Agenda — Willits City Council, March 25, 2026

111 E. Commercial Street
Willits, California 95490
Tel | 707.459.4601
Fax | 707.459.1562
www.cityofwillits.org

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WILLITS CITY COUNCIL
AGENDA
MARCH 25, 2026 | 6:30 PM | CITY COUNCIL CHAMBERS

1. OPENING MATTERS
a. Call to Order. | b. Pledge to Flag. | c. Roll Call.

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

3. PUBLIC MATTERS

4. ENACTMENT OF ORDINANCES
a. None.

5. CONSENT CALENDAR
The City Council considers matters listed under the Consent Calendar as routine. The Council will take action with a single motion and roll call vote. A Councilmember may request the removal of an item(s) from the Consent Calendar for separate discussion and subsequent action.

The following items as presented are before the City Council for approval or denial:
a. City Council Minutes:
i. March 9, 2026 – Special Meeting
ii. March 11, 2026 – Regular Meeting
b. Discussion and Possible Approval Allowing Staff to Transition to a Standardized Action-Only Minute Format.

Presenting staff member: Delores Pedersen, City Clerk.
c. Second Presentation of Audit Conducted by Moss, Levy & Hartzheim Regarding Audited Financial Report for Fiscal Year ending June 30, 2024.

Presenting staff member: Manual Orozco

6. MONTHLY ACTIVITY REPORTS
Willits City Council Agenda – March 25, 2026.

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Matters that do not require action by the City Council but are of public interest. a. None.

7. COMMISSIONS, AGENCIES AND AUTHORITIES
The Willits City Council meets concurrently as the City of Willits Planning Commission & City of Willits Successor Agency.

8. CITY MANAGER REPORTS AND RECOMMENDATIONS
a. Verbal Reports – No Action.
i.

9. DEPARTMENT RECOMMENDATIONS (ACTION ITEMS)
a. Discussion and Possible Action to Approve an Agreement Authorizing the Willits Farmers Market to Operate in Bud Snider Park.

Presenting staff member: Swetha Hiranya Venuturupalli, Senior City Planner.

10. DEPARTMENT MONTHLY REPORTS
a. Airport. b. Community Dev. c. Finance. d. Police Dept. e. Services & Facilities. f. Utilities.

11. CITY COUNCIL ANNOUNCEMENTS, COMMUNICATIONS AND REPORTS

12. GOOD & WELFARE

13. CLOSED SESSION NOTICE
a. Conference regarding Labor Negotiation Pursuant to Government Code §54957.6 – Agency Negotiator Interim City Manager Richardson. Employee Organization(s):

International Brotherhood of Electrical Worker (IBEW), Willits Police Officers Association (WPOA) and Employee Organizations; Management Team and Unrepresented Employees

14. ADJOURNMENT
Right to Appeal - Persons who are dissatisfied with the decisions of the City Council may have the right to a review of that decision by a court. The City has adopted Section 1094.6 of the Code of Civil Procedure, which generally limits to 90- days, the time within an individual and/or entity may judicially challenge the decisions of the City Boards and Agencies.

I hereby certify under penalty of perjury under the laws of the State of California that I posted the foregoing Agenda on the bulletin board at the main entrance of the City of Willits City Hall, located at 111 East Commercial Street, Willits, California, not less than 72 hours prior to the meeting set forth on this Agenda.

Dated this 19th day of March, 2026.

Delores Pedersen, City Clerk
Americans with Disabilities Act (ADA) Compliance
If you need assistance to attend or participate in a City Council meeting, please contact the City Clerk’s office at (707) 459-7113 or Fax (707) 459-1562. Notification at least 48-hours prior to the meeting will assist the City Clerk in assuring the implementation of reasonable accommodations to provide accessibility to the meeting. Our meeting room is wheelchair accessible and ADA parking is available.

Additional Meeting Information for Interested Parties
Materials related to an item on this Agenda submitted to the Willits City Council, Planning Commission, or Community Development Agency after distribution of the agenda packet are available for public inspection at City Clerk’s office at 111 E. Commercial Street, Willits, during normal business hours, Monday through Thursday 9 AM to 5:30 PM. 111 E. COMMERCIAL STREET
WILLITS, CALIFORNIA 95490
(707) 459-4601 TEL
(707) 459-1562 FAX

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WILLITS CITY COUNCIL

SPECIAL MEETING

MINUTES
MONDAY, MARCH 9, 2026
Mayor Allman called a special meeting of the Willits City Council to order at 6:30 p.m., in Council Chambers.

Roll Call: Councilmembers Larry Stranske, Gerardo Gonzalez, Bruce Burton, Vice Mayor Matthew Alaniz and Mayor Tom Allman were present.

Also present were staff members: Bob Richardson, Interim City Manager; Walter Kolon, Services and Facilities Director; and Delores Pedersen, City Clerk.

2. CLOSED SESSION NOTICE
a. Conference regarding Labor Negotiation Pursuant to Government Code §54957.6 – Agency Negotiator Interim City Manager Richardson. Employee Organization(s):

International Brotherhood of Electrical Worker (IBEW), Willits Police Officers Association (WPOA) and Employee Organizations; Management Team and Unrepresented Employees
Public Comment:
 Bear Kamoroff inquired how long the Council would be in closed session, so that the audience does not have to wait around for an hour or more. Mayor Allman could not commit to a time. City Clerk Pedersen will call those that want to be called when Council is done with Closed Session.
 Nicole Caldwell thank Interim City Manager Richardson for clarifying regarding the pay scale for the Water and Wastewater Departments. Based on the items in the packet it appeared that there would be a pay cut, which is not the case. Ms. Caldwell also addressed the Leave Buyout item, stating that she has been able to do leave buyouts since she started working for the City.
 Mark Wilson, Business Representative for IBEW Local 1245, expressed his disappointment with the lack of communication that IBEW has received from the City.
 Manual Orozco expressed his grievances and concern over the direction the City is going.

Willits City Council Convened to Closed Session at 6:40 pm.

The City Council reconvened to open session at 7:25 pm, and reported direction was given to staff.

Willits City Council Special Meeting Minutes of March 9, 2026 Page 2 of 5

3. Adoption of a Resolution Declaring Fiscal Emergency.  Mayor Allman asked what a Declaration of Fiscal Emergency is. Jim Lance, City Attorney explained that in the case of an unexpected or extreme emergency, including a financial emergency, City’s can make a declaration and the impact of making a declaration and passing a resolution declaring a fiscal emergency, is that certain contractual obligations the City has with other parties can be relaxed. For example, if the City is in a collective bargaining contract those requirements can be waived so the City can do any reasonable and necessary thing toward the mitigation of the emergency including lay-offs and reorganization.  Andy Heath, City Financial Consultant, presented the Council with a PowerPoint Presentation of Forecast Update/Declaration of Fiscal Emergency Public Comment:
 Tamara Alaniz inquired, since the Declaration of Fiscal Emergency is only in response to the General Fund, would the City be addressing the enterprise funds budget overruns or is that going to be done in the future? Mayor Allman responded that tonight’s issue is the General Fund and Measure K Fiscal Emergency.

Moved by Burton/Seconded by Alaniz and carried unanimously to adopt Resolution No. 2026-09 declaring a Fiscal Emergency Pursuant to Government Code Section 3504.5 and California Constitution, Article XII(c), Section 2(b)

4. Adoption of Resolution Approving Reorganization of City Departments in Response to the Declaration of a Fiscal Emergency, Establishing new classifications and the related classification Specifications and Pay Ranges, and Authorizing the Interim City Manager to Initiate Layoffs and Transfers, and take other necessary administrative Actions to Effect the Changes.
 Deborah Muchmore, Muchmore than Consulting, explained that she had pulled the incorrect Job Description for the Water and Wastewater Plant Operator I, II and III. Ms.

Muchmore had included Job Descriptions from 2017. There are new ones that have been passed out to the Council and made available to the public.  Bob Richardson, Interim City Manager, presented a PowerPoint presentation to explain the Reorganization of City Departments.
 Mayor Allman commented that the City has to change. Mr. Allman stated that he is happy with the transparency that the City is going through with not just the audits and the personnel. Mr. Allman added, to the City Employees, this is not personal. Rightsizing the City is what needs to be done or we have a major discussion to dissolve the City.  Councilmember Gonzalez comments that he had a hard time sleeping this past weekend after receiving the Agenda Packet, this is something this council has known is coming.

The Council has been waiting for Bob Richardsons, Interim City Managers, recommendations. What is the best way to go about this, again it is not personal with any staff that is affected. The City obviously has to change the way they are doing things and probably should have been doing it sooner. Mr. Gonzalez stated that he asked plenty of times if there is money for this and that and heard yes, we are good. He has herd from a lot of folks that he should have been more cynical. Not here to point fingers, what Mayor Allman says is really important that we right the ship, move forward and that this is phase one. Mr. Gonzalez states that he would be lying if he told us these might be the only cuts the council will do. Over the next couple months, the Council will be looking at how we do things, what we are doing and what we are buying.  Council Member Stranske states that he taught a lot of the City Employees in his high school class. It is hard for Mr. Stranske to tell these employees that we are going to lose you or you are going to have to change your job with the City. This is going to be hard.

Willits City Council Special Meeting Minutes of March 9, 2026 Page 3 of 5  Council Member Burton states that this is not new information, the previous Interim City Manager, Rob Wilburn, told the council $2.4 million in February of 2025. As a council we have held on to this system longer than he would have. Mr. Burton respects the process that the City is going through, he is of the opinion that if the City needs to adjust do it one time instead of three. Mr. Burton feels they should be looking at pay cuts across the board for all employees, redefining the benefit programs for employees. How much health insurance and the quality of it, they should also be looking at the health insurance that is provided to the City Council, being a non-essential expense. Mr. Burton continues that he feels the City should be looking to privatizing functions that are often privatized in other communities successfully. Mr. Burton feels that to try and bolster up the General Fund with a sunsetting tax does not make sense to him.
 Vice Mayor Alaniz states that he is aware that the decisions that they are making affects whole families. It never makes sense, it isn’t right and you don’t feel good about it. Mr.

Alaniz wants to make it clear that those receiving the layoff notices were not people that the council found at fault. Mr. Alaniz then expressed the need for new people to run for City Council; the Election is in November. The City cannot go backwards.  Mayor Allman stated that ten years from now history will look back as the decision that was started tonight was either the correct decision or the wrong one. The decision that is being made tonight is based on as much information that the council has now.

Public Comment:
 Helen Sims inquired if there would be anything other than the time accrued paid to an employee that is laid off. Mayor Allman responded that no there is no severance package. Ms. Sims inquired if any of the positions that are transferred are any of them subject to a salary reduction. Bob Richardson, Interim City Manager, responded that they have kept pretty much everyone the same but have reduced the working hours for some.
 Nicole Caldwell, responded to Mr. Richardsons statement that no one said stop, she reminds council that there were multiple staff over the last couple years tried to say stop.

Including the Finance Director and other employees. The previous council and management refused to listen and ignored it. This is nothing new. The City Lawyer said that in order for a City to declare a Fiscal Emergency, there has to be an unexpected emergency, nothing here is unexpected, we all knew where we were heading for months and years, and again we tried to stop, again no one wanted to listen. When I look at the Organization Chart, there are two contract positions, one is engineer and one in Human resources, the City employees are being asked to go with issues to a contracted HR Company who is getting their paycheck from the city who will do whatever the City tells them to do. We as the employees deserve better.
 Robin Leler expressed her disappointment as what has come out. Andy Heath, Financial Consultant, presented a good program, he did not say that this justifies a Fiscal Emergency, he said this happened over a long time it is going to take years to correct the path. Mr. Leler then expressed concern over the re-organization happening so soon after passing the Fiscal Emergency. Ms. Leler wants to know why management staff was not consulted for ideas on how to cut. Ms. Leler feels that council should be talking about the mismanagement of the enterprise funds.
 Manual Orozco, Finance Director, states he was not consulted on how the city could save. Mr. Orozco mentioned that he tried to bring out the 2003 Measure A, it does have an expenditure plan that has Full Time Employee’s (FTE’s) associated with it. Mr.

Orozco states that he gave the Measure A information packet to council for consideration but that it was not.
 Bear Kamoroff asked for clarification on the number of employees being laid off vs. vacant positions. Mr. Kamoroff then asked if there are any savings other than salaries and people being laid off? Mayor Allman responded that yes, this is just the starting point.

Willits City Council Special Meeting Minutes of March 9, 2026 Page 4 of 5  Raghda Zacharia stated that she is impressed with the new plan, and she likes the idea of putting Measure K into reserves. She inquired about how long Bob Richardson will be the Interim City Manager. Mr. Richardson responded that he will only be here until early May. Ms. Zacharia then asked what measures will be put in place so that the City does not get in that mess again. Mayor Allman responded that it will be the responsibility of the City Council to do oversight. Ms. Zacharia inquired if Mr. Richardson had thought of shared positions. She also feels that policies and procedures should be imposed on the City Council as well.
 Eric Hart expressed concern over the change in Public Works. Mr. Hart also expressed concern over bringing on contractors for the engineer and HR positions. Mr. Hart then suggested that the City Council look into allowing residents that do not live within City limits but still live in Willits to be able to run for City Council.  Walter Kolon, Services and Facilities Director, states that the past year has been difficult for all of us. The Managers have all looked at their departments to see where changes could be made. When Mr. Kolon started, he came into an untenable position where we had lost a city engineer and two very skilled personnel. The City Managers idea was to put out a Request for Proposals (RFP) to have five engineering firms to be consultants to the City. The city had five Engineering Firms with contracts for 3 years. One firm had 15 task orders. Instead of doing the work in-house the City spent 1.5 million dollars. This made Public Works dependent on outside consultants. The Public Works staff worked hard to get out of those three-year contracts and then tried to build up the department by doing project management in-house to save money, having also brought in a highly skilled Civil Engineer. This new plan breaks this up and loses momentum and makes us rely on outside engineering. Mr. Kolon states that when Mr. Richardson started, he presented him with a written response on what can be done within the Services and Facilities Department to save money. Mr. Kolon has never received a response. Mr.

Kolon feels there has not been good communication, he feels the plan has some merit to it but that it is not ready to be voted on yet.

Moved by Alaniz/Seconded by Gonzalez and carried unanimously to adopt Resolution No. 2026-10 approving Reorganization of City Departments in Response to the Declaration of a Fiscal Emergency, Establishing New Classifications and the Related Classification Specifications and Pay Ranges, and Authorizing the Interim City Manager to Initiate Layoffs and Transfers, and take other necessary administrative actions to effect the changes.

5. Adopt a Resolution Approving a Policy Temporarily Limiting the Cash-Out of Leave Accrual Balances to 40 hours from March 1, 2026 through February 28, 2027.

Public Comment:
 Nicole Caldwell stated that the 40-hour cap with the IRS is just the vacation not the comp time, she believes the vacation time is capped at 240 hours if you are over the cap you have to take it or get it paid out. Comp Time is capped at 120 hours. Sick leave accrues bi-weekly, half of that will be paid out at separation unless you are the previous Assistant City Manager who was allowed to take it all. Ms. Caldwell pointed out some date discrepancies in the resolution that is in the packet. Ms. Muchmore clarified the correct date that should be noted.
 Tamara Alaniz expressed concern over the multiple updates to the Agenda Packet that were made for this meeting.
 Vice Mayor Alaniz suggested changing the allowed buyout amount from 40 to 60 hours.

Willits City Council Special Meeting Minutes of March 9, 2026 Page 5 of 5  Council Member Gonzalez asked that the date in the Resolution be fixed on line item No. 5. The paragraph starts “Beginning in March 2028”, where it should read March 2026. Mr. Gonzalez also moved to have the by-out rate increased from 40-hours to 60- hours.

Moved by Gonzalez/Seconded by Alaniz and caried 4/1 with Burton dissenting to adopt Resolution No. 2026-11 establishing a policy limitation of 60 hours on leave accrual sales from March 1, 2026 through February 28, 2027.

6. ADJOURNMENT
Mayor Allman declared the meeting adjourned at 9:10 pm.

For more information on the March 9, 2026 Willits City Council Special Meeting please view the recording on YouTube.
___________________________________
Tom Allman, Mayor
City Council for the City of Willits
ATTEST:
________________________________
DELORES PEDERSEN, City Clerk
111 E. COMMERCIAL STREET
WILLITS, CALIFORNIA 95490
(707) 459-4601 TEL
(707) 459-1562 FAX

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WILLITS CITY COUNCIL

MINUTES
WEDNESDAY MARCH 11, 2025
Mayor Allman called a regular meeting of the City Council to order at 6:30 p.m., in Council Chambers. The meeting was preceded by the pledge to the flag.

Roll Call: Councilmembers Gerardo Gonzalez, Larry Stranske, Bruce Burton, Vice Mayor Matthew Alaniz and Mayor Tom Allman were present.

Also, present were staff members: Bob Richardson, Interim City Manager; Jim Lance, City Attorney; Dusty Duley, Community Development Director; Manuel Orozco, Finance Director; Walter Kolon, Services and Facilities Director; Connor Stack, City Planner; Brian Fay, Police Chief; and Delores Pedersen, City Clerk.

2. Public Communications
 Carol Press, League of Women Voters, read a statement from Charlene McAllister, President of the League of Women Voters. The letter spoke in opposition of the Safeguarding American Voter Eligibility Act (SAVE).
 Madge Strong requested that the SAVE Act item be placed on the next agenda and asked that the council send a letter to the Senators. Ms. Strong also mentioned that Willits Economic Localization (WELL) has come out with a new newsletter. There are events listed in the Newsletter. WELL has a new website it is well95490.org.  Helen Sims mentioned she was at the Special Council Meeting on Monday March 3, 2026, she wanted to let the council know that she appreciates how they handled the meeting.

3. Public Matters
a. Proclamation Recognizing National Nutrition Month – March.  Mayor Allman Read the Proclamation Recognizing National Nutrition Month.

Annie Ersly and Sarah Dellett, Representatives of Howard Memorial Hospital, were there to accept the Proclamation.

4. Enactment of Ordinances
a. Discussion and Request for Adoption of an Amendment to Willits Municipal Code Title 17 - Zoning, Adding Chapter 17.89 “Entertainment Zones” To Establish Regulations For Entertainment Zones.
 Connor Stack gave a brief PowerPoint review of the ordinance.

Public Comment:
 John McKee stated that he does not believe that having alcohol available at the Car Show should not happen. Mayor Allman stated that this Ordinance is allowing the Willits City Council Minutes of March 11, 2026 Page 2 of 4 businesses on main street to compete with service organizations that are allowed to sell alcohol during events.
 Council Member Stranske inquired who would be responsible for any costs associated with the Entertainment District. Connor Stack responded that any costs would be the responsibility of whoever is throwing the event.  Vice Mayor stated that this is one step. The next step will be the management plans which will set the limitations on the Entertainment Zone. Mr. Stack stated that next month he will be going to the businesses that would be affected by this Ordinance and from there he will set up the rules and regulations with the help of the Chief of Police.
 Council Member Gonzalez stated that it is the responsibility of the Businesses or nonprofits that would be applying for the permits to watch what they are doing because Office of Alcohol Beverage Control (ABC) can put a stop to it.  Council Member Burton asked to hear what the Willits Chamber of Commerce has to say.
 John Kvasnicka, Chamber of Commerce, stated that the Entertainment Zone is designed to increase the commerce in town.

Moved by Gonzalez/Seconded by Alaniz and carried 4/1 with Stranske dissenting to adopt Ordinance No. 2026-01 adopting an amendment to Title 17 (Zoning) of the Willits Municipal Code Including the addition of Chapter 17.89 Entertainment Zones.

5. Consent Calendar
The following item(s) are recommended for approval or denial, as follows:
a. City Council Minutes:
i. February 25, 2026 – Special Meeting.
ii. February 25, 2026 – Regular Meeting.

Public Comment:
 Nicole Caldwell identified a correction to the minutes, in public comment for Item 9a.

Ms. Caldwell had mentioned the Transportation Tax of 2003, it was noted as 2023.

Correction will be made by City Clerk Pedersen.

Moved by Alaniz/Seconded by Gonzalez and carried unanimously to approve Consent Calendar item(s) (a) with noted corrections.

6. Monthly Activity Reports
Matters that do not require action by the City Council but are of public interest. a. Accounts Payable Activity Report: February 2026.
b. Building Permit Activity Report: February 2026.
c. Business License Activity Report: February 2026.
 Council Member Burton asked for clarification on certain line items in the Accounts Payable Activity Report.
 Vice Mayor Alaniz inquired about the large number of Business Licenses in the Activity Report. Mr. Orozco responded that staff had been working to get business licenses caught up.

7. Commissions, Agencies and Authorities
None presented.

8. City Manager Reports and Recommendations
a. Verbal Reports – No Action.

Willits City Council Minutes of March 11, 2026 Page 3 of 4  Interim City Manager Richardson reported that staff is beginning the process moving forward with the reorganization. Starting the week of March 16th staff will start on a regular routines with different operating groups to develop the new and best practices for all operations moving forward. Mr. Richardson expects there will be a presentation provided to council in early to mid-April, reviewing all new standards and operating procedures department by department.
b. Approve a Proposal from Bob Richardson, Interim City Manager to Conduct a Recruitment for a New City Manager.

Public Comment:
 Nicole Caldwell stated that with the new figures that were given on Monday that the council would want to do a review before moving on. Ms. Caldwell inquired why a couple employees that received layoff notices did not have full access to their work equipment.
 Council Member Burton does not agree with the wage range. Mr. Burton feels Council needs more flexibility. Council Member Gonzalez agreed with Mr. Burton. Mr.

Richardson stated it is entirely up to council to set the range. Mr. Burton stated that being the budget issues maybe the City can not be as competitive at this time.  Council Member Gonzales made a motion to set the pay rate to $147,000 to $186,000 Moved by Gonzalez/Seconded by Alaniz and carried unanimously to adopt Resolution No. 2026-12 Authorizing the Interim City Manager to begin the Executive Recruitment of the New City Manager.

9. Department Recommendations (Action Items)
a. Discussion and Possible Adoption of a Resolution Approving Conditional Use Permit Application #U-26-01 for an Accessory Caretakers Unit at an Existing Storage Facility Located at 325 Robert Drive Owned by Mr. Curtis Lyon.
 Connor Stack, City Planner, presented a PowerPoint presentation on thee Conditional Use Permit.

Public Comment: None presented.

Moved by Gonzalez/Seconded by Alaniz and carried unanimously (4/1 with Council Member Burton recused) to adopt Resolution No. 2026-13 approving a Conditional Use Permit No. U-26-01 to allow Construction of a Single-Family Residence (Caretaker Unit) at 325 Robert Drive (APN 006-200-12).
b. Discussion and Possible Adoption of a Resolution Authorizing Request for Proposal (RFP) to Solicit Design and Cost Proposals for the East Valley Bridge Replacement Project 2026-01 BRLS-508290680.
 Council Member Burton asked if there is option for a design build project that you have one company that takes it from beginning to end and any design changes or modifications, the company takes all responsibility. Interim City Manager Richardson stated that this topic would need it own agenda item or for a workshop, there are a number of different things a City can do to help the process through, but the City is at some disadvantages because of where we are located.

Public Comment: None Presented
Moved by Alaniz/Seconded by Stranske and carried unanimously to adopt Resolution No. 2026-14 to prepare a Request for Proposals (RFP) for qualified firms for Project Willits City Council Minutes of March 11, 2026 Page 4 of 4 2026-01,BRLS-508290680, East Valley Bridge Replacement, Preliminary Design and Budgeting.

10. City Council Announcements, Communications and Reports Councilmember Gonzalez
 League of California Cities (LCC) – Meeting on Friday March 13, 2026.

Councilmember Stranske
 Expressed concern over the E-Bikes and motorized Scooters and Skateboards that are ridden on the sidewalks. Mr. Stranske expressed concern for the potential of someone getting hurt.

Vice Mayor Alaniz
 Chamber Mixer at Mendocino College on Friday March 13, 2026.

Mayor Allman
 Mendocino College had an open house to announce a $20 million dollar obligation for the new Fire Academy, Medical Training and Building Trades facility.  When will the Great Redwood Trail construction start again. When is the estimated date that the Solar Project at the Ball Fields going to be complete? Mr. Kolon responded that he believes in the next month and a half the construction will start on the Great Redwood Trail. The Solar project is expected to be complete by in May, the fence will be taken down in the parking lot around the project in the next month. Mr. Kolon is keeping the Baseball league in formed of this.

Public Comment: None presented.

No action taken.

11. Good & Welfare
 Vice Mayor Alaniz
 Will be teaching a Citizenship Class starting March 26th. If there is anyone that needs to pass the course, please sign up.
 Councilmember Gonzalez
 Sip Some Soup will be at the community center on Saturday March 14, 2026

12. Closed Session Notice
None presented.

13. Adjournment
Mayor Allman declared the meeting adjourned at 9:13 p.m.

For more information on the March 11, 2026 Willits City Council Meeting please view the recording on YouTube.
_____________________________
Tom Allman, Mayor
City Council for the City of Willits
ATTEST:
__________________________

DELORES PEDERSEN
City Clerk
Item No. 5b
Meeting Date: March 25, 2026

AGENDA SUMMARY REPORT
To: Honorable Mayor and Council Members
From: Delores Pedersen, City Clerk.

Agenda Title: DISCUSSION AND POSSIBLE APPROVAL ALLOWING STAFF TO TRANSITION TO A STANDARDIZED ACTION-ONLY MINUTE FORMAT.

Type: Presentation Consent Regular Agenda Public Hearing Urgent Time: 15 minutes.

Summary of Request: The City of Willits currently utilizes an "Action-Only" format for meeting minutes. Historically, the City Clerk has included abbreviated summaries of individual public comment.

To enhance operational efficiency and ensure the highest level of record integrity, we request a transition to a standardized "Action-Only" format.

Proposed Format: The Public Comment section will be streamlined to reference the official digital recording.
• Example: John Smith provided Public Comment; the full comment is available on YouTube at timestamp 1:25:00.

Justification: This transition allows staff to focus on core administrative duties during the current organizational restructuring. Furthermore, it provides the public with a direct, verbatim link to comments, eliminating the risk of clerical misinterpretation or subjective summarization.

Recommended Action: Allow staff to transition to a standardized Action-Only format.

Alternative(s): Do not approve and stay with current format of Action-Only Minutes.

Fiscal Impact: No fiscal impact.

Personnel Impact: This change will free up time for staff to focus on core job descriptions during the re-organization.

Identified City Council Conflict of Interest: None.

California Environmental Quality Act: Does not apply.

AGENDA SUMMARY REPORT
To: Honorable Mayor and Council Members
From: Manuel J. Orozco, Finance Director
Agenda Title: SECOND PRESENTATION OF AUDIT CONDUCTED BY MOSS, LEVY & HARTZHEIM REGARDING AUDITED FINANCIAL REPORT FOR FISCAL YEAR ENDING JUNE 30, 2024.

Type: Presentation Consent Regular Agenda Public Hearing Urgent Time: 15 minutes.

Summary of Request: The firm Moss, Levy & Hartzheim LLP issued an opinion on the City of Willits financial statements for the fiscal year ending June 30, 2024.

The Financial Report is presented in three sections: Independent Auditors Report, Management Discussion and Analysis and Financial Statements, including the notes to the Financial Statements. The Independent Auditor’s Report section discusses the standards that were used to formulate the basis of the Auditor’s Opinion. The Management Discussion and Analysis is part of the report where management provides an overview of the City’s financial performance over the previous year and its current financial condition.

This item was brought back to Council so that they could consider the addition of the Management, Discussion and Analysis that was added on to the Financials. Please read the Management Discussion and Analysis for an overview of the financial statements. The Management Discussion and Analysis and the Notes to the Financial Statements are an integral part of understanding the financial statements.

Recommended Action: Accept the Financial Statements for the Fiscal Year Ending June 30, 2024.

Alternative(s): N/A
Fiscal Impact: None.

Personnel Impact: N/A
Identified City Council Conflict of Interest: None.
2021 Adopted Goals: The request conforms with the recommendation listed as Goal #1, Policy #1.4 under Administration…Provide the community with annual report on the use of increasing revenues related to Measure K, cannabis revenues and tourism revenues (annual City reporting).

California Environmental Quality Act: Does not apply.

CITY OF WILLITS
Annual Financial Report
Fiscal Year Ended June 30, 2024

CITY OF WILLITS

ANNUAL FINANCIAL REPORT
Fiscal Year Ended June 30, 2024

TABLE OF CONTENTS
I. FINANCIAL SECTION
A. Independent Auditor’s Report ................................................................................................ 1 B. Management’s Discussion and Analysis ................................................................................ 4 C. Basic Financial Statements:

Government-wide Financial Statements:

Statement of Net Position ............................................................................................. 17 Statement of Activities ................................................................................................. 18 Fund Financial Statements:

Governmental Funds:

Balance Sheet ......................................................................................................... 20 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position ......................................................................... 21 Statement of Revenues, Expenditures, and Changes in Fund Balances ................ 22 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities ......................................................................................................... 23 Proprietary Funds:

Statement of Net Position ...................................................................................... 24 Statement of Revenues, Expenses, and Changes in Net Position .......................... 25 Statement of Cash Flows ...................................................................................... 26 Fiduciary Funds:

Statement of Fiduciary Net Position ...................................................................... 27 Statement of Changes in Fiduciary Net Position ................................................... 28 Notes to Basic Financial Statements ................................................................................. 29 D. Required Supplementary Information:

General Fund – Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual ........................................................................ 55 Transportation Sales Tax Special Revenue Fund – Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual ....................... 56 Measure K Sales Tax Special Revenue Fund – Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual ....................... 57 Schedule of the City’s Proportionate Share of the Net Pension Liability ......................... 58 Schedule of Pension Contributions ................................................................................... 59 E. Other Supplemental Information
Capital Outlay Capital Projects Fund– Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual ..................................................... 61

CITY OF WILLITS

ANNUAL FINANCIAL REPORT
Fiscal Year Ended June 30, 2024

TABLE OF CONTENTS
II. FINANCIAL SECTION (Continued)
Nonmajor Governmental Funds
Description of Nonmajor Governmental Funds ........................................................... 63 Combining Balance Sheet ............................................................................................ 64 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances ....................................................................................................... 66 Schedules of Revenues, Expenditures, and Changes in Fund Balances- Budget and Actual:

Gas Tax Special Revenue Fund ............................................................................. 68 LEAA Program Special Revenue Fund ................................................................. 69 Narcotic Forfeiture Special Revenue Fund ............................................................ 70 H&S Restitution Special Revenue Fund ................................................................ 71 Nonmajor Proprietary Funds
Description of Nonmajor Proprietary Funds................................................................ 72 Combining Statement of Net Position.......................................................................... 73 Combining Statement of Revenues, Expenses, and Changes in Net Position..............74 Combining Statement of Cash Flows........................................................................... 75 OFFICES: BEVERLY HILLS ∙ CULVER CITY ∙ SANTA MARIA
MEMBER AMERICAN INSTITUTE OF C.P.A.’S ∙ CALIFORNIA SOCIETY OF MUNICIPAL FINANCE OFFICERS ∙ CALIFORNIA ASSOCIATION OF SCHOOL

BUSINESS OFFICIALS
1 PARTNERS COMMERCIAL ACCOUNTING & TAX SERVICES GOVERNMENTAL AUDIT SERVICES CRAIG A HARTZHEIM, CPA 8383 WILSHIRE BLVD., SUITE 800 5800 E. HANNUM, SUITE E HADLEY Y HUI, CPA BEVERLY HILLS, CA 90210 CULVER CITY, CA 90230 ADAM V GUISE, CPA TEL: 310.670.2745 TEL: 310.670.2745
TRAVIS J HOLE, CPA FAX: 310.670.1689 FAX: 310.670.1689
WILSON LAM, CPA www.mlhcpas.com www.mlhcpas.com

INDEPENDENT AUDITOR’S REPORT
The Members of the City Council of the
City of Willits
Willits, California
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 City of Willits, California as of and for the fiscal 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.

Opinions
In our opinion, the accompanying financial statements present fairly, in all material respects, the respective financial position of the governmental activities, the general fund, and the aggregate remaining fund information of the City of Willits, as of June 30, 2024, and the respective changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America.

In our opinion, except for the possible effects of the matter described in the Basis for Qualified and Unmodified Opinions section of our report, the accompanying financial statements present fairly, in all material respects, the respective financial position of the business-type activities and the Water, Wastewater, and Airport Enterprise Funds of the City of Willits, as of June 30, 2024, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

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

We were unable to obtain sufficient appropriate audit evidence supporting the cash receipts of the business-type activities and the Water, Wastewater, and Airport Enterprise Funds because the City's records regarding cash receipts were inadequate and lacking supporting documentation. Consequently, we were unable to determine whether any adjustments to these amounts were necessary. 2 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; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

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

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

Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists.

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

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

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

Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis on pages 4 through 15, Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget to Actual – General Fund, and the Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget to Actual – Sales Tax Special Revenue Fund, Schedule of Changes in the Net Pension Liability and Related Ratios, and Schedule of Pension Contributions on pages 57 through 61 be presented to supplement the basic financial statements. Such information, 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 3 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.

Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Willits’s basic financial statements. The Budgetary Comparison Schedules for the Capital Outlay Major Capital Projects Fund and Nonmajor Governmental Funds; the Combining Financial Statements for the Nonmajor Governmental Funds, and the Nonmajor Enterprise Funds listed in the table of contents are presented for purposes of additional analysis and are not required parts of the basic financial statements.

The Budgetary Comparison Schedules for the Capital Outlay Major Capital Projects Fund and Nonmajor Governmental Funds; the Combining Financial Statements for the Nonmajor Governmental Funds, and the Nonmajor Enterprise Funds are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in our 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 financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated February 20, 2026, on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is 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 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.

Moss, Levy & Hartzheim, LLP
Culver City, California
February 20, 2026

CITY OF WILLITS
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2024
4 This discussion and analysis provide an overview of the City of Willits’ financial performance for the fiscal year ended June 30, 2024. This report has been prepared in accordance with Accounting Principles Generally Accepted in the United States of America (GAAP) as established by the Governmental Accounting Standard Board (GASB). We encourage our readers to consider this information in conjunction with the information provided in the accompanying basic financial statements and notes.

FINANCIAL HIGHLIGHTS
Financial highlights of the fiscal year ending June 30, 2024, include the following:

Government-wide:
 The City’s total net position was $31,567,386 as of June 30, 2024. This was a decrease of $3,097,304 or 9% from the prior fiscal year's restated beginning net position of $34,664,690.  Of this total, $6,447,418 was governmental net position (a decrease of $871,216) and $25,119,968 was business-type net position (a decrease of $2,226,088).  Governmentwide primary government revenues were $8,695,696 and were $37,823 or less than 1% lower than the prior fiscal year ($8,733,519). They include program revenues of $4,814,169 and general revenues and transfers of $3,881,527.
 Governmentwide primary government expenses were $9,566,912 and were $3,071,490 or 47% more than the prior fiscal year ($6,495,422) , driven predominantly by General Government, Public Safety, and Public Works.
 Business-type revenues were $7,172,583 including transfers and were $108,727 or 2% more than the prior fiscal year ($7,063,856). They include program revenues of $6,792,045 and general revenues and transfers of $380,538.
 Business-type expenses were $9,398,671 and were $2,442,659 or 35% more than the prior fiscal year ($6,956,012), with Water and Sewer operations constituting the largest segments.

Fund Level:
 Governmental fund balances decreased by $1,643,425 or 18% in fiscal year 2024, reporting a combined ending fund balance of $7,514,005 compared to a restated beginning balance of $9,157,430.
 Governmental fund revenues were $8,331,124 in fiscal year 2024. This represents a decrease of $376,542 or 4% from the prior year's revenues of $8,707,666.  Governmental fund expenditures were $10,339,121, representing an increase of $350,634 or 4% from the prior year's total of $9,988,487.
 General Fund revenues were $5,287,511 in 2024, representing a decrease from the prior year's $6,831,067. This decrease is primarily attributable to the structural reclassification of Measure K revenues into a separate fund.
 General Fund expenditures were $7,099,943, an increase of $624,791 or 10% from the prior year's $6,475,152.
 General Fund balance was $484,943 as of June 30, 2024, a decrease of $2,307,716 from its restated beginning balance of $2,792,659. When comparing the General Fund to the 2023 reported ending balance of $5,604,343, it is critical to note that the 2023 figures included Measure K revenues and reserves. For fiscal year 2024, the City reclassified these major sales tax revenues, separating the Measure K Sales Tax into its own distinct special revenue fund. This restructuring accounts for the significant change in the General Fund's standalone balance.  Measure K Sales Tax Fund, reported independently for the first time in 2024, ended the year with a strong balance of $4,655,821, generated largely from $1,368,302 in direct sales and use tax revenues during the year.
 Transportation Sales Tax Fund reported an ending fund balance of $2,259,753, representing a decrease of $205,544 from the year's restated beginning balance.  Proprietary (Enterprise) Funds: At the fund level, the Water Fund's net position decreased by $754,848 to end at $15,033,139 (compared to $15,709,679 in 2023). The Sewer Fund's net position decreased by $1,174,911 to end at $10,974,507 (compared to $11,959,848 in 2023).

CITY OF WILLITS
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2024
5 OVERVIEW OF THE COMPREHENSIVE ANNUAL FINANCIAL REPORT The financial section of this report consists of five parts.  Independent Auditor's Report
 Management Discussion and Analysis (Unaudited)
 Basic Financial Statements, which include: Government-Wide Financial Statements, Fund Financial Statements and Notes to Basic Financial Statements  Required Supplementary Information (Unaudited)
 Supplementary Information, which includes Combining Fund Statements The Statement of Net Position and Statement of Activities provide information about the activities of the City, presenting an aggregate view of the City’s finances. The basic financial statements also include notes explaining pertinent information in the financial statements and provide more detailed data.

The Basic Financial Statements for the District are presented as "Government-Wide" and Governmental or Enterprise Fund financial statements. The chart below provides an overview of the major features of the financial statements.

The Government-Wide financial statements provide a comprehensive, long-term view of the City’s entire operations using full accrual accounting, which recognizes all assets, liabilities, revenues, and expenses regardless of when cash changes hands.

In contrast, the fund financial statements focus on specific activities and operate differently depending on the fund type. Governmental fund statements use modified accrual accounting to measure short-term financial resources, reporting only current assets and liabilities, and tracking near-term inflows and outflows without including capital assets or long-term debt.

Proprietary fund statements, however, operate similarly to private businesses and the government-wide statements, utilizing full accrual accounting to report both short- and long-term financial and capital information for the City's enterprise activities, such as the water and wastewater systems.

Go vernmental F unds P ro prietary F unds
Entire City government The activities of the City that are not proprietary or fiduciary, such
as police, fire, and parks
Activities the City operates similar
to private businesses: such as
water and wastewater systems.

Statement of net position Balance sheet Statement of net position Statement of activities Statement of revenues,
expenditures, and changes in fund
balances
Statement of revenues expenses,
and changes in net position
Statement of cash flows
Accrual accounting and economic
resources measurement focus
M odified accrual accounting and
current financial resources
measurement focus
Accrual accounting and economic
resources measurement focus
All revenues and expenses during
year, regardless of when cash is
received or paid
Revenues for which cash is
received during or soon after the
end of the year; expenditures when
goods or services have been
received and payment is due during
the fiscal year or soon thereafter
All revenues and expenses during
year, regardless of when cash is
received or paid
T ype o f
inflo w/ o utflo w
info rmatio n
A cco unting basis
and measurement
fo cus
F und Statements
Sco pe
R equired financial
statements
Major Features of City of Willits' Government-wide and Fund Financial Statements F igure A
T ype o f
asset/ liability
info rmatio n
All assets and liabilities, both
financial and capital, and short-term
and long-term
Only assets expected to be used
up and liabilities that come due
during the fiscal year or soon
thereafter; no capital assets or
long-term liabilities included
All assets and liabilities, both
financial and capital, and shortterm and long-term
Go vernment-wide Statements

CITY OF WILLITS
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2024
6 Government-wide Financial Statements
The Government-wide financial statements provide a longer-term view of the City’s activities as a whole and comprise the Statement of Net Position and the Statement of Activities. The Statement of Net Position provides information about the financial position of the City as a whole, including all of its capital assets and long-term liabilities on the full accrual basis, similar to that used by corporations.

The Statement of Activities provides information about all the City’s revenues and all of its expenses, also on the full accrual basis, with the emphasis on measuring net revenues or expenses of each of the City’s programs. The Statement of Activities explains in detail the change in net positions for the fiscal year.

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

Government-wide financial statements are prepared on the accrual basis, which mean they measure the flow of all economic resources of the City as a whole.

The Statement of Net Position and the Statement of Activities present information about the following:

Governmental Activities – All of the City’s basic services are considered to be governmental activities. These services are supported by the general City revenues such as taxes, and by specific program revenues such as user fees and charges.

Business-type Activities – The City’s enterprise activities consist of water, wastewater, solid waste and airport are reported in this area. Unlike governmental services, these services are supported by charges paid by users based on the amount of service they use.

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

The fund financial statements provide detailed information about each of the City’s most significant funds, called major funds. Major funds account for the major financial activities of the City and are presented individually, while the activities of non-major funds are presented in summary, with subordinate schedules presenting the detail for each of these other funds. The concept of major funds, and the determination of which funds are major, was established by the Governmental Accounting Standards Board (GASB) Statement No. 34 and replaces the concept of combining like funds and presenting them in total. Instead, each major fund is presented individually, with all non-major funds summarized and presented only in a single column. Subordinate schedules present detail of these non-major funds. Major funds present the major activities of the City for the fiscal year and may change from year to year as a result of changes in the pattern of the City’s activities.

The fund statements report on four major governmental funds: the General Fund, Sales Tax Special Revenue Fund, Measure K Sales Tax Special Revenue Fund and Capital Outlay Capital Projects.

The major business-type or enterprise funds are Water and Wastewater (Sewer) and two non-major enterprise funds.

Fund financial statements include governmental and proprietary funds as discussed below.

Governmental fund financial statements are prepared on the modified accrual basis, which means they measure only current financial resources and uses. Capital assets and other long-lived assets, along with

CITY OF WILLITS
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2024
7 long-term liabilities, are not presented in the governmental fund financial statements.

Proprietary fund financial statements are prepared on the full accrual basis and include all assets and liabilities, current and long-term.

FINANCIAL ACTIVITIES OF THE CITY AS A WHOLE
This analysis focuses on the net positions of the City as a whole. Table 1 below is a summary of the Statement of Net Position for the City as a whole combining the governmental and business-type activities.

GOVERNMENTAL ACTIVITIES
Tables 2 and 3 below focus on the City’s Governmental Statement of Net Position and Statements of Activities. 2024 2023 Dollar
Change
Percent
Change
Assets
Cash and investments $ 14,701,081 $ 16,621,661 $ (1,920,580) -12% Other assets 2,735,637 3,136,136 (400,499) -13%
Capital assets, net 44,658,815 46,580,122 (1,921,307) -4% Total Assets $ 62,095,533 $ 66,337,919 $ (4,242,386) -6% Deferred Outflows of Resources
Pension related $ 4,413,880 $ 4,585,324 $ (171,444) -4% Total Deferred Outflows $ 4,413,880 $ 4,585,324 $ (171,444) -4% Liabilities
Long term liabilities $ 33,087,563 $ 32,951,644 $ 135,919 0% Other liabilities 1,149,415 2,058,739 (909,324) -44%
Total Liabilities $ 34,236,978 $ 35,010,383 $ (773,405) -2% Deferred Inflows of Resources
Pension related $ 705,049 $ 1,056,130 $ (351,081) -33%
Total Deferred Inflows $ 705,049 $ 1,056,130 $ (351,081) -33% Net Position
Net investment in capital assets $ 24,537,597 $ 26,260,180 $ (1,722,583) -7% Restricted 2,916,896 3,003,076 (86,180) -3%
Unrestricted 4,112,893 5,593,474 (1,480,581) -26%
Total Net Position 31,567,386 $ $ 34,856,730 $ (3,289,344) -9% 2024 2023
Assets
Cash and investments $ 4,840,204 $ 6,594,574 $ (1,754,370) -27% Other assets 3,214,739 2,973,088 241,651 8%
Capital assets, net 5,462,908 5,397,416 65,492 1%
Total Assets 13,517,851 14,965,078 (1,447,227) -10%
Deferred Outflows of Resources
Pension related 3,452,689 3,586,798 (134,109) -4%
Total Deferred Outflows 3,452,689 3,586,798 (134,109) -4% Liabilities
Long term liabilities 9,190,973 8,936,134 254,839 3%
Other liabilities 780,635 1,035,930 (255,295) -25%
Total Liabilities 9,971,608 9,972,064 (456) 0%
Deferred Inflows of Resources
Pension related 551,514 826,141 (274,627) -33%
Total Deferred Inflows 551,514 826,141 (274,627) -33%
Net Position
Net investment in capital assets 5,462,908 5,397,416 65,492 1% Restricted 2,916,896 3,003,076 (86,180) -3%
Unrestricted (1,932,386) (646,821) (1,285,565) 199%
Total Net Position $ 6,447,418 $ 7,753,671 $ (1,306,253) -17% Dollar Change
Percent
Change

CITY OF WILLITS
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2024
8 The City’s governmental net position amounted to $ 6,447,418 as of June 30, 2024, a decrease of $1,306,253 or 17% over 2023. The City’s net position as of June 30, 2024, comprised the following:

Cash and investments comprised $4,840,204. Substantially all of these amounts were held in shortterm investments in government securities, as detailed in Note 3 to the financial statements Other assets comprised $1,304,992 in accounts receivable, $225,481 of notes receivable, $1,371,094 due from other funds, and $313,172 of inventory totaling $3,214,739.

Capital assets of $5,462,908, net of accumulated depreciation, which included all the City’s capital assets used in governmental activities.

Current liabilities, including accounts payable, deposits, and other amounts due currently, total $780,635.

Long-term liabilities of $9,190,973. The liability is primarily related to the City’s Net Pension Liabilities and compensated absences.

Net investment in capital assets of $5,462,908, representing the City’s investment in capital assets used in governmental activities, net of accumulated depreciation and amounts borrowed to finance those capital assets.

Unrestricted net position, the part of net position that can be used to finance day-to-day operations without constraints net of debt covenants or other legal requirements or restrictions, was $(1,932,386) as of the June 30, 2024 fiscal year, a decrease of $1,285,565 from the prior fiscal year 2023.

The Statement of Activities presents program revenues, expenses, and general revenues. Program revenues are charges for services and grants/contributions that are generally restricted to funding all or a portion of expenses for specific services. Table 3 below summarizes the governmental revenues by program, general and transfers, and expenses.
2024 2023
Expenses
General Government $ 3,452,469 $ 1,326,066 $ 2,126,403 160% Public Safety 2,829,058 2,238,397 590,661 26%
Community Development 817,445 1,093,302 (275,857) -25%
Public Works 2,162,930 1,203,480 959,450 80%
Parks and Recreation 305,010 338,603 (33,593) -10%
Planning 295,574 (295,574) -100%
Total Expenses 9,566,912 6,495,422 3,071,490 47%
Revenues
Program revenues
Charges for services 1,146,257 663,458 482,799 73%
Operating grants and contributions 2,199,346 916,571 1,282,775 140% Capital grants and contributions 1,468,566 1,715,915 (247,349) -14% Total program revenues 4,814,169 3,295,944 1,518,225 46% General revenues and transfers
Taxes 3,077,035 4,559,446 (1,482,411) -33%
Use of money and property 183,759 84,683 99,076 117%
Other revenue 256,161 767,593 (511,432) -67%
Transfers 364,572 25,853 338,719 1310%
Total general revenues and transfers 3,881,527 5,437,575 (1,556,048) -29% Total Revenues and Transfers 8,695,696 8,733,519 (37,823) 0% Change in Net Position (871,216) 2,238,097 (3,109,313) -139% Net Position - Beginning of Fiscal Year 7,753,671 5,515,574 2,238,097 41% Prior Period Adjustments (435,037) (435,037)
Net Position - Beginning of Fiscal Year, Restated 7,318,634 5,515,574 1,803,060 33% Net Position - End of Fiscal Year $ 6,447,418 $ 7,753,671 $ (1,306,253) -17% Dollar
Change
Percent
Change

CITY OF WILLITS
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2024
9 As Table 3 shows, $4,814,169, or 55%, of the City’s fiscal year 2024 governmental revenue came from program revenues, and $3,881,527, or 45%, came from general revenues such as taxes, interest, and transfers. This represents a significant shift from general tax revenues to program revenues compared to the prior year, largely because Measure K was pulled out of the General Fund and established as its own special revenue fund; consequently, this dedicated sales tax revenue is now reported as program income rather than general revenue.

Program revenues were composed of charges for services of $1,146,257, which included permit revenues, fees, and charges; $2,199,346 of operating grants and contributions; and $1,468,566 of capital grants and contributions. General revenues are not allocable to programs and are used to pay for the net cost of governmental services. When evaluating the net cost of these services and the significant year-over-year increase in total expenses, it is critical to note that government-wide expenditures are reported on a full accrual basis and can be widely affected by GASB 68 actuarial adjustments. These annual non-cash pension expense calculations can cause substantial volatility in reported departmental expenses that operate completely independently of the City's actual day-to-day operational spending.

Governmental Revenues
Governmental revenues are primarily from taxes ($3,077,035, or 35%), operating grants and contributions ($2,199,346, or 25%), capital grants and contributions ($1,468,566, or 17%), and charges for services ($1,146,257, or 13%). When comparing 2024 to 2023, there is a significant shift from general tax revenues to program revenues. This variance is heavily driven by the fact that Measure K was pulled out of the General Fund and established as its own special revenue fund. Consequently, this dedicated sales tax revenue no longer shows up as general revenue, but is instead reported as program income.

Governmental Expenses
Governmental expenses include current fiscal year expenses and depreciation, but do not include capital outlays, which are added to the City’s capital assets. Public safety, public works, and general government make up 88% of the total governmental expenses. Total expenses of $9,566,912 were driven predominantly by General Government ($3,452,469), Public Safety ($2,829,058), and Public Works ($2,162,930).

When analyzing the significant increase in expenses from the prior year, it is critical to note that governmentwide expenditures are reported on a full accrual basis and can be widely affected by GASB 68 actuarial adjustments. The annual non-cash pension expense adjustments calculated by actuaries can cause substantial volatility in reported departmental expenses (such as the increases seen in General Government and Public Works) that operate completely independently of the City's actual day-to-day operational spending.

CITY OF WILLITS
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2024
10 BUSINESS-TYPE ACTIVITIES
The Statement of Net Position and Statement of Activities present a summary of the City’s Business-type activities that are composed of the City’s enterprise funds. In Table 4 below, the net position of business-type activities decreased by $1,983,091, or 7%, from the prior fiscal year ending balance.

From the Statement of Activities, Table 5 summarizes the changes in net position for all the enterprise funds. Program revenues were $6,792,045 for the fiscal year 2024, which is $204,303 less than the prior fiscal year. The program revenues make up 95% of the total revenues available to fund the enterprises. The expenses for fiscal year 2024 were $9,398,671, which was $2,442,659, or 35%, more than the prior fiscal year.
2024 2023
Assets
Current Assets $ 9,381,775 $ 11,157,144 $ (1,775,369) -16% Capital assets, net 39,195,907 41,182,706 (1,986,799) -5% Total Assets 48,577,682 52,339,850 (3,762,168) -7%
Deferred Outflows of Resources
Pension related 961,191 998,526 (37,335) -4%
Total Deferred Outflows 961,191 998,526 (37,335) -4%
Liabilities
Long term liabilities 21,685,364 23,444,484 (1,759,120) -8% Current liabilities 2,580,006 2,560,844 19,162 1%
Total Liabilities 24,265,370 26,005,328 (1,739,958) -7% Deferred Inflows of Resources
Pension related 153,535 229,989 (76,454) -33%
Total Deferred Inflows 153,535 229,989 (76,454) -33%
Net Position
Net investment in capital assets 19,074,689 20,862,764 (1,788,075) -9% Unrestricted 6,045,279 6,240,295 (195,016) -3%
Total Net Position $ 25,119,968 $ 27,103,059 $ (1,983,091) -7% Dollar
Change
Percent
Change

CITY OF WILLITS
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2024
11 The Sewer Fund operating revenues decreased by $396,561, or 10%, in fiscal year 2024 and operating expenses increased by $1,445,144, or 49%, resulting in a net operating loss of $943,312 for fiscal year 2024. Most of the increase in expenses is related to operations, materials and supplies, and non-cash pension adjustments. The fund's net position decreased by $1,174,911 to a new total of $10,974,507. Of this amount, $6,572,179 was net investment in capital assets and $4,402,328 was unrestricted.

The Water Fund operating revenues increased by $143,364, or 5%, in fiscal year 2024. Operating expenses increased by $1,276,931, or 43%, in fiscal year 2024, resulting in an operating loss of $1,088,729. The fund's net position decreased by $754,848 in the fiscal year 2024. As of June 30, 2024, the fund's net position was $15,033,139, of which $11,380,283 was net investment in capital assets, and $3,652,856 was unrestricted. 2024 2023
Expenses
Water 4,294,452 $ 2,978,401 $ 1,316,051 $ 44%
Wastewater 4,642,553 3,550,081 1,092,472 31%
Solid Waste 179,231 155,986 23,245 n/a
Airport 282,435 271,544 10,891 4%
Total Expenses 6,956,012 9,398,671 2,442,659 35%
Revenues
Program revenues
Charges for services 6,792,045 6,995,670 (203,625) -3%
Operating grants and contributions 678 (678) -100%
Total program revenues 6,996,348 6,792,045 (204,303) -3% General revenues and transfers
Use of money and property 284,357 93,361 190,996 205%
Other revenue 460,753 460,753 #DIV/0!
Transfers (364,572) (25,853) (338,719) 1310%
Total general revenues and transfers 67,508 380,538 313,030 464% Total Revenues and Transfers 7,063,856 7,172,583 108,727 2% Change in Net Position 107,844 (2,226,088) (2,333,932) -2164% Net Position - Beginning of Fiscal Year 26,995,215 27,103,059 107,844 0% Prior Period Adjustments 242,997 242,997 Net Position - End of Fiscal Year $ 27,103,059 25,119,968 $ (1,983,091) $ -7% Dollar
Change
Percent
Change

CITY OF WILLITS
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2024
12 ANALYSIS OF GOVERNMENTAL FUNDS
From the Fund Statement of Revenues, Expenditures, and Changes in Fund Balance, Table 6 below, summarizes the activity for the General Fund and other governmental funds. The revenues and expenditures are on a modified accrual basis and include capital outlay expenditures.

The General Fund revenues of $5,287,511 decreased by $1,543,556 from the prior fiscal year. This change is entirely structural and planned. In 2023, Measure K revenues were grouped within the General Fund. For 2024, the City recognized these revenues in their own distinct special revenue fund, shifting the associated tax revenue from the General Fund column into the "Other Governmental Funds" column.

General Fund expenditures were $7,099,943, an increase of $624,791 or 10%, from the prior year. This expenditure increase was mainly driven by higher General Government operational costs.

As of June 30, 2024, the General Fund's fund balance totaled $484,943. Following the structural separation of Measure K, the unassigned portion of the General Fund Balance was $171,771.

The Other Governmental funds include the newly separated Measure K Sales Tax fund, the Transportation Sales Tax fund, the Capital Outlay fund, and the Gas Tax fund, which collectively account for major dedicated capital expenditures, maintenance, rehabilitation, reconstruction, and construction of City streets and infrastructure.
2024 2023 2024 2023 2024 2023
Revenue
Taxes $ 3,077,035 $ 4,559,446 $ 2,261,194 $ 882,658 $ 5,338,229 $ 5,442,104 Licenses and Permits 79,461 97,999 79,461 97,999
Interest 112,968 33,774 70,791 50,909 183,759 84,683
Charges for Services 1,087,088 653,683 59,169 9,775 1,146,257 663,458 Intergovernmental 831,044 816,571 575,674 933,257 1,406,718 1,749,828 Other 99,915 669,594 76,785 176,700 669,594
Total Revenues 5,287,511 6,831,067 3,043,613 1,876,599 8,331,124 8,707,666 Expenses
Current:

General Government 2,949,570 2,008,717 7,500 2,949,570 2,016,217 Planning 295,574 - 295,574
Public Safety 2,624,710 2,984,449 27,339 65,481 2,652,049 3,049,930 Public Works 342,724 224,507 1,143,982 978,973 1,486,706 1,203,480 Parks & Recreation 305,010 338,603 305,010 338,603
Community Development 799,059 623,302 18,386 470,000 817,445 1,093,302 Capital Outlay 78,870 2,049,471 1,991,381 2,128,341 1,991,381 Total Expenditures 7,099,943 6,475,152 3,239,178 3,513,335 10,339,121 9,988,487 (1,812,432) 355,915 (195,565) (1,636,736) (2,007,997) (1,280,821) Other Financing Sources (Uses)
Transfers In 224,846 41,722 1,393,797 1,398,649 1,618,643 1,440,371 Transfers Out (720,130) (533,941) (1,414,518) (1,254,071) (1,414,518) Total Other Financing Sources
(Uses) (495,284) 41,722 859,856 (15,869) 364,572 25,853 (2,307,716) 397,637 664,291 (1,652,605) (1,643,425) (1,254,968) 2,316,824 5,206,706 6,214,908 4,579,994 8,531,732 9,786,700 Prior Period Adjustments 475,836 149,863 625,699 - $ 484,944 $ 5,604,343 $ 7,029,062 $ 2,927,389 $ 7,514,006 $ 8,531,732 General Fund Other Governmental Funds Total Governmental Funds Fund Balances, End of Year
Fund Balances, Beginning of Year
Net Change in Fund Balances
Excess (Deficiency) of Revenues
over Expenditures

CITY OF WILLITS
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2024
13 CAPITAL ASSETS
GASB Statement No. 34 required the City to record all its capital assets including infrastructure, which was not recorded prior to GASB Statement No. 34. Infrastructure includes roads, bridges, signals, and similar assets used by the entire population.

In fiscal year 2024, the City reported the cost of all its infrastructure assets and computed the amounts of accumulated depreciation for these assets based on their original acquisition dates. At the end of fiscal year 2024, the cost of infrastructure and other capital assets recorded on the City’s financial statements is as shown in Table 7 below.

Details on capital assets, current fiscal year additions and construction in progress can be found in the Notes under Note 5. The City depreciates all its capital assets over their estimated useful lives, as required by GASB Statement No. 34. The purpose of depreciation is to spread the cost of a capital asset over the years of its useful life so that an allocable portion of the cost of the asset is borne by all users. Additional information on depreciable lives may be found in the Notes to the financial statements.

LONG TERM DEBT AND LIABILITIES
The City issues debt financing for capital improvements primarily for water and wastewater enterprises. The long-term liabilities are employee compensated absences, Net Pension from CalPERS and Landfill Post-Closure costs. The City’s debt issues and Landfill costs are discussed in detail in Note 7 of the financial statements. The Pension liabilities are discussed in Note 12.

The City's long-term debt and liability balances as of June 30 were as follows:
2024 2023 2024 2023 2024 2023
Land $ 150,963 $ 150,963 $ 1,804,213 $ 1,804,213 $ 1,955,176 $ 1,955,176 Buildings and improvements 1,938,567 1,938,567 8,965,632 8,945,492 10,904,199 10,884,059 Machinery and Equipment 2,150,242 2,150,242 10,500,825 10,555,553 12,651,067 12,705,795 Infrastructure 3,384,023 2,889,725 48,586,083 47,255,228 51,970,106 50,144,953 Construction in progress 820,955 2,244,131 108,864 1,490,857 929,819 3,734,988 Less : Accumulated Depreciation (2,981,842) (3,976,212) (30,769,710) (28,868,637) (33,751,552) (32,844,849) Total $ 5,462,908 $ 5,397,416 $ 39,195,907 $ 41,182,706 $ 44,658,815 $ 46,580,122 Governmental Activities Business Type Activities Total
2024 2023 2024 2023 2024 2023
Compensated Absences $ 667,407 $ 479,393 $ 214,484 $ 73,477 $ 881,891 $ 552,870 Net Pension Liability 8,763,263 8,456,741 2,439,599 2,146,964 11,202,862 10,603,705 Total Pension and Leave Liability 9,430,670 8,936,134 2,654,083 2,220,441 12,084,753 11,156,575 2012 Safe Drinking Water State Revolving Fund 2,224,297 2,330,216 2,224,297 2,330,216 2015 Wastewater Tax Compliance Certificates 2,037,505 2,224,134 2,037,505 2,224,134 2020 Wastewater Refunding Bonds 15,340,000 15,545,000 15,340,000 15,545,000 Total Bond and Loan Liabitlties 19,601,802 20,099,350 19,601,802 20,099,350 Landfill Post- Closure costs 881,592 881,592 881,592 881,592 Total Long-Term Liabilities $ 9,430,670 $ 8,936,134 $ 23,137,477 $ 23,201,383 $ 32,568,147 $ 32,137,517 Governmental Activities Business Type Activities Total

CITY OF WILLITS
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2024
14 Total long-term debt and liabilities for the City experienced a marginal net increase of $135,921 during the fiscal year. This overall change was composed of a $391,855 increase in the City's combined net pension liability and a $260,852 increase in compensated absences, which were substantially offset by decreases in outstanding debt of $516,786 resulting from scheduled principal repayments and premium amortization. The City successfully made all scheduled repayments on its current debt obligations during the year.

ECONOMIC CONDITION, OUTLOOK, AND ACTIVITY
The passing of Measure K has continued to play a vital role in stabilizing the City’s finances and addressing deferred maintenance. While the overall Financial Position of the City decreased by $3,097,304 in 2024 (prior to restatement adjustments), a major financial milestone reflected in this year's report is the structural isolation of the Measure K initiative funds. By partitioning Measure K revenues into their own special revenue fund, the City has established greater transparency and security for this vital revenue flow, which successfully generated $1,368,302 during the fiscal year.

At the time, the City continued to work on several capital and infrastructure projects to combat the historical deterioration of its infrastructure. Staff completed or advanced several key initiatives in 2024, including the 2024 Pavement Preservation Project, necessary infrastructure repairs at the Rodeo Grounds, and significant downtown beautification projects—such as improvements to Main Street, East Commercial Street, and various City parks—supported by the Caltrans Clean California Local Grant Program.

Staff expected to complete or advance a robust roster of projects in 2025 and beyond. Management had several initiatives including the construction of the Rail with Trail Project (bolstered by millions in external grant allocations), Phase I of the Blosser Lane Rehabilitation Project, the 2025 Pavement Preservation Project on W. Mendocino Avenue, Water and Sewer line replacement projects and the Baechtel Road sidewalk and road widening improvements. Additionally, the City initiated key studies and upgrades at the Airport, including pavement management and wildlife hazard assessments, to secure its viability for the future.

The City is also highly focused on the continued viability of its Utility Programs. With operating expenses and non-cash pension adjustments increasing in both the Water and Sewer enterprise funds, the City continues to carefully evaluate utility rates and infrastructure needs to ensure sustainable service delivery over the next five years. Concurrently, city streets and roadways were actively maintained, paved, and rid of potholes utilizing the Transportation sales tax revenues, guided by the updated Local Road Safety Action Plan.

At the time, the City Council and management were united in their dedication to ongoing, longterm initiatives such as the General Plan Update, which encompasses comprehensive land use planning, capital financing, code enforcement, and essential street rehabilitation. Although the goal was to continue to move forward on projects and infrastructure remediation, the implementation of new financial software identified a financial turn that needed to be addressed. Prior to implementation, payroll expenses were not accounted for in the prior financial software, this was because of a movement to an online payroll processing service that was unable to provide the necessary reporting that would apply the payroll cost to the various funds. Therefore, in the subsequent months after the close of the fiscal year, the City began to make changes to the operations of the city that drastically cut the ongoing spending of contracted services.

CITY OF WILLITS
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2024
15 CONTACTING THE CITY’S FINANCIAL MANAGEMENT
This Basic Financials report is intended to provide citizens, taxpayers, and creditors with a general overview of the City’s finances. Questions about this report should be directed to the City of Willits, at 111 E Commercial St, Willits, CA 95490.
16 Page Intentionally Left Blank
Governmental Business-type
Activities Activities Total
Assets:

Cash and Investments 4,840,204 $ 9,860,877 $ $ 14,701,081 Accounts Receivable 1,304,992 698,798 2,003,790
Notes Receivable 225,481 225,481
Internal Balances 1,371,094 (1,371,094)
Inventory 313,172 193,194 506,366
Capital Assets, Not Being Depreciated 971,918 1,913,077 2,884,995 Capital Assets, Net of Accumulated Depreciation 4,490,990 37,282,830 41,773,820 Total Assets 13,517,851 48,577,682 62,095,533
Deferred Outflows of Resources:

Pension related 3,452,689 961,191 4,413,880
Total Deferred Outflows of Resources 3,452,689 961,191 4,413,880 Liabilities:

Accounts Payable 488,416 295,520 783,936
Interest Payable 221,992 221,992
Deposits Payable 52,522 90,965 143,487
Noncurrent Liabilities:

Net Pension Liability 8,763,263 2,439,599 11,202,862
Due Within One Year 239,697 607,431 847,128
Due in More Than One Year 427,710 20,609,863 21,037,573 Total Liabilities 9,971,608 24,265,370 34,236,978
Deferred Inflows of Resources:

Pension related 551,514 153,535 705,049
Total Deferred Inflows of Resources 551,514 153,535 705,049 Net Position:

Net Investment in Capital Assets 5,462,908 19,074,689 24,537,597 Restricted for:

Community Development 380,498 380,498
Streets and Roads 2,427,099 2,427,099
Public Safety 109,299 109,299
Unrestricted (1,932,386) 6,045,279 4,112,893
Total Net Position $ 6,447,418 $ 25,119,968 $ 31,567,386

CITY OF WILLITS
Statement of Net Position
June 30, 2024
The notes to the financial statements are an integral part of this statement. 17 Operating Capital
Charges for Grants and Grants and
Expenses Services Contributions Contributions
Primary Government:

Governmental Activities:

General Government 3,452,469 $ 1,087,088 $ 2,199,346 $ 164,057 $ Public Safety 2,829,058 59,169
Community Development 817,445
Public Works 2,162,930 - 1,304,509
Parks and Recreation 305,010
Total Governmental Activities 9,566,912 1,146,257 2,199,346 1,468,566 Business-type Activities:

Water 4,294,452 3,166,603 -
Sewer 4,642,553 3,458,178
Solid Waste 179,231
Airport 282,435 167,264
Total Business-type Activities 9,398,671 6,792,045 -
Total Primary Government $ 18,965,583 $ 7,938,302 $ 2,199,346 $ 1,468,566 Taxes:

Property Taxes
Sales and Use Taxes
Business License Taxes
Franchise
Transient Occupancy Taxes
Other Taxes
Licenses and Permits
Investment Earnings
Other Revenue
Transfers
Total General Revenues and Transfers
Change in net position
Net Position - Beginning of Fiscal Year
Prior Period Adjustment
Net Position - Beginning of Fiscal Year, Restated
Net Position - End of Fiscal Year
Functions
General Revenues:

Program Revenues
The notes to the financial statements are an integral part of this statement.

CITY OF WILLITS
Statement of Activities
For the Fiscal Year Ended June 30, 2024
18 Net (Expenses) Revenues and Changes in Net Position
BusinessGovernmental type
Activities Activities Total
$ (1,978) $ - $ (1,978)
(2,769,889) (2,769,889)
(817,445) (817,445)
(858,421) (858,421)
(305,010) (305,010)
(4,752,743) (4,752,743)
(1,127,849) (1,127,849)
(1,184,375) (1,184,375)
(179,231) (179,231)
(115,171) (115,171)
(2,606,626) (2,606,626)
(4,752,743) (2,606,626) (7,359,369)
529,242 529,242
1,375,976 1,375,976
130,799 130,799
402,221 402,221
283,515 283,515
355,282 355,282
79,461 79,461
183,759 284,357 468,116
176,700 460,753 637,453
364,572 (364,572)
3,881,527 380,538 4,262,065
(871,216) (2,226,088) (3,097,304)
7,753,671 27,103,059 34,856,730
(435,037) 242,997 (192,040)
7,318,634 27,346,056 34,664,690
$ 6,447,418 $ 25,119,968 $ 31,567,386
19 Capital Projects
Nonmajor Total
Transportation Measure K Governmental Governmental
General Sales Tax Sales Tax Capital Outlay Funds Funds
Assets:

Cash and Investments $ - $ 2,163,405 $ 2,238,082 $ - $ 438,717 $ 4,840,204 Accounts Receivable 810,564 153,078 230,185 76,785 34,380 1,304,992 Due from Other Funds 288,126 2,187,554 2,475,680
Loans Receivable 225,481 225,481
Inventory 313,172 313,172
Total Assets $ 1,411,862 $ 2,316,483 $ 4,655,821 $ 76,785 $ 698,578 $ 9,159,529 Liabilities and Fund Balances:

Liabilities:

Accounts Payable $ 303,911 $ 56,730 $ - $ 108,795 $ 18,980 $ 488,416 Deposits Payable 38,547 9,909 4,066 52,522
Due to Other Funds 584,461 83,084 437,041 1,104,586
Total Liabilities 926,919 56,730 201,788 460,087 1,645,524 Fund Balances:

Nonspendable 313,172 313,172
Restricted for:

Public Safety 109,299 109,299
Public Works 2,259,753 167,346 2,427,099
Community Development 380,498 380,498
Unassigned 171,771 4,655,821 (125,003) (418,652) 4,283,937 Total Fund Balances 484,943 2,259,753 4,655,821 (125,003) 238,491 7,514,005 Total Liabilities and Fund Balances $ 1,411,862 $ 2,316,483 $ 4,655,821 $ 76,785 $ 698,578 $ 9,159,529

CITY OF WILLITS
Balance Sheet
Governmental Funds
June 30, 2024
The notes to the financial statements are an integral part of this statement.

Special Revenue
20 Total fund balances - governmental funds $ 7,514,005 In governmental funds, only current assets are reported. In the statement of net position, all assets are reported, including capital assets and accumulated depreciation.

Capital assets at historical cost 9,765,010 $
Accumulated depreciation (4,302,102) 5,462,908
(551,514)
3,452,689
In governmental funds, only current liabilities are reported. In the statement of net position, all liabilities, including long-term liabilities, are reported. Long-term liabilities relating to governmental activities consist of:

Net pension liability (8,763,263)
Compensated absences payable (667,407)
Total net position - governmental activities $ 6,447,418 The notes to the financial statements are an integral part of this statement.

Deferred inflows related to pension
Deferred outflows related to pension

CITY OF WILLITS
Reconciliation of the Governmental Funds Balance Sheet
June 30, 2024
to the Statement of Net Position
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. 21 Capital Projects
Nonmajor Total
Transportation Measure K Governmental Governmental
General Sales Tax Sales Tax Capital Outlay Funds Funds
Revenues
Property Taxes 529,242 $ - $ - $ - $ - $ 529,242 $
Sales and Use Taxes 1,375,976 892,892 1,368,302 3,637,170 Business License Taxes 130,799 130,799
Franchise Fees 402,221 402,221
Transient Occupancy Taxes 283,515 283,515
Other Taxes 355,282 355,282
Licenses and Permits 79,461 79,461
Interest 112,968 61,499 9,292 183,759
Charges for Services 1,087,088 1,146,257 59,169
Intergovernmental 831,044 164,057 411,617 1,406,718
Other 99,915 76,785 176,700
Total Revenues 5,287,511 954,391 1,368,302 240,842 480,078 8,331,124 Expenditures
Current:

General Government 2,949,570 2,949,570
Public Safety 2,624,710 2,652,049 27,339
Public Works 342,724 505,404 139,923 498,655 1,486,706
Parks and Recreation 305,010 305,010
Community Development 799,059 817,445 18,386
Capital Outlay 78,870 120,590 1,928,881 2,128,341
Total Expenditures 7,099,943 625,994 2,068,804 544,380 10,339,121 Excess (Deficiency) of Revenues over
(under) Expenditures 328,397 (1,812,432) 1,368,302 (1,827,962) (64,302) (2,007,997) Other Financing Sources (Uses):

Transfers In 224,846 1,393,797 1,618,643
Transfers Out (720,130) (533,941) (1,254,071)
Total Other Financing Sources (Uses) (495,284) (533,941) 1,393,797 364,572 Net Change in Fund Balances (2,307,716) (205,544) 1,368,302 (434,165) (64,302) (1,643,425) Fund Balances - June 30, 2023 2,437,650 2,316,824 3,287,519 178,920 310,819 8,531,732 Prior Period Adjustments 27,647 475,835 130,242 (8,026) 625,698 Fund Balances - July 1, 2023, Restated 2,465,297 2,792,659 3,287,519 309,162 302,793 9,157,430 Fund Balances - June 30, 2024 $ 2,259,753 484,943 $ 4,655,821 $ (125,003) $ 238,491 $ 7,514,005 $ The notes to the financial statements are an integral part of this statement.

CITY OF WILLITS
Statement of Revenues, Expenditures, and Changes in Fund Balance Governmental Funds
For the Fiscal Year Ended June 30, 2024
Special Revenue
22 Amounts reported for governmental activities in the statement of activities are different because:

Net change in fund balances - total governmental funds $ (1,643,425) Governmental funds report capital outlays as expenditures. However, in the statement of activities, the costs of those capital assets are allocated over their estimated useful lives as depreciation expense. This is the amount by which capital outlay exceeded depreciation in the current period.

Capital outlay 1,452,117 $
Depreciation expense (325,890) 1,126,227
Compensated absence expenditures reported in the statement of activities do not require the use of current financial resources and therefore, are not reported as expenditures in a governmental fund. This is the net change in compensated absences for the current period. (188,014)
In governmental funds, pension costs are recognized when employer contributions are made. In the (166,004)
Change in net position of governmental activities $ (871,216) The notes to the financial statements are an integral part of this statement.

CITY OF WILLITS
Reconciliation of the Statement of Revenues, Expenditures, and Changes in For the Fiscal Year Ended June 30, 2024
Fund Balances of Governmental Funds to the Statement of Activities statement of activities, pension costs are recognized on the accrual basis. This fiscal year, the difference between accrual-basis pension costs and actual employer contributions was:
23 Nonmajor
Sewer Water Enterprise
Fund Fund Funds Total
Assets
Current Assets:

Cash and Investments 5,600,002 $ 4,260,875 $ - $ 9,860,877 $ Accounts Receivable 292,466 327,406 78,926 698,798
Inventory 193,194 193,194
Total Current Assets 5,892,468 4,588,281 272,120 10,752,869 Noncurrent Assets:

Capital Assets:

Land 1,369,269 423,252 11,692 1,804,213
Buildings and Improvements 3,453,985 3,733,794 1,777,853 8,965,632 Machinery and Equipment 2,406,410 8,039,548 54,867 10,500,825 Infrastructure 33,806,621 14,779,462 48,586,083
Construction in Progress 108,864 108,864
Less:

Accumulated Depreciation (16,567,184) (13,480,341) (722,185) (30,769,710) Total Noncurrent Assets 24,469,101 13,604,579 1,122,227 39,195,907 Deferred Outflows of Resources:

Pension Related 623,297 337,894 961,191
Total Deferred Outflows of Resources 623,297 337,894 961,191 Total Assets and Deferred Outflows of Resources 30,984,866 18,530,754 1,394,347 50,909,967 Liabilities
Current Liabilities:

Accounts Payable 105,588 169,362 20,570 295,520
Interest Payable 207,028 14,964 221,992
Due to Other Funds 1,371,094 1,371,094
Deposits Payable 82,196 8,769 90,965
Long Term Debt - Due within One Year 462,927 144,504 607,431 Total Current Liabilities 775,543 411,026 1,400,433 2,587,002 Noncurrent Liabilities:

Compensated Absences 84,376 56,630 141,006
Net Pension Liability 1,581,990 857,609 2,439,599
Long Term Debt - Due in More Than One Year 17,468,888 2,118,377 881,592 20,468,857 Total Noncurrent Liabilities 19,135,254 3,032,616 881,592 23,049,462 Deferred Inflows of Resources:

Pension Related 99,562 53,973 153,535
Total Deferred Inflows of Resources 99,562 53,973 153,535 Total Liabilities and Deferred Inflows of Resources 20,010,359 3,497,615 2,282,025 25,789,999 Net Position
Net Investment in Capital Assets 6,572,179 11,380,283 1,122,227 19,074,689 Unrestricted 4,402,328 3,652,856 (2,009,905) 6,045,279
Total Net Position $ 10,974,507 $ 15,033,139 $ (887,678) $ 25,119,968 The notes to the financial statements are an integral part of this statement.

CITY OF WILLITS
Statement of Net Position
Proprietary Funds
June 30, 2024
Business-type Activities-Enterprise Funds
24 Nonmajor
Sewer Water Enterprise
Fund Fund Funds Total
Operating Revenues:

Charges for Services 3,458,178 $ 3,166,603 $ 167,264 $ 6,792,045 $ Total Operating Revenues 3,458,178 3,166,603 167,264 6,792,045

Operating Expenses:

Operations 1,874,102 1,342,449 201,947 3,418,498
Administrative 381,120 484,622 6,413 872,155
Materials and Supplies 938,765 1,258,766 2,197,531
Maintenance 229,940 292,973 206,319 729,232
Depreciation 977,563 876,522 46,987 1,901,072
Total Operating Expenses 4,401,490 4,255,332 461,666 9,118,488 Operating Income (Loss) (943,312) (1,088,729) (294,402) (2,326,443) Non-operating Revenues (Expenses):

Interest Revenue 164,410 119,947 - 284,357
Interest Expense (241,063) (39,120) (280,183)
Miscellaneous Revenue 11,263 449,490 460,753
Total Non-Operating Revenue (Expenses) (65,390) 530,317 - 464,927 Income (Loss) Before Transfers (1,008,702) (558,412) (294,402) (1,861,516) Transfers
Transfers Out (166,209) (196,436) (1,927) (364,572)
Total Transfers (166,209) (196,436) (364,572)
Change in Net Position (754,848) (1,174,911) (296,329) (2,226,088) Net Position - Beginning of Fiscal Year 11,959,848 15,709,679 (566,468) 27,103,059 Prior Period Adjustment 189,570 78,308 (24,881) 242,997 Net Position - Beginning of the Fiscal Year, Restated 12,149,418 15,787,987 (591,349) 27,346,056 Net Position - End of Fiscal Year 10,974,507 $ 15,033,139 $ (887,678) $ 25,119,968 $ Business-type Activities - Enterprise Funds

CITY OF WILLITS
Statement of Revenues, Expenses, and Changes in Net Position Proprietary Funds
For the Fiscal Year Ended June 30, 2024
The notes to the financial statements are an integral part of this statement. 25 Nonmajor
Sewer Water Enterprise
Fund Fund Funds
CASH FLOWS FROM OPERATING ACTIVITIES:

Cash Received from Users 3,779,323 $ 3,238,918 $ 90,201 $ 7,108,442 $ Cash Payments to Suppliers and Contractors (1,480,521) (2,374,967) (474,598) (4,330,086) Cash Payments to Employees (1,795,085) (1,296,031) (3,091,116) Net Cash Provided (Used) By Operating Activities 503,717 (432,080) (384,397) (312,760) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:

Interfund Borrowing (166,209) (196,436) 597,511 234,866 Intergovernmental 449,490 449,490
Net Cash Provided (Used) By Noncapital Financing Activities (166,209) 253,054 595,584 682,429 CASH FLOWS FROM INVESTING ACTIVITIES:

Interest Received 164,410 119,947 284,357
Net Cash Provided (Used) in Investing Activities 164,410 119,947 284,357

CASH FLOWS FROM CAPITAL AND RELATED FINANCING
ACTIVITIES:

Principal Payments on Debt Borrowings (391,629) (105,919) (497,548) Interest Paid (39,120) (241,063) (280,183)
Acquisition of Property, Plant, and Equipment (292,071) (211,187) (503,258) Net Cash Provided (Used) In Capital and Related
Financing Activities (621,429) 12,380 (211,187) (820,236)

NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (46,699) (119,511) - (166,210)
CASH AND CASH EQUIVALENTS, BEGINNING OF FISCAL YEAR 5,719,513 4,307,574 - 10,027,087 CASH AND CASH EQUIVALENTS, END OF FISCAL YEAR 5,600,002 $ 4,260,875 $ - $ 9,860,877 $ Reconciliation to Statement of Net Position:

Cash and Investments 5,600,002 $ 4,260,875 $ - $ 9,860,877 $ $ 4,260,875 5,600,002 $ - $ 9,860,877 $
CASH FLOWS FROM OPERATING ACTIVITIES:

Operating Income (Loss) (943,312) $ (1,088,729) $ (294,402) $ (2,326,443) $

Adjustment to Reconcile Operating Income
(Loss) to Net Cash Provided (Used) by Operating
Activities:

Depreciation 876,522 977,563 46,987 1,901,072
Changes in Assets, Deferred Outflows, Liabilities, and Deferred Inflows:
(Increase) Decrease in Accounts Receivable 321,145 (9,881) (77,363) 233,901 Increase (Decrease) in Accounts Payable 69,304 (255,976) (1,569) (188,241) Increase (Decrease) in Compensated Absences 49,049 30,172 79,221 Increase (Decrease) in Net Pension Liability 29,968 16,246 46,214 Increase (Decrease) in Deposits Payable 300 (434) (134) (Increase) Decrease in Inventory (58,350) (58,350)
Total Adjustments 1,447,029 656,649 (89,995) 2,013,683
Net Cash Provided (Used) By Operating Activities 503,717 $ (432,080) $ (384,397) $ (312,760) $ The notes to the financial statements are an integral part of this statement.

Totals
Business-type Activities - Enterprise Funds

CITY OF WILLITS

PROPRIETARY FUNDS
For the Fiscal Year Ended June 30, 2024

STATEMENT OF CASH FLOWS
26 Private Purpose
Trust Fund
RDA
Successor
Agency
ASSETS
Cash and Investments 710,525 $
Total Assets 710,525

LIABILITIES
Interest Payable 42,148
Accounts Payable 993
Long-term Debt, Due Within One Year 295,250
Total Liabilities 338,391

NET POSITION
Held in Trust for Others 372,134
Total Net Position 372,134 $
The notes to the financial statements are an integral part of this statement. 27 CITY OF WILLITS

FIDUCIARY FUNDS

STATEMENT OF NET POSITION
June 30, 2024
Private Purpose
Trust Fund
RDA
Successor
Agency
Additions:

Intergovernmental 375,480 $
Interest 90
Total Additions 375,570
Deductions:

Community Development 33,576
Interest Expense 7,600
Total Deductions 41,176
Change in Net Position 334,394
Net Position - June 30, 2023 37,740
Net Position - June 30, 2024 372,134 $
28 The notes to the financial statements are an integral part of this statement.

CITY OF WILLITS

FIDUCIARY FUNDS

STATEMENT OF CHANGES IN NET POSITION
For the Fiscal Year Ended June 30, 2024

CITY OF WILLITS

NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2024
29 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting Entity
The City of Willits (City) is a general law City incorporated in the State of California. The City is governed by an elected five-member City Council. The following services are provided by the City to its citizens; public safety (police); streets; drinking water; wastewater collection, treatment and disposal; public improvements, parks and recreation; planning and zoning; and general administrative services.

As required by accounting principles generally accepted in the United States of America (USGAAP), these basic financial statements present the City of Willits (the primary government) and any component units.

Individual Component Unit Disclosures
There are no entities which meet the Governmental Accounting Standards Board (GASB) Statement No.14 as amended by GASB Statement No.39 and GASB Statement No. 61 criteria for disclosure within these financial statements.

Description of Joint Powers Agreements
The City participates in several joint power agreements (JPAs) as described in Note 8. The financial activities of the JPAs are not included in the accompanying basic financial statements because JPAs are administered by governing boards that are separate from and independent of the City.

B. Basis of Presentation
Government-wide Financial Statements
The statement of net position and statement of activities display information about the primary government (the City). These statements include the financial activities of the overall government, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. These statements distinguish between the governmental and business-type activities of the City. 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 charged to external parties.

The statement of activities presents a comparison between direct expenses and program revenues for each segment of the business-type activities of the City and for each function of the City’s governmental activities. Direct expenses are those that are specifically associated with a program or function and; therefore, are clearly identifiable to a particular function. Program revenues include 1) charges paid by the recipients of goods or services offered by the programs and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented instead as general revenues.

When both restricted and unrestricted net positions are available, unrestricted resources are used only after the restricted resources are depleted.

CITY OF WILLITS

NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2024
30 NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) B. Basis of Presentation (Continued)
Fund Financial Statements
The fund financial statements provide information about the City’s funds, including fiduciary funds.

Separate statements for each fund category – governmental, proprietary, and fiduciary – are presented. The emphasis of fund financial statements is on major governmental and enterprise funds; each displayed in a separate column. All remaining governmental and enterprise funds are separately aggregated and reported as nonmajor funds.

Proprietary funds distinguish operating revenues, such as charges for services, and result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Nonoperating revenues, such as subsidies and investment earnings, result from nonexchange transactions or ancillary activities.

The City reports three major governmental funds:
 The General Fund is used to account for all revenues and expenditures necessary to carry out basic governmental activities of the City that are not accounted for through other funds. For the City, the General Fund includes activities such as public protection, public works and facilities, parks and recreation, and community development.
 The Transportation Sales Tax Special Revenue Fund was established to account for all sales tax revenues set aside for transportation improvements.
 The Measure K Sales Tax Special Revenue Fund was established to account for Measure K sales tax revenues.
 The Capital Outlay Capital Projects Fund was established to account for capital expenditures throughout the City.

The City reports the following two major enterprise funds:
 The Sewer Fund was established to account for the financial activity for the purpose of operation and maintenance of the City’s sewer system including the wastewater treatment plant. The costs of providing these services to the general public are financed or recovered through user charges.  The Water Fund was established to account for the financial activity for the purpose of operation and maintenance of City’s water utility. The costs of providing these services to the general public are financed or recovered through user charges.

Fiduciary Funds
Agency Funds are used to account for assets held by the City in a trustee capacity or as an agent for individuals, private organizations, other government units, and/or other funds.

Private Purpose Trust Fund accounts for the operations of the former redevelopment agency.

CITY OF WILLITS

NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2024
31 NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Basis of Accounting and Measurement Focus
The government-wide, proprietary, and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time the liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the City gives (or receives) value without directly receiving (or giving) equal value in exchange, include property and sales taxes, grants, entitlements and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenues from sales tax are recognized when the underlying transactions take place. Revenues from grants, entitlements, and donations are recognized in the fiscal year in which all eligible requirements have been satisfied.

Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when susceptible to accrual (i.e., when they are "measurable and available"). "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to pay liabilities of the current period. The City considers all revenues available if they are collected within 60 days after fiscal year-end. Expenditures are recorded when the related fund liability is incurred, except for debt service expenditures which are recognized when due, and certain compensated absences and claims and judgments which are recognized when the obligations are expected to be liquidated with expendable available financial resources. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds from long-term debt and capital leases are reported as other financing sources.

Property taxes, transient occupancy taxes, and interest are susceptible to accrual. Sales taxes collected and held by the state at fiscal year-end on behalf of the City are also recognized as revenue.

Other receipts and taxes become measurable and available when cash is received by the City and are recognized as revenue at that time.

Entitlements and shared revenues are recorded at the time of receipt or earlier if the susceptible to accrual criteria are met. Expenditure-driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other grant requirements have been met.

D. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources, Net Position or Equity

1. Deposits and Investments
In order to maximize the flexibility of its investment program and to aid in cash budgeting, the City pools the cash of all funds, except for monies deposited with fiscal agents in accordance with related bond indentures. The cash and investments balance in each fund represents that fund’s equity share of the City’s cash and investment pool. As the City places no restrictions on the deposit or withdrawal of a particular fund’s equity in the pool, the pool operates like a demand deposit account for the participating funds.

CITY OF WILLITS

NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2024
32 NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources, Net Position or Equity (Continued)

1. Deposits and Investments (Continued)
Interest income earned on pooled cash and investments is allocated monthly to the various funds based on month-end balances and is adjusted at fiscal year-end. Interest income on restricted cash and investments with fiscal agents is credited directly to the related fund.

In accordance with the State of California Government Code, the City adopts an investment policy annually that, among other things, authorizes types and concentrations of investments and maximum investment terms.

The City’s investments are carried at fair value. The fair value of equity and debt securities is determined based on sales prices or bid-and-asked quotations from SEC-registered securities exchanges or NASDAQ dealers. LAIF determines the fair value of its portfolio quarterly and reports a factor to the City; the City applies that factor to convert its share of LAIF from amortized cost to fair value. Changes in fair value are allocated to each participating fund.

For purposes of the statement of cash flows, the City has defined cash and cash equivalents to be change and petty cash funds, equity in the City’s cash and investment pool, and restricted non-pooled investments with initial maturities of three months or less.

Investments are stated at fair value in accordance with GASB Statement No.31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. Short-term investments are reported at cost, which approximates fair value. The fair values are based on quoted market prices, if available, or estimated using quoted market prices for similar securities. Securities traded on national or international exchanges are valued at the last reported sales price at current exchange rates. Interest, dividends, and realized and unrealized gains and losses, based on the specific identification method, are included in interest revenue when earned.

2. Receivables and Payables
Transactions between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to 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”. Advances between funds are reported in the fund financial statements as nonspendable to indicate that they are not available for appropriation and are not available financial resources.

CITY OF WILLITS

NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2024
33 NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources, Net Position or Equity (Continued)

2. Receivables and Payables (Continued)
The County of Mendocino assesses properties, bills for, collects, and distributes property taxes for the City per the following schedule:

Secured Unsecured
Valuation dates January 1 January 1
Lien/levy dates July 1 July 1
Due dates 50% on November 1 July 1
50% on February 1
Delinquent as of December 10, April 10 August 31
The term “unsecured” refers to taxes on personal property other than real estate, land, and buildings.

These taxes are secured by liens on the property being taxed. Property tax revenues are recognized by the City in the fiscal year they are assessed provided they become available as defined above. The City has elected to receive the City’s portion of the property taxes from the county under the county Teeter Bill program. Under this program, the City receives 100 percent of the City’s share of the levied property taxes in periodic payments with the county assuming the responsibility for the delinquencies.

3. Inventories and Prepaid Items
Inventories are valued at cost using the first-in/first-out (FIFO) method. The costs of governmental fund-type inventories are recorded as expenditures when consumed rather than when purchased.

Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items.

4. Capital Assets
Capital assets, which include property, plant, equipment and infrastructure assets, are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. As a phase 3 government under GASB Statement No.34, the City has elected to restate its capital assets as of July 1, 2008, to report infrastructure assets acquired prior to June 30, 2003. The City has determined that it is preferable to report all City infrastructure to provide for more accurate reporting. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated assets are valued at the fair value of the assets on the date on which they were contributed. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend the assets’ lives are not capitalized. The City utilizes a capitalization threshold of $10,000.

Depreciation is charged to operations using the straight-line method over the estimated useful lives of the assets as follows:

Buildings and improvements 30 years
Vehicles 5 years
Machinery and equipment 5 to 15 years
Infrastructure 50 to 80 years

CITY OF WILLITS

NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2024
34 NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources, Net Position or Equity (Continued)

5. Compensated Absences
Full-time employees accumulate earned vacation, holiday and compensated leave of varying amounts dependent upon length of service with the City. These amounts are deemed fully vested with the employee when earned. The City also provides full time employees with sick leave that generally must be used for sickness and injury-related leave time. However, upon an employee’s retirement after 5 years of employment with the City, an employee is paid 30% of unused sick leave and after 10 years of employment, they are paid 50%. In both cases the limit is 1,000 hours. Therefore, a liability has been recorded for the estimated benefits that will be taken as a result of retirement. These liabilities will be liquidated in their respective business-type funds or the general fund as they are used or upon retirement.

The City does not offer post-employment benefits.

6. 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, proprietary or fiduciary fund type statements of net position. Debt premiums and discounts are deferred and amortized over the life of the indebtedness using the straight-line method. Notes payable are reported net of the applicable bond premium or discount.

In the fund financial statements, governmental fund types recognize debt premiums and discounts 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.

7. Net Position
The government-wide financial statements utilize a net position presentation. Net position is categorized as net investment in capital assets, restricted, and unrestricted.

Net Investment In Capital Assets – This category groups all capital assets, including infrastructure, into one component of net position. Accumulated depreciation and the outstanding balances of debt that are attributable to the acquisition, construction, or improvement of these assets reduce the balance in this category.

Restricted Net Position – This category presents external restrictions imposed by creditors, grantors, contributors, or laws or regulations of other governments and restrictions imposed by law through constitutional provisions or enabling legislation.

Unrestricted Net Position – This category represents net position of the City, not restricted for any project or other purpose.

When an expense is incurred for purposes for which both restricted and unrestricted resources are available, the City’s policy is to apply restricted resources first.

CITY OF WILLITS

NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2024
35 NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources, Net Position or Equity (Continued)

8. Deferred Outflows and Inflows of Resources
Pursuant to GASB Statement No. 68 and 71, the City recognizes deferred outflows and inflows of resources. Deferred outflow and inflow of resources are defined as a consumption or resource of net position by the government that is applicable to a future reporting period.

E. Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements. Estimates also affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

F. Fund Balance
In the fund financial statements, governmental funds report fund balance as nonspendable, restricted, committed, assigned, or unassigned based primarily on the extent to which the City is bound to honor constraints on how specific amounts can be spent.
• Nonspendable fund balance – amounts that cannot be spent because they are either (a) not spendable in form or (b) legally or contractually required to be maintained intact. • Restricted fund balance – amounts with constraints placed on their use that are either (a) externally imposed by creditors, grantors, contributors, or laws or regulations of other governments; or (b) imposed by law through constitutional provisions or enabling legislation. • Committed fund balance – amounts that can only be used for specific purposes determined by formal action of the City’s highest level of decision-making authority (the City Council) and that remain binding unless removed in the same manner. The underlying action that imposed the limitation needs to occur no later than the close of the reporting period. • Assigned fund balance – amounts that are constrained by the City’s intent to be used for specific purposes. The intent can be established at either the highest level of decision making, or by a body or an official designated for that purpose. • Unassigned fund balance – the residual classification for the City’s funds that include amounts not contained in the other classifications.

The City Council establishes, modifies or rescinds fund balance commitments and assignments by passage of an ordinance or resolution.

When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources first, followed by committed, assigned, and unassigned resources as they are needed.

CITY OF WILLITS

NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2024
36 NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) G. New GASB Pronouncements
Implementation of New Accounting Pronouncements
GASB Statement No. 99 “Omnibus 2022
The objectives of this Statement are to enhance comparability in accounting and financial reporting and to improve the consistency of authoritative literature by addressing (1) practice issues that have been identified during implementation and application of certain GASB Statements and (2) accounting and financial reporting for financial guarantees. The City did not report any significant accounting changes from the implementation of this Statement during the fiscal year ended June 30, 2024.

Future Accounting Pronouncements
GASB Statements listed below will be implemented in future financial statements.

The provisions of Statement Number 100 “Accounting Changes and Error Corrections – an amendment of GASB Statement No. 62” are effective for fiscal years beginning after June 15, 2023.

The provisions of Statement Number 101 “Compensated Absences” are effective for fiscal years beginning after December 15, 2023.

The provisions of Statement Number 102 “Certain Risk Disclosures” are effective for fiscal years beginning after June 15, 2024.

The provisions of Statement Number 103 “Financial Reporting Model Improvements” are effective for fiscal years beginning after June 15, 2025.

NOTE 2 - STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY
A. Budgetary Information
The City Council adopts an Annual Budget no later than the second meeting of June of each fiscal year for the fiscal year commencing the following July 1. The City follows these procedures in establishing the budgetary data reflected in the financial statements:

1. During May of each fiscal year, the City Manager submits to the City Council a proposed operating budget for the next following fiscal year. The operating budget includes proposed revenues and expenditures.

2. After a review by the City Council, a public hearing is conducted and further comment is received from the City Council and the general public.

3. Upon completion of the hearings and modifications, if any, to the proposed budget, it is adopted by the City Council through passage of an appropriate resolution.

4. Generally, the budget is amended in the middle of the fiscal year and at the end of the fiscal year.

All approved additional appropriations are added to the adopted budget and an amended budget is presented to the City Council, which adopts it after due review.

5. The City Manager is authorized to make transfers between operational expenditure categories within certain departments and funds.

CITY OF WILLITS

NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2024
37 NOTE 2 - STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY (Continued)

6. City Council approval is required for all fund to fund transfers, department to department transfers, fund reserve to appropriations transfers, transfers for new revenue sources with offsetting appropriations, and for transfer to/from the capital expenditure category.

7. The Haehl Creek, Business Rehab, Vehicle Abatement, HSG Rehab, H&S Restitution, DNA Cost Reimb, Business Loan, Lateral Repair Loan special revenue funds do not have adopted budgets.

B. Budget/USGAAP Reconciliation
No funds adopted project-length or budgetary basis budgets and, therefore, no schedule reconciling the amounts on the Combined Statement of Revenues, Expenditures, and Changes in Fund BalanceBudget to Actual to the amounts on the Combined Statement of Revenues, Expenditures, and Changes in Fund Balances has been prepared.

C. Excess of Expenditures over Appropriations
For the fiscal year ended June 30, 2024, expenditures exceeded appropriations in the following funds:

Final
Fund Appropriation Expenditure Excess
Major Funds:

Capital Outlay Capital Projects Fund 600,000 $ 2,068,804 $ 1,468,804 $ Nonmajor Funds:

Gas Tax Special Revenue Fund 298,831 402,210 103,379
LEAA Program Special Revenue Fund 5,604 17,095 11,491
D. Deficit Fund Equity
At June 30, 2024, the following funds had accumulated deficits:

Fund Amount
Major Governmental Fund:

Capital Outlay Capital Projects 125,003 $
Nonmajor Governmental Fund:

Vehicle Abatement 5,256
Gas Tax 413,396
Nonmajor Enterprise Fund:

Solid Waste 1,760,160
The City believes that portions if not the majority of the costs and debt associated with the Solid Waste fund are the responsibility of the State or the County. The City is currently in discussions with both entities to securing funding for these and future costs.

The City believes that operations in the subsequent fiscal year will rectify negative fund balances in the other funds listed. Otherwise, the City will make transfers from the General Fund to offset any deficits.

CITY OF WILLITS

NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2024
38 NOTE 3 – CASH AND INVESTMENTS
Cash and investments as of June 30, 2024 are classified in the accompanying financial statements as follows:

Statement of net position:

Cash and investments 14,701,081 $
Fiduciary funds:

Cash and investments 710,525
Total cash and investments 15, $ 411,606
Cash and investments as of June 30, 2024 consist of the following:

Cash on hand 550 $
Deposits with financial institutions 6,588,460
Investments 8,822,596
Total cash and investments 15,411,606 $
A. Investments Authorized by the California Government Code and the City’s Investment Policy
The table below identifies the investment types that are authorized for the City of Willits (City) by the California Government Code (or the City’s investment policy, where more restrictive). The table also identifies certain provisions of the California Government Code (or the City’s investment policy, where more restrictive) that address interest rate risk, credit risk, and concentration of credit risk.

This table does not address investments of debt proceeds held by bond trustee that are governed by the provisions of debt agreements of the City rather than the general provisions of the California Government Code or the City’s investment policy.

Maximum Maximum
Maximum Percentage Investment
Maturity of Portfolio in One Issuer
Bonds issued by the City N/A None None
US Treasury Obligations 5 years None None
Federal Agency Issues 5 years None None
Negotiable Certificates of Deposit 5 years 30% None
Repurchase Agreements 1 year None None
Bankers' Acceptances 180 days 40% 30%
Medium Term Notes 5 years 30% None
Money Market Mutual Funds N/A None 10%
Commercial Paper 270 days 25% None
County Pool Investment Funds N/A None None
Local Agency Investment Fund (LAIF) N/A None $75 Million Collateralized Bank Deposits N/A None None
Mortgage Pass-through Securities 5 years 20% None
Shares of Beneficial Interest by a JPA N/A None None
Authorized Investment Type
The investment policy allows for the above investments which have equal safety and liquidity as all other allowed investments. Maturity depends on the cash needs of the City.

CITY OF WILLITS

NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2024
39 NOTE 3 – CASH AND INVESTMENTS (Continued)
B. Investments Authorized by Debt Agreements
Investment of debt proceeds held by bond trustees are governed by provisions of the debt agreements rather than the general provisions of the California Government Code or the City’s investment policy.

The table below identifies the Investment types that are authorized for investments held by bond trustee. The table also identifies certain provisions of these debt agreements that address interest rate risk, credit risk, and concentration of credit risk.

Maximum Maximum
Maximum Percentage Investment
Maturity of Portfolio in One Issuer
Local Agency Bonds N/A None None
U.S. Treasury Obligations N/A None None
State Obligations N/A None None
U.S. Government Agency Issues N/A None None
Money Market Mutual Fund N/A None None
Bankers Acceptances N/A None None
Commercial Paper 270 days None None
Certificates of Deposit N/A None None
Repurchase Agreements N/A None None
Investment Agreements N/A None None
Local Agency Investment Fund (LAIF) N/A None None
Authorized Investment Type
C. Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the City manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations.

Information about the sensitivity of the fair values of the City’s investments (including investments held by bond trustee) to market interest rate fluctuations is provided by the following table that shows the distribution of the City’s investments by maturity:
12 Months 13 to 24 25-60 More Than 60
Totals or Less Months Months Months
State Investment Pool (LAIF) 4,887,795 $ 4,887,795 $ - $ - $ - $ Certificates of Deposit 3,934,801 742,810 1,966,244 1,225,747 $ 5,630,605 8,822,596 $ 1,966,244 $ 1,225,747 $ - $
Remaining maturity (in Months)
Investment Type

CITY OF WILLITS

NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2024
40 NOTE 3 – CASH AND INVESTMENTS (Continued)
D. Investments with Fair Values Highly Sensitive to Interest Rate Fluctuations The City has no investments (including investments held by bond trustees) that are highly sensitive to interest rate fluctuations (to a greater degree than already indicated in the information provided above).

E. Disclosures Relating to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the minimum rating required by (where applicable) the California Government Code, the City’s investment policy, or debt agreements, and the actual rating as of fiscal year end for each investment type.

Minimum Exempt
Legal From Not
Investment Type Amount Rating Disclosure AAA AA A Rated State Investment Pool 4,887,795 $ N/A - $ - $ - $ - $ 4,887,795 $ Certificates of Deposit 3,934,801 N/A 3,934,801
Total 8,822,596 $ - $ - - $ - $ 8,822,596 $
Rating as of Fiscal Year End
F. Concentration of Credit Risk
The investment policy of the City contains limitations on the amount that can be invested in any one issuer beyond that stipulated by the California Government Code. There are no investments in any one issuer (other than money market or external investment pool) that represent 5% or more of total City’s investments.

G. Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code and the City’s investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits: The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The fair value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits.

As of June 30, 2024, all of the City’s deposits with financial institutions in excess of federal depository insurance limits were held in collateralized accounts.

CITY OF WILLITS

NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2024
41 NOTE 3 – CASH AND INVESTMENTS (Continued)
H. Investment in State Investment Pool
The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by the California Government Code under the oversight of the Treasurer of the State of California. The fair value of the City’s investment in this pool is reported in the accompanying financial statements at amounts based upon the City’s pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis.

I. Fair Value Measurements
The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. These principles recognize a three tiered fair value hierarchy as follows:

Level 1 – Investments reflect prices quoted in active markets; Level 2 – Investments reflect prices that are based on similar observable asset either directly or indirectly, which may include inputs in markets that are not considered active; and Level 3 – Investments reflect prices based upon unobservable sources. The City’s investments applicable to recurring fair value measurements as of June 30, 2023 are all shown at fair value.

NOTE 4 – INTERFUND TRANSACTIONS
A. Interfund Receivables and Payables
During the course of normal operations, numerous transactions occur between individual funds that may result in amounts owed between funds. Those related to goods and services type transactions are classified as “due to and from other funds”. The following presents a summary of current interfund balances at June 30, 2024.

Amount Amount
Major Fund: Major Fund:

General Fund 288,126 $ General Fund $ 584,461
Measure K Sales Tax 2,187,554 Capital Outlay 83,084
Totals 2,475,680 $ Nonmajor Enterprise Fund:

Solid Waste 872,496
Airport 498,598
Nonmajor Governmental Fund:

Vehicle Abatement 5,256
Gas Tax 431,785
Totals 2 $ ,475,680
Receivable Fund Payable Fund
B. Transfers between Funds
Transfers are indicative of funding for capital projects, lease payments or debt service, subsidies of various City operations, and re-allocations of special revenues. All inter-fund transfers between individual government funds have been eliminated on the government-wide statements. The following schedule briefly summarizes the City’s transfer activity for the fiscal year ended June 30, 2024:

CITY OF WILLITS

NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2024
42 NOTE 4 – INTERFUND TRANSACTIONS (CONTINUED)
B. Transfers between Funds (Continued)
Transfers-in Transfers-out
Major Governmental Funds:

General Fund 224,846 $ 720,130 $
Transportation Sales Tax 533,941
Capital Outlay 1,393,797
Major Enterprise Funds:

Water Fund 196,436
Sewer Fund 166,209
Nonmajor Enterprise Funds:

Airport Fund 1,927
Totals 1,618,643 $ 1,618,643 $
Fund
NOTE 5 – CAPITAL ASSETS
Capital Asset activity for the fiscal year ended June 30, 2024 was as follows:

Balance at Prior Period Balance at
June 30, 2023 Additions Deletions Transfers Adjustments June 30, 2024 Governmental activities:

Capital assets, not being depreciated:

Land 150,963 $ - $ - $ - $ - $ 150,963 $
Construction in progress 2,244,131 1,508,266 (56,149) (1,320,260) (1,555,033) 820,955 Total capital assets, not being depreciated 2,395,094 1,508,266 (56,149) (1,320,260) (1,555,033) 971,918 Capital assets, being depreciated:

Buildings and improvements 1,938,567 1,938,567
Machinery and equipment 2,150,242 2,150,242
Infrastructure 2,889,725 494,298 3,384,023
Total capital assets being depreciated 6,978,534 494,298 7,472,832 Less accumulated depreciation for:

Buildings and improvements (1,686,361) (30,775) 541,756 (1,175,380) Machinery and equipment (1,996,450) (44,033) (2,040,483) Infrastructure (293,401) (251,082) 778,504 234,021
Total accumulated depreciation (3,976,212) (325,890) 1,320,260 (2,981,842) Total capital assets, being depreciated, net 3,002,322 (325,890) 1,320,260 494,298 4,490,990 Governmental activities capital assets, net 5,397,416 $ 1,182,376 $ (56,149) $ - $ (1,060,735) $ 5,462,908 $ Balance at Prior Period Balance at
Business-type activities: June 30, 2023 Additions Deletions Transfers Adjustments June 30, 2024 Capital assets, not being depreciated:

Land 1,804,213 $ - $ - $ - $ - $ 1,804,213 $
Construction in progress 1,490,857 186,146 (1,568,139) 108,864 Total capital assets, not being depreciated 3,295,070 186,146 (1,568,139) 1,913,077 Capital assets, being depreciated:

Buildings and improvements 8,945,492 20,140 8,965,632
Machinery and equipment 10,471,132 29,693 10,500,825
Infrastructure 47,047,637 1,538,446 48,586,083
Total capital assets, being depreciated 66,464,261 20,140 1,568,139 68,052,540 Less accumulated depreciation (28,868,638) (1,901,072) (30,769,710) Total capital assets, being depreciated, net 37,595,623 (1,880,932) 1,568,139 37,282,830 Business-type activities capital assets, net 40,890,693 $ (1,694,786) $ - $ - $ - $ 39,195,907 $

CITY OF WILLITS

NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2024
43 NOTE 5 – CAPITAL ASSETS (CONTINUED)
Depreciation
Depreciation expense was charged to governmental functions as follows:

General Government $ 325,890
Total depreciation expense – governmental functions $ 325,890 Depreciation expense was charged to business-type functions as follows:

Sewer $ 977,563
Water 876,522
Airport 46,987
Total depreciation expense – business-type functions $ 1,901,072 NOTE 6 – NOTES RECEIVABLE
The City has established a number of housing assistance loan programs using HOME Investment Partnerships Program grant funds. These loans consist of several loans for first-time home buyers assistance and home rehabilitation assistance loans for qualified persons. The City also utilizes Community Development Block Grant (CDBG) to provide business assistance loans and home rehabilitation loans to qualified persons.

All housing loans are secured by deeds of trust. Loans carry interest rates ranging from 0% to 5% with repayment terms from 10 to 55 years or upon sale or transfer of property. Interest rates are set at below market rates and, in some cases, below the rate of inflation. Repayment of these loans is not assured until cash is received, and in some instances, the loans terms are extended.

NOTE 7 – LONG-TERM LIABILITIES
The following is a schedule of long-term liabilities for Governmental Activities and Business-type Activities for the fiscal year ended June 30, 2024:

Balance at Balance at Due Within
June 30, 2023 Additions Repayments June 30, 2024 One Year Governmental Activities:

Compensated absences 479,393 $ 427,711 $ (239,697) $ 667,407 $ 239,697 $ Total Governmental Activities $ 427,711 479,393 $ (239,697) $ 667,407 $ 239,697 $ Business-type Activities:

Compensated absences 141,646 $ 146,316 $ (73,478) $ 214,484 $ 73,478 $ Debt from direct borrowings and direct placements:

State Water Revolving Fund Loan 2,330,216 (105,919) 2,224,297 105,919 2015 Tax Compliance Certificates 2,224,134 (186,629) 2,037,505 193,796 2020 Wastewater Refunding Bonds 15,545,000 (205,000) 15,340,000 215,000 Premium on debt 538,656 (19,238) 519,418 19,238
Landfill Post-closure Costs 881,592 881,592
Total Business-type Activities 21, $ 146,31 661,244 $ (590,264) 6 $ 21,217,29 $ 607,431 6 $

CITY OF WILLITS

NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2024
44 NOTE 7 – LONG-TERM LIABILITIES (Continued)

1. Business-type Activities – Direct Borrowings and Placements of Debt – California State Water Resources Control Board Revolving Loan
In November of 2011, The City Council adopted a resolution approving funding in the amount of $5,779,623 for the Water Plant Improvements Project and pledged the City’s Water Fund as the specific revenue source for the repayment of the loan. The loan consists of loan principal of $3,366,510 and a grant in the amount of $3,000,000. The term of the loan is 30 years with 0% interest. The maximum loan amount $3,170,935. Principal and interest are payable semi-annually on January 1 and July 1. Annual principal payments are $105,919 and continue through the fiscal year ending 2045. In the event of a default, the full outstanding balance of the loan is due and payable.

Annual debt service requirements for the loan are shown below:

Fiscal Year
Ended June 30, Principal Interest Total
2025 105,919 $ - $ 105,919 $
2026 105,919 105,919
2027 105,919 105,919
2028 105,919 105,919
2029 105,919 105,919
2030-2034 529,595 529,595
2035-2039 529,595 529,595
2040-2044 529,595 529,595
2045 105,917 105,917
$ - 2,224,297 $ 2,224,297 $
State Water Revolving Fund Loan

4. Business-type Activities- Direct Borrowings and Placements of Debt – 2015 Tax Compliance Certificates
On December 1, 2015, the City issued $3,350,945 in debt to provide for refunding and redemption of the outstanding 1993 Sewer Revenue Bonds and pledged the City’s Sewer Fund as the specific revenue source for the repayment of the Bond. Interest on the bond is 3.84% and interest payments are due semi-annually on November 1 and May 1. Principal payments are due annually on November 1, ranging from $143,360 to $261,976 through the fiscal year 2033. In the event of a default, the full outstanding balance of the Loans are due and payable. Annual debt service requirements for the certificates are shown below:

Fiscal Year
Ended June 30, Principal Interest Total
2025 193,796 $ 74,519 $ 268,315 $
2026 201,237 66,934 268,171
2027 208,965 59,058 268,023
2028 216,989 50,880 267,869
2029 225,321 42,388 267,709
2030-2033 991,197 77,917 1,069,114
$ 371,696 2,037,505 $ 2,409,201 $
2015 Tax Compliance Certificates

CITY OF WILLITS

NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2024
45 NOTE 7 – LONG-TERM LIABILITIES (Continued)

5. Business-type Activities- Direct Borrowings and Placements of Debt – 2020 Wastewater Refunding Bond
On August 1, 2020 the City issued $16,055,000 in debt to provide for refunding and redemption of the outstanding 2007 Sewer Loans series A and B as well as the 2011 Wastewater Bond and pledged the City’s Sewer Fund as the specific revenue source for the repayment of the Bond. Interest on the bond is between 2.5% and 4% and interest payments are due semi-annually on November 1 and May

1. Principal payments are due annually on November 1, ranging from $130,000 to $885,000 through the fiscal year 2051. In the event of a default, the full outstanding balance of the Loans are due and payable. Annual debt service requirements for the certificates are shown below:

Fiscal Year
Ended June 30, Principal Interest Total
2025 215,000 $ 415,012 $ 630,012 $
2026 220,000 406,312 626,312
2027 230,000 397,313 627,313
2028 245,000 387,812 632,812
2029 250,000 377,912 627,912
2030-2034 1,700,000 1,720,760 3,420,760
2035-2039 3,180,000 1,307,390 4,487,390
2040-2044 3,550,000 922,104 4,472,104
2045-2049 4,005,000 471,498 4,476,498
2050-2051 1,745,000 43,938 1,788,938
$ 6,450,051 15,340,000 $ 21,790,051 $
2020 Wastewater Refunding Bond
Fiscal Year
Ended June 30, Principal Interest Total
2025 514,715 $ 489,531 $ 1,004,246 $
2026 527,156 473,246 1,000,402
2027 544,884 456,371 1,001,255
2028 567,908 438,692 1,006,600
2029 581,240 420,300 1,001,540
2030-2034 3,220,792 1,798,677 5,019,469
2035-2039 3,709,595 1,307,390 5,016,985
2040-2044 4,079,595 922,104 5,001,699
2045-2049 4,110,917 471,498 4,582,415
2050-2051 1,745,000 43,938 1,788,938
$ 6,821,747 19,601,802 $ 26,423,549 $
Total Business-type Activities

6. Landfill Post-closure Costs
The City’s solid waste landfill was closed during the 1997/98 fiscal year. State and federal laws and regulations require that the City place a final cover (closure) on its landfill when closed, and perform certain maintenance and monitoring functions (post-closure) at the landfill site for thirty years after closure. At June 30, 2000, the City had completed its landfill closure activities and, therefore, no closure liability is included in the accompanying financial statements. The City’s estimated liability for the continuing landfill post-closure care costs at June 30, 2024 was $881,592. However, the actual cost of post-closure care may change due to inflation, changes in technology, or changes in landfill laws and regulations.

CITY OF WILLITS

NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2024
46 NOTE 7 – LONG-TERM LIABILITIES (Continued)

7. Compensated Absences
The City’s policy relating to compensated absences is described in Note (1). Compensated absences are liquidated primarily by the General and Enterprise Funds. The total amount outstanding at June 30, 2024, was $ 214,484 for business-type activities and $667,407 for governmental activities.

NOTE 8 – JOINT POWER AGREEMENTS
The City is a member of various joint powers authorities, which provide goods for services to the City and other authority members. Under the criteria established by GASB No. 14, the City does not have sufficient authority, influence or accountability over these entities to incorporate them in this annual report.

Additionally, the City has determined that it has no ongoing financial interest in or responsibility for any of these organizations as defined by GASB No. 14. The names and general functions of these joint powers are as follows:

Redwood Empire Municipal Insurance Fund (REMIF):

A group of Northern California cities participate in this agreement to provide themselves with various levels of liability, property and workers’ compensation insurance. REMIF is administered by a commission comprised of one member and one alternate appointed by each member city. The City provides for its general insurance needs through REMIF. During the fiscal year ended June 30, 2023, the City paid $202,708 to REMIF for insurance coverage. Beginning July 1, 2015 REMIF city members have become self-insured with their health benefits.

Mendocino Solid Waste Management Authority:

Mendocino Solid Waste Management Authority consists of three Mendocino County cities and the County of Mendocino. Mendocino Solid Waste Management Authority was created for the purpose of a) siting, licensing, developing, constructing, maintaining, and operating disposal sites and sanitary landfills and b) preparing and implementing a solid waste management plan. Mendocino Solid Waste management Authority is governed by a commission comprised of one member for each city and two members who are appointed by the Mendocino County Board of Supervisors.

Mendocino Emergency Services Authority:

Mendocino Emergency Services Authority (Authority) consists of four Mendocino County cities and the County of Mendocino. The authority was created for the purpose of coordinating disaster and other emergency preparedness planning and recovery programs, training of employees and volunteers, administration of disaster recovery assistance programs, and other related activities. The Authority is governed by a commission comprised of one member from each member agency.

Solid Waste Disposal Facility Operations Agreement:

The City and the County of Mendocino have entered into an agreement for the purpose of joint ownership, maintenance and operation of the solid waste landfill serving the City and certain unincorporated areas of the County of Mendocino. The City has been granted complete control of and authority over the administration, operation and maintenance of the landfill. The City and County will equally share the costs associated with the landfill including the purchase of equipment and closure/post-closure costs. Due to the City’s overall control of the landfill activity, the accompanying financial statements include 100% of the landfill activity, including the liability for closure/post-closure costs described in Note 7.

CITY OF WILLITS

NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2024
47 NOTE 9 – CONTRACTED SERVICES
The City has entered into an agreement to provide services to persons living outside the City limits. The general purpose and description of this contract agreement is as follows:

Brooktrails Community Services District
The City has entered into an agreement with the District to provide the District with sewage treatment.

Under the terms of the agreement, the District is to reimburse the City for costs allocated to the District based on the ratio of total flow entering the treatment plant. The cost allocation was carried over from previous years. During the fiscal year ended June 30, 2015, the City settled a lawsuit with the District. The new District allocation of $22,000 per month began July 1, 2015 as well as 36% of the bond payments.

NOTE 10 – CONTINGENCIES
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies, principally the federal government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures that may be disallowed by the grantor cannot be determined at this time although the City expected such amounts, if any, to be immaterial.

The City violated the National Primary Drinking Water Regulations maximum contaminant level for total Trihalomethanes (TTHMs) which is one of the contaminant standards required by the Safe Drinking Water Act. The cost of the violation to the City cannot be currently determined.

There are other pending lawsuits in which the City is involved. Although the outcome of these lawsuits is not presently determinable, it is the opinion of the City Attorney that the resolutions of these matters will not have a material adverse effect on the financial condition of the City.

NOTE 11 – DEFERRED COMPENSATION PLAN
The City offers its employees deferred compensation plans created in accordance with IRS Code Section 457. The plans, available to all City employees, permit employees to defer a portion of their salary until future years. Participation in the plans is optional. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. As explained previously, the City has adopted the provisions of GASB No. 32 and, therefore, assets and liabilities of these plans have been excluded from the accompanying financial statements.

NOTE 12 – PENSION PLAN
For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Plans and additions to/deductions from the Plans' fiduciary net position have been determined on the same basis as they are reported by CalPERS’ Financial Office. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.

A. General Information about the Pension Plan
Plan Descriptions - All qualified employees are eligible to participate in the City’s separate Safety (police and fire) and Miscellaneous (all other) Plans, cost sharing defined benefit pension plans administered by the California Public Employees' Retirement System (CalPERS’), which acts as a common investment and administrative agent for its participating member employers. Benefit provisions under the Plans are established by State statute and Local Government resolution.

CITY OF WILLITS

NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2024
48 NOTE 12 – PENSION PLAN (CONTINUED)
A. General Information about the Pension Plan (Continued) CalPERS’ issues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumptions and membership information that can be found on the CalPERS’ website.

Benefits Provided - CalPERS’ provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full time employment. Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for non-duty 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:

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 l following notice of a change in the rate. Funding contributions for both Plans are 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.

Prior to January 1, On or after January 1,
Hire date 2013 2013
Benefit formula 2.7% @ 55 2% @ 62
Benefit vesting schedule 5 Years Service 5 Years Service Benefit payments Monthly for life Monthly for life
Retirement age 55-55 52-67
Monthly benefits, as a % of eligible compensation 2.0% to 2.5% 1.0% to 2.5% Required employee contribution rates 8% 6.75%
Required employer contribution rates 13.35% 7.59%
City Misc Plan
Prior to January 1, On or after January 1, On or after January 1, Hire date 2012 2012 2013
Benefit formula 3.0% @ 50 3.0% @ 55 2.7% @ 57
Benefit vesting schedule 5 Years Service 5 Years Service 5 Years Service Benefit payments Monthly for life Monthly for life Monthly for life Retirement age 50-55 50-55 50-57
Monthly benefits, as a % of eligible compensation 3.00% 2.4% to 3.0% 2.0% to 2.7% Required employee contribution rates 9% 13.00% 13.00%
Required employer contribution rates 22.48% 13.13% 13.13% City Safety Plan

CITY OF WILLITS

NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2024
49 NOTE 12 – PENSION PLAN (Continued)
B. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions
As of June 30, 2024, the City reported net pension liabilities for its proportionate share of the net pension liability of the Plan as follows:

Misc. Plan Safety Plan
$ 4,125,218 7,077,643 $
Proportionate Share of Net Pension
Liability
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 plans 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:

City Miscellaneous City Safety
Plan Plan
Proportion - June 30, 2022 0.144850% 0.058700%
Proportion - June 30, 2023 0.141540% 0.055190%
Change - Increase (Decrease) -0.003310% -0.003510%
For the fiscal year ended June 30, 2024, the City recognized pension expense of $1,267,222. At June 30, 2024, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Deferred
Outflows of Inflows of
Resources Resources
Pension contributions subsequent to measurement date 1,265,529 $ - $ Net differences between projected and actual earnings
on pension plan investments 1,710,469
Differences based on actual experience 582,415
Differences based on change of assumptions 668,062
Differences between actual vs proportionate contribution 4,471 (626,166) Adjustment due to differences in proportions 182,934 (78,883) Total 4,413,880 $ (705,049) $
$1,265,529 reported as deferred outflows of resources related to contributions subsequent to the measurement date and will be recognized as a reduction of the net pension liability in the fiscal year ended June 30, 2025. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions and will be recognized as pension expense as follows:

CITY OF WILLITS

NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2024
50 NOTE 12 – PENSION PLAN (Continued)
B. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions (Continued)
Fiscal Year Ended
June 30, Amount
2025 625,964 $
2026 450,809
2027 1,317,891
2028 48,638
Total $ 2,443,302
The City’s net pension liability for each Plan is measured as the total pension liability, less the pension plan's fiduciary net position. The net pension liability of each of the Plans 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:
(1) Depending on age, service and type of employment
(2) Net of pension plan investment expenses, including inflation The underlying mortality assumptions and all other actuarial assumptions used in the June 30, 2017 valuation were based on the results of a January 2014 actuarial experience study for the period 1997 to 2011. Further details of the Experience Study can found on the CalPERS’ website.

Discount Rate - The discount rate used to measure the total pension liability was 6.90% for each Plan.

To determine whether the municipal bond rate should be used in the calculation of a discount rate for each plan, CalPERS’ stress tested plans that would most likely result in a discount rate that would be different from the actuarially assumed discount rate. Based on the testing, none of the tested plans run out of assets. Therefore, the current 6.90 percent discount rate is adequate and the use of the municipal bond rate calculation is not necessary. The long term expected discount rate of 6.90 percent will be applied to all plans in the Public Employees Retirement Fund (PERF). The stress test results are presented in a detailed report that can be obtained from the CalPERS’ website.

Miscellaneous Safety
Valuation Date June 30, 2022 June 30, 2022
Measurement Date June 30, 2023 June 30, 2023
Actuarial Cost Method
Actuarial Assumptions:

Discount Rate 6.90% 6.90%
Inflation 2.30% 2.30%
Payroll Growth 3.00% 3.00%
Projected Salary Increase 3.30%-14.20% (1) 3.30%-14.20% (1) Investment Rate of Return 6.90% (2) 6.90% (2)
Mortality
Entry-Age Normal Cost Method
Derived using CalPERS’' Membership Data for all Funds

CITY OF WILLITS

NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2024
51 NOTE 12 – PENSION PLAN (Continued)
B. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions (Continued)
CalPERS’ was scheduled to review all actuarial assumptions as part of its regular Asset Liability Management (ALM) review cycle that was scheduled to be completed in February 2018. Any changes to the discount rate will require Board action and proper stakeholder outreach. For these reasons, CalPERS’ expects to continue using a discount rate net of administrative expenses for GASB 67 and 68 calculations through at least the 2017-18 fiscal year. CalPERS’ will continue to check the materiality of the difference in calculation until such time as we have changed our methodology.

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

In determining the long-term expected rate of return, CalPERS’ took into account both short-term and long-term market return expectations as well as the expected pension fund cash flows. Using historical returns of all the funds' asset classes, expected compound returns were calculated over the short-term (first 10 years) and the long-term (11-60 years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equivalent to the single equivalent rate calculated above and rounded down to the nearest one quarter of one percent.

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

Assumed Asset Real Return Real Return
Asset Class Allocation Year 1-10(a) Year 11+(b)
Global Equity 50.00% 4.80% 5.98%
Fixed Income 28.00% 1.00% 2.62%
Inflation Assets 0.00% 0.77% 1.81%
Private Equity 8.00% 6.30% 7.23%
Real Assets 13.00% 3.75% 4.93%
Liquidity 1.00% 0.00% -0.92%
a) An expected inflation of 2% used for this period
b) An expected inflation of 2.92% used for this period
Sensitivity of the Net Pension Liability to Changes in the Discount Rate -The following presents the net pension liability of the Local Government for each Plan, calculated using the discount rate for each Plan, as well as what the City's net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower or 1 percentage point higher than the current rate:

CITY OF WILLITS

NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2024
52 NOTE 12 – PENSION PLAN (Continued)
B. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions (Continued)
Pension Plan Fiduciary Net Position - Detailed information about each pension plan's fiduciary net position is available in the separately issued CalPERS’ financial reports.

NOTE 13 - SUCCESSOR AGENCY TRUST FOR ASSETS OF FORMER REDEVELOPMENT AGENCY
On December 29, 2011, the California Supreme Court upheld Assembly Bill 1X 26 (“the 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 Willits (City) 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 units until they are distributed to other units of state and local government. On January 10, 2012, the City Council elected to become the Successor Agency for the former redevelopment agency in accordance with the Bill as part of the City resolution number 2012-04. 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 of the date of the dissolution (including the completion of any unfinished projects that were subject to legally enforceable contractual commitments). Successor agencies will only be 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.

Long-term debt of the Successor Agency as of June 30, 2024, consisted of the following:

Balance Balance Due within
June 30, 2023 Additions Deletions June 30, 2024 one year 2020 Tax Allocation Refunding Bonds $ 611,780 $ (316,530) - $ $ 295,250 $ 295,250 Totals $ 1,241,247 $ (316,530) - $ $ 295,250 $ 295,250
Miscellaneous Safety
1% Decrease 5.90% 5.90%
Net Pension Liability $10,184,875 $6,000,432
Current Discount Rate 6.90% 6.90%
Net Pension Liability $7,077,643 $4,125,218
1% Increase 7.90% 7.90%
Net Pension Liability $4,520,125 $ 2,592,097

CITY OF WILLITS

NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2024
53 NOTE 13 - SUCCESSOR AGENCY TRUST FOR ASSETS OF FORMER REDEVELOPMENT

AGENCY (CONTINUED)
Tax Allocation Refunding Bonds – Series 2020
The former redevelopment agency issued $1,541,112 of tax allocation refunding bonds on January 14, 2020 to refund the Tax Allocation Bonds – Series 2002. In the event of default, the outstanding balance is due immediately. Annual debt service requirements for the bond are shown below:

Fiscal Year
Ended June 30, Principal Interest Total
2025 295,250 $ 3,849 $ 299,099 $
$ 3,849 295,250 $ 299,099 $
2020 Tax Allocation Refunding Bonds
NOTE 14 – OTHER POST EMPLOYMENT BENEFITS
The City does not offer other post-employment benefits.

NOTE 15 – NON-COMMITMENT DEBT
The City has sponsored the issuance of $5,500,000 of Certificates of Participation for Frank R.

Howard Foundation, a nonprofit corporation. The Trust agreement is dated July 1, 2015. The funds will be used for construction; installation and furnishing of a single story 16,000 square foot medical office. The medical office will be located at 3 Marcela Drive in Willits, California. The City is not liable for repayment of the debt but was assisting the Frank R. Howard Foundation to obtain tax exempt financing.

NOTE 16 – RISK MANAGEMENT/JOINT VENTURE
A. Risk Management
The City of Willits is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omission; injuries to employees; and natural disasters. The City participates in a public entity risk pool for workers’ compensation, general liability and property insurance coverage. During fiscal year 2023-24, there were no significant reductions in insurance coverage. There has also been no significant variance in insurance coverages within the last 3 fiscal years.

B. Risk Pool Arrangements
The City is an associate member of the Redwood Empire Municipal Insurance Fund (REMIF), a public entity pool comprised of fifteen northern California charter and associate member cities.

REMIF is organized under a Joint Powers Agreement pursuant to the California Government Code.

The purpose of REMIF is to arrange and administer programs of insurance for the pooling of selfinsured losses and to purchase excess insurance coverage.

For each of its insurance programs, REMIF has a multilevel risk sharing arrangement. Initially each individual charter or associate member city participating in a program assumes its own losses up to a predetermined deductible level. Losses and claims in excess of the deductibles and within REMIF’s stated retention limits are paid out of a central pool maintained by REMIF. This central pool is funded by all of the cities participating in that program through premium assessments.

REMIF purchases excess loss insurance policies (reinsurance) to provide coverage for losses and claims in excess of REMIF’s stated retention limits up to specified amounts.

CITY OF WILLITS

NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2024
54 NOTE 16 – RISK MANAGEMENT/JOINT VENTURE (Continued)
B. Risk Pool Arrangements (Continued)
Losses and claims ceded to reinsurers would represent a contingent liability to REMIF if the reinsurers were unable to meet their existing obligations under the reinsurance agreements. Losses and claims which surpass the limits of the excess of loss insurance policies are the responsibility of the individual city in which the loss or claim originates.

The City of Willits participates in the following REMIF programs:

General Liability Insurance – Annual premiums are paid by the member cities and are adjusted retrospectively to cover costs. The City of Willits self-insures for the first $5,000 of each loss and pays 100% of all losses incurred under $5,000. The City does not share or pay for losses of other cities under a range of between $5,000 to $25,000, depending on the entity’s deductible amount.

Participating cities then share in the next $5,000 to $500,000 per loss occurrence. Specific coverage includes comprehensive and general liability, personal injury, contractual liability, professional liability, and certain other coverage. REMIF is a member of the California Joint Powers Risk Management Authority, which provides REMIF with an additional $39,500,000 liability insurance coverage over and above REMIF retention level of $500,000.

Worker’s Compensation – Periodic deposits are paid by member cities and are adjusted retrospectively to cover costs. The City of Willits is self-insured for the first $10,000 of each loss and pays 100% of all losses incurred under $10,000. The City does not share or pay for losses of other cities under $10,000. Excess worker’s compensation insurance coverage is maintained with a limit of $1,000,000 to protect against catastrophic losses.

Property Insurance –The City of Willits maintains the following property insurance coverages:

Automobile – Loss limit: Stated Value. Deductible: $10,000. Boiler/Machinery – Loss limit: $100 million. Deductible: $5,000. Cyber Coverage – Loss Limit: $2 million. Deductible: $100,000.

Pollution: - Loss Limit: $2 million. Deductible: $100,000. Property Loss: Loss Limit: $400 million.

Deductible: $10,000 (excludes flood, earthquake, and boiler/machinery. Earthquake and Flood – Loss Limit: $20 million. Deductible: $100,000.

The June 30, 2024 financial statements for REMIF are available online at www.remif.com.

NOTE 17 – COMMITMENTS AND CONTIGENCIES
There are various lawsuits and claims against the City. Although the outcomes of these lawsuits and claims is not presently determinable, management, after consultation with legal counsel is of the opinion will not have an material adverse effect on the financial condition of the City as of June 30, 2024.

NOTE 18 – PRIOR PERIOD ADJUSTMENTS
A prior period adjustment of $717,052 (General Fund), $189,570 (Water), $78,308 (Sewer), $(24,881) (Airport), $27,647 (Transportation Sales Tax), $130,242 (Capital Outlay), $8,026 (Gas Tax) were posted due to misstatements of accounts payable balances related to a system error in the ERP transition.

A prior period adjustment of $(241,217) was made in the General Fund related to an overstatement of accounts receivable in the prior fiscal year.

A prior period adjustment of $(1,060,735) was made on the government-wide statement related to the overstatement of construction in progress.

Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
Revenues
Property Taxes 501,600 $ 501,600 $ 529,242 $ 27,642 $
Sales and Use Taxes 1,941,500 1,941,500 1,375,976 (565,524) Business License Taxes 146,500 146,500 130,799 (15,701) Franchise Fees 320,200 320,200 402,221 82,021
Transient Occupancy Taxes 453,200 453,200 283,515 (169,685) Other Taxes 530,400 530,400 355,282 (175,118)
Licenses and Permits 192,496 192,496 79,461 (113,035)
Interest 30,000 30,000 112,968 82,968
Charges for Services 75,300 75,300 1,087,088 1,011,788
Intergovernmental 699,551 699,551 831,044 131,493
Other 599,332 599,332 99,915 (499,417)
Total Revenues 5,490,079 5,490,079 5,287,511 (202,568)
Expenditures
Current:

General Government 2,537,797 2,537,797 2,949,570 (411,773) Planning 333,026 333,026 333,026
Public Safety 2,887,980 2,887,980 2,624,710 263,270
Public Works 296,314 296,314 342,724 (46,410)
Parks and Recreation 379,863 379,863 305,010 74,853
Community Development 600,100 600,100 799,059 (198,959) Capital Outlay: 78,870
Total Expenditures 7,035,080 7,035,080 7,099,943 14,007 Excess (Deficiency) of Revenues Over
(Under) Expenditures (1,545,001) (1,545,001) (1,812,432) (267,431) Other Financing Sources (Uses):

Transfers In 224,846 224,846
Transfers Out (151,000) (151,000) (720,130) (569,130)
Total Other Financing Sources (Uses) (151,000) (151,000) (495,284) (344,284) Net Change in Fund Balance (1,696,001) (1,696,001) (2,307,716) (611,715) Fund Balance - July 1, 2023 2,316,824 2,316,824 2,316,824 Prior Period Adjustments 475,835 475,835
Fund Balance - July 1, 2023, Restated 2,316,824 2,316,824 2,792,659 475,835 Fund Balance - June 30, 2024 $ 620,823 $ 620,823 $ 484,943 $ (135,880) Budgeted Amounts

CITY OF WILLITS

GENERAL FUND
FOR THE FISCAL YEAR ENDED JUNE 30, 2024

SCHEDULE OF REVENUES, EXPENDITURES,

BUDGET AND ACTUAL

AND CHANGES IN FUND BALANCES
55 Variance with
Final Budget
Original Final Actual Positive (Negative)
Revenues
Sales and Use Taxes 1,062,033 $ 1,062,033 $ 892,892 $ (169,141) $ Interest 61,499 61,499
Intergovernmental 200,000 200,000 (200,000)
Total Revenues 1,262,033 1,262,033 954,391 (307,642)
Expenditures
Current:

Public Works 4,594,104 4,594,104 505,404 4,088,700
Capital Outlay 120,590 (120,590)
Total Expenditures 4,594,104 4,594,104 625,994 3,968,110 Excess (Deficiency) of Revenues Over
(Under) Expenditures (3,332,071) (3,332,071) 328,397 3,660,468 Other Financing Sources (Uses):

Transfers Out (1,995,000) (1,995,000) (533,941) 1,461,059 Total Other Financing Sources (Uses) (1,995,000) (1,995,000) (533,941) 1,461,059 Net Change in Fund Balance (5,327,071) (5,327,071) (205,544) 5,121,527 Fund Balance - July 1, 2023 2,437,650 2,437,650 2,437,650 Prior Period Adjustment 27,647 27,647
Fund Balance - July 1, 2023, Restated 2,437,650 2,437,650 2,465,297 27,647 Fund Balance - June 30, 2023 $ (2,889,421) $ (2,889,421) $ 2,259,753 $ 5,149,174

CITY OF WILLITS

SCHEDULE OF REVENUES, EXPENDITURES,

AND CHANGES IN FUND BALANCES

BUDGET AND ACTUAL

TRANSPORTATION SALES TAX SPECIAL REVENUE FUND
FOR THE FISCAL YEAR ENDED JUNE 30, 2024
Budgeted Amounts
56 Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
Revenues
Sales and Use Taxes 1,545,000 $ 1,545,000 $ 1,368,302 $ (176,698) $ Total Revenues 1,545,000 1,545,000 1,368,302 (176,698)
Net Change in Fund Balance 1,545,000 1,545,000 1,368,302 (176,698) Fund Balance - July 1, 2023 3,287,519 3,287,519 3,287,519 Fund Balance - June 30, 2024 $ 4,832,519 4,832,519 $ 4,655,821 $ (176,698) $ Budgeted Amounts

CITY OF WILLITS

SCHEDULE OF REVENUES, EXPENDITURES,

AND CHANGES IN FUND BALANCES

BUDGET AND ACTUAL

MEASURE K SALES TAX SPECIAL REVENUE FUND
FOR THE FISCAL YEAR ENDED JUNE 30, 2024
57 CITY OF WILLITS

REQUIRED SUPPLEMENTAL INFORMATION
JUNE 30, 2024
58 Cost Sharing Defined Benefit Pension Plans
Schedule of the City’s Proportionate Share of the Net Pension Liability – Last 10 Years Misc Plan Safety Plan Misc Plan Safety Plan Misc Plan Safety Plan Misc Plan Safety Plan Misc Plan Safety Plan Proportion of the net pension liability 0.141540% 0.055190% 0.144850% 0.058700% 0.209960% 0.066670% 0.144290% 0.056630% 0.144400% 0.059340% Proportionate share of the net pension liability 7,077,643 $ 4,125,218 $ 6,777,718 $ 4,033,289 $ 3,986,796 $ 2,339,777$ $ 6,086,133 $ 3,772,924 $ 5,782,463 3,545,788$ Covered-employee payroll 1,988,424$ $ 550,124 $ 1,941,809 $ 812,511 $ 1,960,626 725,122$ $ 1,995,011 838,234$ 1,844,079$ 665,707$ Proportionate Share of the net pension liability
as a percentage of covered-employee payro 355.94% 749.87% 349.04% 496.40% 203.34% 322.67% 305.07% 450.10% 313.57% 532.63% Plan's fiduciary net position 15,897,066 $ 9,544,297 $ 15,719,519 $ 9,012,511 $ 17,999,030 $ 9,441,255 $ 14,255,123 $ 9,945,145$ $ 9,057,376 13,500,184 $ Plan's total pension liability $ 13,669,515 22,974,709 $ 21,287,905 $ 14,255,133 $ $ 20,244,424 $ 20,341,256 13,522,533 $ 13,718,069$ $ 12,644,758 19,282,647 $ Plan fiduciary net position as a percentage of
total pension liability 69.19% 69.82% 73.84% 63.22% 88.91% 69.82% 70.08% 72.50% 70.01% 71.63% June 30, 2024 June 30, 2023 June 30, 2022 June 30, 2021 June 30, 2020 Misc Plan Safety Plan Misc Plan Safety Plan Misc Plan Safety Plan Misc Plan Safety Plan Misc Plan Safety Plan Proportion of the net pension liability 0.144900% 0.059010% 0.142270% 0.059340% 0.143320% 0.093130% 0.152275% 0.067911% 0.151177% 0.067559% Proportionate share of the net pension liability 5,461,003 $ 3,462,358$ 5,608,277$ 3,545,788$ 4,978,929$ $ 4,177,620 3,235,381 $ $ 3,736,327 2,798,221 $ $ 2,534,118 Covered-employee payroll 1,798,882$ 537,809$ 1,678,686$ 587,395$ 1,743,044$ 747,527$ 1,612,018$ 773,076$ 1,577,211$ 785,122$ Proportionate Share of the net pension liability
as a percentage of covered-employee payroll 303.58% 643.79% 334.09% 603.65% 285.65% 432.81% 259.15% 361.96% 236.89% 322.77% Plan's fiduciary net position $ 9,551,447 19,014,416 $ $ 9,001,638 17,178,465 $ $ 6,687,054 11,065,481 $ 11,402,375 $ 6,825,730 $ 11,269,690 $ 6,833,187 $ Plan's total pension liability $ 13,565,469 27,035,996 $ 22,786,742 $ 12,547,426 $ 16,044,411 $ 9,922,435 $ 15,579,995 $ 9,623,951 $ 15,006,017 $ 9,367,305 $ Plan fiduciary net position as a percentage of
total pension liability 70.33% 70.41% 75.39% 71.74% 68.97% 67.39% 73.19% 70.92% 75.10% 72.95% June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 Notes to Schedule
Change in Benefit Terms: The figures above do not include any liability impact that may have resulted from plan changes which occurred after June 30, 2013 as they have minimal cost impact. This applies for voluntary benefit changes as well as any offers of Two Years Additional Service Credit (a.k.a Golden Handshakes).

Change in Assumptions: Discount rate has changed to 7.15% in fiscal year 2017.

Discount rate has changed to 6.90% in fiscal year 2023.

Inflation rate has changed to 2.3% in the fiscal year 2023

CITY OF WILLITS

REQUIRED SUPPLEMENTAL INFORMATION
JUNE 30, 2024
59 Cost Sharing Defined Benefit Pension Plans
Schedule of Contributions – Last 10 Years
Misc Safety Misc Safety Misc Safety Misc Safety Misc Safety Plan Plan Plan Plan Plan Plan Plan Plan Plan Plan
Contractual required contribution (actuarially
determined) $ 925,304 $ 340,225 $ 895,361 $ 371,861 $ 607,211 $ 590,683 $ 541,588 $ 544,157 $ 598,503 $ 414,634 Contributions in relation to the actuarially
determined contributions (925,304) (340,225) (895,361) (371,861) (607,211) (590,683) (541,588) (544,157) (598,503) (414,634) Contribution deficiency (excess) $ - $ - $ - $ - $ - $ - -$ -$ -$ -$ Covered employee payroll $ 2,152,483 585,124$ $ 1,988,424 $ 550,124 $ 2,185,744 500,004$ $ 2,089,451 $ 615,479 $ 2,103,326 $ 729,919 Contributions as a percentage of covered
employee payroll 42.99% 58.15% 45.03% 67.60% 27.78% 118.14% 25.92% 88.41% 28.46% 56.81% June 30, 2024 June 30, 2023 June 30, 2022 June 30, 2021 June 30, 2020 Misc Safety Misc Safety Misc Safety Misc Safety Misc Safety Plan Plan Plan Plan Plan Plan Plan Plan Plan Plan
Contractual required contribution (actuarially
determined) $ 513,332 321,412$ $ 470,671 338,047$ $ 448,765 $ 370,313 $ 331,977 $ 236,700 $ 332,087 $ 285,632 Contributions in relation to the actuarially
determined contributions (513,332) (321,412) (470,671) (338,047) (448,765) (370,313) (331,977) (236,700) (332,087) (285,632) Contribution deficiency (excess) $ - -$ -$ -$ -$ -$ -$ -$ -$ -$ Covered employee payroll $ 1,844,079 665,707$ $ 1,798,882 537,809$ $ 1,678,686 587,395$ $ 1,743,044 747,527$ 1,612,018$ $ 773,076 Contributions as a percentage of covered
employee payroll 27.84% 48.28% 26.16% 62.86% 26.73% 63.04% 19.05% 31.66% 20.60% 36.95% June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 Notes to Schedule
(1)The mortality table was developed based on CalPERS’ specific data. The table includes 20 years of mortality improvements using Society of Actuaries Scale BB. For more details on this table, please refer to the 2014 experience study report.

Valuation Date: June 30, 2022
Methods and assumptions used to determine contributions rates:

Actuarial Cost Method Entry Age Normal Cost Method
Amortization Method Level Percent of Payroll
Asset Valuation Method Market Value
Inflation 2.30%
Salary Increase 3.30% to 14.2 %
Investment Rate of Return 6.90%
Mortality Rate Table(1) Derived using CalPERS’ Data
Variance with
Final Budget
Budget Actual Positive (Negative)
Revenues
Intergovernmental - $ $ 164,057 $ 164,057
Other 76,785 76,785
Total Revenues 240,842 240,842
Expenditures
Current:

Public Works 139,923 (139,923)
Capital Outlay 600,000 1,928,881 (1,328,881)
Total Expenditures 600,000 2,068,804 (1,468,804)
Excess (Deficiency) of Revenues Over
(Under) Expenditures (600,000) (1,827,962) (1,227,962)
Other Financing Sources (uses):

Transfers In 1,393,797 1,393,797
Total Other Financing Sources (Uses) 1,393,797 1,393,797 Net Change in Fund Balance (600,000) (434,165) 165,835
Fund Balance - July 1, 2023 178,920 178,920
Prior Period Adjustments 130,242 130,242
Fund Balance - July 1, 2023, Restated 178,920 309,162 130,242 Fund Balance - June 30, 2023 $ (421,080) $ (125,003) $ 296,077 FOR THE FISCAL YEAR ENDED JUNE 30, 2024
Final

CITY OF WILLITS

SCHEDULE OF REVENUES, EXPENDITURES,

AND CHANGES IN FUND BALANCES

BUDGET AND ACTUAL

CAPITAL OUTLAY CAPITAL PROJECTS FUND
61 63

NONMAJOR GOVERNMENTAL FUNDS

SPECIAL REVENUE FUNDS
______________________________
Special revenue funds are used to account for specific revenues that are legally restricted to expenditure for particular purposes.
______________________________
Haehl Creek Fund was established to account for the development of improvements at the intersections of Baechtel Road with South Main Street or along the Haehl Creek Drive, East Hill Road, or Baechtel Road corridors.

LEAA Fund was established to account for revenue and expenditures associated with the Law Enforcement Assistance Administration Program.

Narcotics Forfeiture Fund was established to account for funds distributed to the Willits Police Department in accordance with law as a result of a local or state narcotics forfeiture and/or seizure. As required by law these funds will be utilized exclusively to support the law enforcement and prosecutor efforts of the Willits Police Department.

Business Rehab Fund was established to account for funds set aside for the business rehabilitation program loans and to account for revenues and expenditures associated with repayment and disbursement of loans.

Vehicle Abatement Fund was established to account for funds received as part of the CHP abandoned vehicle abatement program.

HSG Rehab Fund was established to account the CDBG Housing Rehabilitation program loans.

DNA Cost Reimb Fund was established to account for funds distributed to the Willits Police Department in accordance with California State laws for funds from the State Department of Justice.

H&S Restitution Fund was established to account for funds distributed to the Willits Police Department by offenders whose actions have caused resources to be expended to remediate their operations/locations, according to the District Attorney’s 11470.2 H&S Restitution Fund.

Business Loan Fund was established to account for local small business loans and to account for revenues and expenditures associated with repayment and disbursement of loans.

Lateral Repair Loan Fund was established to account for loans given by the City for residents to make necessary repairs to sewer lateral improvement and repairs.

Gas Tax Fund was established to account for revenue and expenses associated with gasoline tax.

LEAA Narcotics Business Vehicle
Haehl Creek Program Forfeiture Rehab Abatement HSG Rehab Assets
Cash and Investments 132,309 $ 2,185 $ 61,132 $ 4,154 $ - $ 73,759 $ Accounts Receivable
Loans Receivable 225,481
Total Assets $ 132,309 $ 2,185 $ 61,132 $ 4,154 $ 299,240 - $ Liabilities
Accounts Payable -$ $ - $ 514 -$ $ - $ 2,475
Deposits Payable 4,066
Due to other Funds 5,256
Total Liabilities 4,580 5,256 2,475
Fund Balances
Restricted 132,309 2,185 56,552 4,154 296,765
Unassigned (5,256)
Total Fund Balances 132,309 2,185 56,552 4,154 (5,256) 296,765 Total Liabilities and Fund Balances 132,309 $ $ 2,185 $ 61,132 $ 4,154 $ 299,240 - $ Special Revenue Funds

CITY OF WILLITS

COMBINING BALANCE SHEET

NONMAJOR GOVERNMENTAL FUNDS
June 30, 2024
64 Total
Nonmajor
DNA Cost H&S Housing Lateral Governmental
Reimb Restitution Loan Repair Loan Gas Tax Funds
$ 50,562 $ 37,308 $ 42,271 $ 35,037 $ 438,717
34,380 34,380
225,481
$ 50,562 $ 37,308 $ 42,271 $ 35,037 $ 34,380 $ 698,578
-$ $ - $ - $ - $ 15,991 $ 18,980
4,066
431,785 437,041
447,776 460,087
50,562 37,308 42,271 35,037 657,143
(413,396) (418,652)
50,562 37,308 42,271 35,037 (413,396) 238,491
$ 50,562 $ 37,308 $ 42,271 $ 35,037 $ 34,380 $ 698,578

CITY OF WILLITS

COMBINING BALANCE SHEET

NONMAJOR GOVERNMENTAL FUNDS
June 30, 2024
Special Revenue Funds
65 LEAA Narcotics Business Vehicle
Haehl Creek Program Forfeiture Rehab Abatement HSG Rehab Revenues:

Sales and Use Taxes $ - $ - $ - $ - $ - $ -
Interest 3,726 61 1,722 117
Charges for Services
Intergovernmental 9,601 92,309
Total Revenues 3,726 61 11,323 117 92,309
Expenditures:

Current:

Community Development 18,386
Public Safety 17,095 10,244
Public Works 1,507
Total Expenditures 1,507 17,095 10,244 18,386
Excess (Deficiency) of Revenues
over (Under) Expenditures 2,219 (17,034) 1,079 117 73,923 Net Change in Fund Balances 2,219 (17,034) 1,079 117 73,923 Fund Balances - June 30, 2023 130,090 19,219 55,473 4,037 (5,256) 222,842 Prior Period Adjustments
Fund Balances - July 1, 2023, Restated 130,090 19,219 55,473 4,037 (5,256) 222,842 Fund Balances - June 30, 2024 $ 132,309 $ 2,185 $ 56,552 4,154$ (5,256)$ 296,765$ Special Revenue Funds

CITY OF WILLITS

COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES

NONMAJOR GOVERNMENTAL FUNDS
For the Fiscal Year Ended June 30, 2024
66 Total
Nonmajor
DNA Cost H&S Housing Lateral Governmental
Reimb Restitution Loan Repair Loan Gas Tax Funds
$ - $ - $ - $ - $ - $ -
1,424 1,051 1,191 9,292
3,885 55,284 59,169
41,080 268,627 411,617
5,309 1,051 42,271 323,911 480,078
18,386
27,339
497,148 498,655
497,148 544,380
5,309 1,051 42,271 (173,237) (64,302)
5,309 1,051 42,271 (173,237) (64,302)
45,253 36,257 35,037 (232,133) 310,819
(8,026) (8,026)
45,253 36,257 35,037 302,793 (240,159)
$ 50,562 $ 37,308 $ 42,271 $ 35,037 $ (413,396) $ 238,491

CITY OF WILLITS

COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES

NONMAJOR GOVERNMENTAL FUNDS
For the Fiscal Year Ended June 30, 2024
Special Revenue Funds
67 Variance with
Final Budget
Budget Actual Positive (Negative)
Revenues
Charges of services - $ $ 55,284 $ 55,284
Intergovernmental 243,189 268,627 25,438
Total Revenues 243,189 323,911 80,722
Expenditures
Current:

Public Works 314,692 497,148 (182,456)
Total Expenditures 314,692 497,148 (182,456)
Excess (Deficiency) of Revenues Over
(Under) Expenditures (71,503) (173,237) (101,734)
Net Change in Fund Balance (71,503) (173,237) (101,734) Fund Balance - July 1, 2023 (232,133) (232,133)
Prior Period Adjustments (8,026) (8,026)
Fund Balance - July 1, 2023, Restated (232,133) (240,159) (8,026) Fund Balance - June 30, 2024 $ (303,636) $ (413,396) $ (109,760)

CITY OF WILLITS

SCHEDULE OF REVENUES, EXPENDITURES,

AND CHANGES IN FUND BALANCES

BUDGET AND ACTUAL

GAS TAX SPECIAL REVENUE FUND
FOR THE FISCAL YEAR ENDED JUNE 30, 2024
Final
68 Variance with
Final Budget
Budget Actual Positive (Negative)
Revenues
Interest - $ $ 61 $ 61
Total Revenues 61 61
Expenditures
Current:

Public Safety 5,604 17,095 (11,491)
Total Expenditures 5,604 17,095 (11,491)
Excess (Deficiency) of Revenues Over
(Under) Expenditures (5,604) (17,034) (11,430)
Net Change in Fund Balance (17,034) (17,034)
Fund Balance - July 1, 2023 19,219 19,219
Fund Balance - June 30, 2024 $ 19,219 $ 2,185 $ (17,034)

CITY OF WILLITS

SCHEDULE OF REVENUES, EXPENDITURES,

AND CHANGES IN FUND BALANCES

BUDGET AND ACTUAL

LEAA PROGRAM SPECIAL REVENUE FUND
FOR THE FISCAL YEAR ENDED JUNE 30, 2024
Final
69 Variance with
Final Budget
Budget Actual Positive (Negative)
Revenues
Interest 500 $ 1,722 $ 1,222 $
Intergovernmental 35,000 9,601 (25,399)
Total Revenues 35,500 11,323 (24,177)
Expenditures
Current:

Public Safety 35,000 10,244 24,756
Total Expenditures 35,000 10,244 24,756
Excess (Deficiency) of Revenues Over
(Under) Expenditures 1,079 500 579
Net Change in Fund Balance 500 1,079 579
Fund Balance - July 1, 2023 55,473 55,473
Fund Balance - June 30, 2024 55,973 $ 56,552 $ 579 $

SCHEDULE OF REVENUES, EXPENDITURES,

CITY OF WILLITS

AND CHANGES IN FUND BALANCES

BUDGET AND ACTUAL

NARCOTICS FORFEITURE SPECIAL REVENUE FUND
FOR THE FISCAL YEAR ENDED JUNE 30, 2024
Final
70 Variance with
Final Budget
Budget Actual Positive (Negative)
Revenues
Interest 500 $ $ 1,051 $ 551
Total Revenues 500 1,051 551
Expenditures
Current:

Public Safety 10,000 - 10,000
Total Expenditures 10,000 10,000
Excess (Deficiency) of Revenues Over
(Under) Expenditures (9,500) 1,051 10,551
Net Change in Fund Balance (9,500) 1,051 10,551
Fund Balance - July 1, 2022 36,257 36,257
Fund Balance - June 30, 2023 $ 26,757 $ 37,308 $ 10,551 Final

CITY OF WILLITS

SCHEDULE OF REVENUES, EXPENDITURES,

AND CHANGES IN FUND BALANCES

BUDGET AND ACTUAL

H&S RESTITUTION SPECIAL REVENUE FUND
FOR THE FISCAL YEAR ENDED JUNE 30, 2024
71 72

NONMAJOR PROPRIETARY FUNDS

PROPRIETARY FUNDS
______________________________
Proprietary funds are used to account for operations that are financed and operated in a manner similar to private business enterprises - for these funds, it is the intent of the City Council that the costs of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges.
______________________________
Solid Waste - This fund is used to account for revenues and expenses associated with solid waste services.

Airport - This fund is used to account for revenues and expenses associated with the Airport.

Total
Nonmajor
Solid Waste Airport
Fund Fund
Assets
Current Assets:

Cash and Investments $ - $ - $ -
Accounts Receivable 78,926 78,926
Inventory 193,194 193,194
Total Current Assets 272,120 272,120
Noncurrent Assets:

Capital Assets:

Land 11,692 11,692
Buildings and Improvements 1,777,853 1,777,853
Machinery and Equipment 54,867 54,867
Less:

Accumulated Depreciation (722,185) (722,185)
Total Noncurrent Assets 1,122,227 1,122,227
Total Assets 1,394,347 1,394,347
Liabilities
Current Liabilities:

Accounts Payable 6,072 14,498 20,570
Due to Other Funds 872,496 498,598 1,371,094
Deposits Payable 8,769 8,769
Total Current Liabilities 878,568 521,865 1,400,433
Noncurrent Liabilities:

Landfill Post-closure Costs 881,592 881,592
Total Noncurrent Liabilities 881,592 881,592
Total Liabilities 1,760,160 521,865 2,282,025
Net Position
Net Investment in Capital Assets 1,122,227 1,122,227
Unrestricted (1,760,160) (249,745) (2,009,905)
Total Net Position $ (1,760,160) $ 872,482 $ (887,678)

CITY OF WILLITS

NONMAJOR PROPRIETARY FUNDS

COMBINING STATEMENT OF NET POSITION
June 30, 2024
Enterprise Funds
Enterprise
Funds
73 Total
Nonmajor
Solid Waste Airport
Fund Fund
Operating Revenues
Charges for Services $ 128,264 - $ $ 128,264
Other 39,000 39,000
Total Operating Revenues 167,264 167,264
Operating Expenses
Operations 201,947 201,947
Administrative 6,413 6,413
Maintenance 179,231 27,088 206,319
Depreciation 46,987 46,987
Total Operating Expenses 179,231 282,435 461,666
Operating Income (Loss) (179,231) (115,171) (294,402)
Non-Operating Revenue (Expenses)
Interest Revenue
Total Non-Operating Revenue (Expenses)
Net Income (Loss) (179,231) (115,171) (294,402)
Transfers
Transfers Out (1,927) (1,927)
Changes in Net Position (179,231) (117,098) (296,329)
Net Position - Beginning of Fiscal Year (1,580,929) 1,014,461 (566,468) Prior Period Adjustment (24,881) (24,881)
Net Position - Beginning of Fiscal Year, restated (1,580,929) 1,014,461 (591,349) Net Position - End of Fiscal Year $ (1,760,160) $ 897,363 $ (887,678) Enterprise

NONMAJOR PROPRIETARY FUNDS

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

CITY OF WILLITS
74 Total
Nonmajor
Solid Waste Airport
Fund Fund
CASH FLOWS FROM OPERATING ACTIVITIES:

Cash Received from Users - $ $ 90,201 $ 90,201
Cash Payments to Suppliers and Contractors (184,204) (290,394) (474,598) Net Cash Provided (Used) By Operating Activities (184,204) (200,193) (384,397) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:

Interfund Borrowing 184,204 413,307 597,511
Net Cash Provided (Used) By Noncapital Financing Activities 184,204 411,380 595,584 CASH FLOWS FROM INVESTING ACTIVITIES:

Interest Received -
Net Cash Provided (Used) in Investing Activities

CASH FLOWS FROM CAPITAL AND RELATED FINANCING
ACTIVITIES:

Acquisition of property, plant, and equipment (211,187) (211,187) Net Cash Provided (Used) In Capital and Related
Financing Activities (211,187) (211,187)

NET INCREASE (DECREASE) IN CASH AND CASH

EQUIVALENTS

CASH AND CASH EQUIVALENTS, BEGINNING OF FISCAL YEAR
CASH AND CASH EQUIVALENTS, END OF FISCAL YEAR $ - $ - $ - Reconciliation to Statement of Net Position:

Cash and Cash Equivalents $ - $ - $ -
CASH FLOWS FROM OPERATING ACTIVITIES:

Operating Income (Loss) $ (179,231) $ (115,171) $ (294,402) Adjustment to Reconcile Operating Income
(Loss) to Net Cash Provided (Used) by Operating
Activities:

Depreciation Expense 46,987 46,987
Changes in Assets and Liabilities:

Increase (Decrease) in Accounts Payable (4,973) 3,404 (1,569) (Increase) Decrease in Inventory (58,350) (58,350)
Total Adjustments (4,973) (85,022) (89,995)
Net Cash Provided (Used) By Operating Activities $ (184,204) $ (200,193) $ (384,397)

CITY OF WILLITS
FOR THE FISCAL YEAR ENDED JUNE 30, 2024
Funds

NONMAJOR PROPRIETARY FUNDS

COMBINING STATEMENT OF CASH FLOWS
Enterprise Funds
Enterprise
75 Resolution No. 2026-__ Page 1 of 1 March 25, 2026
RESOLUTION NO. 2026-__

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF WILLITS TO ACCEPT THE AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDING JUNE 30, 2024.

WHEREAS, the City of Willits retained the services of Moss, Levy & Hartzheim LLP to review and test processes and audit the financial statements of the governmental activities and business-type activities of each major fund, and the aggregate remaining funds and information for the Fiscal Year ending June 30, 2024; and
WHEREAS, the auditor has the responsibility to express opinions on the financial statements where Moss, Levy & Hartzheim LLP conducted the audit in accordance with Government Auditing Standards, issued by the Comptroller General of the United States; and WHEREAS, the auditor offered a modified opinion and stated that the financial statements are presented fairly and in all material respects regarding the financial position of the governmental activities and business-type activities for each major fund, and the aggregate remaining funds.

NOW, THEREFORE, BE IT RESOLVED that the Willits City Council Does hereby accept the City of Willits Annual Financial Report for the Fiscal Year ending June 30, 2024.

PASSED, APPROVED AND ADOPTED, this 25th day of March, 2026.

THE CITY OF WILLITS
______________________________
Tom Allman, Mayor
ATTEST:

I, Delores Pedersen, City Clerk of the City of Willits, do hereby certify that the foregoing Resolution was duly and regularly passed, approved and adopted by the City Council of the City of Willits, California, at its regular meeting held on the 14th day of January 2026, by the following vote:

AYES:

NOES:

ABSENT:

RECUSED:
______________________________
Delores Pedersen, City Clerk
Item No. 9a
Meeting Date: March 25, 2026

AGENDA SUMMARY REPORT
To: Honorable Mayor and Council Members
From: Swetha Hiranya Venuturupalli, Senior City Planner Agenda Title: DISCUSSION AND POSSIBLE ACTION TO APPROVE AN AGREEMENT AUTHORIZING THE WILLITS FARMERS MARKET TO OPERATE IN BUD SNIDER PARK.

Type: Presentation Consent Regular Agenda Public Hearing Urgent Time: 15 minutes.

Summary of Request: Staff has received a request from the Market Manager, Michael Foley, to operate the Willits Farmers Market in Bud Snider Park starting in the Northwest Corner of the Park, at N. Humboldt and State Street, and extend east on State Street to its intersection with N. Marin Street. Vendors on the street side would park perpendicular to the curb; all others would be asked to unload and park away from the Park, so as to maximize parking for customers. The Farmer’s market plans to operate on Thursdays from 1:00 p.m. to 6:30 p.m. as a Spring/Summer/Fall home, typically April through the end of October. The following language is excerpted from Mr.

Foley’s previous letter dated March 10, 2025.
“We would have vendors on both sides of the sidewalk, and canopies for those on the street side would extend a bit into the sidewalk. Vendors on the street side would park perpendicular to the curb; all others would be asked to unload and park away from the Park, so as to maximize parking for customers. We have one food truck – Fairall’s Farm Little Blue Wagon – that has been a part of the market for years now and would need space, either on Humboldt, near the NW corner, or at the end of our line of vendors on State Street.” Staff consulted with Mr. Foley and understood that no changes are proposed to the Farmers Market operations. Staff is seeking Council approval to authorize the Mayor to execute an agreement with the Mendocino County Farmers Market Association (MCFARM) to operate the Market at Bud Snider Park. A draft agreement is provided as Attachment A.

Background: The Willits Farmers Market previously operated at the northern side of Bud Snider Memorial Park for several years before moving operations to the Recreation Grove Park and thereafter operating in the City public parking lot on Main Street, and then at the private parking lot associated with the old Rexall building. The market moved back to Bud Snyder Park last year. The market has historically operated indoors at the Willits Grange during the winter months.

Key Issues: The following is a discussion of potential issues identified by staff.

Available Parking
Current staff have been made aware that vendors blocking private residential driveways was an issue at times during the market’s previous operation at the Park; however, staff are unaware of any issues during the Market’s operation at the Park in 2025. It is stated in the request provided that vendors that will not remain parked perpendicular to the curb will be asked to unload and park away from the park. Ambiguous parking recommendations could lead to errors or vendors accidentally blocking nearby driveways of private residences. Staff will work with the Market Manager and Police Department, if necessary, to ensure vendors do not block private residential driveways.

Trash Disposal
When Bud Snider Park was previously used, at times, the public trash receptacles available were overused and overflowing with not just customer trash, but in addition vendor trash, such as unsold produce. Services and Facilities Department staff noted that farmers market previous use of Bud Snider Park resulted in public trash receptacles overflowing, not necessarily from the addition of more trash being added by the public, but rather from the receptacles being used by vendors to dispose of their excess produce and goods. Staff recommends requiring the Farmers Market to provide waste receptacles for the purpose of collecting and disposing of waste produced by the vendors.

Any food waste should be collected separate from other waste streams for the purpose of diverting food waste from the landfill. Language has been added to the Agreement to require the farmers market to deal with the waste of their vendors separately. Again, staff is not aware that this was an issue during the Market’s operation at the Park in 2025.

Signage
Farmers Market will need to set up no parking signage along Bud Snider Park in advance to reserve parking spaces for vendors. These signs can be provided by the City, but staff is requesting that signage be put up and taken down appropriately by the Mendocino Farmers Market. Previously adopted Ordinance Number 99-02 (Attachment D) established traffic restrictions and parking regulations for the Farmers Market.

Permits/Further Planning
Farmers Market will need to obtain an encroachment permit from the City to operate the Farmers Market in the public right-of-way as well as reserve parking on the north side of Bud Snider Park. City staff will continue to coordinate with Farmers Market leadership to ensure the success of the Farmers Market at this location.

Attachments:
-Attachment A: Willits Farmers’ Market Facilities Use Agreement. -Attachment B: Farmers Market Site Plan (developed by staff based on MCFARM letter) -Attachment C: Mendocino County Farmer’s Market Vendor Regulations excerpt -Attachment D: Ordinance 99-02 establishing traffic restrictions and parking regulations for the Farmer’s Market. -Attachment E: Resolution authorizing execution of agreement Recommended Action: Approve a Resolution authorizing the Mayor to execute an Agreement with the Willits Farmers Market to operate the Farmers’ Market in Bud Snider Park from 1:30 p.m. to 6:30 p.m., every Thursday, from the beginning of April to the end of October 2026.

Alternative(s): (1) Direct staff to revise the Facilities Use Agreement; or (2) Deny the request and direct staff to work with the Farmers Market to identify an alternative location to operate within the City of Willits.

Fiscal Impact: No additional resources are necessary.

Personnel Impact: Staff time will be required to ensure that the Farmers Market operates consistent with the established agreement and all applicable codes.

Identified City Council Conflict of Interest: None.

California Environmental Quality Act: Project is categorically exempt under CEQA Guidelines Section 15301(Existing Facilities) and 15304(e) (minor temporary use of land having negligible or no permanent effects on the environment).

This Item Relates to the following General Plan Element : N/A Land Use Circulation Conservation and Open Space Noise Housing Public Services and Facilities, Parks and Recreation Economic Development
Reviewed by: Interim City Manager City Attorney City Clerk Finance Director Human Resources Council Action: Approved Denied Other: ________________________________________ Records: Agreement Resolution #_________ Ordinance #_________ Other _________ 1 REVOCABLE LICENSE FOR THE USE OF CITY PROPERTY,
WILLITS FARMERS’ MARKET FACILITIES USE AGREEMENT
THIS USE AGREEMENT is made and entered into the 25th of March, 2026 by and between the City of Willits, a Municipal Corporation of the State of California (City) and the Mendocino County Farmers Market Association, a California Non-Profit Corporation, (Licensee) concerning the Licensee’s use of City property at Bud Snider Park to conduct a weekly Farmers’ Market each Thursday afternoon during the 2026 season, April 1 through October 31, 2026.

RECITALS
WHEREAS, the City of Willits is a general law municipal corporation located in the County of Mendocino; and
WHEREAS, the Willits City Council supports the operation of the Farmers’ Market, which provides an opportunity for local farmers and gardeners to sell locally grown produce and for the local community, including the citizens of Willits, to purchase such produce.

NOW, THEREFORE, in consideration of the mutual covenants, agreements, and benefits to the parties, for the 2026 Farmers’ Market season, the parties agree as follows:

1. Market Location.

The Farmers’ Market will be held at its former location at Bud Snider Park, along and adjacent to the south sidewalk of State Street, between Humboldt and Marin Streets in the City of Willits. Initially the Market will conduct its operations near the North Westerly portion of that sidewalk. Upon completion of the planned construction of a park pavilion, that is anticipated to occur in August or September 2026, Licensee will conduct its operation within and adjacent to the pavilion area.

2. Term of Agreement.

The term of this agreement begins April 1, 2026 and ends October 31, 2026 unless terminated earlier pursuant to the terms of this agreement. During the final month of the term of this agreement, or sooner, the parties shall meet and negotiate in good faith for the possible revision or extension of this agreement.

3. Time of Operation.

This license shall be effective only during the hours of operation of the Willits Farmers’ Market, which takes place on Thursday afternoons between the hours of 12:00 p.m. and 6:30 p.m. commending April 1, 2026 and ending October 31, 2026. These hours may be changed by resolution of the Willits City Council.

4. Revocation of License.

The City expressly reserves the right, by majority vote of the Willits City Council, to revoke this license at any time with or without cause by giving the Licensee thirty (30) days written notice. Notice shall begin to run on the date that the City deposits such notice in the U.S.

Mail, addressed to Licensee at 2301 East Hill Road. Willits, CA 95490. Such thirty (30) day notice shall not be required where conditions of emergency necessitate immediate action.
2 5. Acceptance and Maintenance of Premises.

The Market Manager shall inspect the premises prior to use and report any damage.

Otherwise, the Market Manager will accept premises in “as is” condition.

6. Repair and Maintenance.

Licensee agrees to remove any trash or debris resulting from Market use of grounds, restroom facilities, walkways and parking areas and to leave them clean and in good order and repair and in a safe condition appropriate for use as a public use and recreational event facility. Licensee agrees to take responsibility for any inadvertent or intentional damage to premises caused by Market activities and to repair said damage to the satisfaction of the Services and Facilities Director.

7. Alterations.

Licensee shall make no alterations or additions to the premises without first obtaining written consent of the City Manager. All additions or alterations made by Licensee shall be deemed a part of the Premises and shall remain upon and be surrendered with the premises at the termination of this license by lapse of time or otherwise.

8. Indemnification.

The Licensee will indemnify and hold the City, and its employees, agents and elected or appointed officials harmless against all liability, demands, claims, suits, losses, damages, causes of action, fines or judgments including costs, attorney’s and witness fees and expenses incident thereto for injuries to persons or property arising out of or in connection with the Licensee’s use of the property under this license. The City will give the Licensee prompt written notice of any such demand, claim or suit against it.

9. Transfer of License.

The Licensee shall not have the right to assign or otherwise transfer any interest in this license to any other party without previous written approval by the City Manager.

10. Enforcement.

In any action or proceeding by the City to enforce the provisions of this license, the prevailing party shall be entitled to recover all costs and expenses incurred therein, including reasonable attorney’s fees.

11. Market Setup and Display.

Licensee shall set up its Farmers’ Market operations at the locations described in paragraph 1 above, and consistent with its past practices at Bud Snider Park. Vendors may operate on both sides of the sidewalk, and canopies for those on the street side may extend onto the sidewalk. Vendors on the street side shall park perpendicular to the curb; all others shall unload and park away from the Park, so as to maximize parking for customers. Licensee’s food truck “Fairall’s Farm Little Blue Wagon” may be located 3 either on Humboldt Street, near its intersection with State Street, or adjacent to the market vendors on State Street. American with Disabilities Act (ADA) access along sidewalk shall be maintained during market operations. Licensee shall be responsible for placing and removing any signage for the purpose of establishing traffic restrictions and parking limitations as approved by the City.

12. Entire Agreement.

This license agreement represents the entire agreement between the parties. No other agreement between the parties or any amendments to this agreement shall be valid unless executed in writing and signed and dated by the parties.

Whereupon this Revocable License Agreement is approved and executed this 25th day of March, 2026 as follows:
_______________________
Tom Allman, Mayor ATTESTED TO:
_______________________ _____________________________
Michael Foley, Willits Farmers Market Manager Delores Pedersen, City Clerk Mendocino Co. Farmers’ Market Assn

From the Mendocino County Farmers Market Association Rules & Regulations (rev. 3/4/2025) (available in full at: https://mcfarm.org/vendor-resources) III. ADMISSION OF A PRODUCER AND PRODUCTS TO A MARKET
Admission policies are based on support for local agricultural producers. In MCFARM’s Articles of Incorporation, the first purpose of our association is to provide farmers markets for “vegetables, fruits and related agricultural products grown and produced in Mendocino and nearby counties”, more specifically as per ByLaws, Mendocino and Lake counties. Admission of other products is also based on these locations.

A. Local Produce Vendors
Vendors with certified produce from Mendocino and Lake counties, shall be accepted until all spaces are full. All products that are listed on their primary producer certificates shall be accepted at each market.
-----

4. In order to be placed in the certified section of the market, any crafts sold by this produce vendor must be created from products harvested on the farm, must not predominate by volume or value, and must be accepted by the Market Manager.

B. Non-Certified Ag Producers (e.g. meat, aqua cultured oysters, cheese) New Non-Certified Producers will only be allowed in markets that have sufficient space to allow maximum participation from all certified producers who notify the manager before the season begins.

Market Managers must have the latitude to use their discretion in considering market supply and demand for non-certified ag products, but these producers have admission priority over other non-AG food products.

C. Other Food Products
Admission of producers of other food products such as processed food, wild seafood, seaweed, salt etc. is determined by market need, based on Market Manager discretion and has priority over admission of crafts. At least one of these factors should be present to assist the manager in determining admission:

1. The food is harvested or caught in the region of Mendocino and Lake counties.

2. The food is grown or raised by the vendor and processed locally.

3. It is a local business selling processed specialty foods.

D. Food to Go
Admission of food to go is based on Market Manager discretion, available space, and the need to provide market hospitality. The market image, healthfulness of the product, and the inclusion of local ingredients are important factors to consider.

E. Crafts
For the specific markets that accept crafts, admissions shall be based on Market Manager discretion.

The manager may also rely on a volunteer committee for reviewing work prior to admission. Market Managers should strive to keep the number of craft vendors below 25% of the number of certified vendors. A rotating schedule may be utilized to meet this percentage and still allow greater participation. The following factors assist the manager in determining admission:

1. It appears that at least 75% of the work in the craft item is created by the local vendor.

2. The person uses local products when possible.

3. The product is unique and the quality is commendable.

Title 10 - VEHICLES AND TRAFFIC
Chapter 10.74 FARMERS' MARKET, TRAFFIC RESTRICTIONS AND PARKING REGULATIONS Willits, California, Code of Ordinances Created: 2024-06-10 14:59:11 [EST] (Supp. No. 19)

Page 1 of 2 ends

Chapter 10.74 FARMERS' MARKET, TRAFFIC RESTRICTIONS AND PARKING

REGULATIONS
Sections:

10.74.010 Time of operation.

The traffic restrictions and parking regulations established by this ordinance shall be effective only during the time of operation of the farmers' market, which is Thursday afternoon between the hours of one p.m. and sixthirty p.m., commencing May 1st and ending October 31st of each year. The hours of operation and day or days of the week of operation may be changed by resolution of the city council. (Ord. 99-02 § 1(part)).

10.74.020 Closure to through traffic.

During the time of operation of the farmers' market, the area of State Street between Humboldt and Marin Streets shall be closed to through vehicular traffic and shall be open only to vehicles traveling to or from the residences in said area.
(Ord. 99-02 § 1(part)).

10.74.040 Reserved parking.

During the time of operation of the farmers' market, the area of State Street between Humboldt and Marin Streets adjacent to the south curb line and bordering the north side of Bud Snider Memorial Park shall be reserved for parking of farmers' market merchants only. Vehicles of said merchants shall be angle parked to allow the use of vehicle beds and the adjacent curbside and sidewalk area for display and sale of market merchandise. (Ord. 99-02 § 1(part)).

10.74.050 Signage.

The city shall post and maintain signs along the south curb line of State Street bordering the north side of Bud Snider Park restricting parking to farmers' market merchants only during the hours of operation of said farmers' market. The signs shall state that vehicles parked in violation of the ordinance codified in this chapter shall be towed.
(Ord. 99-02 § 1(part)).

10.74.060 Through traffic and nonmerchant parking prohibited.

It shall be unlawful for any person operating a motor vehicle, other than those persons legitimately traveling to or from the residences in the area of State Street between Humboldt and Marin Street, to drive through said area during the time of operation of the farmers' market. It shall be unlawful for any person, other than a farmers' Created: 2024-06-10 14:59:11 [EST]
(Supp. No. 19)

Page 2 of 2 ends

market merchant parking for the purpose of participating in the sale of products at the farmers' market, to park in violation of the posted limits set by this chapter.
(Ord. 99-02 § 1(part)).

Resolution No. 2026- Page 1 of 1 March 25, 2026
RESOLUTION NO. 2026-

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF WILLITS APPROVING THE TERMS OF AN AGREEMENT BETWEEN THE CITY AND THE MENDOCINO COUNTY FARMERS’ MARKET ASSOCIATION TO CONDUCT WEEKLY FARMERS’ MARKETS FOR THE 2026

SEASON AT BUD SNIDER PARK
WHEREAS, the City Council of the City of Willits supports the operation of the Mendocino County Farmers’ Market Association (Association), which provides an opportunity for local farmers and gardeners to sell locally grown produce and for the community to purchase such produce within the City of Willits; and
WHEREAS, the Association has historically conducted its seasonal farmers’ markets at Bud Snider Park in the area along and adjacent to the south sidewalk of State Street, between Humboldt and Marin Streets in the City of Willits, and the Association desires to return to this location for the 2026 season; and
WHEREAS, the City Council of the City of Willits approves of the return of the farmers’ market operations to the above-described location and approves of the terms proposed in the agreement reached between the Association and the Community Development Department staff attached hereto; and
WHEREAS, the Licensee requests, and the city council concurs, that the farmers’ market will conduct its market operations on Thursday afternoons during the period of April 1st through October 31st and that traffic restrictions and parking regulations shall be imposed on each such market day from noon to 6:30 p.m., notwithstanding the days and times set forth within Willits Municipal Code Chapter 10.74.010.

NOW, THEREFORE, the City Council of the City of Willits hereby approves the terms of the REVOCABLE LICENCE FOR THE USE OF CITY PROPERTY, WILLITS FARMERS’ MARKET FACILITIES USE AGREEMENT; resolves that the market shall conduct its operations during the period of April 1st through October 31st, 2026; authorizes the establishment of traffic restrictions and parking regulations at the market location from noon to 6:30 p.m.; and authorizes Mayor Larry Stranske to execute same.

The above and foregoing Resolution was introduced by Councilmember ______ seconded by Councilmember _______ and passed and adopted at a regular meeting of the City Council of the City of Willits, held on the, 25th day of March 2026, by the following vote:

AYES:

NOES:

ABSENT:
________________________________
TOM ALLMAN, Mayor
City Council of the City of Willits
ATTEST:
_______________________________

DELORES PEDERSEN
City Clerk
1 Monthly Achievements & Activities
● Grant funds from the State DOT for Airport maintenance are being pursued to address tree removal and procure materials to rebuild the Segmented Circle. ● Hangar #16 was rented and now occupied, the tenant paid in full for a year. Another potential tenant to rent the last available nested T-hanger has expressed interest, staff is waiting to hear back regarding their final decision.
● SHN was given permission to use the Airport property to set up survey equipment to collect data for the County funded project to re-establish an emergency access route for CALFIRE and Emergency Service Vehicles in the event of a fire or other emergency that would trigger evacuation of the Brooktrails community.
● Delinquent rent has been collected from tenants who were behind on payments. ● Airport staff has drafted an Airport Advisory Circular to collate and make available relevant documents, procedures, and flight operation procedures. This is a is in development and common at Airports to centralize information and make readily available.

Project Updates
● Any potential out-of-pocket improvement projects that are not critical to the safety of flight operations and compliance are on hold due to budget constraints and the Cities’ current financial state.

Staffing Items
● Staff members continue to visit the Airport weekly for maintenance, security evaluation, and fuel quality assurance.

Budget Status
● No Change, 2 empty hangars.

Focus for Next Month
● Continuing work with legal to resolve the PART 16 Complaint and satisfy the FAA determination. Meet the expectations declared by the Director in order to continue receiving AIRPORT – O28
FEBRUARY 2026 | Report
2 the funding needed to sustain the facility, as previously mentioned in this report – This is ongoing.
● Begin contracting for tree removal and planning in-house repair of the Segmented Circle as determined necessary to improve the safety of flight operations by the State DOT (Caltrans Division of Aeronautics) in the recent annual inspection. These potential projects would be funded though State entitlements that have accrued over the last three fiscal years in the amount of approximately 30k eligible solely for the purpose of maintenance of the Airport. ● Continue to monitor trail heads and access points.
● Finalize The Airport Advisory Circular and vet it with the stake holders. 1 Monthly Achievements & Activities
• Issued 12 Building Permits ...............................................9 in January. • Opened 3 Code Enforcement Cases .............................3 in January. • Closed 3 Code Enforcement Cases................................3 in January. • Total of 48 Active Code Enforcement Cases..............48 in January.

The Department required an average of 9.6 calendar days to issue February Building Permits.  Over the counter Permits (reroofs/minor electrical) are typically issued on the day of submission and are not included in the average processing timeline.  Timeline includes time for Fire Department to complete required review for certain permits.

Project Updates
• Willits Housing Rehabilitation Loan Program
o $553,857 allocated (2019–2023 funding cycle)
o Now accepting applications for $25,000–$50,000 no-interest loans o Application deadline: April 30, 2026
o Program supports rehabilitation of owner-occupied affordable housing o For more information, property owners may contact Phil Davidson at [email protected] or 707-459-7153
• Community Development Block Grant (CDBG) 2025 NOFA
o City Council authorized City staff to develop applications for the 2025 CDBG Notice of Funding Availability (NOFA).
o Applications include:
• $1.5 million for City Business Loan Assistance Program • $1.0 million for the Willits Grange, including new roof and ADA improvements • $300,000 to support design of new MCHC medical campus at the old Howard Hospital site
o CDBG applications have been submitted to the California Department of Housing and Community Development (HCD). Award of applications are expected to be announced in September 2026.
• Entertainment Zone Ordinance
o At Council direction, staff is developing a draft ordinance to establish a regulatory framework, allowing the City to designate Entertainment Zones by resolution during City approved special events.
• Free Dump Days (Clean California Grant)
o Staff is providing free dump vouchers for City residents to dispose of household waste at the Willits Transfer Station between dates of February 24-28.

Community Development February 2026 | Report
2 o Vouchers are currently available at City Hall.

Staffing Items
• No items to report.

Budget Status
• No items to report.

Focus for Next Month
• Clean California Grant
o Finalize Bud Snider Park Improvement Designs
o Coordinate with School District woodshop class to build community kiosks. o Release RFP for Main Street improvements including decorative streetlights and banner system
• Entertainment Zone Ordinance
o Resolution to establish entertainment zone in downtown Willits o Coordinate with Willits Police Department
o Seek community input including downtown business owners. • LAFCO Municipal Service Review
o Work with LAFCO staff to develop public draft MSR
o Submit Sphere of Influence Amendment application to be processed concurrently with City MSR update.
• Farmers Market Agreement to operate at Bud Snyder Park for the 2026 season • Review operational impacts of staffing changes in the Department and identify structural adjustments to maintain core services.
• Complete the abandonment request for the Oak Park Subdivision alley right-of-way in accordance with applicable State and local requirements • Establish schedule for the 2026 City Pool season
Achievements & Activities
• FY 2023-24 Audit Completed, represented to Council.
• Continued to work on Bank Reconciliations for current Fiscal Year in preparation of Monthly Treasurer Reports.
• Stalled on preparation for FY 2024-25 Audit due to reprioritization for layoffs • Continued to Assist consultants on reporting and navigation within the Springbrook Software system.
• Worked on balancing journal entries to promote continuous information from software without key individuals .

Project Updates
• Springbrook Implementation:
o Project Management Module on hold. Suggest disengagement due to downgrade in capability.

Staffing Items
• None
Focus for Next Month
• Continuity of basic capabilities during departmental flux.

Finance February and March 2026 | Report
1 Monthly Achievements & Activities
• Parts are on order to replace a section of failed storm drain that caused a sinkhole on W.

Mendocino Ave.
• Trees on Main St. (Downtown), E. Commercial adjacent to S. Humboldt St., at Snider Park, and various other locations were pruned.
• The Flooded Advisory signs and Road Closed Barricades were collected and stored for the season. The Sandbag station was also closed.
• Multiple water leaks were repaired , and Public Works crew members assisted in flushing the Water System, see UTILITY REPORT for more details.
• Franklin St. drainage and sidewalk repairs are underway, nearing completion. • Ditch clearing and vegetation removal on E. Valley is almost finished, approximately 30 cubic yards of debris removed, and the channel re-established for drainage. Staff is waiting for the soil to dry before finishing the project. There is a section of failed culvert that has been identified and will need to be replaced at a later date. Debris from flooding was collected from various locations, including Walnut Ave. x Locust St. and portions of E. Commercial St. adjacent to the Sports Complex.
• City staff spent several hours marking underground utilities along the South Main St. / Hwy 20 corridor for asset damage prevention during the next phase of the underground fiber optic data line installation project and PG&E gas line replacements in the vicinity of Baechtel Grove Middle School. This has been on-going for several weeks, additional calls for mark and locate have increased as construction projects throughout the City have resumed, consuming approximately 40 hours of staff time per month to fulfill the program requirement. ● The Solar Project at the Sports Complex is nearly complete.

Services & Facilities FEBRUARY 2026 | Report
2 Project Updates
• Pothole patching was conducted at various locations; approximately 10 Cubic yards of asphalt cold mix was distributed as needed. The material bin was re-stocked again to support operations.
● Franklin St. drainage and sidewalk repairs are underway, nearing completion. • Fleet vehicles were repaired and serviced as needed, minor mechanical repairs conducted. • Turf care products to fertilize the City Athletic Fields and park greens were purchased and are being applied as needed, The Sports Complex was serviced in preparation for upcoming athletic seasons.
● Tree work at recreation Grove was contracted to reduce liability and increase public safety, work is scheduled to be completed by the end of April.
● Continued graffiti removal and vandalism mitigation was conducted at Recreation Grove and other City properties is ongoing.
● Approximately 14 cubic yards of debris and trash from transient camps and illegal roadside dumping were collected, including several abandoned appliances on Robert Dr. ● Parks maintenance equipment was serviced, mowing and weed abatement has begun at all locations, irrigation has been turned on and regular watering schedules have resumed.

Drinking fountains were repaired and serviced as needed. ● Several signs were replaced, including but not limited to a STOP sign on E. Valley St., and NO U-TURN signs adjacent to Brookside School. Graffiti was removed from several others. ● Brickwork on Main St. in the Downtown area was repaired and serviced as needed.

Staffing Items
● Three Public Works Employees were dismissed, one Maintenance Worker II, the Engineering & Construction Technician, and the Services and Facilities Director.

Budget Status
• No Report, spending has been reduced, and several projects are on hold.

Focus for Next Month*
*NOTE: SEVERAL ITEMS WERE ROLLED OVER FROM LAST MONTH OR ARE PART OF ONGOING SEASONAL OPERATION.
3 • Complete ditch and drainage repairs on E. Vallet St. and begin roadside mowing and vegetation management throughout the City owned right of ways. • Pothole patching and minor road repairs at various locations, this is ongoing in areas prone to pavement failure.
• Pour and finish concrete on a small section of sidewalk on East Hill Rd. Bridge left over from the PG&E Yard Project.
• Repair the sink hole and failed culvert pipe on W. Mendocino Ave. • Continue assisting with the annual flushing of the water system. • Begin tree work at Recreation Grove.
• Order replacements parts to repair the damages to the play structure at Snider Park. • Conduct tree trimming at various locations adjacent to public right of ways. • Restore the parking stalls at the Sports Complex impacted by the Solar Project.

POLICE DEPARTMENT REPORT
February 2026
Monthly Achievements & Activities
February 2025 February 2026
• 911 Calls Received 46 47
• Calls for service (CFS) 402 392
• Cases 43 32
• Arrests 31 18
• Citations 9 5
• Traffic Stops 14 9
Project Updates
• As staffing allows - continued traffic safety education and enforcement, emphasizing school zones, pedestrians in crosswalks, speeding, and passing to the right violations. • Continued deployment of the speed awareness radar trailer. • Providing extra patrols in city parks as time allows.

Staffing Items
• One lateral Police Officer has respectfully withdrawn from consideration. • Former Community Service Officer Kolby Johnson has successfully completed the Dispatch Training Program.
• Community Services Officer Christopher Dendy continues training at the Santa Rosa Junior College Basic Police Academy.
• Police Officer Steven Duran continues to progress through the Field Training Program. • The Department continues to focus on an ongoing recruitment effort to establish eligibility lists to fill vacancies for Police Officers, Dispatchers, and Community Service Officers when authorized.
1 Monthly Achievements & Activities
• Calibrated and cleaned CL2 analyzer with new standard formula at SWTP. • Completed new sampling requirements for PFAS from Morris reservoir. • Replaced thirty failed water meter registers and endpoints throughout the water distribution system.
• Cleaned and repaired broken soda ash (used for corrosion control) lines at SWTP. • Ran the back-up power generators at all water distribution facilities. • Operators completed many jar tests due to the fluctuations in turbidity during the storms at SWTP.
• Repaired multiple water leaks throughout the water distribution system. • Completed the installation of Centennial splashboards. • Replaced breakers and fuses at the Northbrook pressure station. • Switched and rewired pump at Northbrook pump station due to leaking pump. • Unwired and removed old wall heater from the SWTP office/lab. • Operators assisted in monthly Hi/Low late payment door hangers. • Submitted the annual California Environmental Reporting System (CERS) report. • Completed and uploaded the 2025 Consumer Confidence Report for water. • Started the annual water mainline and valve exercising program February 24th. • Met with AT&T on the timeline for removal of all copper DSL lines currently in use throughout the city’s water distribution system.
• Completed Trident filter inspection with WesTech March 10th & 11th. • Assisted Wylatti on the relocation and installation of the new fire hydrant at Franklin/Hwy 20.

Project Updates
• Ongoing: Fats, Oils and Grease (F.O.G.) program throughout the sewer collection system. • Ongoing: Sewer lateral inspection program.
• Ongoing: Water meter replacement program.
• Ongoing: Grounds maintenance at Water/Wastewater facilities. • Reservoir Capacity: Morris 665-acre feet and Centennial 635-acre feet equate to 100-percent of full capacity (March 17th).

Utilities February 2026 | Report
2 • Feb. 2026 Water Usage: SWTP: 10,266,314 MG. Feb. 2025: 6,362,562 MG.

GWTP: 3,000,000MG. Feb. 2025: 5,100,000 MG.

Totals: 13,266,314 MG. Feb. 2025: 11,462,562 MG
• Feb. Non-Potable Water Usage [Truck Fill Station]: 4,497 Gals. • February 2026 Wastewater Treatment Plant Flows: 60,047,537 MG.

Staffing Items
• Caleb Allen received his Grade I state wastewater treatment license.

Budget Status
• In Progress.

Focus for Next Month
• Schedule Veolia for the replacement of the Ultraviolet (UV) Disinfection control panel at WWTP.

New panel was received on March 16th.
• Schedule 307 Blosser Lane failing sewer lateral replacement at the intersection of HWY 20 at Blosser Lane with Wipf Construction.
• Receive and replace laser shields in Filter #2 multi-block underdrain. • Install new filter media in the Trident #2 filter.
• Continue annual water mainline and valve exercising program. Anticipated main street night flushing will occur during the week of March 23rd.
• Complete and submit 2025 Electronic Annual Report (EAR).

Willits City CouncilMarch 25, 2026

Willits City Council
March 25, 2026