Financial Report (ACFR) and other annual reports for the fiscal year ended June 30, 2025.

REASONS FOR RECOMMENDATION
The City is required by Charter Section 721 to have an independent audit of its financial records performed each fiscal year. The audited financial statements for the fiscal year that ended June 30, 2025, have been completed. Copies of the ACFR and other annual reports will be available for public inspection during the meeting. Additionally, electronic copy of the reports have been posted on the city website and can be accessed using the link provided below:
https://cdnsm5-
hosted.civiclive.com/UserFiles/Servers/Server_16925367/File/%20City%20Hall/Departments%20&%20Divi sions/Finance%20Department/Annual%20Comprehensive%20Financial%20Report%20for%20the%20Fisca l%20Year%20ended%20June%2030,%202025.pdf

BACKGROUND AND DISCUSSION
Each year, the City is required under Charter Section 721 to undergo an independent audit of its financial records. For Fiscal Year (FY) 2024–25, the City engaged LSL, LLP, an independent certified public accounting firm, to conduct the annual audit of the City of Vallejo and its blended component units.

The Annual Comprehensive Financial Report (ACFR) provides a detailed overview of the City’s financial position and that of its component units. The FY 2024–25 ACFR was prepared in accordance with Generally Accepted Accounting Principles (GAAP) and the reporting standards established by the Governmental Accounting Standards Board (GASB). This comprehensive, general-purpose report covers all City funds and presents detailed financial information intended to meet the needs of a broad range of stakeholders.

Historically, the City has filed its ACFR in December or January following the June 30 fiscal year-end. The City’s 2024 transition to the Finance Enterprise Resource Planning (ERP) system temporarily impacted the year-end closing process, resulting in a delay in the preparation of the ACFR. Finance staff continues to monitor system functionality and internal controls during this refinement phase. As implementation efforts progress, the ERP system is expected to strengthen internal controls, improve reporting efficiency, and support reliable and sustainable financial operations, positioning the City for timely and accurate financial reporting in future fiscal years.

Page 151 of 594 ends

Date: March 10, 2026
Subject: ADOPT A RESOLUTION TO RECEIVE AND FILE THE ANNUAL COMPREHENSIVE

FINANCIAL REPORT (ACFR) AND OTHER ANNUAL REPORTS FOR THE FISCAL YEAR ENDED JUNE 30, 2025

Page 2 ends

The quality of the City’s financial reporting is evaluated in two key ways:

1. Receipt of a clean audit opinion from the independent auditors, indicating sound financial management; and

2. Achievement of the Certificate of Achievement for Excellence in Financial Reporting, awarded by the Government Finance Officers Association (GFOA) of the United States and Canada. This recognition represents the highest standard in governmental accounting and financial reporting.

For FY 2024–25, the independent auditors issued an unmodified opinion, or clean audit report, on the City’s financial statements—the highest level of assurance (see Auditor’s Opinion in the ACFR). The Auditor’s Communication Letter and the Report on Internal Control are included as attachments to this staff report.

In addition, the City received the GFOA Certificate of Achievement for Excellence in Financial Reporting for the FY 2023–24 ACFR, marking the 11th time the City has earned this distinction since emerging from bankruptcy. Staff anticipates that the FY 2024–25 ACFR will also meet the requirements for this prestigious award.

A summary of the City’s financial condition is provided in the Transmittal Letter and the Management’s Discussion and Analysis (MD&A) section of the ACFR. The City also prepares a Popular Annual Financial Report (PAFR), which is a condensed, more accessible version of the ACFR that highlights key financial information. While the PAFR is not audited, it serves as a supplemental resource and is included as an attachment to this staff report.

Financial Highlights for Fiscal Year 2024–25
Government-Wide Financial Statements (Statement of Net Position) : The statement presents a long-term view of the City’s financial activities using the full accrual basis of accounting, similar to a private-sector entity.

As of June 30, 2025, the City’s total net position for all activities was $466.3 million, representing the excess of assets and deferred outflows of resources over liabilities and deferred inflows of resources. Net position is categorized as follows:
• Invested in capital assets: $421.5 million
• Restricted: $139.4 million
• Unrestricted (deficit): $(94.6) million

The unrestricted net position reflects a deficit primarily due to long-term obligations, including pension liabilities and compensated absences. Additional information is provided in the MD&A and Note 12 of the financial statements.

Fund-Level Financial Statements : The statements provide a more detailed view of the City’s financial operations than the government-wide statements.

Governmental Funds
The City maintains a total of 78 governmental funds, which account for most City programs. At the close of FY 2024–25, total governmental fund balances were $230.3 million, an increase of $17.9 million (8%) from the

Page 152 of 594 ends

Date: March 10, 2026
Subject: ADOPT A RESOLUTION TO RECEIVE AND FILE THE ANNUAL COMPREHENSIVE

FINANCIAL REPORT (ACFR) AND OTHER ANNUAL REPORTS FOR THE FISCAL YEAR ENDED JUNE 30, 2025

Page 3 ends

prior year. Of this total, $85.6 million (37%) is attributable to the General Fund. Governmental fund balances are classified as follows:
• Nonspendable: $7.2 million
• Restricted: $131.6 million
• Committed: $43.8 million
• Assigned: $18.4 million
• Unassigned: $29.3 million

Additional details are provided in Note 12 of the ACFR.

General Fund : The General Fund is the City’s primary operating fund and a key indicator of financial condition. It includes revenues from Measure B/V, Measure P, and the American Rescue Plan Act (ARPA).

For FY 2024–25, the General Fund reported a surplus:
• Total revenues and other financing sources: $165.3 million • Total expenditures and other financing uses: $158.6 million • Surplus: $6.7 million

The $6.7 million surplus was allocated among fund balance categories as summarized below:

Category FY 23–24 Balance FY 24–25 Surplus FY 24–25 Balance Nonspendable $4.0 $2.4 $6.5
Restricted $26.9 $2.1 $29.0
Assigned – Other $3.0 $(0.9) $2.1
Assigned – Measure P $15.0 $1.3 $16.3
Unassigned (Available) $30.0 $1.8 $31.7
Total $78.9 $6.7 $85.6

The General Fund’s unassigned fund balance of $31.7 million represents approximately 23% (2.8 months) of the FY 2025–26 original operating budget, excluding Measure P revenues. This exceeds the GFOA- recommended minimum reserve level of two months of expenditures. Further analysis is provided in the MD&A and Note 12 of the ACFR.

Proprietary Funds
Enterprise funds include the Water Fund and other non-major funds such as Golf, Marina, Parking, and Fiber.

Total unrestricted net position for enterprise funds was $44.6 million, of which $44.3 million (99%) was attributable to the Water Fund. The Water Fund’s unrestricted net position increased by $12.2 million during FY 2024–25, primarily due to strong investment earnings, previously adopted water rate increases (2017 and 2019), and lower operating and capital-related expenditures.

Internal service funds include Fleet Maintenance/Replacement, Payroll and Benefits, Retiree Health (OPEB), General Liability, and Workers’ Compensation. Combined unrestricted net position totaled $16.5 million. All funds reported positive balances except the Retiree Health Benefits (OPEB) fund, which reported a $6.2

Page 153 of 594 ends

Date: March 10, 2026
Subject: ADOPT A RESOLUTION TO RECEIVE AND FILE THE ANNUAL COMPREHENSIVE

FINANCIAL REPORT (ACFR) AND OTHER ANNUAL REPORTS FOR THE FISCAL YEAR ENDED JUNE 30, 2025

Page 4 ends

million deficit due to the net OPEB liability.

Audit Opinion and Other Annual Reports
• Audit Opinion: The independent auditor issued an unmodified opinion for FY 2024–25, concluding that the City’s financial statements present fairly, in all material respects, the financial position and changes in financial position of the City in accordance with GAAP and GASB standards. • Report on Internal Control and Compliance: No deficiencies were identified. • Auditor Communication Letter: No findings were reported. • Measure B/V Compliance Report: The City was found to be in compliance with the ordinance. • Transportation Development Act (TDA) Audit: The city had no TDA-funded projects during FY 2024-25 and was therefore not subject to a TDA audit for this period.

Reports Scheduled for Future Presentation
• Measure P Annual Report: To be presented to the Measure P Oversight Committee on March 9, 2026, and to the City Council in April 2026.
• Single Audit Report: The audit is currently in progress and expected to be completed by March 2026, with presentation of the report to the City Council scheduled for April 2026.

FISCAL IMPACT
The item has no fiscal impact. The cost of preparing the ACFR and other annual reports along with the independent audit was budgeted as part of the Finance Department's annual budget.

ATTACHMENTS

1. Resolution on ACFR CAO STAMP

2. City of Vallejo Annual Comprehensive Financial Report as of June 30, 2025

3. Auditor's Communication Letter as of 6-30-25

4. Auditor's Report on City of Vallejo's Internal Control Letter as of 6-30-25

5. City of Vallejo Measure BV Annual Compliance Report as of 6-30-25

6. City of Vallejo Popular Annual Financial Report as of June 30, 2025

CONTACT
Florita Cruz, Assistant Finance Director (707-648-4592) [email protected]

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Approved as to form:

By: for
Veronica Nebb, City Attorney
RESOLUTION NO. __________

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VALLEJO,

CALIFORNIA, RECEIVING AND FILING THE ANNUAL COMPREHENSIVE

FINANCIAL REPORT AND OTHER ANNUAL REPORTS FOR THE FISCAL YEAR ENDED JUNE 30, 2025

WHEREAS, the City Charter requires an annual audit of all financial records of the City by an independent certified public accountant; and
WHEREAS, LSL, LLP, has audited the City’s financial statements for the fiscal year ended June 30, 2025, and issued an unmodified opinion ("clean opinion") on the Annual Comprehensive Financial Report (ACFR); and
WHEREAS, the ACFR was prepared in accordance with Generally Accepted Accounting Principles (GAAP) and Governmental Accounting Standards Board (GASB) standards, and includes the Independent Auditor’s Report; and
WHEREAS, the City also prepares and publishes additional annual reports to promote transparency and accountability, including the Measure B/V Annual Compliance Report, and the Popular Annual Financial Report (PAFR); and
NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Vallejo, State of California, that the City Council hereby receives and files the following reports for the fiscal year ended June 30, 2025:

1. Annual Comprehensive Financial Report (ACFR)

2. Measure B/V Annual Compliance Report

3. Popular Annual Financial Report (PAFR)

Adopted by the City Council of the City of Vallejo at a regular meeting held on February 10, 2026, with the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

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______________________________________

ANDREA SORCE, MAYOR

ATTEST:

______________________________________
DAWN G. ABRAHAMSON, CITY CLERK

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CITY OF VALLEJO, CALIFORNIA
Annual Comprehensive Financial Report
For the Fiscal Year Ended June 30, 2025
Prepared by the Finance Department
2

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CITY OF VALLEJO

VALLEJO, CALIFORNIA
Annual Comprehensive Financial Report
For the Fiscal Year Ended June 30, 2025
Table of Contents
INTRODUCTORY SECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Letter of Transmittal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Public Officials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Organizational Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 GFOA Certificate of Achievement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 FINANCIAL SECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Independent Auditors’ Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Management’s Discussion and Analysis (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Basic Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Government-Wide Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Statement of Net Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Statement of Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 Fund Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 Governmental Fund Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 Balance Sheet - Governmental Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 Statement of Revenues, Expenditures and Changes in Fund Balances . . . . . . . . . . . . . . . . 59 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities . . . . . . . . . . . . . . . . . . . . . . . 61 Proprietary Fund Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 Statement of Net Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 Statement of Revenues, Expenses and Changes in Net Position . . . . . . . . . . . . . . . . . . . . . . 65 Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 Fiduciary Fund Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 Statement of Fiduciary Net Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Statement of Changes in Fiduciary Net Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 Notes to The Basic Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 Page
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Table of Contents
FINANCIAL SECTION (continued)
Required Supplementary Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141 Budgetary Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142 Schedules of Revenues, Expenditures, and Changes in Fund Balances:

Budget and Actual - General Fund and Major Special Revenue Funds . . . . . . . . . . . . . . . . . 143
General Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144 Housing Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145 City's Retiree Medical Benefits (OPEB) Schedule of Changes in the Net OPEB Liability and Related Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146
City's Retiree Medical Benefits (OPEB) Schedule of Contributions . . . . . . . . . . . . . . . . . . . . . . . . 148 VFWD’s Schedule of Changes in the Net OPEB Liability and Related Ratios . . . . . . . . . . . . . . . 150 VFWD’s Schedule of Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152 Schedule of Changes in the Net Pension Liability and Related Ratios (Miscellaneous Plan) . . 154 Schedule of Plan Contributions (Miscellaneous Plan) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156 Schedule of Changes in the Net Pension Liability and Related Ratios (Safety Plan) . . . . . . . . . 158 Schedule of Plan Contributions (Safety Plan) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160 Schedule of the Plan's Proportionate Share of the Net Pension Liability and Related Ratios (VFWD) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162
Schedule of Plan Contributions (VFWD) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164 Supplementary Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166 Nonmajor Governmental Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167 Combining Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances . . . . . . . . . 177 Combining Schedules of Revenues, Expenditures, and Changes in Fund Balances:

Budget and Actual - Nonmajor Special Revenue Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185
Community Development Block Grant Fund #101 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186 HOME Program Fund #102 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187 Neighborhood Stabilization Program Fund #103 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188 Mare Island Base Reuse Fund #107 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189 Mare Island CFD 2002 Fund #112 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190 Mare Island CFD 2005 1A (State) Fund #113 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191 Mare Island CFD 2005 1B (Local) Fund #114 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192 Outside Services Fund #129 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193 State Gas Tax Fund #133 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 194 State Lands Fund #134 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195 Solid Waste Disposal Fund #135 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196 Hiddenbrooke Community Services District Fund #138 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197 Traffic Offender / Vehicle Impound Program Fund #140 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198 Hazmat Revolving Fund #143 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199 NLP Nuisance Abatement Fund #147 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200 Supplemental Law Enforcement Grant Fund #151 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201 Landscape Maintenance Districts Fund #161-188 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202 Navigation Center #191 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203 Administrative Trust Fund #601 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204 Page
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Table of Contents
FINANCIAL SECTION (continued)
Schedules of Revenues, Expenditures, and Changes in Fund Balances:

Budget and Actual - Nonmajor Debt Service Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205
Certificates of Participation Fund #-Various . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206 Schedules of Revenues, Expenditures, and Changes in Fund Balances:

Budget and Actual - Permanent Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207
McCune Collection Fund #603 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208 Nonmajor Enterprise Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209 Combining Statement of Net Position - Other Enterprise Funds . . . . . . . . . . . . . . . . . . . . . . . 210 Combining Statement of Revenues, Expenses and Changes in Net Position - Other Enterprise Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211
Combining Statement of Cash Flows - Other Enterprise Funds . . . . . . . . . . . . . . . . . . . . . . . . 212 Internal Service Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215 Combining Statement of Net Position - Internal Service Funds . . . . . . . . . . . . . . . . . . . . . . . . 216 Combining Statement of Revenues, Expenses and Changes in Net Position - Internal Service Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 218
Combining Statement of Cash Flows - Internal Service Funds . . . . . . . . . . . . . . . . . . . . . . . . . 219 Combining Fiduciary Funds (Custodial Funds) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221 Combining Statement of Fiduciary Net Position - Fiduciary Funds - Custodial Funds . . . . . 222 Combining Statement of Changes in Fiduciary Net Position - Fiduciary Funds - Custodial Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223
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Table of Contents
Page
STATISTICAL SECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 224 Financial Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 226 Net Position by Component . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227 Changes in Net Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228 Fund Balances of Governmental Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231 Changes in Fund Balances of Governmental Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 232 Revenue Capacity Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 234 Assessed Value and Estimated Actual Value of Taxable Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235 Direct and Overlapping Property Tax Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 236 Top 10 Principal Property Tax Payers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 237 Property Tax Levies and Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 238 Taxable Sales by Category . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239 Top 25 Principal Sales Tax Payers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 240 Debt Capacity Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 241 Ratios of Outstanding Debt by Type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 242 Direct and Overlapping Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 243 Legal Debt Margin Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 244 Pledged Revenue Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 245 Demographic and Economic Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 248 Demographic and Economic Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 249 Top 10 Principal Employers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250 Authorized Full-time and Part-time City Employees by Function . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 251 Operating Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 252 Operating Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 253 Capital Asset Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 254 6

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INTRODUCTORY SECTION
7

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Letter of Transmittal
February 18, 2026
To the Honorable Mayor, Members of the City Council
And Citizens of the City of Vallejo, California
It is our pleasure to present to you the 2025 Annual Comprehensive Financial Report (ACFR) for the City of Vallejo, California. The Finance Department has prepared this ACFR in conformance with the principles and standards for financial reporting set forth by the Governmental Accounting Standards Board (GASB). This report presents the City of Vallejo's financial position as of June 30, 2025, the results of its operations, and the cash flows of its proprietary funds for the year then ended in accordance with Generally Accepted Accounting Principles (GAAP).

Responsibility for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures, rests with the City. To the best of our knowledge, we believe the data, as presented, is accurate in all material aspects. It is presented in a manner designed to fairly set forth the City's financial position and changes in financial position. All disclosures necessary to enable the reader to gain an understanding of the City's financial affairs have been included.

LSL, LLP, a fully licensed public accounting firm qualified to perform audits of the state and local governments within the State of California, have audited the City's basic financial statements. The independent audit's goal was to provide reasonable assurance that the City's basic financial statements for the fiscal year ended June 30, 2025, are free of material misstatement. The independent auditors' report is presented as the first component of the financial section of this report.

The ACFR is presented in three parts: introductory, financial and statistical sections. This transmittal letter is the introductory section together with organizational chart. Management's Discussion and Analysis (MD&A) provides a narrative introduction, overview, and analysis to accompany the basic financial statements. This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The MD&A can be found immediately following the report of the independent auditors in the financial section. The statistical section includes selected financial and demographic information presented on a multi-year basis.

PROFILE OF GOVERNMENT
The City of Vallejo is a municipal corporation incorporated in March 1868, under the laws of the State of California. A Charter City located within Solano County in Northern California, the City operates under a City Charter initially adopted in 1911 and last amended in November 2013. The Charter provides for a Council- Manager form of government in which the City Manager recommends policy, program, and budget priorities to the City Council, who in turn develops legislation and policies to direct the City.

The citizens elect the City of Vallejo's governing body in a general, popular election. The Mayor, elected by the community-at-large to a four-year term, acts as the City's formal representative and presides over Council meetings. The City Council, elected on a nonpartisan basis, consists of six members elected by the six districts to four-year, staggered terms. Vallejo is the largest city in Solano County with a population of approximately 123,475 Vallejo is the site of Mare Island Naval Shipyard, the first United States naval base established on the Pacific Ocean. Established in 1854, the shipyard began building ships the following year. More than 500 naval vessels were constructed, and thousands were overhauled at Mare Island before the base closure in 1996.

OFFICE OF THE FINANCE DIRECTOR • 555 Santa Clara Street • Vallejo • CA • 94590 • 707.648.4592 8

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The Sacramento, Napa, and San Joaquin Rivers all flow into the San Francisco Bay at Vallejo. Rolling hills surround the City, protecting it from fog and wind typical of many coastal towns. Vallejo enjoys a mild Mediterranean climate. It is connected to the Greater Bay Area, the Pacific Rim, and the rest of the world by ship, rail, automobile, and air.

Vallejo is located in Northern California, 30 miles northeast of San Francisco, Approximately 60 miles southwest of Sacramento, 70 miles north of Silicon Valley, and 385 miles north of Los Angeles. *Map Source: Google Maps
The City provides a wide range of municipal services, including public safety (police and fire protection), a municipal water system, street maintenance, and other public works infrastructure functions, housing assistance, golf courses, planning, building inspection, public marina, and general administration. The separate Greater Vallejo Recreation District (GVRD) provides for Parks and Recreation programs and services, Water Emergency Transport Agency (WETA) provides for ferry services, and Solano County Transit (SolTrans) provides bus services.

OFFICE OF THE FINANCE DIRECTOR • 555 Santa Clara Street • Vallejo • CA • 94590 • 707.648.4592 9

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This report includes all organizations and activities for which elected City officials exercise financial accountability.

The notes to the financial statements further discuss the City as a financial reporting entity.

Accordingly, the following entities, although legally separate, are component units and are incorporated in the accompanying financial statements:
• Housing Authority of the City of Vallejo (Blended Component Unit) • Marine World Joint Powers Authority (Blended Component Unit) • Parking Authority of the City of Vallejo (Blended Component Unit) • Public Financing Authority of the City of Vallejo (Blended Component Unit) • Vallejo Flood and Wastewater District (Discrete Component Unit) • Vallejo Flood and Wastewater District Financing Corporation (Discrete Component Unit)

ECONOMIC CONDITION AND OUTLOOK
During fiscal year 2024–25, the City of Vallejo experienced steady economic activity, supported by housing affordability and ongoing revitalization efforts. Regional employment trends remain stable, with Solano County unemployment at 5.6% in September 2025, well below the 2020 peak. The City is advancing its 2025 Economic Development Strategic Plan to support local businesses and attract investment. At the same time, Vallejo faces challenges common to many California cities, including aging infrastructure, rising labor costs, and increasing service demands. In response, the City is emphasizing fiscal prudence, cost control, and responsible financial management while pursuing key development projects such as the Mare Island Mixed-Use Development, Cooke Property Costco and housing project, Blue Rock Springs golf and housing development, and Solano360 at the Solano County Fairgrounds. Together, these initiatives, along with careful financial oversight and ongoing infrastructure investment, position the City to foster economic growth, expand its tax base, and maintain long-term fiscal stability and community vitality, even as regional and national economic conditions evolve.

At the state level, California continues to show a strong and diverse economy. In 2024, California became the fourth-largest economy in the world, supported by major industries such as technology, manufacturing, agriculture, and trade.

Similar to local trends, the state’s job market has softened slightly, with the unemployment rate increasing to about

5.6% as of September 2025. Even with this increase, California’s economy has remained steady, helped by continued consumer spending and solid personal income growth.

Looking ahead to 2026, California’s outlook includes both opportunities and challenges. The Governor’s proposed FY 2026–27 Budget anticipates modest economic growth while taking a cautious approach due to uncertainty in financial markets, inflation, and federal policy. While recent revenues have performed better than expected, slower job growth and rising costs may limit future revenue growth. The State’s focus on maintaining reserves and responsible budgeting is intended to help California manage economic changes and continue investing in infrastructure, public services, and workforce development over the long term.

Revenues and Local Sales Tax Increase - In November 2016, Vallejo voters approved a sales tax measure, known as “Measure V,” which permanently extended the City’s 2011 Measure B one-cent per dollar transaction and use tax. This tax continues to generate approximately $20.1 million in annual revenue, which the City Council strategically allocates to specific projects, targeted staffing, and the rebuilding of reserves.

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In November 2022, voters approved “Measure P,” adding an additional 0.875% transaction tax to the existing

8.375% rate, resulting in a total City sales tax of 9.25% effective April 1, 2023. Measure P generated approximately $17.5 million in 2025 and is projected to provide $17.7 million in 2026. These funds support street maintenance and essential services, including fire protection and emergency medical response, crime prevention, and programs addressing homelessness and blight.

The chart below illustrates improvements in total General Fund revenues over the past ten years. The revenue budget for FY 2025–26 is lower than the prior two years because it does not include multi-year ARPA grants.

General Fund - Revenue Trends
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CURRENT FINANCIAL CONDITIONS
Current Financial Conditions – The graph below illustrates the City’s improved fiscal stability following the passage of the 2011 Measure B/V tax and the 2022 Measure P tax, showing changes in the General Fund balance over the past ten years. The City also maintained its General Fund unassigned fund balance above the Government Finance Officers Association (GFOA) recommended level of two months of expenditures. These reserves provide a financial cushion to support ongoing operations, address unexpected costs, and help mitigate potential fiscal challenges, reinforcing sustainable service delivery and long-term financial stability.

Pension and Other Post-Employment Benefit (OPEB) Obligations – While CalPERS has made progress in improving its funded status and investment returns, California cities, including Vallejo, continue to face rising pension obligations. Ongoing adjustments to actuarial assumptions remain essential to managing these challenges effectively.

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During fiscal year 2024–25, the City contributed 21.98% and 11.35% of employee salaries toward the normal cost of its Safety and Miscellaneous pension plans, respectively. In addition, in July 2024, the City made its $28.1 million required annual payment on the Unfunded Accrued Liability (UAL). Based on projections using July 2025 CalPERS data, the City’s FY 2029–30 normal rates for the Safety and Miscellaneous plans are expected to decrease to 18.4% and 9.7%, respectively, as new employees are hired into lower benefit tiers, while the total required annual payment on the UAL is projected to increase to $38.8 million.

The City has taken proactive steps to mitigate both CalPERS rate increases and its OPEB obligations. In 2013, the City made a supplemental contribution of $6.5 million to CalPERS to begin stabilizing the pension plan. In August 2017, the City established an Internal Revenue Code (IRC) Section 115 Trust with the Public Agency Retirement Services (PARS) to further address future CalPERS cost increases. As of June 30, 2025, the General Fund reported total cumulative contributions of $24.3 million to the PARS Pension Trust Fund, including investment earnings.

To address OPEB obligations, the City established a dedicated and irrevocable retiree health benefits trust during 2013–14. As of June 30, 2025, the market value of the City’s California Employers’ Retiree Benefit Trust (CERBT) was $31.7 million, representing 93% of the City’s total OPEB liability of $34.0 million as of the June 30, 2024, measurement date.

These funding strategies, combined with the City’s ongoing financial monitoring and corrective actions, support the long-term sustainability of pension and retiree health benefits and are integrated into the City’s broader financial planning to maintain fiscal stability over the coming years.

Five-Year Financial Forecasting
General Fund Five-Year Financial Forecast – The City uses the General Fund five-year financial forecast to guide planning, assess risks, and anticipate future funding needs. The table below presents a five-year view of the City’s fiscal condition, incorporating both operating and capital requirements.

General Fund Long Term Forecast through Fiscal Year 29/30 (In millions) FY 24/25
Actual
FY 25-26
Adopted
FY 26-27
Projected
FY 27-28
Projected
FY 28-29
Projected
FY 29-30
Projected
Revenues $ 139 $ 139 $ 137 $ 142 $ 149 $ 156
Expenditures 136 137 147 152 159 163
(Deficit)/ Surplus for Year 3 2 (10) (10) (10) (7) Ending Available Balance $ 32 $ 25 $ 15 $ 5 $ (5) $ (12) Excludes Measure P
While the City operates with a budget surplus in FY 2025–26, the five-year forecast projects potential fiscal challenges, including deficits beginning in FY 2026-27. These projected shortfalls highlight the importance of proactive financial management. The City is committed to taking timely corrective action, including revenue enhancements, expenditure controls, and operational adjustments, to address potential deficits. By incorporating both operating and capital needs, the forecast ensures that resource allocation decisions support sustainable service delivery and infrastructure investment throughout the five-year period.

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Capital Improvement Project Planning – The City's Capital Improvement Program (CIP) is planned for five years and analyzed using City-specific prioritization criteria. This is updated regularly to reflect changing needs, funding availability and removal of projects which have been completed. The CIP budget for 2025-26 is $11.7 million. Funding comes from multiple sources, including General fund transfers, fees, grants, and bond proceeds.

MAJOR INITIATIVES
Each year the City is provided with a new opportunity to identify, address, and resolve issues facing the community and its residents.

Economic Development Strategic Plan Initiatives
The City continues to focus on economic development with a commitment to advance job growth, create sustainable revenue, and to maintain an excellent quality of life for all residents. The Economic Development Strategic Plan was approved in 2025. This document provides strategies and a road map to implement them to ensure economic development growth in the future. Some of the first milestones moving towards implementation are the Pop-Up Events Downtown and Waterfront (RFP drafted), Shop Local Campaign (RFP drafted), Small Business Revolving Loan fund (in process), Capital Facilities and Long-Range Property Management Plan (RFP being drafted).

Several exciting Economic and Community Improvement Projects on key pieces of property are seeing movement over the past year with a list of opportunities in the coming year. The City continues to see many business and development inquires, and staff are working diligently to expedite these projects with the vision that their success will ripple through the community and help bolster future development opportunities. Some of these projects include:

Mare Island - Proposed Mixed-Use Development
The Nimitz group took ownership of the majority of Mare Island and contracted with development partner Southern Land Company at the end of 2019. The Nimitz Group and Southern Land Company embarked on a program of hiring a development team, facilitating business in their core commercial area, assessing current buildings for upgrades, providing security and improvements, analyzing the infrastructure costs on the island, and the costs for North Mare Island. They also have added to their design and planning team to develop an island- wide master plan to set up Mare Island as a community of manufacturing, business, employment, housing, and recreation. Over the past year they have held monthly community meetings to keep all informed of plans and progress as well as meeting regularly with the City staff to implement the North Mare Island exclusive negotiating agreement into a full Development Agreement (DA). The DA was approved in the first quarter of 2022 and will guide development of the island over the next several years and includes a requirement for a new island-wide Specific Plan to guide future development. The initial transfer of the City's 125 acres closed October 12, 2022, and the remaining 32 acres will be conveyed to Nimitz after the Navy completes the environmental cleanup and transfers the parcels to the City. Phase 1 of the DA implementation includes the Connelly Corridor development to be constructed within 60 months of closing. This proposal includes approximately 29,000 sq. ft. of office, 373 multifamily units, a 200-room hotel, 46,000 sq ft of ancillary uses, and 194,000 sq ft open space.

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Cooke Property - New Costco and Housing Development in Process Vallejo Fairview Developers/Lewis Group received entitlement approval for a Master Plan to construct a new, expanded Costco, additional retail and 178 new single-family homes on the 50-acre parcel formerly known as the Cooke Property on Admiral Callahan Lane adjacent to I-80 in 2020. The applicant is working towards increasing density on the site to allow for additional residential units. The long-vacant site's size and visibility make it an ideal relocation site for Costco, and it allows the City to retain this major employer and sales tax collector, as well as provides much needed housing to the community housing stock. After lengthy litigation, the agreements to implement this project are complete and the land is purchased with the developer preparing to move forward with construction in the coming months.

Blue Rock Springs - Proposed Golf and Housing Development Currently, under an Exclusive Negotiating Agreement with the Greg Norman Company and Lewis Group, the proposed Project Concept would transform two fiscally unsustainable City golf courses and an aging clubhouse on 225 acres of City-owned land into a new community of approximately 400 single-family homes designed within a single 18-hole Greg Norman golf course and state-of-the-art clubhouse. Revenue from the proposed project would cover modernization of the golf course and a new clubhouse and eliminate potential General Fund subsidies, but the golf component would remain public/City-owned. The Pandemic, neighbor concerns, and other challenges have slowed this project process, but the coming year should see increased movement as the disposition of the land has been completed and negotiation of the key deal terms and performance timelines is currently taking place.

Solano360 - Solano Fairgrounds
The overall site consists of 149.1 acres in the Vallejo City limits. The City and the County worked together on a Request for Qualifications (RFQ) process that selected two primary development groups to propose on a Request for Proposals (RFP) to amend the 2009 Specific Plan. The City and County selected one master developer based on their proposal in October 2020. The County has signed an agreement with the preferred developer to facilitate their vision for the development of the area as an iconic region-serving public entertainment destination and private-mixed use development, and an integrated "Fair of the Future". A proposed Specific Plan Amendment envisions that the site would develop with a mix of region-serving entertainment uses along with restaurant, retail and hospitality uses that complement the existing Solano County Fairgrounds and the adjacent Six Flags Discovery Kingdom facility. Development kickoff meetings began in 2021 and the County and developer are preparing detailed plans to be submitted to the City in preparation of moving this project forward in the coming year.

Firm Foundation Housing Project - Broadway Project
The City, along with non-profit developer Firm Foundation, received a $12 Million grant from the State Housing and Community Development Commission (HCD) for the Homekey grant to build 48 units on Broadway Street to serve as permanent supportive housing for chronically homeless individuals in the community. The City and Firm Foundation partnered with Factory OS to provide the units and ground broke in the fall of 2022. Construction was completed August 2025 and anticipated to be completely lease up by December 31, 2025.

Improving Technology
The City is actively modernizing its technology to enhance operational efficiency, strengthen cybersecurity, and expand digital access for residents. These efforts reflect the City’s commitment to providing reliable, secure, and equitable services in a rapidly evolving digital environment.

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Enterprise Systems: The City completed an upgrade of its ERP financial system, replacing a decades-old legacy system. Additional enhancements are in progress, including the implementation of Human Resources Information Systems (HRIS), budgeting software, and enterprise asset management, which will streamline processes, improve data accuracy, and provide more timely reporting.

Cybersecurity: Recognizing the growing threat of cyber-attacks to local governments, the City has established a comprehensive cybersecurity program. Key measures include the adoption of a cybersecurity incident response plan, the hiring of a dedicated Cybersecurity Administrator, ongoing network infrastructure upgrades, and regular staff training and awareness initiatives. These steps are designed to protect critical systems, ensure business continuity, and maintain public trust.

Broadband and Digital Equity: The City is advancing its fiber network strategy to expand broadband access and close the digital divide. Projects include expanding public Wi-Fi in key community locations, connecting municipal buildings to the City’s fiber network, and deploying fiber to underserved housing units. These initiatives not only improve connectivity for residents and City operations but also position Vallejo to leverage federal infrastructure funding and support long-term digital equity goals.

Through these initiatives, the City is strengthening internal operations, enhancing cybersecurity, and improving digital services and access for the community, ensuring residents benefit from modern, secure, and equitable technology infrastructure.

Pavement Management Program
The City continues to develop and deliver a comprehensive 10-year Pavement Management Program aimed at improving and maintaining roadway infrastructure to ensure long-term sustainability and safety. This initiative focuses on conducting thorough assessments of the current pavement conditions, identifying areas in need of repair or reconstruction, addressing accessibility compliance, and implementing a data-driven approach to prioritize repairs based on factors such as traffic volume, pavement age, and severity of deterioration. The program incorporates modern technologies like geographic information systems (GIS) and pavement condition index (PCI) tracking to optimize resources and budget allocation. Pavement management efforts have traditionally been funded from gas tax revenues, but this latest effort is being significantly increased with additional funding from Measure P. Over the 10 years, the City aims to treat ~80% of Vallejo’s roadway network, significantly reduce the backlog of deteriorating roads, and significantly improve overall driving conditions for its residents.

Mare Island Bridge Upgrade and Rehabilitation Project
The Mare Island Causeway Bridge upgrade and rehabilitation project involves extensive preventative maintenance and structural repairs to the historic vertical lift span bridge that connects Vallejo to Mare Island. The work includes repairing and repainting the lift span and towers, replacing deteriorated piles and damaged concrete, overlaying the bridge deck, replacing joint seals, fixing sidewalks and railings, upgrading lighting and fenders, and more. The project is funded primarily through grant sources, and is expected to improve safety, reliability, and long-term connectivity, with anticipated completion around early 2027.

Solar Street Lights
The Solar Street Light project will convert existing streetlights to solar-powered streetlights and install new solar streetlights where needed, supporting the City’s goals of reducing operating costs and expanding green infrastructure. By relying on renewable solar energy, the project will lower long-term electricity and maintenance expenses, reduce dependence on the power grid, and provide more resilient lighting during power outages. In addition, the use of solar streetlights will decrease greenhouse gas emissions, advance sustainability objectives, and improve public safety by delivering reliable, energy-efficient lighting throughout the community.

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Advanced Metering Infrastructure (AMI) Program
The Advanced Metering Infrastructure (AMI) Program modernizes the City’s water metering system by replacing legacy meters with industry-standard smart meters and upgrading supporting communications and data systems.

AMI provides secure 15-minute interval consumption data to the City and customers, improving meter accuracy, billing efficiency, and system visibility. As of this week, the program is approximately 97% complete and is scheduled to reach full implementation by mid-February. Once complete, AMI is expected to result in approximately 1,184 acre-feet of annual water savings, support faster leak detection, enable monthly billing, and enhance customer access to water-use information.

During fiscal year 2024–25, the City continued implementation of the Advanced Metering Infrastructure (AMI) Program to modernize the water metering system with industry-standard smart meters and supporting communications and data systems. Implementation activities during the fiscal year focused on system deployment, testing, and integration to support improved meter accuracy, billing efficiency, leak detection, and customer access to water-use information.

Skyview Tank Replacement Project
The Skyview Tank Replacement Project involves construction of a new 6.0-million-gallon AWWA D110 Type I prestressed concrete water storage reservoir to replace the existing Skyview Reservoir, which has reached the end of its useful life. The project includes demolition of the existing tank, site preparation and earthwork, geotechnical investigation, and construction of a new tank foundation, walls, roof, liner system, and appurtenant mechanical, electrical, instrumentation, and security systems. Upon completion, the new reservoir will improve water storage reliability, water quality, pressure stabilization, and fire protection for the surrounding service area.

During fiscal year 2024–25, the City completed final design for the Skyview Tank Replacement Project, which will replace an existing water storage reservoir that has reached the end of its useful life. Design efforts included development of a new 6.0-million-gallon prestressed concrete reservoir and associated structural, mechanical, electrical, and site improvements. The project advanced toward construction readiness but had not yet entered procurement during the fiscal year.

SCADA System Upgrades
The SCADA (Supervisory Control and Data Acquisition) System Upgrades program modernizes the City’s computerized monitoring and control systems that support 24/7/365 operation of the water treatment and distribution system. SCADA enables staff to remotely monitor and control processes at the City’s three water treatment plants and throughout approximately 600 miles of distribution infrastructure. The program includes replacement of aging fiber infrastructure, improvements to alarm and event management, development of standardized HMI and PLC programming, establishment of SCADA policies and governance, and evaluation of long-term data management solutions. Collectively, these upgrades improve system reliability, cybersecurity, operational efficiency, and long-term maintainability of critical water system assets.

During fiscal year 2024–25, the City finalized the Supervisory Control and Data Acquisition (SCADA) system master plan, which establishes standards and long-term strategies for monitoring and controlling the water treatment and distribution system. The master plan provides the framework for future SCADA infrastructure upgrades, system standardization, cybersecurity improvements, and data management enhancements.

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Dams Maintenance Program
The Dams Maintenance Program addresses ongoing maintenance and rehabilitation needs at the City’s seven water supply dams to ensure continued regulatory compliance, structural integrity, and long-term operational reliability. The program includes vegetation management, embankment surface repairs, erosion control, rodent damage remediation, drainage and outlet maintenance, access road improvements, and targeted concrete repairs at dam crests, spillways, and outlet structures. The City is preparing to bid a maintenance contract to systematically address identified deficiencies across multiple facilities, support dam safety requirements, and reduce long-term maintenance risks associated with aging infrastructure.

During fiscal year 2024–25, the City initiated planning and design efforts for a Dams Maintenance Program to address identified maintenance needs at the City’s seven water supply dams. Activities during the fiscal year included development of maintenance scopes, preparation of bid documents, and project design to support future contracting and implementation.

BUDGETARY CONTROL
The City maintains budgetary control through an annual budget adopted by the City Council. The City Manager is required to submit the proposed budget to the City Council at least 45 days prior to the beginning of the new fiscal year. Expenditures may not legally exceed the amounts appropriated in the adopted budget. However, pursuant to City Council resolution, the City Manager is authorized to transfer unencumbered appropriations within departments or between funds, as appropriate.

Budgetary control is established at varying levels depending on the type of fund: (a) General Fund—department level; (b) other governmental funds—fund level; and (c) capital projects—department level. The City Manager is authorized to approve line-item budget transfers within the adopted appropriations. Salary-related transfers and capital project budget adjustments are subject to review and approval by the Finance Director and the City Manager.

The City uses encumbrance accounting as an extension of formal budgetary integration to reserve budget authority for purchase orders, contracts, and other commitments. Encumbered amounts represent commitments related to unperformed contracts and are reported as restricted, committed, or assigned fund balance, as appropriate. Unused appropriations lapse at fiscal year-end, except for encumbered balances, capital projects, grants, and multi-year programs, which are carried forward into the subsequent fiscal year.

In addition, contracting and spending authority is delegated to the City Manager and City Attorney for contracts up to $100,000, with further delegation to staff in accordance with established internal signature authority limits.

ACCOUNTING SYSTEM CONTROL
Note 1 in the Basic Financial Statements provides a comprehensive overview of the City’s significant accounting policies. To protect government assets from loss, theft, or misuse and to ensure the responsible management of public resources, the City has implemented a system of internal controls. While recognizing that the cost of these controls should not exceed their benefits, the City’s control framework is designed to provide reasonable—not absolute—assurance that financial statements are free from material misstatements.

The City also maintains several documented financial policies, including policies related to purchasing, debt management, investments, capital assets, and cash handling. These policies establish consistent standards and procedures to promote transparency, accountability, and compliance with applicable laws and regulations. The policies are periodically reviewed and updated to reflect changes in regulations, operational needs, and recognized best practices.

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Fiscal Year 2024–25 marked the City’s second year utilizing the Central Square Finance Enterprise Resource Planning (ERP) system. The financial modules went live in March 2024, replacing the City’s legacy financial system. As a result, FY 2024–25 continued to represent an implementation, stabilization, and refinement period rather than a fully mature operating year. During this second year, the City continued to refine system configurations, adjust business processes, enhance internal controls, and improve staff proficiency as users gained additional experience with the system. Management continues to monitor system functionality and related controls during this refinement phase. As refinement efforts progress, the ERP system is expected to further strengthen internal controls, improve reporting efficiency, and support reliable and sustainable financial operations over the long term.

AWARDS

GOVERNMENT FINANCE OFFICERS ASSOCIATION OF THE UNITED STATES AND CANADA (GFOA)

CERTIFICATE OF ACHIEVEMENT FOR EXCELLENCE IN FINANCIAL REPORTING We are once again pleased to report that the Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Vallejo for its Annual Comprehensive Financial Report for the fiscal year ended June 30, 2024.

The Certificate of Achievement is a prestigious national award recognizing conformance with the highest standards for preparing state and local government financial reports. To be awarded a Certificate of Achievement, a governmental unit must publish an easily readable and efficiently organized annual comprehensive financial report, whose contents conform to program standards. Such reports must satisfy both generally accepted accounting principles and applicable legal requirements. In addition, the City has also been awarded the Triple Crown, having achieved all three of GFOA’s top certifications including the Popular Annual Financial Reporting Award and the Distinguished Budget Presentation Award.

ACKNOWLEDGMENTS
The preparation of this Annual Comprehensive Financial Report would not have been possible without the outstanding efforts, dedication, and teamwork throughout the year of the entire Finance Department, in particular the Accounting and Audit team, with the cooperation and assistance of all City departments.

I also recognize the professional support and guidance of the City's audit firm, LSL, LLP.

Finally, I would like to express my gratitude to the Mayor, City Council and City Manager, for their vision and continued support to maintain long-term fiscal stability for the City.

Respectfully submitted,
Nalungo Conley
Acting Finance Director
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Public Officials
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Organizational Chart
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GFOA Certificate of Achievement
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FINANCIAL SECTION
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INDEPENDENT AUDITORS’ REPORT
To the Honorable Mayor and Members of the City Council
City of Vallejo
Vallejo, California
Report on the Audit of the Financial Statements
Opinions
We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, the discretely presented component unit, and the aggregate remaining fund information of the City of Vallejo, California, (hereafter, the City) as of and for the year ended June 30, 2025, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, the discretely presented component unit, and the aggregate remaining fund information of the City as of June 30, 2025, and the respective changes in financial position, and, where applicable, cash flows thereof, for the year then ended in accordance with accounting principles generally accepted in the United States of America.

We did not audit the financial statements of the Vallejo Flood and Wastewater District (VFWD), a discretely presented component unit, as of June 30, 2025. Those statements were audited by other auditors whose report has been furnished to us, and our opinions, insofar as it relates to the amounts included for VFWD, are based solely on the report of the other auditors.

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 Auditors’ 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.

Emphasis of Matter
Change in Accounting Principle
As described in Note 1 to the financial statements, in 2025, the City adopted new accounting guidance, GASB Statement No. 101, Compensated Absences. 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 the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
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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.

Auditors’ 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 auditors’ 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, 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.

To the Honorable Mayor and Members of the City Council
City of Vallejo
Vallejo, California
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Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, budgetary comparison information, and required pension and other post-employment benefits schedules as listed on 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 and individual fund financial statements and schedules (supplementary information) are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplementary information is fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Other Information
Management is responsible for the other information included in the annual report. The other information comprises the introductory and statistical sections but does not include the basic financial statements and our auditors’ 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.

To the Honorable Mayor and Members of the City Council
City of Vallejo
Vallejo, California
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Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards , we have also issued our report dated February 18, 2026 , on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering City’s internal control over financial reporting and compliance.

Sacramento, California
February 18, 2026
To the Honorable Mayor and Members of the City Council
City of Vallejo
Vallejo, California
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MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)
Management’s Discussion and Analysis (Unaudited)
This narrative of the City of Vallejo’s financial performance provides an overview and analysis of the City’s financial activities for the year ended June 30, 2025. We encourage readers to consider the information presented here in conjunction with the Transmittal Letter, the Basic Financial Statements, and the accompanying notes to the financial statements.
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FINANCIAL HIGHLIGHTS
Government-wide (full accrual basis)
• The City’s assets and deferred outflows exceeded its liabilities and deferred inflows at the close of the fiscal year 2025 by $466.3 million (net position). This amount improved by $25.1 million from the prior fiscal year.
• The City’s net position increased by $25.1 million during the fiscal year. Governmental activities contributed an increase of $4.6 million and Business-type activities accounted for an increase of $20.5 million. These changes reflect the City’s overall positive financial performance for the year, strengthening its capacity to support ongoing operations, capital projects, and community services.

Fund level (modified accrual basis)
• As of June 30, 2025, the City’s governmental funds reported a combined fund balance of $230.3 million, $17.9 million higher than the prior year balance. Approximately 12.7% of this amount, or $29.3 million, is categorized as unassigned funds, providing the City with discretionary resources for targeted spending initiatives.
• At the end of the fiscal year, the General Fund reported a fund balance of $85.6 million, reflecting an increase of $6.6 million from the prior year. Of this total, $31.7 million, or 37%, is unassigned.

This unassigned portion represents 2.8 months, or 23%, of the Fiscal Year 2025-26 original budgeted expenditures, excluding Measure P appropriations, exceeding both the City’s target and the recommendations of the Government Finance Officers Association (GFOA). The City’s commitment to maintaining a reserve level above the two-month expenditure benchmark demonstrates prudent financial management and provides a strong foundation for meeting future obligations and supporting community needs.
• The passage of Measure P implemented a new transaction tax of 0.875%, increasing the City’s total sales tax rate to 9.25%, effective April 2023. This strategic measure was intended to provide additional financial resources to support essential services and community initiatives. In Fiscal Year 2024-25, the city received $17.5 million in Measure P sales tax revenue. • The city has expended $23.3 million of the $25.7 million received through the American Rescue Plan Act (ARPA). These one-time funds were strategically allocated by the City Council to a variety of carefully selected projects to address the diverse needs of the community, with implementation planned through December 2026. For Fiscal Year 2024-25, the City spent $6.9 million of these allocated funds.
• The Water Fund reported an unrestricted net position of $44.3 million, an increase of $12.2 million from the prior year. This improvement positions the Water Fund to effectively meet its operational and capital requirements.

Detailed discussion of the changes in net position and fund balances can be found in the subsequent sections.

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OVERVIEW OF THE FINANCIAL STATEMENTS
The financial section of this report is presented in the following sections:
1) This introductory commentary, Management’s Discussion and Analysis 2) Basic Financial Statements, including:
a. Government-wide financial statements
b. Fund financial statements
c. Notes
3) Required Supplementary Information
a. Net OPEB Liability and Contribution Schedules
b. Net Pension Liability and Contribution Schedules
4) Supplemental Information:
a. Non-major governmental funds
b. Internal service funds
c. Custodial funds

BASIC FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the City’s Basic Financial Statements, comprised of the Government-wide Financial Statements and the Fund Financial Statements.

These two sets of financial statements provide two different views of the City’s financial activities and financial position.

Government-wide Financial Statements
The Government-wide Financial Statements provide a long-term view of the City’s activities as a whole.

The Statement of Net Position provides information about financial position, including capital assets and long-term liabilities on a full accrual basis, similar to that used by commercial enterprises. The Statement of Activities provides information about the City’s revenues and expenses, also on a full accrual basis, with emphasis on measuring the net revenues and expenses of City programs. Information is presented both in total and separately for governmental activities, which are generally supported by taxes and grants, and for business-type activities, which are generally supported by user fees. The City’s activities include the activities of multiple legal entities, and the Vallejo Flood and Wastewater District (VFWD, formerly Vallejo Sanitation and Flood Control District), a discretely presented component unit, because the City is either financially accountable for these entities or has control of the governing board of these entities.

Fund Financial Statements
The Fund Financial Statements report the City’s operations in more detail than the government-wide statements. The focus is on the individual funds that are used to report the status of restricted or otherwise segregated resources and also to demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into the following three categories:

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• Governmental Funds – Governmental funds account for essentially the same functions reported as governmental activities in the Government-wide Financial Statements. However, unlike the Government-wide Financial Statements, governmental fund financial statements focus on near - term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year (Modified Accrual Basis of Accounting). Such information may be useful in evaluating the City’s near -term financing requirements. To understand the long - term impact of the City’s near -term financing decisions, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the Government-wide Financial Statements. Both the Governmental Funds Balance Sheet and the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.
• Proprietary Funds – The City maintains two different types of proprietary funds: enterprise funds and internal service funds.

Enterprise Funds report the same functions presented as business -type activities in the Government-wide Financial Statements. The City has five enterprise funds. Water Fund is reported as major fund, while others are reported as nonmajor.

Internal Service Funds are an accounting device used to accumulate and allocate costs internally among the City’s various functions. The City’s internal service funds account for fleet maintenance and replacement, risk management and insurance, payroll and retiree health benefits.

Since these services predominantly benefit governmental rather than business -type functions, they are consolidated within governmental activities in the Government-wide Financial Statements.

Proprietary funds provide the same type of information as the Government-wide Financial Statements, but in more detail. The proprietary funds financial statements provide separate information for each of the enterprise funds. Data for the four internal service funds are combined into a single, aggregated presentation in the proprietary funds financial statements. • Fiduciary Funds – Fiduciary funds account for resources held for the benefit of parties outside the City. Fiduciary funds are not reflected in the Government-wide Financial Statements because the resources of those funds are not available to support the City’s own programs. Fiduciary fund accounting is similar to proprietary fund accounting. The City has two types of fiduciary funds:
the custodial funds and the private purpose trust funds.

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

OTHER INFORMATION
In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City’s progress in funding its obligation to provide pension and retiree medical benefits to its employees. Required Supplementary Information follows the notes to the financial statements. Supplementary information on non-major governmental funds and internal service funds are also presented immediately following the required supplementary information on pensions.

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FINANCIAL ANALYSIS OF THE CITY AS A WHOLE
Below is a summary of the City’s government-wide net position as of June 30, 2025 and 2024, as measured on a full accrual basis of accounting. Over time, increases or decreases in net position may serve as a useful indicator as to whether the City’s financial position is improving or weakening.

Current and other assets increased by $11.1 million, or 2.4 %, in fiscal year 2025 compared to the prior year, primarily due to higher cash and investments. Cash inflows from all revenue sources continued to exceed cash outflows, largely attributable to the delayed implementation of certain City capital projects and programs.

Capital assets increased by $1.5 million, mainly due to the recognition of right-to-use subscription assets related to the Flock Safety Camera System subscription. The Flock Safety subscription, utilized by the Police Department, provides advanced investigative tools designed to help prevent, detect, and solve crimes.

The City’s assets and deferred outflows exceeded its liabilities and deferred inflows at the close of the fiscal year by $466.3 million (net position). This represents an increase of $25.1 million, or 5.7%, from the prior year and comprised of the following major components:

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• Net investment in capital assets decreased from $424.5 million in the prior year to $421.5 million, a reduction of $3.0 million, primarily due to an accounting adjustment related to the Broadway Homekey capital improvement project. The city uses these capital assets to provide services to its residents and other stakeholders; therefore, they are not available for future spending. Although the City’s investment in capital assets is reported net of related debt, the resources required to repay this debt must come from other sources, as the capital assets themselves cannot be used to liquidate these liabilities.
• Restricted net position increased by $7.9 million, reaching $139.4 million. These resources are subject to legal or contractual restrictions imposed by creditors, developers, grantors, or other governmental entities. By definition, the City cannot use these funds for purposes outside the restrictions, as they are externally imposed.
• The unrestricted net deficit improved to $94.6 million in 2025, compared with $114.8 million in 2024, primarily due to a $32.7 million reduction in total liabilities. The deficit largely reflects the recognition of the net pension obligation. Additional information on the net pension liability is provided in Note 10 to the financial statements, with related trend information included in the Required Supplementary Information (RSI) section.

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Governmental Activities
The following analysis focuses on the changes in net position of the City’s governmental activities for the years ended June 30, 2025 and 2024.

Governmental activities increased the City’s net position by $4.6 million, driven by a 1% growth in total revenues.

Revenues
Revenues are classified into two categories: Program Revenues, which are the revenues derived directly from the functional programs or from parties outside the City’s taxpayers or citizenry; and General Revenues, which are the revenues that do not meet the requirements of program revenue, most of which are taxes. These are property, sales and transaction, franchise, transit occupancy, and business license taxes.

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Program revenues decreased by $0.4 million to $97.7 million. This decrease was primarily attributable to a $7.5 million reduction in capital grants and contributions, reflecting lower project expenditures funded by grants, mainly related to the California Infill Infrastructure Project and the Bay/Vine Trail, compared to the prior year. Charges for services increased due to higher development activity and related fees.

Major projects contributing to this increase included Tri Pointe Homes (Cascade at Waterstone), PG&E infrastructure projects, and Next Phase Construction’s West Harbor Park Apartments.

Total general revenues of $148.9 million increased by $2.2 million from the prior year. General revenues include general taxes, which provide the City Council with the greatest discretionary spending authority.

Significant changes in general revenues were as follows:
• Property tax increased by $1.9 million, primarily due to rising home values and reassessments upon property sales.
• Sales and transaction tax revenues decreased by $1.8 million, or 3%, to $57.5 million, reflecting a slowdown in consumer spending.
• Investment earnings and other revenues increased by $1 million, driven by continued positive market performance.

Total revenues for the City’s governmental activities showed a modest increase. Combined, general and program revenues grew by $1.8 million. The largest increase, $7.3 million, was in charges for services, while capital grants and contributions—the largest revenue source in the prior year—declined by $7.5 million, reflecting the substantial completion of major projects such as the Bay/Vine Trail.

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The pie chart below illustrates the distribution of the governmental activities revenues by source. The largest source of revenue for governmental activities are grants and contributions at $61.5 million (25%) and sales tax at $57.5 million (23%) followed by property related tax (16%) and charge for services (15%). The City’s reliance upon grant and tax revenues is evident from the chart, which is consistent with the nature and purpose of governmental funds, particularly in the General Fund, where programs are largely supported by general taxes.

Expenses
Overall expenses for governmental activities increased from $193.4 million in the prior year to $220.9 million in the current fiscal year. Most functional categories experienced increases, primarily driven by higher salaries and benefits, including pension and OPEB expenses resulting from adjustments required under GASB Statements No. 68 and 75. In addition, the increase in Public Works expenses is largely attributable to $8.5 million in street maintenance and repair costs that were expensed rather than capitalized.

Net Revenues (Expenses)
Program revenues associated with Governmental Activities totaled $97.7 million, or 44%, of program expenses ($220.9 million). Expenses not covered by program revenues must be funded from non-program sources like general tax revenues. The table on the next page illustrates the gap between program revenues and expenses by major activity. Public safety programs rely heavily on taxes to support operations. Public Work’s program revenues include capital grant funding for capital outlay. General government programs provide benefits to both business-type and governmental activities and receive some funding through internal indirect cost allocations to supplement programs and general tax revenues.

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Detailed analysis of the General Fund and other major governmental funds are discussed in the subsequent sections.

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Business-type Activities
The following analysis focuses on the changes in net position of the City’s business-type activities for the years ended June 30, 2025, and 2024.

Business-type activities increased the City’s net position by $20.5 million, or 18%, to $132 million.

Charges for services were up by $1.6 million, or 3%, driven primarily by the Water Fund. Water charges for services rose by $1 million compared to the previous year.

Capital grants and contributions declined by $1.2 million, or 52%, reflecting reduced commercial development activity during the year.

Investment earnings of $5.6 million in the current fiscal year were due to improved investment income and significant unrealized gains resulting from favorable market fluctuations.

Overall expenses of $53 million decreased from the previous year by $3 million. This reduction was largely attributable to lower operating expenses in the Water Fund.

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The table on the next page provides a visual representation of the net program cost information for business-type activities for the year ended June 30, 2025. In these programs, annual surpluses or deficits are retained in the programs as an increase or decrease in the program’s net position.

In total, program revenues for these business-type operations are generally intended to cover operating, debt service, and capital reinvestment requirements. For the current year, Water operations contributed $14.2 million while the other funds reported a combined loss of $.4 million. Although each program collected user fees, the fees of Marina and Fiber funds did not generate sufficient revenues to cover their annual costs. The General Fund transferred $1.0 million to support the Marina Fund’s debt service payments and operations, and the ARPA fund transferred $0.7 million to Fiber fund to build the physical network necessary to support and sustain retail/residential customers.

Detailed analysis of each of the business-type operations are discussed in the Enterprise Funds section.

FINANCIAL ANALYSIS OF THE CITY’S FUNDS
In addition to the full accrual-basis government-wide statements described above, the City also maintains financial records at the fund level for budgetary control. Individual funds are generally established to track the resources and operating results for specific, restricted programs. The results for governmental funds below differ from the results reported above in the government-wide statements. Here, the focus is to provide information on near-term inflows, outflows, and balances of spendable resources, which can be useful in assessing the City’s financing requirements. Specifically, unassigned fund balance can serve as an informative measure of a government’s net resources available for discretionary use at the end of the fiscal year.

As of June 30, 2025, the City’s Governmental Funds reported a combined ending fund balance of $230.3 million, a $17.9 million increase in comparison with the prior year’s total ending fund balances. The chart showing the components of City’s governmental total fund balance are presented on the next page.

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• Nonspendable Fund Balance increased to $7.2 million, a $2.5 million increase from prior year, primarily due to the new Permanent Supportive Housing loan funded by Measure P. These amounts are not spendable in form or are legally or contractually required to be maintained intact and are made up of long-term receivables and prepaid expenses and deposits. • Restricted Fund Balance increased by $5.1 million to $131.6 million. Restricted fund balance represents amounts constrained for specific purposes by creditors, grantors, contributors, laws, regulations, or enabling legislation. Of the total restricted balance, $47.8 million is restricted for streets and highways, $33.8 million for community development and housing, $12.8 million for public facilities projects, and $24.3 million for pension benefits. • Committed Fund Balance increased by $13.8 million to $43.8 million. These amounts are committed for specific purposes by formal action of the City Council and remain binding unless removed by the Council through the same formal process. Of the total committed balance, $6.7 million is committed for public facilities projects and $17.6 million for Measure P programs and $17.8 million for capital outlay.
• Assigned Fund Balance decreased by $3.1 million to $18.4 million. This fund balance reflects amounts the City intends to use for specific purposes that are neither restricted nor committed.

Of this total, $13.5 million is assigned for Measure P programs. • Unassigned Fund Balance decreased by $0.4 million to $29.3 million. The City’s General Fund reported an unassigned fund balance of $31.7 million, which is partially offset by negative balances in other governmental funds.

For more information on governmental fund balances, please refer to Note 12 of the Basic Financial Statements.

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Presented below and on the next pages are the major funds that either qualified under the reporting criteria or are considered to be important to financial statement users.

GENERAL FUND
The City’s General Fund provides police, fire, community development, public works, and administrative services to the City’s 122,207 residents, other funds, businesses and visitors. The General Fund is distinct from other funds because it is the only source of unrestricted funds that can be allocated, at the discretion of the City Council, for any municipal purpose. For financial reporting purposes, the scope of General Fund balances and activities includes the City’s Measure B/V and Contingency Reserve Funds as well as Measure P voter approved tax.

During fiscal year 2025, the General Fund expended $108.6 million in labor costs to provide these services, funding 509 authorized full-time equivalent positions. Labor costs comprise 69% of General Fund’s total expenditure and transfers out.

Budgetary Highlights – During the fiscal year 2025, adjustments were made between the original budget and the final budget, resulting in an $8.7 million increase in budgeted revenues and transfers in primarily due to ARPA budget carryover. Similarly, there was a significant $32.2 million increase in budgeted expenditure and transfers out. Of the $32.2 million increase, $16.5 million and $9.3 million were allocated to Measure P and ARPA projects respectively, with remainder supporting other City programs.

Actual revenues and transfers totaled $165.3 million, exceeding the final budget by $4.1 million, or 2.5%.

This positive variance was primarily attributable to higher-than-anticipated investment income and SAFER grant revenues.

Total expenditures were $6.3 million below the final budget, as program departments expended less than their approved appropriations. Expenditure savings were mainly the result of salary savings, unspent ARPA-funded service and supply appropriations, and higher interfund reimbursements. In addition, transfers out were $5.6 million below budget due to the delayed implementation of ARPA- and Measure P-funded projects.

Collectively, these variances resulted in a total budgetary surplus of $11.9 million for the fiscal year.

Current Year Increase in General Fund Revenues/Expenditures – General Fund revenues, including other financing sources, increased by $2.4 million, or 1.4%, from $162.9 million in the prior fiscal year to $165.3 million in FY 2024–25. This increase was primarily attributable to OPEB trust reimbursements and the extension of the Fire SAFER grant.

General Fund expenditures, excluding transfers out, totaled $126.8 million in FY 2024–25, compared to $121.5 million in the prior year, representing an increase of $5.3 million, or 4.3%. This change reflects a $6.6 million increase in salaries and benefits, partially offset by a $1.3 million decrease in services and supplies. Transfers out increased by $4.8 million, from $27.1 million in the prior year to $31.9 million in the current year, primarily due to an additional $8.2 million Measure P contribution, offset by reductions of $1.2 million in ARPA transfers and $2.2 million in other City program transfers.

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Fund balance –At the close of FY 2024–25, the General Fund reported a surplus as total revenues and other financing sources of $165.3 million exceeded total expenditures and other financing uses of $158.6 million by $6.7 million. As a result, the General Fund’s total fund balance increased to $85.6 million, of which $31.7 million is unassigned and 13.5 million is assigned for Measure P programs.

The chart below illustrates the changes in the components of the General Fund balance from June 30, 2024, to June 30, 2025.

OTHER MAJOR GOVERNMNENTAL FUNDS
Housing Authority Fund –During the fiscal year, the Housing Authority Fund received $28.6 million in federal HUD grant allocations and other revenues to support $29.0 million in Section 8 Housing Choice Voucher Program expenditures. As of June 30, 2025, the Fund reported a combined fund balance of $16.5 million, consistent with the prior fiscal year. Of this amount, $14.9 million is restricted and committed.

The majority of these resources are invested in long-term loans and mortgages and are not expected to be collected within the next fiscal year.

Capital Projects Funds – The Capital Projects Funds, comprised of the Capital Outlay Fund and the Measure P Capital Fund, reported total revenues of $26.7 million during fiscal year 2025. Revenues consisted of $1.4 million in interest earnings and $25.3 million in transfers, including $10.2 million from the General Fund and $15.0 million from Measure P. Expenditures totaled $20.5 million for the year, resulting in an ending fund balance of $37.4 million. The fund balance is committed to public facilities projects and Measure P–funded programs.

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ENTERPRISE FUNDS
The City’s enterprise fund statements provide the same information as the government-wide financial statements but in greater detail.

As of June 30, 2025, total enterprise funds net position increased to $131.9 million, an increase of $20.4 million from $111.5 million in the prior year. Significant changes by enterprise fund are discussed below:

Water – The Water Fund reported total net position of $122.5 million as of June 30, 2025, an increase of $19.5 million from the prior year. The increase was primarily attributable to higher investment earnings and increased charges for services. Rate structures adopted in June 2017 and October 2019 continued to provide for scheduled user fee increases during the fiscal year, supporting the operation and maintenance of the Vallejo Municipal Water System. The ongoing smart meter replacement project, which is upgrading outdated meters to advanced metering infrastructure, is expected to improve water conservation and operational efficiency.

Marina – The Marina Fund reported an increase in total net position of $0.4 million as of June 30, 2025.

During the fiscal year, the fund received $0.7 million in transfers from the General Fund to support annual debt service payments and $0.26 million from the State Lands Fund for operating purposes, which primarily contributed to the increase in net position. The Vallejo Municipal Marina is operated by F3, and operations continued to face challenges from silting and vandalism, resulting in reduced operating revenues.

Golf – At the end of fiscal year 2025, the Blue Rock Springs Golf Courses generated $4.7 million in user fees, a 3% increase from the prior year. The increase in revenues supported program operations and debt service payments and was driven by favorable weather, membership tournaments, and higher food, beverage, and merchandise sales. Operating expenses increased by 2.5%, primarily due to higher labor costs for tournament events, irrigation water, and building maintenance and repairs. Total net position of the Golf Fund decreased by $0.2 million to $5.0 million as of June 30, 2025, mainly due to the repayment of General Fund advances. The City continues to see positive results from contracting with Touchstone Golf to manage operations. In fiscal year 2025, Touchstone partnered with Kemper Sports, strengthening operational capacity and service delivery.

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Vallejo Station Parking – The Vallejo Station Parking Fund reported total net position of $1.4 million as of June 30, 2025, an increase of $0.3 million from the prior year. The increase was mainly driven by higher operating revenues, which exceeded $1.0 million during the fiscal year, reflecting increased commuter traffic at the Vallejo Waterfront and improved collection efficiency from modern electronic payment systems.

Fiber Optic – The Fiber Optic Fund was established in May 2017 with a $0.8 million interfund loan from the General Fund to promote economic development. As of June 30, 2025, total net position increased by $0.4 million, primarily due to $0.7 million in ARPA funding for the expansion of the City’s broadband network. In November 2022, the City contracted Smart Fiber Networks to operate the system under a 40 percent revenue-sharing arrangement, which will commence once customer numbers reach 500; this threshold was not met in fiscal year 2025.

CAPITAL ASSETS
GASB Statement No. 34 requires that the City record all its capital assets that are used in the performance of the City’s functions, including infrastructure assets. The following is a summary of these assets as of June 30, 2025 and 2024.

Throughout the fiscal year, the City’s capital assets experienced notable changes, with major additions in governmental capital assets attributed to construction in progress related to infrastructure enhancements, building and improvements, and right to use assets, totaling $22.0 million. These additions were partially offset by annual depreciation and amortization of $11.4 million for Governmental activities.

Major governmental capital projects in FY24-25 included:
• Bay Trail/vine Trail Project - $3.8 million
• Lake Dalwigk Park Improvement -$2.6 million
• PD Building Improvement -$2.9 million
• Homeless Navigation Center - $4.9 million
Business-type capital assets also increased, with major additions of $11.8 million in construction in progress related to water equipment and infrastructure improvements. These additions were partially offset by $5.0 million in annual depreciation.

Key business-type construction in progress projects include:

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• Water main replacement - $7.5 million
• Advance Metering Infrastructure - $2.5 million
Overall, the City’s capital assets, net of depreciation, increased by $1.5 million. This net change reflects, in part, the accounting adjustment related to the Broadway HomeKey capital improvement project.

DEBT ADMINISTRATION
The following is a summary of the City’s long-term debt obligations as of June 30, 2025, and 2024.

Annual Activity – The City’s total long-term debt decreased by $7.6 million as of June 30, 2025, primarily as a result of scheduled debt service payments. Detailed information on the City’s outstanding debt, including terms and conditions, is presented in Note 7 to the financial statements.

Total long-term obligations of the City decreased by $5.1 million as of June 30, 2025. Key factors contributing to this change include the following:
• Net Pension Liability: Decreased by $9.0 million, largely attributable to higher-than-expected investment returns from CalPERS. Investment income increased from $33 million in the prior year to $53 million in the current year.
• Subscription-Based Information Technology Arrangements (SBITA): The City utilizes subscription-based information technology services. During the current year, subscription liabilities recognized under GASB Statement No. 96 increased by $2.2 million, primarily due to the execution of a new Flock SBITA agreement.
• Other Postemployment Benefits (OPEB): The net OPEB obligation decreased by $2.7 million, driven by net investment income exceeding benefit payments during the year.

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• Compensated Absences: During the fiscal year ended June 30, 2025, the City implemented GASB Statement No. 101, Compensated Absences . Adoption of this standard required a restatement of beginning net position to reflect the cumulative effect of the change in accounting principle. As a result, beginning net position decreased by approximately $1.9 million for governmental activities and $0.2 million for business-type activities. Compensated absences liabilities increased by approximately $2.0 million.

Additional information regarding long-term obligations is provided in Note 5 (GASB Statements No. 87 and 96), Note 9 (Compensated Absences), Note 10 (Pensions), and Note 11 (OPEB) to the financial statements.

Bond Rating – On June 11, 2024, Standard & Poor’s raised its rating from ‘A-’ to “A“ for the 1999 Certificates of Participation. It further states that, given the combination of revenue enhancement, very strong reserve balances, and good financial policies and practices, the city’s financial position will remain at least stable in the near term.

Net Debt - The percentage of net bonded debt to taxable property valuation, and the amount of bonded debt per capita, are useful indicators of the City’s net debt position to management, citizens, and investors. A comparison of these indicators follows. Per capita debt outstanding decreased to $773 as of June 30, 2025, from $837 in the prior fiscal year.

June 30, 2025 June 30, 2024

Net debt (in millions) $ 94.4 $ 101.9
Net debt per capita $ 773 $ 837
Net debt per capita as a percentage
of per capita personal income 1.89 % 2.05 %
Net debt as a percentage of
net assessed value 0.68 % 0.76 %
ECONOMIC FACTORS AND NEXT YEAR’S BUDGET
Economic Factors
The economy and the City’s major initiatives for next year are discussed in detail in the accompanying Transmittal Letter.

Next Year’s Budget
Total revenues are budgeted at $315.7 million, with the General Fund, a key component of the City’s financial plan, projected to contribute $132.8 million, representing a slight decrease of $1.5 million from the prior year, excluding Measure P revenues. To achieve a balanced budget, the City applied surplus funds from the prior year, ensuring that planned expenditures align with available resources. General Fund revenues are expected to increase modestly in the coming fiscal year due to economic factors affecting most municipalities, including the implementation of new licensing programs designed to strengthen revenue streams.

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T h e C i t y ’ s t o t a l e x p e n d i t u r e s f o r F Y 2 0 2 5 - 2 6 a r e s e t a t $ 3 2 5 . 9 m i l l i o n , w i t h $ 1 3 6 . 9 m i l l i o n a l l o c a t e d t o the General Fund. This level of appropriations reflects the City’s commitment to maintaining existing service levels and staffing (“status quo” expenditures) while also addressing key priorities such as public safety, infrastructure maintenance, economic development, support for local businesses, and affordable housing initiatives. Strategic cost management measures, including the temporary freezing of 27 vacant positions and careful monitoring of project spending, help ensure that the budget remains balanced.

Vallejo, like many California municipalities, continues to face challenges associated with aging i n f r a s t r u c t u r e , r i s i n g l a b o r c o s t s , a n d i n c r e a s i n g s e r v i c e d e m a n d s . T h e F Y 2 0 2 5 - 2 6 b u d g e t d e m o n s t r a t e s a deliberate approach to sustaining core services, maintaining financial stability, and planning for the City’s l o n g - t e r m f i s c a l h e a l t h w h i l e a l i g n i n g r e s o u r c e s w i t h c o m m u n i t y n e e d s a n d s t r a t e g i c p r i o r i t i e s .

CONTACTING THE CITY’S FINANCIAL MANAGEMENT
This Annual Comprehensive Financial Report (ACFR) is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the City’s finances and to show the City’s accountability for the money it receives. For the convenience of the public, a copy of this report is posted on the City’s website (City of Vallejo, CA / Our City / Departments & Divisions / Finance Department). If you have questions about this report, separate reports of the City’s component units, or need any additional financial information, contact the Finance Department at 555 Santa Clara Street, Vallejo, California, 94590, phone 707-648-4592.
47

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Basic Financial Statements
48

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Government-Wide Financial Statements
49

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Statement of Net Position
ASSETS
Cash and investments (Note 2) $ 224,452,989 $ 77,102,013 $ 301,555,002 $ 67,778,481 Receivables (net of uncollectibles):

Accounts 6,515,677 11,586,141 18,101,818 3,203,155
Interest receivable 2,227,825 - 2,227,825 317,234
Due from other governments 21,025,811 1,961,592 22,987,403 8,241,398 Notes and loans (Note 4) 35,304,493 - 35,304,493 254,419 Internal balances (Note 3c) 530,000 (530,000) - -
Materials, parts and supplies (Note 1f) 226,743 1,717,247 1,943,990 393,346 Prepaids and deposits (Note 1h) 2,301,973 553,100 2,855,073 813,720 Restricted assets:

Cash and investments (Note 2) 37,400,320 3,404 37,403,724 2,093,267 Cash with fiscal agent (Note 2) 5,269,907 42,304,732 47,574,639 - Lease receivable (Note 5a) 11,106,339 - 11,106,339 - Land held for redevelopment 499,684 - 499,684 -
Capital assets not being depreciated (Note 6) 156,381,716 49,354,658 205,736,374 55,995,681 Capital assets, net of depreciation/amortization (Note 6) 196,904,304 75,397,079 272,301,383 173,369,048 Total assets 700,147,781 259,449,966 959,597,747 312,459,749

DEFERRED OUTFLOWS OF RESOURCES
Related to pensions (Note 10) 51,921,968 5,765,455 57,687,423 10,793,313 Related to OPEB (Note 11) 1,246,233 362,767 1,609,000 2,147,990 Deferred charge on refunding (Note 7) - 680,744 680,744 - Total deferred outflows of resources 53,168,201 6,808,966 59,977,167 12,941,303 Primary Government Component Unit
Vallejo Flood
Governmental Business-Type and Wastewater
Activities Activities Total District

CITY OF VALLEJO
Statement of Net Position
June 30, 2025
See accompanying Notes to the Basic Financial Statements 50

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LIABILITIES
Accounts payable and accrued liabilities $ 19,002,041 $ 5,074,238 $ 24,076,279 $ 6,176,819 Due to other governments 520,755 798,286 1,319,041 - Accrued interest 134,953 461,012 595,965 396,402
Deposits payable 2,877,943 4,934,998 7,812,941 -
Unearned revenues 12,664,974 663,126 13,328,100 -
Noncurrent liabilities:

Due within one year:

Long-term debt due within one year (Note 7) 1,878,995 5,214,920 7,093,915 1,585,000 Employee benefits payable due within one year (Note 9) 3,681,386 513,015 4,194,401 639,342 Claims due within one year (Note 13) 7,828,026 - 7,828,026 - Lease payable due within one year (Note 5b) 109,659 199,654 309,313 - Subscription payable due within one year (Note 5c) 635,177 136,237 771,414 - Due in more than one year:

Long-term debt due more than one year (Note 7) 12,990,571 74,326,357 87,316,928 58,986,861 Employee benefits payable due in more than one year
(Note 9) 9,955,351 1,313,215 11,268,566 2,533,350
Lease payable due in more than one year (Note 5b) 3,387,224 690,271 4,077,495 - Subscription payable due in more than one year (Note
5c) 2,241,811 - 2,241,811 -
Claims due in more than one year (Note 13) 22,279,743 - 22,279,743 - Net Pension Liability (Note 10) 300,611,050 38,056,137 338,667,187 32,419,592 Net OPEB Liability (Note 11) 3,523,995 825,005 4,349,000 6,099,423 Total liabilities 404,323,654 133,206,471 537,530,125 108,836,789

DEFERRED INFLOWS OF RESOURCES
Related to pensions (Note 10) - - - 891,441
Related to OPEB (Note 11) 4,642,208 1,086,792 5,729,000 3,227,844 Related to leases (Note 5a) 10,061,328 - 10,061,328 - Deferred amount on refunding - - - 1,615,760
Total deferred inflows of resources 14,703,536 1,086,792 15,790,328 5,735,045 NET POSITION (NOTE 12)
Net investment in capital assets 334,493,256 87,016,728 421,509,984 162,822,283 Restricted:

Capital projects 36,906,844 - 36,906,844 30,399,987
Debt service 300,577 11,660 312,237 -
Housing programs 29,075,512 - 29,075,512 -
Mare Island programs 13,640,480 - 13,640,480 -
Community development projects 6,726,859 381,490 7,108,349 - Pension trust fund 24,300,464 - 24,300,464 -
Public safety 1,501,322 - 1,501,322 -
Landscape maintenance district services 26,469,148 - 26,469,148 - Nonexpendable - McCune Endowment 64,625 - 64,625 -
Unrestricted (deficit) (139,190,295) 44,555,791 (94,634,504) 17,606,948 Total net position $ 334,288,792 $ 131,965,669 $ 466,254,461 $ 210,829,218 Primary Government Component Unit
Vallejo Flood
Governmental Business-Type and Wastewater
Activities Activities Total District

CITY OF VALLEJO
Statement of Net Position (Continued)
June 30, 2025
See accompanying Notes to the Basic Financial Statements 51

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Statement of Activities
Primary government:

Governmental activities:

Legislative and advisory $ 299,418 $ - $ - $ -
Executive 3,932,954 - 1,114,237 -
Finance 3,435,217 - 27,786 -
Human resources 2,486,820 - - -
Law 2,554,370 - - -
Community services 33,615,620 3,787,508 30,793,486 - Planning and development services 8,045,416 5,541,274 - - Fire services 42,217,667 6,629,118 2,284,809 -
Police services 66,096,035 2,261,246 1,566,898 -
Public works 45,900,716 17,645,667 11,129,840 7,536,328 Economic development 8,521,186 389,611 5,813,393 -
Information technology 3,316,329 - 1,216,261 -
Interest on long-term debt 495,407 - - -
Total governmental activities 220,917,155 36,254,424 53,946,710 7,536,328 Business-type activities:

Water Fund 45,608,675 56,813,666 1,887,054 1,125,715 Marina Fund 1,793,170 1,196,049 77,081 -
Golf Fund 4,464,510 4,691,886 - -
Vallejo Station Parking Fund 839,459 1,044,526 - -
Fiber Optic Fund 337,949 22,835 - -
Total business-type activities 53,043,763 63,768,962 1,964,135 1,125,715 Total primary government $ 273,960,918 $ 100,023,386 $ 55,910,845 $ 8,662,043 Component Units:

Vallejo Flood and Wastewater District $ 49,153,339 $ 60,329,863 $ - $ 354,871 General revenues and transfers:

General revenues:

Property taxes, levied for general purpose
Transient occupancy taxes
Sales taxes
Franchise taxes
Utility users tax
Other taxes
Use of money and property
Other
Gain (loss) on sale of capital asset
Transfers (Note 3a)
Special items
Total general revenues and transfers
Change in net position
Net position-beginning
Restatement-changes in accounting principle (Note 12E)
Net position-beginning, as restated
Net position-ending
Program Revenues
Expenses
Charges for
Services
Operating
Contributions and
Grants
Capital
Contributions and
Grants
Functions/Programs:

CITY OF VALLEJO
Statement of Activities
For the Fiscal Year Ended June 30, 2025
See accompanying Notes to the Basic Financial Statements 52

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$ (299,418) $ - $ (299,418) $ -
(2,818,717) - (2,818,717) -
(3,407,431) - (3,407,431) -
(2,486,820) - (2,486,820) -
(2,554,370) - (2,554,370) -
965,374 - 965,374 -
(2,504,142) - (2,504,142) -
(33,303,740) - (33,303,740) -
(62,267,891) - (62,267,891) -
(9,588,881) - (9,588,881) -
(2,318,182) - (2,318,182) -
(2,100,068) - (2,100,068) -
(495,407) - (495,407) -
(123,179,693) - (123,179,693) -
- 14,217,760 14,217,760 -
- (520,040) (520,040) -
- 227,376 227,376 -
- 205,067 205,067 -
- (315,114) (315,114) -
- 13,815,049 13,815,049 -
(123,179,693) 13,815,049 (109,364,644) -
- - - 11,531,395
40,820,706 - 40,820,706 1,548,866
1,733,680 - 1,733,680 -
57,550,258 - 57,550,258 -
7,494,576 - 7,494,576 -
15,821,439 - 15,821,439 -
6,317,901 - 6,317,901 -
16,235,595 5,596,679 21,832,274 2,363,189
2,992,049 - 2,992,049 142,608
26,883 - 26,883 -
(1,227,113) 1,227,113 - -
(18,078,141) - (18,078,141) -
129,687,833 6,823,792 136,511,625 4,054,663
6,508,140 20,638,841 27,146,981 15,586,058
329,710,435 111,522,953 441,233,388 196,140,431
(1,929,783) (196,125) (2,125,908) (897,271)
327,780,652 111,326,828 439,107,480 195,243,160
$ 334,288,792 $ 131,965,669 $ 466,254,461 $ 210,829,218 Net (Expenses) Revenues and Changes in Net Position
Primary Government Component Unit
Governmental
Activities
Business-Type
Activities Total
Vallejo Flood and
Wastewater District

CITY OF VALLEJO
Statement of Activities
For the Fiscal Year Ended June 30, 2025
See accompanying Notes to the Basic Financial Statements 53

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Fund Financial Statements
54

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Governmental Fund Financial Statements
The City reported three major governmental funds in fiscal year 2024-25. These major funds were presented in their respective columns and described in Note 1.d. The remaining funds were combined into a column titled "Other Governmental Funds". Individual fund data for each of these non-major funds may be found in the Supplemental Information section.
55

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Balance Sheet - Governmental Funds
Special
Revenue Funds
Capital Projects
Funds
Housing
Authority
Capital Outlay
Fund #201 and
Measure P
Capital Fund
#228General Fund
ASSETS
Cash and investments $ 49,528,409 $ 3,400,881 $ 38,211,659 Receivables (net of allowance for uncollectible):

Accounts receivable 4,632,520 140,723 45,337
Notes and loans receivable 5,822,314 17,371,672 -
Interest and dividends receivable 2,142,289 - 618
Leases 5,955,138 - 501,643
Prepaids and deposits 88,015 - 613,392
Due from other governments, current 11,493,325 - -
Advances from other funds 530,000 - -
Materials, parts, and supplies 1,434 - -
Land held for redevelopment 499,684 - -
Restricted assets:

Cash and investments, restricted 24,300,464 832,952 - Cash with fiscal agent - - -
Total assets $ 104,993,592 $ 21,746,228 $ 39,372,649

LIABILITIES
Accounts payable and accrued liabilities $ 8,539,903 $ 164,838 $ 1,522,277 Unearned revenues 4,025,142 - -
Deposits payable 988,719 587,038 -
Due to other governments 1,169 - -
Due to other funds (Note 3b) - - -
Total liabilities 13,554,933 751,876 1,522,277

DEFERRED INFLOWS OF RESOURCES
Unavailable revenues 612,614 4,459,410 -
Deferred inflows for leases 5,254,279 - 465,549
Total deferred inflows of resources 5,866,893 4,459,410 465,549

FUND BALANCES (DEFICITS)
Nonspendable 6,491,321 - 613,392
Restricted 29,015,061 13,555,711 3,449,787
Committed 2,082,623 1,317,657 33,321,644
Assigned 16,323,844 1,661,574 -
Unassigned 31,658,917 - -
Total fund balances (deficits) 85,571,766 16,534,942 37,384,823 Total liabilities, deferred inflows of resources,
and fund balances (deficits) $ 104,993,592 $ 21,746,228 $ 39,372,649

CITY OF VALLEJO
Balance Sheet - Governmental Funds
June 30, 2025
See accompanying Notes to the Basic Financial Statements 56

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Other Total
Governmental Governmental
Funds Funds
ASSETS
Cash and investments $ 84,406,589 $ 175,547,538
Receivables (net of allowance for uncollectible):

Accounts receivable 1,334,912 6,153,492
Notes and loans receivable 12,110,507 35,304,493
Interest and dividends receivable 84,918 2,227,825
Leases 4,649,558 11,106,339
Prepaids and deposits 37,276 738,683
Due from other governments, current 9,532,486 21,025,811 Advances from other funds - 530,000
Materials, parts, and supplies - 1,434
Land held for redevelopment - 499,684
Restricted assets:

Cash and investments, restricted 12,266,904 37,400,320 Cash with fiscal agent 300,577 300,577
Total assets $ 124,723,727 $ 290,836,196

LIABILITIES
Accounts payable and accrued liabilities $ 7,471,093 $ 17,698,111 Unearned revenues 8,639,832 12,664,974
Deposits payable 1,302,186 2,877,943
Due to other governments 519,586 520,755
Due to other funds (Note 3b) 5,189,959 5,189,959
Total liabilities 23,122,656 38,951,742

DEFERRED INFLOWS OF RESOURCES
Unavailable revenues 6,505,837 11,577,861
Deferred inflows for leases 4,341,500 10,061,328
Total deferred inflows of resources 10,847,337 21,639,189

FUND BALANCES (DEFICITS)
Nonspendable 101,901 7,206,614
Restricted 85,543,176 131,563,735
Committed 7,101,356 43,823,280
Assigned 392,867 18,378,285
Unassigned (2,385,566) 29,273,351
Total fund balances (deficits) 90,753,734 230,245,265 Total liabilities, deferred inflows of resources,
and fund balances (deficits) $ 124,723,727 $ 290,836,196

CITY OF VALLEJO
Balance Sheet - Governmental Funds (Continued)
June 30, 2025
See accompanying Notes to the Basic Financial Statements 57

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Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position Amounts reported for governmental activities in the Statement of Net Position are different because:

Total fund balances - governmental funds $ 230,245,265
Capital assets, net of accumulated depreciation/amortization, used in governmental activities are not financial resources and, therefore, are not reported in the funds. 344,408,085 Differences between expected and actual experiences, assumption changes and net differences between projected and actual earnings, and contributions subsequent to the measurement date for the postretirement benefits (pension and OPEB) are recognized as deferred outflows of resources and deferred inflows of resources on the Statement of Net Position.

Deferred outflows-pension related 51,334,167
Total deferred outflows and inflows related to postemployment benefits 51,334,167 Other long-term assets that are not available to pay for current period expenditures and, therefore, are either labeled unavailable or not reported in the funds.

Miscellaneous revenues 11,577,861
Total other long-term assets 11,577,861
Internal service funds provide services to other funds on a cost-reimbursement basis. The assets, deferred outflows of resources, liabilities, and deferred inflows of resources of the internal service funds are included in governmental activities in the Statement of Activities. 24,685,824
Long-term liabilities that are not due and payable in the current period, and therefore, are not reported in the funds.

Long-term debt (11,134,566)
Lease payable (3,496,883)
Subscription payable (2,876,988)
Employee benefits payable (13,342,992)
Accrued interest payable on long-term debt (123,188)
Net pension liability (296,987,793)
Total long-term liabilities (327,962,410)
Net position of governmental activities $ 334,288,792

CITY OF VALLEJO
Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position June 30, 2025
See accompanying Notes to the Basic Financial Statements 58

Page 214 of 594 ends

Statement of Revenues, Expenditures and Changes in Fund Balances Special Revenue Funds Capital Projects Funds
Housing Authority
Capital Outlay Fund
#201 and Measure P
Capital Fund #228General Fund

REVENUES
Taxes $ 127,710,220 $ - $ -
Licenses and permits 5,350,262 - 192,804
Intergovernmental revenues 12,684,624 28,600,490 -
Charges for services 9,294,078 - -
Use of money and property 6,101,131 103,376 1,393,851 Fines and forfeitures 964,723 - -
Contribution revenue - - -
Other 1,969,331 107,795 148,576
Total revenues 164,074,369 28,811,661 1,735,231

EXPENDITURES
Current:

Legislative and advisory 256,666 - -
Executive 2,381,127 - 372,965
Finance 2,600,071 - -
Human resources 2,278,898 - -
Law 2,220,186 - -
Community services - 29,002,065 -
Planning and development services 5,655,081 - 1,470,409 Fire services 35,314,757 - 37,033
Police services 55,560,870 - -
Public works 9,587,190 - 31,274
Economic development 1,740,750 - 144,012
Information technology 1,620,917 - 1,434,820
Non departmental 7,515,401 - -
Capital outlay - - 15,664,087
Debt service:

Principal long term debt payments - - 436,208
Principal - lease payments 18,166 443 88,461
Principal - subscription payments - - 729,797
Interest and fiscal charges 1,244 - 83,793
Total expenditures 126,751,324 29,002,508 20,492,859 Excess (deficiency) of revenues
over (under) expenditures 37,323,045 (190,847) (18,757,628)

OTHER FINANCING SOURCES (USES)
Transfers in (Note 3a) 1,178,060 190,000 25,271,060
Transfers out (Note 3a) (31,864,825) - -
Issuance of debt - leases 17,782 - -
Issuance of debt - subscriptions - - 2,361,660
Total other financing sources (uses) (30,668,983) 190,000 27,632,720 Net change in fund balances 6,654,062 (847) 8,875,092 Fund balances-beginning 78,917,704 16,535,789 28,509,731 Restatements-changes within financial reporting entity - - - Fund balances (deficit)-beginning, as restated 78,917,704 16,535,789 28,509,731 Fund balances (deficit)-ending $ 85,571,766 $ 16,534,942 $ 37,384,823

CITY OF VALLEJO
Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds
For the Fiscal Year Ended June 30, 2025
See accompanying Notes to the Basic Financial Statements 59

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Capital Project Funds
Formerly Major Fund
Mare Island
Conversion #106
Other Total
Governmental Governmental
Funds Funds

REVENUES
Taxes $ - $ 5,266,456 $ 132,976,676
Licenses and permits - 452,468 5,995,534
Intergovernmental revenues - 20,260,515 61,545,629
Charges for services - 13,581,207 22,875,285
Use of money and property - 6,049,398 13,647,756
Fines and forfeitures - 8,656 973,379
Contribution revenue - 6,800 6,800
Other - 81,559 2,307,261
Total revenues - 45,707,059 240,328,320

EXPENDITURES
Current:

Legislative and advisory - - 256,666
Executive - - 2,754,092
Finance - - 2,600,071
Human resources - - 2,278,898
Law - - 2,220,186
Community services - 1,130,134 30,132,199
Planning and development services - 369,835 7,495,325 Fire services - 2,632,124 37,983,914
Police services - 2,409,212 57,970,082
Public works - 12,538,273 22,156,737
Economic development - 6,511,956 8,396,718
Information technology - - 3,055,737
Non departmental - - 7,515,401
Capital outlay - 17,556,007 33,220,094
Debt service:

Principal long term debt payments - 823,687 1,259,895 Principal - lease payments - 25,044 132,114
Principal - subscription payments - 373,508 1,103,305 Interest and fiscal charges - 143,365 228,402
Total expenditures - 44,513,145 220,759,836
Excess (deficiency) of revenues
over (under) expenditures - 1,193,914 19,568,484

OTHER FINANCING SOURCES (USES)
Transfers in (Note 3a) - 1,899,613 28,538,733
Transfers out (Note 3a) - (1,928,060) (33,792,885)
Issuance of debt - leases - - 17,782
Issuance of debt - subscriptions - 1,163,041 3,524,701 Total other financing sources (uses) - 1,134,594 (1,711,669) Net change in fund balances - 2,328,508 17,856,815
Fund balances-beginning 4,333,793 84,091,433 212,388,450 Restatements-changes within financial reporting entity (4,333,793) 4,333,793 - Fund balances (deficit)-beginning, as restated - 88,425,226 212,388,450 Fund balances (deficit)-ending $ - $ 90,753,734 $ 230,245,265

CITY OF VALLEJO
Statement of Revenues, Expenditures and Changes in Fund Balances (Continued) Governmental Funds
For the Fiscal Year Ended June 30, 2025
See accompanying Notes to the Basic Financial Statements 60

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Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities Amounts reported for governmental activities in the Statement of Activities are different because:

Net change in fund balances - total governmental funds: $ 17,856,815 Governmental funds report capital outlays are expenditures. However, in the Statement of Activities, the cost of these assets is allocated over their estimated useful lives and reported as depreciation/amortization expense.

This is the amount by which capital outlays exceeded depreciation/ amortization expense in the current period.

Capital outlay $ 19,130,398
Deletion of capital asset project at 2441 Broadway st (18,078,141) Adjustments due to subscription/leases and other capital assets (153,733) Depreciation/amortization expense (9,423,633)
Total adjustment (8,525,109)
Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds.

Earned but unavailable other revenues 3,787,507
Total adjustment 3,787,507
Bond and other debt proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the Statement of Net Position. Repayment of bond and other debt principal is an expenditure in the governmental funds, but repayment reduces long-term liabilities in the Statement of Net Position. Also, governmental 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.

Repayment of debt principal is added back to fund balance 1,259,895 Interest accrued to principal is deducted from fund balance (101,463) Leases issued (17,782)
Lease payable payments 107,070
Subscription issued (3,643,372)
Subscription payments 1,270,423
Total adjustment (1,125,229)
Internal service funds provide services to other funds on a cost- reimbursement basis. The net revenue of certain activities of internal service funds is reported with governmental activities. 5,032,593 Some expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental funds.

Accrued interest on long-term debt 2,588
Compensated absences (626,254)
Changes in pension liabilities and related deferred outflows and inflows of resources (9,894,771)
Total adjustment (10,518,437)
Change in net position of governmental activities $ 6,508,140

CITY OF VALLEJO
Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities
For the Fiscal Year Ended June 30, 2025
See accompanying Notes to the Basic Financial Statements 61

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Proprietary Fund Financial Statements
The City reported Water enterprise fund as major fund in fiscal year 2024-25. This fund was presented in its respective columns and described in Note 1.d. In addition, all the remaining enterprise funds were combined into a single column titled “Other Enterprise Funds”. All internal service funds were combined into a single, aggregated presentation. Individual fund data for each of the other enterprise funds and internal service funds may be found in the Supplemental Information section.

See accompanying Notes to the Basic Financial Statements 62

Page 218 of 594 ends

Statement of Net Position
ASSETS
Current assets:

Cash and investments $ 73,432,542 $ 3,669,471 $ 77,102,013 $ 48,905,451 Receivables (net of uncollectibles):

Accounts receivable 11,451,026 135,115 11,586,141 362,185 Due from other governments, current 1,887,054 74,538 1,961,592 - Prepaids and deposits 434,400 118,700 553,100 1,563,290 Due from other funds (Note 3b) - - - 5,266,078
Materials, parts, and supplies 1,587,536 129,711 1,717,247 225,309 Restricted:

Cash and investments, restricted 3,404 - 3,404 -
Cash with fiscal agent 41,923,242 381,490 42,304,732 4,969,330 Total current assets 130,719,204 4,509,025 135,228,229 61,291,643 Noncurrent:

Capital assets, net 102,244,912 22,506,825 124,751,737 8,877,935 Total noncurrent assets 102,244,912 22,506,825 124,751,737 8,877,935 Total assets 232,964,116 27,015,850 259,979,966 70,169,578

DEFERRED OUTFLOWS OF RESOURCES
Related to pensions 5,765,455 - 5,765,455 587,802
Related to OPEB 362,767 - 362,767 1,246,234
Unamortized loss on refunding of debt 680,744 - 680,744 - Total deferred outflows of resources 6,808,966 - 6,808,966 1,834,036 Business-Type Activities
Governmental
Activities
Water Fund
Other
Enterprise Internal
Funds Totals Service Funds

CITY OF VALLEJO
Statement of Net Position
Proprietary Funds
June 30, 2025
See accompanying Notes to the Basic Financial Statements 63

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LIABILITIES
Current liabilities:

Accounts payable and accrued liabilities 4,364,843 709,395 5,074,238 1,303,930 Accrued interest 337,658 123,354 461,012 11,765
Due to other funds (Note 3b) - - - 76,119
Due to other governments 798,286 - 798,286 -
Unearned revenues 498,620 164,506 663,126 -
Deposits payable 4,824,234 110,764 4,934,998 -
Lease payable 8,680 190,974 199,654 -
Subscription payable 136,237 - 136,237 -
Employee benefits payable, current 513,015 - 513,015 148,545 Accrued claims and judgments - - - 7,828,026
Bonds and notes payable 4,405,000 809,920 5,214,920 690,000 Total current liabilities 15,886,573 2,108,913 17,995,486 10,058,385 Noncurrent liabilities:

Advances from other funds - 530,000 530,000 -
Employee benefits payable 1,313,215 - 1,313,215 145,200 Accrued claims and judgments - - - 22,279,743
Net pension liability 38,056,137 - 38,056,137 3,623,259 Net OPEB liability 825,005 - 825,005 3,523,996
Lease payable 18,240 672,031 690,271 -
Bonds, notes and loans payable 60,074,974 14,251,383 74,326,357 3,045,000 Total noncurrent liabilities 100,287,571 15,453,414 115,740,985 32,617,198 Total liabilities 116,174,144 17,562,327 133,736,471 42,675,583

DEFERRED INFLOWS OF RESOURCES
Related to OPEB 1,086,792 - 1,086,792 4,642,208
Total deferred inflows of resources 1,086,792 - 1,086,792 4,642,208

NET POSITION
Net investment in capital assets 78,197,240 8,819,488 87,016,728 8,147,333 Restricted for community development - 381,490 381,490 - Restricted for debt service 11,660 - 11,660 -
Net position, unrestricted 44,303,246 252,545 44,555,791 16,538,490 Total net position $ 122,512,146 $ 9,453,523 $ 131,965,669 $ 24,685,823 Business-Type Activities
Governmental
Activities
Water Fund
Other
Enterprise Internal
Funds Totals Service Funds

CITY OF VALLEJO
Statement of Net Position (Continued)
Proprietary Funds
June 30, 2025
See accompanying Notes to the Basic Financial Statements 64

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Statement of Revenues, Expenses and Changes in Net Position Business-Type
Activities
Governmental
Activities
Water Fund
Other Total
Enterprise Enterprise Internal
Funds Funds Service Funds

OPERATING REVENUES
Charges for services $ 56,381,713 $ 6,899,586 $ 63,281,299 $ 24,309,241 Other 431,953 55,710 487,663 70,296
Total operating revenues 56,813,666 6,955,296 63,768,962 24,379,537

OPERATING EXPENSES
General and administrative 26,315,088 2,602,688 28,917,776 - Operations expenses 12,475,292 4,196,948 16,672,240 10,753,441 Insurance and claims - - - 13,020,775
Depreciation and amortization expense 4,943,570 381,357 5,324,927 2,046,284 Total operating expenses 43,733,950 7,180,993 50,914,943 25,820,500 Operating income (loss) 13,079,716 (225,697) 12,854,019 (1,440,963)

NONOPERATING REVENUES (EXPENSES)
Intergovernmental revenues 1,887,054 77,081 1,964,135 - Investment income (loss) 5,485,444 111,235 5,596,679 2,587,839 Interest and fiscal charges (1,874,725) (254,095) (2,128,820) (168,205) Gain (loss) on disposal of capital assets - - - 26,883 Total nonoperating revenues (expenses) 5,497,773 (65,779) 5,431,994 2,446,517 Income (loss) before capital contributions and
transfers 18,577,489 (291,476) 18,286,013 1,005,554 Capital contribution - developers 1,125,715 - 1,125,715 - Transfers in (Note 3a) - 1,727,113 1,727,113 4,927,039 Transfers out (Note 3a) - (500,000) (500,000) (900,000) Change in net position 19,703,204 935,637 20,638,841 5,032,593 Net position-beginning 103,005,067 8,517,886 111,522,953 19,672,403 Restatements-change in accounting principle (196,125) - (196,125) (19,173) Net position-beginning, as restated 102,808,942 8,517,886 111,326,828 19,653,230 Net position-ending $ 122,512,146 $ 9,453,523 $ 131,965,669 $ 24,685,823

CITY OF VALLEJO
Statement of Revenues, Expenses and Changes in Net Position Proprietary Funds
For the Fiscal Year Ended June 30, 2025
See accompanying Notes to the Basic Financial Statements 65

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Statement of Cash Flows

CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers $ 57,008,163 $ 6,918,510 $ 63,926,673 $ 110,025,544 Payments to suppliers and service providers (23,543,026) (6,921,048) (30,464,074) (11,157,363) Payments to employees for salaries and benefits (17,945,955) - (17,945,955) (91,806,510) Claims paid - - - (6,006,914)
Net cash provided by (used for)
operating activities 15,519,182 (2,538) 15,516,644 1,054,757

CASH FLOWS FROM NONCAPITAL

FINANCING ACTIVITIES
Transfers from other funds - 1,727,113 1,727,113 4,927,039 Transfers to other funds - (500,000) (500,000) (900,000) Payments from other funds on interfund borrowings - - - 76,119 Payments to other funds on interfund borrowings - (150,000) (150,000) (2,110,396) Operating grants and contributions 50,111 168,888 218,999 - Net cash provided by (used for)
noncapital financing activities 50,111 1,246,001 1,296,112 1,992,762

CASH FLOWS FROM CAPITAL AND RELATED

FINANCING ACTIVITIES
Capital contributions 1,125,715 - 1,125,715 -
Acquisition and construction of capital assets (13,026,707) (508,704) (13,535,411) (2,954,926) Principal paid on capital debt (4,406,701) (794,409) (5,201,110) (665,000) Interest paid on capital debt (2,154,261) (260,259) (2,414,520) (170,407) Principal paid on lease liability (25,062) (95,874) (120,936) - Interest paid on lease liability (633) (612) (1,245) - Principal paid on subscription liability (146,595) - (146,595) - Interest paid on subscription liability (8,413) - (8,413) - Proceeds from sales of assets - - - 44,713
Net cash provided by (used for)
capital and related financing activities (18,642,657) (1,659,858) (20,302,515) (3,745,620)

CASH FLOWS FROM INVESTING ACTIVITIES
Interest on investments 5,485,636 111,235 5,596,871 2,587,839 Net cash provided by (used for)
investing activities 5,485,636 111,235 5,596,871 2,587,839 Net increase (decrease) in
cash and cash equivalents 2,412,272 (305,160) 2,107,112 1,889,738 Cash and cash equivalents-beginning 112,946,916 4,356,121 117,303,037 51,980,587 Cash and cash equivalents-ending $ 115,359,188 $ 4,050,961 $ 119,410,149 $ 53,870,325 Business-Type
Activities
Governmental
Activities
Water Fund
Other
Enterprise Internal
Funds Totals Service Funds

CITY OF VALLEJO
Statement of Cash Flows
Proprietary Funds
For the Fiscal Year Ended June 30, 2025
See accompanying Notes to the Basic Financial Statements 66

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RECONCILIATION OF OPERATING INCOME (LOSS)

TO NET CASH PROVIDED BY (USED FOR)

OPERATING ACTIVITIES
Operating income (loss) $ 13,079,716 $ (225,697) $ 12,854,019 $ (1,440,963) Adjustments to reconcile operating income (loss) to
net cash provided by (used for) operating activities:

Depreciation/amortization expense 4,943,570 381,357 5,324,927 2,046,284 (Increase) decrease in accounts receivable 57,522 (51,383) 6,139 9,308 (Increase) decrease in inventories (287,977) (11,613) (299,590) (27,302) (Increase) decrease in prepaid items 6,103 (16,709) (10,606) (1,130,593) Increase (decrease) in accounts payable (1,326,484) (93,090) (1,419,574) 84,844 Increase (decrease) in deposits payable 113,231 7,947 121,178 - Increase (decrease) in unearned revenue 23,742 6,650 30,392 - Increase (decrease) in compensated absences 217,171 - 217,171 (871,860) Increase (decrease) in claims and judgments - - - 1,563,169 Increase (decrease) in net pension liability (1,273,525) - (1,273,525) 2,439 Increase (decrease) in net OPEB liability (33,887) - (33,887) 823,887 Total adjustments 2,439,466 223,159 2,662,625 2,500,176 Net cash provided by (used for)
operating activities $ 15,519,182 $ (2,538) $ 15,516,644 $ 1,059,213

NON-CASH INVESTING, CAPITAL, AND FINANCING
ACTIVITIES:

Increase in lease liability and the acquisition of right to use assets $ 15,238 $ 958,878 $ 974,116 $ -
Amortization of bond premium 499,498 - 499,498 -
Amortization of loss on refunding of debt (226,914) - (226,914) - Business-Type
Activities
Governmental
Activities
Water Fund
Other
Enterprise Internal
Funds Totals Service Funds

CITY OF VALLEJO
Statement of Cash Flows (Continued)
Proprietary Funds
For the Fiscal Year Ended June 30, 2025
See accompanying Notes to the Basic Financial Statements 67

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Fiduciary Fund Financial Statements
The City has two types of fiduciary funds: the custodial funds and private purpose trust funds. The custodial funds were combined into a single column. Individual fund data of each of the custodial funds may be found in Supplemental Information section.

See accompanying Notes to the Basic Financial Statements 68

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Statement of Fiduciary Net Position
Private
Purpose
Trust Fund
Successor
Agency
Custodial
Funds
ASSETS
Cash and investments (Note 2b) $ 337,933 $ 3,871,987
Restricted cash and investments with fiscal agents (Note 2b) 198,153 3,985,748 Capital assets, not being depreciated (Note 15b) 189,226 - Capital assets, net of accumulated depreciation (Note 15b) 31,450 - Total assets 756,762 7,857,735

LIABILITIES
Accounts payable and accrued liabilities - 4,733
Accrued interest 30,888 173,626
Deposits payable - 252,216
Due to other governments - 1,869,412
Long-term debt
Due in one year (Notes 15c) 205,000 900,000
Due in more than one year (Notes 15c) 3,120,116 7,890,000 Total liabilities 3,356,004 11,089,987
NET POSITION (deficit)
Restricted for governments, individuals or other organizations (deficit) (2,599,242) (3,232,252) Total net position (deficit) $ (2,599,242) $ (3,232,252)

CITY OF VALLEJO
Statement of Fiduciary Net Position
June 30, 2025
See accompanying Notes to the Basic Financial Statements 69

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Statement of Changes in Fiduciary Net Position
Private
Purpose Trust
Fund
Successor
Agency
Custodial
Funds

ADDITIONS
Investment earnings $ 17,780 $ 314,135
Redevelopment property tax trust fund distribution 1,293,385 - Collections for assessment districts - 2,020,611
Total additions 1,311,165 2,334,746

DEDUCTIONS
Administrative expenses 47,182 71,377
Interest and fiscal charges 132,775 536,622
Depreciation and amortization expense 4,193 -
Total deductions 184,150 607,999
Net increase (decrease) in fiduciary net position 1,127,015 1,726,747 Net position-beginning (deficit) (3,726,257) (4,958,999) Net position-ending (deficit) $ (2,599,242) $ (3,232,252)

CITY OF VALLEJO
Statement of Changes in Fiduciary Net Position
For the Fiscal Year Ended June 30, 2025
See accompanying Notes to the Basic Financial Statements 70

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Notes to The Basic Financial Statements
71

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NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Financial Reporting Entity
The City was incorporated in 1868 as a charter City, with a Council-Manager form of Government, and provides all municipal services, excluding garbage disposal and electricity.

The accompanying basic financial statements present the financial activity of the City, which is the primary government presented, along with the financial activities of its component units, which are entities for which the City is financially accountable. Although they are separate legal entities, blended component units are in substance part of the City’s operations and are reported as an integral part of the City’s financial statements. Each discretely presented component unit, on the other hand, is reported in a separate column in the basic financial statements to emphasize it is legally separate from the government.

The City’s component units are described below:
◦ Housing Authority of the City of Vallejo (Blended Component Unit) ◦ Marine World Joint Powers Authority (Blended Component Unit) ◦ Parking Authority of the City of Vallejo (Blended Component Unit) ◦ Public Financing Authority of the City of Vallejo (Blended Component Unit) ◦ Vallejo Flood and Wastewater District (Discrete Component Unit) ◦ Vallejo Flood and Wastewater District Financing Corporation (Discrete Component Unit) Additional financial information for each of these entities can be obtained from the Finance Department City of Vallejo, 555 Santa Clara Street, Vallejo, California 94590.

PRIMARY GOVERNMENT
The financial statements of the primary government of the City of Vallejo include the activities of the City as well as the Housing Authority of the City of Vallejo, the Marine World Joint Powers Authority, the Parking Authority of the City of Vallejo, and the Public Financing Authority of the City of Vallejo, all of which are controlled by and dependent on the City. While these are separate legal entities, their financial activities are integral to those of the City. Their financial activities have been aggregated and merged (termed “blended”) with those of the primary government of the City in the accompanying financial statements.

Blended Component Units
The Housing Authority of the City of Vallejo — was formed in June 1942 and is organized under the California Health and Safety Code. The objectives of the Housing Authority are to aid low-income families in obtaining decent, safe and sanitary housing through federal assistance programs and mortgage revenue bond programs.

On February 1, 2012, the Housing Authority also elected to assume the responsibilities of the Housing Successor for the low/moderate income housing programs of the former Redevelopment Agency. The Housing Authority is governed by a Board of Commissioners composed of the City Council members and two tenants of the Housing Authority. The operations of the Housing Authority are reported in the Housing Authority Special Revenue Fund.

Management of the City has operational responsibility for the Authority.

Separate financial statements for the Housing Authority may be obtained by contacting the office of the Finance Director at 555 Santa Clara Street, Vallejo, California, 94590, phone 707-648-4592.

CITY OF VALLEJO
Notes to Financial Statements
For the Fiscal Year Ended June 30, 2025
504
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
72

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The Marine World Joint Powers Authority — was formed in October 1996, pursuant to the Joint Exercise of Powers Act of the Government Code of the State of California for the purpose of assuming ownership of the Marine World Africa USA theme park from the Marine World Foundation. The City Council is the governing body of the Marine World JPA. The City has full accountability for the Authority’s fiscal affairs. The Authority had no activity and had no assets or liabilities during the year ended June 30, 2025. The Authority does not issue separate financial statements.

The Parking Authority of the City of Vallejo — was formed in May 1975, pursuant to the provisions of California statutes. Operations of the Parking Authority began in May 1977, with the execution of a joint powers agreement with the City. The purpose of this agreement was to provide the acquisition, construction, financing and operation of parking facilities in the downtown area of the City. The City Cou ncil is the governing board of the Parking Authority. The City has full accountability for the Authority’s fiscal affairs. The Authority’s parcels of land had a carrying value of $72,800 as of June 30, 2025. The Authority is inactive and had no activity during the year ended June 30, 2025. The Authority does not issue separate financial statements.

The Public Financing Authority of the City of Vallejo — was formed in July 1990. The primary purpose of the Financing Authority is to provide financing for City projects. The City Council is the governing board of the Financing Authority. The City has full accountability for the Authority’s fiscal affairs. The activities of the Authority are blended with the Certificates of Participation Debt Service Fund, Marina Enterprise Fund, Golf Enterprise Fund and fiduciary funds. The Authority does not issue separate financial statements.

DISCRETELY PRESENTED COMPONENT UNITS
Vallejo Flood and Wastewater District (VFWD) — was created by an act of the California legislature and began operations in April 1952 as the Vallejo Sanitation and Flood Control District (VSFCD). VSFCD changed its name to the Vallejo Flood and Wastewater District during fiscal year 2018. The purpose of the Act was to give autonomous authority to VFWD to provide for the collection, treatment and disposal of wastewater and to control and dispose of storm waters. From 1993 to 1999 VFWD was part of the City’s operations. Commencing July 1, 1999 the VFWD became a separate district from the City. The Board now consists of the seven elected City Council members and one member appointed by the Solano County Board of Supervisors. Although the City Council exercises control over the Board of VFWD, there is no operational responsibility or financial benefit or burden relationship with the primary government. Separate financial statements for VFWD may be obtained by contacting 450 Ryder Street, Vallejo, California 94590.

Vallejo Flood and Wastewater District Financing Corporation (VFWDFC) — is a non-profit public benefit corporation organized in July 1993 as the Vallejo Sanitation and Flood Control District Financing Corporation (VSFCDFC) and was renamed to the Vallejo Flood and Wastewater District Financing Corporation in March 2018.

The VFWDFC was organized under the laws of the State of California for the purpose of assisting the VFWD in funding certain projects and other matters relating to the purpose of VFWD. Members of the Board for VFWD serve as Directors of the VFWDFC. The activities of the VFWDFC are blended with the VFWD and separate financial statements are not prepared for the VFWDFC.

B. Basis of Presentation
These Basic Financial Statements are prepared in conformity with accounting principles generally accepted in the United States of America as applied to governmental agencies. The Governmental Accounting Standards Board is the acknowledged standard setting body for establishing accounting and financial reporting standards followed by governmental entities in the United States of America.

The City’s financial position and results of operations are presented from two perspectives in the following two sets of financial statements:

Government-wide Statements: The government-wide financial statements, including the Statement of Net Position and the Statement of Activities, report the financial activities of the primary government (the City) and its blended and discretely presented component units.

CITY OF VALLEJO
Notes to Financial Statements
For the Fiscal Year Ended June 30, 2025
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 73

Page 229 of 594 ends

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.

Fiduciary activities of the City, which are custodial in nature, are not included in these statements and are presented separately. Eliminations have been made to minimize the double counting of internal activities. All internal balances in the Statement of Net Position have been eliminated except those representing balances between the governmental and business-type activities.

The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the City. Direct expenses are those that are specifically associated with a program or function. Certain indirect costs are included in program expenses reported for individual functions and activities. Program revenues include (a) charges paid by the recipients of goods or services offered by the programs, (b) operating grants and contributions that are restricted to meeting the operational needs of a particular program, and (c) capital fees, grants and contributions that are restricted to financing the acquisition or construction of capital assets. Revenues that are not classified as program revenues are presented as general revenues.

The City may pay for its programs with a combination of cost-reimbursement grants, categorical block grants, and general revenues. Thus, both restricted and unrestricted net position may be available to finance program expenditures. The City’s policy is to first apply restricted grant resources to such programs, followed by general revenues if necessary.

Fund Financial Statements: In addition to the government-wide statements described above, the City also presents Fund Financial Statements. The accounts of the City are organized on the basis of funds. A fund is a separate accounting entity with a self-balancing set of accounts. Each fund is established for the purpose of accounting for specific activities in accordance with applicable regulations, restrictions or limitations. The City accounts for its operations in governmental, proprietary and fiduciary funds, which include the following categories:

Governmental Funds:

General Fund – To account for resources traditionally associated with general government operations of the City, including Measure B Transaction tax and Measure P sales tax and the related expenditures, and pre-1990 Successor Agency loans and the related revenues, that are not required legally or by sound financial management to be accounted for in another fund.

Special Revenue Funds – To account for the proceeds of specific revenue sources that are legally restricted to be expended for specified purposes.

Debt Service Funds – To account for the servicing of long-term debt not being financed by business-type funds.

Capital Projects Funds – To account for capital outlays including the acquisition and construction of capital improvements.

Permanent Funds – To account for and report resources that are restricted to the extent that only earnings, and not principal, may be used for purposes that support the reporting government’s programs — that is, for the benefit of the government or its citizenry.

Proprietary Funds:

Enterprise Funds – To account for operations that are financed substantially through user fees and are operated in a manner similar to private business enterprises.

Internal Service Funds – To account for the financing of goods and services provided by one City department to other departments on a cost reimbursement basis.

Fiduciary Funds:

Custodial Funds – To report fiduciary activities that are not held in a trust or equivalent arrangement.

CITY OF VALLEJO
Notes to Financial Statements
For the Fiscal Year Ended June 30, 2025
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 74

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Private–Purpose Trust Funds – To report trust arrangements under which principal and income benefit other governmental entities.

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

C. Basis of Accounting
The government-wide, proprietary, and fiduciary fund financial statements are reported using the economic resources measurement focus and the full accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place.

Governmental Funds: Governmental funds are used to report the majority of the City’s programs. These funds are reported in the Fund Financial Statements on the modified accrual basis of accounting, with a focus on current financial resources. This basis differs from the accrual basis of accounting used to report the government- wide financial statements and proprietary and fiduciary fund financial statements.

Revenues are recognized when measurable and available. The City considers revenues reported in the governmental funds to be available if the revenues are collected within ninety days after year-end. This period is extended to one year for grant programs. Revenues susceptible to accrual include taxes, intergovernmental revenues, charges for services and interest revenue. Non-exchange transactions, in which the City gives or receives value without directly receiving or giving equal value in exchange, include taxes, grants, entitlements, and donations. Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.

Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, compensated absences and claims payable, which are recognized as expenditures to the extent they have matured. Governmental capital asset acquisitions are reported as expenditures in governmental funds.

Proceeds of governmental long-term debt and acquisitions under capital leases are reported as other financing sources.

Proprietary Funds: The proprietary funds of the City are reported on the accrual basis of accounting in the Fund Financial Statements. Operating revenues in the proprietary funds are those revenues that are generated from the primary operations of the fund. All other revenues are reported as non-operating revenues. Operating expenses are those expenses that are essential to the primary operations of the funds. All other expenses are reported as non-operating expenses.

D. Major Funds
The Fund Financial Statements focus on the individual major funds of the City, each of which is displayed in a separate column, and the aggregate of remaining funds, which are labeled as non-major funds. Major funds are defined as funds with assets and deferred outflows of resources, liabilities and deferred inflows of resources, revenues, expenditures, or expenses equal to ten percent of their fund-type total, and five percent of the grand total, or other funds of reporting significance.

The City reports the following major governmental funds in the accompanying Fund Financial Statements:

General Fund – This 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.

Housing Authority Special Revenue Fund – is used to account for monies received and expended on housing assistance to low and moderate income families and the assets and liabilities assumed from the Housing Fund of the Former Redevelopment Agency upon the dissolution as of February 1, 2012. Funds are provided by receipts from the Federal Section 8 Housing and Urban Development (HUD) programs.

CITY OF VALLEJO
Notes to Financial Statements
For the Fiscal Year Ended June 30, 2025
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 75

Page 231 of 594 ends

Capital Outlay Fund and Measure P Capital Outlay - is used to account for the expenditure of the General Fund and grant funded capital projects, including acquisitions and improvements of public property, public works projects, facilities, equipment and systems. The Measure P fund accounts for revenues received from Measure P sales tax to support a variety of capital projects and community priorities including street and sidewalk repair, public safety enhancements, homelessness services, blight reduction, and improvements to public spaces.

The City reports the Water Fund as major enterprise fund in the accompanying Fund Financial Statements.

Water Fund – is used to account for the production and distribution of water to residents and businesses located within the City. Water service is also provided to Lakes District and Travis Air Force Base customers outside the City limits.

The City also reports the following fund types:

Internal Service Funds: These funds account for fleet maintenance and replacement, workers' compensation and general liability self-insurance programs, payroll and retiree health benefits, all of which are provided to other departments on a cost- reimbursement basis. Revenues are recognized based on cycle billings rendered to customers.

Fiduciary Funds: Trust funds account for assets held by the City as an agent for various functions. Custodial funds are used to account for assets held by the City as a fiduciary for the bondholders of the improvement and assessment land-based debt districts within the City. The Successor Agency to the Redevelopment Agency Private-Purpose Trust Fund accounts for the accumulation of resources to be used for payments at appropriate amounts and times in the future.

E. Cash and Cash Equivalents
For purposes of the Statement of Cash Flows, cash equivalents are defined as cash and investments which are considered to be liquid assets for purposes of measuring cash flows. Cash and investment of all funds are pooled with the City’s pooled cash and investments, and are considered cash and cash equivalents because the pool is used essentially as a demand deposit account from the standpoint of the funds. Investments are recorded at fair value; changes in fair value are included with investment income in the operating statements.

F. Materials, Parts, and Supplies
City materials, parts and supplies are held for consumption and are valued at average cost. Enterprise fund supplies consist of materials and supplies which are held for future use. General Fund supplies are recorded as an expenditure at the time individual supply items are consumed.

VFWD supplies inventories are valued at cost and follow a first-in-first-out (FIFO) flow. This flow approximates market because ending inventory consists of the most recent items purchased. Inventories are recorded as expenses when consumed rather than when purchased.

G. Land Held for Redevelopment
Land held for redevelopment is stated at the lower of historical cost or net realizable value, if estimable. Net realizable value equals the agreed-upon sales price when a disposition agreement has been reached with a developer.

H. Prepaids
Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both the government-wide and fund financial statements. The cost of prepaid items is recorded as expenditures/expenses when consumed rather than when purchased.

CITY OF VALLEJO
Notes to Financial Statements
For the Fiscal Year Ended June 30, 2025
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 76

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I. Deferred Outflows/Inflows of Resources
In addition to assets, the statement of net position or balance sheet reports a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net assets that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The City has three types of items that qualify for reporting in this category. An unamortized loss on refunding of debt results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. The City also has deferred outflows and inflows of resources related to pensions and OPEB as discussed in Note 10 and 11, respectively.

In addition to liabilities, the statement of net position or balance sheet reports 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 type of item, which arises only under the modified accrual basis of accounting that qualifies for reporting in this category. Accordingly, the item, unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from accounts receivable, inter-agency reimbursements, and interest from notes and loans receivable. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. The City also has three items, which arise only under the full-accrual basis of accounting that are reported in this category, which are deferred inflows of resources related to leases, pensions and OPEB as discussed in Notes 5, 10 and 11, respectively.

J. Property Tax Revenues
Solano County assesses properties and bills, collects, and distributes property taxes to the City. The County remits the entire amount levied and handles all delinquencies, retaining interest and penalties. Secured and unsecured property taxes are levied on January 1 of the preceding fiscal year. Property tax revenues are recognized by the City in the fiscal year they are assessed, provided they become available as defined above.

Secured property tax is due in two installments, on November 1 and March 1, and becomes a lien on January 1.

It becomes delinquent after December 10 and April 10, respectively. Unsecured property tax is due on July 1, and becomes delinquent on August 31. The term “unsecured” refers to taxes on personal property other than real estate, land and buildings. These taxes are secured by liens on the property being taxed.

K. Estimates and Assumptions
The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

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

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

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

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

CITY OF VALLEJO
Notes to Financial Statements
For the Fiscal Year Ended June 30, 2025
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If the fair value of an asset or liability is measured using inputs from more than one level of the fair value hierarchy, the measurement is considered to be based on the lowest priority level input that is significant to the entire measurement.

M. Leases
Lessee: The City is a lessee for noncancellable leases of equipment. The City recognizes a lease liability and an i n t a n g i b l e r i g h t - t o - u s e l e a s e a s s e t ( l e a s e a s s e t ) i n t h e f i n a n c i a l s t a t e m e n t s . T h e C i t y r e c o g n i z e s l e a s e l i a b i l i t i e s with an initial, individual value of $5,000 or more.

At the commencement of a lease, the City initially measures the lease liability at the present value of payments expected to be made during the lease term. Subsequently, the lease liability is reduced by the principal portion of lease payments made. The lease asset is initially measured as the initial amount of the lease liability, adjusted for lease payments made at or before the lease commencement date, plus certain initial direct costs. Subsequently, t h e r i g h t - t o - u s e l e a s e a s s e t i s a m o r t i z e d o n a s t r a i g h t - l i n e b a s i s o v e r t h e s h o r t e r o f t h e l e a s e t e r m o r i t s u s e f u l l i f e .

Key estimates and judgments related to leases include how the City determines (1) the discount rate it uses to discount the expected lease payments to present value, (2) lease term, and (3) lease payments. • The City uses the interest rate charged by the lessor as the discount rate. When the interest rate charged by the lessor is not provided, the City generally uses its estimated incremental borrowing rate as the discount rate for leases.
• The lease term includes the noncancellable period of the lease. Lease payments included in the measurement of the lease liability are composed of fixed payments and purchase option price that the City is reasonably certain to exercise.

The City monitors changes in circumstances that would require a remeasurement of its lease and will remeasure the lease asset and liability if certain changes occur that are expected to significantly affect the amount of the lease liability.

Lease assets are reported with other capital assets and lease liabilities are reported separately on the statement of net position.

Lessor: The City is a lessor for a noncancellable leases of various City facilities. The City recognizes a lease receivable and a deferred inflow of resources in the 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.

N. Subscription-Based Information Technology Arrangements The City of Vallejo is a subscriber for a noncancellable subscription of information technology services. The City o f V a l l e j o r e c o g n i z e s a s u b s c r i p t i o n l i a b i l i t y a n d a n i n t a n g i b l e r i g h t - t o - u s e s u b s c r i p t i o n a s s e t ( s u b s c r i p t i o n a s s e t ) i n t h e g o v e r n m e n t - w i d e f i n a n c i a l s t a t e m e n t s . T h e C i t y o f V a l l e j o r e c o g n i z e s s u b s c r i p t i o n l i a b i l i t i e s w i t h a n i n i t i a l , individual value of $50,000 or more.

CITY OF VALLEJO
Notes to Financial Statements
For the Fiscal Year Ended June 30, 2025
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At the commencement of a subscription, the City of Vallejo initially measures the subscription liability at the present value of payments expected to be made during the subscription term. Subsequently, the subscription liability is reduced by the principal portion of subscription payments made. The subscription asset is initially measured as the initial amount of the subscription liability, adjusted for subscription payments made at or before the subscription commencement date, plus certain initial direct costs. Subsequently, the subscription asset is a m o r t i z e d o n a s t r a i g h t - l i n e b a s i s o v e r i t s u s e f u l l i f e . K e y e s t i m a t e s a n d j u d g m e n t s r e l a t e d t o s u b s c r i p t i o n s i n c l u d e how the City of Vallejo determines (1) the discount rate it uses to discount the expected subscription payments to present value, (2) lease term, and (3) subscription payments.

The City of Vallejo uses the interest rate charged by the vendor as the discount rate. When the interest rate charged by the vendor is not provided, the City of Vallejo generally uses its estimated incremental borrowing rate as the discount rate for subscriptions.

The subscription term includes the noncancellable period of the subscription. Subscription payments included in the measurement of the subscription liability are composed of fixed payments that the City of Vallejo is reasonably certain to exercise.

The City of Vallejo monitors changes in circumstances that would require a remeasurement of its subscriptions and will remeasure the subscription asset and liability if certain changes occur that are expected to significantly affect the amount of the subscription liability.

Subscription assets are reported with other capital assets and subscription liabilities are reported separately on the statement of net position.

O. Budgeting Procedures
The City follows these procedures in establishing the budgetary data reflected in the financial statements:

The City Charter requires the City Manager to submit to the City Council a proposed operating budget by May 16 for the fiscal year commencing the following July 1. The operating budget includes proposed expenditures and the financing sources for all funds. Public hearings are conducted to obtain taxpayer comments. The budget is legally enacted through passage of a resolution. The City does not adopt annual budgets for its Capital Projects and Special Revenue Funds for Multi-year grants. Capital Project and multi-year budgets and funding are approved by the City Council as a multi-year budget on a project-by-project basis to cover the total estimated costs of all phases of specific projects that spans over several fiscal years. The Emergency Disaster Fund #109, Justice Assistance Grant Fund #149 and Office of Traffic Safety Fund #146 did not adopt a budget for the fiscal year ended June 30, 2025, as they are special revenue funds with multi-year project based budgets.

Level of Budgetary Control - Budgetary control is established at the following levels: a) General Fund – Department level; b) Other Funds – Fund level. The City Manager may authorize line item budget transfers within a General Fund department, or within a fund other than the General Fund.

Budget Amendments - City Council authorization is required to transfer appropriations between General Fund departments, or between funds. City Council authorization is also required to establish or amend capital project budgets. The Budget may be amended at such times as the City Council may deem necessary, in accordance with the requirements and procedures contained in the City Charter and Municipal Code.

Budgets are adopted on a basis consistent with Generally Accepted Accounting Principles. Budgetary comparisons presented are on this budgetary basis and reflect applicable amendments and revisions.

Expenditures in Excess of Budget
The General Fund had expenditures in excess department budgets for the following departments: human resources $149,938, planning and development services $163,416, fire services $2,254,105, non departmental $18,590, and for debt service $19,410. The total expenditures did not exceed the total budgeted expenditures within the General Fund.

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Notes to Financial Statements
For the Fiscal Year Ended June 30, 2025
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The following funds had fund expenditures in excess of budget as follows:

Housing Authority $ 4,819,863
Supplemental Law Enforcement Grant Fund #151 997,802
State Lands Fund #134 60,752
Solid Waste Disposal #135 6,746
The excess expenditures in Housing Authority, Solid Waste Disposal #135, and State Lands Fund #134 were covered by accumulated fund balance.

The excess expenditures in the Supplemental Law Enforcement Grant Fund #151 were due to the recordings of the SBITA capital outlay, offset by other financing sources - issuance of subscriptions.

P. New GASB Pronouncements Effective during Fiscal Year The following Government Accounting Standards Board (GASB) pronouncements were adopted for the fiscal year ended June 30, 2025:

GASB Statement No. 101, Compensated Absences
The requirements of this Statement will improve financial reporting by implementing a unified recognition and measurement model that will result in a liability for compensated absences that more appropriately reflects when a government incurs an obligation. Establishing the unified model will result in consistent application to any type of compensated absence and will eliminate potential comparability issues between governments that offer different types of leave. This Statement will also result in a more robust estimate of the amount of compensated absences that a government will pay or settle, which will enhance the relevance and reliability of information about the liability for compensated absences.

GASB Statement No. 102, Certain Risk Disclosures
In December 2023, GASB issued Statement No. 102, Certain Risk Disclosures. The primary objective of this Statement is to provide users of government financial statements with essential information about risks related to a government's vulnerabilities due to certain concentrations or constraints. A concentration is defined as a lack of diversity related to an aspect of a significant inflow of resources or outflow of resources. A constraint is a limitation imposed on a government by an external party or by formal action of the government's highest level of decision- making authority. The requirements of this statement are effective for the District's fiscal year ending June 30, 2025.

NOTE 2 - CASH AND INVESTMENTS
A. Administration
Cash and Investments are administered separately by the City and by the discrete component unit, the VFWD.

The respective cash and investment positions as of June 30, 2025, for each of these legal entities is as follows:

Primary Government
City Fiduciary Funds Subtotal Component Unit Total
Cash on Hand $ 8,250 $ - $ 8,250 $ 5,255 $ 13,505
Deposits 6,362,367 - 6,362,367 7,723,442 14,085,809 Investments 380,162,748 8,393,821 388,556,569 62,143,051 450,699,620 $ 386,533,365 $ 8,393,821 $ 394,927,186 $ 69,871,748 $ 464,798,934

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Notes to Financial Statements
For the Fiscal Year Ended June 30, 2025
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B. Classification
Cash and investments are classified in the financial statements as shown below:

Reported on the Statement of Net Position
Primary Government:

Cash and Investments: 1
City
General Fund, including Measure B $ 49,528,409
Other Funds 248,625,712
Total, City $ 298,154,121
Housing Authority 3,400,881
301,555,002
Restricted Cash and Investments (held by fiscal agents): 2 City 84,145,411
Housing Authority 832,952
84,978,363
Subtotal Primary Government Cash and Investments 386,533,365 Discrete Component Unit (VFWD):

Cash and Investments 67,778,481
Restricted Cash and Investments (held by fiscal agents) 3 2,093,267 Subtotal Component Unit Cash and Investments 69,871,748 Reported on the Statement of Fiduciary Net Position
Custodial Funds
Cash and Investments $ 3,871,987
Restricted Investments (held by fiscal agents) 3,985,748 Total Custodial Funds $ 7,857,735
Successor Agency to the Redevelopment Agency
Private-Purpose Trust Fund
Cash and Investments 337,933
Restricted Investments (held by fiscal agents) 198,153 Total, Successor Agency to the Redevelopment Agency 536,086 Subtotal Fiduciary Funds Cash and Investments 8,393,821 Total Cash and Investments $ 464,798,934

1. These balances are available for operations of the City’s various programs and funds subject to their respective grant, fee, assessment, contract, or other restrictions.

2. These balances are held by the City of third party fiscal agents pursuant to debt covenants or other agreements.

3. These balances are held by third party fiscal agents pursuant to debt covenants or other agreements.

C. Policies
The City’s dependence on property tax receipts, which are received semi-annually, requires it to maintain significant cash reserves to finance operations during the remainder of the year. The City pools idle cash from all sources and all funds, except Cash with Fiscal Agents, Housing Authority, and the VFWD, so that it can be invested to achieve a reasonable rate of return, consistent with safety and liquidity.

CITY OF VALLEJO
Notes to Financial Statements
For the Fiscal Year Ended June 30, 2025
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Cash receipts and disbursements, including payroll, are processed by City staff which administers activities for the following separate legal entities: the City, the Successor Agency to the Redevelopment Agency, and the Housing Authority.

These cash transactions are recorded in the City’s main checking account with transactions allocated to each applicable general ledger fund of the City and its blended component units pending periodic reimbursement and settlement of inter-agency balances. As of June 30, 2025, the City held balances of cash for each of the above entities representing their equity in the City’s checking account.

Investment income is allocated among funds on the basis of average month-end cash and investment balances in these funds.

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

The City invests in individual investments and in investment pools. Individual investments are evidenced by specific identifiable securities instruments, or by an electronic entry registering the owner in the records of the Depository Trust Company, known as the book entry system. In order to safeguard the City’s funds, the City employs a bank to act as custodian of certain City-managed investments, regardless of their form. The assets are held in the name of the City and are not comingled with bank assets. Funds held in investment pools are also custodied in the aggregate but held in the City’s name and tracked by the pool’s transfer agent.

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

Cash and cash equivalents, including restricted cash, are considered to be liquid assets for purpose of measuring cash flows.

D. Investments Authorized by the California Government Code and the City’s Investment Policy The City’s Investment Policies and the California Government Code permit the following investments, provided the credit ratings of the issuers are acceptable and approved percentages and maturities are not exceeded. The tables below also identify certain provisions of the California Government Code, or Investment Policies if more restrictive, that addresses interest rate risk, credit risk and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustees that are governed by the provisions of debt agreements, rather than the general provisions of the California Government Code or investment policies.

CITY OF VALLEJO
Notes to Financial Statements
For the Fiscal Year Ended June 30, 2025
NOTE 2 - CASH AND INVESTMENTS (CONTINUED)
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City and Housing Authority
The City’s investment policy and the California Government Code allow the City and the Housing Authority to invest in the following investments:

Maximum Maximum
Maximum Percentage Maximum in Investment
Authorized Investment Type Maturity of Portfolio Portfolio in One Issuer U.S. Government Treasury Bills, Bonds and Notes 5 years No Limit No Limit No Limit U.S. Government Agencies and Government 5 years No Limit 50% 30% Repurchase Agreements N/A No Limit 20% No Limit
Bankers Acceptances 180 Days A 40% 5%
Commercial Paper 270 Days Highest Rating 40% 5%
Corporate Medium Term Notes 5 Years A 30% 5%
Certificates of Deposit 5 Years No Limit 20% No Limit
Negotiable Certificates of Deposit 5 Years A 30% 5%
Local Agency Investment Fund State Pool On Demand No Limit Up To Statutory Limits No Limit State of California or Local Agency Bonds 5 Years A 10% 5% Mutual Funds 4 Years Highest Rating 10% 10%
Money Market Mutual Funds 4 Years Highest Rating 20% 10% Asset Backed Securities 5 Years AA 20% 5%
Mortgage Backed Securities or Collateralized Mortgage 5 Years AA 20% 5% Local Government Investment Pools On Demand No Limit No Limit No Limit Municipal Bonds of Other States 5 Years A 10% 5%
Supranationals 5 Years AA 30% 10%
VFWD
VFWD’s investment policy and the California Government Code allow the VFWD to invest in the following investments:

Maximum
Percentage
Authorized Investment Type of Portfolio
Government Agency obligations (callable) 20%
Medium Term Corporate Notes, Rate A or better 30%
Certificates of Deposit - Non-Negotiable 20%
California Local Agency Investment Fund None
Shares in Beneficial Interest Money Market Funds, two highest ratings 20% United States Treasury Securities None
Certificates of Deposit - Negotiable 30%
Bankers' Acceptances 40%
Commercial Paper of "Prime" Quality 25%
Repurchase Agreements None
Municipal Securities 30%
Asset Backed Securities 20%
Supranationals 30%

CITY OF VALLEJO
Notes to Financial Statements
For the Fiscal Year Ended June 30, 2025
NOTE 2 - CASH AND INVESTMENTS (CONTINUED)
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E. Public Agencies Postemployment Trust
On August 22, 2017, the City Council adopted resolution 17-094 N.C. approving the adoption of the Public Agencies Postemployment Trust administered by Public Agency Retirement Services (PARS). The Trust is an irrevocable trust and qualifies as an Internal Revenue Section 115 trust. This trust will assist the City in mitigating the CalPERS contribution rate volatility. Investments of funds held in Trust are governed by the Investment Guideline Document for the investment account and by the agreement for administrative services with PARS, rather than the general provisions of the California Government Code or the City’s investment policy. The City elected a discretionary investment approach which allows the City to maintain oversight of the investment management, control on target yield and the portfolio’s risk tolerance, under the Moderate HighMark PLUS Mutual Fund investment option. The assets in the Trust will eventually be used to fund pension plan obligations.

F. Investments Authorized by Debt Agreements
The City and VFWD must maintain required amounts of cash and investments with trustees or fiscal agents under the terms of certain debt issues. These funds are unexpended bond proceeds or are pledged reserves to be used if these entities fail to meet their obligations under these debt issues. The California Government Code requires these funds to be invested in accordance with resolutions, bond indentures or State statutes. The table below identifies, by entity, the investment types that are authorized for investments held by fiscal agents. The table also identifies certain provisions of these debt agreements.

City Debt Agreements
Maximum Maximum
Maximum Minimum Credit Percentage Investment
Authorized Investment Type Maturity Quality of Portfolio in One Issuer U.S. Treasury Obligations No Limit No Limit No Limit No Limit U.S. Government Agency Obligation No Limit Two Highest Ratings No Limit 10% Money Market Funds No Limit Prime-1/AA-m No Limit No Limit Government Money Market Funds 360 Days Highest Rating No Limit No Limit Insured FDIC Deposits No Limit No Limit No Limit No Limit Interest-Bearing & Time Deposits - Banks or Savings No Limit A-1 No Limit No Limit Bankers Acceptances 180 Days Two Highest Ratings No Limit No Limit Commercial Paper 270 Days A-1+ No Limit No Limit
Repurchase Agreements 180 Days A No Limit No Limit
Tax-Exempt Obligations No Limit Two Highest Ratings No Limit No Limit Rated Investment Agreements and Contracts No Limit Three Highest Ratings No Limit No Limit State (or Municipality) Bonds/Notes No Limit Two Highest Ratings No Limit No Limit Local Agency Investment Fund No Limit No Limit No Limit No Limit Local Government Investment Pools No Limit No Limit No Limit No Limit Taxable Bonds No Limit A-1 No Limit No Limit
G. Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the City manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations.

CITY OF VALLEJO
Notes to Financial Statements
For the Fiscal Year Ended June 30, 2025
NOTE 2 - CASH AND INVESTMENTS (CONTINUED)
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Information about the sensitivity of the fair values of these investments (including investments held by bond trustees) to market interest rate fluctuations is provided by the following tables that show the distribution of these investments by maturity date or earliest call date at June 30, 2025.

Investment Type Less than 1 Year 1 - 3 Years 3 - 5 Years Total Held by the City and its Blended Component Units:

U.S. Government Agencies $ 7,767,011 $ 1,018,351 $ 3,060,770 $ 11,846,132 Asset Backed Securities 407,459 803,369 2,680,910 3,891,738 Supranational - - 3,809,316 3,809,316
Corporate Medium Term Notes - 11,483,979 14,634,667 26,118,646 U.S. Treasury Notes 83,742,831 22,292,052 28,623,624 134,658,507 California Local Agency Investment Fund 62,072,412 - - 62,072,412 Collateralized Mortgage Obligation - 1,824,603 - 1,824,603 Money Market Mutual Funds 56,009,309 - - 56,009,309 Held by Fiscal Agents:

PARS Post - Employment Benefit Trust -
HighMark PLUS Mutual Fund 24,300,464 - - 24,300,464 Money Market Mutual Funds 64,025,442 - - 64,025,442 Total Investments $ 298,324,928 $ 37,422,354 $ 52,809,287 $ 388,556,569 VFWD
Investment Type Less than 1 Year 1 - 5 Years Total
Government Agency Obligations $ 471,747 $ 2,197,708 $ 2,669,455 US Treasury 39,530,683 4,272,184 43,802,867
Asset Backed Securities - 1,162,113 1,162,113
Supranationals - 447,470 447,470
Medium Term Corporate Notes 721,226 2,574,196 3,295,422 Collateralized Mortgage Obligation - 1,034,397 1,034,397 California Local Agency Investment Fund 5,365,988 - 5,365,988 Money Market Funds 4,347,840 - 4,347,840
Held by Trustee:

Money Market Mutual Funds 17,499 - 17,499
Total $ 50,454,983 $ 11,688,068 $ 62,143,051
Local Agency Investment Fund
The City and the VFWD are participants in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The balance is available for withdrawal on demand and is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis, however, each account is limited to fifteen transactions per month.

Included in LAIF’s investment portfolio are collateralized mortgage obligations, mortgage-backed securities, other asset-backed securities, loans to certain state funds, and floating rate securities issued by federal agencies, government-sponsored enterprises, United States Treasury Notes and Bills, and corporations.

H. Credit Risk
Credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment.

This is measured by the assignment of a rating by a nationally recognized statistical rating organization.

CITY OF VALLEJO
Notes to Financial Statements
For the Fiscal Year Ended June 30, 2025
NOTE 2 - CASH AND INVESTMENTS (CONTINUED)
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Presented below is the actual rating as of June 30, 2025 for the City and Housing Authority by investment type as provided by Moody’s investment rating system.

City and Housing Authority
Investment Type Aaa AA1 to AA3 A1 to A3 Total
Held by the City and its Blended Component Units:

U.S. Government Agencies
Non-Callable $ 11,846,132 $ - $ - $ 11,846,132
Asset Backed Securities 3,891,738 - - 3,891,738
Corporate Medium Term Notes 205,723 9,700,399 16,212,524 26,118,646 Collateralized Mortgage Obligation - 1,824,603 - 1,824,603 Money Market Mutual Funds - - - -
Supranational 3,809,316 - - 3,809,316
Held by Fiscal Agents
Money Market Mutual Funds 64,025,442 - - 64,025,442 Total Rated Investments $ 83,778,351 $ 11,525,002 $ 16,212,524 111,515,877 Exempt:

U.S. Treasury Notes 134,658,507
Non-Rated:

California Local Agency Investment Fund 62,072,412
Money Market Mutual Funds 56,009,309
PARS Post-Employment Benefit Trust
HighMark Plus Mutual Fund 24,300,464
Total Investments $ 388,556,569
VFWD
Presented below is the actual rating as of June 30, 2025 for the VFWD by investment type as provided by Standard and Poor’s investment rating system:

Investment Type AAA/AAAm AA++/AA+AA- Total
Government Agency Obligations $ - $ 2,669,455 $ 2,669,455 US Treasury - 43,802,867 43,802,867
Asset Backed Securities 1,162,113 - 1,162,113
Supranational 447,470 - 447,470
Medium Term Corporate Notes 149,349 3,146,073 3,295,422 Collateralized Mortgage Obligation 130,032 904,365 1,034,397 Money Market Funds 4,347,840 - 4,347,840
Money Market Mutual Funds 17,499 - 17,499
$ 6,254,303 $ 50,522,760 56,777,063
Non-Rated:

California Local Agency Investment Funds 5,365,988
Total Investments $ 62,143,051

CITY OF VALLEJO
Notes to Financial Statements
For the Fiscal Year Ended June 30, 2025
NOTE 2 - CASH AND INVESTMENTS (CONTINUED)
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I. Fair Value Hierarchy
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 fair value of the assets.

Level 1 inputs are quoted prices in an active market for identical assets; Level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs.

City Housing Authority
The following is a summary of the fair value hierarchy of the fair value of investments of the City and Housing Authority as of June 30, 2025:

Level 2 Total
Investments by Fair Value Level:

U.S. Government Agencies $ 11,846,132 $ 11,846,132
Asset Backed Securities 3,891,738 3,891,738
Collateralized Mortgage Obligation 1,824,603 1,824,603 Supranational 3,809,316 3,809,316
Corporate Medium Term Notes 26,118,646 26,118,646
U.S. Treasury Notes 134,658,507 134,658,507
Subtotal $ 182,148,942 $ 182,148,942
Investments Measured at Amortized Cost:

Money Market Mutual Funds 56,009,309
PARS Post-Employment Benefit Trust-
HighMark PLUS Mutual Fund 24,300,464
Held with Fiscal Agent:

Money Market Mutual Funds 64,025,442
Investments Not Subject to Fair Value Hierarchy:

California Local Agency Investment Fund 62,072,412
Total Investments $ 388,556,569
Asset Backed Securities, classified in Level 2 of the fair value hierarchy, are valued using IDC CMO pricing service. U.S. Government Agencies, U.S. Treasury Notes, Corporate Medium Term Notes and Collateralized Mortgage Obligations, classified in Level 2 of the fair value hierarchy, are valued using IDC Institutional Bond Pricing. These prices are obtained from various pricing sources by our custodian bank. Fair value is defined as the quoted market value on the last trading day of the period.

CITY OF VALLEJO
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For the Fiscal Year Ended June 30, 2025
NOTE 2 - CASH AND INVESTMENTS (CONTINUED)
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VFWD
The following is a summary of the fair value hierarchy of the fair value of investments of the VFWD as of June 30, 2025:

Level 2 Total
Investments by Fair Value Level:

U.S. Government Agencies $ 2,669,455 $ 2,669,455
U.S. Treasury Notes 43,802,867 43,802,867
Asset Backed Securities 1,162,113 1,162,113
Supranationals 447,470 447,470
Medium Term Corporate Notes 3,295,422 3,295,422
Collateralized Mortgage Obligation 1,034,397 1,034,397 Subtotal $ 52,411,724 52,411,724
Investments Measured at Amortized Cost:

Money Market Mutual Funds 4,347,840
Held with Fiscal Agent:

Money Market Mutual Funds 17,499
Investments Not Subject to Fair Value Hierarchy:

California Local Agency Investment Fund 5,365,988
Total Investments $ 62,143,051
The District categorizes the fair value measurements of its investments based on the fair value hierarchy established by generally accepted accounting principles. The hierarchy, which has three levels, is based on the valuation inputs used to measure an asset’s fair value: Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. The District does not have any investments that are measured using Level 1 and 3 inputs. Fair values are based on quoted market prices for similar securities in markets that are not active, and model-based techniques for which all significant assumptions are observable in the market, resulting in a Level 2 valuation.

J. Concentration Risk
The City and the VFWD investment policies regarding the amount that can be invested in any one issuer are stipulated by the California Government Code. However, these entities are required to disclose investments that represent a concentration of 5% or more of investments in any one issuer, held by individual Funds in the securities of issuers other than U.S. Treasury securities, mutual funds and external investment pools.

At June 30, 2025, these entities’ investments that represent a concentration of investments in the securities of any individual issuers, other than U.S. Treasury securities, mutual funds or external investment parts, are set forth below.

City Concentration Risk
City did not have any investment that qualified over the concentration risk.

VFWD Concentration Risk
The VFWD had no investments in the securities of any individual issuer, other than U.S. Treasury securities, mutual funds, and external investment pools, that represent 5% or more of total investments for the fiscal year ended June 30, 2025.

CITY OF VALLEJO
Notes to Financial Statements
For the Fiscal Year Ended June 30, 2025
NOTE 2 - CASH AND INVESTMENTS (CONTINUED)
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K. Custodial Credit Risk
The custodial credit risk for cash deposits is the risk that, in the event of the failure of the financial institution holding the deposits, the depositor will not be able to recover the value of its deposits.

At June 30, 2025, the VFWD deposit and investment balances were exposed to custodial risk as follow:

Deposits - uninsured and collateralized with securities held by the pledging bank’s trust department or agent not in the District’s name $6,100,807.

NOTE 3 - INTERFUND TRANSACTIONS
A. Transfers Between Funds
Transfers between funds during the fiscal year ended June 30, 2025, were as follows:

Fund Making Transfers Fund Receiving Transfers
Amount
Transferred
General Fund: Other Governmental Funds $ 1,099,613 (A)(B)(C) Capital Outlay Fund/Measure P Capital Projects 25,271,060 (A)(C)(D) Other Enterprise Funds 1,467,113 (B)(C)
Equipment Replacement 1,677,039 (A)
General Liability Internal Service Fund 2,350,000 (A)
Special Revenue Funds:

Other Governmental Funds General Fund 71,884 (A)
Other Governmental Funds 800,000 (C)
Other Enterprise Funds 260,000 (A)
Capital Projects Funds:

Other Governmental Funds General Fund 606,176 (A)
Housing Authority Special Revenue Fund 190,000 (E)
Enterprise Funds:

Other Enterprise Funds General Fund 500,000 (A)
Internal Service Funds:

Workers Comp General Liability 900,000 (A)
Total $ 35,192,885
(A) To Fund City Operations
(B) To Fund Debt Service Payments
(C) To Fund Capital Program Projects
(D) To Transfer Technology Surcharge Fees to Capital Projects Fund (E) To Fund Affordable Housing
B. Current Interfund Balances
As of June 30, 2025, the City’s Workers’ Compensation Insurance Internal Service Fund had provided $5,266,078 in short-term lending to other governmental funds with deficit cash positions. It is the City’s practice to use the City’s Workers’ Compensation Insurance Internal Service Fund to cover temporary cash shortfalls, as this fund is primarily funded by the General Fund. Additionally, the Workers’ Compensation Insurance Internal Service Fund has built a sufficient cash reserve to be able to cover the temporary cash shortfalls in other funds. These balances are expected to be repaid shortly after the end of the fiscal year upon receipt of grant or other reimbursements.

CITY OF VALLEJO
Notes to Financial Statements
For the Fiscal Year Ended June 30, 2025
NOTE 2 - CASH AND INVESTMENTS (CONTINUED)
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Due from Other Funds Due to Other Funds
Governmental Fund:

Other Governmental $ - $ 5,189,959
Internal Service Fund:

Payroll benefits 76,119
Workers' Comp 5,266,078 -
Total $ 5,266,078 $ 5,266,078
C. Long-Term Interfund Advances
At June 30, 2025 the funds below made advances that are not expected to be repaid within the next year:
(Asset) (Liability)
Fund Making Advance Funds Receiving Advance Amount
General Fund Fiber Optic Enterprise Fund $ 530,000
Marina Enterprise Fund 8,498,950
Golf Enterprise Fund 4,206,949
Vallejo Station Parking Enterprise Fund 1,359,984
Allowance for Collectability (14,065,883)
Net Advances Total $ 530,000
Fiber Optic Fund
In Fiscal Year 2018, the General Fund advanced $830,000 to the Fiber Optic Enterprise Fund to provide a capital and operating reserve, allowing the project to move forward until revenues commence. Amended payments of $150,000 are due annually on June 30, 2025 through June 30, 2028 and one final payment of $80,000 on June 30, 2029 to allow the fund to generate sufficient revenues to make the debt service payments.

Subsidies Allowance
Cumulative to June 30, 2025, the General Fund has advanced $8,498,950 to the Marina Enterprise Fund, $4,206,949 to the Golf Enterprise Fund and $1,359,984 to the Vallejo Station Parking Enterprise Fund. These General Fund advances are offset with a 100% allowance for collectability since there are currently no repayment plans established for these loans. However, the City is anticipating that these funds would have sufficient resources to make repayments in the future with the increased user fees, proposed Golf and Housing development, and downtown parking improvements and enforcements.

In Fiscal Year 2025, the Golf Enterprise Fund repaid $500,000 of its outstanding advance from General Fund.

This repayment reflects improved operating performance. While a full repayment schedule has not yet been formalized, this partial payment demonstrates the fund’s capacity to begin reducing its outstanding balance over time.

D. Internal Balances
Internal balances are presented in the Entity-wide financial statements only. They represent the net interfund receivables and payables remaining after the elimination of all such balances within governmental and business- type activities.

CITY OF VALLEJO
Notes to Financial Statements
For the Fiscal Year Ended June 30, 2025
NOTE 3 - INTERFUND TRANSACTIONS (CONTINUED)
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NOTE 4 - NOTES & LOANS RECEIVABLE
A. Summary of Notes and Loans Receivable
The following notes and loans receivable were outstanding as of June 30, 2025. These loans are not anticipated to be fully collected within the year:

Primary Government and Blended Component Units:

Housing Programs
Housing Authority Programs Major Governmental
Affordable Housing (20% Set Aside)
Eden Housing $ 1,600,000
Avian Glen 3,093,750
Citizen Housing 2,500,000
Solano Vallejo AR, L.P-Solano Vista I 600,000
Single Family Residential 296,933
Firm Foundation Community Housing 3,298,260
Temple Arts Lofts 750,000
Accrued Interest 4,313,605
Residential Rehabilitation 246,592
Vallejo Housing Collaborative 672,532
17,371,672
HOME Program Non-Major Governmental
Avian Glen 900,000
Temple Arts Lofts 495,734
Vallejo Housing Collaborative 100,000
Habitat for Humanity 93,735
Vallejo PSH, LP 495,229
Single Family Residential 1,700,162
Accrued Interest 891,893
4,676,753
Community Development Block Grant Non-Major Governmental Reynaissance Family Center 920,362
Bay Area Community Services 240,000
Temple Art Lofts 400,000
Single Family Residential 241,374
Accrued Interest 877,396
2,679,132
Neighborhood Stabilization Program Non-Major Governmental Temple Arts Lofts 1,437,844
Community Housing Development Program 493,315
Single Family Residential 268,383
Accrued Interest 705,725
2,905,267
General Fund Major Governmental
Vallejo PSH, LLP 1,691,481
Firm Foundation Community Housing 2,879,665
Sereno Village Apartments 777,221
Temple Arts Lofts 23,821
Accrued interest 450,126
5,822,314
Neighborhood Park Funds Non-major Governmental
Sereno Village Apartments 138,760
Accrued Interest 61,391
200,151
Type of Loans Fund Type Amount

CITY OF VALLEJO
Notes to Financial Statements
For the Fiscal Year Ended June 30, 2025
NOTE 4 - NOTES & LOANS RECEIVABLE
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Transportation Impact Mitigation Fund Non-major Governmental Temple Art Lofts 89,088
89,088
Hiddenbrooke Overpass Fund Non-major Governmental
Empress Theater
Accrued Interest 155,488
155,488
Arts and Convention Center Fund Non-major Governmental
Exmpress Theater
Accrued Interest 1,243,898
1,243,898
Bridge Construction Fund Non-major Governmental
Georgia Street Extension
Accrued Interest 160,730
160,730
Total Notes and Loans Receivable $ 35,304,493
Type of Loans Fund Type Amount
B. Affordable Housing and Residential Rehabilitation
On February 1, 2012, the Housing Authority elected to become the Housing Successor of the former Redevelopment Agency (RDA) under the provisions of AB 1484 and assumed the RDA housing assets. These assets include the following various loans granted to developers under the affordable housing programs. $ 1,600,000 In June 30, 2018, the Housing Authority entered into a loan agreement with Eden Housing, Inc., in the amount of $1,600,000. The proceeds of the loan were used to partially fund the plan, development, and construction of seventy-six housing units on Sacramento Street for extremely low-income individuals and households. The loan bears simple interest of 2% and is repayable from residual receipts as defined in the agreement. The loan will be secured by a deed of trust on the property and unpaid principal and interest is due on or before the fifty-fifth anniversary of the promissory note. As of June 30, 2022, the developer had drawn down the full $1,600,000 of the loan proceeds.
$ 3,093,750 In August 2004, the former Redevelopment Agency of the City of Vallejo entered into an acquisition loan agreement in the amount of $750,000 and a permanent financing loan agreement in the amount of $2,343,750 with Avian Glen. The loans were used to partially fund the construction of a multi-family residential housing complex containing 87 units. The term of the promissory note is 30 years at 3% interest per annum and repayable from surplus cash as defined in the agreement.
$ 2,500,000 In July 2003, the former Redevelopment Agency of the City of Vallejo entered into an acquisition loan agreement in the amount of $600,000 and a permanent financing loan agreement in the amount of $1,900,000 with Sereno Village Associates to partially fund the construction of a multi- family residential housing complex containing 125 units. It was agreed to defer repayment of these notes until the VSFCD note and City/GVRD notes are repaid in full. The term of the promissory note is 3% interest per annum with payments made from pro-rated share of Net Surplus Cash from the project.

CITY OF VALLEJO
Notes to Financial Statements
For the Fiscal Year Ended June 30, 2025
NOTE 4 - NOTES & LOANS RECEIVABLE (CONTINUED)
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Vallejo City CouncilMarch 10, 2026

Vallejo City Council
March 10, 2026