CITY OF WATSONVILLE, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to claims and judgments, are recorded only when payment is due.
Property taxes, franchise fees, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the government.
The City reports the following major governmental funds:
The General Fund is the government’s primary operating fund. It accounts for all financial resources of the government, except those required to be accounted for in another fund.
The Impact Fees Special Revenue Fund is assessed at the time of development and is used to mitigate certain increased costs incurred by the government as development occurs. These funds are then used to increase the capacity of roads, build fire stations, public safety equipment, or other governmental facilities. The receipt and disbursement of these fees are recorded in this fund.
The Housing Special Revenue Fund is used for low and moderate-income housing projects. The fund is funded by old 20% Redevelopment Agency’s housing loans monthly payments and with loan payoffs.
The Redevelopment and Housing Grants Special Revenue Fund provides assistance to low and moderate-income individuals via grants. These grants offer a number of housing programs to help low to moderate income Watsonville residents improve their housing condition.
The American Rescue Plan Act Special Revenue Fund accounts for funds received and spent for the American Rescue Plan Act.
The General Debt Service Fund receives funds for the payment of governmental debt of the government.
The City reports the following major proprietary funds:
The Water Fund records the receipts of revenues for water services and records the associated expenses or capital investment. The water service provides water to Watsonville and the surrounding communities, which has a service population of approximately 50,000.
48 Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
The Sewer Fund records the activity of the City’s wastewater treatment plant and collection system. The fund also provides waste treatment services to other local sanitary districts, namely Freedom, Salsipuedes, and Pajaro Utility Districts. Thus, the wastewater plant services some 55,000 residents.
The Solid Waste Fund records the activities of refuse collection, recycling, and landfill operations. The landfill is located near the County landfill and is used only by the citizens of the City of Watsonville.
The Airport Fund represents the activities at the airport and the receipts of Federal Aviation Agency (FAA) grants. The fund is to be supported by the fees the airport collects from fuel sales and facility use fees. The FAA provides substantial grant income for general airport improvements.
The Fiber Optic Fund records the activities of the City’s fiber optic system. The fund receives payments for use of the system.
Additionally, the government reports the following fund types:
The Internal Service Fund is used to account for financing of insurance services (workers’ compensation, general liability and health benefits) provided to other government funds and departments on a cost reimbursement basis.
The Private Purpose Trust Fund is used to account for the transactions of the Successor Agency of the City of Watsonville Redevelopment Agency.
As a general rule, the effect of interfund activity has been eliminated from government-wide financial statements. Exceptions to this general rule are payments-in-lieu of taxes and other charges between the City’s water, sewer, and solid waste functions and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various foundations concerned.
Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes.
Proprietary funds distinguish operating revenues and expenses from nonoperating items.
Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with proprietary funds principal ongoing operations. The principal operating revenues of the government’s enterprise funds and of the City’s internal service fund are charges to customers for sales and services. The City also recognizes as operating revenue the portion of connection fees intended to recover the cost of connecting new customers to the system. Operating expenses for enterprise funds and the internal service fund include the cost of sales and services, administrative expenses, and depreciation on capital assets.
All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.
49 Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources first, then unrestricted resources, as they are needed.
The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America, as prescribed by the GASB and the American Institute of Certified Public Accountants, which require management to make 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 for revenues and expenses or expenditures.
D. Assets, liabilities, and net position or fund balance
1. Deposits and investments
The City’s cash and cash equivalents are considered to be cash on hand, demand deposits, and short term investments with original maturities of three months or less from the date of acquisition.
State statutes authorize the City to invest in the following types of investments:
- Securities of the US Government, or its agencies
- Certificates of Deposit (or Time Deposits) placed with commercial banks and/or savings and loan institutions like institutions such as credit unions - Local Agency Investment Fund (State Pool)
- Repurchase agreements (repos) for a term of one year or less - Passbook Savings Account Demand Deposits
- Debt of the City of Watsonville
- Negotiable Certificates of Deposits
- Bankers' Acceptances
Investments for the City are reported at fair value. The State Treasurers Investment Pool operates in accordance with appropriate state laws and regulations. The reported value of the pool is the same as the fair value of the pool shares. The City has funds held by trustees or fiscal agents pledged to the payment or security of certain bonds and certificates of participation. The California Government Code provides that these funds, in absence of specific statutory provisions governing the issuance of bonds or certificates, may be invested in accordance with the ordinance, resolutions, or indentures specifying the types of investments the trustees or fiscal agent may make.
Cash and cash equivalents
The cash flow statements require presentation of “cash and cash equivalents”. For the purposes of the statement of cash flows, the City considers all proprietary funds pooled cash and investments and cash and investments with fiscal agent as “cash and cash equivalents”. 50 Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
2. Receivables and payables
Activities between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported as “due to/from other funds”. Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances.” Property taxes are levied and collected by the County of Santa Cruz and paid upon collection to the various taxing entities including the City. Property taxes are attached as an enforceable lien on property as of January 1. Taxes are levied on July 1 and are payable in two installments on December 10 and April 10. Unsecured taxes are due on July 1 and become delinquent on August
31. The City recognizes property tax revenues when they become measurable and available for the payment of claims in the current period.
3. Inventories
All inventories are valued at cost using the first-in/first-out (FIFO) method. Inventories of governmental funds are recorded as expenditures when consumed rather than when purchased.
4. Land held for resale
Land held for resale is carried at the lower of cost or estimated realizable value.
5. Capital assets
Capital assets, which include property, plant and equipment, and infrastructure, (e.g., bridges, curbs and gutters, streets and sidewalks, drainage systems, and lighting systems), and construction in progress are recorded in the applicable governmental or business-type activities columns in the government-wide financial statements. The City defines capital assets as assets with an initial, individual cost of more than $5,000 (amount not rounded) and an estimated useful life in excess of two years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets, donated works of art and similar items, and capital assets received in a service concession agreement are valued at their estimated acquisition value on the date donated.
The costs for normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized.
Major outlays for capital assets and improvements are capitalized as projects are constructed.
Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed. 51 Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
Property, plant, and equipment of the primary government, are depreciated using the straight-line method over the following estimated useful lives:
Assets Years
Infrastructure 20 to 50 years
Buildings 20 to 50 years
Improvements 20 to 50 years
Machinery, Equipment,
and Vehicles 3 to 10 years
6. Compensated absences
It is the City’s policy to allow most employee groups to accumulate sick leave to a maximum of 1,000 hours. Sick leave accumulated above this maximum is paid to employees at 50% of such excess in December. The balance of such unused sick leave is lost and the sick leave accrual is reduced to 1,000 hours at January 1 of each year. Earned vacation time is accumulated up to two times the employee's annual accrual rate and unused vacation is paid at the employee's hourly rate upon termination.
The maximum accumulation, for fire-fighters on shift duty, of unused sick leave is 62.5 days (1,500 hours). Sick leave accumulation in any calendar year in excess of 1,500 hours shall be paid at the rate of 50% of such excess. The balance of such unused sick leave is lost and the sick leave accrual is reduced to 1,500 hours at January 1 of each year.
The City accrues for compensated absences in the government-wide and proprietary fund financial statements for which they are liable to make payment directly. The General fund, Inclusionary Housing fund, and all four of the five Enterprise funds incurred costs associated with compensated absences during the last fiscal year.
7. Interfund transactions
A description of the basic two types of the City's interfund transactions during the fiscal year and the related accounting policies are set forth as follows:
1. Transactions related directly to services rendered, or facilities provided, are recorded as revenues in the fund providing the service or facility and expenditures (or expenses) in the fund receiving them.
2. Transactions to allocate resources from one fund to another, not contingent on the occurrence of specific expenditures in the receiving fund, are recorded appropriately as transfers in and transfers out in the respective funds.
52 Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
8. Long-term obligations
In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net position. Bond premiums and discounts are deferred and amortized over the life of the bond using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount.
In the financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures.
9. Deferred Outflows and Inflows of Resources
Pursuant to GASB Statement No. 63, “Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position,” and GASB Statement No. 65, “Items Previously Reported as Assets and Liabilities,” the City recognizes deferred outflows and inflows of resources.
In addition to assets, the Statement of Net Position will sometimes report a separate section for deferred outflows of resources. A deferred outflow of resources is defined as a consumption of net assets by the government that is applicable to a future reporting period. The City has one item which qualifies for reporting; see Note IV. E. for a detailed listing of the deferred outflows. In addition to liabilities, the Statement of Net Position will sometimes report a separate section for deferred inflows of resources. A deferred inflow of resources is defined as an acquisition of net assets by the City that is applicable to a future reporting period. The City has two items which qualify for reporting in this category – unavailable revenue and pension related deferred inflows of resources. Refer to Note IV. E. for a detailed listing of the pension related deferred inflows of resources the City has recognized.
10. Fund balances
Fund balances of the governmental funds are classified as follows:
Nonspendable Fund Balance – represents amounts that cannot be spent because they are either not in spendable form (such as inventory) or legally required to remain intact (such as notes receivable or principal of a permanent fund).
Restricted Fund Balance – represents amounts that are constrained by external parties, constitutional provisions or enabling legislation.
53 Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
Committed Fund Balance – represents amounts that can only be used for a specific purpose because of a formal action by the City’s governing board (ordinance). Committed amounts cannot be used for any purpose unless the governing board removes those constraints by taking the same type of formal action. Committed fund balance amounts may be used for other purpose with appropriate due process by the governing board. Commitments are typically done through adoption and amendment of the budget. Committed fund balance amounts differ from restricted balances in that the constraints on their use do not come from outside parties, constitutional provisions, or enabling legislation.
Assigned Fund Balance – represents amounts which the City intends to use for a specific purpose, but that do not meet the criteria to be classified as restricted or committed. Intent maybe stipulated by the government board or by an official or body to which the governing board delegates the authority. Specific amounts that are not restricted or committed in a special revenue, capital projects, debt service or permanent fund are assigned for purpose in accordance with the nature of their type or the fund’s primary purpose. An assignment within the general fund conveys that the intended use of those amounts is for a specific purpose that is narrower than the general purpose of the City.
Unassigned Fund Balance – represents amounts which are unconstrained in that they may be spent for any purpose. Only the general fund reports a positive unassigned fund balance. Other governmental funds might report a negative balance in this classification because of commitments made, which include future funding sources for specific purposes for which amounts had been restricted, committed or assigned.
When an expenditure is incurred for a purpose for which both restricted and unrestricted fund balance is available, the City considers restricted funds to have been spent first. When an expenditure is incurred for which committed, assigned or unassigned fund balance are available, the City considers amounts to have been spent first out of committed funds, then assigned funds, and finally unassigned funds.
11. Net Position
GASB Statement No. 63 requires that the difference between assets added to the deferred outflows of resources and liabilities added to the deferred inflows of resources be reported as net position. Net position is classified as either net investment in capital assets, restricted, or unrestricted.
Net position that is net investment in capital assets consist of capital assets, net of accumulated depreciation, and reduced by the outstanding principal of related debt. Restricted net position is the portion of net position that has external constraints placed on it by creditors, grantors, contributors, laws, or regulations of other governments, or through constitutional provisions or enabling legislation. Unrestricted net position consists of net position that does not meet the definition of net investment in capital assets or restricted net position. 54 Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
The Net Investment in Capital Assets are calculated as below:
Governmental Business-type
Activities Activities Total
$$$
Capital Asset, net of accumulated depreciation: 113,358,597 101,658,944 215,017,541 Less: Capital debt (2,153,222) (7,371,099) (9,524,321)
Plus: Unspent bond proceeds 1,728,614 1,728,614
Net Investment in Capital Asset: 111,205,375 96,016,459 207,221,834 II. Stewardship, compliance, and accountability
A. Budgetary information
Annual budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America for all governmental funds. All annual appropriations lapse at fiscal year-end.
On or before March 31 of each fiscal year, all departments of the City of Watsonville are required to submit requests for appropriations to the City’s management so that a budget may be prepared. Before May 31 the proposed budget is presented to the City Council for review. City Council holds public hearings and a final budget must be prepared and adopted no later than June
30. The appropriated budget is prepared by fund, department, and division. The City department heads may make transfers of appropriations within a department. Transfers of appropriations between funds require the approval of the City Manager. The legal level of budgetary control (i.e., the level at which expenditures may not legally exceed appropriations) is the fund level.
City Council made several supplemental budget appropriations during the fiscal year. The General Fund budget was increased by $2,189,101 during the fiscal year for reimbursements to the Impact Fees Fund, new solar loan, increased community development department expenditures, and increased salary and overtime for public safety officers.
Encumbrance accounting is employed in governmental funds. The commitments will be reappropriated and honored during the subsequent fiscal year. Encumbrances were as follows at fiscal year-end: General Fund - $1,185,447, Housing Fund - $78,568, Redevelopment and Housing Grants - $67,074, and Other Governmental Funds - $5,355,443. 55 Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
B. Deficit fund equity
As of June 30, 2022, the Parking Garage Special Revenue Fund had a fund balance deficit of ($381,916). The fund will make up the deficits with future licenses, permits and fees collected.
The Internal Services Fund had a fund balance deficit of ($610,542). The fund will make up the deficits with future reimbursements from other funds.
III. Detailed notes on all funds
A. Cash and investments
Cash and investments (including monies held by trustees and fiscal agents) as of June 30, 2022 were as follows:
Balance
June 30, 2022
Cash: $$
Demand Deposits 10,000,319 -
Outstanding Checks (2,816,970) -
Deposits in Transit 391,213 -
Net Demand Deposits 7,574,562 -
Petty Cash 12,836 -
Cash Subtotal - 7,587,398
Investments:
Guaranteed Investment Contracts 1,801,927 -
California Asset Management Program 54,886,708 -
Local Agency Investment Fund 68,894,032 -
Investment Subtotal 125,582,667
Total Cash and Investments 133,170,065
56 Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
The cash and investments of Governmental Activities, Business-Type Activities, and the Private Purpose Trust Fund was as follows as of June 30, 2022:
Balance
June 30, 2022
Governmental Activities: $
General Fund 21,927,988
Impact Fees Special Revenue Fund 8,371,662
Housing Special Revenue Fund 3,343,360
Redevelopment and Housing Grants Special Revenue Fund 2,836,458 American Rescue Plan Act Special Revenue Fund 17,863,042 Debt Service Fund 245,989
Other Nonmajor Funds 14,151,421
Total Governmental Activities: 68,739,920
Business-type Activities:
Water Fund 28,121,135
Sewer Fund 15,202,378
Solid Waste Fund 10,139,218
Airport Fund 358,606
Fiber Optic Fund 92,264
Total Business-Type Activities 53,913,601
Internal Service Fund 6,096,169
Private Purpose Trust Fiduciary Fund 4,420,375
Total City Cash and Investments 133,170,065
The City of Watsonville categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs.
The City of Watsonville has the following fair value hierarchy as of June 30, 2022:
Total Exempt
Investments measured at amortized cost: $ $
Guaranteed Investments Contracts 1,801,927 1,801,927
Local Agency Investment Fund 68,894,032 68,894,032
California Asset Management Program 54,886,708 54,886,708 Total Investments 125,582,667 125,582,667
57 Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
POOLED DEPOSITS/CREDIT RISK:
The California Government Code requires California banks and savings and loan associations to secure a government's deposits by pledging government securities as collateral. The fair value of pledged securities must equal at least 110% of a government's deposits. California law also allows financial institutions to secure the City’s deposits by pledging first trust deed mortgage notes having a value of 150% of the City’s total deposit.
The City may waive collateral requirements for deposits, which are fully insured up to $250,000 by federal depository insurance.
At June 30, 2022, the City’s carrying amount of deposits and cash on hand was $6,877,834 and bank balances were $9,290,756. Bank balances in excess of the FDIC insurance limitations are fully collateralized by the Bank by pledging identified U.S. Government securities.
Investments Authorized by the California Government Code and the City’s Investment Policy
Maximum Maximum
Maximum Percentage Investment
Authorized Investment Type Maturity of Portfolio * In One Issuer U.S. Treasury Obligations 5 years None None
U.S. Agency Securities 5 years None None
Banker's Acceptances 180 days 40% 30%
Commercial Paper 270 days 25% 10%
Negotiable Certificates of Deposit 5 years 30% None
Repurchase Agreements 1 year 20% None
Passbook Savings Account Demand Deposit N/A None None
Medium-Term Corporate Notes 5 years 30% None
Debt of City of Watsonville N/A None None
Money Market Mutual Funds N/A 20% None
Local Agency Investment Fund (LAIF) N/A None $75,000,000 California Asset Management Program (CAMP) N/A None None * Excluding amounts held by bond trustee that are not subject to California Govenrment Code restrictions Investments Authorized by Debt Agreements
Maximum Maximum
Maximum Percentage Investment
Authorized Investment Type Maturity of Portfolio In One Issuer U.S. Treasury Obligations None None None
U.S. Agency Securities None None None
Banker's Acceptances 180 days None None
Commercial Paper 270 days None None
Money Market Mutual Funds N/A None None
Guaranteed Investment Contracts 30 years None None
58 Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
Disclosures Relating to Interest Rate Risk
Remaining Maturity (in Months)
Investment Type 12 Months or Less More Than 60 Months Total $ $$
Local Agency Investment Fund 68,894,032 - 68,894,032
California Asset Management Program 54,886,708 - 54,886,708 Guaranteed Investment Contracts - 1,801,927 1,801,927
Total 123,780,740 1,801,927 125,582,667
Disclosures Relating to Credit Risk
Ratings as of Fiscal Year End
Investment Type AA Not Rated Total
$ $$
Local Agency Investment Fund - 68,894,032 68,894,032
California Asset Management Program - 54,886,708 54,886,708 Guaranteed Investment Contracts 1,801,927 - 1,801,927
Total 1,801,927 123,780,740 125,582,667
(1) The management of the State of California Pooled Money Investment Account (generally referred to as LAIF) has indicated to the City that as of June 30, 2022 the amortized cost value of the pool was $234,590,320,982 and the estimated fair value of the pool was $231,570,067,770. The reported value of the City’s portion of LAIF is the same value as the fair value of LAIF shares. LAIF’s (and the City’s) exposure to risk (credit, market or legal) is not currently available. The State’s Local Agency Investment Fund (LAIF) operates in accordance with appropriate state laws and regulations. At June 30, 2022, these investments had an average maturity of 311 days.
(2) The City is a participant in the California Asset Management Program (CAMP). CAMP is an investment pool offered by the California Asset Management Trust (the Trust). The Trust is a joint powers authority and public agency created by the Declaration of Trust and established under the provisions of the California Joint Exercise of Powers Act (California Government Code Sections 6500 et seq., or the "Act") for the purpose of exercising the common power of CAMP participants to invest certain proceeds of debt issues and surplus funds. CAMP investments are limited to investments permitted by subdivisions (a) to (n), inclusive, of Section 53601 of the California Government Code.
The City reports its investments in CAMP at the fair value amounts provided by CAMP, which is the same as the value of the pool share in accordance with GASB 79 requirements. At June 30, 2022, fair value was approximate to the City's cost. At June 30, 2022, these investments had an average maturity of 28 days. 59 Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
The City has funds held by trustees or fiscal agents pledged to the payment or security of certain bonds. The California Government Code provides that these funds, in absence of specific statutory provisions governing the issuance of bonds or certificates, may be invested in accordance with the ordinance, resolutions, or indentures specifying the types of investments the trustees or fiscal agent may make.
B. Capital assets
Capital asset activity for the fiscal year ended June 30, 2022 was as follows:
Governmental activities:
Balance at Balance at
June 30, 2021 Additions Deletions Transfers June 30, 2022 Capital Assets not being depreciated: $ $ $ $ $
Land and Improvements 16,467,923 - - 16,467,923
Construction in Progress 4,758,154 6,049,501 - (2,172,231) 8,635,424 Total Capital Assets not being depreciated 21,226,077 6,049,501 (2,172,231) 25,103,347 - Capital Assets being depreciated:
Buildings and Improvements 136,661,262 164,263 - 11,000 136,836,525 Machinery and Equipment 17,737,463 417,885 (230,250) - 17,925,098 Infrastructure 38,122,037 865,155 - 2,161,231 41,148,423 Total Capital Assets being depreciated 192,520,762 1,447,303 (230,250) 2,172,231 195,910,046 Less accumulated depreciation for:
Buildings and Improvements (63,459,700) (3,698,500) - (67,158,200) - Machinery and Equipment (12,198,042) (1,094,938) 230,250 - (13,062,730) Infrastructure (26,544,213) (889,653) - (27,433,866) -
Total accumulated depreciation (102,201,955) (5,683,091) 230,250 - (107,654,796) Total Capital Assets being depreciated, net 90,318,807 (4,235,788) 2,172,231 88,255,250 - Governmental activity Capital Assets, net 111,544,884 1,813,713 - 113,358,597 - Business-type activities:
Balance at Balance at
June 30, 2021 Additions Deletions Transfers June 30, 2022 Capital Assets, not being depreciated: $ $ $ $ $
Land and improvement 14,771,215 - - - 14,771,215
Construction in progress 4,739,315 2,555,493 - (1,609,034) 5,685,774 Total Capital Assets not being depreciated 19,510,530 2,555,493 - (1,609,034) 20,456,989 Capital Assets, being depreciated:
Buildings and Improvements 90,405,153 230,203 - 1,346,550 91,981,906 Machinery, Equipment and Vehicles 27,208,831 1,436,418 (1,420,305) - 27,224,944 Infrastructure 70,444,894 118,816 - 262,484 70,826,194
Total Capital Assets being depreciated 188,058,878 1,785,437 (1,420,305) 1,609,034 190,033,044 Less accumulated depreciation for:
Buildings and Improvements (38,628,178) (2,082,612) - (40,710,790) - Machinery Equipment (18,457,370) (1,190,353) 1,086,034 - (18,561,689) Infrastructure (48,429,141) (1,129,469) - (49,558,610) - Total accumulated depreciation (105,514,689) (4,402,434) 1,086,034 - (108,831,089) Total Capital Assets being depreciated 82,544,189 (2,616,997) (334,271) 1,609,034 81,201,955 Business-type activities Capital Assets, net 102,054,719 (61,504) (334,271) - 101,658,944 60 Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
Depreciation expenses were charged to functions/programs of the primary government as follows:
Governmental activities: $
General government 24,940
Public safety 262,106
Streets 4,512,755
Culture and recreation 880,935
Internal Services Fund 2,355
Total depreciation expense - governmental activities 5,683,091 Business-Type activities:
Water Fund 1,575,228
Sewer Fund 1,557,998
Solid Waste Fund 838,477
Airport Fund 395,385
Fiber Optic Fund 35,346
Total depreciation expense - business-type activities 4,402,434 C. Interfund receivables, payables, and transfers
The composition of interfund activities as of June 30, 2022, is as follows:
Due from/to other funds
Current interfund balances arise in the normal course of business and are expected to be repaid shortly after the end of the fiscal year. Due from/to other funds balances at June 30, 2022 were as follows:
Due from
other funds
other
funds
Governmental Funds: $$
General Fund 843,485 -
Redevelopment & Housing Grants Special Revenue Fund - 462,295 Nonmajor Funds - 381,190
Total Governmental Funds 843,485 843,485
61 Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
Advances receivable/payable
Long-term interfund balances arise in the normal course of business and are not expected to be repaid during the next fiscal year. Advances receivable/payable funds balances at June 30, 2022 were as follows:
Advances Receivable Advances Payable
Governmental Funds: $$
General Fund - 2,368,419
Impact Fees Special Revenue Fund 106,344 -
Nonmajor Funds 40,674 -
Total Governmental Funds 147,018 2,368,419
Enterprise Funds:
Water Fund 1,956,182 -
Sewer Fund 184,944 -
Solid Waste Fund 80,275 -
Total Enterprise Funds 2,221,401 -
Total Government 2,368,419 2,368,419
With Council approval, resources may be transferred from one City fund to another. The City made various interfund transfers as follows:
General
Fund
Housing
Special
Revenue Fund
Debt
Service Fund
Nonmajor
Funds
Total
Transfers
Out
Transfers Out $ $ $$$
General Fund - 83,777 - - 83,777
Impact Fee Special Revenue Fund 5,000 - - - 5,000
Redevelopment & Housing Special Revenue Fund 122,000 - 161,934 - 283,934 Nonmajor Governmental Funds 3,656,286 1,604 406,759 72,971 4,137,620 Water Fund - - 26,569 5,056 31,625
Sewer Fund - - 196,920 5,056 201,976
Solid Waste Fund - - 40,579 5,056 45,635
Airport Fund - - 5,056 5,056
Total Transfers In 3,783,286 85,381 832,761 93,195 4,794,623 Transfers In
The City approved various interfund transfers within its budget for various recommencements such as the transfer from the Retirement Fund to the General Fund for recommencements of General Fund employee’s retirement costs, the transfer from the CDBG Fund to the General Fund for the recommencements of qualified recreations staff costs and recommencements of debt payments to the Debt Service Fund. The General Fund also transferred 20% of its reimbursement from the Successor Agency to the Successor Agency Housing Fund as required by State law. 62 Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
D. Leases
Policies
A lease is defined as a contract that conveys control of the right to use another entity’s nonfinancial asset (the underlying asset) as specified in the contract for a period of time in an exchange or exchange-like transaction. Examples of nonfinancial assets include buildings, land, vehicles, and equipment. The City recognizes lease receivable or liabilities with an initial, individual value of $200,000 or more, based on the future lease payments remaining at the start of the lease.
Lessor
The City is a lessor for noncancellable leases of buildings and facilities. The City recognizes a lease receivable and a deferred inflow of resources in the government‐wide and fund financial statements.
At the commencement of a lease, the City initially measures the lease receivable at the present value of payments expected to be received during the lease term. Subsequently, the lease receivable is reduced by the principal portion of lease payments received. The deferred inflow of resources is initially measured as the initial amount of the lease receivable, adjusted for lease payments received at or before the lease commencement date. Subsequently, the deferred inflow of resources is recognized as revenue over the life of the lease term.
Key estimates and judgments include how the City determines (1) the discount rate it uses to discount the expected lease receipts to present value, (2) lease term, and (3) lease receipts as follows:
• The City uses bond interest rate as the discount rate for leases. • The lease term includes the noncancellable period of the lease. • Lease receipts included in the measurement of the lease receivable is composed of fixed payments from the lessee.
The City monitors changes in circumstances that would require a remeasurement of its lease, and will remeasure the lease receivable and deferred inflows of resources if certain changes occur that are expected to significantly affect the amount of the lease receivable. 63 Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
Leases Receivable (City as Lessor)
The provisions of GASB Statements 87 were implemented during fiscal year 2022. As part of the implementation of this-Statement, the City has accounted for certain lessor transactions, which required the restatement and increase of leases receivable and deferred inflows in the same amounts $3,915,100 as of July 1, 2021. As a result, the net effect on beginning net position is zero.
The terms and balances related to leases receivable and deferred inflows of resources recorded in the Enterprise Funds as of June 30, 2022 were:
Lessee Property Address
Original
Lease Date
Lease Ending
Date
Term
Duration
(Years)
Remaining
Lease Term
(years)
Extension
Years
Expiration
Date Including
Options
Zayo Group, LLC
Running between Room MPOE of
the City's Civic Center and Fire
Station Two, 370 Airport
Boulevard 6/30/2021 6/30/2024 3 1 - 6/30/2024
EKB Partners 45 Aviation Way 12/28/2016 12/31/2053 20 14 15 12/31/2053 Mid Valley Supply 220 Airport Blvd 10/1/2014 9/30/2024 5 0 5 9/30/2024 Pacific Golf Centers 101 Ranport Rd 7/2/2013 7/1/2038 5 0 20 7/1/2038 Specialized Helicopter 150 Aviation Way 3/1/2020 2/29/2024 4 1 0 2/29/2024 Watsonville Diesel 101 Aviation Way 8/1/2016 7/31/2056 30 24 10 7/31/2056 United Flight 120 Aviation Way 6/24/2009 11/14/2038 20 7 10 11/14/2038 Ellas 100 Aviation Way 4/1/2022 3/31/2027 5 3 6 3/31/2033 (Continued below)
Lessee
Interest
Revenue Lease Revenue
Monthly Revenue
as of
June 30, 2022
Lease Receivable
Balance at
June 30, 2022
Deferred Inflow
of Resources at
June 30, 2022
$$ $ $ $
Zayo Group, LLC 1,611 61,543 9,337 221,672 195,469
EKB Partners 15,704 14,774 2,540 656,460 652,244
Mid Valley Supply 1,756 95,097 8,071 216,083 223,146
Pacific Golf Centers 8,620 22,813 2,619 427,215 425,692 Specialized Helicopter 1,161 79,965 6,761 134,354 140,423 Watsonville Diesel 19,977 3,724 1,978 842,647 824,189
United Flight 7,274 18,817 2,174 360,752 359,479
Ellas 2,118 12,582 4,900 719,744 721,045
58,222 309,313 38,380 3,578,927 3,541,687
64 Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
The future principal and interest lease receivables as of June 30, were as follows:
For the Year
Ended June 30 Principal Interest Total
$$$
2023 393,654 70,828 464,482
2024 377,287 66,504 443,791
2025 147,758 62,611 210,369
2026 129,278 60,034 189,312
2027 134,615 57,377 191,992
2028-2032 729,817 244,031 973,848
2033-2037 496,085 176,774 672,859
2038-2042 313,725 128,474 442,199
2043-2047 294,782 92,346 387,128
2048-2052 335,379 51,748 387,127
2053-2057 226,547 10,872 237,419
Totals 3,578,927 1,010,727 4,363,107
E. Long-term debt
The City's long-term debt obligations are repaid by the following funds: General Fund, Debt Service Fund, Water Enterprise Fund, Sewer Enterprise Fund, Solid Waste Enterprise Fund and the Airport Enterprise Fund.
Debt payable (Direct Borrowing) – Governmental Activities On April 13, 2012, the City entered into a commercial term loan with Santa Cruz County Bank to finance the cost of installing solar panels through the City of Watsonville. The total amount for which the City was obligated under the loan was $3,014,285. Installation of the solar panels was completed in the 2012/13 fiscal year.
Interest rate for the loan was 5.29% with principal payments ranging from $206,431 to $282,376 through fiscal year 2027.
65 Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
Notes payable:
Governmental Activities -
Section 108 Loan Payable (Direct Borrowing)
The City entered into a contract with the Secretary of U.S. Department of Housing and Urban Development. The contract is for loan guarantee assistance under Section 108 of the Housing and Community Development Act of 1974, as amended, 42 U.S.C. #5308. The promissory note, in the amount of $2,530,000, is for the Downtown Parking Garage Project. The loan is to be repaid with future Community Development Block Grant funds over a period of twenty years at an interest rate of 1.26%.
The annual requirements to amortize the Section 108 loan outstanding as of June 30, 2022 is as follows:
Fiscal Year Principal Interest Debt Service
$$$
2023 155,000 11,308 166,308
2024 163,000 2,902 165,902
2025 170,000 2,423 172,423
Total 488,000 16,633 504,633
PG&E Notes (Direct Borrowings)
The City entered into several agreements with Pacific Gas & Electric Company (PG&E) to retrofit City lighting with qualified energy saving lights throughout the City. The notes are to be repaid with future energy savings over various periods at interest rates of 0%.
The annual requirements to repay the PG&E note outstanding as of June 30, 2022 are as follows:
Business-type Activities - Waste Water System Lights:
Fiscal Year Principal
$
2023 7,036
Total 7,036
66 Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
PG&E 2019 Notes (Direct Borrowing)
The City entered into several agreements with Pacific Gas & Electric Company (PG&E) to retrofit City lighting with qualified energy saving lights throughout the City. The notes are to be repaid with future energy savings over various periods at interest rates of 0%.
The terms and maximum payments required on the 2019 notes are as follows:
Old City Hall - $47,181, 5 year loan, maximum annual payment of $11,323, Civic Center - $60,070, 4 year loan, maximum annual payment of $18,021, Marinovich - $33,071, 4 year loan, maximum annual payment of $9,229, Youth Center - $27,876, 6 year loan, maximum annual payment of $4,993, Ramsay Park - $29,807, 5 year loan, maximum annual payment of $7,013, Fire Station 1 - $36,215, 3 year loan, maximum annual payment of $13,413, Beach St Parking - $35,429, 6 year loan, maximum annual payment of $7,330, Police Station - $85,545, 5 year loan, maximum annual payment of $19,010, Senior Center - $20,657, 8 year loan, maximum annual payment of $2,882.
The annual requirements to repay the PG&E 2019 governmental activities notes outstanding as of June 30, 2022 are as follows:
Fiscal Year Principal
$
2023 78,298
2024 49,374
2025 11,292
2026 3,709
2027 2,882
2028 243
Total 145,798
67 Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
The original note amounts, terms and maximum annual payments required on the 2019 notes are as follows:
Corralitos - $23,326, 5 year loan, maximum annual payment of $5,281, MSC - $34,323, 7 year loan, maximum annual payment of $5,492, Vista Well - $8,722, 3 year loan, maximum annual payment of $3,115.
Business Type Activities
For the Water Fund as follows:
The annual requirements to repay the PG&E 2019 Water Fund notes outstanding as of June 30, 2022 are as follows:
Fiscal Year Principal
$
2023 10,773
2024 10,333
2025 5,489
2026 4,121
Total 30,716
For the Waste Water Fund as follows:
Waste Water Treatment Plant - $86,422, 5 year loan, maximum annual payment of $19,205.
The annual requirements to repay the PG&E 2019 Waste Water Fund note outstanding as of June 30, 2022 are as follows:
Fiscal Year Principal
$
2023 19,205
2024 19,205
2025 8,002
Total 46,412
68 Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
For the Airport Fund as follows:
Airport - $153,579, 7 year loan, maximum annual payment of $23,037.
The annual requirements to repay the PG&E 2019 Airport Fund note outstanding as of June 30, 2022 are as follows:
Fiscal Year Principal
$
2023 23,037
2024 23,037
2025 23,037
2026 23,037
2027 5,759
Total 97,907
For the Solid Waste Fund as follows:
Landfill - $9,110, 7 year loan, maximum annual payment of $1,458.
The annual requirements to repay the PG&E 2019 Solid Waste Fund note outstanding as of June 30, 2022 are as follows:
Fiscal Year Principal
$
2023 1,458
2024 1,458
2025 1,458
2026 970
Total 5,344
69 Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
State Water Resources Control Board Loans (Direct Borrowing) On December 18, 2015, the City entered into an agreement with the California State Water Resources Control Board for a Clean Water State Revolving Fund Loan to finance the Manana Lane Sewer Replacement Project. The amount of the loan is $1,486,310. The interest rate for the 20 year loan is 1.6% with principal payments ranging from $66,227 to $86,741.
The City’s outstanding loan under the California State Water Resources Control Board is secured by a pledge of revenues from the Sewer Enterprise Fund. Events of default include non-payment of interest or principal when due. The City shall have 10 days to clear any default. A penalty of highest legal rate of interest from date of default will be added for each charge, fees, taxes, assessments tools or other charges or imposed by the Recipient of non-payment. There have been no events of default since the loan was issued.
The annual debt services requirements for the loan outstanding as of June 30, 2022 is as follows:
Fiscal Year Principal Interest Debt Service
$$$
2023 68,364 19,767 88,131
2024 69,457 18,673 88,130
2025 70,569 17,561 88,130
2026 71,698 16,432 88,130
2027 72,845 15,285 88,130
2028-2032 382,086 58,565 440,651
2033-2037 413,646 27,004 440,650
2038 86,741 1,388 88,129
Total 1,235,406 174,675 1,410,081
70 Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
On April 15, 2019, the City entered into an agreement with the California State Water Resources Control Board for a Clean Water State Revolving Fund Loan to finance the Freedom Sanitation Trunk Sewer Line Project. The total amount of the loan is $4,600,840, however, the City has only drawn down $4,258,939 as of June 30, 2022. The interest rate for the 20 year loan is 1.7% with principal payments ranging from $191,783 to $259,770 as of June 30, 2022.
The City’s outstanding loan under the California State Water Resources Control Board is secured by a pledge of revenues from the Sewer Enterprise Fund. Events of default include non-payment of interest or principal when due. The City shall have 10 days to clear any default. A penalty of highest legal rate of interest from date of default will be added for each charge, fees, taxes, assessments tools or other charges or imposed by the Recipient of non-payment. There have been no events of default since the loan was issued.
The annual requirements to amortize the loan outstanding as of June 30, 2022 is as follows:
Fiscal Year Principal Interest Debt Service
$$$
2023 191,783 72,402 264,185
2024 195,043 69,142 264,185
2025 198,359 65,826 264,185
2026 201,731 62,454 264,185
2027 205,160 59,025 264,185
2028 208,648 55,537 264,185
2029 212,195 51,990 264,185
2030 215,802 48,382 264,184
2031 219,471 44,714 264,185
2032 223,202 40,983 264,185
2033 226,996 37,188 264,184
2034 230,855 33,329 264,184
2035 234,780 29,405 264,185
2036 238,771 25,414 264,185
2037 242,830 21,354 264,184
2038 246,958 17,226 264,184
2039 251,157 13,028 264,185
2040 255,426 8,758 264,184
2041 259,772 4,416 264,188
Total 4,258,939 760,573 5,019,512
71 Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
Business-type Activities - Municipal landfill closure and post-closure liability and requirements
The City operates a landfill solely for the disposal of Watsonville residents’ solid waste. The landfill is regulated by the California Integrated Waste Management Board, which requires that the City set aside certain funds for the landfill's eventual closure. As of June 30, 1998, the City’s Solid Waste Division had completed the closure of the old landfill cell and recognized $403,773 of expenditures to complete the closure. The City is now operating a new cell, which was expected to provide landfill capacity for 23 years with an estimated post-closure costs of $1,591,230 as of June 30, 2022.
The City recognizes a portion of the closure and post closure care costs in each operating period.
The amount recognized each year to date for the new landfill is based on the landfill capacity used as of the balance sheet date. As of June 30, 2022, the new landfill cell had used 96.7% of its projected space. The estimated closure and post-closure costs were $1,876,793 and $1,803,644, respectively, which will be recognized as the remaining capacity is used (estimated to be 0.6 years). To date, the fund has $239,650 for post closure costs for the closed phase I and II cells and has set aside closure costs of $1,876,793 and post-closure costs of $1,563,994 for the open phase III cell for a total of $3,680,437. The estimated costs of closure and post closure care are subject to changes such as the effects of inflation, revision of laws and other variables.
NET OPEB LIABILITY
Starting July 1, 2015, the City ceased to pay cash subsidies for retirees. The retirees pay the full amount of their CSAC IEA premiums. The medical/drug implicit subsidy was the only source of liability related for OPEB. Since there is no cash subsidy, as of June 30, 2022, the net OPEB liability was calculated to be immaterial for GASB#75 presentation purposes. However, the net OPEB liabilities of $5,036,600 is still reflected as part of the long-term liabilities in the City’s Statements of Net Position as follows: Governmental Activities - $3,631,460, Business-type Activities - $1,405,140.
Capital Leases (Direct Borrowings):
Governmental Activities -
On March 12, 2018, the City entered into an Equipment Lease Purchase agreement with Community First National Bank for the purchase of a Rosenbauer EXT Aerial Tiller Fire Truck.
The amount of the lease pertaining to governmental activities was $1,291,081. The interest rate for the 5 year lease is 3.544% with principal lease payments ranging from $249,076 to $276,507.
If the City should default under any of the provisions hereof, the lessor may charge interest on all amounts due at 10% per annum or the maximum amount permitted by law, whichever is less.
There have been no events of default since the lease was entered into. 72 Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
The annual debt services requirement for the lease outstanding as of June 30, 2022 is as follows:
Fiscal Year Principal Interest Debt Service Purchase Option $ $ $$
2023 276,507 9,799 286,306 -
Total 276,507 9,799 286,306 -
On March 9, 2021, the City entered into a Master Equipment Lease Purchase Agreement with Bank of America for the refinancing of the Solar Project Equipment by prepayment of the 2012 Solar Lease with Santa Cruz County and acquiring four solid waste collection vehicles and one sewer cleaning vehicle. See Capital Lease (Direct Borrowing) – Business-Type Activities for further information. The amount of the lease pertaining to governmental activities was $1,649,451. Interest rate for the 7 year lease is 1.25% with principal lease payments ranging from $137,956 to $279,708.
If the City should default under any of the provisions hereof, the lessor may (1) declare defaulted and all other amounts payable to be immediately due, (2) retake possession or require the City to promptly return such equipment, (3) terminate the lease or (4) take legal action necessary and desirable to enforce its rights. There have been no events of default since the lease was entered into.
The annual requirement to amortize the lease outstanding for governmental activities as of June 30, 2022 is as follows:
Fiscal Year Principal Interest Debt Service
$$$
2023 271,318 11,961 283,279
2024 274,086 9,192 283,278
2025 276,883 6,396 283,279
2026 279,708 3,571 283,279
2027 140,922 717 141,639
Total 1,242,917 31,837 1,274,754
Business-Type Activities -
On March 9, 2021, the City entered into a Master Equipment Lease Purchase agreement with Bank of America for the purchase of a Sewer Cleaning Vehicle Truck. The amount of the lease pertaining to the Sewer Fund was $503,037. Interest rate for the 6 year lease is 1.25% with principal lease payments ranging from $45,873 to $93,206. 73 Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
If the City should default under any of the provisions hereof, the lessor may (1) declare defaulted and all other amounts payable to be immediately due, (2) retake possession or require the City to promptly return such equipment, (3) terminate the lease or (4) take legal action necessary and desirable to enforce its rights. There have been no events of default since the lease was entered into.
The annual requirement to amortize the lease outstanding in the Sewer Fund as of June 30, 2022 is as follows:
Fiscal Year Principal Interest Debt Service
$$$
2023 90,546 3,335 93,881
2024 91,424 2,457 93,881
2025 92,310 1,571 93,881
2026 93,206 676 93,882
Total 367,486 8,039 375,525
On March 9, 2021, the City entered into a Master Equipment Lease Purchase agreement with Bank of America for the purchase of four solid waste collection vehicle trucks. The amount of the lease pertaining to the Solid Waste Fund was $1,809,432. The interest rate for the 6 year lease is 1.25% with principal lease payments ranging from $165,008 to $335,528.
If the City should default under any of the provisions hereof, the lessor may (1) declare defaulted and all other amounts payable to be immediately due, (2) retake possession or require the City to promptly return such equipment, (3) terminate the lease or (4) take legal action necessary and desirable to enforce its rights. There have been no events of default since the lease was entered into.
The annual requirement to amortize the lease outstanding in the Solid Waste Fund as of June 30, 2022 is as follows:
Fiscal Year Principal Interest Debt Service
$$$
2023 325,698 11,994 337,692
2024 328,855 8,838 337,693
2025 332,041 5,651 337,692
2026 335,259 2,433 337,692
Total 1,321,853 28,916 1,350,769
74 Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
Changes in long-term liabilities
Long-term liabilities activity for the fiscal year ended June 30, 2022, are as follows:
Balance Balance Due Within
June 30, 2021 Additions Reductions June 30, 2022 One Year Governmental activities:
Direct Borrowings: $ $ $ $ $
Notes payable 2,937,862 - (784,640) 2,153,222 781,123
Subtotal 2,937,862 - (784,640) 2,153,222 781,123
Other Liabilities:
Compensated absences 2,213,032 1,048,445 (1,069,639) 2,191,838 131,510 Net OPEB liability 2,017,944 1,613,516 3,631,460 - -
Net pension liability 66,279,043 - (24,134,077) 42,144,966 - 73,447,881 2,661,961 (25,988,356) 50,121,486 912,633
Balance Balance Due Within
Business-type activities: June 30, 2021 Additions Reductions June 30, 2022 One Year $$$$ $
5,793,370 - (299,025) 5,494,345 260,147
Notes payable (2015 SWRCB, 2019 SWRCB) 2,357,146 - (480,392) 1,876,754 477,753 Compensated absences 1,009,544 603,681 (582,459) 1,030,766 61,845 Net OPEB liability 1,515,696 - (110,556) 1,405,140 -
Net pension liabilities 23,586,512 - (10,006,493) 13,580,019 - Landfill closure / post-closure liabilities 3,680,437 - - 3,680,437 40,000 37,942,705 603,681 (11,478,925) 27,067,461 839,745
Total Governmental activities
Long-term liabilities
Total Business-type activities
Long-Term liabilities
Loans payable (2019 PG&E various, Sewer
General Fund, Library Fund Sewer Fund, Water Fund, Airport Fund and Solid Waste Fund all were required to pay their portion of costs related to other Net OPEB Liabilities and Net Pension Liabilities.
75 Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
IV. Other information
A. Risk management
The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The City also provides health insurance coverage to employees. There have been no significant reductions in insurance coverage for any risk of loss in the past fiscal year, and settled claims have not exceeded the commercial coverage in any of the past three fiscal years. The City has established a risk management fund to account for and finance its uninsured risks of loss.
The City's risk management programs provide coverage for up to a maximum of $150,000 for each Workers' Compensation claim; $500,000 for each General Liability claim. The City purchases commercial insurance for claims in excess of coverage provided by the self-insurance programs. There have been no significant changes in insurance coverage as compared to last fiscal year.
All funds of the City participate in the self-insurance programs. The employee health insurance program is funded by contributions of a flat rate per employee to the self-insurance fund. Other self-insurance programs are funded by budgeted appropriations. Funding is estimated to provide amounts needed to pay prior and current fiscal year claims and to establish reserves for catastrophic losses.
Liabilities in the self-insurance Internal services fund at June 30, 2022 totaled $3,792,529 as follows: Health Benefits $92,446; General Liability $1,254,030; and Workers’ Compensation $2,446,053.
The basis for estimating incurred but not reported claims is based on the statute of limitation on accepting claims as follows:
Health Benefits are estimated at 2 times the current fiscal year’s average monthly cost, General Liability is estimated at 6 months of current fiscal year’s average monthly claim cost, and Workers’ Compensation is estimated by using the last two weeks of current fiscal year’s average monthly claim cost.
2020-2021 2021-2022
Claims incurred but not reported: $ $
Beginning 2,226,605 1,022,049
Incurred claims 51,216 2,040,881
Claims paid (1,255,772) (1,716,454)
Ending 1,022,049 1,346,476
Claims payable
Beginning 2,345,006 2,628,520
Incurred claims 4,016,832 (2,589,343)
Claims paid (3,733,318) 2,406,876
Ending 2,628,520 2,446,053
Total claims payable 3,650,569 3,792,529
76 Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
B. Public entity risk pool
In November 1994, the City became a member of the Public Agency Risk Sharing Authority of California (PARSAC), formerly known as California Municipal Insurance Authority (CMIA).
PARSAC, a consortium of 34 municipalities and one fire district, which was established in May 1986 to pool resources, share risks, purchase excess insurance, and to share costs for professional risk management and claims administration. The Authority’s governing board consists of one appointed official and an alternate from participating cities.
General liability
The City is self-insured for general liability claims up to $500,000 (effective July 1, 2022) for each occurrence. Coverage for individual losses in excess of $500,000, up to $10,000,000 is provided through the California Intergovernmental Risk Authority (CIRA). Under this program, members share in losses between the members’ individual self-insured retention and $1,000,000 under a risk sharing pool program; and from $1,000,000 to $40,000,000, coverage is provided by another risk pool, CSAC-EIA.
Estimates for all liabilities have been accrued in the Self-Insurance Internal Service Fund, which included an estimate for incurred but not reported claims. At June 30, 2022, total estimated claims payable for General Liability were $1,254,030.
C. Commitments and Contingencies
Litigation
Various claims and lawsuits are pending against the City. In the opinion of City management, the potential claims loss will not be significant to the City's financial statements.
Grant audits
The City receives grants for specific purposes that are subject to review and audit by grantor agencies. Such audits could result in a request for reimbursement by the grantor for expenditures disallowed under the terms and conditions of the appropriate agency. In the opinion of City management, such disallowance, if any, will not be significant. 77 Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
Contingency
Proposition 218, which was approved by the voters in November 1996, regulates the City’s ability to impose, increase and extend taxes, assessments and fees. Any new, increased or extended taxes, assessments, and fees subject to the provisions of Proposition 218 require voter approval before they can be implemented. Additionally, Proposition 218 provides that these taxes, assessments, and fees are subject to the voter initiative process and may be rescinded in the future by the voters. Therefore, the City’s ability to finance the services for which the taxes, assessments and fees were imposed may be significantly impaired. Certain language in the initiative is unclear as to the scope and impact of the proposition. Future court rulings or state legislation may clarify these issues. At this time it is uncertain as to the effect that Proposition 218 will have on the City’s ability to maintain or increase the revenue it receives from taxes, assessments and fees, or its effect on interfund payments in lieu of taxes and transfers of surplus funds from enterprise funds to the general fund. Also unclear is the extent to which a 1995 California Supreme Court ruling (the Guardino case) upholding the voter approval requirements of a previously enacted state initiative (Proposition 62) is applicable to prior periods. However, because the City of Watsonville is a Charter City, management believes that the Guardino ruling does not apply to its general law application in the cited case.
D. Post-employment health care benefits
Retiree benefits – COBRA benefits
Under the Consolidated Omnibus Budget Reconciliation Act (COBRA), the City provides health care benefits to eligible former employees and their eligible dependents. Certain requirements are outlined by the federal government for this coverage. The premium plus a 2% administration fee is paid in full by the insured on or before the tenth day of the month for the actual month covered. This program is offered for a duration between 18 and 36 months, after the termination date, depending on circumstances related to eligibility to Medicare, death or divorce. During the last fiscal year two former employees participated in the program. 78 Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
E. Defined Benefit Pension Plans
The City has two defined benefit pension plans, a Miscellaneous Plan and a Safety Plan. The Miscellaneous Plan is an Agent-Multiple Employer Plan and the Safety Plan is a Cost-Sharing Employer Plan administered by the California Public Employees’ Retirement System (CalPERS).
Below is a summary of the deferred outflows, net pension liabilities and deferred inflows of resources by Plan:
Deferred Outflows Net Pension Deferred Inflows Pension
CalPERS Plan of Resources Liability of Resources Expense $ $$ $
Miscellaneous - Agent Multiple Employer 6,973,089 26,706,790 13,357,762 2,140,406 Safety - Cost-Sharing Multiple Employer 12,238,219 29,018,195 19,947,039 7,523,036 Totals 19,211,308 55,724,985 33,304,801 9,663,442
Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in the pension expense as follows:
Fiscal Safety Plan Miscellaneous Plan Total
Year Ended Annual Annual Annual
June 30 Amortization Amortization Amortization
$$$
2023 (2,229,281) (2,537,075) (4,766,356)
2024 (2,766,454) (2,566,800) (5,333,254)
2025 (3,702,737) (2,963,521) (6,666,258)
2026 (4,752,849) (3,690,006) (8,442,855)
Total (13,451,321) (11,757,402) (25,208,723)
See Notes below for further information about the Plans.
CALPERS miscellaneous employees plan
A. General Information about the Miscellaneous Pension Plan Plan Description
All qualified permanent and probationary miscellaneous employees are eligible to participate in the City’s Miscellaneous Employee Pension Plan, agent multiple-employer defined benefit pension plan administered by the California Public Employees’ Retirement System (CalPERS), which acts as a common investment and administrative agent for its participating member employees. Benefit provisions under the Plan is established by State statue and City resolution.
CalPERS issues publicly available reports that include a full description of the pension plan regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website.
79 Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
Benefits Provided
CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full time employment. Members with five years of total service are eligible to retire at age 55 with statutorily reduced benefits. All members are eligible for nonduty disability benefits after 10 years of service. The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost of living adjustments for each plan are applied as specified by the Public Employees’ Retirement Law.
The Plans’ provisions and benefits in effect at June 30, 2022, are summarized as follows:
Miscellaneous
Hire date
Prior to
July 1, 2011
On or after
July 1, 2011
On or after
January 1, 2013
Benefit formula 2.0% @ 55 2.0% @ 60 2.0% @ 62
Benefit vesting schedule 5 years service 5 years service 5 years service Benefit payments monthly for life monthly for life monthly for life Retirement age 55 60 62
Monthly benefits, as a % of eligible compensation 1.426% to 2.418% 1.092% to 2.418% 1% to 2.5% Required employee contribution rates 7.00% 7.00% 6.25%
Required employer contribution rates 8.08% 8.08% 12.555% Beginning in fiscal year 2016, CalPERS collects employer contributions for the Plan as a percentage of payroll for the normal cost portion as noted in the rates above as a dollar amount for contributions toward the unfunded actuarial liability (UAL). The dollar amounts are billed on a monthly basis or the City can elect a lump sum payment option. The City’s required contribution for the unfunded liability in the Miscellaneous plan for the year ended June 30, 2022 was $3,440,393, which were made under the lump sum payment option.
Employees Covered
The following employees were covered by the benefit terms for the Miscellaneous Plan as of the most recent actuarial valuation date of June 30, 2020 and measurement date as of June 30, 2021:
Miscellaneous
Inactive employees or beneficiaries currently receiving benefits 325 Inactive employees entitled to but not yet receiving benefits 341 Active employees 299
Total 965
80 Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
Contributions
Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. Funding contributions for the Plan is determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability.
The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees.
B. Net Pension Liability
The City’s net pension liability for the Miscellaneous Plan is measured as the total pension liability less the pension plan’s fiduciary net pension. The net pension liability of the Plan is measured as of June 30, 2021, using an annual actuarial valuation as of June 30, 2020 rolled forward to June 30, 2021 using standard update procedures. A summary of principal assumptions and methods used to determine the net pension liability is shown below.
Actuarial Assumptions - The total pension liabilities in the June 30, 2021 actuarial valuations were determined using the following actuarial assumptions:
Miscellaneous
Valuation Date June 30, 2020
Measurement Date June 30, 2021
Actuarial Cost Method Entry-Age Normal Cost Method
Actuarial Assumptions:
Discount Rate 7.15%
Inflation 2.50%
Payroll Growth 2.75%
Projected Salary Increase (1)
Investment Rate of Return 7.15% (2)
Mortality Derived using CalPERS Membership Data for all Funds (3) (1) Depending on age, service and type of employment
(2) Net of pension plan investment expenses, includes inflation (3) The mortality table used was developed based on CalPERS' specific data. The probabilities of mortality are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015. Pre-retirement and post-retirement mortality rates include 15 years of projected mortality improvement using 90% of Scale MP-2016 published by the Society of Actuaries. For more details on this table, please refer to the CalPERS Experience Study and Review of Actuarial Assumptions report from December 2017 that can be found on the CalPERS website.
81 Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
The underlying mortality assumptions and all other actuarial assumptions used in the June 30, 2020 valuation were based on the results of a December 2017 actuarial experience study for the period 1997 to 2015. Further details of the Experience Study can be found on the CalPERS website.
Discount Rate – The discount rate used to measure the total pension liability was 7.15%. The projection of cash flows used to determine the discount rate for each Plan assumed that contributions from all plan members in the Public Employees Retirement Fund (PERF) will be made at the current member contributions rates and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on those assumptions, each Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members for all plans in the PERF. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments of current plan members for all plans in the PERF.
Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total pension liability for each Plan.
The long-term expected rate of return on pension plan investments was determined using a building-block method in which expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class.
In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations as well as the expected pension fund cash flows. Using historical returns of all the funds’ asset classes, expected compound returns were calculated over the short-term (first 10 years) and the long-term (11+ years) using a building-block approach.
Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the rounded single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equal to the single equivalent rate calculated above and rounded down to the nearest one quarter of one percent.
82 Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
The table below reflects the long-term expected real rates of return by asset class:
Asset Class (a)
New
Strategic
Allocation
Real Return
Years 1 - 10(b)
Real Return
Years 11+(c)
Global Equity 50.0% 4.80% 5.98%
Fixed Income 28.0% 1.00% 2.62%
Inflation Assets 0.0% 0.77% 1.81%
Private Equity 8.0% 6.30% 7.23%
Real Assets 13.0% 3.75% 4.93%
Liquidity 1.0% 0.00% -0.92%
Total 100.0%
(a) In the CalPERS Annual Comprehensive Financial Report, Fixed Income is included in Global Debt Securities; Liquidity is included in Short-term Investments; Inflation Assets are included in both Global Equity Securities and Global Debt Securities.
(b) An expected inflation of 2.0% used for this period. (c) An expected inflation of 2.92% used for this period.
C. Changes in the Net Pension Liability
The changes in the Net Pension Liability for the Miscellaneous Plan were as follows:
Increase (Decrease)
Total Pension
Liability
Plan Fiduciary
Net Position
Net Pension
Liability/(Asset)
$$ $
Balance at June 30, 2020 162,350,328 118,980,216 43,370,112 Changes in the year:
Service cost 3,154,808 - 3,154,808
Interest on the total pension liability 11,578,015 - 11,578,015 Differences between actual and expected experience 1,720,257 - 1,720,257 Contribution - employer - 4,850,242 (4,850,242)
Contribution - employee - 1,488,988 (1,488,988)
Net investment income - 26,896,026 (26,896,026)
Benefit payments, including refunds of employee
contributions (7,435,396) (7,435,396) -
Administrative expense - (118,854) 118,854
Net changes 9,017,684 25,681,006 (16,663,322)
Balance at June 30, 2021 171,368,012 144,661,222 26,706,790 83 Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
Sensitivity of the Net Pension Liability to Changes in the Discount Rate – The following presents the net pension liability of the City for the Plan, calculated using the discount rate for the Plan, as well as what the City’s net pension liability would be if it were calculated using a discount rate that is 1-percent point lower or 1-percent point higher than the current rate:
1% Decrease 6.15%
Net Pension Liability $49,783,889
1% Decrease 7.15%
Net Pension Liability $26,706,790
1% Increase 8.15%
Net Pension Liability $7,616,706
Pension Plan Fiduciary Net Pension – Detailed information about the pension plan’s fiduciary net position is available in the separate issued CalPERS financial report.
D. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pension For the fiscal year ended June 30, 2022, the City recognized pension expense of $2,140,406. At June 30, 2022, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:
Deferred Outflows Deferred Inflows
of Resources of Resources
$$
Pension contributions subsequent to measurement date 5,372,729 - Differences between actual and expected experience 1,600,360 - Changes in assumptions - -
Net differences between projected and actual earnings on plan investments - (13,357,762)
Total 6,973,089 (13,357,762)
84 Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
The amount of $5,372,729 was reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2023. Other amounts reported as deferred outflow of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:
Year Ended Annual
June 30 Amortization
$
2023 (2,537,075)
2024 (2,566,800)
2025 (2,963,521)
2026 (3,690,006)
Total (11,757,402)
CALPERS Safety (Police & Fire) Employees Plan
A. General Information about the Safety Pension Plan
Plan Descriptions
All qualified public safety permanent and probationary employees are eligible to participate in the City’s Safety Employee Pension Plan, cost-sharing multiple employer defined benefit plans administered by the California Public Employees’ Retirement System (CalPERS). Benefit provisions under the Plans are established by State statue and City resolution. CalPERS issues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website.
Benefits Provided
CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full time employment. Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for nonduty disability benefits after 10 years of service. The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost of living adjustments for each plan are applied as specified by the Public Employees’ Retirement Law.
85 Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
The Plans’ provisions and benefits in effect at June 30, 2022, are summarized as follows:
Hire date
Prior to
July 1, 2011
After
July 1, 2011
After
July 1, 2013
Benefit formula 3% @ 50 3% @ 55 2.7% @ 57
Benefit vesting schedule 5 years service 5 years service 5 years service Benefit payments monthly for life monthly for life monthly for life Retirement age 50 55 57
Monthly benefits, as a % of eligible compensation 3.0% 2.4%-3.0% 2.0%-2.7% Required employee contribution rates 9.0% 9.0% 13.0%
Required employer contribution rates 23.71% 20.64% 13.13% Safety
Beginning in fiscal year 2016, CalPERS collects employer contributions for the Plan as a percentage of payroll for the normal cost portion as noted in the rates above as a dollar amount for contributions toward the unfunded actuarial liability (UAL). The dollar amounts are billed on a monthly basis or the City can elect a lump sum payment option. The City’s required contribution for the unfunded liability in the Safety plan for the year ended June 30, 2022 was $3,439,748, which were made under the lump sum payment option.
Contributions – Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. Funding contributions for the Plan is determined annually on an actuarial basis as of June 30 by CalPERS.
The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the fiscal year, with an additional amount to finance any unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. Contributions to the pension plan from the City were $5,742,501 for the fiscal year ended June 30, 2022.
B. Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions
For purposes of measuring the net pension liability and deferred outflow/inflows of resources related to pensions and pension expense, information about the fiduciary net position of the Plan and additions to/deductions from the Plan’s fiduciary net position have been determined on the same basis as they are reported by the CalPERS financial Office. For this purpose, benefit payments (including refunds of employee contributions) are recognized when currently due and payable in accordance with the benefit terms. Investments are reported at fair value. 86 Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
As of June 30, 2022, the City reported a net pension liability for its proportionate share of the net pension liability of the Plan as follows:
Safety Plans
Proportion - June 30, 2020 0.69788%
Proportion - June 30, 2021 0.82685%
Change - Increase (Decrease) 0.12897%
For the year ended June 30, 2022, the City recognized pension expense of $7,523,036 for the Safety Plan. At June 30, 2022, the City reported deferred outflows of resources and deferred inflows of resources related to pension from the following sources:
Deferred Outflows Deferred Inflows
of Resources of Resources
$$
Pension contributions subsequent to measurement date 5,742,501 - Differences between actual and expected experience 4,957,734 - Changes in assumptions - -
Net differences between projected and actual earnings
on plan investments - (17,271,404.00)
Differences between actual contributions and
proportional contributions - (2,675,635)
Adjustment due to differences in proportion 1,537,984 - Total 12,238,219 (19,947,039)
The amount of $5,742,501 was reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as areduction of the net pension liability in the year ended June 30, 2023.
Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pension will be recognized as pension expense as follows:
Year Ended Annual
June 30 Amortization
$
2023 (2,229,281)
2024 (2,766,454)
2025 (3,702,737)
2026 (4,752,849)
Total (13,451,321)
87 Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
Actuarial Assumptions
For the measurement period ended June 30, 2021, the total pension liability was determined by rolling forward the June 30, 2020 total pension liability. The June 30, 2020 total pension liabilities were based on the following actuarial methods and assumptions for all benefit tiers:
Valuation Date June 30, 2020
Measurement Date June 30, 2021
Actuarial Cost Method Entry-Age Normal Cost Method
Actuarial Assumptions:
Discount Rate 7.15%
Inflation 2.50%
Salary Increases (1)
Investment Rate of Return 7.15% (2)
Mortality Derived using CalPERS Membership Data
for all Funds (3)
(1) Depending on age, service and type of employment
(2) Net of pension plan investment expenses, includes inflation (3) The mortality table used was developed based on CalPERS' specific data. The table includes 15 years of mortality improvements using the Society of Actuarial Scale 90% of scale MP 2016. For more details on this table, please refer to the December 2017 experience study report (based on CalPERS demographic data from 1997 to 2015) that can be found on the CalPERS website.
The underlying mortality assumptions and all other actuarial assumptions used in the June 30, 2020 valuation were based on the results of a December 2017 actuarial experience study for the period 1997 to 2015. Further details of the Experience Study can be found on the CalPERS website.
88 Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
Discount Rate – The discount rate used to measure the total pension liability for the plan was
7.15%. The projection used to determine the discount rate for the Plan assumed that contributions from all plan members in the Public Employees Retirement Fund (PERF) will be made at the current member contribution rates and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total pension liability.
The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class.
In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations as well as the expected pension fund cash flows. Using historical returns of all the funds’ asset classes, expected compound returns were calculated over the short-term (first 10 years) and the long-term (11+ years) using a building-block approach.
Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the rounded single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equal to the single equivalent rate calculated above and rounded down to the nearest one quarter of one percent.
The table below reflects the expected real rates of return by asset class.
Asset Class (a)
New
Strategic
Allocation
Real Return
Years 1 - 10(b)
Real Return
Years 11+(c)
Global Equity 50.0% 4.80% 5.98%
Fixed Income 28.0% 1.00% 2.62%
Inflation Assets 0.0% 0.77% 1.81%
Private Equity 8.0% 6.30% 7.23%
Real Assets 13.0% 3.75% 4.93%
Liquidity 1.0% 0.00% -0.92%
Total 100.0%
(a) In the CalPERS Annual Comprehensive Financial Report, Fixed Income is included in Global Debt Securities; Liquidity is included in Short-term Investments; Inflation Assets are included in both Global Equity Securities and Global Debt Securities.
(b) An expected inflation of 2.0% used for this period. (c) An expected inflation of 2.92% used for this period. 89 Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in Discount Rate – The following presents the City’s proportionate share of the net pension liability calculated using the discount rate of 7.15 percent, as well as what the City’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower (6.15 percent) or 1- percentage point higher (8.15 percent) than the current rate:
Safety
1% Decrease 6.15%
Net Pension Liability $52,193,129
Current Discount Rate 7.15%
Net Pension Liability $29,018,195
1% Increase 8.15%
Net Pension Liability $9,982,849
Pension Plan Fiduciary Net Position – Detailed information about the pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports.
F. Successor Agency Private-Purpose Trust Fund for Assets of former Redevelopment Agency of the City of Watsonville.
On December 29, 2011, the California Supreme Court upheld Assembly Bill 1X 26 (“Bill”) that provides for the dissolution of all redevelopment agencies in the State of California. This action impacted the reporting entity of the City of Watsonville that previously had reported a redevelopment agency within the reporting entity of the City as a blended component unit.
The Bill provides that upon dissolution of a redevelopment agency, either the city or other unit of local government will agree to serve as the “successor agency” to hold the assets until they are distributed to other units of state and local governments. On January 10, 2012, the City Council elected to become the Successor Agency for the former redevelopment agency in accordance with the Bill as part of City.
Resolution Number 4-12
After enactment of the law, which occurred on June 28, 2011, redevelopment agencies in the State of California cannot enter into new projects, obligations or commitments. Subject to the control of a newly established oversight board, remaining assets can only be used to pay enforceable obligations in existence as the date of the dissolution (including the completion of any unfinished projects that were subject to legally enforceable contractual commitments).
Successor agencies are allocated revenue in the amount that is necessary to pay the estimated annual installment payments on enforceable obligations of former redevelopment agency until all enforceable obligations of the prior redevelopment agency have been paid in full and all assets have been liquidated.
90 Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
The Bill directs the State Controller of the State of California to review the propriety of any transfers of assets between redevelopment agencies and other public bodies that occurred after January 1, 2011. If the public body that received such transfers is not contractually committed to a third party for the expenditure or encumbrance of those assets, the state Controller is required to order the available assets to be transferred to the public body designated as the successor agency by the Bill.
Management believes, in consultation with legal counsel, that the obligations of the former redevelopment agency due to the City are valid enforceable obligations payable by the successor agency trust under the requirements of the Bill. The City’s position on this issue is not a position of settled law and there is considerable legal uncertainty regarding this issue. It is reasonably possible that a legal determination may be made at a later date by an appropriate judicial authority that would resolve this issue unfavorably to the City.
In accordance with the timeline set forth in the Bill (as modified by the California Supreme Court on December 29, 2011) all redevelopment agencies in the State of California were dissolved and ceased to operate as a legal entity as of February 1, 2012. After the date of dissolution, the assets and activities of the dissolved redevelopment agency are reported in a fiduciary fund (private-purpose trust fund) in the financial statements of the City.
The following is a schedule of long-term liabilities for the fiscal year ended June 30, 2022:
Balance Balance Due Within
June 30, 2021 Retirements June 30, 2022 One Year
$ $$$
Refunding tax allocation bonds 8,210,000 (1,325,000) 6,885,000 1,390,000 Bond Premium 1,123,079 (86,391) 1,036,688 -
Total Bonds Payable 9,333,079 (1,411,391) 7,921,688 1,390,000 Notes Payable 1,855,275 (391,523) 1,463,752 955,275
Net OPEB Liability 64,461 (64,461) - -
Total 11,252,815 (1,867,375) 9,385,440 2,345,275
Tax allocation refunding bonds
In June of 2004 the former Redevelopment Agency of the City of Watsonville issued tax allocation bonds in three series as follows:
1. Series A - $19,000,000
2. Series B-1 - $2,310,000
3. Series B-2 - $4,635,000
In April of 2016, the Successor Agency issued $11,790,000 of 2016 Tax Allocation Refunding Bonds, Series A and $2,420,000 of 2016 Tax Allocation Refunding Bonds, Taxable Series B for a current refunding of the $14,190,000 2004 Tax Allocation Bonds Series A and B-1 and $2,720,000 Tax Allocation Taxable Series B-2 Bonds. The Series A refunding bonds had $2,965,772 of additional funding and Series B had $410,577 of additional funding. The refunding was done to reduce future debt service payments. 91 Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
The transaction resulted in an economic gain of $3,269,616 and a reduction of $3,856,103 in future debt service payments and accounting loss of $163,765 which is shown as a deferred outflow of resources to be amortized over the life of the bonds.
The annual debt services requirements for the loan outstanding as of June 30, 2022 is as follows:
Fiscal Year Principal Interest Debt Service
$ $$
2023 1,390,000 296,950 1,686,950
2024 1,465,000 227,450 1,692,450
2025 945,000 154,200 1,099,200
2026 295,000 106,950 401,950
2027 305,000 92,200 397,200
2028-2032 1,715,000 290,788 2,005,788
2033-2034 770,000 34,800 804,800
Total 6,885,000 1,203,338 8,088,338
Net OPEB Liability
As of the transfer of the former Agency assets to the Successor Agency, the Net OPEB liability was $0. This amount will be reduced by an allocation of future costs incurred by the City from former staff members of the former Agency.
Notes Payable
The City and former Agency had several notes payable from the former Agency to the City for various costs and fees associated with the construction of the Civic Plaza as follows:
Parking Garage Loan for Construction Costs $1,855,275
The State of California deemed these notes as a non-enforceable obligation, and the City could not be paid back until a finding of completion was received from the State’s Department of Finance, which the City received on February 21, 2014 and the Successor Agency’s oversight board made a finding that the notes were for a legitimate redevelopment purpose. The Oversight Board also made the finding for all the above notes. The notes are allowed to add interest based on the State of California Local Agency Investment Fund’s (LAIF) monthly interest rate.
Interest has been projected for the debt service at the most recent rate available.
Debt Payable Recap:
Parking Garage Loan
Fiscal Year Principal Interest Total
$ $$
2023 955,275 876 956,151
Total 955,275 876 956,151
92 Attachment 1
Required Supplementary Information
Attachment 1
This Page Left Intentionally Blank
Attachment 1
The following table provides required supplementary information regarding the City's Miscellaneous Pension Plan:
MEASUREMENT DATE: 2014 2015 2016 2017 2018 2019 2020 2021 TOTAL PENSION LIABILITY $$$$$$$$
Service Cost 2,348,593 2,251,567 2,250,229 2,616,009 2,696,646 2,918,120 3,126,358 3,154,808 Interest 8,369,558 8,741,399 9,093,428 9,502,933 9,872,907 10,452,164 10,957,570 11,578,015 Differences between expected and actual experience (1,088,430) - (1,307,204) (160,738) (622,350) 1,523,815 181,334 1,720,257 Changes in assumptions (2,194,095) - 8,126,558 - (617,380) - - - Changes in benefits - - - - - - - -
Benefit payments, including refunds of employee contributions (4,554,651) (4,874,482) (5,292,339) (5,612,765) (5,877,340) (6,327,905) (6,846,317) (7,435,396) Net change in total pension liability 6,163,500 2,835,959 4,744,114 14,471,997 5,452,483 8,566,194 7,418,945 9,017,684 Total pension liability - beginning 112,697,136 118,860,636 121,696,595 126,440,709 140,912,706 146,365,189 154,931,383 162,350,328 Total pension liability - ending (a) 118,860,636 121,696,595 126,440,709 140,912,706 146,365,189 154,931,383 162,350,328 171,368,012
PLAN FIDUCIARY NET POSITION
Contributions - employer 1,750,491 1,881,144 2,288,840 2,856,260 3,443,447 3,756,237 4,648,909 4,850,242 Contributions - employee 1,087,253 1,064,147 1,145,223 1,265,745 1,301,275 1,520,671 1,474,994 1,488,988 Net investment income (1) 14,090,974 2,081,010 501,726 10,269,390 8,537,327 7,097,297 5,707,428 26,896,026 Administrative expense - (105,873) (57,299) (136,723) (457,364) (76,957) (160,932) (118,854) Benefit payments, including refunds of employee contributions (4,554,651) (4,874,482) (5,292,339) (5,612,765) (5,877,340) (6,327,905) (6,846,317) (7,435,396) Net Plan to Plan Resource Movement - - - (2,203) (250) (3,911) - - Other Miscellaneous Income/(Expense) - - - - - - - -
Net change in plan fiduciary net position 12,374,067 45,946 (1,413,849) 8,639,704 6,947,095 5,965,432 4,824,082 25,681,006 Plan fiduciary net position - beginning 81,597,739 93,971,806 94,017,752 92,603,903 101,243,607 108,190,702 114,156,134 118,980,216 Plan fiduciary net position - ending (b) 93,971,806 94,017,752 92,603,903 101,243,607 108,190,702 114,156,134 118,980,216 144,661,222 Net pension liability - ending (a)-(b) 24,888,830 27,678,843 33,836,806 39,669,099 38,174,487 40,775,249 43,370,112 26,706,790 Plan fiduciary net position as a percentage of the total pension liability 79.06% 77.26% 73.24% 71.85% 73.92% 73.68% 73.29% 84.42% Covered payroll 17,390,545 17,452,658 17,680,742 18,366,981 18,917,990 19,029,329 20,531,347 21,939,351 Net pension liability as percentage of covered-employee payroll 143.12% 158.59% 191.38% 215.98% 201.79% 214.28% 211.24% 121.73% Notes to Schedule:
* Fiscal year 2015 was the 1st year of implementation.
Changes in assumptions: In 2017. the accounting discount rate reduced from 7.65% to 7.15%. In 2016, 2018, 2019, and 2020, there were no changes. In 2015. amounts reported reflect an adjustment of the discount rate from 7.5% (net of administrative expense) to 7.65% (without a reduction for pension plan administrative expense). In 2014, amounts were based on the 7.5% discount rate.
Benefit changes: The figures above do not include any liability impact that may have resulted from plan changes which occurred after June 30. This applies for voluntary benefit changes as well as any offers of Two Years Additional Service Credit (a.k.a. Golden Handshakes).
CITY OF WATSONVILLE, CALIFORNIA
SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS
LAST EIGHT FISCAL YEARS
JUNE 30, 2022
95 Attachment 1
The following table provides required supplementary information regarding the City's Miscellaneous Pension Plan:
2015 2016 2017 2018 2019 2020 2021 2022
$$$$$$$$
Contractually required contribution 1,769,613 2,299,823 2,288,840 2,856,260 3,756,236 4,648,909 4,850,246 5,372,729 Contributions in relation to the actuarially
determined contributions (1,769,613) (2,299,823) (2,288,840) (2,856,260) (3,756,236) (4,648,909) (4,850,246) (5,372,729) Contribution deficiency (excess) - - - - - - - -
Covered payroll 17,452,658 17,680,742 18,366,981 18,917,990 19,029,329 20,531,347 21,939,351 22,534,340 Contributions as a percentage of covered
payroll 10.14% 13.01% 12.46% 15.10% 19.74% 22.64% 22.11% 23.84% Notes to Schedule
Valuation date: 6/30/20
Methods and assumptions used to determine contribution rates:
Discount Rate 7.15% @ 6/30/2020
7.15% @ 6/30/2019
7.15% @ 6/30/2018
7.15% @ 6/30/2017
7.65% @ 6/30/2016
7.65% @ 6/30/2015
7.50% @ 6/30/2014
Inflation
Salary increases Varies by Entry Age and Service
Investment rate of return
Mortality Rate Table (1)
Post Retirement Benefit Increase
* Fiscal year 2015 was the 1st year of implementation.
(1) The probabilities of mortality are based on the CalPERS Experience Study. Pre-retirement and Post-retirement mortality rates include 20 years of projected mortality improvement using Scale BB published by the Society of Actuaries for 2015 to 2018. For 2019 to 2022, pre-retirement and post-retirement mortality rates include 15 years of projected mortality improvement using 90% of Scale MP-2016 published by the Society of Actuaries.
CITY OF WATSONVILLE, CALIFORNIA
SCHEDULE OF CONTRIBUTIONS
LAST EIGHT FISCAL YEARS*
JUNE 30, 2022
2.75% for 2015 to 2019, 2.625% for 2020, and 2.50% for 2021 & 2022
7.50% for 2015 to 2018, 7.375% for 2019, 7.25% for 2020, and 7.00% for 2021 & 2022, net of pension plan investment expenses, including inflation.
Derived using CalPERS' Membership Data for all Funds
Contract COLA up to 2.50% until Purchasing Power Protection Allowance Floor on Purchasing Power applies, 2.50% thereafter. 96 Attachment 1
The following table provides required supplementary information regarding the City's Safety Pension Plan:
2014 2015 2016 2017 2018 2019 2020 2021
$$$$$$$$
Proportion of the net pension liability 0.358953% 0.379737% 0.387650% 0.388914% 0.666691% 0.679156% 0.697883% 0.826850% Proportionate share of the net pension liability 22,335,737 26,064,837 33,543,690 38,569,604 39,118,450 42,396,602 46,495,443 29,018,195 Covered payroll 10,541,326 9,190,095 9,792,080 11,557,360 11,496,504 11,783,799 12,765,651 12,422,544 Proportionate share of the net pension liability as
percentage of covered payroll 211.89% 283.62% 342.56% 333.72% 340.26% 359.79% 364.22% 233.59% Plan's total pension liability 30,829,966,631 31,771,217,402 18,961,274,094 21,144,800,930 22,053,702,155 23,442,265,225 24,782,493,361 172,165,293 Plan fiduciary net position 24,607,502,515 24,907,305,871 13,782,056,004 15,169,595,595 16,186,149,467 17,199,726,799 18,120,140,152 143,147,098 Plan fiduciary net position as a percentage of the
total pension liability 79.82% 78.40% 72.69% 71.74% 73.39% 73.37% 73.12% 83.15% Notes to Schedule:
* Fiscal year 2015 was the 1st year of implementation. Years will be added until 10 years of data is reached.
CITY OF WATSONVILLE, CALIFORNIA
SCHEDULE OF PROPORTIONATE SHARE OF NET PENSION LIABILITY LAST EIGHT FISCAL YEARS*
JUNE 30, 2022
97 Attachment 1
The following table provides required supplementary information regarding the City's Safety Pension Plan:
2015 2016 2017 2018 2019 2020 2021 2022
$ $ $ $ $ $$$
Actuarially determined contribution 2,648,853 2,921,288 3,364,471 3,606,866 3,940,104 4,649,154 5,129,097 5,742,501 Contributions in relation to the actuarially
determined contributions (2,648,853) (2,921,288) (3,364,471) (3,606,866) (4,006,904) (4,699,442) (5,129,097) (5,742,501) Contribution deficiency (excess) - - - - (66,800) (50,288) - - Covered payroll 9,190,095 9,792,080 11,557,360 11,496,504 11,783,799 12,765,651 12,422,544 13,235,291 Contributions as a percentage of covered payroll 28.82% 29.83% 29.11% 31.37% 34.00% 36.81% 41.29% 43.39% Notes to Schedule
Valuation date: 6/30/20
Methods and assumptions used to determine contribution rates:
Discount Rate 7.15% @ 6/30/2020
7.15% @ 6/30/2019
7.15% @ 6/30/2018
7.15% @ 6/30/2017
7.65% @ 6/30/2016
7.65% @ 6/30/2015
7.50% @ 6/30/2014
Inflation
Salary increases Varies by Entry Age and Service
Investment rate of return
Mortality Rate Table (1)
Post Retirement Benefit Increase
* Fiscal year 2015 was the 1st year of implementation. Years will be added until 10 years of data is reached.
Contract COLA up to 2.50% until Purchasing
Power Protection Allowance Floor on Purchasing
Power applies, 2.50% thereafter.
7.50% for 2015 to 2018, 7.375% for 2019, 7.25% for
2020, and 7.00% for 2021 & 2022, net of pension
plan investment expenses, including inflation.
Derived using CalPERS' Membership Data for all
Funds
(1) The probabilities of mortality are based on the CalPERS Experience Study. Pre-retirement and Post-retirement mortality rates include 20 years of projected mortality improvement using Scale BB published by the Society of Actuaries for 2015 10 2018. For 2019 to 2022, pre-retirement and postretirement mortality rates include 15 years of projected mortality improvement using 90% of Scale MP-2016 published by the Society of Actuaries.
2.75% for 2015 to 2019, 2.625 for 2020, and 2.50%
for 2021 & 2022
CITY OF WATSONVILLE, CALIFORNIA
SCHEDULE OF CONTRIBUTIONS
LAST EIGHT FISCAL YEARS*
JUNE 30, 2022
98 Attachment 1
City of Watsonville, California
Nonmajor Governmental Funds
Special Revenue Funds
Gas Tax
The City of Watsonville receives various revenues from taxes imposed on the sale of gasoline.
These funds are to be used for maintaining and improving Watsonville's roads and transportation system.
Narcotics Assets Seizure
Federal and State law authorize the seizure of assets used in the sale of illegal drugs. The proceeds from these seizures are to be used to further Police enforcement. These monies are accounted for in this fund.
Business Development
This fund collects a business license surcharge and downtown property tax assessment which is then remitted to the Chamber of Commerce and Economic Development for their respective purposes.
Economic Development
Funds held for economic development. The fund receives interest income and loan payoffs that are used to support economic development.
Library
The Library Fund receives sales tax, grants, donations and state subventions for the advancement of the Library in Watsonville. This fund receives such revenues and records their expenditures.
Parks Development
This fund's revenues are grants, park development impact fees and 1972 Landscape and Lighting Assessment fees. These funds are used to acquire, improve and maintain the government’s parks.
Retirement Tax
The City of Watsonville participates in the California Public Employees Retirement System.
The government's contribution for General Fund employees is funded by a voter approved property tax override. The tax is collected in this fund and then used to pay for appropriate retirement expenses.
(Continued)
99 Attachment 1
City of Watsonville, California
Nonmajor Governmental Funds
Special Revenue Funds
Parking Garage
This fund is used to record operating costs used to maintain the government’s parking garage downtown.
Measure G /Y
This fund was established in 2014, the Citizens of Watsonville approved an additional sales tax of .5% for seven years to increase funding for public safety.
Abandoned Vehicle
The government has assigned a Watsonville Police Department Service Specialist to aggressively enforce all State laws and City of Watsonville Ordinances pertaining to the abatement of all abandoned, wrecked, dismantled, inoperative vehicles or parts from any and all private or public properties. This fund collects State and County funds used to pay for these services.
Inclusionary Housing
The government levies an impact fee on all market rate housing development, which either requires a specified number of below market housing units be created or the payment of a fee.
This fund collects those fees and uses them to create low-income housing.
SB 1 Gas Tax
This fund was established in 2017, which increased the gas tax by $0.12 per gallon, increased the diesel fuel tax by $0.20 per gallon, increased the sales tax on diesel fuels by an additional 4 percentage points, created an annual transportation improvement fee, and created an annual zeroemission vehicles fee.
Measure D
This fund was established in 2017, Measure D is a comprehensive and inclusive package of transportation improvements passed in November 2016 by over 2/3 of Santa Cruz County voters.
This ½-cent sales tax guarantees every city and the county a steady, direct source of local funding for local streets and road maintenance, bicycle and pedestrian projects (especially near schools), safety projects, and transit and paratransit service, as well as numerous essential transportation projects and programs throughout the county. (Concluded)
100
Attachment 1
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Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NONMAJOR GOVERNMENTAL FUNDS
COMBINING BALANCE SHEET
JUNE 30, 2022
NARCOTICS
GAS ASSETS BUSINESS ECONOMIC PARKS RETIREMENT
TAX SEIZURE DEVELOPMENT DEVELOPMENT LIBRARY DEVELOPMENT TAX $$ $ $ $ $ $
ASSETS:
Cash and investments 780,539 219,423 219,332 28,409 1,666,381 2,229,116 371,077 Receivables:
Interest - - - 45,370 - - -
Taxes 96,209 - - - - - 156,678
Accounts 3,533 - 3,927 - 338,018 10,115 -
Intergovernmental 303,231 - - - - - -
Advances receivable - - - - 17,878 18,045 -
Loans receivable - - - 52,068 - - -
Total Assets 1,183,512 219,423 223,259 125,847 2,022,277 2,257,276 527,755 LIABILITIES:
Accounts payable 51,280 32,721 - - 45,140 19,394 -
Accrued personnel costs 22,834 - - - - 3,296 -
Retentions payable - - - - - - -
Unearned revenue - - - - - - -
Deposits payable - - - - - - -
Due to other funds - - - - - - -
Total Liabilities 74,114 32,721 - - 45,140 22,690 -
Deferred Inflows of Resources
Unavailable revenue 303,231 - 15,988 97,437 - - -
Total Deferred Inflows of Resources 303,231 - 15,988 97,437 - - - Fund Balances:
Nonspendable - - - - 17,878 18,045 -
Restricted for:
Assets seizure - 186,702 - - - - -
Business development - - 207,271 - - - -
Economic development - - - 28,410 - - -
Library - - - - 1,959,259 - -
Parks development - - - - - 2,216,541 -
Retirement tax - - - - - - 527,755
Measure G/Y - - - - - - -
Inclusionary housing - - - - - - -
SB1 gas tax 806,167 - - - - - -
Measure D - - - - - - -
Unassigned - - - - - - -
Total Fund Balances 806,167 186,702 207,271 28,410 1,977,137 2,234,586 527,755 Total Liabilities, Deferred Inflows of
Resources, and Fund Balances 1,183,512 219,423 223,259 125,847 2,022,277 2,257,276 527,755 Continued
Special Revenue Funds
102
Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NONMAJOR GOVERNMENTAL FUNDS
COMBINING BALANCE SHEET
JUNE 30, 2022
PARKING ABANDONED INCLUSIONARY SB 1
GARAGE MEASURE G/Y VEHICLE HOUSING GAS TAX MEASURE D TOTAL $ $$ $ $ $
ASSETS:
Cash and investments 541 3,189,574 22,082 197,815 1,922,182 3,304,950 14,151,421 Receivables:
Interest - - - 145,003 - 190,373 -
Taxes - 928,585 - - 94,300 300,489 1,576,261
Accounts 7,783 - - - - 363,376 -
Intergovernmental - - - - - 303,231 -
Advances receivable - - - 4,751 - 40,674 -
Loans receivable - - - 1,606,538 - 1,658,606 -
Total Assets 8,324 4,118,159 22,082 1,954,107 2,016,482 3,605,439 18,283,942 LIABILITIES:
Accounts payable 7,820 477,995 - 23,129 62,104 39,770 759,353 Accrued personnel costs - 146,499 - 13,356 - 185,985 -
Retentions payable - - - - - - -
Unearned revenue 1,230 - - - - - 1,230
Deposits payable - - - - - - -
Due to other funds 381,190 - - - - 381,190 -
Total Liabilities 390,240 624,494 - 36,485 62,104 39,770 1,327,758 Deferred Inflows of Resources
Unavailable revenue - - - 1,751,542 - 2,168,198 -
Total Deferred Inflows of Resources - - - 1,751,542 - 2,168,198 - Fund Balances:
Nonspendable - - - 4,751 - 40,674 -
Restricted for:
Assets seizure - - - - - 186,702 -
Business development - - - - - 207,271 -
Economic development - - - - - 28,410 -
Library - - - - - 1,959,259 -
Parks development - - - - - 2,216,541 -
Retirement tax - - - - - - 527,755
Measure G/Y - 3,493,665 - - - 3,493,665 -
Abandoned vehicle - - 22,082 - - 22,082 -
Inclusionary housing - - - 161,329 - 161,329 -
SB1 gas tax - - - - 1,954,378 - 2,760,545
Measure D - - - - - 3,565,669 3,565,669
Unassigned (381,916) - - - - (381,916) -
Total Fund Balances (381,916) 3,493,665 22,082 166,080 1,954,378 3,565,669 14,787,986 Total Liabilities, Deferred Inflows of
Resources, and Fund Balances 8,324 4,118,159 22,082 1,954,107 2,016,482 3,605,439 18,283,942 Concluded
Special Revenue Funds
103
Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NONMAJOR GOVERNMENTAL FUNDS
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES FOR THE FISCAL YEAR ENDED JUNE 30, 2022
NARCOTICS
GAS ASSETS BUSINESS ECONOMIC PARKS RETIREMENT
TAX SEIZURE DEVELOPMENT DEVELOPMENT LIBRARY DEVELOPMENT TAX $$ $ $ $ $ $
REVENUES:
Taxes - - - - 4,017,058 - 3,789,571
Licenses, permits and fees - - 96,884 - 11,532 271,147 - Intergovernmental 1,209,629 - - - 63,430 - -
Charges for services - - - - - - -
Interest 2,564 807 798 - 4,948 7,628 -
Miscellaneous (370) 12,216 - 2,393 9,750 - -
Total revenues 1,211,823 13,023 97,682 2,393 4,106,718 278,775 3,789,571 EXPENDITURES:
Current:
General government - - 15,000 - - - 1,147
Public safety - 50,013 - - - - -
Housing - - - - - - -
Streets 1,127,455 - - - - - -
Culture and recreation - - - - 3,155,170 199,281 -
Total expenditures 1,127,455 50,013 15,000 - 3,155,170 199,281 1,147 Excess (deficiency) of revenues over
(under) expenditures 84,368 (36,990) 82,682 2,393 951,548 79,494 3,788,424 OTHER FINANCING SOURCES (USES):
Transfers in - - - - - - -
Transfers (out) - - (24,900) - (187,697) - (3,631,386)
Total other financing sources (uses) - - (24,900) - (187,697) - (3,631,386) Net change in fund balances 84,368 (36,990) 57,782 2,393 763,851 79,494 157,038 Fund balances, July 1 721,799 223,692 149,489 26,017 1,213,286 2,155,092 370,717 Fund balances, June 30 806,167 186,702 207,271 28,410 1,977,137 2,234,586 527,755 Continued
Special Revenue Funds
104
Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NONMAJOR GOVERNMENTAL FUNDS
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES FOR THE FISCAL YEAR ENDED JUNE 30, 2022
PARKING ABANDONED INCLUSIONARY SB 1
GARAGE MEASURE G/Y VEHICLE HOUSING GAS TAX MEASURE D TOTAL $ $ $ $ $$$
REVENUES:
Taxes 5,248,855 - - 1,032,484 - 1,260,173 15,348,141
Licenses, permits and fees 117,113 25,268 62,878 78,920 - 663,742 - Intergovernmental - - - - - 1,273,059 -
Charges for services - - - 22,247 - 22,247 -
Interest 11,881 - - 1,315 6,536 9,889 46,366
Miscellaneous (39) - - 2,949 215,326 - 242,225
Total revenues 117,074 5,286,004 62,878 105,431 1,039,020 1,485,388 17,595,780 EXPENDITURES:
Current:
General government 180,141 - - - - 196,288 -
Public safety - 5,231,130 60,000 - - 5,341,143 -
Housing - - - 473,532 - 473,532 -
Streets - - - 875,374 - 505,797 2,508,626
Culture and recreation - - - - - - 3,354,451
Total expenditures 180,141 5,231,130 60,000 473,532 875,374 505,797 11,874,040 Excess (deficiency) of revenues over
(under) expenditures (63,067) 54,874 2,878 (368,101) 163,646 979,591 5,721,740 OTHER FINANCING SOURCES (USES):
Transfers in 93,195 - - - - 93,195 -
Transfers (out) (7,330) (286,307) - - - (4,137,620) -
Total other financing sources (uses) 85,865 (286,307) - - - (4,044,425) - Net changes in fund balances 22,798 (231,433) 2,878 (368,101) 163,646 979,591 1,677,315 Fund balances, July 1 (404,714) 3,725,098 19,204 534,181 1,790,732 2,586,078 13,110,671 Fund balances, June 30 (381,916) 3,493,665 22,082 166,080 1,954,378 3,565,669 14,787,986 Concluded
Special Revenue Funds
105
Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NONMAJOR SPECIAL REVENUE FUNDS
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30, 2022
Variance With Variance With
Final Budget - Final Budget -
Positive Positive
Original Final Actual (Negative) Original Final Actual (Negative) $ $ $ $ $ $$ $
REVENUES:
Taxes - - - - - - - -
Intergovernmental 1,209,629 1,209,629 1,209,629 - - - - - Interest 2,562 2,562 2,564 2 807 807 807 -
Miscellaneous (370) (370) (370) 12,216 - 12,216 12,216 - Total revenues 1,211,821 1,211,821 1,211,823 2 13,023 13,023 13,023 - EXPENDITURES:
Public safety - - - 50,013 - 50,013 50,013 -
Streets 1,127,455 1,127,455 1,127,455 - - - - -
Total expenditures 1,127,455 1,127,455 1,127,455 50,013 - 50,013 50,013 - Net changes in fund balances 84,366 84,366 84,368 (36,990) (2) (36,990) (36,990) - Fund balances, July 1 (as restated) 721,799 721,799 721,799 223,692 - 223,692 223,692 - Fund balances, June 30 806,165 806,165 806,167 (2) 186,702 186,702 186,702 - Budgeted Amounts
GAS TAX NARCOTICS ASSETS SEIZURE
Budgeted Amounts
106
Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NONMAJOR SPECIAL REVENUE FUNDS
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30, 2022
Variance With Variance With
Final Budget - Final Budget -
Positive Positive
Original Final Actual (Negative) Original Final Actual (Negative) $$$ $ $ $ $ $
REVENUES:
Licenses, permits and fees 96,884 96,884 96,884 - - - - - Interest 798 798 798 - - - - -
Miscellaneous - - - - 2,392 2,392 2,393 1
Total revenues 97,682 97,682 97,682 2,392 - 2,392 2,393 1 EXPENDITURES:
Current:
General government 15,000 15,000 15,000 - - - - -
Total expenditures 15,000 15,000 15,000 - - - - -
Excess (deficiency) of revenues over
(under) expenditures 82,682 82,682 82,682 2,392 - 2,392 2,393 1 OTHER FINANCING SOURCES (USES):
Transfers (out) (24,900) (24,900) (24,900) - - - - -
Total other financing sources (uses) (24,900) (24,900) (24,900) - - - - - Net changes in fund balances 57,782 57,782 57,782 2,392 - 2,392 2,393 1 Fund balances, July 1 149,489 149,489 149,489 - - 26,017 - 26,017 Fund balances, June 30 207,271 207,271 207,271 - 2,392 2,392 28,410 26,018 Budgeted Amounts
BUSINESS DEVELOPMENT ECONOMIC DEVELOPMENT
Budgeted Amounts
107
Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NONMAJOR SPECIAL REVENUE FUNDS
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30, 2022
Variance With Variance With
Final Budget - Final Budget -
Positive Positive
Original Final Actual (Negative) Original Final Actual (Negative) $$ $ $ $$$ $
REVENUES:
Taxes 4,017,058 4,017,058 4,017,058 - - - - -
Licenses, permits and fees 11,532 11,532 11,532 - 271,147 271,147 271,147 - Intergovernmental 63,430 63,430 63,430 - - - - -
Interest 4,948 4,948 4,948 - 7,629 7,629 7,628 (1)
Miscellaneous 9,750 9,750 9,750 - - - - -
Total revenues 4,106,718 4,106,718 4,106,718 - 278,776 278,776 278,775 (1) EXPENDITURES:
Current:
Culture and recreation 3,155,170 3,155,170 3,155,170 - 199,281 199,281 199,281 - Total expenditures 3,155,170 3,155,170 3,155,170 - 199,281 199,281 199,281 - Excess (deficiency) of revenues over
(under) expenditures 951,548 951,548 951,548 - 79,495 79,495 79,494 (1) OTHER FINANCING SOURCES (USES):
Transfers (out) (187,697) (187,697) (187,697) - - - - - Total other financing sources (uses) (187,697) (187,697) (187,697) - - - - - Net change in fund balances 763,851 763,851 763,851 - 79,495 79,495 79,494 (1) Fund balances, July 1 1,213,286 1,213,286 1,213,286 - 2,155,092 2,155,092 2,155,092 - Fund balances, June 30 1,977,137 1,977,137 1,977,137 - 2,234,587 2,234,587 2,234,586 (1)
LIBRARY PARKS DEVELOPMENT
Budgeted Amounts Budgeted Amounts
108
Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NONMAJOR SPECIAL REVENUE FUNDS
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30, 2022
Variance With Variance With
Final Budget - Final Budget -
Positive Positive
Original Final Actual (Negative) Original Final Actual (Negative) $$$ $ $$ $ $
REVENUES:
Taxes 3,789,571 3,789,571 3,789,571 - - - - -
Licenses, permits, and fees - - - - 117,113 117,113 117,113 - Miscellaneous - - - - (40) (40) (39) 1
Total revenues 3,789,571 3,789,571 3,789,571 - 117,073 117,073 117,074 1 EXPENDITURES:
Current:
General government 1,147 1,147 1,147 - 180,141 180,141 180,141 - Total expenditures 1,147 1,147 1,147 - 180,141 180,141 180,141 - Excess (deficiency) of revenues over
(under) expenditures 3,788,424 3,788,424 3,788,424 - (63,068) (63,068) (63,067) 1 OTHER FINANCING SOURCES (USES):
Transfers in - - - - 93,195 93,195 93,195 -
Transfers (out) (3,631,386) (3,631,386) (3,631,386) - (7,330) (7,330) (7,330) - Total other financing sources (uses) (3,631,386) (3,631,386) (3,631,386) - 85,865 85,865 85,865 - Net change in fund balances 157,038 157,038 157,038 - 22,797 22,797 22,798 1 Fund balances, July 1 370,717 370,717 370,717 - (404,714) (404,714) (404,714) - Fund balances, June 30 527,755 527,755 527,755 - (381,917) (381,917) (381,916) 1
RETIREMENT TAX
Budgeted Amounts
PARKING GARAGE
Budgeted Amounts
109
Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NONMAJOR SPECIAL REVENUE FUNDS
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30, 2022
Variance With Variance With
Final Budget - Final Budget -
Positive Positive
Original Final Actual (Negative) Original Final Actual (Negative) $ $ $ $ $$ $ $
REVENUES:
Taxes 4,390,477 - 5,248,855 5,248,855 - - - -
Licenses, permits and fees 100 25,268 25,268 - 62,878 62,878 62,878 - Interest 50,000 11,881 11,881 - - - - -
Total revenues 4,440,577 37,149 5,286,004 5,248,855 62,878 62,878 62,878 - EXPENDITURES:
Current:
Public safety 5,363,118 5,363,118 5,231,130 131,988 60,000 60,000 60,000 - Total expenditures 5,363,118 5,363,118 5,231,130 131,988 60,000 60,000 60,000 - Excess (deficiency) of revenues over
(under) expenditures (922,541) (5,325,969) 54,874 5,380,843 2,878 2,878 2,878 - OTHER FINANCING SOURCES (USES):
Transfers (out) (286,307) (286,307) (286,307) - - - - - Total other financing sources (uses) (286,307) (286,307) (286,307) - - - - - Net change in fund balances (1,208,848) (5,612,276) (231,433) 5,380,843 2,878 2,878 2,878 - Fund balances, July 1 3,725,098 3,725,098 3,725,098 - 19,204 19,204 19,204 - Fund balances, June 30 2,516,250 (1,887,178) 3,493,665 5,380,843 22,082 22,082 22,082 - Budgeted Amounts Budgeted Amounts
MEASURES G/Y ABANDONED VEHICLE
110
Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NONMAJOR SPECIAL REVENUE FUNDS
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30, 2022
Variance With Variance With
Final Budget - Final Budget -
Positive Positive
Original Final Actual (Negative) Original Final Actual (Negative) $ $ $ $ $$ $ $
REVENUES:
Taxes - - - - 1,032,484 1,032,484 1,032,484 -
Licenses, permits and fees 78,920 78,920 78,920 - - - - - Charges for services 22,247 22,247 22,247 - - - - -
Interest 1,315 1,315 1,315 - 6,536 6,536 6,536 -
Miscellaneous 2,949 2,949 2,949 - - - - -
Total revenues 105,431 105,431 105,431 - 1,039,020 1,039,020 1,039,020 - EXPENDITURES:
Current:
Housing 473,532 473,532 473,532 - - - - -
Streets - - - 875,374 - 875,374 875,374 -
Total expenditures 473,532 473,532 473,532 875,374 - 875,374 875,374 - Excess (deficiency) of revenues over
(under) expenditures (368,101) (368,101) (368,101) 163,646 - 163,646 163,646 - OTHER FINANCING SOURCES (USES):
Transfers (out) - - - - - - - -
Total other financing sources (uses) - - - - - - - -
Net changes in fund balances (368,101) (368,101) (368,101) 163,646 - 163,646 163,646 - Fund balances, July 1 534,181 534,181 534,181 1,790,732 - 1,790,732 1,790,732 - Fund balances, June 30 166,080 166,080 166,080 1,954,378 - 1,954,378 1,954,378 - Budgeted Amounts
INCLUSIONARY HOUSING SB 1 - GAS TAX
Budgeted Amounts
111
Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
NONMAJOR SPECIAL REVENUE FUNDS
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30, 2022
Variance With
Final Budget -
Positive
Original Final Actual (Negative)
$ $$ $
REVENUES:
Taxes 1,260,173 1,260,173 1,260,173 -
Interest 9,889 9,889 9,889 -
Miscellaneous 215,326 215,326 215,326 -
Total revenues 1,485,388 1,485,388 1,485,388 -
EXPENDITURES:
Current:
Streets 505,797 505,797 505,797 -
Total expenditures 505,797 505,797 505,797 -
Excess (deficiency) of revenues over
(under) expenditures 979,591 979,591 979,591 -
Net change in fund balance 979,591 979,591 979,591 -
Fund balance, July 1 2,586,078 2,586,078 2,586,078 -
Fund balance, June 30 3,565,669 3,565,669 3,565,669 -
MEASURE D
Budgeted Amounts
112
Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
DEBT SERVICE FUND
SCHEDULE OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JUNE 30, 2022
Variance With
Final Budget -
Positive
Original Final Actual (Negative)
$$$ $
REVENUES:
Intergovernmental - - - -
Total revenues - - - -
EXPENDITURES:
Debt service:
Principal 791,233 791,233 791,233 -
Interest and fiscal charges 42,297 42,297 42,297 -
Total expenditures 833,530 833,530 833,530 -
Excess (deficiency) of revenues over
(under) expenditures (833,530) (833,530) (833,530) -
OTHER FINANCING SOURCES (USES):
Transfers in 832,761 832,761 832,761 -
Total other financing sources (uses) 832,761 832,761 832,761 - Net change in fund balance (769) (769) (769) -
Fund balance, July 1 246,758 246,758 246,758 -
Fund balance, June 30 245,989 245,989 245,989 -
Budgeted Amounts
113
Attachment 1
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Attachment 1
STATISTICAL SECTION
This part of the City of Watsonville’s comprehensive annual financial report presents detailed information as a context for the understanding what the information in the financial statements, note disclosures, and required supplementary information says about the government’s overall financial health.
Contents Page
Financial Trends 117
These schedules contain trend information to help the reader understand how the city’s financial performance and well-being have changed over time.
Revenue Capacity 122
These schedules contain information to help the reader assess the City’s most significant local revenue source, the property tax.
Debt Capacity 127
These schedules present information to help the reader assess the affordability of the city’s current levels of outstanding debt and the city’s ability to issue additional debt in the future.
Demographic and Economic Information 131
These schedules offer the demographic and economic indicators to help the reader understand the environment within which the city’s financial activities take place.
Operating Information 134
These schedules contain service and infrastructure data to help the reader understand how the information in the city’s financial report relates to the services the city provides and the activities it performs.
SOURCE: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year.
115
Attachment 1
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Attachment 1
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
$ $ $ $ $ $ $ $ $ $
Governmental activities
Net investment in capital assets 121,354 118,302 114,148 110,806 111,256 108,892 110,033 109,660 108,607 111,205 Restricted 41,689 42,945 44,188 16,754 16,496 19,849 19,803 8,803 24,412 27,012 Unrestricted (4,812) (2,634) (39,888) (7,184) (3,294) 475 (1,797) 6,712 (4162) (4,102) Total governmental activities net position 158,231 158,613 118,448 120,376 124,458 129,216 128,039 125,175 133,019 134,115 Business-type activities
Net investment in capital assets 100,375 99,277 98,484 94,655 96,034 95,782 92,296 97,119 93,904 96,016 Restricted - - - - - - - - - -
Unrestricted 6,562 10,865 (2,581) 2,587 5,524 9,085 20,058 19,821 27,642 34,895 284
Total business-type activities net position 106,937 110,142 95,903 97,242 101,558 104,867 112,354 116,940 121,546 131,195 Primary government
Net investment in capital assets 221,729 217,579 212,632 205,461 207,290 204,674 202,329 206,779 202,511 Restricted 41,689 42,945 44,188 16,754 16,496 19,849 19,803 22,228 24,412 27012 Unrestricted 1,750 8,231 (42,469) (4,597) 2,230 9,560 18,261 13,109 Total primary government net position 265,168 268,755 214,351 217,618 226,016 234,083 240,393 242,116 226,923 27,012 Fiscal Year
CITY OF WATSONVILLE, CALIFORNIA
Net Position By Component
Last Ten Fiscal Years
(accrual basis of accounting)
(amounts expressed in thousands)
117
Attachment 1
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
$ $ $ $ $ $ $ $ $ $
Expenses:
Governmental activities:
General government 7,140 11,773 5,494 7,151 8,257 7,032 15,143 13,812 8,599 12,246 Public safety 21,249 23,020 25,716 27,751 27,382 30,972 31,221 35,811 35,608 33,149 Housing 1,543 820 1,298 1,389 2,318 1,158 2,289 2,059 24,412 3,255 Highways and streets 7,110 6,708 4,697 3,043 6,348 5,974 8,561 6,931 8,652 6,050 Culture and recreation 7,511 7,334 7,916 8,613 7,817 8,591 9,152 9,850 (4162) 10,264 Interest on long term debt 346 189 132 112 146 158 491 78 123 42 Total government activities 44,899 49,844 45,253 48,059 52,268 53,885 66,857 68,541 77,394 65,006 Business-type activities:
Water 11,249 11,001 11,583 15,537 13,851 12,038 13,996 19,378 15,960 16,095 Sewer 9,863 9,298 10,741 10,731 10,272 13,175 14,195 14,099 14,190 13,633 Solid Waste 8,557 8,699 10,136 9,181 10,976 12,758 11,925 12,567 19,189 14,355 Airport 3,347 2,888 2,580 2,225 2,684 3,382 5,118 3,803 4,235 4,470 Fiber Optic - - - 8 41 46 68 59 69 64
Total business-type activities 33,016 31,886 35,040 37,682 37,824 41,399 45,302 49,906 53,643 48,617 284
Total primary government 77,915 81,730 80,293 85,741 90,092 95,284 112,159 118,447 131,037 113,623 Program Revenues:
Governmental activities:
Charges for services:
General government 3,489 9,249 5,488 5,524 8,426 8,285 12,233 8,649 9,181 9,420 Public safety 1,623 1,549 1,396 1,853 1,780 1,875 822 874 821 777 Housing 97 1,619 391 - 675 289 866 782 667
Highways and streets 1,579 2,501 1,585 1,858 2,284 2,663 1,057 799 Culture and recreation 739 827 1,330 833 952 1,189 1,244 832 606 669 Operating grants and contributions 4,926 2,657 2,393 3,590 3,310 2,772 2,501 5,988 5,100 3,541 Capital grants and contributions - - - - - - - - - -
Total governmental activates program revenues 12,453 18,402 12,583 13,658 17,427 17,073 18,723 17,924 16,375 14,407 Business-type activities:
Charges for services:
Water 9,964 12,363 12,075 12,756 14,617 15,243 17,358 20,484 19,885 21,045 Sewer 9,128 10,864 10,046 14,307 12,069 12,475 13,444 14,153 15,119 16,366 Solid Waste 8,952 9,580 10,471 10,746 11,225 12,549 13,493 14,587 18,310 16,116 Airport 2,254 1,844 1,956 2,159 1,937 2,576 5,595 3,713 2,432 2,706 Fiber Optic - - - 23 44 43 45 74 609 94
Operating grants and contributions 784 603 901 759 1,373 1,430 2,016 796 732 (20) Capital grants and contributions 994 1,156 590 659 1,104 311 94 163 107 489 Total business-type activities program revenues 32,076 36,410 36,039 41,409 42,369 44,627 52,045 53,970 57,194 56,796 Continued
Fiscal Year
CITY OF WATSONVILLE, CALIFORNIA
Changes In Net Position
Last Ten Fiscal Years
(accrual basis of accounting)
(amounts expressed in thousands)
118
Attachment 1
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
$ $ $ $ $ $ $ $ $ $
Net (expense) / revenue
Governmental activities (32,448) (31,442) (32,670) (34,401) (34,840) (37,564) (48,134) (50,655) (46,217) (49,359) Business-type activities (939) 4,525 999 3,727 4,544 3,227 6,744 4,065 3,551 8,179 Total primary government net expense (33,387) (26,917) (31,671) (30,674) (30,296) (34,337) (41,390) (46,590) (42,666) (41,180) General Revenues and Other Changes (4162)
in Net Position
Governmental activities:
Taxes
Property taxes 12,383 12,090 11,868 12,846 13,300 13,436 15,669 16,243 16,169 16,977 Sales taxes 9,276 11,436 13,988 16,693 16,083 18,393 19,369 19,075 22,232 24,408 Utility users taxes 3,068 3,029 3,437 3,183 3,679 4,019 4,011 4,265 3,994 4,144 Franchise taxes 417 365 404 456 471 436 460 458 563 538 Other taxes 1,069 1,120 1,295 1,457 1,792 2,060 3,125 2,906 2,610 3,618 Intergovernmental revenue not restricted 1,235 1,686 1,475 1,120 1,009 1,048 1,021 1,139 1,434 1,727 Transfers 171 211 226 232 308 270 272 251 246 284
Unrestricted investment earnings 2,173 1,890 1,916 2,098 2,218 2,660 3,030 3,416 2,531 2,857 Total governmental activities 29,792 31,827 34,609 38,085 38,860 42,322 46,957 47,753 49,779 54,553 Business-type activities:
Transfers (171) (211) (226) (231) (308) (270) (272) (251) (246) Other Revenue - - - - - - - - 1,274 1,296
Unrestricted investment earnings 291 263 269 201 206 352 1,014 811 70 239 Total business-type activities 120 52 43 -30 (102) 82 742 560 1,098 Total primary government 29,912 31,879 34,652 38,055 38,758 42,404 47,699 48,313 Change in net position before extraordinary item
Governmental activities (2,656) 385 1,939 3,683 4,020 4,758 (1,177) (2,863) 3,605 5,258 Business-type activities (819) 4,577 1,043 3,696 4,442 3,309 7,486 4,586 4,606 9,366 Total primary government (3,475) 4,962 2,982 7,379 8,462 8,067 6,309 1,723 8,211 14,624 Extraordinary items
Governmental activities - - - - - - - - - -
Total primary government - - - - - - - - - -
Change in net position
Governmental activities (2,656) 385 1,939 3,683 4,020 4,758 (1,177) (2,863) 3,605 5,258 Business-type activities (819) 4,577 1,043 3,696 4,442 3,309 7,486 4,586 4,606 9,366 Total primary government (3,475) 4,962 2,982 7,379 8,462 8,067 6,309 1,723 8,211 14,624 Concluded
CITY OF WATSONVILLE, CALIFORNIA
Fiscal Year
(amounts expressed in thousands)
(accrual basis of accounting)
Last Ten Fiscal Years
Changes In Net Position
119
Attachment 1
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
$ $ $ $ $ $ $ $ $ $
General fund
Nonspendable 65 56 35 3,365 2,965 2,588 123 114 308 147 Restricted - - - - - - - - - -
Unassigned 4,428 1,881 4,595 4,228 6,057 10,342 13,144 16,478 18,253 18,228 Total general fund 4,493 1,937 4,630 7,593 9,022 12,930 13,267 16,592 18,561 18,375 All other governmental funds
Restricted, reported in
Special revenue funds 12,069 12,021 14,566 18,216 17,880 20,926 20,607 22,465 24,778 27107 Debt service funds 87 79 72 125 131 123 129 238 247 246 Unassigned (1,021) (910) (1,069) (770) (740) (728) (615) (475) (404) (381) Total all other governmental funds 11,135 11,190 13,569 17,571 17,271 20,321 20,121 22,228 24,621 26,972 Fiscal Year
CITY OF WATSONVILLE, CALIFORNIA
Fund Balances of Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
(amounts expressed in thousands)
120
Attachment 1
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
$ $ $ $ $ $ $ $ $ $
Revenues
Taxes 27,448 29,725 32,466 35,754 36,198 39,392 43,655 42,029 45,583 49,693 Licenses, permits, and fees 2,757 4,855 5,248 5,795 5,885 6,642 5,971 5,315 3,378 5,848 Intergovernmental 4,530 3,032 2,458 3,336 3,410 3,455 3,417 9,167 5,734 5,735 Charges for services 4,704 2,447 2,458 2,945 2,770 3,224 3,072 3,534 3,396 3,523 Fines 588 622 552 690 737 723 708 24,412 462 593
Interest 2,309 2,084 2,076 2,168 2,435 2,869 3,405 3,280 2,529 2,844 Special assessment 229 92 91 77 60 58 50 (4162) - -
Miscellaneous 475 825 1,995 2,810 1,871 2,491 3,007 3,826 3,940 3,785 Total revenues 43,040 43,682 47,344 53,575 53,366 58,854 63,285 91,563 65,022 72,021 Expenditures
Current:
General government 6,407 10,447 5,574 6,989 7,556 7,978 13,062 11,330 10,089 14,262 Public safety 20,353 20,406 22,707 24,860 24,271 26,744 30,459 30,543 30,012 33,544 Housing 1,566 820 1,298 1,389 2,318 1,158 2,289 2,059 4,159 3,057 Streets 6,509 5,972 4,252 1,672 5,772 5,385 8,759 8,911 7,827 8,770 Culture and recreation 6,051 6,505 7,172 7,090 7,079 7,837 9,406 9,076 8,297 9,383 Capital outlay 1,134 1,581 817 3,286 4,833 2,404 - - 284 7,463 Debt service:
Principal 1,381 439 495 429 478 463 730 797 2,391 785
Interest and fiscal charges 299 195 159 183 173 161 220 82 147 49 Total expenditures 43,700 46,365 42,474 45,898 52,480 52,130 64,925 62,798 63,206 77,313 Excess (deficiency) of revenues
over (under) expenditures (660) (2,683) 4,870 7,677 886 6,724 (1,640) 28,765 1816 (5,292) Other financing sources (uses)
Bond/note proceeds 695 191 - - - - 1,541 144 1,649 -
Transfers in 4,388 3,238 3,340 3,692 3,562 4,464 5,457 4,750 6,171 4,795 Transfers out (4,217) (3,309) (3,150) (3,496) (3,290) (4,230) (5,222) (4,535) (5,926) (4,510) Total other financing sources (uses) 866 120 190 196 272 234 1,776 359 1,894 285 Net change in fund balances before
extraordinary items 206 (2,563) 5,060 7,873 1,158 6,958 136 29,124 3,995 (5,007) Extraordinary items - - - - - - - - - -
Net change in fund balances 206 (2,563) 5,060 7,873 1,158 6,958 136 29,124 3,995 (5,007) Debt service as a percentage of ** ** **
noncapital expenditures 8.1% 4.1% 1.4% 1.6% 1.5% 1.4% 1.5% 1.4% 4.31% 1.31% Fiscal Year
CITY OF WATSONVILLE, CALIFORNIA
Net Change in Fund Balances of Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
(amounts expressed in thousands)
121
Attachment 1
Fiscal Property Sales Franchise Utility User Other
Year Tax Tax Tax Tax Tax Total
$ $ $ $ $ $
2013 12,090 11,436 365 3,029 1,120 28,040
2014 12,090 11,436 365 3,029 1,120 28,040
2015 11,868 13,988 404 3,437 1,295 30,992
2016 12,846 16,693 455 3,183 1,457 34,634
2017 13,300 16,083 471 3,679 1,793 35,326
2018 13,436 18,393 436 4,019 3,108 39,392
2019 15,669 19,369 460 4,011 3,125 42,634
2020 16,243 19,075 458 4,265 2,906 42,947
2021 16,169 22,232 563 3,994 2,610 45,568
2022 16,977 24,408 538 4,144 3,618 49,685
Source: City of Watsonville Finance Department
(amounts expressed in thousands)
CITY OF WATSONVILLE, CALIFORNIA
General Governmental Tax Revenues By Source
Last Ten Fiscal Years
(modified accrual basis of accounting)
122
Attachment 1
Fiscal Total Estimated Assessed
Year Less: Taxable Direct Actual Value as a %
Ended Residential Commercial Industrial Other Unsecured Tax Exempt Assessed Tax Taxable of Actual June 30 Property Property Property Property Property Property Value Rate (1) Value Taxable Value $ $ $ $ $ $ $ % $ %
2013 2,025,747 565,486 102,758 336,060 217,213 177,934 3,069,330 1.15 3,069,330 1.00 2014 2,091,245 544,645 103,080 329,813 212,372 171,985 3,109,170 1.18 3,109,170 1.00 2015 2,316,558 548,165 106,401 350,110 231,586 185,687 3,367,133 1.18 3,367,133 1.00 2016 2,456,187 563,026 115,344 361,791 235,517 200,675 3,531,190 1.18 3,531,190 1.00 2017 2,606,044 626,252 135,130 394,814 229,211 229,936 3,761,515 1.16 3,761,515 1.00 2018 2,757,691 609,505 168,676 435,526 259,425 252,874 3,977,950 1.17 3,977,950 1.00 2019 2,727,533 583,841 442,945 421,714 262,350 222,957 4,215,426 1.16 4,215,426 1.00 2020 2,858,513 618,090 470,547 459,879 277,705 246,737 4,437,997 1.09 4,437,997 1.00 2021 3,002,026 640,089 485,947 410,766 276,813 205,383 4,610,258 1.16 4,610,258 1.00 2022 3,150,126 671,837 505,514 456,649 275,930 249,202 4,810,854 1.09 4,810,854 1.00 Notes:
(2.) Estimated Actual Value is derived from a series of calculations comparing median assessed values from 1940 to current median sale prices.
Based on these calculations a multiplier value was extrapolated and applied to current assessed values. (1.) Total Direct Tax Rate is represented by TRA 02-021 Source: HDL, Coren & Cone
CITY OF WATSONVILLE, CALIFORNIA
Assessed Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years
(amounts expressed in thousands)
123
Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
Property Tax Rates - Direct
and Overlapping
(Per $100 of Assessed Value)
Last Ten Years
Basic
Countywide School
Year Levy Districts Retirement Total
2013 1.000 0.075 0.077 1.152
2014 1.000 0.109 0.077 1.186
2015 1.000 0.098 0.077 1.175
2016 1.000 0.101 0.077 1.178
2017 1.000 0.086 0.077 1.163
2018 1.000 0.094 0.077 1.171
2019 1.000 0.081 0.077 1.158
2020 1.000 0.087 0.077 1.164
2021 1.000 0.084 0.077 1.161
2022 1.000 0.090 0.077 1.167
Source: HDL, Coren & Cone
124
Attachment 1
Percentage of Percentage of
Taxable Total Taxable Taxable Total Taxable
Assessed Assessed Assessed Assessed
Value Rank Value Value Rank Value
$ % $ %
S Martinelli And Company 51,517 1 1.14% 35,107 2 1.22%
MPT of Watsonville 49,731 2 1.03%
New Horizons Affordable Housing and Dev 48,900 3 1.08%
OW George Jr. Trustte, etal 35,139 4 0.77% 16,902 7 0.59% Freedom Associates LLC 27,654 5 0.61% 20,198 3 0.70%
Blackbird Homes LLC 27,180 6 0.60%
William J and Neva J Hansen Co Trustees 25,403 7 0.56%
Save Mart Portfolio Owner Fund V Ca 25,000 8 0.55%
bridge Paloma Associates LLC 24,170 9 0.53%
111 Jenning Drive LLC 23,224 10 0.51%
WRI Freedom Center Lp 17,943 6 0.62%
Dayton Hudson Corporation 15,866 8 0.55%
Watsonville Hospital Corp 58,289 1 2.02%
Harvest Drive Properties LLC 19,839 4 0.69%
Hd Development of Maryland Inc 18,648 5 0.65%
Granite Construction Co 15,791 9 0.55%
Carl E Best 1999 Trust 15,209 10 0.53%
Totals 337,918 7.38% 233,792 8.12%
Source: HDL, Coren & Cone
2022 2013
CITY OF WATSONVILLE, CALIFORNIA
Principal Property Taxpayers
June 30, 2021
(amounts expressed in thousands)
125
Attachment 1
Percent Supplemental Delinquent
Fiscal Total * Current Tax * Of Levy Tax Tax * Total Tax Year Tax Levy Collections Collected Collections Collections Collections $ $ $ $ $ $
2013 7,125,579 7,125,579 100% 30,475 - 7,156,054
2014 8,242,044 8,242,044 100% 69,092 - 8,311,136
2015 7,837,187 7,837,187 100% 112,079 - 7,949,266
2016 7,801,004 7,801,004 100% 117,264 - 7,918,268
2017 8,615,411 8,615,411 100% 200,484 - 8,815,895
2018 8,605,570 8,605,570 100% 225,296 - 8,830,866
2019 10,536,951 10,536,951 100% 238,730 - 10,775,681
2020 10,859,042 10,859,042 100% 212,455 - 11,071,497
2021 10,732,446 10,732,446 100% 127,234 - 10,859,680
2022 11,026,084 11,026,084 100% 352,022 - 11,378,106
Source: City of Watsonville
*Property Tax collection equals property Tax collected due to agreement with the County of Santa Cruz.
With this agreement the City does not receive any Delinquent tax collection.
CITY OF WATSONVILLE, CALIFORNIA
Property Tax Collection
Last Ten Fiscal Years
126
Attachment 1
General Special Total Percentage
Fiscal Obligation Assessment Capital Revenue Loans & Capital Primary of Personal Per Year Debt Debt Leases Bonds Notes Leases Government Income Capita $ $ $ $ $ $ $
2013 5,241 467 86 31,064 5,321 - 42,179 5.81% 0.817
2014 5,082 379 - 30,313 8,181 - 43,955 4.90% 0.852
2015 4,676 290 - 29,057 11,124 - 45,147 5.22% 0.875
2016* 4,254 214 - 677 347 - 5,492 0.59% 0.104
2017 3,818 149 - 461 582 - 5,010 0.50% 0.092
2018 3,406 98 - 235 922 - 4,661 0.47% 0.090
2019 4,283 49 - - 1,639 - 5,971 0.59% 0.113
2020 3,679 - - - 1,693 - 5,372 0.50% 0.104
2021 2,938 - - - 8,150 - 11,088 1.24% 0.216
2022 2,153 - - - 7,371 - 9,524 0.94% 0.219
Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements. 1 See the Schedule of Demographic and Economic Statistics for the personal income and population data. * Water Revenue Bonds were removed on 6/30/2016
Governmental Activities Business-Type Activities
CITY OF WATSONVILLE, CALIFORNIA
Ratio of Outstanding Debt By Type
Last Ten Fiscal Years
(amounts expressed in thousands, except per capita amount) 127
Attachment 1
Percentage of
Estimated
General Less:Amounts Actual Taxable
Fiscal Obligation Available in Debt Value of Per
Year Debt Service Fund Total Property Capita
$ $ $ $
2013 5,082 87 4,995 0.16% 1,033
2014 4,676 79 4,597 0.15% 1,123
2015 4,676 72 4,604 0.15% 1,121
2016 4,254 125 4,129 0.13% 1,250
2017 3,818 131 3,687 0.12% 1,438
2018 3,406 123 3,283 0.09% 1,615
2019 4,283 129 4,154 0.10% 1,276
2020 3,679 238 3,441 0.08% 1,497
2021 2,938 247 2,691 0.06% 1,909
2022 2,153 246 1,907 0.04% 2,657
Note: Detail of the City's outstanding debt can be found in the notes to the financial statements.
See the Schedule of Assessed Value and Estimated Actual Value of Taxable Property for estimated actual property value data.
Population data can be found in the Schedule of Demographic and Economic Statistics
CITY OF WATSONVILLE, CALIFORNIA
Ratio of Net General Obligation Debt Outstanding
Last Ten Fiscal Years
(amounts expressed in thousands, except per capita amount) 128
Attachment 1
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
$ $ $ $ $ $ $ $ $ $
Debt limit 121,772 123,043 133,232 139,945 149,679 158,656 166,439 175,678 181,450 189,752 Total net debt applicable to limit 5,241 5,082 4,676 4,129 3,687 3,283 4,154 3,441 2,691 1,907 Legal debt margin 114,555 118,367 128,556 135,816 145,992 155,373 162,285 172,237 178,759 187,845 Total net debt applicable to the limit 4.304% 4.130% 3.510% 2.950% 2.463% 2.069% 2.496% 1.959% 1.483% 1.005% as a percentage of debt limit
Legal Debt Margin Calculation for Fiscal Year 2022
Assessed value $4,810,855
Add back: exempt real property 249,202
Total assessed value 5,060,057
Debt Limit = 3.75% of assessed valuation 189,752
Debt applicable to limit 2,153
Less: Amount set aside for repayment of
general obligation debt 246
Total net debt applicable to limit 1,907
Legal debt margin $ 187,845
Source: City of Watsonville
Fiscal Year
(amounts expressed in thousands)
Last Ten Fiscal Years
Legal Debt Margin Information
CITY OF WATSONVILLE, CALIFORNIA
129
Attachment 1
Estimated
Total Share of
Debt Percentage Overlapping
Jurisdiction Outstanding Applicable Debt
$ $
Direct Debt:
City of Watsonville 2,153 100% 2,153
Total of Direct Debt 2,153
Overlapping Tax Debt:
Cabrillo Joint Community College District 9,548 9.14% 873 Pajaro Valley Unified School District 43,719 26.56% 11,610 Santa Cruz County General Fund
Obligations 8,178 9.22% 754
Santa Cruz County Office of Education
General Fund Obligations 700 9.22% 65
Pajaro Valley Joint Unified School District
Certificates of Participation 3,344 26.56% 888
City of Watsonville General
Fund Obligations 3,754 100.00% 3,754 (1)(2)
Successor Agency 6,885 100.00% 6,885
Total Overlapping Debt 76,128 (3) 24,829
Total Direct and Overlapping Bonded Debt 78,281 24,831
Source: California Municipal Statistics, Inc
(1) Excludes the Bonds
(2) Includes share of Santa Cruz County Emergency Communication Center obligations ($480,963). (3) Excludes tax and reveune anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations.
CITY OF WATSONVILLE, CALIFORNIA
Computation of Direct and Overlapping Bonded Debt
June 30, 2022
(amounts expressed in thousands, except per capita amount) 130
Attachment 1
Education
Personal (2) Per Level in
Income Capita Years of
Fiscal (amounts expressed Personal Median Formal School (4) Unemployment Year Population (1) in thousands) Income Age (3) Schooling Enrollment Rate $ $
2013 51,612 873,974 16.934 29.2 N/A 20,001 19.4%
2014 52,508 896,824 17.080 29.7 N/A 20,362 19.3%
2015 52,087 864,719 16.601 29 N/A 20,438 19.2%
2016 52,891 934,271 17.664 29.9 N/A 20,354 19.2%
2017 53,015 981,527 18.514 30.1 N/A 20,400 19.2%
2018 53,434 1,052,216 19.692 29.7 N/A 20,279 19.3%
2019 53,021 1,014,448 19.133 29.7 N/A 20,106 10.4%
2020 51,515 1,068,567 20.742 30.3 N/A 18,616 10.1%
2021 51,366 1,122,733 21.857 30.3 N/A 19,772 14.8%
2022 50,669 1,183,950 23.366 30.9 N/A 18,675 13.6%
Source: MuniServices, LLC & Data Reporting Office Ca. Dept of Ed.
1.) Population Projections are provided by the California Department of Finance Projections.
2.) Income Data is derived from previous income adjusted for inflation.
3.) Unemployment Data is provided by the EDD's Bureau of Labor Statistics Department.
CITY OF WATSONVILLE, CALIFORNIA
Demographic and Economic Statistics
Last Ten Fiscal Years
4.) Student Enrollment reflects the total number of students enrolled in the Pajaro Valley Unified School District. Other School Districts w/in the City are not accounted for in this statistics. 131
Attachment 1
Percentage Percentage
of Total City of Total City
Employees Rank Employment Employees Rank Employment
Pajaro Valley Unified School District * 2,300 1 9.54% 2,066 1 11.95% Watsonville Community Hospital 658 3 2.73% 662 2 3.83%
Granite Construction 566 4 2.35%
Salud Para La Gente 445 5 1.85%
City of Watsonville 390 6 1.62% 362 5 2.09%
Lakeside Organic Gardens LLC 300 7 1.24%
Nordic Naturals, Inc 278 8 1.15%
S Martinelli & Co. 275 9 1.14% 180 8 1.04%
FedEx Ground Package Systems, INC 233 10 0.97%
West Marine Products 407 4 2.35%
Fox Factory 400 3 2.31%
Target 237 6 1.37%
Del Mar Food Products, Inc 200 7 1.16%
Mi Pueblo Food Center 172 9 1.00%
Couch Distributing 165 10 0.95%
Total 5,445 22.59% 4,851 28.06%
* Includes Certificated, classified & Admin.
(1) Total City Labor Force provided by EDD Labor Force Data https://www.labormarketinfo.edd.ca.gov/data/labor-force-and-unemployment-for-cities-and-census-areas.html Source: 2012-2013 previously published CAFR
Source: BL Data, MuniServices, LLC & Called Employers
2022 2013
CITY OF WATSONVILLE, CALIFORNIA
Principal Employers
Current Fiscal Year and Ten Years Ago
132
Attachment 1
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Function
General Government 6 6 7 7 9 9 9 9 10 11
Community Development 13 14 13 11.5 14 15 16 16 12 15
Finance 22 17 16 16 10 10 11 11 10 10
Fire 36 35 41 41 40 42 43 43 31 31
Informaion Services * n/a n/a n/a n/a 8 8 8 9 11 16
Police:
Officers 73 68 64 67.2 66 75 75 75 71 75
Civilians 19 17 22 26 27 22 24 23 21 19
Library 29 29 29 27.41 25 25 26 27 23 22
Parks & Community
Services 27 27 27 25.88 26 29 29 26 22 24
Public Works 16 16 16 14 14 13 15 15 15 12
Airport 9 9 9 9 9 10 13 13 10 11
LLMAD 1 1 1 1 1 1 1 1 1 1
Gas Tax n/a n/a n/a n/a 0 2 4 4 3 3
Parking Garage 0 0 0 0 0 0 0 0 0 0
Redevelopment and
Housing 4 4 4 5.2 3 4 4 4 5 4
Solid Waste 37 38 36 44 46 49 43 43 43 44
Wastewater 44 46 47 49 53 55 59 59 52 53
Water 27 31 34 35 38 41 44 44 44 39
363 358 366 379.19 389 410 424 422 384 390
* Information Services was created and moved out of General Government.
Source: City of Watsonville's Biennial Budget documents.
CITY OF WATSONVILLE, CALIFORNIA
Full-time Equivalent City Government Employees by Function Last Ten Fiscal Years
133
Attachment 1
CITY OF WATSONVILLE, CALIFORNIA
Operating Indicators by Function
Last Ten Fiscal Years
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Function
General Government:
City Council meetings 24 22 27 19 21 25 25 23 22 34
Resolutions processed 169 153 181 199 187 192 180 229 282 285 Community Development:
Planning application reviews 332 259 393 361 369 423 442 396 230 501 Construction inspections 1784 1851 1725 1165 2933 3828 3624 2904 1029 3557 Building Permits 852 625 768 817 862 1034 810 758 1493 927 Finance:
Payroll checks issued 12336 12203 12327 12511 12547 13323 13028 13045 11200 12973 Utility accounts 14618 14685 15023 15024 14985 15043 15070 14556 14474 14104 A/P checks issued 7484 7460 7313 7517 7644 7588 8062 7695 6890 6904 Fire:
Field incidents dispatched 4092 4123 4282 4282 4997 5070 5286 5427 6539 6271 Information Services:
Client Computers 450 542 542 531 531 646 646 682 698 609 Library:
Items used/checked out 259986 262929 411234 411234 439234 272468 326888 303137 34242 53238 Parks & Community Services:
Registered Participants 628 506 549 475 479 413 297 335 48 1972 Police:
Moving and Parking Citations 11204 9876 10524 11105 12747 9600 15659 9738 8721 15466 Service Calls Dispatch 62126 61239 65288 69668 67632 65635 44386 56901 53730 54239 URC Crime Rate 27 25 39 40 43 38 34 34 30 28
(# crimes/1,000 population, calendar years)
Wastewater:
Avrg. Annual volume per day septage
treated (in million gallons) 7 8 8 3 3 4 5 5 6 8
Water:
Water production (acre feet) 7761 8133 7163 6597 6648 7102 6906 7882 7100 6950 Solid Waste:
Refuse handled (tons) 32995 32607 40204 41389 36028 34286 35109 35202 39898 33373 Recycled material (tons) 5847 6041 4946 7466 7081 8188 7070 6050 5808 7869 Source: City of Watsonville departments
134
Attachment 1
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Function
Fire:
Stations 2 2 2 2 2 2 2 2 2 2
Police:
Patrol units 18 18 17 17 17 22 22 22 22 26
Patrol motorcycles 6 6 4 5 5 5 5 6 6 5
Library:
Buildings 2 2 2 2 2 2 2 2 2 2
Parks & Community Services:
Parks 21 21 26 26 26 26 26 26 26 26
Acreage of parks 85.0 85.0 143.0 143.0 143.0 143.0 143.0 143 143 143.0 Community Centers 6 6 5 5 5 5 6 8 8 7
Public Works:
Miles of streets 96 96 89 89 89 89 89 89 89 84.1
Airport:
Runways 2 2 2 2 2 2 2 2 2 2
Wastewater:
Treatment plants 1 1 1 1 1 1 1 1 1 1
Capacity of treatment plant* 12.1 12.1 12.1 12.1 12.1 12.1 12.1 12.1 12.1 12.1 *(gallons per day in millions)
Water:
Maximum pumping capacity* 18.7 18.7 19.1 19.1 19.1 19.1 19.1 19.1 19.1 19.1 Average consumption* 6.3 6.3 6.1 5.9 5.9 5.9 6.2 7 7 6
*(gallons per day in millions)
Solid Waste:
Collection trucks 16 16 16 19 19 20 20 25 25 25
Source: City of Watsonville departments
Last Ten Fiscal Years
Capital Assets Statistics by Function
CITY OF WATSONVILLE, CALIFORNIA
135
Attachment 1
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Attachment 1
City of Watsonville, California
Measure Y Fund
Financial Statements
For the Year Ended June 30, 2022
Attachment 2
The Page Left Intentionally Blank
Attachment 2
CITY OF WATSONVILLE
MEASURE Y FUND
FINANCIAL STATEMENTS
For the Year ended June 30, 2022
Table of Contents
Independent Auditor’s Report .............................................................................................................................. 1 Financial Statements:
Balance Sheet ........................................................................................................................................ 4 Statement of Revenues, Expenditures, and Changes in Fund Balance ................................................. 5 Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual ......................................................................................................................... 6 Notes to the Financial Statements ......................................................................................................... 7 Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ............................................................ 9 Attachment 2
The Page Left Intentionally Blank
Attachment 2
INDEPENDENT AUDITOR’S REPORT
To the Honorable Mayor and Members of City
Council of the City of Watsonville, California
Report on the Audit of the Financial Statements
Opinions
We have audited the accompanying financial statements of the Measure Y Fund (the Fund) of the City of Watsonville, California (City), as of and for the year ended June 30, 2022, and the related notes to the 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 Fund as of June 30, 2022, and the respective changes in the financial position listed in the Table of Contents as part of the financial statements for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Fund and to meet our other ethical responsibilities, in accordance with the relevant ethical requirement 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 a Matter
As discussed in Note 1, the financial statements present only the Fund and do not purport to, and do not present fairly the financial position of the Fund of Watsonville as of June 30, 2022, the changes in its financial position, for the year then ended in accordance with accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter.
Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error.
1 Attachment 2
Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. 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, individually or in the aggregate, they could reasonably be expected to influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we:
• Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’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.
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.
2 Attachment 2
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 21, 2022, 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 the City’s internal control over financial reporting and compliance.
Pleasant Hill, California
December 21, 2022
3 Attachment 2
ASSETS
Cash and investments 3,189,574 $
Accounts receivable 928,585
Total Assets $ 4,118,159
LIABILITIES
Accounts payable $ 477,995
Accrued liabilities 146,499
Total Liabilities 624,494
FUND BALANCE
Restricted for:
Fire services 1,217,196
Police services 1,793,411
Parks and recreation 483,058
Total Fund Balance 3,493,665
TOTAL LIABILITIES AND FUND BALANCE $ 4,118,159
See accompanying Notes to Financial Statements.
CITY OF WATSONVILLE
MEASURE Y FUND
BALANCE SHEET
June 30, 2022
(FORMERLY KNOWN AS MEASURE G)
4 Attachment 2
AND CHANGE IN FUND BALANCE
REVENUES
Sales tax - Fire 1,851,763 $
Sales tax - Police 2,977,184
Sales tax - Parks and recreation 419,908
Interest - Fire 6,416
Interest - Police 5,466
Other revenue - police 25,268
Total Revenues 5,286,005
EXPENDITURES
Fire 2,049,887
Police 2,982,899
Park and Recreation 198,345
Total Expenditures 5,231,131
Excess (deficiency) of revenues over expenditures 54,874 OTHER FINANCING SOURCES (USES):
Transfers out for debt services payments (286,307)
NET CHANGE IN FUND BALANCE (231,433)
FUND BALANCE
Beginning Fund Balance 3,725,098
Ending Fund Balance $ 3,493,665
See accompanying Notes to Financial Statements.
CITY OF WATSONVILLE
MEASURE Y FUND
STATEMENT OF REVENUES, EXPENDITURES,
For The Year Ended June 30, 2022
(FORMERLY KNOWN AS MEASURE G)
5 Attachment 2
CITY OF WATSONVILLE
MEASURE Y FUND
(FORMERLY KNOWN AS MEASURE G)
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGE IN FUND BALANCE - BUDGET AND ACTUAL
For The Year Ended June 30, 2022
Variance
Final Favorable
REVENUES Budget Actual (Unfavorable)
Sales tax - Fire 1,673,684 $ 1,851,763 $ 178,079 $
Sales tax - Police 2,378,393 2,977,184 598,791
Sales tax - Parks and recreation 338,400 419,908 81,508 Interest - Fire 15,000 6,416 (8,584)
Interest - Police 35,000 5,466 (29,534)
Other revenue - Police 100 25,268 25,168
Total Revenues 4,440,577 5,286,005 845,428
EXPENDITURES
Fire:
Salaries and Wages 1,029,793 1,038,096 (8,303)
Operations 408,217 372,461 35,756
Capital Outlay 859,000 639,330 219,670
Total Fire 2,297,010 2,049,887 247,123
Police:
Salaries and Wages 1,663,439 1,508,287 155,152
Operations 749,079 843,020 (93,941)
Capital Outlay 836,427 631,592 204,835
Total Police 3,248,945 2,982,899 266,046
Park and Recreation:
Salaries and Wages 59,330 33,597 25,733
Operations 279,070 164,748 114,322
Total Park and Recreation 338,400 198,345 140,055
Total Expenditures 5,884,355 5,231,131 653,224
Excess (deficiency) of revenues over expenditures (1,443,778) 54,874 1,498,652 Other financing sources (uses):
Transfers out for debt services payments - Fire (286,307) (286,307) NET CHANGE IN FUND BALANCE $ (1,443,778) (231,433) 1,498,652 $
FUND BALANCE
Beginning Fund Balance 3,725,098
Ending Fund Balance $ 3,493,665
See accompanying Notes to Financial Statements.
6 Attachment 2
CITY OF WATSONVILLE
MEASURE Y FUND
(FORMERLY KNOWN AS MEASURE G)
NOTES TO THE FINANCIAL STATEMENTS
June 30, 2022
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting Entity
In the June 3, 2014 election, City of Watsonville (City) voters approved Measure G, establishing a temporary half-cent transaction sales and use tax. The Measure G Fund (Fund) was established to accumulate revenues transmitted by the State Board of Equalization (BOE), the agency responsible for administering and collecting the transactions and use taxes for the City, and apportion them to essential services outlined within the approved expenditure plan.
On March 3, 2020, City voters approved Measure Y to renew and continue the half-cent transaction sales and use tax. The fund was used to accumulate revenues transmitted by the State Board of Equalization and apportion them to essential services outlined within the approved expenditure plan.
The financial statements present only the activities of the Measure Y Fund, and are not intended to present the financial position and changes in financial position of the City of Watsonville, in accordance with accounting principles generally accepted in the United States of America.
B. Basis of Accounting
The Measure Y Fund of the City is maintained on the modified accrual basis of accounting. As such, revenues are recognized when they become susceptible to accrual, that is, when they become both measurable and available to finance expenditures of the current period. Expenditures are recognized in the accounting period in which the liability is incurred (when goods are received or services rendered).
C. Estimates
The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
NOTE 2 - CASH AND INVESTMENTS
Cash and investments at June 30, 2022, consist of the following:
Pooled cash and investments with the
City of Watsonville $3,189,574
Please refer to the notes of the City's June 30, 2022 Comprehensive Annual Financial Report regarding cash and investments for additional detail.
7 Attachment 2
The Page Left Intentionally Blank
Attachment 2
INDEPENDENT AUDITOR’S REPORT ON
INTERNAL CONTROL OVER FINANCIAL REPORTING
AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN
AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE
WITH GOVERNMENT AUDITING STANDARDS
To the Honorable Mayor and Members of City Council of
the City of Watsonville, California
We have audited, in accordance with the 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, the financial statements of the City of Watsonville Measure Y Fund (the Fund) as of and for the year ended June 30, 2022, and the related notes to the financial statements, and have issued our report thereon dated December 21, 2022.
Report on Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the Fund’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control.
Accordingly, we do not express an opinion on the effectiveness of the Fund’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the Fund’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that have not been identified.
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Fund’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards.
9 Attachment 2
We have also issued a separate Memorandum on Internal Control dated December 21, 2022 which is an integral part of our audit and should be read in conjunction with this report.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Fund’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Fund’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Pleasant Hill, California
December 21, 2022
10 Attachment 2
Reso No. (CM)
Meeting Date: 022123
Reference: Resolution No. 138-22 SWZ ______ RM ______ Finance ______ 1 RESOLUTION NO.__________ (CM)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
WATSONVILLE AMENDING THE 2022-23 BUDGET TO AUTHORIZE
$1,789,759 BUDGET APPROPRIATION INTO VARIOUS FUNDS AND TO
AUTHORIZE FOUR ADDITIONAL POSITIONS
WHEREAS, on June 28, 2022, the City Council adopted Resolution No. 138-22 (CM) approving the Final Budget for the City of Watsonville for fiscal year 2022-23; and WHEREAS, current projections show that without budget adjustments, certain City departments will go over budget by the end of the fiscal year; and WHEREAS, City staff recommends budget increases for certain City departments, and four additional positions, to meet increases in demand for services.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF WATSONVILLE, CALIFORNIA, AS FOLLOWS:
1. Adopting a Resolution authorizing certain budget appropriations does not meet CEQA's definition of a “project,” because the action does not have the potential for resulting in either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment.
2. That the City Council hereby authorizes certain budget appropriations and new positions for fiscal year 2022-23, as fully described on Exhibit “A,” attached hereto and incorporated herein for fiscal year ending June 30, 2023. ********************************
Org Amount Explanation
160 51,000 Hosted Services - 20,000 Docusign, 31,0000 other 450 150,000 Fire Overtime
450 150,000 Fire Overtime
337 28,930 New Position - Rec Specialist PVUSD Conctract 337 22,121 New Position - Rec Coordinator PVUSD Conctract various 500,000 To fund for Storms Costs, EOC, OT and Storm Clean up 220 3,200 OT- Respond after hours currently no budget
220 6,000 Pest Services in City Hall
220 1,500 Uniform Services
510 75,000 Reimbursable property repairs - delay in getting material, proj from last yr 510 75,000 Reimbursable property repairs - delay in getting material, proj from last yr 510 20,000 MSC charges, increase in charges
526 75,000 Training - Medi Support Program
450 7,000 First Aid Supplies - EMS increase
529 341,500 CIP - GYM floor, scorebord, stage, computers, window guards, soccer goals, copier/printers, upgrade exterior lighting, benches 967 36,735 CIP - Auto 410 75,000 add one more training day per month - OT to backfill 560 10,000 Fuel & Lubricants - increase in prices
560 20,000 Special Events - increase in prices
309 60,000 Temporary Wages - reinstate
596 33,000 New Position - Water Operator I
532 41,000 New Position - Wastewater Operator III
532 232,773 Contract Services - Recycling Plant Assessment Exhibit A
MARISSA DURAN, ADMINISTRATIVE SERVICE DIRECTOR
FEBRUARY 21 , 2023
ACFR FY 21-22 and Mid Year
Report FY 22-23
RECOMMENDED ACTIONS
• Accept by motion, the Annual
Comprehensive Financial Report for FY
2021-22, and
• Accept by motion, the mid-year financial
report for the 2022-23 Fiscal Year:
• Accept by motion, the Annual Measure Y
Audit Report for FY 2021-22, and
• Approve a resolution appropriating
$1,789,752 including four additional
positions
ACFR Online
https://www.cityofwatsonville.org/DocumentCenter
/View/20697/Annual-Comprehensive-FinancialReport-for-FY-21-22
2022 CAFR
General Fund Balance
Use in Fund Balance
Total 18,228,109
Cash Flow Reserve (10%) 5,068,449
Emergency Reserve (10%) 5,068,449
CalPERS Reserve 1,000,000
Carryforward Capital 2,787,766
Ramsay Capital 4,207,483
Remaining Balance 95,962
THIS IS DATA THROUGH DEC
SALES TAX DATA THROUGH SEPT. 30
FY 2022-23
General Fund Revenues
General Fund Revenues - Overall
Property tax is projected to be just slightly overbudget Sales tax is projected to be a little better than budget at the same rate as last fiscal year, $188k higher
Utility tax is projected to be on $359K over the budget Hotel tax is will be on over budget and reflect prepandemic receipts $177k over Measure R - $1.2MM to fund reserves, has the same
reserve requirement as the General Fund
Department Revenues, CDD, Police and PCS lower than
budgeted
One Time Revenues
On the “Other Revenues” category
Reminder, these are Leases, Business License,
Franchise Fees agreements, etc.
This year we had 2 one time monies – Sale of Porter
Building $1.1M and the County Loan for the
Purchase of the Hospital – showing both the loan
and the loan payback in this 6 month period
General Fund Expenditures
General Fund Appropriations Requests
Fire - $150,000 overtime costs, reimbursed with
Mutual Aid agreements
PCS- $51,051 to fund 2 new positions Recreation
Specialist And Coordinator, reimbursed by PVUSD
Contract
City Clerk - $51,000 hosted services, such as
Docusign
Public Works - $105,000 Reimbursable property
repairs, MSC charges and other building repairs
Storms Response- $500,000 overtime, cleanup, EOC
Enterprise Funds
Airport – was conservative on their budget, despite facing increases for both fuel and legal costs is projected to have and increase to fund balance.
Utility Funds
Are seeing revenue stabilize and good projected fund balances. Waste Water requesting a Wastewater Operator III to manage the Recycled Water Facility more effectively.
Water requesting a Water Operator I to meet operational needs and the upcoming Chromium 6 needs.
Enterprise Funds
Summary of Other Funds for FY 2022-23
Starting
Balance Revenue Expense Capital Ending Balance
Airport Revised Budget 358,606 4,203,780 4,080,895 60,000 421,491 Projection 4,501,511 4,423,221 34,005 402,891
Variance 297,731 342,326 (25,995) 614,061
Waste Water Revised Budget 15,202,378 17,068,157 16,362,852 8,454,016 7,453,668 Projection 17,003,692 16,393,218 5,452,451 10,360,401
Variance (64,465) 30,366 (3,001,564) (3,035,663)
SW Revised Budget 10,139,218 16,631,170 16,022,059 5,102,136 5,646,193 Projection 17,136,958 16,020,810 3,155,391 8,099,975
Variance 505,788 (1,249) (1,946,745) (1,442,206)
Water Revised Budget 28,121,135 23,094,698 15,364,770 17,317,942 18,533,121 Projection 21,950,745 13,032,481 8,874,143 28,165,255
Variance (1,143,953) (2,332,288) (8,443,799) (11,920,041)
Enterprise Funds Appropriations
Airport - $30,000 offset increased events and fuel
Wastewater – $273,773 one-position, Wastewater
Operator III ($41,000)and contract services
($232,773 Recycling Plan Assessment)
Water - $33,000 Water Operator I
Internal Service Funds
Information and Technology – The department is
currently working on modernizing City IT by rolling
out Office 365 and replacing a failing 18-year-old
phone system throughout all departments. IT is also
working to continually increase cybersecurity
awareness and enhancements through all upgrades
and new systems purchased.
MSC Vehicle Shop – This division is in its 2nd year
and facing increased costs for fuel and vehicle parts
but was able to build these into their budget and is
expected to absorb the increases.
Internal Service Funds
Summary of Other Funds for FY 2022-23
Starting
Balance Revenue Expense Capital Ending Balance
IT Revised Budget 1,858,427 3,410,335 3,410,335 1,607,964 250,463 Projection 3,410,575 3,112,426 939,543 1,217,033
Variance 240 (297,909) (668,421) (966,090)
MSC Shop Revised Budget 738,091 3,411,647 3,411,647 738,091 Projection 2,834,517 2,938,337 634,271
Variance (577,130) (473,310) (1,050,440)
Other Funds
Summary of Other Funds for FY 2022-23
Starting
Balance Revenue Expense Capital Ending Balance
Library Revised Budget 1,977,137 4,102,329 4,510,572 10,000 1,558,894 Projection 4,246,042 4,362,136 - 1,861,042
Variance 143,713 (148,436) (10,000) (14,723)
Measure Y Revised Budget 3,493,665 5,169,351 4,947,965 1,931,867 1,783,184 Projection 5,501,774 4,390,591 678,346 3,926,502
Variance 332,423 (557,374) (1,253,521) (1,478,472)
Gas Tax Revised Budget 806,167 1,314,339 756,936 850,398 513,173 Projection 1,347,109 755,932 548,487 848,858
Variance 32,770 (1,004) (301,911) (270,144)
SB1 Revised Budget 1,954,378 950,000 1,428,188 1,476,190 Projection 1,125,567 730,000 2,349,945
Variance 175,567 (698,188) (522,621)
Measure D Revised Budget 3,565,669 971,903 3,748,065 789,507 Projection 1,258,676 710,212 4,114,133
Variance 286,773 (3,037,853) (2,751,081)
Measure Y
FY 21-22 FY 22-23
PROPOSED
BUDGET ACTUALS
Variance
Positive /
(Negative)
REVISED
BUDGET
Actual
through
12/30/2022 Projected
Police Tax Revenue 2,378,393 2,977,184 598,791 2,772,496 1,475,561 2,951,122 Interest 35,000 4,515 (30,485) 35,000 3,000
Other Revenue 100 25,268 25,168 100 100
Fire Tax Revenue 1,673,684 1,851,763 178,079 1,951,015 1,038,357 2,076,714 Interest 15,000 6,416 (8,584) 15,000 6,500
PCS Tax Revenue 338,400 419,908 81,508 410,740 218,602 437,204 Interest 951 951
Total Revenues 4,440,577 5,286,005 845,428 5,184,351 2,732,520 5,474,640 Police Operations 2,412,518 2,351,307 (61,211) 2,788,767 1,270,791 2,541,582 Equipment / Facilities (police) 836,427 631,592 (204,835) 1,028,349 217,416 434,832 Fire Operations 1,724,317 1,696,864 (27,453) 1,733,395 848,874 1,697,748 Equipment / Facilities 859,000 639,330 (219,670) 1,165,849 71,347 200,000 - PCS Operations 338,400 198,345 (140,055) 425,803 125,653 434,832 Equipment / Facilities - - - 341,500
Totals Expenses 6,170,662 5,517,438 (653,224) 7,142,163 2,534,081 5,650,494 Change in Fund Balance (1,730,085) (231,433) 1,498,652 (1,957,812) 198,439 (175,854) Reserve Police as of July 1 1,768,398 1,792,466
Reserve Fire as of July 1 1,695,206 1,217,191
Reserve PCS as of July 1 261,495 484,009
Reserve Police as of June 30 1,792,466 1,770,274
Reserve Fire as of June 30 1,217,191 1,402,657
Reserve PCS as of June 30 484,009 - 144,881
Measure Y Appropriation Requests
Measure Y Fire - $82,000 to fund Fire Paramedic
Program and first aid supplies
Measure Y Police- $85,000 to fund overtime costs
for one additional training day – Adhoc Committee
recommendation - $37,000 insurance
reimbursement for vehicle damage
Measure Y Parks - $341,500 to funds various centers
improvements, gym floors, benches, improved
lighting etc.
Outlook and Caution
PERS Unfunded Liability – PERS had a 6.1% loss at
end of FY 2022
Capital needs – working on both Facilities and Parks
Studies
Labor Negotiations – Management, MidManagement, Confidential, Police Management, Fire Management and Executive Team
Today’s Actions
Accept by motion, the Annual Comprehensive
Financial Report for FY 2021-22, and
Accept by motion, the mid-year financial report for
the 2022-23 Fiscal Year:
Accept by motion, the Annual Measure G Audit
Report for FY 2021-22, and
Approve a resolution appropriating $1,789,752
including four additional positions
Pension Costs Overview
Sales Tax
UAL Payments and Normal Costs
UAL
UAL Payments
City Staff Storms Response Hours and Cost
Payroll 1/13-23 to 2/10/23
Storm Disaster
Fund Org Department Hours Wages Benefits Total
150 120 CITY MANAGER 730 53,453 11,137 64,590
150 160 CITY CLERK - GENERAL 17.5 1,079 330 1,408
150 210 PERSONNEL 99 7,780 1,872 9,652
150 220 CENTRAL OFFICE/BUILDING MAINTE 187 6,986 2,231 9,217 150 240 PURCHASING 28 923 322 1,245
150 315 COMMUNITY DEVELOPMENT DEPT 321.5 18,897 4,375 23,272 150 409 POLICE - SUPPORT SERVICES 120.12 9,443 1,464 10,907 150 410 POLICE - GENERAL 718.07 53,681 11,213 64,894
150 419 RESEARCH & PROGRAM DEVELOPMENT 13 528 169 697
150 450 FIRE 1055.01 75,683 8,403 84,086
150 510 STREETS 329.25 11,116 3,540 14,657
150 620 LIBRARY - GENERAL FUND 28.25 808 279 1,087
150 680 RECREATION - PARKS 1330.13 48,898 11,985 60,883 150 681 RECREATION FACILITIES 64.75 2,416 782 3,198
150 682 COMMUNITY SERVICES 376.75 14,821 4,416 19,237
150 683 RECREATION 121.5 3,848 962 4,810
150 690 RECREATION - ADMINISTRATION 201 17,660 3,309 20,969 150 693 RECREATION - PAL PROGRAM 73.25 2,891 939 3,830
150 694 SCIENCE WORKSHOP 38 1,716 508 2,225
204 368 RDA-OBLGTN RETIREMENT HOUSING 37.5 2,478 547 3,025 221 347 AFFORDABLE HOUSING 12 925 201 1,126
262 109 ARPA FUND-AMERICAN RELIEF PLAN 44.25 1,737 577 2,314 265 393 PEG - CABLE TV FUND 48.25 1,620 287 1,907
310 526 SALES TAX MEASURE Y - FIRE 192.33 6,996 1,002 7,997 527 SALES TAX MEASURE Y - POLICE 103.74 4,495 1,252 5,747 General Fund 6290.15 350,877 72,102 422,980
710 530 WASTEWATER - TREATMENT PLANT 87.25 6,232 1,345 7,577 710 531 WASTEWATER - SANITARY COLLECT 609.5 28,855 7,233 36,087 710 532 WATER RECYCLING OPRTNS & MAINT 0.5 26 7 33
710 540 UTILITIES ADMINISTRATION 343.75 26,427 5,462 31,890 710 543 ENVIRONMENTAL SUSTAINABILITY 104.5 10,349 1,562 11,911 710 544 ENGINEERING DIVISION 40 2,250 595 2,844
720 596 WATER - OPERATIONS 42 2,436 558 2,994
720 597 WATER - CUSTOMER SERVICES 42.75 1,616 473 2,089 720 598 WATER - FIELD SERVICES 1205.5 48,264 13,965 62,229 720 600 WATER - UTILITY REVENUE GROUP 45.5 2,290 623 2,913 730 560 AIRPORT 180.42 13,360 2,378 15,738
740 570 SOLID WASTE - COLLECTIONS 611.55 19,848 6,038 25,886 740 571 SOLID WASTE - STREET SWEEPER 5.5 273 65 338
740 572 SOLID WASTE - RECYCLING 21.5 2,035 634 2,669
740 575 SOLID WASTE - LANDFILL 10 506 115 621
790 285 INFORMATION SERVICES 382.18 23,114 5,371 28,484 Enterprise/Other Funds 3732.4 187,879 46,424 234,303
Grand Total 10,022.55 538,757 118,526 657,283
Pepra vs Classic
Classic Misc 148 48%
Pepra Misc 163 52%
Classic Fire 15 39%
Pepra Fire 23 61%
Classic Police 41 56%
Pepra Police 32 44%
Grand Total 422
Classic 204 48%
Pepra 218 52%
Grand Total 422
ARPA Recap
Reserve Policy
within that 20% commitment, the City should have a
goal of general fund operating expenses
committing 10% of the value of operating
expenditures to an emergency reserve that can
only be used with City Council approval for disasters, revenue shortfall, retirement cost
increases and asset failure
Hotels in Watsonville
ROYAL INN
781 FREEDOM BLVD,
WATSONVILLE, CA
95076
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LLC/MOTEL 6
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WATSONVILLE, CA
95076
124
HOLIDAY INN
EXPRESS
1855 MAIN ST,
WATSONVILLE, CA
95076
65 BEST WESTERN ROSE
GARDEN INN
740 FREEDOM BLVD,
WATSONVILLE, CA
95076
46 MIA MANAGEMENT
LLC DBA COMFORT
INN
112 AIRPORT BLVD,
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41 MANJU HOSPITALITY
DBA VALLEY INN
970 MAIN ST,
WATSONVILLE, CA
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22 HAMPTONN INN &
SUITES
WATSONVILLE/ ELITE
HOSPITALIY GROUP
LLC
75 LEE RD,
WATSONVILLE, CA
95076
RODEWAY INN
TOURISM
1620 W BEACH ST,
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ARPA Budget
FY 21-22 FY 22-23 FY 23-24 FY 24-25* Total
Programs / Activities to Support
Community Mental Health and
Encompass Community
Recovery Center & Affordable 400,000 400,000.00
Community Mental Health
Support Programs 100,000 100,000 200,000.00
Wrap-Around Community
Services Coordination 150,000 150,000 300,000.00
Mental Health liaison 77,000 77,000 154,000.00
Responsible Landlord
Engagement Initiative 75,000 75,000 75,000 225,000.00
Police adhoc recommendations 100,000 100,000 200,000.00
2. BUSINESS SUPPORT
Business Support and Expansion
to Alternative Spaces 100,000 100,000.00
Small Business/ Minority
Owned (Childcare) 0 0
3. YOUTH SUPPORT
Youth Job Training and
Mentoring Program 200,000 550,000 550,000 1,300,000.00
Summer in the City Program 50,000
ARPA City Projects
4. CITY PROJECTS
Ramsay - All inclusive
Playground 4,483,800 4,483,800.00
Nature Center and PCS
Headquarters 2,933,628 2,933,628.00
Restoration of positions 442,000 442,000 884,000.00
Council Chambers / Community
Rooms Technology Upgrades 335,000 335,000.00
Airport land use plan/GP update 600,000 600,000.00
General Plan update to increase
densities 1,100,000 1,100,000.00
COVID 19- Response Pay 450,000 450,000.08
Neighborhood Street & Traffic
Safety Improvements 1,950,000 2,000,000 3,950,000.00
Citywide Wayfinding & Median
Beautification 150,000 500,000 500,000 1,150,000.00
COVID -19 Memorial / Community
Space $50,000 50,000.00
Total 4,629,000 5,494,000 5,808,800 2,933,628 18,815,428
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