Watsonville City Council
February 25, 2025

2 | Principal Management Analyst Job Description
• Assists in the management of budget policy and provides leadership in budget development. • Develops and manages requests for proposals for professional and/or contracted services; prepares scope of work; evaluates proposals and recommends award; negotiates and administers contacts; ensures all contractual obligations are met.
• Responds to and resolves difficult and sensitive complaints and inquiries; provides general and specialized information and assistance within area of assignment that may require the use of judgment, tact, and sensitivity and the interpretation of policies, rules, and procedures as appropriate; explains programs, policies, and activities related to specific program area of assignment; prepares responses, writes reports, makes recommendations and reviews with City Manager as appropriate. • Serves as liaison between City Manager, City management staff, City staff, the general public, and outside groups and agencies; reviews, determines the priority, and routes incoming reports, requests and instructions; refers matters to appropriate staff; acts as liaison in coordinating matters between the City Manager’s Office and other department heads and managers. • Represents the City Manager at meetings with high level public and private industry officials, occasionally serving in the capacity of project leader or coordinator; makes presentations to agency boards at public meetings, or to neighborhood or citizen groups on behalf of the City Manager. • Prepares grant requests as necessary.
• Participates in meetings, conferences, workshops, and training sessions; remains current on new trends and innovations within assigned areas of responsibility; researches emerging products and enhancements and their applicability to City needs.
• May oversee the general office administrative team in the City Manager’s Office. • May direct the work of Staff on a project or day-to-day basis, trains Staff in work procedures. • Attends and participates in professional group meetings; stays abreast of new trends and innovations in the fields of business and public administration.
• Performs related duties as required.

EMPLOYMENT STANDARDS
Knowledge of:
• Operational characteristics, services, and activities of the City Manager’s Office. • Principles and practices of program, policy, and procedure evaluation and development. • Principles of public administration.
• Advanced methods and techniques of data collection, research, and report preparation. • Advanced methods and techniques of statistical and financial analysis. • Principles and practices of budget preparation and administration. • Principles and practices used in grant development and administration. • Principles of business letter writing and report preparation. • Basic principles of supervision and training.
• Principles and practices of record keeping and records management. • Public relations and customer service techniques.
• Public speaking techniques.
• Office procedures, methods, and equipment including computers and applicable software applications such as word processing, spreadsheets, and databases.
• English usage, spelling, grammar, and punctuation.
• Pertinent federal, state and local laws, codes and regulations.

3 | Principal Management Analyst Job Description
Ability to:
• Perform a wide variety of highly responsible, complex, and diverse advanced level professional duties involved in providing administrative and analytical support to the City Manager’s Office involving the use of independent judgment and personal initiative.
• Understand the organization and operation of the City as a whole and outside agencies as necessary to assume assigned responsibilities.
• Provide administrative and professional leadership on a City-wide basis. • Interpret and apply pertinent federal, state, and local laws, codes, and regulations as well as City and departmental policies and procedures.
• Plan, organize, and direct the work of project teams. • Delegate authority and responsibility as necessary.
• Conduct various administrative and organizational studies and analyses on a wide variety of complex issues.
• Analyze problems, identify alternative solutions, project consequences of proposed actions, and implement recommendations in support of goals.
• Develop, implement, and interpret City policies, procedures, regulations, and codes. • Research, analyze, and evaluate City-wide programs, policies, and procedures. • Collect, evaluate, and interpret complex information and data. • Prepare clear and concise technical, administrative, and financial reports. • Assist with budget preparation and administration.
• Identify, apply for, and administer private, state, and federal funding sources. • Operate office equipment including computers and supporting word processing, spreadsheet, and database applications.
• Maintain a variety of records and reports.
• Effectively represent the City Manager internally and externally. • Communicate clearly and concisely, both orally and in writing. • Establish and maintain effective working relationships with those contacted in the course of work.

EDUCATION/TRAINING AND EXPERIENCE:

Any combination of training and experience which would provide the required knowledge and abilities is qualifying. A typical way to obtain the knowledge and abilities would be:

Education/Training:

Equivalent to a Bachelor’s degree from an accredited college or university with major course work in public administration, business administration, or a closely related field. A Master’s degree is preferred Experience:

Five years of increasingly responsible administrative and analytical experience in a local government including project management experience.

LICENSE & CERTIFICATION:
• Possession of a valid California Class C driver’s license and a safe driving record.

PHYSICAL DEMANDS AND WORKING ENVIRONMENT
The conditions herein are representative of those that must be met by an employee to successfully perform the essential functions of this job. Reasonable accommodations may be made to enable individuals with disabilities to perform the essential job functions.

4 | Principal Management Analyst Job Description
• Environment: Work is performed primarily in a standard office environment with some travel to different sites; incumbents may be required to work extended hours including evenings and weekends and may be required to travel outside City boundaries to attend meetings. • Physical: Primary functions require sufficient physical ability and mobility to work in an office setting; to stand or sit for prolonged periods of time; to occasionally stoop, bend, kneel, crouch, reach, and twist; to lift, carry, push, and/or pull light to moderate amounts of weight; to operate office equipment requiring repetitive hand movement and fine coordination including use of a computer keyboard; to travel to other locations using various modes of private and commercial transportation; and to verbally communicate to exchange information.
• Vision: See in the normal visual range with or without correction. • Hearing: Hear in the normal audio range with or without correction.

Reso No. (CM)
Meeting Date: 022525 1
RESOLUTION NO.__________ (CM)

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

WATSONVILLE APPROVING AND AUTHORIZING THE NEW JOB

CLASSIFICATION AND JOB DESCRIPTION FOR PRINCIPAL HUMAN

RESOURCES ANALYST (MANAGEMENT) AT THE ESTABLISHED
SALARY RANGE OF $50.23-$67.31 PER HOUR OR $8,706.69-$11,667.78

PER MONTH
WHEREAS, on February 18, 2025, the Personnel Commission of the City of Watsonville reviewed and recommended to the City Council the new job classification and job description of Principal Human Resources Analyst; and WHEREAS, the City Manager has submitted her report and recommendation to the City Council to approve and authorize the new job classification and job description of Principal Management Analyst, a copy of which is attached hereto and incorporated herein by this reference.

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF WATSONVILLE, CALIFORNIA, AS FOLLOWS:

1. This action is exempt from the requirements of the California Environmental Quality Act (CEQA) in accordance with CEQA Guidelines Section 15378(b)(5), in that adopting a Resolution approving and authorizing the new job classification and job description for Principal Human Resources Analyst 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 and if a “project,” is exempt under the “common sense” exception (14 Cal. Code Regs. § 15061(b)(3)) because it can be seen with certainty that there is no possibility that this action may have a significant effect on the environment.

Reso No. (CM)
Meeting Date: 022525 2

2. That the new job classification and description of Principal Human Resources Analyst (Management), attached hereto, is hereby approved and authorized at the established Salary Range of $50.23-$67.31 per hour or $8.706.69 - $11,667.78 per month.
**********************************

1 | Principal Human Resources Analyst Job Description
City of Watsonville
Job Description
JOB TITLE: Principal Human Resources Analyst DATE APPROVED:

DEPARTMENT: Human Resources SUPERSEDES: N/A
REPORTS TO: Deputy City Manager
SUPERVISION: Over lower level professional and technical staff EMPLOYEE UNIT: Management
FLSA : Exempt
JOB SUMMARY:

Under general direction, plans, supervises, assigns, and participates in the work of staff responsible for performing professional level human resources duties in the administration of recruitment and examination, classification and compensation, employee benefits, employee/labor relations, employee training and development, workers compensation, benefits administration and related human resources functions; advises and assists managers in the resolution of departmental personnel issues and performs complex research and analysis; coordinates assigned activities with other divisions, outside agencies, and the general public; and provides highly responsible and complex assistance to the Deputy City Manager.

DISTINGUISHING CHARACTERISTICS:

This is the supervisory level within the Human Resources Analyst series. Employees in this classification receive administrative direction within a framework of general guidelines and requires a comprehensive knowledge of human resources principles, practices, laws, and regulations.

EXAMPLES OF ESSENTIAL DUTIES:

The following duties are performed personally, in cooperation with the City Manager, and/or in coordination with other City employees, operating partners, community groups, and other public and private organizations.

Additional duties may be assigned.
• Plans, prioritizes, assigns, supervises, reviews, and participates in the work of staff responsible for performing professional level human resources duties in the administration of recruitment and examination, classification and compensation, employee benefits, employee/labor relations, employee training and development, workers compensation, benefits administration and related human resources functions.
• Participates in the development and implementation of goals and objectives as well as policies and procedures; makes recommendations for changes and improvements to existing standards, policies, and procedures; monitors work activities to ensure compliance with established policies and procedures.
• Participate in the selection and evaluation of assigned staff; provides or coordinates staff training; works with employees to correct deficiencies; implements discipline procedures. • Analyzes and develops recommendations on a wide range of personnel related issues.

2 | Principal Human Resources Analyst Job Description
• Serves as a resource to City supervisors, managers, and department heads regarding human resources issues.
• Develops and prepares materials for orientation sessions, training classes, and public presentations. • Participates in the preparation and administration of the human resources budget; submits budget recommendations; monitors expenditures.
• Represents the department to outside agencies and organizations. • Oversees and assists in the administration of the City’s Personnel Rules and Regulations. • Drafts, recommends, and implements administrative policies and procedures related to personnel. • Interprets and applies personnel policies and regulations, bargaining unit memoranda of understanding, and related guiding documents.
• Advises and assists managers on personnel and labor relations matters such as hiring, performance problems, appraisals and documentation, disciplinary actions, and grievances. • Performs and/or directs special projects as assigned. • Provides staff assistance to Personnel Commission as needed including preparing agendas, reports, and attending meetings.
• May supervise the preparation and maintenance of records including personnel files, required statistical reporting, and related documents.
• May assist in the investigation of allegations of sexual harassment, employment discrimination, policy violations, or other prohibited practices.
• Oversees the coordination of staff development training for the City. • Provides staff assistance to the Deputy City Manager; participates on committees as assigned; prepares and presents reports, recommendations, correspondence, and related communications as assigned. • Conducts research and analytical studies on a variety of topics related to personnel administration as assigned.
• May develop specifications, evaluate proposals, recommend consultant selection, and may monitor and administer contracts for contract and consultant services. • Attends and participates in professional group meetings; maintains awareness of new trends and developments in the field of human resources.
• Performs related duties as required.

EMPLOYMENT STANDARDS
Knowledge of:
• Operations, services, and activities of a human resources program. • Principles and practices of public personnel administration including recruitment, selection, classification and pay, labor relations, benefits, and training. • Pertinent federal, state, and local laws, codes, and regulations governing public personnel administration.
• Principles, rights, and techniques of public sector collective bargaining. • Basic principles and techniques of supervision, training, and performance evaluation. • Methods and techniques of recordkeeping and reporting requirements related to public personnel administration.
• Research methods and techniques.
• Principles of mathematics and basic statistics related to data analysis and setting exam pass points. • Basic principles and practices of budget preparation and administration.

3 | Principal Human Resources Analyst Job Description
• Office procedures, methods, and equipment including computers and applicable software applications such as word processing, spreadsheets, and databases.

Ability to:
• Plan, coordinate, and participate in assigned human resources programs including recruitment and selection, classification and pay, benefit administration, and training. • Supervise, organize, and review the work of others.
• Select, train, and evaluate staff.
• Recommend and implement goals, objectives, policies and procedures for human resources programs. • Develop, recommend, implement, interpret and apply policies, regulations, and provisions of memoranda of understanding.
• Analyze complex human resources issues and develop and implement appropriate responses; advise and counsel departments of best course of action.
• Independently develop and coordinate effective systems, programs, and procedures. • Implement, explain, and apply applicable laws, codes, and regulations. • Participate in the preparation and administration of assigned budgets. • Prepare and present effective reports, recommendations, and correspondence. • Represent the City to employees, managers, bargaining unit representatives, elected officials, vendors, and the public.
• Develop and implement revisions to standard operating procedures to improve effectiveness and/or comply with regulatory changes.
• Read, interpret, and record data accurately.
• Maintain confidentiality
• Operate office equipment including computers and supporting word processing, spreadsheet, and database applications.
• Drive an automobile.
• Communicate clearly and concisely, both orally and in writing. • Establish and maintain effective working relationships with those contacted in the course of work.

EDUCATION/TRAINING AND EXPERIENCE:

Any combination of training and experience which would provide the required knowledge and abilities is qualifying. A typical way to obtain the knowledge and abilities would be:

Education/Training:

Equivalent to a Bachelor’s degree from an accredited college or university with major course work in public administration, human resources, business administration, or a closely related field.

Experience:

Five years of experience performing professional level human resources work with one year of supervisory experience preferred.

LICENSE & CERTIFICATION:
• Possession of a valid California Class C driver’s license and a safe driving record.

4 | Principal Human Resources Analyst Job Description

PHYSICAL DEMANDS AND WORKING ENVIRONMENT
The conditions herein are representative of those that must be met by an employee to successfully perform the essential functions of this job. Reasonable accommodations may be made to enable individuals with disabilities to perform the essential job functions.
• Environment: Work is performed primarily in a standard office environment with extensive public contact and constant interruptions.
• Physical: Primary functions require sufficient physical ability and mobility to work in an office setting; to stand or sit for prolonged periods of time; to occasionally stoop, bend, kneel, crouch, reach, and twist; to lift, carry, push, and/or pull light to moderate amounts of weight; to operate office equipment requiring repetitive hand movement and fine coordination including use of a computer keyboard; and to verbally communicate to exchange information.
• Vision: See in the normal visual range with or without correction. • Hearing: Hear in the normal audio range with or without correction.

Reso No. (CM)
Meeting Date: 022525 1
RESOLUTION NO.__________ (CM)

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

WATSONVILLE APPROVING AND AUTHORIZING THE REVISED JOB

CLASSIFICATION AND JOB DESCRIPTION FOR COMMUNITY

DEVELOPMENT DIRECTOR (EXECUTIVE) AT THE ESTABLISHED
SALARY RANGE OF $73.84-$98.96 PER HOUR OR $12,799.41-
$17,152.42 PER MONTH
WHEREAS, on February 18, 2025, the Personnel Commission of the City of Watsonville reviewed and recommended to the City Council the revised job classification and job description of Community Development Director; and WHEREAS, the City Manager has submitted her report and recommendation to the City Council to approve and authorize the revised job classification and job description of Community Development Director, a copy of which is attached hereto and incorporated herein by this reference.

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF WATSONVILLE, CALIFORNIA, AS FOLLOWS:

1. This action is exempt from the requirements of the California Environmental Quality Act (CEQA) in accordance with CEQA Guidelines Section 15378(b)(5), in that adopting a Resolution approving and authorizing the revised job classification and job description for Community Development Director 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 and if a “project,” is exempt under the “common sense” exception (14 Cal. Code Regs. § 15061(b)(3)) because it can be seen with certainty that there is no possibility that this action may have a significant effect on the environment.

Reso No. (CM)
Meeting Date: 022525 2

2. That the revised job classification and description of Community Development Director (Executive), attached hereto, is hereby approved and authorized at the established Salary Range of $73.84-$98.96 per hour or $12,799.41-$17,152.42 per month.
**********************************

1 | Community Development Director Job Description
City of Watsonville
Job Description
JOB TITLE: Community Development Director DATE APPROVED:

DEPARTMENT: Community Development SUPERSEDES: N/A
REPORTS TO: City Manager
SUPERVISION: Over management, supervisory, professional, and/or administrative support staff
EMPLOYEE UNIT: Executive
FLSA : Exempt
JOB SUMMARY:

Under general administrative direction, plans, directs, manages, and oversees the activities and operations of the Community Development Department including planning, building inspection and compliance, plan checking, issuance of all permits, code enforcement, and housing programs, services, and activities; administers and maintainsthe City's General Plan, Zoning Ordinance and other development regulations; serves as Secretary to the Planning Commission; coordinates assigned activities with other departments and outside agencies; and provides highly responsible and complex administrative support to the City Manager.

DISTINGUISHING CHARACTERISTICS:

Employees in this classification receive executive direction within a framework of overall goals and objectives.

This job class functions at a Department Management level of classification and is responsible for the activities, operations, and management of the Community Development Department. This position is part of the City’s Leadership Team, with full responsibility for leading the activities of the Department and providing support throughout the organization. Successful performance of the work requires the ability to independently implement programs, projects, and policies in conformance with generally accepted standards.

EXAMPLES OF ESSENTIAL DUTIES:

The following duties are performed personally, in cooperation with the City Manager, and/or in coordination with other City employees, operating partners, community groups, and other public and private organizations.

Additional duties may be assigned.
• Assumes full management responsibility of the Community Development Department services and activities including planning, building inspection and compliance, plan checking, issuance of all permits, code enforcement, and housing programs.
• Manages the development and implementation of departmental goals, objectives, and priorities for each assigned service area; recommends and administers policies and procedures. • Establishes, within City policy, appropriate service and staffing levels; monitors and evaluates the efficiency and effectiveness of service delivery methods and procedures; allocates resources accordingly.
• Assesses and monitors work load, administrative and support systems, and internal reporting relationships; identifies opportunities for improvement; directs and implements changes.

2 | Community Development Director Job Description
• Plans, directs, and coordinates, through subordinate level staff, the Community Development Department’s work plan; assigns projects and programmatic areas of responsibility; reviews and evaluates work methods and procedures; meets with key staff to identify and resolve problems. • Selects, trains, motivates, and evaluates assigned personnel; provides or coordinates staff training; works with employees to correct deficiencies; implements discipline and termination procedures. • Oversees and participates in the development and administration of the department budget; approves the forecast of funds needed for staffing, equipment, materials, and supplies; approves expenditures and implements budgetary adjustments as appropriate and necessary. • Oversees the City’s planning functions and activities; develops, manages, and implements complex planning and policy programs.
• Supervises and coordinates the environmental review and development review process for private and public development activities in the City; reviews plans and resolves sensitive, controversial and complex issues; solves problems with developers, property owners, the public, architects, engineers, and planners as well as City Council and Planning Commission. • Oversees building plan check, building inspection, and code enforcement activities and ensures compliance with appropriate laws, ordinances, and regulations. • Oversees housing programs including the City’s Affordable Housing services and activities; oversees and provides support to programs that provide safe, sanitary, and affordable housing for the community. • Oversees the processing of applications for private construction, subdivisions, and land development, including plan check, design review, field inspection and permit enforcement • Reviews and recommends appropriate adjustments to fees for services provided by the Community Development Department; prepares and/or approves a variety of technical studies, reports and correspondence.
• Oversees the California Environmental Quality Act (CEQA) with respect to private development projects. • Provides staff assistance to the City Manager; prepares and presents staff reports and other necessary correspondence.
• Represents the Community Development Department to other departments, elected officials, and outside agencies; coordinates assigned activities with those of other departments and outside agencies and organizations.
• Explains, justifies, and defends department programs, policies, and activities; negotiates and resolves sensitive and controversial issues.
• Participates on a variety of boards, commissions, and committees including City Council and Planning Commission.
• Attends and participates in professional group meetings; maintains awareness of new trends and developments in the fields of community development; incorporates new developments as appropriate. • Responds to and resolves difficult and sensitive citizen inquiries and complaints. • Performs related duties as assigned.

EMPLOYMENT STANDARDS
Knowledge of:
• Operations, services, and activities of a comprehensive community development program. • Advanced principles and practices of program development and administration. • Principles and practices of land use planning, land subdivision, zoning and other land use regulations, building regulation, and code enforcement.
• Applicable City policies, procedures and memoranda of understanding relating to community development, budgeting, finance and personnel management

3 | Community Development Director Job Description
• Principles and practices of municipal budget preparation and administration. • Principles of supervision, training, and performance evaluation. • Office procedures, methods, and equipment including computers and applicable software applications such as word processing, spreadsheets, and databases.
• Pertinent federal, state, and local laws, codes, and regulations.

Ability to:
• Manage and direct a comprehensive community development program including long range staff planning, organizational development, forecasting, benchmarking, etc. • Develop and administer departmental goals, objectives, and procedures. • Analyze and assess programs, policies, and operational needs and make appropriate adjustments. • Identify and respond to sensitive community and organizational issues, concerns, and needs. • Plan, organize, direct, and coordinate the work of lower level staff. • Delegate authority and responsibility.
• Select, supervise, train, and evaluate staff.
• Analyze problems, identify alternative solutions, project consequences of proposed actions, and implement recommendations in support of goals.
• Research, analyze, and evaluate new service delivery methods and techniques. • make effective presentations to elected and appointed officials, city executives, the general public, community and neighborhood groups, business owners, and other governmental bodies • Prepare clear and concise administrative and financial reports. • Prepare and administer large and complex budgets.
• Interpret and apply applicable federal, state, and local policies, laws, and regulations. • Operate office equipment including computers and supporting word processing, spreadsheet, and database applications.
• Communicate clearly and concisely, both orally and in writing. • Establish and maintain effective working relationships with those contacted in the course of work.

EDUCATION/TRAINING AND EXPERIENCE:

Any combination of training and experience which would provide the required knowledge and abilities is qualifying. A typical way to obtain the knowledge and abilities would be:

Education/Training:

Equivalent to a Bachelor's degree from an accredited college or university with major course work in public administration, political science, management, city planning, architecture, business administration, economics, or a closely related field. A Master's degree is preferred.; Experience:

Eight years of increasingly responsible experience in the management and direction of one or more municipal planning, building, construction, housing, economic development, or closely related programs and services including three years of management and administrative responsibility.

LICENSE & CERTIFICATION:
• Possession of a valid California Class C driver's license and a safe driving record.

PHYSICAL DEMANDS AND WORKING ENVIRONMENT

4 | Community Development Director Job Description
The conditions herein are representative of those that must be met by an employee to successfully perform the essential functions of this job. Reasonable accommodations may be made to enable individuals with disabilities to perform the essential job functions.
• Environment: Work is performed primarily in a standard office environment with some travel to different sites; incumbents may be required to work extended hours including evenings and weekends and may be required to travel outside City boundaries to attend meetings. • Physical: Primary functions require sufficient physical ability and mobility to work in an office setting; to stand or sit for prolonged periods of time; to occasionally stoop, bend, kneel, crouch, reach, and twist; to lift, carry, push, and/or pull light to moderate amounts of weight; to operate office equipment requiring repetitive hand movement and fine coordination including use of a computer keyboard; to travel to other locations using various modes of private and commercial transportation; and to verbally communicate to exchange information.
• Vision: See in the normal visual range with or without correction. • Hearing: Hear in the normal audio range with or without correction.

CITY MANAGER REPORT
February 25, 2025

COMMUNITY SURVEY
We are a survey directed to residents
to gauge input on various topics.
• Received over 660 responses so far
• The survey must be submitted by
March 7, 2025
TOPICS: • Safety • Community Engagement & Inclusivity • Recreation and Wellness • Economy • Building and Employment • Housing Security • Public Works • Library Services • Communication
2 Page 380 of 597
D7 - COMMUNITY RESILIENCE

MEETING
Thursday, February 27, 2025
Ann Soldo Elementary
Multipurpose Room
1140 Menasco Dr, Watsonville, CA
Topics include:
• Fire Safety Tips
• Preparing for Winter Storms
• Residents’ Role & Responsibilities vs. City
• Available Resources
Your safety starts with preparation! Don’t miss this
opportunity to get informed and ask questions.
3 Page 381 of 597

POTENTIAL FUNDING CUTS

FOR HUD
The Department of Housing and
Urban Development's Office of
Community Planning and
Development is facing a potential
84% staff reduction.

This would be the largest cut in the
agency, which advocates warn could
worsen record-high homelessness by
delaying funding for local housing
and support programs.
4 Page 382 of 597

SUMMER IN THE CITY

SUMMER IN THE CITY
June 12 – July 8
20 Participants

APPLICATION WILL BE

RELEASED MID-MARCH

SEE, CLICK, FIX
See-Click-Fix is Watsonville's tool to
report non-emergency issues within
the City's jurisdiction such as:
• Potholes
• Graffiti
• Sidewalk Damage
• Damaged (or not working) Street
lights

QUESTIONS?

2/20/2025 8:00:36 PM
C:\Program Files\eSCRIBE\TEMP\2003341339\2003341339,,,CONSIDERATION OF COMPREHENSIVE FINANCIAL REPORT FOR FY 2023-24 AND MID-YEAR REPORT FOR FY 2024-25.docx
0 CITY COUNCIL AGENDA REPORT
MEETING DATE: Tuesday, February 25, 2025
TO: CITY COUNCIL
RECOMMENDED BY: ADMINISTRATIVE SERVICES DIRECTOR DURAN
APPROVED BY: TAMARA VIDES, CITY MANAGER
SUBJECT: CONSIDERATION OF COMPREHENSIVE FINANCIAL REPORT AND MID-YEAR REPORT FOR FY 2024-25
RECOMMENDATION:

That the City Council:

1. Receive audited financial reports for Fiscal Year 2023-24 and a mid-year financial report for FY 2024-25.

2. Accept by motion, the Annual Comprehensive Financial Report for FY 2024-25, and

3. Accept by motion, the mid-year financial report for the 2024-25 Fiscal Year, and

4. Accept by motion, the Annual Measure Y Audit Report for FY 2023-24, and

5. Approve a resolution appropriating $6,398,664, including three new positions into various funds as described in Attachment 1.

BACKGROUND:

I. Review of Fiscal Year 2023-24
The City’s Charter and the State of California law require that all general-purpose local governments publish a complete set of financial statements presented in conformity with accounting principles generally accepted in the United States of America (US GAAP). Upon its completion, the City prepared the Annual Comprehensive Financial Report (ACFR). The ACFR was audited by Maze and Associates, a certified public accountant firm, who issued an unqualified opinion of the City's audit. This opinion indicates that the financial statements represent fairly, in all material aspects, the financial position of the City in accordance with Generally Accepted Accounting Principles (GAAP) 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.

1 The Government Finance Officers Association of the United States and Canada (GFOA) sponsors an award program for excellence in financial reporting. The City has received this Award for excellence for 21 consecutive years. City staff believes the June 30, 2024, ACFR continues to maintain the high standards set by the GFOA and has submitted this year's ACFR for evaluation under this esteemed program.

ACFR Organization
The City’s ACFR is organized into three major sections: Introductory, Financial, and Statistical.

The following is a summary of the contents of each of these sections:

1. Introductory Section: The letter of transmittal and other information of general interest are presented in this section, including the organizational chart, directory of officials, as well as the Government Finance Officers Association’s Certificate of Achievement for Excellence in Financial Reporting. The letter of transmittal is an opportunity for management to provide an overview of the city’s activities, prospective information, and subjective information that is useful in assessing the city’s economic condition.

2. Financial Section: The financial section includes the report of the independent auditor, management’s discussion and analysis, basic financial statements (including notes), required supplementary information and related notes, combining statements (i.e., non-major funds), and individual fund financial statements and schedules.

3. Statistical Section: The statistical section offers operational, economic, and historical data that provide a context for assessing the City’s economic condition. Such data includes information on financial trends, revenue capacity, debt capacity, demographic and economic information, and operating information.

Highlights from the statements audited include: (all figures are in the thousands unless otherwise indicated):
 The City of Watsonville's assets exceeded its liabilities by $302,635. See Table 1 below.  The City's total net position increased by $15,089, with a $7,315 increase in the net position for governmental activities, mainly due to the receipts of grant funds received, higher interest earnings, and higher than budgeted sales tax proceeds, and a $7,774 increase in the net position for businesstype activities, primarily due to Water ending with positive operating income.  As of the end of the fiscal year, the City's governmental funds reported a combined ending fund balance of $65,665, a $16,957 increase from the prior fiscal year. The fund balance was comprised of $31,654 restricted, and $34,011 unassigned, with much of the unassigned balance created by increases in the general fund and in impact fees, housing funds and Measure D during the fiscal year 2023-24, as well as budgetary expenditure savings.

2 General Fund Balance
The General Fund balance for the fiscal year 2023-24 was $34,011k, an increase of $12,385k from the prior fiscal year. The General Fund, which encompasses 18 subaccounts, the most significant increase is due to this fiscal year being the first full year of receiving Measure R, and the spending plan got a late start, so this fund added $4.8MM in fund balance, received an additional $2MM in sales tax proceeds and lastly with the current high interest rates the general fund was able to earn $3MM from investment earnings. Additionally, we had the Ramsay project budgeted in our Capital Improvement Budget that we will be carrying forward to next fiscal year’s budget. It is expected that most of the fund balance above the reserve requirement will be spent in this next fiscal year to finish up the Ramsay Renaissance Park Project, Nature Center, Library Rooftop Project, streets projects, and other pressing capital needs.

3 Table 1:

City of Watsonville’s Net Position
June 30, 2024(in thousands)

4 I. Review of Fiscal Year 2024-25
REVENUES:

The Fiscal Year 2025 Mid-Year Budget Monitoring Report (Mid-Year Report) provides the City Council and the public with a comprehensive forecast of year-end projections for revenues and expenditures, in funds with budgeted personnel expenditures, and compares those projections to the current fiscal year’s budget.

Property Taxes
The budget assumed a 3.0% growth in property taxes, considering the lower increase in the Consumer Price Index (CPI) for existing assessments would be offset by increases in the assessed values of properties changing hands, as well as increases in supplemental and transfer taxes for property changing hands. The current projections indicate that the city will slightly exceed the budget by around $146k in property taxes, mainly in property tax in-lieu revenues. In the 2024 calendar year, the median sales price for detached homes has decreased from 2023 by 5.38%. The average price for detached homes in calendar year 2023 was $646,000 and in calendar year 2024, the median price dropped to $611,250.

Sales tax
Sales tax has seen a statewide sluggish 2024 decline of 0.8% in FY 2024/25. The consumer is looking for values and deals with their purchasing dollars. Retail sales have very much changed in recent years from brick-and-mortar storefronts, which remain in competition with the convenience of online shopping trends.

Our consultants, HDL Companies, tell us that car sales continue to outpace statewide sales in our projection.

We are expecting to receive about $622k over budget. Measure R is coming a bit under budget along with our other special sales taxes, as we are seeing the same declines as the Statewide sales taxes. The sales tax measure is expected to bring in about $5.4MM, about $100k less than our budget estimate.

Hotel tax
Hotel tax is performing close to budget projections. Six hotels are currently collecting and remitting this tax revenue to the City.

Other General Revenues
The city's other general revenues, including interest earnings, utility taxes, franchise fees, and business licenses, are performing a little better than expected. We are estimating collecting $600k over our budget estimate for interest earnings and $370k higher than budget in Utility User’s Tax.

Departmental Revenues
Rental and program revenues for the Parks and Community Services Department are lower than anticipated, mainly due to the closure of Ramsay Park due to construction and reduced services provided to PVUSD’s

5 Expanded Learning program due to reductions in their funding. Most of these revenue sources have associated operating costs that have been reduced as services have been reduced.

The Community Development Department revenues coming in are currently expected to be under the budget estimate by $573k. This is less than last fiscal year when we experienced higher revenues. The police department will have slightly less revenue than budgeted due to budgeting for two School Resource Officer contracts but only being able to provide one officer due to staffing shortages. The fire department’s revenue will be coming in over budget as they have been able to bill and collect mutual aid revenue of $463k more than budgeted reimbursements. The public works department is showing lower than budgeted revenue in reimbursable activities, but expenditure savings will offset this.

EXPENDITURES:

Most departments are within budget, and minor savings are expected. However, some departments are facing challenges and require additional funds.
1- Fire Department
The Fire Department has experienced high overtime costs overages in this fiscal year. The overtime costs are associated with regular staffing needs and mutual aid activities. We deployed a team to assist in the recent fires in Los Angeles , and this has resulted in higher than budgeted overtime costs. There is about $463k more in revenues expected that will be offset with mutual aid reimbursement. The department will need an additional appropriations of $650k. They have three recruits currently in training for the medical support program which aims to help recruit local EMTs to become accredited paramedic\firefighters with the city. The purpose of this program is to help recruit and retain local firefighters. 2- Police
The Police Department has about 10 vacancies in the police officer rank. We have implemented a hiring bonus and other incentives to attract laterals and recruits. The department has had several vacancies and injuries that have contributed to the increase in overtime. With fewer sworn personnel, available, the Department is proposing to replace one Administrative Police Sergeant position with a Police Civilian Manager and an Investigative Specialist. This will relieve some of the work that is currently being done by the sergeants. Both positions are expected to offer relief to the department’s sworn personnel. 3- Community Development Department
The Community Development Department is coming in a bit under budget. Statewide building/construction permits have dropped 0.7 percent compared to last year. The Department is not requesting any additional funds.
4- City Clerk
The City Clerk Department is coming in on budget. The department has seen an increase in public records requests, and they have been busy coordinating those efforts. In recent years, they have added hosting services, which has helped modernize the department and assist City departments in becoming more efficient with staff reports to Council and contract management. The department is requesting additional funds for a software upgrade for Next Request.

6 5- City Manager
The City Manager’s office is seeking additional funds to help pay for our portion of the Warming Center’s cost, our jurisdiction’s share of the expenses related to the Annual Homelessness Action Partnership. The additional appropriation request for this is $142k. Additionally, we are requesting $2MM to complete the Wayfinding Project. Initially, this project was funded through ARPA, but since it wasn’t ready before the grant deadline, we reallocated the funds to the Ramsay project. Now, we need to secure funding to move forward with the Wayfinding project. Additionally, the department is currently hiring a Senior Administrative Analyst who will work on Economic Development projects that are currently being identified by our consultants Kosmont Financial Services through collaborations with our City Manager’s Office. 6- Public Works
The General Fund divisions of public works oversee building, street, and sidewalk maintenance and are expecting to come below budget. Reimbursable property repairs are coming in slower this fiscal year. This is also reflected on the revenue side as we are not anticipating either cost or revenue. The department is asking for $31k to offset a contract for janitorial services and other cost increases. 7- Parks and Community Services
The Parks and Community Services department is projected to have some savings due to programs that could potentially be offered at both the Ramsay and the Veteran’s Hall, which have not been offered due to construction and County of Santa Cruz usage. The savings are realized in the temporary salary savings.

The department is asking for additional funds for Bay Breeze, Vista Montana and asking to appropriate funds received from the Friends of Watsonville.
8- Measure R
Measure R is in its first full year of budget in this fiscal year. This new funding source significantly boosts the capacity of the Parks, Library and Streets departments, enabling them to enhance and have additional funding for new programming, infrastructure, and street projects within the City. The Nature Center is the top budgeted project in this fiscal year at $1.84MM. As you may recall, last year after bidding the construction of the Nature Center, we determined that this project exceeded the budget and our financial capacity. The project was budgeted to be a $3.5 million project (construction and design), and the construction bids came in at $8.6 million. Considering the desires to still construct a state-of-the-art Nature Center and to care for existing City assets, Public Works and Parks staff is working on a design to renovate the Ramsay Park Family Center to house the new Nature Center. This strategy of prioritizing the renovation of existing assets over a new building is consistent with the City’s desire to not add maintenance dollars but rather invest in and maintain our currently owned assets.

Coming in at a close second is the appropriation in the Streets division, with an allocation of 1.83MM in the current fiscal year. They are working on Green Valley Road and Bridge Streets projects, trails, and other smaller street work, along with the purchase of a field services container truck. We are also requesting an appropriation in the amount of $505k to support further street improvement projects. Additionally, there is also an allocation of $683k towards the Ramsay Park Renaissance project. The Parks Division has been able to add programming for Older Adults and Special Events.

The Library Department has completed the design phase for their outdoor café on the second floor of the library.

7 We are currently working with a financial advisor to issue bonds that will cover the funding gap to pay for the Ramsay Project completely. Staff will be recommending to bond for $12MM for a period of 10 years with an annual debt service payment of $1.5MM. We anticipate seeking approval and securing this funding within the next six months. Below is a summary of the current fiscal year. In the next fiscal year, FY 25/26, Measure R will budget to pay for the Rooftop Library Project in the amount of $2.5MM.

8 Table 2: Measure R
9- Other Departments
We will also be asking for more appropriations for legal services. In this fiscal year, we have had increased costs due to labor negotiations, investigations, and general plan. We will be requesting an additional $400k in the general fund for this increase. We will also be asking for $340k for legal settlements.

Overall, all other departments are expected to end the year within their budgets. However, some General Fund capital projects may not be completed as budgeted this fiscal year and will be rolled into the 2025-26 fiscal year. Tables 3 and 4 summarize all general fund appropriation requests and the overall projection for

SALES TAX - MEASURE R
BEGINNING FUND BALANCE 4,762,529.65
FY 2025 PROJECTED REVENUES 5,403,984.42

OPERATIONS
DEBT SERVICE 1,500,000.00
LIBRARY 350,000.00
PARKS 1,363,411.00
TOTALS 3,213,411.00
Budgeted Projects
PARKS - PINTO LAKE MASTER PLAN 200,000.00
PARKS - PARK ASSESSMENT CIPS 500,000.00
PARKS - CALLAGHAN COURT CONVER 100,000.00
LIBRARY DESIGN DOCUMENTS ARCH 214,000.00
OTHER CONTRACT SERVICES 26,971.00
OHLONE PRK ST IMPROVEMENTS 10,285.00
FIELD SERVICES CONTAINER TRUCK 66,106.00
AUTOMOTIVE EQUIPMENT 160,000.00
GREEN VALLEY ROAD IMPROVEMENTS 517,432.00
BRIDGE STREET RECONSTRUCTION 930,000.00
RAMSAY PARK - MASTER PLAN NATU 683,000.00
STREETS - OTHER 83,998.00
STREETS/SIDEWALKS-TRAILS 34,162.00
NATURE CENTER BUILDING 1,838,600.00
NEW STREETS APPROPRIATION REQUEST 505,000.00
TOTALS 5,869,554.00
BUDGET RESERVES 1,080,796.88
UNRESERVED FUND BALANCE 2,752.19

9 the general fund for FY 2024-25. Table 3 below shows a summary of all general fund appropriations requests. Table 4 summarizes the overall projection for the general fund for FY 2024-25.

Table 3: Summary of General Fund Appropriation Requests Recommended Midyear Appropriations FY 2024-25
General Fund
Department Description Expense Revenues
Other Legal 400,000
Claim 340,000
Homelessness 81,614
Warm Shelter to County 60,000
CM Wayfinding 2,000,000
HR Neogov 3,000
Fire Overtime strike-team 600,000 463,000
Police Patrol Vehicle Replacement - ongoing 200,000
Graykey Purchase 20,000
Eliminate Police Sergeant (219,484)
Police Civilian Manager 139,984
Investigative Specialist 95,251
Reduce Police - Other Contract Services (32,599)
Sr. Admin Analyst to Crime Analyst 2,483
Media & Comm Asst to Media and Comm Specialist 8,762
Youth Specialist to a Program Coordinator 8,086
City Clerk Software upgrade for Next Request 3,000
Library Erate allocations 15,000
Parks Friends of Watsonville PCS donation 22,000
Acrylic basketball rims Callaghan 4,000
Main St. light repairs 13,000
Volunteer Program 2,500
Measure R Streets Appropriation Request 505,000
Public Works City Hall janitor 26,400
Telephone Service 3,000
Repair & Maintenance - Uniforms 1,500
TOTALS 4,280,497 485,000

10 Table 4: General Fund Summary for Fiscal Year 2024-25 Department
Actuals
FY 2024
Revised
Budget Projection Variance
Revenues:

Property Tax 14,788,668 14,797,577 14,943,741 146,164
Sales Tax-General 15,936,386 14,974,566 15,596,717 622,151 Hotel Room Tax 1,412,314 1,600,000 1,600,000 -
Utility User Tax 4,675,775 4,400,000 4,769,979 369,979
Transfers In 3,993,020 4,264,868 4,249,900 (14,968)
Measure R 6,190,360 5,518,000 5,403,984 (114,016)
Total Revenues 46,996,523 45,555,011 46,564,321 1,009,310 CDD 2,433,199 2,355,600 1,781,992 (573,608)
Police 1,608,643 1,707,297 1,441,599 (265,698)
Fire 465,725 509,592 972,679 463,087
PW 44,078 522,742 82,122 (440,620)
PCS 804,092 960,363 627,513 (332,850)
Other 15,434,439 8,981,717 9,673,042 691,325
Total GF Revenue 67,786,699 60,592,322 61,143,269 550,947 Expenditutres
Actuals
FY 2024 Budget Projection Variance
City Council 125,142 296,825 126,876 169,949
City Manager 1,831,926 1,896,960 1,896,960 -
City Clerk/Attorney 895,580 1,765,667 1,070,042 695,625 Community Development 3,086,169 3,355,522 2,800,956 554,566 Finance 1,564,016 1,898,810 1,870,914 27,896
Human Resources 894,256 913,185 913,185 -
Social Services 239,436 279,415 222,160 57,255
Parks & Community Services 5,085,654 6,009,647 5,638,562 371,085 Fire 9,344,775 9,239,593 9,731,385 (491,792)
Library 541,684 593,584 593,584 -
Non-Department 3,498,748 2,854,728 2,839,876 14,852
Police 22,539,380 24,034,535 23,475,641 558,894
Public Works 1,754,656 2,120,709 2,093,661 27,048
Measure R 853,048 3,213,441 945,270 2,268,171
Total Depts 52,254,470 58,472,621 54,219,071 1,985,379
Capital 2,192,797 6,410,095 4,000,000 2,410,095
Capital-Measure R 919,105 5,364,554 536,404 4,828,150
Total Expenditures 54,447,268 70,247,270 58,755,475 9,223,624 YE Change to Fund Balance 13,339,431 (9,654,948) 2,387,794 Capital Carry Forward 7,238,245
General Fund Estimate Expenditures and Revenues
Fiscal Year Ending June 30, 2025

11 Other Funds
The Airport Fund ended the FY 2023-24 with $294,172 in cash, despite facing challenges such as fuel costs.

The department's prudent revenue projections contributed to a positive financial finish for the year. They are expected to increase their cash balance by approximately $285,000 at the end of FY 2024-25.

On the other hand, the Utility Enterprise Funds for Water, Sewer, and Solid Waste are witnessing normal revenues. Sewer and Water funds expect to fully expend their operating budgets, but not their capital budgets.

There are several capital projects that have either not yet begun or are currently in the design phase. These projects are expected to be carried over and completed in the following fiscal year. This will result in an increase in their ending cash balances for the fiscal year. The Sewer Fund is requesting to add an additional position of Wastewater Operator 1 to have some overlap and training before an upcoming retirement. This additional position will be eliminated once the retirement takes place. The department will offset the additional costs with savings from their operations budget. The Solid Waste fund does expect to fully expend both its operating and capital budget. It is anticipated that the Cell IV will open soon, this new landfill will save money and give the City a place to haul its waste for as long as three decades. They are also proposing an increase in the enterprise funds budget in the amount of $1.6MM, mostly due to the timing of the new landfill opening and the need to continue to haul the City’s waste to Marina.

Revenues from sales tax are the primary source for the Library, Measure D, and Measure Y funds. The Library Fund has received notification from the County of Santa Cruz that the revenue estimate has decreased by 3.8%.

The revision has been done after the first two quarters of sales tax receipts were below budget. As a result, we have revised the sales tax estimate a bit. Each of these funds plans to expend most of their operating budgets.

It is expected that Measure D and Measure Y funds will also have some savings in capital expenditure because of lower than budgeted expenditures for completed projects and projects that will be carried over to the next fiscal year. As a result of these savings, it is expected to see an increase in their cash balances and the availability of one-time funds for future projects.

Gas Tax and SB1 revenues are primary influenced by the number of miles driven rather than by the price of gasoline. While significant fluctuations in revenues are not expected, it is projected that there will be savings from capital projects that are not expected to be completed this fiscal year. These projects are expected to be carried over and completed in future years.

In Information and Technology, the internal service fund is expected to end the year with a 1.6MM fund balance. They are requesting an appropriation of $120k to continue with the Citywide computer replacement program. Innovation and Technology is continuing modernization efforts through collaboration with Finance, Human Resources, Utility Billing, City Clerk, Permitting, and the Building Official to transition the on-premises ERP system to a Software as a Service (SaaS) solution. This migration aligns with the city’s cybersecurity initiatives, enhances software availability, and provides the opportunity to implement new modules that streamline processes, reduce paperwork, and increase operational efficiencies through automated workflows.

The Municipal Service Center Vehicle Shop, the internal service fund in its fourth year, manages the maintenance of all city vehicles. The fleet manager is making changes to the operation to yield a more efficient and data-driven fleet management. This division is facing increased costs for vehicle parts and supplies and is requesting additional budget appropriation of $100k.

12 For a summary of all non-General fund appropriation requests and major other funds, see tables 5 and 6.

Table 5: Summary of Non-General Fund Appropriation Requests Next Steps
The mid-year report officially marks the beginning of the budget season for Fiscal Year 2025-26. Based on the report's findings and projections, an updated five-year projection and budget outlook will be developed. In early March, budget instructions will be provided to departments to use in preparing their budget proposals to the City Manager by March 31st. Throughout the rest of the fiscal year, both revenues and expenditures will be closely monitored and any necessary updates to the projections will be made at the end of the third quarter in April or May. On May 31st or before, a proposed FY 2025-26 budget will be submitted to the Council for review and presented in June twice, once as a study session and the second meeting will be for Council approval.

Department Description Expense Revenues
Police RFID Readers at both parking gates 25,000.00
Pistol Replacement 68,000.00
Parks Bay Breeze 30,000.00
Vista Montana 43,000.00
IT Computer Replacement 120,000.00
Public Works Parts & supplies 100,000
Increase disposal costs 1,093,500
Temporary wages 45,000
Repair & Maintenance - Uniforms 3,000
ES Engineering 90,000
Fuels & Lubricants 30,000
Landfill Cell IV Opening 218,396
Landfill Closure 82,271
Wastewater Operator 1- temporary overhire
Airport Fuel Farm 170,000
2,118,167.00 -

13 Table 6: Summary of Other Funds for FY 2024-25
Summary of Other Funds for FY 2024-25
Starting
Balance Revenue Expense Capital Ending Balance
Airport Revised Budget 294,172 4,790,378 4,310,334 1,027,600 (253,384) Projection 5,362,387 4,133,025 944,003 579,530
Variance 572,009 (177,308) (83,597) 311,104
Waste Water Revised Budget 17,672,626 36,009,971 19,690,122 22,208,202 11,784,273 Projection 26,400,219 20,375,122 12,883,273 10,814,450
Variance (9,609,752) 685,000 (9,324,929) (18,249,681)
SW Revised Budget 16,336,406 22,403,880 17,584,096 9,087,535 12,068,655 Projection 22,403,880 18,345,596 9,388,202 11,006,488
Variance - 761,500 300,667 1,062,167
Water Revised Budget 35,269,091 26,473,508 18,281,651 33,718,197 9,742,751 Projection 26,473,508 18,447,105 17,869,407 25,426,087
Variance - 165,454 (15,848,790) (15,683,336)
Library Revised Budget 2,241,212 4,636,759 4,631,772 300,000 1,946,199 Projection 4,460,562 4,329,772 300,000 2,072,002
Variance (176,197) (302,000) - (478,197)
IT Revised Budget 1,970,344 3,611,995 3,640,128 823,105 1,119,106 Projection 3,611,005 3,313,478 636,101 1,631,770
Variance (990) (326,650) (187,004) (514,644)
Measure Y Revised Budget 2,824,366 5,539,100 5,723,530 1,878,585 761,351 Projection 5,452,651 4,903,534 1,297,610 2,075,873
Variance (86,449) (819,996) (580,975) (1,487,420)
Gas Tax Revised Budget 997,743 1,413,546 1,050,395 988,817 372,077 Projection 1,413,546 1,050,395 650,367 710,527
Variance - - (338,450) (338,450)
SB1 Revised Budget 3,616,944 1,100,000 - 3,243,417 1,473,527 Projection 1,100,000 - 1,318,674 3,398,270
Variance - - (1,924,743) (1,924,743)
Measure D Revised Budget 4,772,079 1,178,000 5,309,473 640,606 Projection 1,178,000 2,317,392 3,632,687
Variance - (2,992,081) (2,992,081)
MSC Shop Revised Budget 359,964 3,121,234 3,121,234 359,964 Projection 3,221,234 3,221,234 359,964
Variance 100,000 100,000 200,000

14 STRATEGIC PLAN:
02-Fiscal Health: the report above meets strategic plan goal number 2 by keeping the Council and the public informed about the status of the City’s finances.

FINANCIAL IMPACT:

The proposed appropriations listed in Attachment 1 amount to $5,893,664 and are funded by $485,000 in revenue, with the remainder of the requests being covered using fund balance and budget savings from various funds that have the capacity to absorb these additional expenditures within their operating budgets.

We are also proposing to add three additional positions.

ALTERNATIVE ACTION:

The Council has the discretion to accept some, all, or none of the recommendations presented to them.

ATTACHMENTS AND/OR REFERENCES (IF ANY):
1: Recommended Appropriation Detail
2: Annual Comprehensive Financial Report for FY 2023-24 3: Annual Measure Y Audit Report for FY 2023-24

City of Watsonville
Recommended Midyear Appropriations FY 2024-25
Org Obj Proj Department Description Expense Revenues
130 7303 Other Legal 400,000
Claim 340,000
280 7361 Homelessness 81,614
280 7361 Warm Shelter to County 60,000
901 7813 05014 CM Wayfinding 2,000,000
210 7360 HR Neogov 3,000
450 5895 06005 Fire Overtime strike-team 600,000 463,000 901 7805 Police Patrol Vehicle Replacement - ongoing 200,000 901 7813 Graykey Purchase 20,000
410 7011 Eliminate Police Sergeant (219,484)
410 7011 Police Civilian Manager 139,984
410 7011 Investigative Specialist 95,251
410 7361 Reduce Police - Other Contract Services (32,599) 410 7011 Sr. Admin Analyst to Crime Analyst 2,483
410 7011 Media & Comm Asst to Media and Comm Specialist 8,762 410 7011 Youth Specialist to a Program Coordinator 8,086 160 7360 City Clerk Software upgrade for Next Request 3,000 620 7361 Library Erate allocations 15,000
975 7837 Measure R Street appropriation 505,000
682 5850 Parks Friends of Watsonville PCS donation 22,000 680 7533 Acrylic basketball rims Callaghan 4,000
680 7361 Main St. light repairs 13,000
683 7555 9057 Volunteer Program 2,500
220 7361 Public Works City Hall janitor 26,400
220 7222 Telephone Service 3,000
220 7327 Repair & Maintenance - Uniforms 1,500
971 7813 Police RFID Readers at both parking gates 25,000 971 7813 Pistol Replacement 68,000
Parks Bay Breeze 30,000
Vista Montana 43,000
550 7225 IT Computer Replacement 120,000
545 7505 Public Works Parts & supplies 100,000
570 7361 Increase disposal costs 1,093,500
575 7021 Temporary wages 45,000
Wastewater Operator 1- temporary overhire
575 7327 Repair & Maintenance - Uniforms 3,000
575 7361 ES Engineering 90,000
575 7561 Fuels & Lubricants 30,000
915 7855 14969 Landfill Cell IV Opening 218,396
915 7855 15042 Landfill Closure 82,271
910 7855 14900 Airport Fuel Farm 170,000
TOTAL ASKS 6,398,664.00 485,000.00

CITY OF

WATSONVILLE

CALIFORNIA

ANNUAL COMPREHENSIVE

FINANCIAL REPORT

FISCAL YEAR ENDING
JUNE 30, 2024
Watsonville CALIFORNIA
watsonville.gov

City of Watsonville, California
ANNUAL

COMPREHENSIVE

FINANCIAL
REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2024
Prepared by the Finance Department
Marissa Duran, Administrative Services Director

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CITY OF WATSONVILLE, CALIFORNIA
Annual Comprehensive Financial Report
Fiscal Year Ending June 30, 2024

TABLE OF CONTENTS
I. INTRODUCTORY SECTION:

Transmittal Letter .................................................................................................................... 1 GFOA Certificate of Achievement ......................................................................................... 7 Officers and Officials .............................................................................................................. 8 Organizational Structure .......................................................................................................... 9 II. FINANCIAL SECTION:

Independent Auditor’s Report ............................................................................................... 11 Management’s Discussion and Analysis ............................................................................... 15 Basic Financial Statements:

Government-wide Financial Statements:

Statement of Net Position. ........................................................................................ 28 Statement of Activities .............................................................................................. 30 Fund Financial Statements:

Balance Sheet – Governmental Funds ...................................................................... 32 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position ............................................................................ 34 Statement of Revenues, Expenditures, and Changes in
Fund Balances – Governmental Funds. ................................................................. 36 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities ............ 38 Statement of Revenues, Expenditures, and Changes in
Fund Balance – Budget and Actual – General Fund ............................................. 39 Statement of Revenues, Expenditures, and Changes in
Fund Balance – Budget and Actual – Housing Fund ............................................ 40 Statement of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – Redevelopment and Housing Grants Fund .......................... 41 Statement of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – American Rescue Plan Act Fund ......................................... 42 Statement of Net Position – Proprietary Funds ........................................................ 44 Statement of Revenues, Expenses, and Changes in
Net Position – Proprietary Funds ........................................................................... 46 Statement of Cash Flows – Proprietary Funds ......................................................... 48 Statement of Fiduciary Net Position – Successor Agency
Private Purpose Trust Fund .................................................................................... 50 Statement of Changes in Fiduciary Net Position – Successor Agency Private Purpose Trust Fund .................................................................................... 51 Notes to Financial Statements ............................................................................................... 53

CITY OF WATSONVILLE, CALIFORNIA
Annual Comprehensive Financial Report
Fiscal Year Ending June 30, 2024
TABLE OF CONTENTS (Continued)
Required Supplementary Information (Unaudited)
Schedule of Changes in the Net Pension Liability and Related Ratios – Miscellaneous Pension Plan ................................................................................. 102 Schedule of Contributions – Miscellaneous Pension Plan ..................................... 104 Schedule of Proportionate Share of Net Pension Liability – Safety Pension Plan .............................................................................................. 105 Schedule of Contributions – Safety Pension Plan .................................................. 106 Supplementary Information:

Combining and Individual Fund Statements and Schedules:

Combining Balance Sheet – Nonmajor Governmental Funds ..................................... 110 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – Nonmajor Governmental Funds .................................................. 112 Schedule of Revenues, Expenditures, and Changes
in Fund Balances – Budget to Actual:

Gas Tax and Narcotics Assets Seizure Funds ..................................................... 114 Business Development and Economic Development Funds ............................... 115 Library and Parks Development Funds ............................................................... 116 Retirement Tax and Parking Garage Funds. ........................................................ 117 Measure G/Y and Abandoned Vehicle Funds. .................................................... 118 Inclusionary Housing and SB 1 – Gas Tax Fund ................................................ 119 Measure D Fund ................................................................................................... 120 Schedule of Revenues, Expenditures, and Changes
in Fund Balances – Budget and Actual:

Debt Service Fund ................................................................................................ 121 III STATISTICAL SECTION (Unaudited):

Net Position By Component – Last Ten Fiscal Years ............................................ 125 Changes In Net Position – Last Ten Fiscal Years .................................................. 126 Fund Balances of Governmental Funds .................................................................. 128 Net Change In Fund Balances of Governmental Funds – Last Ten Fiscal Years ............................................................................................... 129 General Governmental Tax Revenues By Source – Last Ten Fiscal Years ........... 130 Assessed Value and Estimated Actual Value of Taxable Property. ....................... 131 Property Tax Rates – Direct and Overlapping – Last Ten Years ........................... 132 Principal Property Taxpayers – Current Year and Nine Years Ago ..................... 133 Property Tax Collection – Last Ten Fiscal Years ................................................... 134 Ratio of Outstanding Debt By Type – Last Ten Fiscal Years ................................ 135 Ratio of Net General Obligation Debt Outstanding – Last Ten Fiscal Years ........ 136

CITY OF WATSONVILLE, CALIFORNIA
Annual Comprehensive Financial Report
Fiscal Year Ending June 30, 2024
TABLE OF CONTENTS (Continued)
III STATISTICAL SECTION (Unaudited) (Continued):

Legal Debt Margin Information – Last Ten Fiscal Years ...................................... 137 Computation of Direct and Overlapping Bonded Debt .......................................... 138 Demographic and Economic Statistics – Last Ten Fiscal Years ............................ 139 Principal Employers – Current Fiscal Year and Ten Years Ago ........................... 140 Full-time Equivalent City Government Employees by Function – Last Ten Fiscal Years ....................................................................................... 141 Operating Indicators by Function – Last Ten Fiscal Years .................................... 142 Capital Assets Statistics by Function – Last Ten Fiscal Years .............................. 143

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INTRODUCTORY

SECTION

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Department of Finance
“Working with our community to create positive impact through service with heart.” 831-768-3100
[email protected]
www.watsonville.gov
Administration
275 Main Street, Suite 400
Watsonville, CA 95076
December 26, 2024
Honorable Mayor, City Council and Citizens of the City of Watsonville:

REPORT PURPOSE AND ORGANIZATION
We are pleased to present the City of Watsonville’s Annual Comprehensive Financial Report (ACFR) for the fiscal year ended June 30, 2024. The ACFR is intended to present information above, what is required by generally accepted accounting principles and State law.

The Charter of the City of Watsonville and the State of California law require that all general-purpose local governments publish within six months of the close of the fiscal year a complete set of financial statements presented in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP). The report should also be audited by an independent firm of certified public accountants (CPA) in accordance with generally accepted government auditing standards (GAGAS). Pursuant to the requirements, we hereby issue the comprehensive annual financial report of the City of Watsonville for the fiscal year ended June 30, 2024.

The ACFR consists of management’s representation concerning the finances of the City of Watsonville (City). Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, management of the City has established a comprehensive internal control framework that is designed both to protect the government’s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the City of Watsonville’s financial statements in conformity to U.S. GAAP. Because the cost of internal controls should not outweigh their benefits, the City of Watsonville’s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects.
1

Department of Finance
“Working with our community to create positive impact through service with heart.”

831-768-3100
[email protected]
www.watsonville.gov
Administration
275 Main Street, Suite 400
Watsonville, CA 95076
Audited Financial Statements
Certified Public Accountants have issued an unmodified (“clean”) opinion on the City of Watsonville’s financial statements for the fiscal year ending June 30, 2024. A copy of this report is included in page 11 in the Financial Section of this report.

The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion that the City’s financial statements for the fiscal year ended June 30, 2024, are fairly presented in conformity with U.S. GAAP. The independent auditors’ report is presented as the first component of the financial section of this report.

The independent audit of the financial statements of the City of Watsonville also incorporates a broader, federally mandated Single Audit Uniform Guidance designed to meet the special needs of federal grantor agencies. The standards governing the Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited government’s internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. These reports are available in the City of Watsonville’s separately issued Single Audit Report.

GAPP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement MD&A and should be read in conjunction with it. The City of Watsonville’s MD&A can be found immediately following the report of the independent auditors.

CITY OF WATSONVILLE PROFILE
The City of Watsonville was incorporated in 1868 and is located six miles inland from the Monterey Bay in the State of California. The government has a land area of 6.19 square miles and a population of 52,590 people based on the US Census 2020 Census.

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Department of Finance
“Working with our community to create positive impact through service with heart.”

831-768-3100
[email protected]
www.watsonville.gov
Administration
275 Main Street, Suite 400
Watsonville, CA 95076
Watsonville became a charter City government in 1908. Policymaking and legislative authority are vested in the governing City Council, which consists of seven Council Members, one of whom serves as mayor. The mayor is appointed on a sequential basis from each of the numbered City Council districts and serves for a term of one year. The council is elected on a non-partisan basis from seven electoral districts.

Council members are elected to four-year terms. Elections are staggered with four Council Members elected during one election and three Council Members elected in the following election two years later. The governing City Council is responsible, among other things, for passing ordinances, adopting the budget, appointing committees, and hiring the government's City Manager, City Clerk, and Attorney. The City Manager is responsible for carrying out the policies and ordinances of the governing council, for overseeing the day-to-day operations of the government, and for appointing the department heads.

City Services
The City of Watsonville provides a full range of services including police and fire protection; water treatment and distribution; solid waste collection and disposal; sanitary sewer collection and treatment; airport facilities; building inspection, planning, economic development, housing rehabilitation, and general government services; library; recreation; parks; street construction and maintenance; and general administration.

The financial reporting entity of the City includes all the funds of the City of Watsonville, as well as all of its component units. Component units are legally separate entities for which the primary government is financially accountable. The Successor Agency of the City of Watsonville Redevelopment Agency’s information in this year’s financial report is presented separately as part of the fiduciary statements.

Additional information can be found on this entity starting on page 97 within the notes to the financial statements.

Budgetary Process and Controls
The annual budget serves as the foundation for the City of Watsonville’s financial planning and control. All departments of the City of Watsonville are required to submit requests for appropriations to the government’s management on or before March 31 of each fiscal year. The Finance Department uses these requests as a starting point for developing a proposed budget. The Finance Department then presents this proposed budget to the Council for review prior to May 31. The Council is required to hold public hearings on the proposed budget and to adopt a final budget by no later than June 30, the close of the City of Watsonville’s fiscal year. The appropriated budget is prepared by fund (i.e. General Fund, Water), department (i.e., police), and division (i.e., investigation).
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Department of Finance
“Working with our community to create positive impact through service with heart.”

831-768-3100
[email protected]
www.watsonville.gov
Administration
275 Main Street, Suite 400
Watsonville, CA 95076
Department directors may make transfers of appropriations within a department.

Transfers of appropriations between departments, however, require the special approval of the City Manager. Budget to actual comparisons is provided in this report for each individual governmental fund for which an appropriated annual budget has been adopted. The general fund, impact fee fund, housing fund, and redevelopment and housing grants fund comparisons are presented on pages 39 to 42 as part of the basic financial statements for the governmental funds. For governmental funds, other than major funds, with appropriated annual budgets, these comparisons can be found in the governmental fund subsection of this report, which starts on page 110.

FACTORS AFFECTING FINANCIAL CONDITON
With the passage of Measure R, which provided $6 million in additional funding in this fiscal year along with an additional $1 million in sales tax revenues, Watsonville City budget gained valuable opportunities to enhance its streets, library, senior services and parks projects in the 2023-24 fiscal year. The United States reported an annual inflation rate of 2.6%, the increase primarily attributed to rising fuel and clothing process. We have budgeted to spend some of our fund balance to fund Ramsay Park and are beginning our planning for the Library Rooftop Project and the Plaza Revitalization project. We ended the year with an increase to the fund balance in the General Fund of $12.3MM. Most of this increase is due to Measure R ending the year with $4.8MM. We had a late start in developing our spending plan for Measure due to some challenges with the Round Table initiative. Additionally, the city experienced positive financial impacts during fiscal period, driven by an increase in sales tax revenue from the robust performance of the auto industry and higher than anticipated interest earnings exceeding budget projections.

The CPI (Consumer Price Index) is used by the U.S. Bureau of Labor Statistics to measure inflation. The September 2024 CPI-U (Consumer Price index for all Urban Consumers) increased 2.4 percent over the previous 12 months, marking the smallest year-over-year rise since February 2021. Core CPI (CPI less food and energy) is 3.3 percent compared to 6.6 percent in September 2022. Core CPI represents a more accurate picture of underlying inflation trends since volatile food and energy products are excluded. While the global economic activity remains uncertain, the U.S. Bureau of Labor Statistics’ Employment Projections for 2023-2025 shows a projected growth from 227 million over last year, with notable increases in health care, leisure and hospitality and government.

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Department of Finance
“Working with our community to create positive impact through service with heart.”

831-768-3100
[email protected]
www.watsonville.gov
Administration
275 Main Street, Suite 400
Watsonville, CA 95076
Local Economy
The city’s general fund relies heavily on taxes, luckily, we have been able to see some constant increases in the last few years. Watsonville was able to end the fiscal year on a positive note, driven by year-over-year tax increases and responsible spending and savings on the part of our departments. We also experienced delays in the execution of our budgeted capital projects.

Property taxes saw an increase of $1.2 MM from FY 2022-2023. Property tax collections in FY 2023-24 were driven by assessments and increases in supplemental taxes that were set the prior year. We saw less transfer taxes than in the prior years, which are a direct result of higher interest rates. The doubling of the 30-year mortgage interest rates to over 6.5% during the latter of calendar year 2022 and still to this day appears to be reducing the demand to purchase homes.

In November 2022, voters approved Measure R, a half-cent sales tax on most goods sold within Watsonville. This tax became effective April 1, 2023. While this is a general-purpose tax, it will solely be used to primary support investment in street maintenance, pothole repairs, parks and recreation, library services, employment opportunities and services for seniors. Fiscal year 2023-24 was the first full year of collecting this tax. We had a bit of a low start to developing our spending plan. As a result, we ended the year with an increase in fund balance of $4.6MM due to this revenue source. We are excited to be able to plan for additional streets, library, parks and senior services with this funding source.

The biggest increase continues to be Sales tax revenues, we saw an increase of $1.1MM from FY 2022-2023. The city experienced positive financial impacts during fiscal period, driven the robust performance of the auto industry, general consumer goods and building and construction. The largest decreases came from fuel service stations as falling fuel prices at the pump reduced receipts from gas stations and petroleum providers. Consumption of food and drugs is generally lower as this sector is softening in our state. Sales tax for the remainder of 24 appears likely to follow the recent trend of moderate declines before leveling off in 2025. Consumer confidence has increased to 111.7 in November of 2024. This marks the highest level in more than one year, indicting growing optimism about economy and labor market.

Watsonville is a strong and resilient community with a history of doing more with less.

We are on a good path and with slow and steady steps we will stay there.

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Department of Finance
“Working with our community to create positive impact through service with heart.”

831-768-3100
[email protected]
www.watsonville.gov
Administration
275 Main Street, Suite 400
Watsonville, CA 95076
Independent Audit
Each year the City requires an independent annual audit of the City's financial records, the results of its operations, and cash flows. This report includes the opinion of the City's independent auditors, Maze & Associates, for the basic financial statements of the City. In addition, the document also contains the auditors' 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.

Awards and Acknowledgements
The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Watsonville, California for its annual comprehensive financial report (ACFR) for the fiscal year ending June 30, 2023. This was the twentieth consecutive year that the government has received this prestigious award. To be awarded a Certificate of Achievement, the government must publish an easy, readable, and efficiently organized ACFR. The report satisfies both U.S. GAAP and applicable legal requirements.

A Certificate of Achievement is valid for a period of one year only. We believe that our current ACFR meets the Certificate of Achievement Program’s requirements, and we are submitting it to GFOA to determine its eligibility for another certificate. In addition, the City has received the GFOA’s Award for Distinguished Budget Presentation for its biennial budget dated June 30, 2023. To qualify for the Distinguished Budget Presentation Award, the government’s budget document was judged to be proficient in several categories, including policy documentation, a financial plan, and a communication device.

The preparation of this report could not have been accomplished without the efficient and dedicated service of the Finance Department staff. We would like to express our appreciation to all members of the department who assisted and contributed to the preparation of this report. Brenda Castillo, Ilda Estrada, Jorge Ortiz, and Patricia Rodriguez deserve special recognition for their contribution to the report. The mayor and the governing council should also be given due credit for their interest and support in managing the City of Watsonville in a responsible and progressive manner.

Respectfully submitted,
Administrative Services Director
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Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Watsonville
California
For its Annual Comprehensive
Financial Report
For the Fiscal Year Ended
June 30, 2023
Executive Director/CEO
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City of Watsonville, California
Officers and Officials
For the Fiscal Year End June 30, 2024
City Council:

Mayor – E Vanessa Quiroz-Carter
Mayor Pro Tempore – Maria Orosco
Council Member – Eduardo Montesino
Council Member – Casey Clark
Council Member – Krystal Salcido
Council Member – Jimmy Dutra
Council Member – Ari Parker
City Officials:

City Manager - Tamara Vides
City Clerk – Irwin Ortiz
Fire Chief – Rudy Lopez
Administrative Services Director – Marissa Duran
Police Chief – Jorge Zamora
Public Works Director – Courtney Lindberg
Library Director – Alicia Martinez
Community Development Director – Suzi Merriam
Parks and Community Services Director – Nick Calubaquib Airport Director – Rayvon Williams
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This Page Left Intentionally Blank

D1 - Eduardo Montesino
D2 - Vanessa Quiroz-Carter
D3 - Maria Orozco
D4 - Kristal Salcido
D5 - Casey Clark
D6 - Jimmy Dutra
D7 - Ari Parker
City Council
Irwin I. Ortiz
City Clerk
Tamara Vides
City Manager
Samantha Zutler
City Attorney
Organizational Chart
Watsonville Residents
Vacant
Asst. City Manager
Administrative
Services
Human
Resources
Fire
Department
(Interim) Community
Development
Innovation &
Technology
Marissa Duran Justin Meek Rudy Lopez Sr. Nathalie Manning Brandon Gill Alicia Martinez Rayvon Williams Nick Calubaquib Jorge Zamora Courtney Lindberg Library Police
Department
Public Works &
Utilities
Parks & Community
Services
Municipal
Airport Page 421 of 597
INDEPENDENT AUDITOR’S REPORT
To the Honorable Mayor and Members of the City Council
City of Watsonville, California
Report on the Audit of the Financial Statements
Opinions
We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Watsonville, California (City), as of and for the year ended June 30, 2024, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the Table of Contents.

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City as of June 30, 2024, and the respective changes in financial position and, where applicable, cash flows thereof and the respective budgetary comparisons listed in the Table of Contents as part of the basic 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 City 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.

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.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. 11

Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists.

The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if, there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

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

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
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Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis and other required supplementary information as listed in the Table of Contents be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

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

Other Information
Management is responsible for the other information included in the annual report. The other information comprises the Introductory Section and Statistical Section listed in the Table of Contents, but does not include the basic financial statements and our auditor’s report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon.

In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report.
13

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 26, 2024, on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of 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 26, 2024
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CITY OF WATSONVILLE, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS
As management of the City of Watsonville, we offer readers of the City of Watsonville’s financial statements this narrative overview and analysis of the financial activities of the City of Watsonville for the fiscal year ended June 30, 2024. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages 1 - 6 of this report. All amounts, unless otherwise indicated, are expressed in thousands of dollars.

Fiscal Year 2024 Financial Highlights
• The assets and deferred outflows of the City of Watsonville exceeded its liabilities and deferred inflows at the close of the most recent fiscal year by $302,635. • The City’s deferred outflow of resources-Pension totaled $41,527 and its deferred inflow of resources-Pensions totaled $2,263 and inflow of resources-Lease $4,486. • The City’s liabilities totaled $173,699.
• The City’s total net position increased by $15,089. Governmental activities net position increased by $7,314 most of this increase is due to the passage of Measure R by our voters in November 2022. The city was able to collect its first full year of this new sales tax in the 2024 fiscal year. Our Bradley Burns sales tax also saw some increases as the city experienced positive financial impacts from increases in sales tax revenue from the robust performance of the auto industry. We also benefited from higher than anticipated interest earnings.

Additionally increase in Property taxes was due to increases in supplemental tax receipts.

Business type activities net position increased by $7,774. Most of this increase was from Water, Sewer and Solid Waste funds ending with positive operating income. • As of the close of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $65,665, an increase of $16,957 in comparison with the prior fiscal year’s balances. The restricted portion was $31,950 and the unassigned amount was $33,715 which is an increase of $3,442 from the prior fiscal year.

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

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

15 The Statement of Net Position presents information on all of the City of Watsonville’s assets and liabilities, with the difference between the two reported as net position. Increases or decreases in net position may serve as a useful indicator of whether the financial position of the City of Watsonville is improving or deteriorating overtime.

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

Both of the government-wide financial statements distinguish functions of the City of Watsonville that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City of Watsonville include general government, public safety, housing, streets, and culture and recreation. The business-type activities of the City of Watsonville include water, sewer, solid waste, airport, and fiber optic activities.

The government-wide financial statements can be found on pages 28 to 30 of this report.

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

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

Because the focus of governmental funds is narrower than that of government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements.

By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental funds balance sheet and the governmental fund statements of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.

16 The City of Watsonville maintains eighteen individual governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances for the general fund, impact fees fund, housing fund, redevelopment and housing grants fund, American rescue plan act fund and general debt service fund which are all major funds. Data for the other thirteen governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements elsewhere in this report.

The City of Watsonville adopts a biennial budget (one year adopted and one year proposed) for all its governmental funds.

The basic governmental fund financial statements can be found on pages 32 to 38 of this report.

Proprietary funds. The City of Watsonville maintains two types of proprietary funds; Enterprise and Internal Service funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City of Watsonville uses enterprise funds to account for Water, Sewer, Solid Waste, Airport and Fiber Optic operations.

Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary funds financial statements provide separate information for the water, sewer, solid waste, airport and fiber optic operations, all of which are considered to be major funds of the City of Watsonville.

Internal service funds are an accounting device used to accumulate and allocate costs internally among the City of Watsonville’s various functions. The City of Watsonville uses an internal service fund to account for insurance activities of the City. The fund predominantly benefits governmental funds rather than business-type functions, and it has been included within governmental activities in the government-wide financial statements. Conversely, the internal service fund is presented in the proprietary funds’ financial statements.

The basic proprietary funds financial statements can be found on pages 44 to 49 of this report.

Fiduciary fund. Fiduciary funds are used to account for resources held for the benefit of parties’ outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the City of Watsonville’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds.

The basic fiduciary fund financial statements can be found on pages 50 to 51.

Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 53 to 99 of this report.

Other information. In addition to the basic financial statements and accompanying notes, required supplementary information, combining statements and schedules referred to earlier in connection with non-major governmental funds are presented immediately following the notes to the financial statements. Combining and individual fund statements and schedules can be found on pages 102 to 106 of this report.

17 Government-wide Financial Analysis
Statement of Net Position. As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. In the case of the City of Watsonville, assets and deferred outflows exceeded liabilities and deferred inflows by $302,635 at the close of the most recent fiscal year.

By far the largest portion of the City of Watsonville’s net position $226,752 reflects its investment in capital assets (e.g., land, buildings and improvements, machinery, work in progress, and infrastructure) less any related outstanding debt used to acquire those assets. The City of Watsonville uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City of Watsonville’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.

An additional portion of the City of Watsonville’s net position $56,061 represent resources that are subject to external restrictions on how they may be used by creditors (such as through debt covenants), grantors, contributions or laws or regulations of other governments. The remaining balance of unrestricted net position $21,076 is unrestricted and available for next year’s operations at the direction of the City Council.

City of Watsonville’s Net Position
June 30, 2024
(in thousands)
At the end of the current fiscal year, the City of Watsonville can report positive balances in net investment in capital assets and restricted net position for the government as a whole.

18 City of Watsonville
Summary of Changes in Net Position
For the Fiscal Year Ending June 30, 2024
(in thousands)
Governmental Activities. Governmental activities increased the City of Watsonville’s Net Position by $7,315. Key elements of this increase are as follows:
• Governmental revenues saw an increase in charges for service at about $125 and a combined increase in Sales Tax and Property Taxes at about $8,441. Investment Interest Revenue saw an increase of $3,927, this is a result of a higher earnings rate than in the last year. There were other minimal increases in other tax categories and charges for services were relatively flat offset by increases in grants and contributions.
• Governmental spending increased by $14,243 primarily in general government and streets and public safety. The increase in spending is primarily due to the passage of Measure R and the first year in spending these funds, the city being able to work on street projects and increases in Public Safety costs.

19 For the fiscal year ending June 30, 2024
Expenses and Program Revenues
Governmental Activities
Revenues by Source
Governmental Activities

20 Business-type activities. Business-type activities increased the City of Watsonville’s net position by $7,774. Key elements of this increase are as follows:

For the fiscal year ending June 30, 2024
Expenses and Program Revenues
Business-type Activities
• Charges for services increased in comparison to last fiscal year by $3,872, this was mainly due to a 7% rate increases for Sewer and Solid Waste Funds other revenues increased by $2,047, this was mainly due to higher interest rates bringing in increases in investment interest. • The Funds had an increase in spending, mostly due to more capital spending and an increase in pension obligation costs.

For the fiscal year ending June 30, 2024
Revenues by Source
Business-type Activities

21 Financial Analysis of the City of Watsonville’s Funds As noted earlier, the City of Watsonville uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.

Governmental funds. The focus of the City of Watsonville’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City of Watsonville’s financing requirements. In particular, restricted fund balances for specific proposes may serve as a useful measure of a government’s net resources available for spending on various activities at the end of the fiscal year.

As of the end of the current fiscal year, the City of Watsonville’s governmental funds reported combined ending fund balances of $65,665, an increase of $16,957 in comparison with the prior year. Much of the fund balances is restricted for specific purposes and the largest restricted portion is for impact fees in the amount of $8,647 and the housing fund at $5,027. This balance is for projects that have been budgeted, planned or will be completed within the next five years. The remainders of fund balances are either non-spendable or unassigned at year end. The nonspendable portion of fund balances represents the amounts of funds that cannot be spent because they are either not in spendable form or legally required to remain intact. Unassigned fund balances represent amounts which are unconstrained in that they may be spent for any purpose.

The General Fund is the chief operating fund of the City of Watsonville. At the end of the current fiscal year, the charter reserve of the General Fund was $12,385. As a measure of the General Fund’s liquidity, it may be useful to compare both the charter reserve and total fund balance to total fund expenditures. The City’s General Fund Reserve met the Charter Reserve this fiscal year end. The required Charter Reserve fund balance would be 4.2 percent of total general fund expenditures; the total fund balance represented 38.5 percent of the same amount.

The fund balance of the City of Watsonville’s General Fund increased by $12,385 during the current year largely due to the City having passed Measure R sales tax measure and modest increases in property taxes. We are also able to collect on a loan that was payable from the general fund as part of the ROPS to the enterprise funds, this loan was in the amount of $3,158.

The changes in Governmental Fund balance can be attributed to:

The General Fund increase in fund balance was from increases in various revenue types, such as, sales tax and property tax in lieu of vehicle license fees, decrease in operating costs from a controlled spending initiative. We also were able to collect The Impact Fees Fund had a fund balance of $8,647, an increase of $1,657 over the prior year’s fund balance. This increase was due to new construction permits for Golden Brands Distributor and a 53 – Eden Housing affordable housing project. The revenues in the impact fee funds are reserved for future projects in fund balance.

The Housing Fund had a fund balance of $5,027, an increase of $1,608 over the prior year’s fund balance. Most of the increase in this fund is attributed to a loan repayment from Evergreen apartments along with several smaller loan repayments received during the fiscal year.

22 The Redevelopment and Housing Grants Fund has a fund balance of $643, an increase of $270 from the prior year’s fund balance. This increase is the result of loan payments and higher than anticipated interest earnings.

The government’s Debt Service Fund had a fund balance of $322, an increase decrease of $2 during the fiscal year.

Proprietary funds. The City of Watsonville’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail.

Net position and changes of net position for the five major enterprise funds are as follows:

Other factors concerning the finances of these funds have already been addressed in the discussion of the City of Watsonville’s business-type activities.

General Fund Budgetary Highlights
Watsonville’s finances remain on a steady path. For the most part, our revenue increases are able to match our expenditure increases. The high levels of inflation seen in the economy at large are impacting limited areas of our budget, both revenue and expenses. Interest earnings are exceeding budget projections. Due to their volatility, we are categorizing these revenues one-time sources of funding.

We do continue to see large year-over-year increases in CalPERS retirement costs, although those expected to begin decreasing in coming years. We also continue to have a backlog of unfunded capital needs and the inability to expand service levels in some areas requested by the public and our departments. The steady approach we have taken to budgeting in recent years has paid off in that our funds have the reserves needed to manage future economic shocks should they occur.

There is also room for optimism in future years as the peak in CalPERS’ costs seems to be approaching.

Interest earnings saw an increase of $2.5MM, due to the interest earnings rate being higher than anticipated. Property taxes saw an increase of $1.2 MM from FY 2022-2023. Property tax collections in FY 2023-24 were driven by assessments and increases in supplemental taxes that were set the prior year. Sales tax saw an increase of $7.3 MM. This increase was mainly due to the passage of Measure R sales tax revenue measure, with this revenue stream bring in $6.0M this fiscal year. We are also benefiting from robust performance in the auto industry, general consumer goods and building and construction sectors.

23 Capital Asset and Debt Administration
Capital assets. The City of Watsonville’s capital assets, for its governmental and business type activities as of June 30, 2024, was $233,268 (net of depreciation). This represents a $11,825 increase from the prior year or 5.34%. The increase is due to increases in construction in progress.

Governmental Type Activities increased by 1.78% due to increases in construction in progress category.

While Business Type Activities increased by 9.21% due to increases in construction in progress category.

Additional information on the City of Watsonville’s capital assets can be found in Note 4 on pages 57 to 58 of this report.

24 Long-Term Debt. At the end of the current fiscal year, the City of Watsonville had total net debt outstanding of $140,278. The debt for governmental activities is made up of notes payable of $886, net OPEB liability of $3,168, compensated absences of $2,402, subscription liabilities of $669 and net pension liability of $86,739. Business type activities have $4,970 in notes payable, $6,779 in a loan, net OPEB liability of $1,889, compensated absences of $1,024, net pension liability of $28,072 and landfill closure/post closure liability of $3,680.

State statutes limit the amount of general obligation debt a governmental entity may issue to 10 percent of its total assessed valuation. The current debt limit for the City of Watsonville is $210,191 which is significantly more than the City of Watsonville’s outstanding debt subject to this limit.

Additional information on the City of Watsonville’s long-term debt can be found on page 80 of this report.

Economic Factors and Next Year’s Budget
• Budget will include using of the American Rescue Plan Act allocation. • Second full year of Measure R sales tax revenue and expenditures • In non-General Fund departments, you will see the same cautious growth assumptions, consistent with the revenue activity we have experienced and assumed for the General Fund. • Taking advantage of healthy fund balances to move much needed capital and infrastructure projects.
• Continued and accelerated increases in PERS contributions.

After several years of improving position Watsonville appears poised to weather the immediate impacts. Watsonville was fortunate to receive $18.2 million in direct funding as part of the American Rescue Plan Act (ARPA). We will budget to use the remaining American Rescue Plan Act (ARPA) funds to support improvements in streets, investment in economic development to continue to grow and diversify our revenues, Ramsay Park and opportunities for our citizens to obtain valuable work experience, just to name a few. The 2025-27 Biennial Budget utilized a limited amount of ARPA funding for restoring those departments hardest hit by the pandemic.

The ARPA funding plan will include opportunities for community input and will prioritize areas of greatest community need. We still face ever increasing PERS contributions and have a large pent up demand for capital investments. Watsonville will have to act cautiously to balance increasing expenditure pressure with what is likely to be several years of flatter revenue growth than we have recently experienced.

25 The City was successful in passing a new transaction and use tax. This new tax measure will be used to meet community goals. The tax enables the City to invest in repair and expansion of aging parks, playgrounds and trails; creating safe place for kids, maintaining after-school and gang prevention programs, fixing potholes and maintaining streets; expanding library access and services or seniors; and creating employment opportunities. Watsonville has an opportunity to reset, restructure, and rebuild the budget in ways that we meet community goals, without recreating structural deficits.

All these factors will be taken into consideration during the preparation of the City of Watsonville’s bi-annual budget for the fiscal year 2025-27.

Request for Information
This financial report is designed to provide a general overview of the City of Watsonville’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Marissa Duran, Administrative Services Director, City of Watsonville, and 250 Main Street, Watsonville, CA 95076.

26 BASIC FINANCIAL STATEMENTS

CITY OF WATSONVILLE, CALIFORNIA

STATEMENT OF NET POSITION
JUNE 30, 2024
Governmental Business-type
Activities Activities Total
$$ $
ASSETS
Cash and investments 84,999,872 63,071,526 148,071,398
Restricted cash - 491,871 491,871
Cash & investments with fiscal agent - 6,295,975 6,295,975 Receivables:

Interest 3,193,939 - 3,193,939
Taxes 7,674,579 - 7,674,579
Accounts 2,083,133 6,463,692 8,546,825
Intergovernmental 3,995,576 520,070 4,515,646
Internal balances (344,747) 344,747 -
Loans receivable 23,583,765 183,175 23,766,940
Inventories 329,254 430,497 759,751
Deposits 60,000 - 60,000
Land held for resale 150,000 - 150,000
Leases receivable - 4,761,263 4,761,263
Capital assets (net of depreciation and
amortization, where applicable):

Land 17,043,868 14,820,562 31,864,430
Construction in progress 14,120,305 19,344,425 33,464,730 Buildings and Improvements 63,405,752 47,073,895 110,479,647 Machinery and equipment 4,901,480 8,922,226 13,823,706
Infrastructure 17,185,839 25,685,940 42,871,779
Right to use subscription assets 763,899 - 763,899
Total Assets 243,146,514 198,409,864 441,556,378

DEFERRED OUTFLOWS OF RESOURCES
Deferred outflow of resources - Pensions 32,850,525 8,677,346 41,527,871 Total Deferred Outflow of Resources 32,850,525 8,677,346 41,527,871 Continued
Primary Government
See accompanying notes to financial statements
28

CITY OF WATSONVILLE, CALIFORNIA

STATEMENT OF NET POSITION
JUNE 30, 2024
Governmental Business-type
Activities Activities Total
$$$

LIABILITIES
Accounts payable 4,158,009 3,598,036 7,756,045
Accrued personnel costs 1,039,201 448,472 1,487,673
Insurance claims payable 4,368,818 - 4,368,818
Interest payable 2,019 80,320 82,339
Retentions payable 95,066 199,542 294,608
Unearned revenue 16,205,670 35,087 16,240,757
Deposits payable 3,150,562 40,713 3,191,275
Noncurrent liabilities
Due within one year 810,092 943,874 1,753,966
Due in more than one year 93,053,630 45,470,362 138,523,992 Total Liabilities 122,883,067 50,816,406 173,699,473

DEFERRED INFLOWS OF RESOURCES
Leases related - 4,486,373 4,486,373
Deferred inflows of resources - pensions 2,263,404 - 2,263,404 Total Deferred Inflows of Resources 2,263,404 4,486,373 6,749,777

NET POSITION
Net investment in capital assets 115,866,142 110,885,941 226,752,083 Restricted for:

Debt service 321,872 - 321,872
Impact fee 8,647,444 - 8,647,444
Housing 29,434,645 - 29,434,645
Grants, contributions & fees for
parks and related capital projects 17,656,527 - 17,656,527 Unrestricted (21,076,062) 40,898,490 19,822,428
Total Net Position 150,850,568 151,784,431 302,634,999
Concluded
Primary Government
See accompanying notes to financial statements
29

CITY OF WATSONVILLE, CALIFORNIA

STATEMENT OF ACTIVITIES
FOR THE FISCAL YEAR ENDED JUNE 30, 2024
Operating Capital
Charges for Grants and Grants and Governmental Business-type Functions/Programs Expenses Services Contributions Contributions Activities Activities Total Primary Government: $ $ $$ $ $ $
Governmental activities:

General government 23,174,690 13,344,289 731,181 130,950 (8,968,270) - (8,968,270) Public safety 39,039,890 791,361 598,815 - (37,649,714) - (37,649,714) Housing 1,776,970 168,358 236,875 - (1,371,737) - (1,371,737) Streets 7,569,329 144,708 - 60,540 (7,364,081) - (7,364,081) Culture and recreation 12,901,995 1,089,947 225,897 - (11,586,151) - (11,586,151) Interest on long term debt 15,761 - - - (15,761) 327,132 (342,893) Total governmental activities 84,478,635 15,538,663 1,792,768 191,490 (66,955,714) 327,132 (67,282,846) Business-type activities:

Water 17,183,675 21,109,386 17,533 48,046 - 3,991,290 3,991,290 Sewer 18,956,176 17,492,480 - 228,908 - (1,234,788) (1,234,788) Solid Waste 15,929,691 18,988,836 3,471 - - 3,062,616 3,062,616 Airport 5,278,151 2,971,433 457,994 - - (1,848,724) (1,848,724) Fiber Optic 76,894 130,811 - - - 53,917 53,917
Total business-type activities 57,424,587 60,692,946 478,998 276,954 - 4,024,311 4,024,311 Total primary government 141,903,222 76,231,609 2,271,766 468,444 (66,955,714) 3,697,179 (63,258,535) General revenues:

Property taxes 18,990,129 - 18,990,129
Sales taxes 32,589,648 - 32,589,648
Utility users taxes 4,675,775 - 4,675,775
Franchise taxes 669,577 - 669,577
Other taxes 3,788,644 - 3,788,644
Intergovernmental revenues not restricted to specific program 4,895,655 - 4,895,655 Unrestricted investment earnings 8,375,697 3,027,132 11,402,829 Lease revenue - 1,334,994 1,334,994
Transfers 285,056 (285,056) -
Total general revenues and transfers 74,270,181 4,077,070 78,347,251 Change in net position 7,314,467 7,774,249 15,088,716
Net position - beginning 143,536,101 144,010,182 287,546,283 Net position - ending 150,850,568 151,784,431 302,634,999 Program Revenues Primary Government
See accompanying notes to financial statements
30

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CITY OF WATSONVILLE, CALIFORNIA

GOVERNMENTAL FUNDS

BALANCE SHEET
JUNE 30, 2024

REDEVELOPMENT AMERICAN

AND HOUSING RESCUE

GENERAL IMPACT FEES HOUSING GRANTS PLAN ACT
$$$ $ $
ASSETS:

Cash and investments 33,481,768 8,647,444 4,249,269 2,703,603 12,761,447 Receivables:

Interest 481,417 - 1,060,789 1,378,840 -
Taxes 6,075,779 - - - -
Accounts 1,526,293 - - - -
Intergovernmental 3,160,583 - - 169,247 -
Due from other funds 300,619 - - - -
Loans receivable 3,750 - 9,639,752 12,288,401 -
Land held for resale - - 150,000 - -
Total Assets 45,030,209 8,647,444 15,099,810 16,540,091 12,761,447 LIABILITIES:

Accounts payable 2,632,984 155 37,896 466,219
Accrued personnel costs 860,322 - 14,441 6,406 15,962
Retentions payable 57,007 - - 25,172 -
Due to other funds - - - - -
Advances payable 344,747 - - - -
Unearned revenue 1,465,376 - - 2,120,715 12,279,266
Deposits payable 3,150,091 - 471 - -
Total Liabilities 8,510,527 15,067 2,190,189 12,761,447

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue 2,508,219 - 10,700,235 13,706,745 - Total Deferred Inflows of Resources 2,508,219 - 10,700,235 13,706,745 - FUND BALANCES:

Restricted for:

Debt service - - - - -
Streets - Impact fees - 8,647,444 - - -
Housing - - 4,384,508 643,157 -
Public safety - Narcotics assets seizure - - - - -
Housing - Business development - - - - -
Housing - Economic development - - - - -
Cultural and recreation - Library - - - - -
Cultural and recreation - Parks development - - - - -
General government - Retirement tax - - - - -
Public safety - Measure G/Y - - - - -
Public safety - Abandoned vehicle - - - - -
Housing - Inclusionary housing - - - - -
Streets - SB1 Gas tax - - - - -
Streets - Measure D - - - - -
Unassigned 34,011,463 - - - -
Total Fund Balances 34,011,463 8,647,444 4,384,508 643,157 - Total Liabilities, Deferred Inflows of
Resources, and Fund Balances 45,030,209 8,647,444 15,099,810 16,540,091 12,761,447 Continued

SPECIAL REVENUE FUNDS
See accompanying notes to financial statements
32

OTHER TOTAL

DEBT GOVERNMENTAL GOVERNMENTAL

SERVICE FUNDS FUNDS
$$ $
321,872 16,764,141 78,929,544
- 272,893 3,193,939
- 1,598,800 7,674,579
- 397,328 1,923,621
- 665,746 3,995,576
- - 300,619
- 1,651,862 23,583,765
- - 150,000
321,872 21,350,770 119,751,643
- 744,189 3,881,443
- 70,702 967,833
- 9,447 91,626
- 300,619 300,619
- - 344,747
- 340,313 16,205,670
- - 3,150,562
- 1,465,270 24,942,500
- 2,228,973 29,144,172
- 2,228,973 29,144,172
321,872 - 321,872
- - 8,647,444
- - 5,027,665
- 229,696 229,696
- 372,201 372,201
- 33,392 33,392
- 2,241,212 2,241,212
- 1,754,809 1,754,809
- 1,042,040 1,042,040
- 2,824,366 2,824,366
- 54,838 54,838
- 13,517 13,517
- 4,614,687 4,614,687
- 4,772,079 4,772,079
- (296,310) 33,715,153
321,872 17,656,527 65,664,971
321,872 21,350,770 119,751,643
Concluded
See accompanying notes to financial statements
33

CITY OF WATSONVILLE, CALIFORNIA

GOVERNMENTAL FUNDS

RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS

TO THE STATEMENT OF NET POSITION
JUNE 30, 2024
Amounts reported for governmental activities in the Statement of Net Position are different from those reported in the governmental funds because: $ Fund balances of governmental funds 65,664,971
Capital assets (gross) used in Governmental Activities are not financial resources and, therefore, are not reported in the governmental funds. 236,002,917 Accumulated depreciation has not been included in the governmental funds financial statements. (119,100,125)
The internal service fund is used by management to charge the costs of insurance to individual governmental funds. The net current assets and liabilities of the internal service fund are included in Governmental Activities on the Statement of Net Position. (841,560)
Loans and intergovernmental receivables recorded as unavailable revenue in the governmental funds are recorded as revenue on the Statement of Activities. 29,144,172 Interest payable is not due and payable in the current period and therefore, not reported in governmental funds. (2,019)
Long-term liabilities are not due and payable in the current period and therefore, not reported in governmental funds. (89,216,533)
Deferred outflows and inflows of resources relating to pensions: in governmental funds, deferred outflows and inflows of resources relating to pensions are not reported because they are applicable to future periods. In the Statement of Net Position, deferred outflows and inflows of resources relating to pensions are reported.

Deferred outflows of resources relating to pensions 31,462,149 Deferred inflows of resources relating to pensions (2,263,404) Total Net Position - Governmental Activities 150,850,568 See accompanying notes to financial statements
34

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CITY OF WATSONVILLE, CALIFORNIA

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES

GOVERNMENTAL FUNDS
FOR THE FISCAL YEAR ENDED JUNE 30, 2024

REDEVELOPMENT AMERICAN

AND HOUSING RESCUE

GENERAL IMPACT FEES HOUSING GRANTS PLAN ACT
$$$ $ $
REVENUES:

Taxes 44,616,220 - - - -
Licenses, permits, and fees 3,376,598 1,340,041 - - -
Intergovernmental 5,169,535 20,000 - 1,539,119 3,017,642 Charges for services 4,431,903 - - - -
Fines 455,543 - - - -
Interest 6,091,126 337,311 1,116,884 112,605 -
Miscellaneous 4,825,770 - 137,848 - -
Total revenues 68,966,695 1,697,352 1,254,732 1,651,724 3,017,642 EXPENDITURES:

Current:

General government 16,180,306 - - - 3,017,642
Public safety 31,757,510 - - - -
Housing - - 376,084 1,100,691 -
Streets 5,568,676 35,347 - - -
Culture and recreation 6,810,839 - - - -
Debt service:

Principal 201,136 - - - -
Interest and fiscal charges 7,060 - - - -
Total expenditures 60,525,527 35,347 376,084 1,100,691 3,017,642 Excess (deficiency) of revenues over
(under) expenditures 8,441,168 1,662,005 878,648 551,033 -

OTHER FINANCING SOURCES (USES)
Transfers in 4,092,815 - 86,186 - -
Transfers out (148,479) (5,000) - (280,825) -
Total other financing sources (uses) 3,944,336 (5,000) 86,186 (280,825) - Net change in fund balances 12,385,504 1,657,005 964,834 270,208 - Fund balances, July 1 21,625,959 6,990,439 3,419,674 372,949 - Fund balances, June 30 34,011,463 8,647,444 4,384,508 643,157 - Continued

SPECIAL REVENUE FUNDS
See accompanying notes to financial statements
36

OTHER TOTAL

DEBT GOVERNMENTAL GOVERNMENTAL

SERVICE FUNDS FUNDS
$$ $
- 16,097,553 60,713,773
- 1,053,177 5,769,816
- 1,482,784 11,229,080
- 268,290 4,700,193
- - 455,543
- 544,064 8,201,990
- 44,674 5,008,292
- 19,490,542 96,078,687
- 196,547 19,394,495
- 5,839,094 37,596,604
- 300,195 1,776,970
- 3,021,345 8,625,368
- 4,491,110 11,301,949
486,460 - 687,596
16,319 - 23,379
502,779 13,848,291 79,406,361
(502,779) 5,642,251 16,672,326
500,357 93,195 4,772,553
- (4,053,193) (4,487,497)
500,357 (3,959,998) 285,056
(2,422) 1,682,253 16,957,382
324,294 15,974,274 48,707,589
321,872 17,656,527 65,664,971
Concluded
See accompanying notes to financial statements
37

CITY OF WATSONVILLE, CALIFORNIA

GOVERNMENTAL FUNDS

RECONCILIATION OF STATEMENT OF REVENUES, EXPENDITURES,

AND CHANGES IN FUND BALANCES OF GOVERNMENTAL

FUNDS TO THE STATEMENT OF ACTIVITIES
FOR THE FISCAL YEAR ENDED JUNE 30, 2024
$
Amounts reported for governmental activities in the statement of activities are different because of the following:

Net Change In Fund Balance - Total Governmental Funds 16,957,382 Capital Assets Transactions
Governmental Funds report capital outlay as expenditures However, the cost of those assets is capitalized in the Statement of Activities and allocated over their estimated useful lives and reported as depreciation expense.

The capital outlay expenditures are therefore added back to fund balance 7,811,969 Net retirements of capital assets are deducted from the fund balance (1,810) Depreciation expense is deducted from the fund balance (5,843,766) Long-Term Debt Proceeds and Payments
Debt and lease proceeds provide current financial resources to Governmental Funds but increases long-term liabilities in the Statement of Net Position.

The repayment of the principal is an expenditure in the governmental funds, but in the Statement of Net Position the repayment reduces long-term liabilities.

Repayment of debt and subscription principal is added back to fund balance 687,596 Accrual of Non-Current Items
The amounts below included in the Statement of Activities do not provide or (require) the use of current financial resources and therefore are not reported as revenue or expenditures in governmental funds (net change):

Interest payable 7,618
Compensated Absences (46,345)
Net pension liabilities and pension-related deferred outflows/inflows of resources (5,697,716) Net OPEB liability (1,989,820)
Unavailable revenue (4,731,903)
Internal Service Funds Are Used By Management To Charge The Costs Of Insurance To Individual Funds. 161,262
Change In Net Position Of Governmental Funds 7,314,467
See accompanying notes to financial statements
38

CITY OF WATSONVILLE, CALIFORNIA

GENERAL FUND

STATEMENT OF REVENUES, EXPENDITURES,

AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JUNE 30, 2024
Variance With
Final Budget -
Positive
Original Final Actual (Negative)
$$$$
REVENUES:

Taxes 41,138,261 41,138,261 44,616,220 3,477,959
Licenses, permits, and fees 2,731,701 2,731,701 3,376,598 644,897 Intergovernmental 8,506,329 22,957,976 5,169,535 (17,788,441) Charges for services 4,311,708 4,311,708 4,431,903 120,195 Fines 647,560 647,560 455,543 (192,017)
Interest 3,314,505 3,314,505 6,091,126 2,776,621
Miscellaneous 1,651,577 1,659,077 4,825,770 3,166,693
Total revenues 62,301,641 76,760,788 68,966,695 (7,794,093) EXPENDITURES:

Current:

General government 29,372,569 31,412,744 16,180,306 15,232,438 Public safety 31,380,286 32,650,745 31,757,510 893,235
Streets 6,827,971 13,802,470 5,568,676 8,233,794
Culture and recreation 6,662,970 13,660,981 6,810,839 6,850,142 Debt service:

Principal - - 201,136 (201,136)
Interest - - 7,060 (7,060)
Total expenditures 74,243,796 91,526,940 60,525,527 31,001,413 Excess (deficiency) of revenues over
(under) expenditures (11,942,155) (14,766,152) 8,441,168 23,207,320

OTHER FINANCING SOURCES (USES)
Transfers in 4,663,481 4,663,481 4,092,815 (570,666)
Transfers out (238,211) (238,211) (148,479) 89,732
Total other financing sources (uses) 4,425,270 4,425,270 3,944,336 (480,934) Net change in fund balance (7,516,885) (10,340,882) 12,385,504 22,726,386 Fund balance, July 1 21,625,959 21,625,959 21,625,959 - Fund balance, June 30 14,109,074 11,285,077 34,011,463 22,726,386 Budgeted Amounts
See accompanying notes to financial statements
39

CITY OF WATSONVILLE, CALIFORNIA

STATEMENT OF REVENUES, EXPENDITURES,

AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JUNE 30, 2024
Variance With
Final Budget -
Positive
Original Final Actual (Negative)
$$$ $
REVENUES:

Interest 15,000 15,000 1,116,884 1,101,884
Miscellaneous 250,000 250,000 137,848 (112,152)
Total revenues 265,000 265,000 1,254,732 989,732
EXPENDITURES:

Current:

Housing 791,020 791,020 376,084 414,936
Total expenditures 791,020 791,020 376,084 414,936
Excess (deficiency) of revenues over
(under) expenditures (526,020) (526,020) 878,648 1,404,668

OTHER FINANCING SOURCES (USES)
Transfers In 86,186 86,186 86,186 -
Total other financing sources (uses) 86,186 86,186 86,186 - Net change in fund balance (439,834) (439,834) 964,834 1,404,668 Fund balance, July 1 3,419,674 3,419,674 3,419,674 -
Fund balance, June 30 2,979,840 2,979,840 4,384,508 1,404,668 Budgeted Amounts

HOUSING FUND
See accompanying notes to financial statements
40

CITY OF WATSONVILLE, CALIFORNIA

STATEMENT OF REVENUES, EXPENDITURES,

AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JUNE 30, 2024
Variance With
Final Budget -
Positive
Original Final Actual (Negative)
$$$ $
REVENUES:

Intergovernmental 1,128,588 1,376,229 1,539,119 162,890 Interest - 24,760 112,605 87,845
Total revenues 1,128,588 1,400,989 1,651,724 250,735
EXPENDITURES:

Housing 1,707,520 2,418,092 1,100,691 1,317,401
Total expenditures 1,707,520 2,418,092 1,100,691 1,317,401 Excess (deficiency) of revenues over
(under) expenditures (578,932) (1,017,103) 551,033 1,568,136 OTHER FINANCING SOURCES (USES):

Transfers (out) (430,934) (279,022) (280,825) 1,803
Total other financing sources (uses) (430,934) (279,022) (280,825) 1,803 Net change in fund balance (1,009,866) (1,296,125) 270,208 1,569,939 Fund balance, July 1 372,949 372,949 372,949 -
Fund balance, June 30 (636,917) (923,176) 643,157 1,569,939 Budgeted Amounts

REDEVELOPMENT AND HOUSING GRANTS FUND
See accompanying notes to financial statements
41

CITY OF WATSONVILLE, CALIFORNIA

STATEMENT OF REVENUES, EXPENDITURES,

AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JUNE 30, 2024
Variance With
Final Budget -
Positive
Original Final Actual (Negative)
$$$ $
REVENUES:

Intergovernmental 14,591,883 14,591,883 3,017,642 (11,574,241) Total revenues 14,591,883 14,591,883 3,017,642 (11,574,241) EXPENDITURES:

General Government 14,591,883 12,936,991 3,017,642 9,919,349 Total expenditures 14,591,883 12,936,991 3,017,642 9,919,349 Excess (deficiency) of revenues over
(under) expenditures - 1,654,892 - 1,654,892
Net change in fund balance - 1,654,892 - 1,654,892
Fund balance, July 1 - - - -
Fund balance, June 30 - 1,654,892 - 1,654,892

AMERICAN RESCUE PLAN ACT FUND
Budgeted Amounts
See accompanying notes to financial statements
42

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CITY OF WATSONVILLE, CALIFORNIA

PROPRIETARY FUNDS

STATEMENT OF NET POSITION
JUNE 30, 2024

WATER SEWER SOLID WASTE AIRPORT FIBER OPTIC
$ $$$$
ASSETS
Current Assets:

Cash and investments 35,269,091 17,180,755 10,040,431 294,172 287,077 Restricted cash - 491,871 - - -
Cash and investments with fiscal agent - - 6,295,975 - - Receivables:

Accounts 2,390,778 2,263,273 1,724,496 72,979 12,166
Intergovernmental 11,085 9,364 2,032 497,589 -
Loans receivable - 183,175 - - -
Deposits - - - - -
Inventories 359,853 - 8,550 62,094 -
Total Current Assets 38,030,807 20,128,438 18,071,484 926,834 299,243 Noncurrent Assets:

Advances receivable 344,747 - - - -
Leases receivable - - - 4,761,263 -
Capital assets:

Land and improvements 289,333 8,375,598 1,769,401 4,386,230 - Construction in progress 9,851,867 3,992,228 5,500,330 - - Buildings 49,626,108 30,918,503 2,289,649 9,160,742 -
Machinery and equipment 7,848,272 7,629,854 13,279,608 508,089 - Vehicles - - - - -
Infrastructure 16,845,116 51,843,079 76,916 7,966,694 706,929 Accumulated depreciation (37,069,872) (55,395,848) (11,441,374) (12,824,687) (285,717) Net Capital Assets 47,390,824 47,363,414 11,474,530 9,197,068 421,212 Total Noncurrent Assets 47,735,571 47,363,414 11,474,530 13,958,331 421,212 Total Assets 85,766,378 67,491,852 29,546,014 14,885,165 720,455

DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows of resources - pension 2,082,563 4,165,126 1,909,016 520,641 - Total Deferred Outflows of Resources 2,082,563 4,165,126 1,909,016 520,641 -

LIABILITIES
Current Liabilities:

Accounts payable 1,181,284 930,146 1,312,046 172,607 1,953 Accrued personnel costs 99,230 228,844 91,373 29,025 -
Insurance claims payable - - - - -
Retentions payable - - 193,694 5,848 -
Customer deposits 21,549 - 19,164 - -
Unearned revenue - - 478 30,189 4,420
Interest payable - 43,884 36,436 - -
Current maturities of long term debt:

Compensated absences 14,674 30,113 13,664 3,004 -
Notes payable 5,492 100,312 484,650 23,037 -
Loans payable - 268,928 - - -
Total Current Liabilities 1,322,229 1,602,227 2,151,505 263,710 6,373 Noncurrent Liabilities:

Compensated absences 229,894 471,763 214,068 47,065 -
Net OPEB liability 501,126 681,017 565,373 141,344 -
Liability for landfill closure - - 3,680,437 - -
Net pension liability 6,737,218 13,474,436 6,175,783 1,684,304 - Notes payable 4,118 93,206 6,039,644 28,796 -
Loans payable - 4,700,770 - - -
Total Noncurrent Liabilities 7,472,356 19,421,192 16,675,305 1,901,509 - Total Liabilities 8,794,585 21,023,419 18,826,810 2,165,219 6,373

DEFERRED INFLOWS OF RESOURCES
Leases related - - - 4,486,373 -
Total Deferred Inflows of Resources - - - 4,486,373 -

NET POSITION
Net investment in capital assets 47,381,214 42,692,069 11,246,211 9,145,235 421,212 Unrestricted 31,673,142 7,941,490 1,382,009 (391,021) 292,870 Total Net Position 79,054,356 50,633,559 12,628,220 8,754,214 714,082 Continued
Enterprise Funds
Business-type Activities -
See accompanying notes to financial statements
44

Business-type Activities - Governmental
Enterprise Funds Activities -
Internal Service
TOTALS Fund
$$
63,071,526 6,070,328
491,871 -
6,295,975 -
6,463,692 159,512
520,070 -
183,175 -
- 60,000
430,497 329,254
77,456,806 6,619,094
344,747 -
4,761,263 -
14,820,562 -
19,344,425 410,596
91,995,002 -
29,265,823 87,503
- 33,910
77,438,734 -
(117,017,498) (13,658)
115,847,048 518,351
120,953,058 518,351
198,409,864 7,137,445
8,677,346 1,388,376
8,677,346 1,388,376
3,598,036 276,566
448,472 71,368
- 4,368,818
199,542 3,440
40,713 -
35,087 -
80,320 -
61,455 9,343
613,491 -
268,928 -
5,346,044 4,729,535
962,790 146,368
1,888,860 -
3,680,437 -
28,071,741 4,491,478
6,165,764 -
4,700,770 -
45,470,362 4,637,846
50,816,406 9,367,381
4,486,373 -
4,486,373 -
110,885,941 518,351
40,898,490 (1,359,911)
151,784,431 (841,560)
Concluded
See accompanying notes to financial statements
45

CITY OF WATSONVILLE, CALIFORNIA

PROPRIETARY FUNDS

STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION FOR THE FISCAL YEAR ENDED JUNE 30, 2024
Business-type Activities -
Enterprise Funds

WATER SEWER SOLID WASTE AIRPORT FIBER OPTIC
$$$$$
OPERATING REVENUES:

Charges for services 21,109,386 $17,492,480 18,988,836 2,971,433 130,811 Total operating revenues 21,109,386 17,492,480 18,988,836 2,971,433 130,811 OPERATING EXPENSES:

Costs of sales and services 15,537,268 17,396,503 15,314,196 4,866,866 41,548 Depreciation 1,646,407 1,559,673 615,495 411,285 35,346 Total operating expenses 17,183,675 18,956,176 15,929,691 5,278,151 76,894 Operating income (loss) 3,925,711 (1,463,696) 3,059,145 (2,306,718) 53,917

NONOPERATING REVENUES (EXPENSES)
Lease revenues - - - 1,334,994 -
Grant revenues 17,533 - 3,471 457,994 -
Interest revenues 1,232,744 615,875 1,034,624 133,803 10,086 Interest expenses (18,567) (91,541) (217,024) - -
Total nonoperating revenues (expenses) 1,231,710 524,334 821,071 1,926,791 10,086 Income (loss) before contributions and transfers 5,157,421 (939,362) 3,880,216 (379,927) 64,003 Capital contributions - connection fees 48,046 228,908 - - - Transfers (out) (31,651) (202,513) (45,836) (5,056) -
Changes in net position 5,173,816 (912,967) 3,834,380 (384,983) 64,003 Total Net Position - Beginning 73,880,540 51,546,526 8,793,840 9,139,197 650,079 Total Net Position - Ending 79,054,356 50,633,559 12,628,220 8,754,214 714,082 Continued
See accompanying notes to financial statements
46

Business-type Activities - Governmental
Enterprise Funds Activities -
Internal Service
TOTALS Fund
$$
60,692,946 $20,298,429
60,692,946 20,298,429
53,156,381 20,305,092
4,268,206 5,652
57,424,587 20,310,744
3,268,359 (12,315)
1,334,994 -
478,998 -
3,027,132 173,577
(327,132) -
4,513,992 173,577
7,782,351 161,262
276,954 -
(285,056) -
7,774,249 161,262
144,010,182 (1,002,822)
151,784,431 (841,560)
Concluded
See accompanying notes to financial statements
47

CITY OF WATSONVILLE, CALIFORNIA

PROPRIETARY FUNDS

STATEMENT OF CASH FLOWS
FOR THE FISCAL YEAR ENDED JUNE 30, 2024

WATER SEWER SOLID WASTE AIRPORT FIBER OPTIC
$ $ $ $$
CASH FLOWS FROM OPERATING ACTIVITIES:

Receipts from customers and users 22,580,871 18,086,019 19,256,209 2,338,189 124,677 Receipts from interfund services provided - - - - -
Payments to suppliers (13,811,668) (12,789,113) (11,343,865) (3,410,589) (39,595) Payments to employees (978,408) (2,266,254) (3,058,484) (1,242,609) - Receipt for interfund services provided 677,394 97,665 68,269 - - Net cash provided (used) by operating activities 8,468,189 3,128,317 4,922,129 (2,315,009) 85,082

CASH FLOW FROM NONCAPITAL FINANCING ACTIVITIES
Grant revenue 17,533 - 3,471 457,994 -
Transfers (to) other funds (31,651) (202,513) (45,836) (5,056) - Net cash provided (used) by noncapital financing activities (14,118) (202,513) (42,365) 452,938 -

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition of capital assets (6,167,247) (1,959,828) (5,801,607) (106,998) - Connection fees 48,046 228,908 - - -
Principal paid on long term debt (10,333) (375,128) (475,747) (23,037) - Interest paid on long term debt (18,567) (91,541) (217,024) - - Net cash provided (used) by capital and related financing activities (6,148,101) (2,197,589) (6,494,378) (130,035) - CASH FLOWS FROM INVESTING ACTIVITIES:

Lease revenue - - - 1,334,994 -
Interest received 1,232,744 615,875 1,034,624 133,803 10,086 Net cash provided (used) by investment activities 1,232,744 615,875 1,034,624 1,468,797 10,086 Net cash flows 3,538,714 1,344,090 (579,990) (523,309) 95,168 Cash and cash equivalents at beginning of period 31,730,377 16,328,536 16,916,396 817,481 191,909 Cash and cash equivalents at ending of period 35,269,091 17,672,626 16,336,406 294,172 287,077 Reconciliation of Statement of Net Position:

Cash and investments 35,269,091 17,180,755 10,040,431 294,172 287,077 Restricted cash - 491,871 - - -
Cash and investments with fiscal agents - - 6,295,975 - - 35,269,091 17,672,626 16,336,406 294,172 287,077
Reconciliation of operating income (loss) to cash flows from operating activities Operating Income (loss) 3,925,711 (1,463,696) 3,059,145 (2,306,718) 53,917 Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities:

Depreciation 1,646,407 1,559,673 615,495 411,285 35,346 (Increase) decrease in receivables 1,237,401 344,029 248,258 (71,136) (12,166) (Increase) decrease in inventories 121,520 - 491 4,693 - (Increase) decrease in loans receivable - 108,751 - - - (Increase) decrease in due from other governments 234,084 140,759 23,714 (418,930) - (Increase) decrease in advances receivable 677,394 97,665 68,269 - - (Increase) decrease in leases receivable - - - (113,472) 1,612 (Increase) decrease in deferred outflows 197,464 (290,786) 458,434 29,484 - Increase (decrease) in accounts payable 206,778 141,895 853,100 51,035 1,953 Increase (decrease) in claims payable - - - - -
Increase (decrease) in accrued personnel costs (23,549) 97,791 (35,998) 454 - Increase (decrease) in retentions payable - - 193,694 5,848 - Increase (decrease) in unearned revenue - - (7,057) (29,706) 4,420 Increase (decrease) in customer deposits 3,870 - 2,458 - - Increase (decrease) in net pension liability 112,775 2,217,834 (702,661) 85,957 - Increase (decrease) in net OPEB liabilities 128,334 174,402 144,787 36,197 - Total adjustments 4,542,478 4,592,013 1,862,984 (8,291) 31,165 Net cash provided (used) by operating activities 8,468,189 3,128,317 4,922,129 (2,315,009) 85,082 Continued
See accompanying notes to financial statements
Business-type Activities -
Enterprise Funds
48

Business-type Activities - Governmental
Enterprise Funds Activities -
Internal Service
TOTALS Fund
$$
62,385,965 -
- 20,352,218
(41,394,830) (19,351,897)
(7,545,755) (1,002,030)
843,328 -
14,288,708 (1,709)
478,998 -
(285,056) -
193,942 -
(14,035,680) (96,426)
276,954 -
(884,245) -
(327,132) -
(14,970,103) (96,426)
1,334,994 -
3,027,132 173,577
4,362,126 173,577
3,874,673 75,442
65,984,699 5,994,886
69,859,372 6,070,328
63,071,526 6,070,328
491,871 -
6,295,975 -
69,859,372 6,070,328
3,268,359 (12,315)
4,268,206 5,652
1,746,386 25,457
126,704 (26,435)
108,751 -
(20,373) 28,332
843,328 -
(111,860) -
394,596 364,955
1,254,761 (118,605)
- 376,917
38,698 (14,178)
199,542 (3,395)
(32,343) -
6,328 -
1,713,905 (602,692)
483,720 (25,402)
11,020,349 10,606
14,288,708 (1,709)
Concluded
See accompanying notes to financial statements
49

CITY OF WATSONVILLE, CALIFORNIA

SUCCESSOR AGENCY PRIVATE PURPOSE TRUST FUND

STATEMENT OF FIDUCIARY NET POSITION
JUNE 30, 2024
ASSETS $
Cash and investments 1,089,083
Cash and investments with fiscal agent 1,692,450
Notes receivable 71,527
Total Assets 2,853,060

DEFERRED OUTFLOW OF RESOURCES
Deferred Loss on Refunding 136,471
Total Deferred Outflow of Resources 136,471

LIABILITIES
Current Liabilities:

Interest Payable 63,792
Notes Payable 8,887
Refunding Bonds Payable 945,000
Total Current Liabilities 1,017,679
Noncurrent liabilities:

Refunding Bonds Payable 3,948,907
Total Non Current liabilities 3,948,907
Total Liabilities 4,966,586
Net Position
Held in trust for other purposes (1,977,055)
Total Net Position (1,977,055)
See accompanying notes to financial statements
50

CITY OF WATSONVILLE, CALIFORNIA

SUCCESSOR AGENCY PRIVATE PURPOSE TRUST FUND

STATEMENT OF CHANGES IN NET POSITION
FOR THE FISCAL YEAR ENDED JUNE 30, 2024
ADDITIONS: $
Taxes 1,037,821
Interest 96,639
Amortization 72,744
Total additions 1,207,204
DEDUCTIONS:

Interest 167,808
Total deductions 167,808
Change in Net Position 1,039,396
Net Position (Deficit), July 1 (3,016,451)
Net Position (Deficit), June 30 (1,977,055)
See accompanying notes to financial statements
51

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CITY OF WATSONVILLE, CALIFORNIA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

A. Reporting entity
The City of Watsonville, California was incorporated in 1868 as a charter city and operates under the Council-Manager form of government. The City provides the following services: public safety (police, fire and building inspections), highway and streets, water, sewer and solid waste services, airport, public improvements, planning and zoning, housing and general administration.

B. Government-wide and fund financial statements
The Government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the activities of the primary government except for the Fiduciary fund type – Private Purpose Trust Fund. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support.

The statement of activities demonstrates the degree to which the direct expenses of a given function or segments are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among programs revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements.

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

Governmental funds financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collected within the current period or soon enough thereafter to pay liabilities of the current period.
53

CITY OF WATSONVILLE, CALIFORNIA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
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 the former 20% Redevelopment Agency’s 20% 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 conditions.

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 City.

The City reports all its enterprise funds as:

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.

54

CITY OF WATSONVILLE, CALIFORNIA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
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. It also accounts for capital assets and pension related balances.

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 functions concerned.

Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, 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.
55

CITY OF WATSONVILLE, CALIFORNIA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
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, 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
- Joint Powers Authority Pool
- California Asset Management Program (CAMP)
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”. 56

CITY OF WATSONVILLE, CALIFORNIA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024

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. 57

CITY OF WATSONVILLE, CALIFORNIA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
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 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. 58

CITY OF WATSONVILLE, CALIFORNIA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024

8. Long-term obligations
In the government-wide financial statements, proprietary, and fiduciary 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 and fiduciary 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
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 three items which qualify for reporting in this category – unavailable revenue, lease related and pension related deferred inflows of resources. Refer to Note III. D and Note IV. E. for a detailed listing of the lease related and 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.
59

CITY OF WATSONVILLE, CALIFORNIA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
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
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. 60

CITY OF WATSONVILLE, CALIFORNIA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
The Net Investment in Capital Assets are calculated as below:

Governmental Business-type
Activities Activities Total
$$$
Capital Assets, net of accumulated depreciation: 117,421,143 115,847,048 233,268,191 Less: Capital debt (1,555,001) (11,748,953) (13,303,954) Plus: Unspent bond proceeds - 6,787,846 6,787,846
Net Investment in Capital Assets: 115,866,142 110,885,941 226,752,083

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

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

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

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

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

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 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. 61

CITY OF WATSONVILLE, CALIFORNIA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
The appropriated budget is prepared by fund, department, and division, with the exception of the Impact Fees Special Revenue Fund. The City’s budget policy requires that all funds be included in the annual appropriated budget, but the Impact Fee Special Revenue Fund was excluded from the fiscal year 2024 budget. 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 $2,823,997 during the fiscal year for public safety overtime, an economic development position, and Citywide pavement repair.

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 - $6,061,446, Housing Fund - $628,421, and Other Governmental Funds - $18,729,220.

B. Deficit fund balances
As of June 30, 2024, the Parking Garage Special Revenue Fund had a fund balance deficit of ($296,310). The fund will make up the deficits with future licenses, permits and fees collected.

The Internal Service Fund had a net position deficit of ($841,560). The fund will make up the deficit 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, 2024 were as follows:

Balance
June 30, 2024
Cash: $$
Demand Deposits 9,048,249 -
Outstanding Checks (4,996,696) -
Deposits in Transit 242,423 -
Net Demand Deposits 4,293,976 -
Petty Cash 13,036 -
Cash Subtotal - 4,307,012
Investments:

Guaranteed Investment Contracts 1,692,684 -
California Asset Management Program 105,987,998 -
Local Agency Investment Fund 39,357,108 -
Money Market Mutual Funds 6,295,975 -
Investment Subtotal 153,333,765
Total Cash and Investments 157,640,777
62

CITY OF WATSONVILLE, CALIFORNIA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
The cash and investments of Governmental Activities, Business-Type Activities, and the Private Purpose Trust Fund was as follows as of June 30, 2024:

Balance
June 30, 2024
Governmental Activities: $
General Fund 33,481,768
Impact Fees Special Revenue Fund 8,647,444
Housing Special Revenue Fund 4,249,269
Redevelopment and Housing Grants Special Revenue Fund 2,703,603 American Rescue Plan Act Special Revenue Fund 12,761,447 Debt Service Fund 321,872
Other Nonmajor Funds 16,764,141
Internal Service Fund 6,070,328
Total Governmental Activities: 84,999,872
Business-type Activities:

Water Fund 35,269,091
Sewer Fund 17,672,626
Solid Waste Fund 16,336,406
Airport Fund 294,172
Fiber Optic Fund 287,077
Total Business-Type Activities 69,859,372
Private Purpose Trust Fiduciary Fund 2,781,533
Total City Cash and Investments 157,640,777
The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs.

The following is a summary of the fair value hierarchy of investments as of June 30, 2024:

Total
Amortized
Cost
Investments measured at amortized cost: $ $
Guaranteed Investments Contracts 1,692,684 1,692,684
California Asset Management Program 105,987,998 105,987,998 Money Market Mutual Funds 6,295,975 6,295,975
Total Investments 113,976,657 113,976,657
The Local Agency Investment Fund (LAIF) is exempt from the fair value hierarchy. 63

CITY OF WATSONVILLE, CALIFORNIA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
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, 2024, the City’s carrying amount of deposits and cash on hand was $4,293,976 and bank balances were $9,048,249. 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
Minimum Maximum Maximum
Maximum Credit Percentage Investment
Authorized Investment Type Maturity Quality of Portfolio * In One Issuer U.S. Treasury Obligations 5 years None None None
U.S. Agency Securities 5 years None None None
Banker's Acceptances 180 days None 40% 30%
Commercial Paper 270 days *** 25% 10%**
Negotiable Certificates of Deposit 5 years None 30% None Repurchase Agreements 1 year None 20% None
Passbook Savings Account Demand Deposit N/A None None None Medium-Term Corporate Notes 5 years A 30% None**
Debt of City of Watsonville N/A None None None
Money Market Mutual Funds N/A AAAm 20% None
Local Agency Investment Fund (LAIF) N/A None None $75 M per account California Asset Management Program (CAMP) N/A None None None * Excluding amounts held by bond trustee that are not subject to California Government Code restrictions ** No more than 10% of the outstanding commercial paper and medium-term notes of any single issuer. *** Highest letter and number rating by a NRSRO.

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
64

CITY OF WATSONVILLE, CALIFORNIA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
Disclosures Relating to Interest Rate Risk
Remaining Maturity (in Months)
Investment Type 12 Months or Less 121 Months Total
$ $$
Local Agency Investment Fund 39,357,108 - 39,357,108
California Asset Management Program 105,987,998 - 105,987,998 Guaranteed Investment Contracts - 1,692,684 1,692,684
Money Market Mutual Funds 6,295,975 6,295,975 -
Total 151,641,081 1,692,684 153,333,765
Disclosures Relating to Credit Risk
Ratings as of Fiscal Year End
Investment Type AAA/AAAm AA Not Rated Total
$ $ $$
Local Agency Investment Fund (1) - - 39,357,108 39,357,108 California Asset Management Program (2) 105,987,998 - 105,987,998 Guaranteed Investment Contracts - 1,692,684 - 1,692,684 Money Market Mutual Funds 6,295,975 - 6,295,975 -
Total 112,283,973 1,692,684 39,357,108 153,333,765
(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, 2024 the amortized cost value of the pool was $178,914,245,370 and the estimated fair value of the pool was $178,255,132,764. 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. The balance is available for withdrawal on demand, and is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis. Each regular LAIF account is permitted to have up to 15 transactions per month, with a minimum transaction amount of $5,000, a maximum transaction amount of $75 million and at least 24 hours advance notice for withdrawals of $10 million or more. Bond proceeds accounts are subject to a one‐time deposit with no cap and are set up with a monthly draw down schedule. Included in LAIF’s investment portfolio are collateralized mortgage obligations, mortgage-backed securities, other asset-backed securities, loans to certain state funds, and floating rate securities issued by federal agencies, government-sponsored enterprises, United States Treasury Notes and Bills, and corporations. At June 30, 2024, these investments had an average maturity of 217 days.
65

CITY OF WATSONVILLE, CALIFORNIA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(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. The City, as a CAMP shareholder, may withdraw all or any portion of the funds in each CAMP account at any time by redeeming shares. The CAMP Declaration of Trust permits the CAMP trustee to suspend the right of withdrawal from CAMP or to postpone the date of payment of redemption proceeds if the New York Stock Exchange is closed other than for customary weekend and holiday closings, if trading on the New York Stock Exchange is restricted, or if, in the opinion of the CAMP trustees, an emergency exists such that disposal of the CAMP pool securities or determination of its net asset value is not reasonably practicable. If the right of withdrawal is suspended, the City may either withdraw its request for that withdrawal or receive payment based on the net asset value of the CAMP pool next determined after termination of the suspension of the right of withdrawal. 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, 2024, fair value was approximate to the City's cost. At June 30, 2024, these investments had an average maturity of 38 days.

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.
66

CITY OF WATSONVILLE, CALIFORNIA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
B. Capital assets
Capital asset activity for the fiscal year ended June 30, 2024 was as follows:

Governmental activities:

Balance at Balance at
June 30, 2023 Additions Deletions Transfers June 30, 2024 Capital Assets not being depreciated: $ $ $ $ $
Land and Improvements 17,043,868 - - - 17,043,868
Construction in Progress 13,113,415 6,311,588 - (5,304,698) 14,120,305 Total Capital Assets not being depreciated 30,157,283 6,311,588 - (5,304,698) 31,164,173 Capital Assets being depreciated and amortized:

Buildings and Improvements 137,817,125 - - - 137,817,125 Machinery, Equipment and Vehicles 18,513,769 1,596,807 (221,805) - 19,888,771 Infrastructure 41,163,614 - - 5,304,698 46,468,312
Right to Use Subscription Assets 1,196,545 - - - 1,196,545 Total Capital Assets being depreciated and amortized 198,691,053 1,596,807 (221,805) 5,304,698 205,370,753 Less accumulated depreciation and amortization for:

Buildings and Improvements (70,737,128) (3,674,245) - - (74,411,373) Machinery, Equipment and Vehicles (14,108,271) (1,099,015) 219,995 - (14,987,291) Infrastructure (28,422,638) (859,835) - - (29,282,473)
Right to Use Subscription Assets (216,323) (216,323) - - (432,646) Total accumulated depreciation (113,484,360) (5,849,418) 219,995 - (119,113,783) Total Capital Assets being depreciated and amortized, net 85,206,693 (4,252,611) (1,810) 5,304,698 86,256,970 Governmental activity Capital Assets, net 115,363,976 2,058,977 (1,810) - 117,421,143 In accordance with GASB Statement No. 96, Subscription-Based Information Technology Arrangements, the subscription asset is offset with a subscription liability as discussed in Note III. F.

Business-type activities:

Balance at Balance at
June 30, 2023 Additions Deletions Transfers June 30, 2024 Capital Assets, not being depreciated: $ $ $ $ $
Land and improvement 14,820,562 - - 14,820,562 -
Construction in progress 7,049,342 12,295,083 - 19,344,425 - Total Capital Assets not being depreciated 21,869,904 12,295,083 - 34,164,987 - Capital Assets, being depreciated:

Buildings and Improvements 91,995,002 - - 91,995,002 -
Machinery, Equipment and Vehicles 27,779,381 1,740,597 (254,155) - 29,265,823 Infrastructure 77,438,734 - - 77,438,734 -
Total Capital Assets being depreciated 197,213,117 1,740,597 (254,155) - 198,699,559 Less accumulated depreciation for:

Buildings and Improvements (42,821,481) (2,099,626) - (44,921,107) - Machinery Equipment (19,542,692) (1,055,060) 254,155 - (20,343,597) Infrastructure (50,639,274) (1,113,520) - (51,752,794) - Total accumulated depreciation (113,003,447) (4,268,206) 254,155 - (117,017,498) Total Capital Assets being depreciated 84,209,670 (2,527,609) - 81,682,061 - Business-type activities Capital Assets, net 106,079,574 9,767,474 - 115,847,048 - 67

CITY OF WATSONVILLE, CALIFORNIA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
Depreciation expenses were charged to functions/programs of the primary government as follows:

Governmental activities: $
General government 511,894
Public safety 588,628
Streets 4,738,558
Culture and recreation 4,686
Internal Service Fund 5,652
Total depreciation expense - governmental activities 5,849,418 Business-Type activities:

Water Fund 1,646,407
Sewer Fund 1,559,673
Solid Waste Fund 615,495
Airport Fund 411,285
Fiber Optic Fund 35,346
Total depreciation expense - business-type activities 4,268,206 C. Interfund receivables, payables, and transfers
The composition of interfund activities as of June 30, 2024, 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, 2024 were as follows:

Due from
other funds
other
funds
Governmental Funds: $$
General Fund 300,619 -
Nonmajor Funds - 300,619
Total Governmental Funds 300,619 300,619
68

CITY OF WATSONVILLE, CALIFORNIA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
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, 2024 were as follows:

Advances Receivable Advances Payable
Governmental Funds: $$
General Fund - 344,747
Total Governmental Funds - 344,747
Enterprise Funds:

Water Fund 344,747 -
Total Enterprise Funds 344,747 -
Total Advances 344,747 344,747
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
Governmental
Funds
Total
Transfers Out
Transfers Out $$$$$
General Fund - 86,186 48,810 13,483 148,479
Impact Fees Special Revenue Fund 5,000 - - - 5,000
Redevelopment & Housing Grants Special Revenue Fund 113,120 - 167,705 - 280,825 Nonmajor Governmental Funds 3,974,695 - 19,010 59,488 4,053,193 Water Fund - 26,595 - 5,056 31,651
Sewer Fund - 197,457 - 5,056 202,513
Solid Waste Fund - - 40,780 5,056 45,836
Airport Fund - - - 5,056 5,056
Total Transfers In 4,092,815 86,186 500,357 93,195 4,772,553 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. 69

CITY OF WATSONVILLE, CALIFORNIA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
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 leases 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 the current 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 are 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. 70

CITY OF WATSONVILLE, CALIFORNIA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
Leases Receivable (City as Lessor)
The terms and balances related to leases receivable and deferred inflows of resources recorded in the Enterprise Funds as of June 30, 2024 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 5/27/2016 3/13/2024 8 - 3 3/13/2024 EKB Partners 45 Aviation Way 12/28/2016 12/31/2053 20 13 15 12/31/2053 Mid Valley Supply 220 Airport Blvd 10/1/2014 12/31/2026 12 2 5 12/31/2026 Pacific Golf Centers 101 Ranport Rd 7/2/2013 7/1/2038 25 14 20 7/1/2038 Specialized Helicopter 150 Aviation Way 3/1/2020 2/29/2024 4 - - 2/29/2024 Watsonville Diesel 101 Aviation Way 8/1/2016 7/31/2056 40 32 10 7/31/2056 United Flight 120 Aviation Way 6/24/2009 11/14/2038 20 14 10 11/14/2038 Ellas 100 Aviation Way 4/1/2022 3/31/2027 5 3 6 3/31/2033 SC Animal Services 580 Airport Blvd 7/1/2022 7/1/2047 25 23 5 7/1/2047 Expoimaging 121 Aviation Way 10/1/2021 9/30/2025 4 2 - 9/30/2025 Calibro 50 Aviation Way 7/1/2023 6/30/2027 4 3 - 6/30/2027 GTE Mobilnet Verizon
Airport Communication
Tower, and portion of 370
Airport Boulevard 7/1/2023 6/30/2033 10 9 6/30/2033
(Continued below)
Lessee
Interest
Revenue Lease Revenue
Monthly Revenue
as of
June 30, 2024
Lease Receivable
Balance at
June 30, 2024
Deferred Inflow
of Resources at
June 30, 2024
$$ $ $ $
Zayo Group, LLC 808 80,553 - - -
EKB Partners 16,439 20,653 1,719 628,740 579,800
Mid Valley Supply 8,543 103,705 8,633 264,364 249,003
Pacific Golf Centers 8,459 26,468 2,203 381,755 355,730 Specialized Helicopter 147 60,054 6,467 - -
Watsonville Diesel 21,612 24,125 2,008 834,816 771,509
United Flight 7,157 21,849 1,819 323,286 302,319
Ellas 11,383 67,378 5,609 617,658 592,893
SC Animal Services 33,292 40,575 3,378 958,474 893,869
Expoimaging 1,027 62,033 5,164 78,390 75,924
Calibro 7,430 76,102 6,890 251,147 243,717
GTE Mobilnet Verizon - 47,286 3,930 422,633 421,609
116,297 630,781 47,820 4,761,263 4,486,373
71 -

CITY OF WATSONVILLE, CALIFORNIA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
The future principal and interest related to leases receivable as of June 30, were as follows:

For the Year
Ended June 30 Principal Interest Total
$$$
2025 434,436 123,546 557,982
2026 402,176 113,153 515,329
2027 344,735 103,089 447,824
2028 212,216 96,033 308,249
2029 220,375 90,466 310,841
2030-2034 1,072,346 360,730 1,433,076
2035-2039 641,481 246,360 887,841
2040-2044 518,601 165,874 684,475
2045-2049 481,953 85,931 567,884
2050-2054 337,821 34,067 371,888
2055-2057 95,123 2,685 97,808
Totals 4,761,263 1,421,934 6,183,197
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.

Loan payable (Direct Borrowing) – Governmental Activities – Solar Panels 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 Financed Purchase (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.

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NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
The annual requirement to amortize the lease outstanding for governmental activities as of June 30, 2024 is as follows:

Fiscal Year Principal Interest Debt Service
$$$
2025 276,883 9,192 286,075
2026 279,708 6,396 286,104
2027 140,922 3,571 144,493
Total 697,513 19,159 716,672
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, 2024 is as follows:

Fiscal Year Principal Interest Debt Service
$$$
2025 170,000 2,423 172,423
Total 170,000 2,423 172,423
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%.

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NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
Governmental Type Activities
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 $6,606, Marinovich - $33,071, 4 year loan, maximum annual payment of $1,538, 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 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, 2024 are as follows:

Fiscal Year Principal
$
2025 11,292
2026 3,709
2027 2,882
2028 243
Total 18,126
Business Type Activities
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.

For the Water Fund as follows:

The annual requirements to repay the PG&E 2019 Water Fund notes outstanding as of June 30, 2024 are as follows:

Fiscal Year Principal
$
2025 5,492
2026 4,118
Total 9,610

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CITY OF WATSONVILLE, CALIFORNIA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
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, 2024 are as follows:

Fiscal Year Principal
$
2025 8,002
Total 8,002
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, 2024 are as follows:

Fiscal Year Principal
$
2025 23,037
2026 23,037
2027 5,759
Total 51,833
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, 2024 are as follows:

Fiscal Year Principal
$
2025 1,458
2026 972
Total 2,430

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NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
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, 2024 is as follows:

Fiscal Year Principal Interest Debt Service
$$$
2025 70,569 17,561 88,130
2026 71,698 16,432 88,130
2027 72,845 15,285 88,130
2028 74,011 14,120 88,131
2029 75,195 12,935 88,130
2030-2034 394,410 46,240 440,650
2035-2038 338,857 13,662 352,519
Total 1,097,585 136,235 1,233,820
On October 14, 2016, 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 $4,490,677, of which only $3,872,112 remains unpaid as of June 30, 2024. The interest rate for the 20 year loan is 1.7% with principal payments ranging from $191,784 to $259,771 as of June 30, 2024.

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.
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NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
The annual requirements to amortize the loan outstanding as of June 30, 2024 is as follows:

Fiscal Year Principal Interest Debt Service
$$$
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
2030-2034 1,116,326 204,596 1,320,922
2035-2039 1,214,496 106,427 1,320,923
2040-2041 515,198 13,174 528,372
Total 3,872,113 619,029 4,491,142
iBank Loan (Direct Borrowing)
On March 20, 2023, the City received a loan in the amount of $6,000,000, plus accrued interest, from the California Infrastructure and Economic Development Bank. Proceeds from the loan are to be used for construction of a 7.1 acre landfill site. Principal is due annually on August 1st and interest is due semi-annually on August 1st and February 1st, commencing August 1, 2023. The interest rate for the 20 year loan is 3.93% with principal payments ranging from $145,435 to $366,819 as of June 30, 2024.

The loan is secured by a pledge of revenues from the Solid Waste 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 nonpayment. There have been no events of default since the loan was issued.

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NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
The annual requirements for loan repayments on the loan outstanding as of June 30, 2024 is as follows:

Fiscal Year Principal Interest Debt Service
$$$
2025 151,151 227,114 378,265
2026 157,091 221,057 378,148
2027 163,265 214,762 378,027
2028 169,681 208,220 377,901
2029 176,350 201,421 377,771
2030-2034 991,316 895,380 1,886,696
2035-2039 1,202,035 680,522 1,882,557
2040-2044 1,457,545 419,993 1,877,538
2045-2048 1,386,131 111,573 1,497,704
Total 5,854,565 3,180,042 9,034,607
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 expenses to complete the closure. The City plans to operate a new cell (cell IV) in early 2025, which is expected to provide landfill capacity for 28 years with an estimated post-closure costs of $8,779,655 as of June 30, 2024.

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, 2024, the phase I, II, and III had used 100% of its projected space. The estimated post-closure costs were $1,876,793 and $1,803,644, respectively, which will be recognized over the remaining monitoring period. To date, the fund has recorded a liability of $239,650 for post closure costs for the closed phase I and II cells and a liability for closure costs of $1,876,793 and post-closure costs of $1,563,994 for the 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. 78

CITY OF WATSONVILLE, CALIFORNIA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024

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, 2024, the net OPEB liability was calculated to be immaterial for GASB#75 presentation purposes. However, the net OPEB liabilities of $5,056,400 is still reflected as part of the long-term liabilities in the City’s Statements of Net Position as follows: Governmental Activities - $3,167,540, Business-type Activities - $1,888,860.

Financed Purchases (Direct Borrowings):

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.

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, 2024 is as follows:

Fiscal Year Principal Interest Debt Service
$$$
2025 92,310 1,571 93,881
2026 93,206 676 93,882
Total 185,516 2,247 187,763
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.
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CITY OF WATSONVILLE, CALIFORNIA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
The annual requirement to amortize the lease outstanding in the Solid Waste Fund as of June 30, 2024 is as follows:

Fiscal Year Principal Interest Debt Service
$$$
2025 332,041 5,651 337,692
2026 335,258 2,433 337,691
Total 667,299 8,084 675,383
Changes in long-term liabilities
Long-term liabilities activity for the fiscal year ended June 30, 2024 are as follows:

Balance Balance Due Within
at June 30, 2023 Additions Reductions June 30, 2024 One Year $ $$ $ $
Governmental activities:

Direct Borrowings:

Notes payable 1,372,099 - (486,460) 885,639 458,175
Subtotal 1,372,099 - (486,460) 885,639 458,175
Other Liabilities:

Compensated absences 2,381,397 1,429,511 (1,408,568) 2,402,340 144,141 Net OPEB liability 1,177,720 1,989,820 - 3,167,540 -
Net pension liability 80,939,978 5,798,863 - 86,738,841 - Subscription liabilities 870,498 - (201,136) 669,362 207,776 86,741,692 9,218,194 (2,096,164) 93,863,722 810,092
Balance Balance Due Within
June 30, 2023 Additions Reductions June 30, 2024 One Year $ $$ $ $
Business-type activities:
5,234,197 - (264,499) 4,969,698 268,928
7,399,001 - (619,746) 6,779,255 613,491
Compensated absences 1,005,879 744,046 (725,680) 1,024,245 61,455 Net OPEB liability 1,405,140 483,720 - 1,888,860 -
Net pension liabilities 26,357,836 1,713,905 - 28,071,741 - Landfill closure / post-closure liabilities 3,680,437 - - 3,680,437 - 45,082,490 2,941,671 (1,609,925) 46,414,236 943,874
Total Governmental activities
Long-term liabilities
Total Business-type activities
Long-Term liabilities
Loans payable (2015 SWRCB, 2016
SWRCB)
Notes payable (2019 PG&E various, Sewer
Cleaning Truck, Solid Waste Collection
Truck, IBank Loan)
The 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.

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NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
Loans and notes payable activity for the fiscal year ended June 30, 2024, are as follows:

Amount
Balance Balance due within
June 30, 2023 Retirements June 30, 2024 one year
$$ $ $
Governmental activities:
2004 HUD Section 108 333,000 (163,000) 170,000 170,000
Due to Pacific Gas & Electric
Old City Hall 6,606 (6,606) - -
Marrinovich 1,538 (1,538) - -
Youth Center 10,813 (4,993) 5,820 4,993
Ramsay Park 7,015 (7,015) - -
Beach Street Parking Garage 2 9,163 (7,330) 1,833 1,833 Police Department 20,594 (19,010) 1,584 1,584
Senior Center 11,771 (2,882) 8,889 2,882
Solar Panels 971,599 (274,086) 697,513 276,883
Total governmental activities 1,372,099 (486,460) 885,639 458,175 Amount
Balance Balance due within
June 30, 2023 Retirements June 30, 2024 one year
$$ $ $
Business-type activities:

SWRCB 2015 Loan 1,167,042 (69,457) 1,097,585 70,569
SWRCB 2016 Loan 4,067,155 (195,042) 3,872,113 198,359
Due to Pacific Gas & Electric
Airport 74,870 (23,037) 51,833 23,037
Corralitos Filter Plant 4,841 (4,841) - -
MSC 15,102 (5,492) 9,610 5,492
WWTP 2 27,207 (19,205) 8,002 8,002
City Landfill 3,886 (1,456) 2,430 1,458
Sewer System Cleaning Truck 276,940 (91,424) 185,516 92,310 Solid Waste Collection Vehicles 996,155 (328,856) 667,299 332,041 Landfill Obligation
Phase I & II Post closure 239,650 - 239,650 -
Phase III Closure 1,876,793 - 1,876,793 -
Phase III Post closure 1,563,994 - 1,563,994 -
IBank Loan 6,000,000 (145,435) 5,854,565 151,151
Total business-type activities 16,313,635 (884,245) 15,429,390 882,419

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CITY OF WATSONVILLE, CALIFORNIA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
F. Subscription-Based Information Technology Arrangements (SBITAs) A SBITA is a contract that conveys control of the right to use another party’s (a SBITA vendor’s) IT software, alone or in combination with tangible capital assets (the underlying IT assets), as specified in the contract for a period of time in an exchange or exchange-like transaction.

At the commencement of a SBITA, the City initially measures the subscription liability at the present value of payments expected to be made during the contract term. Subsequently, the subscription liability is reduced by the principal portion of payments made. The subscription asset is initially measured as the initial amount of the subscription liability, adjusted for payments made at or before the SBITA commencement date, plus certain initial direct costs.

Subsequently, the subscription asset is amortized on a straight-line basis over shorter of the subscription term or the useful life of the underlying IT assets.

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

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

Subscription assets are reported with other capital assets and subscription liabilities are reported as long-term debt on the statement of net position.

A summary of the City’s subscription liabilities for the fiscal year ended June 30, 2024, are as follows:

Balance Balance Due Within
Governmental activities: June 30, 2023 Retirements June 30, 2024 One Year $$ $ $
OpenGov 136,660 (68,330) 68,330 68,330
Tyler Munis ERP 733,838 (132,806) 601,032 139,446
Total subscription liabilities 870,498 (201,136) 669,362 207,776 82

CITY OF WATSONVILLE, CALIFORNIA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
The future principal and interest subscription liability payments as of June 30, 2024 are as follows:

For the Year
Ended June 30 Principal Interest Total
$ $ $
2025 207,776 5,556 213,332
2026 146,419 4,060 150,479
2027 153,740 2,875 156,615
2028 161,427 1,618 163,045
Totals 669,362 14,109 683,471
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 purchases commercial insurance for claims in excess of coverage provided by the selfinsurance 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 Service Fund at June 30, 2024 totaled $4,368,818 as follows: Health Benefits $104,289; General Liability $1,335,942; and Workers’ Compensation $2,928,587.

The basis for estimating incurred but not reported claims is based on the statute of limitation on accepting claims as follows:

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CITY OF WATSONVILLE, CALIFORNIA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
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.
2022-2023 2023-2024
Claims incurred but not reported: $ $
Beginning 1,346,476 1,345,320
Incurred claims 2,011,595 2,423,113
Claims paid (2,012,751) (2,328,202)
Ending 1,345,320 1,440,231
Claims payable
Beginning 2,446,053 2,646,581
Incurred claims 3,048,035 3,325,648
Claims paid (2,847,507) (3,043,642)
Ending 2,646,581 2,928,587
Total claims payable 3,991,901 4,368,818
B. Public entity risk pool
The City is a member of the California Intergovernmental Risk Authority (CIRA), which is a governmental joint powers authority pursuant to the Government Code of the State of California, commencing with Section 6500. CIRA is a statewide agency providing California municipalities with risk management services including loss control, risk sharing and joint purchase coverage programs.

General liability
The City is self-insured for general liability claims up to $500,000 (effective July 1, 2023) 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, 2024, total estimated claims payable for General Liability were $1,335,942.
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CITY OF WATSONVILLE, CALIFORNIA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
Workers compensation
The City is self-insured for workers compensation claims up to $150,000 for each occurrence.

Coverage for individual losses in excess of $150,000, up to the $500,000 is provided through the California Intergovernmental Risk Authority (CIRA). Under this program, members share in losses between the members’ individual self-insured retention and $500,000 under a risk sharing pool program; and from $500,000 to the statutory limit, 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, 2024, total estimated claims payable for Workers Compensation were $2,928,587.

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.

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. 85

CITY OF WATSONVILLE, CALIFORNIA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
Guaranty with Santa Cruz County Bank
On November 14, 2023, City Council approved a limited commercial guaranty with Santa Cruz County Bank in an amount up to $1,000,000 to secure a commercial loan to the Pajaro Valley Health Care District, for the purpose of establishing a revolving line of credit. The guarantee expires on November 5, 2026. At June 30, 2024, the amount of guarantee extended that remains outstanding is $1,000,000.

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.

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 17,354,693 56,143,483 - 10,362,404 Safety - Cost-Sharing Multiple Employer 24,173,178 58,667,099 2,263,404 9,925,956 Totals 41,527,871 114,810,582 2,263,404 20,288,360
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CITY OF WATSONVILLE, CALIFORNIA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
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
$$$
2025 5,135,699 3,764,916 8,900,615
2026 3,636,456 2,302,557 5,939,013
2027 6,640,650 4,671,207 11,311,857
2028 224,093 170,843 394,936
Total 15,636,898 10,909,523 26,546,421
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.
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CITY OF WATSONVILLE, CALIFORNIA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
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, 2024, 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 50-63 50-63 52-67
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% 7.50%
Required employer contribution rates 8.93% 8.93% 14.880% 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, 2024 was $4,083,668, 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, 2022 and measurement date as of June 30, 2023:

Miscellaneous
Inactive employees or beneficiaries currently receiving benefits 347 Inactive employees entitled to but not yet receiving benefits 361 Active employees 299
Total 1,007

88 CITY OF WATSONVILLE, CALIFORNIA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
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, 2023, using an annual actuarial valuation as of June 30, 2022 rolled forward to June 30, 2023 using standard update procedures. A summary of principal assumptions and methods used to determine the net pension liability is shown below.

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

Miscellaneous
Valuation Date June 30, 2022
Measurement Date June 30, 2023
Actuarial Cost Method Entry-Age Normal Cost Method
Actuarial Assumptions:

Discount Rate 6.90%
Inflation 2.30%
Payroll Growth 2.80%
Projected Salary Increase (1)
Investment Rate of Return 6.90% (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 Actuaries Scale 80% of scale MP 2020. For more details on this table, please refer to the CalPERS Experience Study and Review of Actuarial Assumptions report from November 2021 that can be found on the CalPERS website.

The underlying mortality assumptions and all other actuarial assumptions used in the June 30, 2022 valuation were based on the results of a November 2021 actuarial experience study for the period 2001 to 2019. Further details of the Experience Study can be found on the CalPERS website.
89

CITY OF WATSONVILLE, CALIFORNIA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
Discount Rate – The discount rate used to measure the total pension liability was 6.90%. The projection of cash flows 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 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 payment to determine the total pension liability for the 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. Using historical returns of all the funds’ asset classes, expected compound (geometric) returns were calculated over the next 20 years using a buildingblock approach. 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 returns was then adjusted for assumed administrative expenses of 10 basis points.

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

Asset Class (1)
Assumed
Asset
Allocation
Real Return
(1,2)
Global Equity-Cap Weighted 30.0% 4.54%
Global Equity-Non-Cap Weighted 12.0% 3.84%
Private Equity 13.0% 7.28%
Treasury 5.0% 0.27%
Mortgage-backed Securities 5.0% 0.50%
Investment Grade Corporates 10.0% 1.56%
High Yield 5.0% 2.27%
Emerging Market Debt 5.0% 2.48%
Private Debt 5.0% 3.57%
Real Assets 15.0% 3.21%
Leverage -5.0% -0.59%
Total 100.0%
(1) An expected inflation of 2.30% used for this period. (2) Figures are based on the 2021 Asset Liability Management study. 90

CITY OF WATSONVILLE, CALIFORNIA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
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, 2022 185,884,098 132,708,534 53,175,564 Changes in the year:

Service cost 3,833,093 - 3,833,093
Interest on the total pension liability 12,814,426 - 12,814,426 Differences between actual and expected experience 1,957,943 - 1,957,943 Change of Benefit Terms 233,848 - 233,848
Contribution - employer - 6,045,006 (6,045,006)
Contribution - employee 1,666,205 (1,666,205) -
Net investment income 8,257,768 (8,257,768) -
Benefit payments, including refunds of employee
contributions (8,552,266) (8,552,266) -
Changes of Assumptions - - -
Administrative expense - (97,588) 97,588
Net changes 10,287,044 7,319,125 2,967,919
Balance at June 30, 2023 196,171,142 140,027,659 56,143,483 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 5.90%
Net Pension Liability $83,304,523
1% Decrease 6.90%
Net Pension Liability $56,143,483
1% Increase 7.90%
Net Pension Liability $33,797,860
Pension Plan Fiduciary Net Pension – Detailed information about the pension plan’s fiduciary net position is available in the separate issued CalPERS financial report.

91

CITY OF WATSONVILLE, CALIFORNIA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
D. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pension For the fiscal year ended June 30, 2024, the City recognized pension expense of $10,362,404. At June 30, 2024, 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 6,445,170 - Differences between actual and expected experience 1,904,440 - Changes of assumptions 2,698,867 -
Net differences between projected and actual earnings on plan investments 6,306,216 -
Total 17,354,693 -
The amount of $6,445,170 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, 2025. 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
$
2025 3,764,916
2026 2,302,557
2027 4,671,207
2028 170,843
Total 10,909,523
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. 92

CITY OF WATSONVILLE, CALIFORNIA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
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.

The Plans’ provisions and benefits in effect at June 30, 2024, 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 50-55 50-57
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% 13.75%
Required employer contribution rates 27.11% 22.83% 13.54% 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, 2024 was $3,739,251, 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 $6,272,876 for the fiscal year ended June 30, 2024. 93

CITY OF WATSONVILLE, CALIFORNIA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
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.

As of June 30, 2024, the City reported a net pension liability for its proportionate share of the net pension liability of the Plan was $58,667,099.

The City’s net pension liability for the Plan is measured as the proportionate share of the net pension liability. The net pension liability of the Plan is measured as of June 30, 2023, and the total pension liability for the Plan used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2022 rolled forward to June 30, 2023 using standard update procedures. The City’s proportion of the net pension liability was based on a projection of the City’s long-term share of contributions to the pension plan relative to the projected contributions of all participating employers, actuarially determined.

The City’s proportionate share of the net pension liability for the Plan as of June 30, 2022, and 2023 was as follows:

Safety Plans
Proportion - June 30, 2022 0.78762%
Proportion - June 30, 2023 0.78485%
Change - Increase (Decrease) -0.00277%
For the year ended June 30, 2024, the City recognized pension expense of $9,925,956 for the Safety Plan. At June 30, 2024, 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 6,272,876 Differences between actual and expected experience 4,307,247 (368,746) Changes in assumptions 3,423,890 -
Net differences between projected and actual earnings
on plan investments 8,028,577 -
Differences between actual contributions and
proportional contributions 513,054 (1,894,658)
Adjustment due to differences in proportion 1,627,534 - Total 24,173,178 (2,263,404)
94

CITY OF WATSONVILLE, CALIFORNIA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
The amount of $6,272,876 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, 2025.

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
$
2025 5,135,699
2026 3,636,456
2027 6,640,650
2028 224,093
Total 15,636,898
Actuarial Assumptions
For the measurement period ended June 30, 2023, the total pension liability was determined by rolling forward the June 30, 2022 total pension liability. The June 30, 2023 total pension liabilities were based on the following actuarial methods and assumptions for all benefit tiers:

Valuation Date June 30, 2022
Measurement Date June 30, 2023
Actuarial Cost Method Entry-Age Normal Cost Method
Actuarial Assumptions:

Discount Rate 6.90%
Inflation 2.30%
Salary Increases (1)
Investment Rate of Return 6.90% (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 Actuaries Scale 80% of scale MP 2020. For more details on this table, please refer to the CalPERS Experience Study and Review of Actuarial Assumptions report from November 2021 that can be found on the CalPERS website.

The underlying mortality assumptions and all other actuarial assumptions used in the June 30, 2022 valuation were based on the results of a November 2021 actuarial experience study for the period 2001 to 2019. Further details of the Experience Study can be found on the CalPERS website.

95

CITY OF WATSONVILLE, CALIFORNIA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
Discount Rate – The discount rate used to measure the total pension liability for the plan was

6.90%. The projection of cash flows 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 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. Using historical returns of all the funds’ asset classes, expected compound (geometric) returns were calculated over the next 20 years using a buildingblock approach. 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 returns was then adjusted for assumed administrative expenses of 10 basis points.

The table below reflects the expected real rates of return by asset class.

Asset Class (1)
Assumed
Asset
Allocation
Real Return
(1,2)
Global Equity-Cap Weighted 30.0% 4.54%
Global Equity-Non-Cap Weighted 12.0% 3.84%
Private Equity 13.0% 7.28%
Treasury 5.0% 0.27%
Mortgage-backed Securities 5.0% 0.50%
Investment Grade Corporates 10.0% 1.56%
High Yield 5.0% 2.27%
Emerging Market Debt 5.0% 2.48%
Private Debt 5.0% 3.57%
Real Assets 15.0% 3.21%
Leverage -5.0% -0.59%
Total 100.0%
(1) An expected inflation of 2.30% used for this period. (2) Figures are based on the 2021 Asset Liability Management study. 96

CITY OF WATSONVILLE, CALIFORNIA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
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 6.90 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 (5.90 percent) or 1- percentage point higher (7.90 percent) than the current rate:

Safety
1% Decrease 5.90%
Net Pension Liability $85,769,352
Current Discount Rate 6.90%
Net Pension Liability $58,667,099
1% Increase 7.90%
Net Pension Liability $36,509,079
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.

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.

97

CITY OF WATSONVILLE, CALIFORNIA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
The Bill directed 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, 2024:

Balance Balance Due Within
June 30, 2023 Retirements June 30, 2024 One Year
$$$$
Refunding tax allocation bonds 5,495,000 (1,465,000) 4,030,000 945,000 Bond Premium 950,297 (86,390) 863,907 -
Total Bonds Payable 6,445,297 (1,551,390) 4,893,907 945,000 Notes Payable 461,275 (452,388) 8,887 8,887
Total 6,906,572 (2,003,778) 4,902,794 953,887
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. 98

CITY OF WATSONVILLE, CALIFORNIA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
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 $136,471 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, 2024 is as follows:

Fiscal Year Principal Interest Debt Service
$ $$
2025 945,000 154,200 1,099,200
2026 295,000 106,950 401,950
2027 305,000 92,200 397,200
2028 325,000 76,950 401,950
2029 330,000 69,638 399,638
2030-2034 1,830,000 179,000 2,009,000
Total 4,030,000 678,938 4,708,938
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.

The annual debt services requirements for the note outstanding as of June 30, 2024 is as follows:

Fiscal Year Principal Interest Total
$ $$
2025 - 8,887 8,887
Total 8,887 - 8,887
99

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Required Supplementary Information

CITY OF WATSONVILLE, CALIFORNIA

SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS

LAST TEN FISCAL YEARS
JUNE 30, 2024
The following table provides required supplementary information regarding the City's Miscellaneous Pension Plan:

MEASUREMENT DATE: 2014 2015 2016 2017
TOTAL PENSION LIABILITY $$$$
Service Cost 2,348,593 2,251,567 2,250,229 2,616,009
Interest 8,369,558 8,741,399 9,093,428 9,502,933
Differences between expected and actual experience - (1,088,430) (1,307,204) (160,738) Changes in assumptions - (2,194,095) - 8,126,558
Changes in benefits - - - -
Benefit payments, including refunds of employee contributions (4,554,651) (4,874,482) (5,292,339) (5,612,765) Net change in total pension liability 6,163,500 2,835,959 4,744,114 14,471,997 Total pension liability - beginning 112,697,136 118,860,636 121,696,595 126,440,709 Total pension liability - ending (a) 118,860,636 121,696,595 126,440,709 140,912,706

PLAN FIDUCIARY NET POSITION
Contributions - employer 1,750,491 1,881,144 2,288,840 2,856,260 Contributions - employee 1,087,253 1,064,147 1,145,223 1,265,745 Net investment income (1) 14,090,974 2,081,010 501,726 10,269,390 Administrative expense - (105,873) (57,299) (136,723)
Benefit payments, including refunds of employee contributions (4,554,651) (4,874,482) (5,292,339) (5,612,765) Net Plan to Plan Resource Movement - - - (2,203)
Other Miscellaneous Income/(Expense) - - - -
Net change in plan fiduciary net position 12,374,067 45,946 (1,413,849) 8,639,704 Plan fiduciary net position - beginning 81,597,739 93,971,806 94,017,752 92,603,903 Plan fiduciary net position - ending (b) 93,971,806 94,017,752 92,603,903 101,243,607 Net pension liability - ending (a)-(b) 24,888,830 27,678,843 33,836,806 39,669,099 Plan fiduciary net position as a percentage of the total pension liability 79.06% 77.26% 73.24% 71.85%
Covered payroll 17,390,545 17,452,658 17,680,742 18,366,981 Net pension liability as percentage of covered-employee payroll 143.12% 158.59% 191.38% 215.98% Notes to Schedule:

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).

Changes in assumptions: In 2017, the accounting discount rate reduced from 7.65% to 7.15%. In 2016, 2018, 2019, 2020, 2021 and 2023 there were no changes. In 2022, the accounting discount rate reduced from 7.15% to 6.90%. 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.
102

2018 2019 2020 2021 2022 2023
$$$$$$
2,696,646 2,918,120 3,126,358 3,154,808 3,660,143 3,833,093 9,872,907 10,452,164 10,957,570 11,578,015 12,135,027 12,814,426 (622,350) 1,523,815 181,334 1,720,257 550,395 1,957,943 (617,380) - - - 6,072,451 -
- - - - - 233,848
(5,877,340) (6,327,905) (6,846,317) (7,435,396) (7,901,930) (8,552,266) 5,452,483 8,566,194 7,418,945 9,017,684 14,516,086 10,287,044 140,912,706 146,365,189 154,931,383 162,350,328 171,368,012 185,884,098 146,365,189 154,931,383 162,350,328 171,368,012 185,884,098 196,171,142 3,443,447 3,756,237 4,648,909 4,850,242 5,372,729 6,045,006 1,301,275 1,520,671 1,474,994 1,488,988 1,604,758 1,666,205 8,537,327 7,097,297 5,707,428 26,896,026 (10,938,130) 8,257,768 (457,364) (76,957) (160,932) (118,854) (90,115) (97,588) (5,877,340) (6,327,905) (6,846,317) (7,435,396) (7,901,930) (8,552,266) (250) (3,911) - - - -
- - - - - -
6,947,095 5,965,432 4,824,082 25,681,006 (11,952,688) 7,319,125 101,243,607 108,190,702 114,156,134 118,980,216 144,661,222 132,708,534 108,190,702 114,156,134 118,980,216 144,661,222 132,708,534 140,027,659 38,174,487 40,775,249 43,370,112 26,706,790 53,175,564 56,143,483

73.92% 73.68% 73.29% 84.42% 71.39% 71.38%
18,917,990 19,029,329 20,531,347 21,939,351 22,534,340 23,372,558 201.79% 214.28% 211.24% 121.73% 235.98% 240.21%
103

The following table provides required supplementary information regarding the City's Miscellaneous Pension Plan:
2015 2016 2017 2018 2019
$$$$$
Contractually required contribution 2,299,823 1,769,613 2,288,840 2,856,260 3,756,236 Contributions in relation to the actuarially
determined contributions (2,299,823) (1,769,613) (2,288,840) (2,856,260) (3,756,236) Contribution deficiency (excess) - - - - -
Covered payroll 17,452,658 17,680,742 18,366,981 18,917,990 19,029,329 Contributions as a percentage of covered
payroll 10.14% 13.01% 12.46% 15.10% 19.74%
2020 2021 2022 2023 2024
$$$$$
Contractually required contribution 4,648,909 4,850,246 5,372,729 6,043,172 6,445,170 Contributions in relation to the actuarially
determined contributions (4,648,909) (4,850,246) (5,372,729) (6,043,172) (6,445,170) Contribution deficiency (excess) - - - - -
Covered payroll 20,531,347 21,939,351 22,534,340 23,372,558 24,476,966 Contributions as a percentage of covered
payroll 22.64% 22.11% 23.84% 25.86% 26.33%
Notes to Schedule
Valuation date: 6/30/2021
Methods and assumptions used to determine contribution rates:

Discount Rate 6.8% @ 6/30/2024

6.8% @ 6/30/2023

7.0% @ 6/30/2022

7.0% @ 6/30/2021

7.25% @ 6/30/2020

7.375% @ 6/30/2019

7.5% @ 6/30/2018

7.5% @ 6/30/2017

7.5% @ 6/30/2016

7.5% @ 6/30/2015
Inflation
Salary increases Varies by Entry Age and Service
Investment rate of return
Mortality Rate Table (1)
Post Retirement Benefit Increase

CITY OF WATSONVILLE, CALIFORNIA

SCHEDULE OF CONTRIBUTIONS

LAST TEN FISCAL YEARS
JUNE 30, 2024
(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 AA published by the Society of Actuaries for 2015 to 2018. For 2019, 2020, 2021, and 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. For 2023 and 2024, pre-retirement and postretirement mortality rates include generational mortality improvement using 80% of Scale MP-2020 published by the Society of Actuaries.

2.75% for 2015 to 2019, 2.625% for 2020, and 2.50% for
2021 and 2022, and 2.30% for 2023 and 2024.

7.50% for 2015 to 2018, 7.375% for 2019, 7.25% for 2020, and 7.00% for 2021 and 2022, 6.80% for 2023 and 2024, 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.
104

The following table provides required supplementary information regarding the City's Safety Pension Plan:
2014 2015 2016 2017 2018
$$$$$
Proportion of the net pension liability 0.358953% 0.379737% 0.387650% 0.388914% 0.666691% Proportionate share of the net pension liability 26,064,837 22,335,737 33,543,690 38,569,604 39,118,450 Covered payroll 10,541,326 9,190,095 9,792,080 11,557,360 11,496,504 Proportionate share of the net pension liability as
percentage of covered payroll 211.89% 283.62% 342.56% 333.72% 340.26% Plan's total pension liability 30,829,966,631 31,771,217,402 18,961,274,094 21,144,800,930 22,053,702,155 Plan fiduciary net position 24,607,502,515 24,907,305,871 13,782,056,004 15,169,595,595 16,186,149,467 Plan fiduciary net position as a percentage of the
total pension liability 79.82% 78.40% 74.06% 73.31% 75.26% 2019 2020 2021 2022 2023
Proportion of the net pension liability $$$$$

0.679156% 0.697883% 0.826850% 0.787620% 0.784851%
Proportionate share of the net pension liability
42,396,602 46,495,443 29,018,195 54,122,250 58,667,099
Covered payroll
11,783,799 12,765,651 12,422,544 13,235,291 11,555,278
Proportionate share of the net pension liability as
percentage of covered payroll
359.79% 364.22% 233.59% 408.92% 507.71%
Plan's total pension liability
23,442,265,225 24,782,493,361 172,165,293 186,461,648 197,563,906 Plan fiduciary net position
17,199,726,799 18,120,140,152 143,147,098 132,339,398 138,896,807 Plan fiduciary net position as a percentage of the
total pension liability 75.20% 75.10% 88.29% 76.68% 76.21%

CITY OF WATSONVILLE, CALIFORNIA

SCHEDULE OF PROPORTIONATE SHARE OF NET PENSION LIABILITY

LAST TEN FISCAL YEARS
JUNE 30, 2024
105

The following table provides required supplementary information regarding the City's Safety Pension Plan:
2015 2016 2017 2018 2019
$$$$$
Actuarially determined contribution 2,921,288 2,648,853 3,364,471 3,606,866 3,940,104 Contributions in relation to the actuarially
determined contributions (2,921,288) (2,648,853) (3,364,471) (3,606,866) (4,006,904) Contribution deficiency (excess) - - - - (66,800)
Covered payroll 9,190,095 9,792,080 11,557,360 11,496,504 11,783,799 Contributions as a percentage of covered payroll 28.82% 29.83% 29.11% 31.37% 34.00% 2020 2021 2022 2023 2024
$$$$$
Actuarially determined contribution 4,649,154 5,129,097 5,742,501 6,231,309 6,272,876 Contributions in relation to the actuarially
determined contributions (4,699,442) (5,129,097) (5,742,501) (6,231,309) (6,272,876) Contribution deficiency (excess) (50,288) - - - -
Covered payroll 12,765,651 12,422,544 13,235,291 11,555,278 13,816,012 Contributions as a percentage of covered payroll 36.81% 41.29% 43.39% 53.93% 45.40%

CITY OF WATSONVILLE, CALIFORNIA

SCHEDULE OF CONTRIBUTIONS

LAST TEN FISCAL YEARS
JUNE 30, 2024
106

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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)
108

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)
109

CITY OF WATSONVILLE, CALIFORNIA

NONMAJOR GOVERNMENTAL FUNDS

COMBINING BALANCE SHEET
JUNE 30, 2024

NARCOTICS

GAS ASSETS BUSINESS ECONOMIC PARKS RETIREMENT

TAX SEIZURE DEVELOPMENT DEVELOPMENT LIBRARY DEVELOPMENT TAX $$ $ $ $ $ $
ASSETS:

Cash and investments 1,017,842 229,696 369,661 33,391 1,884,006 1,871,361 788,538 Receivables:

Interest - - - 50,170 - - -
Taxes 120,564 - - - - - 253,502
Accounts 400 - 3,528 - 357,206 11,310 -
Intergovernmental 303,231 - - - - - -
Loans receivable - - - 48,324 - - -
Total Assets 1,442,037 229,696 373,189 131,885 2,241,212 1,882,671 1,042,040 LIABILITIES:

Accounts payable 135,659 - - - - 126,680 -
Accrued personnel costs 5,404 - - - - 1,182 -
Retentions payable - - - - - - -
Unearned revenue - - - - - - -
Due to other funds - - - - - - -
Total Liabilities 141,063 - - - - 127,862 -
DEFERRED INFLOWS OF RESOURCES:

Unavailable revenue 303,231 - 988 98,493 - - -
Total Deferred Inflows of Resources 303,231 - 988 98,493 - - - FUND BALANCES:

Restricted for:

Assets seizure - 229,696 - - - - -
Business development - - 372,201 - - - -
Economic development - - - 33,392 - - -
Library - - - - 2,241,212 - -
Parks development - - - - - 1,754,809 -
Retirement tax - - - - - - 1,042,040
Measure G/Y - - - - - - -
Inclusionary housing - - - - - - -
SB1 gas tax 997,743 - - - - - -
Measure D - - - - - - -
Unassigned - - - - - - -
Total Fund Balances 997,743 229,696 372,201 33,392 2,241,212 1,754,809 1,042,040 Total Liabilities, Deferred Inflows of
Resources, and Fund Balances 1,442,037 229,696 373,189 131,885 2,241,212 1,882,671 1,042,040 Continued
Special Revenue Funds
110

CITY OF WATSONVILLE, CALIFORNIA

NONMAJOR GOVERNMENTAL FUNDS

COMBINING BALANCE SHEET
JUNE 30, 2024
PARKING ABANDONED INCLUSIONARY SB 1

GARAGE MEASURE G/Y VEHICLE HOUSING GAS TAX MEASURE D TOTAL $ $$ $ $ $
ASSETS:

Cash and investments - 2,104,749 54,838 143 3,696,391 4,713,525 16,764,141 Receivables:

Interest - - - 222,723 - - 272,893
Taxes - 930,003 - - 107,777 186,954 1,598,800
Accounts 24,884 - - - - - 397,328
Intergovernmental - - - 362,515 - - 665,746
Loans receivable - - - 1,603,538 - - 1,651,862
Total Assets 24,884 3,034,752 54,838 2,188,919 3,804,168 4,900,479 21,350,770 LIABILITIES:

Accounts payable 20,575 144,401 - 8,352 180,122 128,400 744,189 Accrued personnel costs - 63,640 - 476 - - 70,702
Retentions payable - 2,345 - - 7,102 - 9,447
Unearned revenue - - - 340,313 - - 340,313
Due to other funds 300,619 - - - - - 300,619
Total Liabilities 321,194 210,386 - 349,141 187,224 128,400 1,465,270 DEFERRED INFLOWS OF RESOURCES:

Unavailable revenue - - - 1,826,261 - - 2,228,973
Total Deferred Inflows of Resources - - - 1,826,261 - - 2,228,973 FUND BALANCES:

Restricted for:

Assets seizure - - - - - - 229,696
Business development - - - - - - 372,201
Economic development - - - - - - 33,392
Library - - - - - - 2,241,212
Parks development - - - - - - 1,754,809
Retirement tax - - - - - - 1,042,040
Measure G/Y - 2,824,366 - - - - 2,824,366
Abandoned vehicle - - 54,838 - - - 54,838
Inclusionary housing - - - 13,517 - - 13,517
SB1 gas tax - - - - 3,616,944 - 4,614,687
Measure D - - - - - 4,772,079 4,772,079
Unassigned (296,310) - - - - - (296,310)
Total Fund Balances (296,310) 2,824,366 54,838 13,517 3,616,944 4,772,079 17,656,527 Total Liabilities, Deferred Inflows of
Resources, and Fund Balances 24,884 3,034,752 54,838 2,188,919 3,804,168 4,900,479 21,350,770 Concluded
Special Revenue Funds
111

CITY OF WATSONVILLE, CALIFORNIA

NONMAJOR GOVERNMENTAL FUNDS

COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES FOR THE FISCAL YEAR ENDED JUNE 30, 2024

NARCOTICS

GAS ASSETS BUSINESS ECONOMIC PARKS RETIREMENT

TAX SEIZURE DEVELOPMENT DEVELOPMENT LIBRARY DEVELOPMENT TAX $$ $ $ $ $ $
REVENUES:

Taxes - - - - 4,037,565 - 4,201,461
Licenses, permits and fees - - 111,963 - 14,697 706,453 - Intergovernmental 1,396,587 - - - 63,995 - -
Charges for services - - - - - - -
Interest 36,745 7,715 14,135 - 89,127 55,713 -
Miscellaneous - 21,771 - 2,591 5,715 - -
Total revenues 1,433,332 29,486 126,098 2,591 4,211,099 762,166 4,201,461 EXPENDITURES:

Current:

General government - - 15,450 - - - 1,693
Public safety - 898 - - - - -
Housing - - - - - - -
Streets 1,399,017 - - - - - -
Culture and recreation - - - - 4,152,404 338,706 -
Total expenditures 1,399,017 898 15,450 - 4,152,404 338,706 1,693 Excess (deficiency) of revenues over
(under) expenditures 34,315 28,588 110,648 2,591 58,695 423,460 4,199,768 OTHER FINANCING SOURCES (USES):

Transfers in - - - - - - -
Transfers (out) - - (24,900) - (159,283) - (3,850,000)
Total other financing sources (uses) - - (24,900) - (159,283) - (3,850,000) Net change in fund balances 34,315 28,588 85,748 2,591 (100,588) 423,460 349,768 Fund balances, July 1 963,428 201,108 286,453 30,801 2,341,800 1,331,349 692,272 Fund balances, June 30 997,743 229,696 372,201 33,392 2,241,212 1,754,809 1,042,040 Continued
Special Revenue Funds
112

CITY OF WATSONVILLE, CALIFORNIA

NONMAJOR GOVERNMENTAL FUNDS

COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES FOR THE FISCAL YEAR ENDED JUNE 30, 2024
PARKING ABANDONED INCLUSIONARY SB 1

GARAGE MEASURE G/Y VEHICLE HOUSING GAS TAX MEASURE D TOTAL $ $ $ $ $$$
REVENUES:

Taxes - 5,249,448 - - 1,309,830 1,299,249 16,097,553
Licenses, permits and fees 143,381 1,377 66,746 8,560 - - 1,053,177 Intergovernmental - - - 22,202 - - 1,482,784
Charges for services - - - 268,290 - - 268,290
Interest - 72,204 - 3,410 120,307 144,708 544,064
Miscellaneous 7 - - 14,590 - - 44,674
Total revenues 143,388 5,323,029 66,746 317,052 1,430,137 1,443,957 19,490,542 EXPENDITURES:

Current:

General government 179,404 - - - - - 196,547
Public safety - 5,776,396 61,800 - - - 5,839,094
Housing - - - 300,195 - - 300,195
Streets - - - - 612,259 1,010,069 3,021,345
Culture and recreation - - - - - - 4,491,110
Total expenditures 179,404 5,776,396 61,800 300,195 612,259 1,010,069 13,848,291 Excess (deficiency) of revenues over
(under) expenditures (36,016) (453,367) 4,946 16,857 817,878 433,888 5,642,251 OTHER FINANCING SOURCES (USES):

Transfers in 93,195 - - - - - 93,195
Transfers (out) (19,010) - - - - - (4,053,193)
Total other financing sources (uses) 74,185 - - - - - (3,959,998) Net changes in fund balances 38,169 (453,367) 4,946 16,857 817,878 433,888 1,682,253 Fund balances, July 1 (334,479) 3,277,733 49,892 (3,340) 2,799,066 4,338,191 15,974,274 Fund balances, June 30 (296,310) 2,824,366 54,838 13,517 3,616,944 4,772,079 17,656,527 Concluded
Special Revenue Funds
113

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, 2024
Variance With Variance With
Final Budget - Final Budget -
Positive Positive
Original Final Actual (Negative) Original Final Actual (Negative) $ $ $ $ $ $$ $
REVENUES:

Intergovernmental 1,314,339 1,310,139 1,396,587 86,448 - - - - Interest 4,200 4,200 36,745 32,545 1,500 1,500 7,715 6,215 Miscellaneous - - - - 10,000 10,000 21,771 11,771
Total revenues 1,318,539 1,314,339 1,433,332 118,993 11,500 11,500 29,486 17,986 EXPENDITURES:

Public safety - - - - 11,500 11,500 898 10,602
Streets 575,000 1,965,435 1,399,017 566,418 - - - -
Total expenditures 575,000 1,965,435 1,399,017 566,418 11,500 11,500 898 10,602 Net changes in fund balances 743,539 (651,096) 34,315 685,411 - - 28,588 28,588 Fund balances, July 1 963,428 963,428 963,428 - 201,108 201,108 201,108 - Fund balances, June 30 1,706,967 312,332 997,743 685,411 201,108 201,108 229,696 28,588 Budgeted Amounts

GAS TAX NARCOTICS ASSETS SEIZURE
Budgeted Amounts
114

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, 2024

BUSINESS DEVELOPMENT
Variance With Variance With
Final Budget - Final Budget -
Positive Positive
Original Final Actual (Negative) Original Final Actual (Negative) $$$ $ $ $ $ $
REVENUES:

Licenses, permits and fees 85,000 111,963 85,000 26,963 - - - - Interest 1,425 1,425 14,135 12,710 - - - -
Miscellaneous 6,000 6,000 - (6,000) - 2,591 - 2,591
Total revenues 92,425 126,098 92,425 33,673 - 2,591 - 2,591 EXPENDITURES:

Current:

General government 73,450 73,450 15,450 58,000 - - - -
Total expenditures 73,450 73,450 15,450 58,000 - - - -
Excess (deficiency) of revenues over
(under) expenditures 18,975 18,975 110,648 91,673 - 2,591 - 2,591 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 (5,925) (5,925) 85,748 91,673 - 2,591 - 2,591 Fund balances, July 1 286,453 286,453 286,453 - 30,801 30,801 30,801 - Fund balances, June 30 280,528 280,528 372,201 91,673 30,801 30,801 33,392 2,591 Budgeted Amounts

ECONOMIC DEVELOPMENT
Budgeted Amounts
115

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, 2024
Variance With Variance With
Final Budget - Final Budget -
Positive Positive
Original Final Actual (Negative) Original Final Actual (Negative) $$ $ $ $$$ $
REVENUES:

Taxes 4,211,968 4,211,968 4,037,565 (174,403) - - - -
Licenses, permits and fees 13,000 13,000 14,697 1,697 - 219,301 706,453 487,152 Intergovernmental 61,243 61,243 63,995 2,752 - - - -
Interest 20,000 20,000 89,127 69,127 - 8,000 55,713 47,713 Miscellaneous 10,000 10,000 5,715 (4,285) - - - -
Total revenues 4,316,211 4,316,211 4,211,099 (105,112) - 227,301 762,166 534,865 EXPENDITURES:

Current:

Culture and recreation 4,072,455 4,342,455 4,152,404 190,051 627,577 464,100 338,706 125,394 Total expenditures 4,072,455 4,342,455 4,152,404 190,051 627,577 464,100 338,706 125,394 Excess (deficiency) of revenues over
(under) expenditures 243,756 (26,244) 58,695 84,939 (627,577) (236,799) 423,460 660,259 OTHER FINANCING SOURCES (USES):

Transfers (out) (159,283) (159,283) (159,283) - - - - - Total other financing sources (uses) (159,283) (159,283) (159,283) - - - - - Net change in fund balances 84,473 (185,527) (100,588) 84,939 (627,577) (236,799) 423,460 660,259 Fund balances, July 1 2,341,800 2,341,800 2,341,800 - 1,331,349 1,331,349 1,331,349 - Fund balances, June 30 2,426,273 2,156,273 2,241,212 84,939 703,772 1,094,550 1,754,809 660,259

LIBRARY PARKS DEVELOPMENT
Budgeted Amounts Budgeted Amounts
116

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, 2024
Variance With Variance With
Final Budget - Final Budget -
Positive Positive
Original Final Actual (Negative) Original Final Actual (Negative) $$$ $ $$ $ $
REVENUES:

Taxes 3,873,308 3,873,308 4,201,461 328,153 - - - -
Licenses, permits, and fees - - - - 162,000 162,000 143,381 (18,619) Miscellaneous - - - - - - 7 7
Total revenues 3,873,308 3,873,308 4,201,461 328,153 162,000 162,000 143,388 (18,612) EXPENDITURES:

Current:

General government 3,000 3,000 1,693 1,307 176,691 176,691 179,404 (2,713) Total expenditures 3,000 3,000 1,693 1,307 176,691 176,691 179,404 (2,713) Excess (deficiency) of revenues over
(under) expenditures 3,870,308 3,870,308 4,199,768 329,460 (14,691) (14,691) (36,016) (21,325) OTHER FINANCING SOURCES (USES):

Transfers in - - - - 93,195 93,195 93,195 -
Transfers (out) (3,850,000) (3,850,000) (3,850,000) - (19,010) (19,010) (19,010) - Total other financing sources (uses) (3,850,000) (3,850,000) (3,850,000) - 74,185 74,185 74,185 - Net change in fund balances 20,308 20,308 349,768 329,460 59,494 59,494 38,169 (21,325) Fund balances, July 1 692,272 692,272 692,272 - (334,479) (334,479) (334,479) - Fund balances, June 30 712,580 712,580 1,042,040 329,460 (274,985) (274,985) (296,310) (21,325)

RETIREMENT TAX
Budgeted Amounts

PARKING GARAGE
Budgeted Amounts
117