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HomeMy WebLinkAboutFinal Packet_02252025     A G E N D A MEETING OF THE CITY COUNCIL Monday, February 24, 2025 ~ 7:00 PM City Council Chambers 211 Eighth Street Seal Beach, California LISA LANDAU MAYOR Third District NATHAN STEELE MAYOR PRO TEM Fifth District   JOE KALMICK COUNCIL MEMBER First District                                                           BEN WONG COUNCIL MEMBER Second District     PATTY SENECAL COUNCIL MEMBER Fourth District     This Agenda contains  a brief general description of  each item  to be considered. No action or discussion shall be taken on any item not appearing on the agenda, except as otherwise provided by law. Supporting documents, including agenda staff reports, and any public writings distributed by the City to at least a majority of the Council Members regarding any item on this agenda are available on the City’s website at www.sealbeachca.gov.   City  Council  meetings  are  broadcast  live  on  Seal  Beach  TV-3  and  on  the  City's  website (www.sealbeachca.gov). Check  SBTV-3  schedule  for  the  rebroadcast  of  meetings.  The meetings are also available on demand on the City’s website (starting 2012).   In  compliance with  the Americans with  Disabilities Act of 1990, if  you require disability related modifications or accommodations, including auxiliary aids or services to attend or participate in the City  Council  meeting, please  call  the  City  Clerk's  office  at  (562) 431-2527  at  least 48 hours prior to the meeting. CITY COUNCIL NORMS:                               Adopted on June 12, 2023 •Maintain a citywide perspective, while being mindful of our districts. •Move from I to we, and from campaigning to governing. •Work together as a body, modeling teamwork and civility for our community. •Assume good intent. •Disagree agreeably and professionally.  •Utilize long range plans to provide big picture context that is realistic and achievable. •Stay focused on the topic at hand.  Ensure each member of Council has an opportunity to speak. •Demonstrate respect, consideration, and courtesy to all. •Share information and avoid surprises. •Keep confidential things confidential. •Respect the Council/Manager form of government and the roles of each party. •Communicate concerns about staff to the City Manager; do not criticize staff in public.                                                                                          CIVILITY PRINCIPLES: Treat everyone courteously; Listen to others respectfully; Exercise self-control;  Give open-minded consideration to all viewpoints;  Focus on the issues and avoid personalizing debate; and, Embrace respectful disagreement and dissent as democratic rights, inherent components of an inclusive public process, and tools for forging sound decisions.  FOLLOW US ON FACEBOOK FOLLOW US ON INSTAGRAM FOLLOW US ON TWITTER/X                                       @CITYOFSEALBEACH                                                             @CITYOFSEALBEACHCA                                    @SEALBEACHCITYCA @SEALBEACHRECREATION&COMMUNITYSERVICES       @SEALBEACH_LIFEGUARD @SEALBEACHPOLICEDEPARTMENT                                    @SEALBEACHPOLICE                                                                                                   @SEALBEACHPUBLICWORKS                                                                                                   @K9YOSA                                                                                                   @K9.SAURUS CALL TO ORDER PLEDGE OF ALLEGIANCE COUNCIL ROLL CALL PRESENTATIONS / RECOGNITIONS •50 Annual Americana Awards Presentation •Parking Technology Upgrades Presentation •Annual Comprehensive Financial Report (ACFR) Presentation ORAL COMMUNICATIONS At this time members of the public may address the Council regarding any items within the  subject  matter jurisdiction  of the City Council. Pursuant  to the Brown Act, the Council  cannot  discuss  or  take  action  on  any  items  not  on  the  agenda  unless authorized  by  law. Matters  not  on the agenda  may, at the Council's  discretion, be referred to the City Manager and placed on a future agenda.   Those members of the public  wishing to speak  are asked to  come forward to  the microphone and state their name for the record. All speakers will be limited to a period of five (5) minutes. Speakers must address their comments only to the Mayor and entire City Council, and not to any individual, member of the staff or audience. Any documents for review should be presented to the City Clerk for distribution. Speaker cards will be available at the Clerk’s desk  for those  wishing to  sign  up to  address  the  Council, although  the submission of a speaker  card is  not  required  in order to address  the Council. Public Comment from JO8N Public Comment from Chad Berlingher Public Comment from James Lingle Public Comment from John Janecek APPROVAL OF AGENDA & WAIVER OF FULL READING OF RESOLUTIONS ORDINANCES By motion of the City Council this is the time to notify the public of any changes to the agenda and /or rearrange the order of the agenda. CITY ATTORNEY REPORT Nicholas Ghirelli, City Attorney    CITY MANAGER REPORT Patrick Gallegos, Interim City Manager    COUNCIL COMMENTS General Council Member comments and reporting pursuant to AB 1234. COUNCIL ITEMS – None CONSENT CALENDAR Items on the consent calendar are considered to be routine and are enacted by a single motion with the exception of items removed by Council Members. th A.Approval of the City Council Minutes - That the City Council approve the minutes of the Closed Session and  Regular City Council meetings held on February 10, 2025.   B.Demand on City Treasury (Fiscal Year 2025)  - Ratification.   C.Monthly Investment Report (February 24, 2025) - Receive and file.   D.City of Seal Beach Annual Audit Reports for Fiscal Year Ending June 30, 2024 - That the City Council receive and file the following documents for the Fiscal Year ending June 30, 2024:       A. Audit Communication Letter       B. Report on Internal Control       C. Annual Comprehensive Financial Report       D. Appropriations Limit Final Report   E.Amendment 1 to the Professional Special Counsel Services Agreement with Telecom Law Firm, P.C. - That the City Council adopt Resolution 7617: 1. Approving Amendment  1 to  the Professional Special Counsel  Services Agreement  with  Telecom  Law  Firm, P.C. to  approve  an  increase  in compensation  of  $30,000  for  professional  legal  and  general telecommunications  services  for  a  revised  total  not-to-exceed  amount  of $70,000, and  a  12-month  extension  to expire on June  30, 2026; and, 2. Directing the Interim City Manager to execute Amendment 1 on behalf of the City.   F.Approving the FY 2025-2026 West Orange County Water Board Budget -  That the City Council adopt Resolution 7618 approving the FY 2025-2026 West Orange County Water Board budget of $1,683,800, of which the City’s proportionate agency contribution is $286,771.   G.Notice of Completion for the North Seal Beach Community Center, CIP BG2501 - That the City Council adopt Resolution 7619: 1. Accepting the North Seal Beach Community Center Project, by MDJ  Management, LLC in  the amount of $404,023.76; and, 2. Directing the City Clerk to file a “Notice of Completion” with the Orange County Clerk-Recorder within 15 days from the date of acceptance and to release retention 35 days after recordation of the Notice of Completion contingent upon no claims being filed on the Project.   H.Approving and Authorizing Amendment 2 to the Professional Services Agreement with Raftelis Financial Consultants, Inc. for Water and Wastewater Financial Planning Services - That  the  City  Council  adopt Resolution  7620: 1. Approving Amendment  2 to  the  Professional Services Agreement with Raftelis Financial Consultants, Inc. dated June 12, 2023, as previously  amended by Amendment  1 dated March 25, 2024, to  provide additional  Water  and  Wastewater  Financial  Planning  Services; increase compensation  for  such  additional services  by  $51,527  for  a  revised  total contract not-to-exceed amount of $187,294; and extend the term to December 31, 2025; and,2. Authorizing and directing the Interim City Manager to execute Amendment  2  on  behalf  of  the  City; and, 3. Authorizing  the  Interim  City Manager to approve unforeseen additional work requests, up to the total not- to-exceed amount of $10,000.     I.Parking Enforcement Automated License Plate Reader (ALPR) and Supporting Equipment Refresh - That  the City Council  adopt  Resolution 7621: 1. Approving the expenditure of $214,479.37 for the reimplementation and refresh of the Seal Beach Parking ALPR system, CIP BG2401; and, 2. Authorizing the Interim City Manager to  execute on  behalf  of the City all contracts and proposals, including any necessary extensions or amendments thereafter.   ITEMS REMOVED FROM THE CONSENT CALENDAR PUBLIC HEARING UNFINISHED / CONTINUED BUSINESS – None NEW BUSINESS – None ADJOURNMENT Adjourn the City Council in memory of Volunteers in Police Services (VIPs) Ron Alsop Cardon and Laurel Mauk to Monday, March 10, 2025 at 5:30 p.m. to meet in closed session, if deemed necessary. 21 Citizens of the Year. More than $500,000 in scholarships & emergency assistance given to students. Thank you for supporting Cypress College students, Seal Beach honorees, and the Americana Awards Gala Seal Beach Police Department ALPR Parking Technology Refresh City Council Meeting February 24, 2025 Background •Mobile Automated License Plate Recognition (ALPR) has been utilized in Seal Beach since the initiation of the smart parking technology program in 2017 and (besides our people)is the central pillar that our parking enforcement and animal control programs are built upon •In 2019, the City was recognized for the innovative use of integrated parking technology (first end-to-end parking technology solution on the West Coast) •Throughout the City, parking is based on the license plate which optimizes the program and provides a more efficient operation Background •The current ALPR technology has exceeded the life cycle (impacting program effectiveness and reductions in parking revenue) •Budget allocation was authorized to proceed with an ALPR technology refresh for 6 vehicles •SBPD has direct experience with the 2 integrated mobile LPR companies (Genetec & Motorola) •Motorola failed to provide the support required by the City’s smart parking technology program Why Genetec? ●Complex & customized nature of the associated Genetec equipment and software ○Able to optimize existing infrastructure and integrations with continuity and consistency with patrol & parking fleet vehicles ○Simplifies maintenance and maximizes interoperability ●Switching vendors would require substantial increases to unnecessarily replace components and needlessly complicate reimplementation efforts (which would exceed budget allocation) Invitation to Bid •3 qualified, experienced and licensed Genetec distributors who support the West Coast region with municipal, parking and law enforcement experience were solicited on October 16, 2024 •The Invitation to Bid included a detailed scope of work, submission criteria and evaluation guidelines •Each distributor completed an onsite inspection of the existing infrastructure with Police Department staff the week of November 5, 2024 •Proposals were received from each distributor on November 26, 2024. Vendor Selection •Proposals were received from Route 1 (incumbent), Eye P Solutions and ComSonics •After thorough review of the proposals received, Route 1 and ComSonics were shortlisted and references were contacted •Existing concerns about responsiveness and consistency with Route 1 were confirmed by other agencies •ComSonics has provided the most cost-effective and complete proposal to the City that includes support and overall coverage Financial & Service Impact Impact to current revenue •In 2023,our operations resulted in approximately 22,900 citations.SCSOs PAs handled over 6,000 service calls.However,ongoing equipment failures are significantly hampering the effectiveness of SCSOs and PAs.This decrease in efficiency is expected to worsen as equipment issues persist. •We anticipate several negative outcomes if immediate action is not taken: 1.A substantial decline in parking revenue 2.Increased response times for service calls 3.SCSO and PO safety issues 4.Significant disruptions to Animal Control and Jail services Budget Allocation •The approved budget allocation for this project was $242,608 •ComSonics proposal is approximately $214,000 •Cost savings = Approximately $30,000 which can be invested in other aspects of the technology configuration •Recurring costs, such as licensing fees, and routine management costs outside of the established warranty and agreements are to be budgeted for in the Police Department technology budget. •We recommend that a portion of the annual parking revenue be set aside in anticipation of preventative maintenance and the inevitable technology updates and upgrades that will be required in the future. Questions? parking@sealbeachca.gov City of Seal Beach AU-C 260 Communication With Those Charge With Governance For the Year Ended June 30, 2024 Presented by: Frances Kuo, CPA, CGMA Engagement Partner 2 CONTENTS •Required Communications (AU-C 260) •Overview of Financial Statements •Key Pension and OPEB Information •Audit Results 2/24/2025 3 Required Communications (AU-C 260) 2/24/2025 4 •Our Responsibility in Accordance with Professional Standards 2/24/2025 Required Communications (AU-C 260) •Form and express an opinion about whether the financial statements that have been prepared by management with your oversight are presented fairly, in all material respects, in accordance with accounting principles generally accepted in the United States of America •Plan and perform the audit to obtain “reasonable” assurance (not “absolute” assurance) about whether the financial statements are free of material misstatements •Consider internal control over financial reporting. Such considerations are solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control •Conclude there are no conditions or events that raise substantial doubt about the City’s ability to continue as a going concern. •Communicate with those charged with governance 5 Required Communications (AU-C 260) •Ethics and Independence •Complied with ALL relevant ethical requirements regarding independence •Significant Accounting Policies •The City of Seal Beach disclosed all significant accounting policies in Note 1 to the financial statements. •Implementation of GASB 100 - Accounting Changes and Error Corrections – an Amendment of GASB Statement No. 62 •Significant Estimates •Investment Fair Value •Depreciation and amortization on Capital Assets •Net Pension Liability •Net OPEB Liability 2/24/2025 6 Required Communications (AU-C 260) •Sensitive Disclosures •Note 1 – Summary of Significant Accounting Policies •Note 9 – Defined Benefit Pension Plans •Note 10 – Other Postemployment Benefits (“OPEB”) Plan •Note 14 – Individual Fund Disclosure •Note 15 – Prior Period Adjustments •Misstatements •No material uncorrected misstatement 2/24/2025 7 Required Communications (AU-C 260) •Consultation with Other Accountants •Management informed us that, and to our knowledge, there were no consultations with other accountants regarding auditing and other matters. •Significant Difficulties •We encountered no significant difficulties in dealing with management. •Disagreement with Management •We did not have any disagreement with management in terms of accounting treatments nor audit procedures performed. 2/24/2025 8 OVERVIEW OF THE FINANCIAL STATEMENTS 2/24/2025 9 City of Seal BeachGovernment-Wide SummaryAs of June 30, 2024 and 2023 2023 2024 (as restated)Change30283028 Net Position: Governmental-Activities 100,459,000$ 95,310,000$ 5,149,000$ Business-type Activities 43,533,000 44,901,000 (1,368,000) Total Net Position 143,992,000 140,211,000 3,781,000 2/24/2025 10 City of Seal BeachGovernment-Wide Summary (Continued)For the Year Ended June 30, 2024 Governmental Activities Business-Type Activities Total Program Expenses 49,498,000$ 10,481,000$ 59,979,000$ Program Revenues 13,499,000 8,712,000 22,211,000 Net Cost of Services (35,999,000) (1,769,000) (37,768,000) General Revenues 41,148,000 401,000 41,549,000 Change in Net Position 5,149,000$ (1,368,000)$ 3,781,000$ 2/24/2025 11 City of Seal BeachGeneral Fund SummaryFor the Year Ended June 30, 2024 Revenue 50,338,000$ Expenditures 44,151,000 Revenue over Expenditures 6,187,000 Net Transfers (4,305,000) Net Change in Fund Balance 1,882,000 Fund Balance at July 1, 2023, as restated 37,587,000 Fund Balance at June 30, 2024 39,469,000$ 2/24/2025 12 City of Seal BeachCalPERS Pension Plan Misc Safety Total 2023 Total Pension Liability 57,305,000$ 108,684,000$ 165,989,000$ 159,733,000$ Fiduciary Net Position 39,480,000 74,040,000 113,520,000 110,428,000 Net Pension Liability 17,825,000$ 34,644,000$ 52,469,000$ 49,305,000$ Funding Ratio 68.89%68.12%68.39%69.13% Contribution Made 1,782,000$ 4,296,000$ 6,078,000$ 5,647,000$ 2024 2/24/2025 13 City of Seal BeachOther Postemployment Benefits (“OPEB”) 2/24/2025 2024 2023 Total OPEB Liability 11,553,000$ 13,421,000$ Fiduciary Net Position 7,834,000 7,130,000 Net OPEB Liability 3,719,000$ 6,291,000$ Funding Ratio 67.81%53.13% Contribution Made 965,000$ 981,000$ 14 AUDIT RESULTS 2/24/2025 15 Audit Results •Financial Statements •Unmodified opinion •Financial Statements are fairly presented in all material respects •Significant accounting policies have been consistently applied •Estimates are reasonable •Disclosures are properly reflected in the financial statements •AU-C 265, Communicating Internal Control Related Matters Identified in an Audit •None Reported 2/24/2025 HQ - ORANGE COUNTY 200 E. Sandpointe Avenue Suite 600 Santa Ana, CA 92707 SAN DIEGO 4660 La Jolla Village Dr. Suite 100 San Diego CA 92122 BAY AREA 2121 North California Blvd. Suite 290 Walnut Creek, CA 94596 LAS VEGAS 1050 Indigo Drive Suite 110 Las Vegas, NV 89145 PHOENIX 4742 North 24th Street Suite 300 Phoenix, AZ 85016 HQ - ORANGE COUNTY 200 E. Sandpointe Avenue Suite 600 Santa Ana, CA 92707 SAN DIEGO 4660 La Jolla Village Drive Suite 100 San Diego, CA 92122 SACRAMENTO 1511 Corporate Way Suite 220 Sacramento, CA 95831 LAS VEGAS 1980 Festival Plaza Drive Suite 300 Las Vegas, NV 89134 PHOENIX 2 N. Central Avenue Suite 1800 Phoenix, AZ 85004 WALNUT CREEK 2121 North California Boulevard Suite 290 Walnut Creek, CA 94596 1 Gloria Harper From:JO8N <JO8N@proton.me> Sent:Sunday, February 23, 2025 1:54 PM To:Ask City Hall; Human Resources; budget; info@sealbeachchamber.org; Lisa Landau; Nathan Steele; Joe Kalmick; Ben Wong; Patty Senecal; Patrick Gallegos; Jill Ingram; nghirelli@rwglaw.com; Michael Henderson; Gloria Harper; Joe Bailey; Alexa Smittle; Barbara Arenado; Iris Lee; Tim Kelsey; Deb Machen; Shaun Temple; Brandon DeCriscio; Anthony Nguyen; Nicholas Nicholas; Mike Ezroj; Julia Clasby; Karen Pickering; rosieritchie@yahoo.com; finbarsitalian@aol.com; info@bestversionmedia.com; ctuchalski@bestversionmedia.com; editor2@sunnews.org; cpenaorg@gmail.com Subject:Application For City Attorney Of Seal Beach And Public Comment For 2/24/2025 Attachments:ESC8ATON C8RIST.pdf; FLESH OUT ESC8ATON C8RIST.pdf To Nick G. From Brea, I Appreciate You Taking The Time To Write Me A Letter. I Have Been Seeking To "Agendize" This Topic Twice As Long As You Have Worked In Seal Beach. Read That Again. Since You Know All My Information, I Formally Request My June 2016 Seal Beach Police Report In Which I Decriminalized Possession Of Psychedelics In Seal Beach (SB 16 1427) To Be Presented To City Council As Supplementary Material To My Public Comment. I Am Just Trying To Love My Neighbor As Myself. I Was Not Intimidating Anyone Or Disrupting Anything, Only Emphasizing The De Facto Law Vs. The De Jure Law. I Simply Wanted To Respond To Mike's Answer To Lisa Which Was Not "Plainly Correct" As There Are Numerous Cities In California That Have Decriminalized Psilocybin Mushrooms For Years Now, But Both Of You Have Chosen To Lie By Omission On Separate Occasions. Do You Believe You Have Told The Whole Truth When Speaking On The Legality Of Psilocybin Mushrooms In California? I Am Allowed To Make Gestures And Clap My Hands As I Do (And Everyone Does) In Every City Council Meeting. Your Letter Fails To Cite The Requested Specific City Law That Determines Where The Public May Stand. There Are No Clear Markings Determining Where "The Well" Is, And The Black Metal Bar Is For People With Disabilities. I Refused Mike's Order To Back Away Because I Did Not Know If That Was A Lawful Order, And I Still Do Not Know If It Is Because Of Your Failure To Cite Sources In Your Letter. https://dictionary.cambridge.org/us/dictionary/english/daylighting Anytime Psychedelics Are Spoken About In A Seal Beach City Council, I Believe I Deserve A Chance To Speak As A Witness As I Have The Experience. In Addition, I Am Using Meta-communication In Order To "Agendize" The Process By Which We "Agendize", So Actually, I Am On Topic In A Discussion Of The "Agenda" Whenever I Give My Public Comment. Failing To "Agendize" Topics Deemed "Not Within The Subject Matter Jurisdiction Of The City Council" May Be "Commonplace", But Is It Not "Fair" To The Community Residents And Workers That Seek Help Mentally, Emotionally, And Spiritually. Many That May Seek Help Are Veterans, First Responders, Elderly, Disabled, Suicidal, Depressed, Traumatized, Addicted, Faithless, Etc. That Have Uncomfortable Truths And Struggles. Do You Respect My First Amendment Right To Practice My Faith By Eating The Flesh And Blood Of Jesus Christ According To The Religious Freedom Restoration Act (RFRA) (1993) And Gonzales v. O Centro Espirita Beneficente Uniao do Vegetal (2006)? If So, Can I Get That In Writing? If You Have To Lose In A Trial Attempting To Prosecute Me, So Be It. I Have More Than Enough Evidence To Defend Myself. The City Asks, For "I Have Food To Eat That You Know Nothing About." (John 4:32) Language was not simply a tool for survival; it was born from the sacred paradox of violence and revelation. Anthropologist René Girard's theory of mimetic violence suggests that human culture originates in cycles of conflict, resolved through the scapegoating mechanism, in which a victim is collectively sacrificed to restore social order (Girard, Violence and the Sacred, 1972). The connection between violence and sacred revelation is also present in Walter Burkert's Homo Necans (1983), where he argues that ritual sacrifice played a crucial role in the emergence of human social structures and symbolic thought. The scapegoat, who ingested the psilocybin mushroom and sang/danced as they were murdered, became the first shaman and the first speaker of human language. Ethnobotanist Terence McKenna proposed in Food of the Gods (1992) that psilocybin mushrooms played a pivotal role in the cognitive evolution of early humans, enhancing linguistic capabilities and spiritual experiences. Michael Harner, in The Way of the Shaman (1980), documents how shamans in indigenous cultures use psychoactive substances to enter altered states of consciousness, often involving ecstatic singing and dancing. Shamanic figures frequently occupied a liminal position in society, 2 sometimes revered and sometimes persecuted, paralleling the scapegoat archetype (Eliade, Shamanism: Archaic Techniques of Ecstasy, 1951). Their song/dance in the throes of death were the first sacred utterances, giving birth to language as a divine technology. David Lewis-Williams, in The Mind in the Cave (2002), argues that early human symbolic thought— expressed through cave art, ritual, and possibly early language—originated in altered states of consciousness, often induced by shamanic experiences. The idea of language as a divine gift is also found in religious traditions, such as in Genesis 2:19, where Adam names the animals, signifying the sacred act of speech. This language, rooted in violence, would evolve into the stories, rituals, and myths that shaped human culture's knowledge of good and evil. Mythographer Joseph Campbell describes in The Hero with a Thousand Faces (1949) how mythic narratives encode fundamental moral struggles, often rooted in sacrificial violence. The Genesis account of Cain and Abel (Genesis 4:1-16) exemplifies this connection between violence and the emergence of moral awareness. Girard further argues in Things Hidden Since the Foundation of the World (1978) that myths obscure the scapegoating mechanism, transforming acts of collective violence into foundational cultural narratives. The ultimate revelation of language’s purpose, however, came with the death of Jesus Christ, who exposed the cycle of violence and offered humanity a path of love and transcendence to eternal life. Girard interprets the Gospels as a revolutionary text that demystifies the scapegoat mechanism, making Jesus the innocent victim whose sacrifice unveils the violent foundations of human culture (I See Satan Fall Like Lightning, 1999). The crucifixion of Christ, narrated in the Gospels (e.g., Matthew 27, Mark 15, Luke 23, John 19), is the climax of this revelation, demonstrating both the injustice of scapegoating and the possibility of redemption beyond violence. The words of Christ, spoken during his life and especially during his crucifixion, fulfill the original utterances of the scapegoat. Jesus' final words, particularly “Father, forgive them, for they know not what they do” (Luke 23:34), echo the function of the original sacrificial victim while subverting the cycle of violence through forgiveness. This radical shift fulfills the prophetic tradition, as seen in Isaiah 53:7, which describes the suffering servant who is “led like a lamb to the slaughter” but does not retaliate. The Gospel of John affirms this in the Logos doctrine (John 1:1-14), where language (the Word) is presented not merely as a human invention but as the divine principle of creation and reconciliation. Girard (1999) and theologian James Alison (The Joy of Being Wrong, 1998) argue that Christ’s revelation permanently alters humanity’s relationship with violence, offering an alternative founded on love and forgiveness. παράκλητος - Paraklétos (John 15:26) Advocate, Helper, Comforter, Counselor The Term "Paraklétos" Is Used In The New Testament To Describe Someone Who Is Called To Aid, Support, Or Intercede On Behalf Of Another. In A Legal Context, It Refers To An Advocate Or Legal Assistant. In A Broader Sense, It Signifies A Helper Or Comforter Who Provides Encouragement And Support. In The New Testament, "Paraklétos" Is Primarily Used To Describe The Holy Spirit, who acts as a divine helper and guide for believers. Derived From The Greek Verb παρακαλέω (Parakaleó), Meaning "To Call To One's Side," "To Summon," Or "To Comfort." One Way - Guess You Didn't Know https://www.youtube.com/watch?v=3gPOLj07EXU The Main Ingredient - Let Me Prove My Love to You https://www.youtube.com/watch?v=SyQPpF15hFk Earth, Wind & Fire - I'll Write a Song for You https://www.youtube.com/watch?v=6bMC5lGLlAA Move 78 - Pearls Before Swine https://www.youtube.com/watch?v=T3texRp4Pj0 Them Two - Am I A Good Man https://www.youtube.com/watch?v=7EUipDulX8c DeBarge - A Dream https://www.youtube.com/watch?v=-dsCxATYMYk Monophonics - It's Only Us https://www.youtube.com/watch?v=iUOYT2L_eRo Taylor McFerrin - As You Are https://www.youtube.com/watch?v=SMjVoRkOBVI ⭼⭽⭾⭿⮀⮁⮂ 3 ၒၓ ࿬࿭࿮ ⯴⯵⯶ ⍾ JO8N Agenda Item A AGENDA STAFF REPORT DATE:February 24, 2025 TO:Honorable Mayor and City Council THRU:Patrick Gallegos, Interim City Manager FROM:Gloria D. Harper, City Clerk SUBJECT:Approval of the City Council Minutes ________________________________________________________________ SUMMARY OF REQUEST: That the City Council approve the minutes of the Closed Session and Regular City Council meetings held on February 10, 2025. BACKGROUND AND ANALYSIS: This section does not apply. ENVIRONMENTAL IMPACT: There is no environmental impact related to this item. LEGAL ANALYSIS: No legal analysis is required for this item. FINANCIAL IMPACT: There is no financial impact for this item. STRATEGIC PLAN: This item is not applicable to the Strategic Plan. RECOMMENDATION: That the City Council approve the minutes of the Closed Session and Regular City Council meetings held on February 10, 2025. Page 2 2 0 0 9 SUBMITTED BY: NOTED AND APPROVED: Gloria D. Harper Patrick Gallegos Gloria D. Harper, City Clerk Patrick Gallegos, Interim City Manager Prepared by: Brandon DeCriscio, Deputy City Clerk ATTACHMENTS: A. Minutes – Closed Session, February 10, 2025 B. Minutes – Regular Session, February 10, 2025 9 8 1 7 Seal Beach, California February 10, 2025 The City Council met in Closed Session at 6:03 p.m. in the City Hall Conference Room. ROLL CALL Present: Mayor Landau Council Members: Kalmick, Wong, Senecal, Steele Absent: None City Staff: Nicholas Ghirelli, City Attorney Patrick Gallegos, Interim City Manager Gloria D. Harper, City Clerk Barbara Arenado, Director of Finance/ City Treasurer ORAL COMMUNICATIONS Mayor Landau opened oral communications. Speakers: None. Mayor Landau closed oral communications. CLOSED SESSION A. CONFERENCE WITH LABOR NEGOTIATOR Government Code §54957.6 City Negotiator(s): Interim City Manager Patrick Gallegos Employee Organization(s): Seal Beach Supervisors & Professionals Association Mid-Management and Confidential Employees Association Orange County Employees Association ADJOURNMENT Mayor Landau adjourned the Closed Session meeting at 6:57 p.m. Gloria D. Harper, City Clerk City of Seal Beach Approved: Lisa Landau, Mayor Attested: Gloria D. Harper, City Clerk Seal Beach, California February 10, 2025 The City Council met in Regular Session at 7:04 p.m. in the City Council Chamber. Council Member Wong led the Pledge of Allegiance. ROLL CALL Present: Mayor Landau Council Members: Kalmick, Wong, Senecal, Steele Absent: None City Staff: Nicholas Ghirelli, City Attorney Patrick Gallegos, Interim City Manager Michael Henderson, Police Chief Barbara Arenado, Director of Finance/City Treasurer Iris Lee, Director of Public Works Joe Bailey, Marine Safety Chief Gloria D. Harper, City Clerk Nick Nicholas, Police Captain Mike Ezroj, Police Captain Tim Kelsey, Recreation Manager PRESENTATIONS / RECOGNITIONS •Trauma Intervention Program (TIP) 30th Anniversary Proclamation •National Black History Month Proclamation ORAL COMMUNICATIONS Mayor Landau opened oral communications. Speakers: Glen Rogers, John Janecek, Jo8n, Jan Arboit, and Mari Cobb addressed the City Council. Mayor Landau closed oral communications. One (1) supplemental communication was received after posting the agenda; it was distributed to the City Council and made available to the public. APPROVAL OF AGENDA & WAIVER OF FULL READING OF RESOLUTIONS AND ORDINANCES Mayor Landau pulled Item G for separate consideration. Council Member Senecal moved, second by Council Member Steele to approve the agenda. 9 8 7 1 AYES: Kalmick, Wong, Landau, Senecal, Steele NOES: None ABSENT: None ABSTAIN: None Motion carried CITY ATTORNEY REPORT City Attorney Ghirelli reported that the City Council met in Closed Session to discuss the one (1) item posted on the agenda. All five (5) Council Members were present, and no reportable action was taken. CITY MANAGER REPORT Interim City Manager Gallegos announced that the city, in partnership with American Association of Retired Persons (AARP) will be offering senior tax assistance services through April 14, 2025. Additionally, Interim City Manager Gallegos announced that mild to heavy rainfall is expected throughout the week. He noted that sandbags are available throughout the city and that additional information on rain preparation can be found on the city’s website. Finally, Interim City Manager Gallegos announced that City Hall will be closed on Monday, February 17, 2025, in observance of President’s Day. COUNCIL COMMENTS Council Member Wong reported his attendance at the College Park West Los Angeles Department of Water and Power (LADWP) Haynes Generating Station Recycled Water Pipeline Project meeting and the League of California Cities New Council Member Academy. Additionally, he reported his attendance at a meeting with the auditors at City Hall, regarding the 2023-2024 Financial Report. Lastly, he reported that he toured the Republic Services Facility in Huntington Beach. Council Member Kalmick reported his attendance at the San Gabriel River Working Group meeting, the Marine Safety Badge Pinning Ceremony, the Orange County Fire Authority (OCFA) Human Resources Committee, the Southern California Association of Governments (SCAG) Joint Committee Forum, and the Los Cerritos Wetlands Authority meeting. Additionally, Council Member Kalmick announced that on Saturday, March 15, 2025, OCFA will host an Open House at the OCFA Headquarters in Irvine. Lastly, Council Member Kalmick announced that on March 22, 2025, the Los Cerritos Wetlands Authority will host an outreach workshop at 1st Street and Pacific Coast Highway regarding the upcoming restoration of the City’s portion of the Los Cerritos Wetlands. Council Member Senecal reported her attendance at the Chamber of Commerce meeting, 9 8 7 1 the Los Angeles Department of Water and Power (LADWP) Haynes Generating Station Recycled Water Pipeline Project Community meeting, the League of California Cities New Council Member Academy, the Southern California Association of Governments (SCAG) Joint Committee forum, the Orange County Council of Governments meeting, and a meet and greet with Joint Forces Training Base Lieutenant Colonel Fox. Additionally, Council Member Senecal announced that there are vacancies to represent District 4 on the Environmental Quality Control Board (EQCB) and the Recreation and Parks Commission. She encouraged residents to reach out to her for more information. Finally, she announced that the Citizen Council Stormwater Advisory Ad Hoc Committee meeting is scheduled for Wednesday, February 26, 2025 at 5:30 p.m. in the City Council Chambers. Mayor Pro Tem Steele reported that he met with the auditors at City Hall regarding the City’s Financial Report. He also reported his attendance at the Los Angeles Department of Water and Power (LADWP) Haynes Generating Station Recycled Water Pipeline Project Community meeting, the Golden Rain Foundation Board meeting, and the Orange County Mosquito and Vector Control meeting. Lastly, Mayor Pro Tem Steele reported he took a ride along with the Seal Beach representative from Orange County Mosquito and Vector Control. Mayor Landau addressed public comments and called upon Police Chief Henderson to discuss the parking citations appeal process and the Local Hazard Mitigation Plan. She also inquired about the City’s position on legalizing psilocybin mushrooms. Community Development Director Smittle announced that the Environmental Quality Control Board will meet on Wednesday, February 19, 2025 at 6:15 p.m. to discuss the Local Hazard Mitigation Plan. COUNCIL ITEMS There were no council items. CONSENT CALENDAR A.Approval of the City Council Minutes - That the City Council approve the minutes of the Closed Session and Regular City Council meetings held on January 27, 2025. B.Demand on City Treasury (Fiscal Year 2025) - Ratification. C.Mary Wilson Library Lease Agreement Between the City of Seal Beach and the County of Orange - That the City Council adopt Resolution 7611: 1. Approving a lease agreement for the Mary Wilson Library between the City of Seal Beach and the County of Orange; and, 2. Directing the Interim City Manager to execute the lease agreement on behalf of the City. 9 8 7 1 D.Approving and Authorizing Amendment 1 to the Professional Services Agreement with NV5, Inc. for On-call Professional Inspection Services - That the City Council adopt Resolution 7612: 1. Approving Amendment 1 to the Professional Services Agreement dated March 13, 2023, with NV5, Inc., increasing the second year compensation for on-call inspection services by $100,000 for a total revised contract amount of $1,540,000; and, 2. Authorizing and directing the Interim City Manager to execute Amendment 1 to the Professional Services Agreement on behalf of the City. E.Approving Budget Amendment BA #25-08-01 for the Drainage Closed Circuit Television Inspection and Maintenance - That the City Council adopt Resolution 7613 approving Budget Amendment BA #25-08-01 for Drainage Closed Circuit Television Inspection and Maintenance. F.Approving the Emergency Purchase of Two Personal Watercraft - That the City Council adopt Resolution 7614: 1. Approving the emergency purchase of two (2) Personal Watercraft for the Marine Safety Department, in response to the critical failure of current units and the ongoing need for reliable lifesaving equipment; and, 2. Authorizing the Interim City Manager to execute an emergency purchase agreement with Del Amo Motorsports in the amount of $35,958. G.Amendment to the Cost Recovery Schedule to Add Penalty Amount for Non- Compliance with California Vehicle Code Daylighting Parking Requirements - That the City Council adopt Resolution 7615 amending the City of Seal Beach Cost Recovery Schedule to include a penalty fee of $56 for violations of California Vehicle Code (CVC) Section 22500(n)(1)(A), known as the "Daylighting" regulation, prohibiting parking within 20 feet of the approach side of any crosswalk, or within 15 feet of crosswalks with curb extensions. H.Approving a Retroactive Payment and Increasing the Contingency Fund to the Telecommunications Services Agreement between the City of Seal Beach and GoTo Communications, Inc - That the City Council adopt Resolution 7616: 1. Approving the retroactive payment of $3,620.13 to GoTo Communications, Inc. for additional telecommunications services for the initial one-year term (Original Term); and, 2. Approving an increase in the contingency funds to $12,000 per one-year extension for the Telecommunications Services Agreement with GoTo Communications, Inc. for a total not to exceed amount of $41,220.96 for the Original Term and four (4) one-year extensions; and, 3. Authorizing and directing the Interim City Manager to approve and execute any necessary supporting documents on behalf of the City to implement the Resolution. Council Member Kalmick moved, second by Mayor Pro Tem Steele to approve the recommended actions on the consent calendar. The vote below is for the Consent Calendar Items with the exception of Item G. 9 8 7 1 AYES: Kalmick, Wong, Senecal, Steele, Landau NOES: None ABSENT: None ABSTAIN: None Motion carried ITEMS REMOVED FROM THE CONSENT CALENDAR G. Amendment to the Cost Recovery Schedule to Add Penalty Amount for Non- Compliance with California Vehicle Code Daylighting Parking Requirements - That the City Council adopt Resolution 7615 amending the City of Seal Beach Cost Recovery Schedule to include a penalty fee of $56 for violations of California Vehicle Code (CVC) Section 22500(n)(1)(A), known as the "Daylighting" regulation, prohibiting parking within 20 feet of the approach side of any crosswalk, or within 15 feet of crosswalks with curb extensions. Interim City Manager Gallegos called upon Police Chief Henderson, who introduced Police Captain Nicholas, to provide an overview of the staff report Police Captain Nicholas provided an in-depth overview of the staff report. A discussion ensued between Captain Nicholas, the City Council, Public Works Director Lee, City Attorney Ghirelli, and Police Chief Henderson. Mayor Pro Tem Steele moved, second by Council Member Kalmick to adopt Resolution 7615 amending the City of Seal Beach Cost Recovery Schedule to include a penalty fee of $56 for violations of California Vehicle Code (CVC) Section 22500(n)(1)(A), known as the "Daylighting" regulation, prohibiting parking within 20 feet of the approach side of any crosswalk, or within 15 feet of crosswalks with curb extensions. AYES: Kalmick, Wong, Senecal, Steele, Landau NOES: None ABSENT: None ABSTAIN: None Motion carried PUBLIC HEARING There were no public hearing items. UNFINISHED/CONTINUED BUSINESS There were no unfinished/continued business items. 9 8 7 1 NEW BUSINESS There were no new business items. ADJOURNMENT Mayor Landau adjourned the City Council at 8:39 p.m. to Monday, February 24, 2025, to meet in Closed Session at 5:30 p.m., if deemed necessary. __________________________ Gloria D. Harper, City Clerk City of Seal Beach Approved: ___________________________ Lisa Landau, Mayor Attested: ____________________________ Gloria D. Harper, City Clerk Agenda Item D AGENDA STAFF REPORT DATE:February 24, 2025 TO:Honorable Mayor and City Council THRU:Patrick Gallegos, Interim City Manager FROM:Barbara Arenado, Director of Finance/Treasurer SUBJECT:City of Seal Beach Annual Audit Reports for Fiscal Year Ending June 30, 2024 ________________________________________________________________ SUMMARY OF REQUEST: That the City Council receive and file the following documents for the Fiscal Year ending June 30, 2024: A. Audit Communication Letter B. Report on Internal Control C. 2024 Annual Comprehensive Financial Report D. Appropriations Limit Final Report BACKGROUND AND ANALYSIS: The audit firm, The Pun Group Accountants & Advisors (Pun Group), has completed the annual audit of the City for the Fiscal Year (FY) ending June 30, 2024. The audit was conducted in accordance with generally accepted auditing standards and included examining, on a test basis, evidence supporting the amounts and disclosures to obtain reasonable assurance that the financial statements are free of material misstatements. In the opinion of the auditors, the financial statements fairly present, in all material respects, the financial position of the City on June 30, 2024. The 2024 Annual Comprehensive Financial Report (ACFR) is included as Attachment C for information and use. The ACFR will be submitted to the Government Finance Officers Association to be considered for the Certificate of Achievement for Excellence in Financial Reporting. The City has won the award for 22 consecutive years. The purpose of the Audit Communication Letter (Attachment A) is to provide a mechanism for communication with the governing body, highlighting significant issues that may arise during the audit process. As indicated, the City’s financial statements were clearly presented. Page 2 2 0 0 8 The purpose of the Report on Internal Control (Attachment B) is to help the auditor in designing audit procedures for the purpose of expressing an opinion on the financial statements. The purpose of the Appropriations Limit Final Report (Attachment D) is to attest the calculation was performed using the correct methodology and was correctly calculated based upon the information provided. On February 3, 2024, Frances Kuo, from the Pun Group, gave a presentation to the City Council Audit Committee, and the item was thoroughly reviewed and discussed. Among the attendees were Interim City Manager Gallegos, Finance Director Arenado, Finance Manager Hoang, Frances Kuo from the Pun Group, Mayor Pro Tem Steele, and Council Member Wong. ENVIRONMENTAL IMPACT: This action is exempt from the California Environmental Quality Act, because it is not defined as a “project” under CEQA. LEGAL ANALYSIS: No legal analysis is required for this item. FINANCIAL IMPACT: There is no financial impact for this item. STRATEGIC PLAN: This item is not applicable to the Strategic Plan. RECOMMENDATION: That the City Council receive and file the following documents for the Fiscal Year ending June 30, 2024: A. Audit Communication Letter B. Report on Internal Control C. 2024 Annual Comprehensive Financial Report D. Appropriations Limit Final Report Page 3 2 0 0 8 SUBMITTED BY: NOTED AND APPROVED: Barbara Arenado Patrick Gallegos Barbara Arenado, Director of Finance/ Treasurer Patrick Gallegos, Interim City Manager ATTACHMENTS: A. Audit Communication Letter B. Report on Internal Controls C. 2024 Annual Comprehensive Financial Report D. Appropriations Limit Final Report 200 E. Sandpointe Avenue, Suite 600 Santa Ana, California 92707 January 29, 2025 To the Honorable Mayor and Members of the City Council of the City of Seal Beach Seal Beach, California We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Seal Beach (the “City”) for the year ended June 30, 2024. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards and Government Auditing Standards, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter to you dated May 24, 2024. Professional standards also require that we communicate to you the following information related to our audit. Significant Audit Findings Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City are described in Note 1 to the basic financial statements. As described in Note 1 to the financial statements, the City implemented GASB Statement No. 100 – Accounting Changes and Error Corrections – an Amendment of GASB Statement No. 62. No other new accounting policies were adopted and the application of existing policies was not changed during 2024. We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period. Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the City’s financial statements were:  Management’s estimate of the investment fair market value is based on information provided by U.S. Bank, the custodial of the investments in the U.S. treasury securities, U.S. government sponsored enterprise securities, asset-backed securities, municipal bonds, corporate notes, negotiable certificates of deposit and bank notes based on institutional bond quotes and certificate of deposit pricing. We evaluated the key factors and assumptions used to develop the investment fair market value in determining that it is reasonable in relation to the financial statements taken as a whole. To the Honorable Mayor and Members of the City Council of the City of Seal Beach Seal Beach, California Page 2  Management’s estimate of the depreciation and amortization on capital assets is based on the industry standard and past experience on actual useful life of the asset groups. We evaluated the key factors and assumptions used to develop the depreciation on capital assets in determining that it is reasonable in relation to the financial statements taken as a whole.  Management’s estimate of the net other postemployment benefits (“OPEB”) liability is based on the actuarial valuation on total OPEB liability and financial statements on fiduciary net position. We evaluated the key factors and assumptions used to develop the OPEB liability in determining that it is reasonable in relation to the financial statements taken as a whole.  Management’s estimate of the net pension liabilities is based on the actuarial valuation on proportionate share of total pension liability and based on audited financial statements on fiduciary net position for CalPERS plans. We evaluated the key factors and assumptions used to develop the net pension liability in determining that it is reasonable in relation to the financial statements taken as a whole. Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users. The most sensitive disclosures affecting the financial statements were:  Note 1 – Summary of Significant Accounting Policies  Note 9 – Defined Benefit Pension Plans  Note 10 – Other Postemployment Benefits (“OPEB”) Plan  Note 14 – Individual Fund Disclosure  Note 15 – Prior Period Adjustments The financial statement disclosures are neutral, consistent, and clear. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. In addition, none of the misstatements detected as a result of audit procedures and corrected by management were material, either individually or in the aggregate, to each opinion unit’s financial statements taken as a whole. Disagreements with Management For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditors’ report. We are pleased to report that no such disagreements arose during the course of our audit. Management Representations We have requested certain representations from management that are included in the management representation letter dated January 29, 2025. To the Honorable Mayor and Members of the City Council of the City of Seal Beach Seal Beach, California Page 3 Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to City’s financial statements or a determination of the type of auditors’ opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Other Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the City’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. Other Matters We applied certain limited procedures to the Management’s Discussion and Analysis (“MD&A”), the Budgetary Comparison Schedules, the Schedule of the City’s Proportionate Share of the Net Pension Liability and Related Ratios, the Schedule of the Contributions – Pensions, the Schedule of Changes in Net Other Postemployment Benefits Liability and Related Ratios, and the Schedule of Contributions – Other Postemployment Benefits, which are required supplementary information (the “RSI”) that supplement the basic financial statements. Our procedures consisted of inquiries of management regarding 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 did not audit the RSI and do not express an opinion or provide any assurance on the RSI. We were engaged to report on the Combining and Individual Fund Financial Statements, which accompany the financial statements but are not RSI. With respect to this supplementary information, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves. We were not engaged to report on the Introductory and the Statistical Sections, which accompany the financial statements but are not RSI. Such information has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it. Restriction on Use This information is intended solely for the information and use of the City Council and management of the City and is not intended to be, and should not be, used by anyone other than these specified parties. Very truly yours, Santa Ana, California 200 E. Sandpointe Avenue, Suite 600 Santa Ana, California 92707 REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Independent Auditors’ Report To the Honorable Mayor and Members of the City Council of the City of Seal Beach Seal Beach, California We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States (“Government Auditing Standards”), the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Seal Beach, California (the “City”) as of and for the year ended June 30, 2024, and the related notes to the financial statements, which collectively comprise the City's basic financial statements, and have issued our report thereon dated January 29, 2025. Report on Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered the City's internal control over financial reporting (“internal control”) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that were not identified. To the Honorable Mayor and Members of the City Council of the City of Seal Beach Seal Beach, California Page 2 Report on Compliance and Other Matters As part of obtaining reasonable assurance about whether the City's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of This Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Santa Ana, California January 29, 2025 CITY OF SEAL BEACHSEAL BEACHSEALBEACHSEAL BEACH CALIFORNIA AAA"//6"-$0.13&)&/4*7& '*/"/$*"-3&1035 FISCAL YEAR 2023 - 2024 City of Seal Beach Annual Comprehensive Financial Report For the Year Ended June 30, 2024 Prepared by the Finance Department Barbara Arenado Director of Finance/City Treasurer City of Seal Beach Annual Comprehensive Financial Report For the Year Ended June 30, 2024 Table of Contents Page INTRODUCTORY SECTION (UNAUDITED) Letter of Transmittal ................................................................................................................................................... i Certificate of Achievement for Excellence in Financial Reporting – Government Finance Officers Association .......................................................................................................... v Organizational Chart ................................................................................................................................................. vi Principal Officials of the City of Seal Beach ........................................................................................................... vii FINANCIAL SECTION Independent Auditors’ Report on the Audit of the Financial Statements ................................................................. 1 Management’s Discussion and Analysis (Required Supplementary Information) (Unaudited) ............................. 5 Basic Financial Statements: Government–Wide Financial Statements: Statement of Net Position .................................................................................................................................. 16 Statement of Activities ...................................................................................................................................... 18 Fund Financial Statements: Governmental Fund Financial Statements: Balance Sheet .............................................................................................................................................. 25 Reconciliation of the Governmental Funds Balance Sheet to the Government–Wide Statement of Net Position ........................................................................... 26 Statement of Revenues, Expenditures, and Changes in Fund Balances ............................................................................................................. 27 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government–Wide Statement of Activities ......................................................................................................................... 28 Proprietary Fund Financial Statements: Statement of Net Position ........................................................................................................................... 30 Statement of Revenues, Expenses, and Changes in Net Position ............................................................... 33 Statement of Cash Flows ............................................................................................................................. 34 Fiduciary Fund Financial Statements: Statement of Fiduciary Net Position ........................................................................................................... 39 Statement of Change in Fiduciary Net Position .......................................................................................... 40 Index to the Notes to the Basic Financial Statements ......................................................................................... 43 Notes to the Basic Financial Statements ............................................................................................................... 45 City of Seal Beach Annual Comprehensive Financial Report For the Year Ended June 30, 2024 Table of Contents (Continued) Page FINANCIAL SECTION (Continued) Required Supplementary Information (Unaudited): Budgetary Comparison Schedule – General Fund .......................................................................................................... 89 Budgetary Comparison Schedule – Citywide Grants Special Revenue Fund ................................................................ 90 Notes to the Budgetary Comparison Schedule ............................................................................................................... 91 Schedule of the City's Proportionate Share of the Net Pension Liability and Related Ratios ........................................ 92 Schedule of Contributions – Pensions ............................................................................................................................ 94 Schedule of Changes in Net Other Postemployment Benefits Liability and Related Ratios .......................................... 96 Schedule of Contributions – Other Postemployment Benefits ....................................................................................... 98 Supplementary Information: Schedule of Revenues, Expenditures, and Change in Fund Balance – Budget and Actual Capital Projects and Equipment Capital Projects Fund ................................................................................... 103 Nonmajor Governmental Funds: Combining Balance Sheet ............................................................................................................................... 106 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances ....................................... 111 Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual Street Lighting Special Revenue Fund ...................................................................................................... 116 Supplemental Law Enforcement Special Revenue Fund .......................................................................... 117 Police Asset Forfeiture Special Revenue Fund ......................................................................................... 118 Air Quality Improvement Special Revenue Fund ..................................................................................... 119 Park Improvement Special Revenue Fund ................................................................................................ 120 Traffic Impact Special Revenue Fund....................................................................................................... 121 State Gasoline Tax Special Revenue Fund ............................................................................................... 122 Measure M2 Special Revenue Fund ......................................................................................................... 123 Community Development Block Grant Special Revenue Fund ................................................................ 124 Police Grants Special Revenue Fund ........................................................................................................ 125 Landscape District Special Revenue Fund ................................................................................................ 126 Heron Pointe Special Revenue Fund ......................................................................................................... 127 Pacific Gateway Special Revenue Fund ................................................................................................... 128 Seal Beach Cable Special Revenue Fund ................................................................................................. 129 SB1 Special Revenue Fund ....................................................................................................................... 130 City Debt Service Fund ............................................................................................................................. 131 Internal Service Fund Financial Statements: Combining Statement of Net Position ............................................................................................................. 135 Combining Statement of Revenues, Expenses, and Change in Net Position .................................................. 136 Combining Statement of Cash Flows .............................................................................................................. 137 Custodial Fund Financial Statements: Combining Statement of Fiduciary Net Position ............................................................................................. 141 Combining Statement of Changes in Fiduciary Net Position .......................................................................... 142 City of Seal Beach Annual Comprehensive Financial Report For the Year Ended June 30, 2024 Table of Contents (Continued) Page STATISTICAL SECTION (Unaudited) Net Position by Component .......................................................................................................................................... 146 Changes in Net Position ............................................................................................................................................... 148 Fund Balances of Governmental Funds ........................................................................................................................ 152 Changes in Fund Balances of Governmental Funds ..................................................................................................... 154 Assessed Value and Estimated Actual Value of Taxable Property .............................................................................. 156 Direct and Overlapping Property Tax Rates ................................................................................................................. 157 Principal Property Taxpayers ....................................................................................................................................... 158 Property Tax Levies and Collections ............................................................................................................................ 159 Ratios of Outstanding Debt by Type ............................................................................................................................ 160 Ratios of General Bonded Debt Outstanding ............................................................................................................... 162 Schedule of Direct and Overlapping Debt .................................................................................................................... 163 Legal Debt Margin Information.................................................................................................................................... 164 Pledged-Revenue Coverage .......................................................................................................................................... 166 Demographic and Economic Statistics ......................................................................................................................... 167 Top 25 Sales Tax Producers ......................................................................................................................................... 168 Full-Time and Part-Time City Employees by Function ............................................................................................... 169 Operating Indicators by Function ................................................................................................................................. 170 Capital Asset Statistics by Function ............................................................................................................................. 172 This page intentionally left blank. i January 29, 2025 Honorable Mayor, Members of the City Council and Citizens of the City of Seal Beach: City of Seal Beach staff is pleased to submit for your information the Annual Comprehensive Financial Report (ACFR) of the City of Seal Beach (City) for the fiscal year ended June 30, 2024. Responsibility for both the accuracy of presented data and the completeness and fairness of the presentation including all disclosures rests with the City. In our opinion, the data is accurate in all material aspects, is presented in a manner designed to fairly set forth the financial position and results of operations of the City and contains all disclosures necessary to enable the reader to gain an understanding of the City’s financial affairs. The financial statements are prepared in accordance with Generally Accepted Accounting Principals (GAAP) as promulgated by the Government Accounting Standards Board (GASB). This report consists of management’s representations concerning the finances of the City. Consequently, management assumes full responsibility for the completeness and reliability of all the information presented in this report. To provide a reasonable basis for making these presentations, management of the City has established a comprehensive internal control framework that is designed to protect the City’s assets from loss, theft, or misuse, and to compile reliable information for the preparation of this report in conformity with GAAP. As management, we assert to the best of our knowledge and belief, this financial report is complete and reliable in all material respects within the reasonable assurance of the internal control framework. The City’s financial statements have been audited by The Pun Group, a public accounting firm fully licensed and qualified to perform audits of the state and local governments within the State of California. The audit was designed to obtain reasonable assurance about whether the basic financial statements are free of material misstatement. The independent auditor concluded, based on the audit, that there was a reasonable basis for rendering an unmodified opinion that the City of Seal Beach’s financial statements for the year ended June 30, 2024, are fairly presented in conformity with Generally Accepted Accounting Principles. The independent auditor’s report is presented as the first component of the financial section of this report. GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statement in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with that section. The City’s MD&A is immediately following the report of the independent auditors in the financial section of the ACFR. PROFILE OF THE CITY In 1904 J.C. Ord, a Civil War veteran, hired a 30–mule team to bring his small general store building from Los Alamitos to Bay City, where he set it down at the southwest corner of what is now known as Main Street and Electric Avenue. J.C. Ord was one of five trustees voted into office in October 1915, the second Mayor, Postmaster, and the first Judge. His store on Main Street was the Post Office and Court House and the Jail House when it was necessary. ii On October 27, 1915, the City was incorporated and governed by an elected five-member council. The new City had an area of 1.25 square miles with a population of 250. Bay City was renamed Seal Beach in August 1913 as part of a marketing re-branding by the Guy M. Rush Realty Company. Another area of Seal Beach, Surfside Colony, was founded in 1929 and is credited as the one of the first beach resort communities of its type on the West Coast, following Santa Monica, Malibu Colony and Anaheim Landing. In early 1944 during World War II, the Navy purchased most of the land around Anaheim Landing to construct the United States Navy's Naval Weapons Station Seal Beach (NWS SB) for loading, unloading, and storing of ammunition for the Pacific Fleet. Today, NWS SB is the Navy’s primary West Coast ordnance storage, loading, and maintenance installation. Located entirely within NWS SB is the Seal Beach National Wildlife Refuge, which was established in 1972 and protects habitat for threatened and endangered species. Meanwhile Leisure World, a retirement community which comprises nearly a third of the city’s residents, opened in 1962. Construction of homes in the College Park East and West neighborhoods occurred in the early 1960s. The City has an area of 13.23 square miles and sits on the coast as the gateway to Orange County between the cities of Long Beach and Huntington Beach and currently has a population of 24,350. ECONOMIC CONDITIONS Local economy: Although the focus of this Annual Comprehensive Financial Report is the financial condition of the City at June 30, 2024, it may be best understood when it is considered from the broader perspective of the specific environment within which the City operates. The City has experienced a strong economic recovery after the challenging financial environment caused by the pandemic. As consumer demand increased and services returned to normal, the City ended the fiscal year in a positive position. Overall, the City’s General Fund revenue for the fiscal year increased by $4.0 million from the prior year. This increase is mostly due to payments regarding the pier repairs and interest rate increases. Property tax is the City’s largest General Fund revenue source with revenues of $15.4 million, an increase of 6.4 percent over the prior fiscal year. Sales tax is the second largest General Fund revenue source with revenues of $11.5 million including transaction tax, a decrease of 1.5 percent from the prior year. Additionally, Transient Occupancy Tax was $1.9 million, a decrease of 0.2 percent, relatively flat from the previous year. The increase in Property Tax is due to the continued robust housing demographics in the City. The slight decrease in Sales Tax, compared to the prior year, is primarily due to a slowdown in the fuel and service stations industry and consumer spending shifting from goods to experiences like dining and entertainment. Long-term financial planning: The City of Seal Beach continues to implement cost saving measures while providing the core services for our residents, businesses, visitors, and to protect all essential services that contribute to the high quality of life our residents expect. On a yearly basis, the City Council sets goals and priorities for the future. Each year the City develops a Five-Year Financial Outlook which is the guiding document for long-range fiscal planning and serves as the framework for development of the next adopted budget. The outlook is included in the budget process and incorporates a range of information on items that influence projected revenues and anticipated appropriation needs over the next five fiscal years. These projections inform the City Council and the public of the long-term costs of programs in the context of the City’s overall General Fund budget and projected revenue growth. In November 2024, Measure GG passed in Seal Beach with 68% voter approval, implementing a 0.5 percent increase in the local sales tax to support current essential City services and will begin in 2025. iii The City continues to be in good financial health due to its stable tax base, disciplined fiscal decisions, and strong governance. Conservative budgeting and sound financial policies have resulted in reserve levels that meet City Council policy. The City Council adopted policy seeks to maintain the reserve level between 20 to 25 percent of the General Fund adopted appropriations. The reserve may be used at the discretion of the City Council to provide resources during temporary decreases in revenues, in the event of an economic downturn while expenditure reductions are implemented, or to provide resources to meet emergency expenditures in the case of flood, fire, earthquake, landslides, or other natural disasters. At June 30, 2024, the reserve balance was $10.5 million or 22.0 percent of the final operating budget. Major initiatives: The Strategic Plan goals are approved and/or affirmed by the City Council each year. Priorities included Organizational Efficiencies, Community Outreach and Capital Projects, Housing Element Updates, Local Coastal Plan, Fiscal Sustainability, Flooding, and Public Safety. Highlights of this year’s major initiatives reflect the City’s commitment to sustaining the community’s quality of life and fiscal health. Key accomplishments include enhancing public safety services through funding for emergency response and community policing, upgrading critical infrastructure such as streets and recreational facilities, and maintaining essential transportation programs like the senior shuttle and the micro-transit pilot program. The City also prioritized preserving beaches and neighborhoods, reducing the unfunded pension liability, and fostering community engagement. Notable achievements include the completion of the new Tennis and Pickleball Center, a major beach sand restoration project recovering nearly 2 million cubic feet lost to storm erosion, and revisions to the Housing Element. Despite volatile economic conditions, the City remained fully operational, reinstated live recreational programs, and continued to deliver essential services to the community. FINANCIAL POLICIES AND PROCEDURES Internal control structure: Management of the City is responsible for establishing and maintaining an adequate internal control structure. Internal accounting controls are designed to ensure that the assets of the City are protected from loss, theft, or misuse, and that adequate accounting data are compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles. The internal control structure is designed to provide reasonable, but not absolute, assurance, that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of the control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits require estimates and judgment by management. Budgetary controls: The annual budget serves as the foundation for the City of Seal Beach’s financial planning and control. The City Council adopts an annual budget and appropriates the funds necessary to provide the services and operations for the fiscal year. The City Manager may make appropriation transfers within and between departments which do not result in an increase in appropriations. The City of Seal Beach City Council must approve all appropriation changes that result in an increase in appropriations. AWARDS GFOA Award Program – Annual Comprehensive Financial Report The Government Finance Officers Association of the United States (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Seal Beach for its Annual Comprehensive Financial Report for the fiscal year ended June 30, 2023. This was the twenty-second consecutive year that the City has received this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized Annual Comprehensive Financial Report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. iv A Certificate of Achievement is valid for a period of one year only. City staff believe that our current Annual Comprehensive Financial Report continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to the GFOA again this year for award. ACKNOWLEDGEMENTS This report was made possible by the highly dedicated Finance staff with their dedicated efforts and teamwork, special thanks to the staff in the Finance Department. Sincere appreciation is also expressed to the City Council and City Manager for their interest and support, which made this presentation possible, and finally to the City’s auditing firm of The Pun Group for their professional assistance. Respectfully submitted, Barbara Arenado Director of Finance/City Treasurer Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Seal Beach California For its Annual Comprehensive Financial Report For the Fiscal Year Ended June 30, 2023 Executive Director/CEO v ORGANIZATIONAL CHART Schelly Sustarsic Mayor Lisa Landau Mayor Pro Tem Joe Kalmick Council Member Thomas Moore Council Member Nathan Steele Council Member Exercise Administrative Control Over All Departments Agenda Preparation Represents City in all legal matters Administrative Policies City Council Support Computer Network Administration Intergovernmental Relations Special Studies/Projects Policy Analysis Risk Management Financial Services/Reporting Business Tax Utility Billing/Cashiering Employee Benefits Budget/Audit/Grants Classification/Compensation Accounts Payable/Payroll Debt Administration Treasury/Investments Successor Agency Administration Engineering Fleet Maintenance Beach Maintenance Water/Sewer Maintenance Capital Projects Storm Drains Planning Building Maintenance Building/Code Enforcement Street Maintenance Development Review Traffic and Transportation Community Development Block Grant Land Use and Coastal Issues General Plan and Code Traffic/Patrol/Detective Services Youth/Adult Class Activity Parking Control Special Event Permitting Detention Center Sports League/Events Beach/Pool Safety Jr. Lifeguard Program Records Management Election Management Gloria D. Harper, City Clerk Joe Bailey, Marine Safety Chief Orange County Fire Authority Personnel Recruitment MARINE SAFETY FIRE SERVICES HUMAN RESOURCES COMMUNITY SERVICES CITY CLERK POLICE SERVICES Nicholas R. Ghirelli, City Attorney Iris Lee, Director of Public Works Michael Henderson, Chief of Police FINANCE DEVELOPMENT COMMUNITY PUBLIC WORKS Alexa Smittle, Director of Community Development & Community Services FY 2023-2024 CITIZENS OF SEAL BEACH MAYOR AND CITY COUNCIL Barbara Arenado, Director of Finance/City Treasurer CITY MANAGER CITY ATTORNEY Jill R. Ingram, City Manager Patrick Gallegos, Assistant City Manager vi CITY OF SEAL BEACH CALIFORNIA Principal Officers City Council 6FKHOO\6XVWDUVLF, Mayor /LVD/DQGDX, Mayor Pro Tem -RH.DOPLFN, Council Member 7KRPDV0RRUH, Council Member 1DWKDQ6WHHOH, Council Member Executive Officers Jill R. Ingram, City Manager 1LFKRODV*KLUHOOL, City Attorney Administrative Personnel Patrick Gallegos, Assistant City Manager 0LFKDHO+HQGHUVRQ, Chief of Police ,ULV/HH, Director of Public Works Barbara Arenado, Director of Finance/City Treasurer Alexa Smittle, Director of Community Development Joe Bailey, Marine Safety Chief Gloria D. Harper, City Clerk vii viii This page intentionally left blank. 200 E. Sandpointe Avenue, Suite 600 Santa Ana, California 92707 INDEPENDENT AUDITORS’ REPORT To the Honorable Mayor and the Members of the City Council of the City of Seal Beach Seal Beach, California Report on the Audit of the Financial Statements Opinions We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of City of Seal Beach, California (the “City”), as of and for the year ended June 30, 2024, and the related notes to the basic financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City, as of June 30, 2024, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America (“GAAS”) and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States (“Government Auditing Standards”). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. 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. To the Honorable Mayor and the Members of the City Council of the City of Seal Beach Seal Beach, California Page 2 2 Auditors’ Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS 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 GAAS 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, the Budgetary Comparison Schedules, the Schedule of the City's Proportionate Share of the Net Pension Liability and Related Ratios, the Schedules of Contributions – Pensions, the Schedule of Changes in Net Other Postemployment Benefits Liability and Related Ratios, and the Schedule of Contributions – Other Postemployment Benefits be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the Required Supplementary Information in accordance with GAAS, 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. To the Honorable Mayor and the Members of the City Council of the City of Seal Beach Seal Beach, California Page 3 3 Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The Combining and Individual Fund Financial Statements are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with GAAS. In our opinion, the Combining and Individual Fund Financial Statements are fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Information Management is responsible for the other information included in the annual report. The other information comprises the Introductory and Statistical Sections but does not include the basic financial statements and our auditors’ report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon. In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated January 29, 2025 on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance. Santa Ana, California January 29, 2025 4 This page intentionally left blank. City of Seal Beach Management’s Discussion and Analysis (Unaudited) For the Year Ended June 30, 2024 5 Management of the City of Seal Beach is pleased to offer this narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2024, along with comparisons to the fiscal year ended June 30, 2023. All increases and decreases are expressed relative to fiscal year 2022-2023. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal and the City’s financial statements. FINANCIAL HIGHLIGHTS  The City’s net position – the difference between its assets and deferred outflows of resources compared to its liabilities and deferred inflows of resources – was $144.0 million, an increase of $3.8 million or 2.7%. The net position of governmental activities increased by $5.1 million or 5.4%, while the net position of business- type activities decreased by $1.4 million or 3.0%.  The net position of $144.0 million consisted of $117.0 million of net investment in capital assets; $9.9 million of resources that are subject to external restrictions on how they may be used; $3.5 million that may be used to meet the City’s obligations for its governmental activities; and $13.6 million to meet obligations for its business-type activities.  Total revenues were $63.8 million and total expenses were $60.0 million. Revenues increased by $4.9 million or 8.3%, and expenses increased by $15.0 million or 33.3%.  As of the close of the fiscal year, the City’s governmental funds reported combined ending fund balances of $46.6 million, representing an increase of $2.1 million or 5.7%. Of this amount, $11.2 million (the sum of assigned and unassigned fund balances) is available for spending at the City’s discretion.  At the end of the current fiscal year, unassigned fund balance in the General Fund was $5.2 million or 10.8% of total General Fund expenditures and transfers out.  The City’s Reserve Fund Policy aims to maintain a minimum balance in the Fiscal Policy Reserve equal to approximately three months’ worth of the City’s General Fund operating expenditures. As of June 30, 2024, the Committed-Fiscal Policy Reserve has a balance of $10.5 million, or 24.0% of General Fund expenditures (less transfers out related to capital projects). This percentage aligns with the City’s goals and is in accordance with the recommendation of the Government Finance Officers Association (GFOA). OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis are intended to serve as an introduction to the City’s basic financial statements. The City’s basic financial statements are comprised of three components: 1) government-wide financial statements, 2) fund financial statements; and 3) notes to the basic financial statements. This report also contains other supplementary information in addition to the basic financial statements. Government-Wide Financial Statements – The government-wide financial statements are designed to provide readers with a view of the City’s finances, in a manner similar to a private-sector business. The Statement of Net Position presents information on all assets and liabilities, deferred outflows and inflows with the difference between them reported as net position. Over time, increases or decreases in the City’s net position are one indicator of whether its financial condition is improving or deteriorating. City of Seal Beach Management’s Discussion and Analysis (Unaudited) (Continued) For the Year Ended June 30, 2024 6 The Statement of Activities presents information showing how the City’s net position changed during the most recent fiscal year. These changes are reported on a full accrual basis when the economic event occurs. regardless of when cash is received or paid. Both government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government and administration, public safety, development services, public works, recreation, and all its component units that are legally separate but whose activities entirely support the City of Seal Beach. The business-type activities of the City include water and sewer operations. The government-wide financial statements can be found immediately following this discussion and analysis. Fund Financial Statements – The fund financial statements provide detailed information about the most significant funds and other funds – not the City as a whole. Some funds are required to be established by State law and by bond covenants. However, management established many other funds to help control and manage money for particular purposes or to verify that all legal requirements for using certain taxes, grants, and other resources are being satisfied. The City’s three types of funds are governmental, proprietary, and fiduciary funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on how money flows in and out of those funds and the balances left at fiscal year-end that are available for spending. These funds are reported using an accounting method called modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the City’s general government operations and the basic services it provides. Governmental fund information helps determine whether there are more or fewer financial resources that can be spent in the near future to finance the City’s programs. The differences of results in the Governmental Fund financial statements to those in the government-wide financial statements are explained in a reconciliation following each of the Governmental Fund financial statements. The City maintains individual governmental funds organized by their type (general, special revenue, debt service, and capital improvements funds). Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures and changes in fund balances for the General Fund and Capital Projects and Equipment Capital Projects Fund, which are considered to be major funds. Data from the remaining governmental funds are combined into a single, aggregated presentation. Individual fund data for each of the other governmental funds is provided in the form of combining statements and schedules elsewhere in this report. The City adopts an annual appropriated budget for its General Fund, Debt Service Fund, and all of the Special Revenue Funds. Budgetary comparison statements have been provided to demonstrate compliance with this budget. The basic governmental fund financial statements can be found immediately following the government-wide financial statements. Proprietary funds are reported in the same way that all activities are reported in the Statement of Net Position and the Statement of Activities. In fact, the City’s enterprise funds are comprised of the business-type activities reported in the government-wide statements but provide more detail and additional information such as a statement of cash flows. Customer charges for various City services are generally reported in proprietary funds. The basic proprietary fund financial statements can be found immediately following the governmental funds financial statements. City of Seal Beach Management’s Discussion and Analysis (Unaudited) (Continued) For the Year Ended June 30, 2024 7 Fiduciary funds account for assets held by the City in a trustee capacity, or as an agent for other governmental entities, private organizations, or individuals. All the City’s fiduciary activities are reported in a separate statement of fiduciary net position and a statement of changes in fiduciary net position. These activities are excluded from the City’s government-wide financial statement because the City cannot use these assets to finance its operations. The basic fiduciary fund financial statements can be found immediately following the proprietary funds financial statements. Notes to the Basic Financial Statements – The notes provide additional information that is essential to fully understand the data provided in the government-wide and fund financial statements. The notes to the basic financial statements can be found immediately following the fiduciary funds financial statements. Required Supplementary Information (Unaudited) and Supplementary Information – In addition to the required elements of the basic financial statements, a required supplementary information section concerning the City’s progress in funding it obligation to provide pension and other post-employment benefits to City employees is included. Also included in this section are the budgetary comparison schedules for the general and major funds. The required supplementary information can be found immediately following the notes to the basic financial statements. Combining statements and individual fund statements for non-major governmental funds, internal service and custodial funds are presented immediately following the required supplementary information. GOVERNMENT-WIDE FINANCIAL ANALYSIS The Government-wide Financial Analysis focuses on the City’s net position and changes in net position resulting from the City’s activities as a whole. Analysis of Net Position – As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. The City’s combined net position was $144.0 million and $140.2 million for the years ended June 30, 2024, and June 30, 2023, respectively, as shown in Table 1. 2024 2023* 2024 2023* 2024 2023* Current and other assets 62,658$ 61,898$ 19,762$ 19,864$ 82,420$ 81,762$ Capital assets 88,007 85,343 33,746 34,534 121,753 119,877 Total assets 150,665 147,241 53,508 54,398 204,173 201,639 Deferred outflows of resources 20,128 21,111 2,443 2,171 22,571 23,282 Long-term liabilities outstanding 52,856 53,514 9,637 9,743 62,493 63,257 Other liabilities 4,841 5,635 1,742 1,472 6,583 7,107 Total liabilities 57,697 59,149 11,379 11,215 69,076 70,364 Deferred inflows of resources 12,636 13,893 1,038 455 13,674 14,348 Net position Net investment in capital assets 87,074 83,687 29,884 30,163 116,958 113,850 Restricted 9,915 10,354 25 25 9,940 10,379 Unrestricted 3,470 1,269 13,624 14,713 17,094 15,982 Total net position 100,459$ 95,310$ 43,533$ 44,901$ 143,992$ 140,211$ * as restated (in Thousands) Governmetal Activities Table 1 Business-Type Activities Total Activities Condensed Statement of Net Position City of Seal Beach Management’s Discussion and Analysis (Unaudited) (Continued) For the Year Ended June 30, 2024 8 As of June 30, 2024, the City continued to report positive balances in all three categories of net position for the government as a whole. Net position – Net investment in capital assets ($117.0 million or 81.2% of total net position) represents capital assets, such as land, buildings, infrastructure, and equipment, less any related outstanding debt used to acquire those assets. This is an overall increase of $3.1 million, or 2.7%. The City uses these capital assets to provide services to the citizens; consequently, these assets are not available for future spending. Although the investment in capital assets is reported net of related debt, resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. Net position – Restricted ($9.9 million or 6.9% of total net position) represents resources that are subject to external restrictions on how they may be used. This is a decrease of $0.4 million, or 4.2%. The majority of this decrease occurred in restrictions for public works, which decreased $0.7 million, or 12.3%. Net position – Unrestricted ($17.1 million or 11.9% of total net position) represents an increase of $1.1 million or 7.0%. The governmental activities unrestricted of $3.5 million is an increase of $2.6 million or 301.5% as a result of the effect of implementing Governmental Accounting Standards Board (GASB) statements related to pension and other post-employment benefits (OPEB) liabilities. The total deferred inflows of resources on pension plans decreased by $2.4 million as a result of net differences between projected and actual earnings on pension plan investments. Generally accepted accounting principles require financial statement recording when a liability is incurred. However, the City, like many other governments, raises and budgets resources needed to liquidate certain liabilities during the year in which the liability is to be liquidated rather than during the year in which the liability is incurred. The City will continue to fund these obligations on an actuarial basis, contributing the full amount of annual required contributions every year. Analysis of Activities – The City’s net position increased by $3.8 million or 2.7%. The following Table 2 provides a summary of the City’s operations for the years ended June 30, 2024, and June 30, 2023. 2024 2023* 2024 2023* 2024 2023* Revenues: Program revenues: Charges for services 9,266$ 8,924$ $ 8,712 8,132$ 17,978$ 17,056$ Operating grants and contributions 4,318 4,308 - - 4,318 4,308 Capital grants and contributions 1 1 - - 1 1 General revenues: Taxes: Property taxes 15,386 14,468 -- 15,386 14,468 Sales taxes 11,495 11,667 -- 11,495 11,667 Utility user taxes 5,510 5,349 - - 5,510 5,349 Other taxes 3,889 4,202 - - 3,889 4,202 Use of money and property 2,673 782 401 290 3,074 1,072 Other 2,109 1,145 - - 2,109 1,145 Total revenues 54,647 50,846 9,113 8,422 63,760 59,268 Expenses: General government 7,834 8,171 - - 7,834 8,171 Public safety 26,933 20,575 -- 26,933 20,575 Community development 2,723 1,836 - - 2,723 1,836 Community services 1,208 264 - - 1,208 264 Public works 10,766 8,583 -- 10,766 8,583 Interest on long-term debt 34 36 -- 34 36 Water - - 7,128 5,188 7,128 5,188 Sewer - - 3,353 2,122 3,353 2,122 Total expenses 49,498 39,465 10,481 7,310 59,979 46,775 Change in net position before transfers 5,149 11,381 (1,368) 1,112 3,781 12,493 Transfers - 734 - (734) - - Changes in net position 5,149 12,115 (1,368) 378 3,781 12,493 Net position at beginning of year 95,310 83,195 44,901 44,523 140,211 127,718 Net position at end of year 100,459$ 95,310$ 43,533$ 44,901$ 143,992$ 140,211$ * as restated Condensed Statement of Activities (in Thousands) Total Activities Governmental Activities Business-Type Activities City of Seal Beach Management’s Discussion and Analysis (Unaudited) (Continued) For the Year Ended June 30, 2024 9 Governmental Activities experienced an increase of $5.1 million in net position as of June 30, 2024, compared to an increase of $13.7 million at June 30, 2023. The reason for this year-to-year net increase of $5.1 million is due to increases of $4.2 million in revenues in addition to increases to total expenditures of $12.0 million. The overall net change in revenues is due to recognizing 1) payments received regarding the pier, and 2) increases in use of money and property due to rising interest rates throughout the fiscal year. The cost of all governmental activities during the current fiscal year was $49.5 million, which is a $12.0 million increase from fiscal year 2022-2023. The majority of this increase was due to pension expenses increasing by $3.1 million (refer to Note 9 of the Notes to the Basic Financial Statements for further analysis of the pension expense). The largest operating cost was comprised of Public Safety, representing 54.4% of total governmental expenditures compared to 53.6% of total governmental expenditures in fiscal year 2022-2023. Business-type Activities net position decreased by $1.3 million. The City is in the process of an updated water and sewer rate study that will be conducted in 2025. Increases in operating costs were mostly due to repairs and imported water. The net position decreased by nearly $1.3 million from operations. During the year, business-type activities paid $0.7 million in administrative costs which were recorded as revenues to governmental activities. FINANCIAL ANALYSIS OF CITY FUNDS The City uses fund accounting to provide proper financial management of the City’s resources and to demonstrate compliance with finance-related legal requirements. Governmental funds – The objective of governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. As of June 30, 2024, the City’s governmental funds reported combined ending fund balances of $46.6 million. Approximately $4.5 million, or 9.6% of this total amount, constitutes unassigned fund balance. The remainder of the fund balance is reported as nonspendable, restricted, committed, or assigned to indicate that it is not available for new spending because it has already been designated to pay for encumbrances, loans, prepaid expenses, or advances to other funds or has been legally restricted for other purposes. The General Fund ended the fiscal year with a fund balance of $39.5 million, representing a net increase of $1.9 million. In comparison, in the prior fiscal year, the General Fund had a net increase of $3.0 million to fund balance. Fiscal year 2023-2024 had an increase of $4.1 million in revenues which was due to payments received from the pier and interest rate increases, offset by an increase in expenditures of $2.9 million. The primary reason for the increase in fund balance is due to revenues over expenditures of $6.2 million offset by net transfers of $4.3 million. Net transfers increased by $2.3 million compared to the prior fiscal year. Total governmental fund revenues increased overall by $5.1 million or 10.2% due to collecting higher tax revenues; payments regarding the pier, offset by slight reductions in licenses and permits and fines and forfeitures, and by increases in interest earnings due to rising interest rates throughout the fiscal year which caused an increase in the fair value of investments as of June 30. Overall expenditures increased by $6.0 million or 12.9%, as the City continued to support essential City services and support to residents and businesses. Proprietary funds – The City’s proprietary funds financial statements provide the same type of information found in the government-wide financial statements, but in more detail. Unrestricted net position totaled $3.2 million and $10.4 million for the Water and Sewer Funds, respectively. The Water Fund had an operating loss of $0.8 million and the Sewer Fund also had an operating loss of $0.8 million. The City is currently going through a rate study that may address this. City of Seal Beach Management’s Discussion and Analysis (Unaudited) (Continued) For the Year Ended June 30, 2024 10 GENERAL FUND BUDGETARY HIGHLIGHTS When preparing its budget, the City attempts to estimate its revenues using realistic, but conservative methods to budget its expenditure appropriations in a prudent manner. Amendments were approved during the fiscal year to the adopted budget. The fiscal year 2023-2024 General Fund’s revenue budget was adopted at $46.4 million and had amendments to taxes and intergovernmental, offset by fined and forfeitures of $1.5 million. The fiscal year 2023- 2024 General Fund’s original (adopted) budget for expenditures was $45.8 million, and the final budget was $47.8 million, a net increase of $2.0 million. The largest change was an increase of $1.3 million in Public Works due to rising labor and material cost. This increase also resulted from certain legacy contracts, which historically had lower costs, now coming in at higher amounts upon expiration and rebid. The General Fund balance reflected a net total positive budget variance of $16.8 million when comparing actual amounts to the final amended budget for the current fiscal year. Actual revenues show a positive variance of $3.9 million or 8.4% of the final budget due to unanticipated receipts of taxes and insurance reimbursement revenues due to a case settlement. Actual expenditures of $44.2 million generated budgetary savings of $3.6 million, or 7.6% of the final budget mostly due to savings in Public Works stemming from several factors, including (1) several unexpected vacancies that were not filled promptly, which, in turn, impacted the ability to carry out the planned work; (2) funds were allocated for emergency-related purposes due to uncertain climate conditions, but not all those funds were utilized; (3) the message to overall reduce City-wide expenditures to meet future-year funding availability; and (4) carry-over of encumbrances of work that straddled two or more fiscal years. Additionally, although capital outlay was budgeted, project delivery extended across multiple fiscal years, and changes in project scope led to expenditures being lower than anticipated. CAPITAL ASSETS The City’s capital assets for its governmental and business-type activities as of June 30, 2024, total $121.8 million compared to $121.6 million (net of accumulated depreciation and amortization) as of June 30, 2023. The investment in capital assets includes land, land easements, building and improvements, machinery and equipment, vehicles, infrastructure, leases, subscriptions and construction in progress as summarized in the following Table 3. Additional information on the City’s capital assets can be found in Note 5 in the notes to the basic financial statements. 2024 2023* 2024 2023* 2024 2023* Land and land easements 21,220$ 21,220$ -$ -$ 21,220$ 21,220$ Buildings and improvements 7,841 8,250 - - 7,841 8,250 Machinery and equipment 1,328 1,648 585 617 1,913 2,265 Vehicles 1,235 1,377 247 74 1,482 1,451 Infrastructure 46,871 48,751 29,434 30,767 76,305 79,518 Lease assets 203 321 - - 203 321 Subscription assets 450 706 202 284 652 990 Construction-in-progress 8,859 3,070 3,278 2,792 12,137 5,862 Totals 88,007$ 85,343$ 33,746$ 34,534$ 121,753$ 119,877$ * as restated Table 3 Capital Assets, At Fiscal Year-End (Net of Depreciation, in Thousands) Governmental Activities Business-Type Activities Total Activities City of Seal Beach Management’s Discussion and Analysis (Unaudited) (Continued) For the Year Ended June 30, 2024 11 During fiscal year 2023-2024, major capital projects formally completed include:  Environmental Clean Up Program Project (SD2201) - $425,576  Seal Beach Pier Emergency Pier Repair (EM2023) - $1,265,484.08  Lampson Avenue Fiber (O-ST-6) - $383,264.04  Annual ADA Improvements – Public ROW (O-ST-4): o Sidewalk Assessment and Trip Hazard Removal Services - $114,483 o Pedestrian Improvement (Central Way at 1st Street) Project - $46,221  FY 20233-24 Annual Slurry Seal Program (STO1) - $243,888.92  Seal Beach Boulevard Water Main Repair (EM2402) - $256,456.15  LED Chevron Signs at Seal Beach Boulevard and Westminster Avenue (ST2302) - $54,275 DEBT ADMINISTRATION As of June 30, 2024, the City had bonded debt, lease liabilities, notes payable, subscription liabilities, claims payable, and compensated absence liabilities totaling $6.3 million compared to $7.7 million at the end of the fiscal year 2022- 2023. The City’s governmental activities maintained $2.3 million in lease revenue bonds, leases, subscription liabilities, claims payable, and compensated absences versus $3.1 million last fiscal year, representing a decrease of approximately $0.8 million. This decrease reflects the payoff of the fire station bond and the Climatec as well as interest and principal payments made during fiscal year 2023-2024 in addition to an increase to leases. The City’s business-type activities debt decreased $.5 million from $4.5 million to $4.0 million. Debt in the business- type activities consists of lease revenue bonds, State loans for water and sewer capital improvement projects, subscription liabilities and compensated absences. The decrease reflects interest and principal payments made during fiscal year 2023-2024. A summary of outstanding debt can be found in the following Table 4, and additional information on the City’s long- term debt can be found in Note 6 in the basic financial statements. 2024 2023 2024 2023 2024 2023 Lease revenue bonds -$ 315$ 1,180$ 1,385$ 1,180$ 1,700$ Leases 210 546 -- 210 546 Capital project notes - - 2,500 2,758 2,500 2,758 Subscription liabilities 456 695 205 277 661 972 Self-insured Claims Payable 171 175 -- 171 175 Compensated absences 1,455 1,395 127 114 1,582 1,509 Total 2,292$ 3,126$ 4,012$ 4,534$ 6,304$ 7,660$ Table 4 Outstanding Debt, At Fiscal Year-End (in Thousands) Governmental Activities Business-Type Activities Total Activities ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS The City of Seal Beach economy and tax base continue to support core services for our residents, businesses, and visitors contributing to the high quality of life within the City. The City has largely emerged from the pandemic- depressed revenues due to improved economic activity. For the upcoming fiscal year, revenues are expected to continue to improve. However, challenges from high inflation and supply chain issues temper the recovering outlook. City of Seal Beach Management’s Discussion and Analysis (Unaudited) (Continued) For the Year Ended June 30, 2024 12 Property taxes are expected to increase as well, primarily from continued improvement in assessed value and the continued strength in the local real estate market. The City prepared a balanced annual budget for fiscal year 2024-2025. Expenditures of the City were reduced to maintain the current level of service with capital improvement projects to be supported primarily by the City’s General Fund Balance. The revenue projections for the 2024-2025 budget year were conservative and determined in partnership with the City’s consultants.. In November 2024, Measure GG passed in Seal Beach with 68% voter approval, implementing a 0.5% increase in the local sales tax to support current essential City services and will begin in 2025. The City will continue to monitor revenue streams throughout the coming years and will adjust spending levels as necessary. The most significant issues facing the City are the aged condition of the City’s infrastructure. The City has completed and adopted numerous infrastructure planning documents (i.e., Water Master Plan, Sewer Master Plan, Master Plan of Drainage, Facilities Master Plan, and Pavement Management Plan). These plans identify well over $160 million in needed improvements throughout the City. The City annually adopts a 5-year Capital Improvement Program (CIP) that strategically plans construction of these needed improvements. The fiscal year 2025-2029 CIP recommends approximately $35.6 million in improvements over the next 5 years, including $2.9 million for implementation of Revitalization projects. The 5-Year Capital Improvement Program identifies needs in the following areas: Buildings ($14.9M), Beach and Pier ($1.7M), Parks ($1.8M), Sewer System ($2.9M), Streets and Transportation ($11.0M), Storm Drain ($.7M), and Water System ($0.6M). It should be noted that a comprehensive Water System 5-Year CIP projection is not included and is deferred until a Water/Sewer Financial Plan/Rate Update is approved. REQUEST FOR INFORMATION This financial report is designed to provide the City’s citizens, taxpayers, customers, investors, and creditors with a general overview of the City’s finances and to demonstrate the City’s accountability for the funds it receives. If you have questions about this report or need additional financial information, contact the City’s Finance Department at 211 8th Street, Seal Beach, CA 90740-6379 or call (562) 431-2527. BASIC FINANCIAL STATEMENTS 13 This page intentionally left blank. 14 GOVERNMENT-WIDE FINANCIAL STATEMENTS 15 Governmental Business-Type Activities Activities Total ASSETS Current Assets: Cash and investments 43,596,480$ 18,270,865$ 61,867,345$ Accounts receivable 1,955,142 1,419,992 3,375,134 Taxes receivable 3,614,683 - 3,614,683 Lease receivable, due within one year 355,053 - 355,053 Interest receivable 389,231 - 389,231 Prepaid items 2,978,558 46,428 3,024,986 Total current assets 52,889,147 19,737,285 72,626,432 Noncurrent Assets: Restricted cash with fiscal agent 11,347 25,082 36,429 Lease receivable, due in more than one year 9,757,574 - 9,757,574 Capital assets: Capital assets, not being depreciated 30,078,810 3,277,791 33,356,601 Capital assets, being depreciated, net 57,274,615 30,265,628 87,540,243 Intangible capital assets, being amortized, net 653,165 201,971 855,136 Total capital assets, net 88,006,590 33,745,390 121,751,980 Total noncurrent assets 97,775,511 33,770,472 131,545,983 Total assets 150,664,658 53,507,757 204,172,415 DEFERRED OUTFLOWS OF RESOURCES Deferred charges on refunding - 60,352 60,352 Pension related 18,828,936 1,588,749 20,417,685 Other postemployment benefits related 1,298,695 793,612 2,092,307 Total deferred outflows of resources 20,127,631 2,442,713 22,570,344 (Continued) Primary Government City of Seal Beach Statement of Net Position June 30, 2024 See accompanying Notes to the Basic Financial Statements 16 Governmental Business-Type Activities Activities Total LIABILITIES Current Liabilities: Accounts payable 2,905,229 1,420,668 4,325,897 Accrued liabilities 616,661 52,854 669,515 Accrued interest - 41,449 41,449 Deposits payable 1,052,337 190,678 1,243,015 Retention payable 266,604 36,802 303,406 Long-term liabilities, due within one year 688,752 666,396 1,355,148 Total current liabilities 5,529,583 2,408,847 7,938,430 Long-term liabilities: Long-term liabilities, due in more than one year 1,603,288 3,345,562 4,948,850 Net pension liabilities 48,255,007 4,213,883 52,468,890 Net other postemployment benefits liabilities 2,308,853 1,410,904 3,719,757 Total noncurrent liabilities 52,167,148 8,970,349 61,137,497 Total liabilities 57,696,731 11,379,196 69,075,927 DEFERRED INFLOWS OF RESOURCES Pension related 1,222,874 243,576 1,466,450 Other postemployment benefits related 1,300,693 794,833 2,095,526 Leases related 10,112,627 - 10,112,627 Total deferred inflows of resources 12,636,194 1,038,409 13,674,603 NET POSITION Net investment in capital assets 87,073,859 29,884,131 116,957,990 Restricted for: Community development projects 1,045,996 - 1,045,996 Public safety 1,335,100 - 1,335,100 Community services 562,850 - 562,850 Public works 4,999,824 - 4,999,824 Debt service 662,234 25,082 687,316 Waste management, park in lieu, and I-405 corridor improvement 1,309,234 - 1,309,234 Total restricted 9,915,238 25,082 9,940,320 Unrestricted 3,470,267 13,623,652 17,093,919 Total net position 100,459,364$ 43,532,865$ 143,992,229$ (Concluded) City of Seal Beach Statement of Net Position (Continued) June 30, 2024 Primary Government See accompanying Notes to the Basic Financial Statements 17 Capital Grants Charges for Operating Grants and Expenses Services and Contributions Contributions Total Functions/Programs Governmental Activities: General government 7,833,713$ 1,252,570$ 2,284$ -$ 1,254,854$ Public safety 26,932,724 1,976,293 826,081 - 2,802,374 Community development 2,722,452 508,638 554,573 - 1,063,211 Community services 1,208,181 1,328,884 - - 1,328,884 Public works 10,766,275 4,199,836 2,848,625 1,199 7,049,660 Interest and fiscal charges 34,336 - - - - Total governmental activities 49,497,681 9,266,221 4,231,563 1,199 13,498,983 Business-Type Activities: Water utility 7,127,839 6,289,312 - - 6,289,312 Sewer utility 3,353,390 2,422,870 - - 2,422,870 Total business-type activities 10,481,229 8,712,182 - - 8,712,182 Total primary government 59,978,910$ 17,978,403$ 4,231,563$ 1,199$ 22,211,165$ (Continued) Program Revenues City of Seal Beach Statement of Activities For the Year Ended June 30, 2024 See accompanying Notes to the Basic Financial Statements 18 Governmental Business-Type Activities Activities Total Functions/Programs Governmental Activities: General government (6,578,859)$ -$ (6,578,859)$ Public safety (24,130,350) - (24,130,350) Community development (1,659,241) - (1,659,241) Community services 120,703 - 120,703 Public works (3,716,615) - (3,716,615) Interest and fiscal charges (34,336) - (34,336) Total governmental activities (35,998,698) - (35,998,698) Business-Type Activities: Water Utility - (838,527) (838,527) Sewer Utility - (930,520) (930,520) Total business-type activities - (1,769,047) (1,769,047) Total primary government (35,998,698) (1,769,047) (37,767,745) General Revenues: Taxes: Property taxes, levied for general purpose 15,473,159 - 15,473,159 Sales taxes 11,494,982 - 11,494,982 Franchise taxes 1,236,189 - 1,236,189 Utility users tax 5,510,087 - 5,510,087 Transient occupancy taxes 1,919,725 - 1,919,725 Other taxes 732,341 - 732,341 Motor vehicle in lieu- unrestricted 31,179 - 31,179 Use of money and property 2,673,147 401,277 3,074,424 Other 2,076,956 - 2,076,956 Total general revenues and transfers 41,147,765 401,277 41,549,042 Changes in net position 5,149,067 (1,367,770) 3,781,297 Net Position: Beginning of year, as restated (Note 15) 95,310,297 44,900,635 140,210,932 End of year 100,459,364$ 43,532,865$ 143,992,229$ (Concluded) Net (Expense) Revenue and Changes in Net Positions City of Seal Beach Statement of Activities (Continued) For the Year Ended June 30, 2024 See accompanying Notes to the Basic Financial Statements 19 This page intentionally left blank. 20 FUND FINANCIAL STATEMENTS 21 This page intentionally left blank. 22 GOVERNMENTAL FUND FINANCIAL STATEMENTS 23 This page intentionally left blank. 24 Capital Projects Citywide Grants and Equipment Nonmajor Special Revenue Capital Projects Governmental General Fund Fund Funds Total ASSETS Cash and investments 33,982,538$ -$ 1,148,892$ 8,305,805$ 43,437,235$ Receivables: Accounts 796,976 990,255 - 153,299 1,940,530 Taxes 3,500,907 - - 113,776 3,614,683 Interest 389,231 - - - 389,231 Leases 10,112,627 - - - 10,112,627 Due from other funds 1,006,816 - - - 1,006,816 Prepaid items 2,978,558 - - - 2,978,558 Restricted assets: Cash and investments with fiscal agents 11,347 - - - 11,347 Total assets 52,779,000$ 990,255$ 1,148,892$ 8,572,880$ 63,491,027$ LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES Liabilities: Accounts payable 1,379,384$ 118,145$ 904,141$ 491,940$ 2,893,610$ Accrued liabilities 601,397 - - 15,264 616,661 Deposits payable 1,052,337 - - - 1,052,337 Due to other funds - 840,260 - 166,556 1,006,816 Retentions payable 22,300 31,850 157,404 55,050 266,604 Total liabilities 3,055,418 990,255 1,061,545 728,810 5,836,028 Deferred inflow of resources: Unavailable revenue 141,900 761,934 - - 903,834 Leases 10,112,627 - - - 10,112,627 Total deferred inflow of resources 10,254,527 761,934 - - 11,016,461 Fund Balances: Nonspendable 2,978,558 - - - 2,978,558 Restricted 1,309,234 - - 7,844,070 9,153,304 Committed 23,224,408 - 87,347 - 23,311,755 Assigned 6,714,071 - - - 6,714,071 Unassigned (deficit) 5,242,784 (761,934) - - 4,480,850 Total fund balances 39,469,055 (761,934) 87,347 7,844,070 46,638,538 Total liabilities, deferred inflow of resources and fund balances 52,779,000$ 990,255$ 1,148,892$ 8,572,880$ 63,491,027$ City of Seal Beach Balance Sheet June 30, 2024 Governmental Funds See accompanying Notes to the Basic Financial Statements 25 Total Fund Balances - Total Governmental Funds 46,638,538$ Nondepreciable 30,078,810$ Depreciable, net of $582,469 reported in Internal Service Funds 56,692,146 Amortizable, net of $200,390 reported in Internal Service Funds 452,775 87,223,731 Lease liabilities (3,046)$ Subscription liabilities (455,855) Claims and judgments (171,203) Compensated absences (1,454,710) (2,084,814) Pension related deferred outflows of resources 18,828,936$ Net pension liability (48,255,007) Pension related deferred inflows of resources (1,222,874) (30,648,945) OPEB related deferred outflows of resources 1,298,695$ Net OPEB liability (2,308,853) OPEB related deferred inflows of resources (1,300,693) (2,310,851) 903,834 737,871 Net Position of Governmental Activities 100,459,364$ Long-term liabilities are not due and payable in the current period and accordingly are not reported as fund liabilities. All liabilities, both current and long-term, net of $207,226 reported in Internal Service Funds, are reported in the Statement of Net Position: Capital assets used in governmental activities were not current financial resources. Therefore, they were not reported in the Governmental Funds Balance Sheet. Internal Service Funds were used by management to charge the costs of certain activities, such as insurance and equipment replacement to individual funds. The assets and liabilities of the Internal Service Funds were included in the governmental activities in the Government-Wide Statement of Net Position. Revenue reported as unavailable revenue in the governmental funds when it is not received soon enough after year-end to be considered available. The availability criteria does not apply to the Government-Wide Financial Statements and, therefore, the revenue is recognized when eligibility requirements are met and earned. Net other postemployment benefits liabilities and the related deferred outflows of resources and deferred inflows of resources are not due and payable in the current period or not available for current expenditures and are not reported in the governmental fund financial statements: Net pension liabilities and the related deferred outflows of resources and deferred inflows of resources are not due and payable in the current period or not available for current expenditures and are not reported in the governmental fund financial statements: City of Seal Beach Reconciliation of the Governmental Funds Balance Sheet to the June 30, 2024 Government-Wide Statement of Net Position Amounts reported for governmental activities in the Statement of Net Position were reported differently because: See accompanying Notes to the Basic Financial Statements 26 Capital Projects Citywide Grants and Equipment Nonmajor General Special Revenue Capital Projects Governmental Fund Fund Fund Funds Total Revenues: Taxes 36,002,178$ -$ -$ 364,304$ 36,366,482$ Licenses and permits 939,640 - - - 939,640 Intergovernmental 1,789,580 801,754 - 3,040,775 5,632,109 Charges for services 6,674,619 - 22,840 93,847 6,791,306 Use of money and property 2,844,020 - - 176,447 3,020,467 Fines and forfeitures 1,402,597 - - - 1,402,597 Contributions 24,471 - - 45,000 69,471 Miscellaneous 661,060 - - - 661,060 Total revenues 50,338,165 801,754 22,840 3,720,373 54,883,132 Expenditures: Current: General government 7,374,474 - 98,146 73,544 7,546,164 Public safety 24,716,603 40,000 167,177 584,817 25,508,597 Community development 2,325,464 - - 373,863 2,699,327 Community services 1,399,938 - - - 1,399,938 Public works 7,304,526 156,575 1,047,870 237,693 8,746,664 Capital outlay 510,685 670,607 2,831,905 2,001,692 6,014,889 Debt service: Principal retirement 493,805 - - 315,000 808,805 Interest and fiscal charges 25,235 - - 8,845 34,080 Total expenditures 44,150,730 867,182 4,145,098 3,595,454 52,758,464 Revenues over (under) expenditures 6,187,435 (65,428) (4,122,258) 124,919 2,124,668 Other Financing Sources (Uses): Transfers in 109,000 - 4,069,624 442,713 4,621,337 Transfers out (4,414,032) (98,305) - (109,000) (4,621,337) Total other financing sources (uses):(4,305,032) (98,305) 4,069,624 333,713 - Net change in fund balances 1,882,403 (163,733) (52,634) 458,632 2,124,668 Fund Balances: Beginning of year, as restated (Note 15) 37,586,652 (598,201) 139,981 7,385,438 44,513,870 End of year 39,469,055$ (761,934)$ 87,347$ 7,844,070$ 46,638,538$ City of Seal Beach Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the Year Ended June 30, 2024 See accompanying Notes to the Basic Financial Statements 27 Net Change in Fund Balances - Total Governmental Funds 2,124,668$ Capital assets used in governmental activities are not financial resources and therefore are not reported in governmental funds. Capital outlay, net of $0 reported in Internal Service Fund 6,014,889$ Depreciation and amortization, net of $266,364 reported in Internal Service Fund (2,942,534) Net effect on disposal of capital assets, net of $13,344 reported in Internal Service Fund (129,371) 2,942,984 Repayment of debt principal, net of $80,587 reported in Internal Service Fund, is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the Statement of Net Position.808,805 Interest expense on long-term debt is reported in the Statement of Activities, but do not require the use of current financial resources. Therefore, interest is reported as an expenditure in governmental funds. This amount represents the change in accrued interest from the prior year.3,509 Claims and judgment changes reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds.(114,731) Compensated absences were reported in the Government-Wide Statement of Activities, but they do not require the use of current financial resources. Therefore, compensated absences were not reported as expenditures in the governmental funds.59,287 Certain pension income (expenses) reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds, net of contribution made after the measurement period in the amount of $5,218,453.(1,201,521) Certain other postemployment benefits income (expenses) reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds, net of contribution made after the measurement period in the amount of $990,171.956,090 Revenues reported as unavailable revenue in the governmental funds and recognized in the Statement of Activities. (238,443) Internal Service Funds are used by management to charge the costs of certain activities, such as insurance and equipment replacement, to individual funds. The net revenue of the Internal Service Funds is reported in governmental activities.(191,581) Change in net position of governmental activities 5,149,067$ Governmental activities in the Statement of Activities were reported differently because: City of Seal Beach Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, For the Year Ended June 30, 2024 and Changes in Fund Balances to the Government-Wide Statement of Activities See accompanying Notes to the Basic Financial Statements 28 PROPRIETARY FUND FINANCIAL STATEMENTS 29 Governmental Activities Internal Water Utility Sewer Utility Total Service Funds ASSETS Current Assets: Cash and investments 6,417,613$ 11,853,252$ 18,270,865$ 159,245$ Accounts receivable 957,673 462,319 1,419,992 14,612 Prepaid items 23,214 23,214 46,428 - Total current assets 7,398,500 12,338,785 19,737,285 173,857 Noncurrent Assets: Restricted cash 25,082 - 25,082 - Capital assets, not being depreciated 2,660,703 617,088 3,277,791 - Capital assets, net of accumulated depreciation 14,255,515 16,010,113 30,265,628 582,469 Intangible assets, net of accumulated amortization 111,118 90,853 201,971 200,390 Total capital assets 17,027,336 16,718,054 33,745,390 782,859 Total noncurrent assets 17,052,418 16,718,054 33,770,472 782,859 Total Assets 24,450,918 29,056,839 53,507,757 956,716 DEFERRED OUTFLOWS OF RESOURCES Deferred charges on refunding - 60,352 60,352 - Pension related items 966,422 622,327 1,588,749 - Other postemployment benefits related items 439,384 354,228 793,612 - Total deferred outflows of resources 1,405,806 1,036,907 2,442,713 - (Continued) Enterprise Funds June 30, 2024 Proprietary Funds Statement of Net Position City of Seal Beach Business-Type Activities See accompanying Notes to the Basic Financial Statements 30 Governmental Activities Internal Water Utility Sewer Utility Total Service Funds LIABILITIES Current Liabilities: Accounts payable 1,394,138 26,530 1,420,668 11,619 Accrued liabilities 29,953 22,901 52,854 - Accrued interest 713 40,736 41,449 - Retention payable 36,802 - 36,802 - Deposits payable 181,108 9,570 190,678 - Compensated absences, due within one year 7,005 21,958 28,963 - Long-term debt, due within one year 170,405 467,028 637,433 81,803 Total current liabilities 1,820,124 588,723 2,408,847 93,422 Noncurrent Liabilities: Compensated absences, due in more than one year 55,920 42,266 98,186 - Long-term debt, due in more than one year 296,997 2,950,379 3,247,376 125,423 Net pension liabilities 2,563,267 1,650,616 4,213,883 - Net other postemployment benefits liabilities 781,149 629,755 1,410,904 - Total noncurrent liabilities 3,697,333 5,273,016 8,970,349 125,423 Total liabilities 5,517,457 5,861,739 11,379,196 218,845 DEFERRED INFLOW OF RESOURCES Pension related items 148,165 95,411 243,576 - Other postemployment benefits related items 440,060 354,773 794,833 - Total deferred inflows of resources 588,225 450,184 1,038,409 - NET POSITION Net investment in capital assets 16,523,132 13,360,999 29,884,131 575,633 Restricted for debt service 25,082 - 25,082 - Unrestricted 3,202,828 10,420,824 13,623,652 162,238 Total net position 19,751,042$ 23,781,823$ 43,532,865$ 737,871$ (Concluded) Enterprise Funds City of Seal Beach Statement of Net Position (Continued) Proprietary Funds June 30, 2024 Business-Type Activities See accompanying Notes to the Basic Financial Statements 31 This page intentionally left blank. 32 Governmental Activities Internal Water Utility Sewer Utility Total Service Funds OPERATING REVENUES: Sales and service charges 6,286,928$ 2,421,972$ 8,708,900$ 137,000$ Miscellaneous 2,384 898 3,282 - Total operating revenues 6,289,312 2,422,870 8,712,182 137,000 OPERATING EXPENSES: Personnel expenses 2,017,372 1,451,293 3,468,665 - Operating expenses 4,572,127 769,267 5,341,394 60,511 Amortization and depreciation expenses 528,399 996,493 1,524,892 266,364 Total operating expenses 7,117,898 3,217,053 10,334,951 326,875 Operating loss (828,586) (794,183) (1,622,769) (189,875) NONOPERATING INCOME (LOSS): Interest revenues 143,506 257,771 401,277 - Interest expenses (9,941) (136,337) (146,278) (3,765) Loss on sale of assets - - - 2,059 Total nonoperating income (loss)133,565 121,434 254,999 (1,706) Changes in net position (695,021) (672,749) (1,367,770) (191,581) NET POSITION: Beginning of year, as restated (Note 15) 20,446,063 24,454,572 44,900,635 929,452 End of year 19,751,042$ 23,781,823$ 43,532,865$ 737,871$ Enterprise Funds Business-Type Activities For the Year Ended June 30, 2024 Statement of Revenues, Expenses, and Changes in Net Position City of Seal Beach Proprietary Funds See accompanying Notes to the Basic Financial Statements 33 Governmental Activities Internal Water Utility Sewer Utility Total Service Funds CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers and users 6,099,775$ 2,356,164$ 8,455,939$ 122,388$ Cash paid to suppliers for goods and services (4,236,255) (893,068) (5,129,323) (78,342) Cash paid to employees for services (1,704,177) (1,018,847) (2,723,024) - Net cash provided by operating activities 159,343 444,249 603,592 44,046 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Acquisition of capital assets (640,064) (83,098) (723,162) - Proceed on disposal of assets - - - 15,403 Principal paid on long-term liabilities (84,857) (450,660) (535,517) (80,587) Interest paid on long-term liabilities (10,004) (128,558) (138,562) (3,765) Net cash used in capital and related financing activities (734,925) (662,316) (1,397,241) (68,949) CASH FLOWS FROM INVESTING ACTIVITIES: Interest received 143,506 257,771 401,277 - Net cash provided by investing activities 143,506 257,771 401,277 - Net change in cash and cash equivalents (432,076) 39,704 (392,372) (24,903) CASH AND CASH EQUIVALENTS: Beginning of year 6,874,771 11,813,548 18,688,319 184,148 End of year 6,442,695$ 11,853,252$ 18,295,947$ 159,245$ RECONCILIATION OF CASH AND CASH EQUIVALENTS: Cash and investments 6,417,613$ 11,853,252$ 18,270,865$ 159,245$ Restricted cash 25,082 - 25,082 - Total cash and cash equivalents 6,442,695$ 11,853,252$ 18,295,947$ 159,245$ (Continued) Enterprise Funds City of Seal Beach Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2024 Business-Type Activities See accompanying Notes to the Basic Financial Statements 34 Governmental Activities Internal Water Utility Sewer Utility Total Service Funds Reconciliation of Operating Income (Loss) to to Net Cash Provided by Operating Activities: Operating income (loss) (828,586)$ (794,183)$ (1,622,769) (189,875)$ Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities: Amortization and depreciation expenses 528,399 996,493 1,524,892 266,364 Changes in assets and liabilities: (Increase)/decrease in accounts receivables (203,616) (67,102) (270,718) (14,612) (Increase)/decrease in prepaid items 3,270 (23,214) (19,944) - (Increase)/decrease in deferred outflows of resources related to pensions 6,946 (31,923) (24,977) - (Increase)/decrease in deferred outflows of resources related to OPEB (106,473) (152,298) (258,771) - Increase/(decrease) in accounts payable 332,602 (100,587) 232,015 (17,831) Increase/(decrease) in accrued liabilities 6,969 9,164 16,133 - Increase/(decrease) in deposits payable 14,079 396 14,475 - Increase/(decrease) in compensated absences (1,826) 15,101 13,275 - Increase/(decrease) in net pension liabilities 203,839 219,487 423,326 - Increase/(decrease) in net OPEB liabilities (101,519) 94,366 (7,153) - Increase/(decrease) in deferred inflows of resources related to pensions (92,830) (50,766) (143,596) - Increase/(decrease) in deferred inflows of resources related to OPEB 398,089 329,315 727,404 - Net cash provided by operating activities 159,343$ 444,249$ 603,592$ 44,046$ NONCASH ITEM: Amortization of deferred charges -$ 12,070$ 12,070$ -$ (Concluded) Enterprise Funds City of Seal Beach Statement of Cash Flows (Continued) Proprietary Funds For the Year Ended June 30, 2024 Business-Type Activities See accompanying Notes to the Basic Financial Statements 35 This page intentionally left blank. 36 FIDUCIARY FUND FINANCIAL STATEMENTS 37 This page intentionally left blank. 38 Custodial Funds ASSETS Cash and investments 646,737$ Receivables: Accounts 736 Taxes 4,284 Restricted investments with fiscal agent 1,026,002 Total assets 1,677,759 LIABILITIES Current liabilities: Interest payable 96,724 Total current liabilities 96,724 Total liabilities 96,724 NET POSITION Restricted for Individual, organization and other government 1,581,035$ Total fiduciary net position June 30, 2024 Statement of Fiduciary Net Position City of Seal Beach Fiduciary Funds See accompanying Notes to the Basic Financial Statements 39 Custodial Funds ADDITIONS: Assessment revenue collected 836,110$ Investment income 59,744 Total additions 895,854 DEDUCTIONS: Return of deposits 12,939 Payment of special assessment district debt service 816,632 Total deductions 829,571 Change in net position 66,283 NET POSITION: Beginning of year 1,514,752 End of year 1,581,035$ City of Seal Beach Statement of Change in Fiduciary Net Position Fiduciary Funds For the Year Ended June 30, 2024 See accompanying Notes to the Basic Financial Statements.40 41 NOTES TO THE BASIC FINANCIAL STATEMENTS 42 This page intentionally left blank. City of Seal Beach Index to the Notes to the Basic Financial Statements For the Year Ended June 30, 2024 43 Page Note 1 – Summary of Significant Accounting Policies ..................................................................................... 45 A. Financial Reporting Entity .............................................................................................................. 45 B. Basis of Accounting and Measurement Focus ................................................................................ 46 C. Cash and Investments ..................................................................................................................... 48 D. Fair Value Measurement ................................................................................................................. 49 E. Property Taxes Receivable ............................................................................................................. 49 F. Lease Receivable ............................................................................................................................ 49 G. Prepaid Items .................................................................................................................................. 50 H. Interfund Transactions .................................................................................................................... 50 I. Capital Assets ................................................................................................................................. 50 J. Unearned and Unavailable Revenue ............................................................................................... 51 K. Compensated Absences Payable ..................................................................................................... 51 L. Claims Payable ............................................................................................................................... 52 M. Pensions .......................................................................................................................................... 52 N. Other Postemployment Benefits ..................................................................................................... 52 O. Deferred Outflows/Inflows of Resources ....................................................................................... 53 P. Long-Term Liabilities ..................................................................................................................... 53 Q. Lease Liabilities .............................................................................................................................. 53 R. Subscription Liabilities ................................................................................................................... 54 S. Net Position .................................................................................................................................... 54 T. Fund Balances ................................................................................................................................. 55 U. Use of Estimates ............................................................................................................................. 56 V. Tax Abatement ................................................................................................................................ 56 W. Implementation of New GASB Pronouncements ........................................................................... 56 Note 2 – Cash and Investments .......................................................................................................................... 56 A. Demand Deposits ............................................................................................................................ 57 B. Investments Authorized by the California Government Code and the City's Investment Policy ................................................................................................................. 57 C. Investments Authorized by Debt Agreements ................................................................................ 58 D. Fair Value Measurement ................................................................................................................. 58 E. Risk Disclosures ............................................................................................................................. 59 F. Investment in Local Agency Investment Fund (“LAIF”) ............................................................... 61 Note 3 – Lease Receivable ................................................................................................................................... 61 Note 4 – Interfund Transactions ........................................................................................................................ 62 A. Due From/To Other Funds .............................................................................................................. 62 B. Transfers ......................................................................................................................................... 62 Note 5 – Capital Assets ........................................................................................................................................ 63 Note 6 – Long-Term Liabilities .......................................................................................................................... 65 A. Governmental Activities ................................................................................................................. 65 B. Business-Type Activities ................................................................................................................ 67 City of Seal Beach Index to the Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2024 44 Page Note 7 – Non-City Obligations ........................................................................................................................... 70 A. Heron Pointe Community Facilities District No. 2002-01 ............................................................ 70 B. Pacific Gateway Business Center Community Facilities District No. 2005-01 ............................ 70 Note 8 – Risk Management and Self Insurance Program ............................................................................... 70 A. Description of Self-Insurance Pool Pursuant to Joint Powers Agreement ..................................... 70 B. Primary Self-Insurance Programs of the Authority ....................................................................... 70 C. Purchased Insurance ...................................................................................................................... 71 D. Adequacy of Protection ................................................................................................................. 72 E. Claims Activity .............................................................................................................................. 72 Note 9 – Defined Benefit Pension Plans ............................................................................................................ 72 A. General Information about the Pension Plan ................................................................................. 72 B. Pension Liabilities, Pension Expenses, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pension ............................................................. 75 Note 10 – Other Postemployment Benefits (“OPEB”) Plan ............................................................................ 79 A. General Information about the OPEB Plan .................................................................................... 79 B. Net OPEB Liability ........................................................................................................................ 80 C. Changes in the Net OPEB Liability ............................................................................................... 81 D. OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB ................................................................................................... 82 Note 11 – Net Investment in Capital Assets ...................................................................................................... 83 Note 12 – Classification of Fund Balances ........................................................................................................ 84 Note 13 – Commitments and Contingencies ..................................................................................................... 85 A. Commitments ................................................................................................................................. 85 B. Contingencies ................................................................................................................................ 85 C. Grants ............................................................................................................................................. 85 Note 14 – Individual Fund Disclosure ............................................................................................................... 85 Note 15 – Prior Period Adjustments ................................................................................................................. 86 A. Government-Wide Financial Statements ....................................................................................... 86 B. Governmental Fund Financial Statements ..................................................................................... 86 C. Enterprise Fund Financial Statements ........................................................................................... 86 D. Internal Service Fund Financial Statements .................................................................................. 86 City of Seal Beach Notes to the Basic Financial Statements For the Year Ended June 30, 2024 45 Note 1 – Summary of Significant Accounting Policies The basic financial statements of the City of Seal Beach, California, (the “City”) have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) as applied to governmental agencies. The Governmental Accounting Standards Board (“GASB”) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The following is a summary of the City’s significant policies: A. Financial Reporting Entity The City was incorporated on October 27, 1915, under the laws of the State of California and enjoys all the rights and privileges applicable to a charter city. It is governed by an elected five-member council. As required by U.S. GAAP these financial statements present the City (the primary government and its component units). The component units discussed below are included in the reporting entity because of their operational or financial relationships with the City. In evaluating how to define the City for financial reporting purposes, management has considered all potential component units. The primary criteria for including a potential component unit within the reporting entity are the governing body’s financial accountability and a financial benefit or burden relationship and whether it is misleading to exclude. A primary government is financially accountable and shares a financial benefit or burden relationship, if it appoints a voting majority of an organization’s governing body and it is able to impose its will on the organization, or if there is a potential for the organization to provide specific financial benefits to, or impose specific financial burdens on the primary government. A primary government may also be financially accountable if an organization is fiscally dependent on the primary government regardless of whether the organization has a separately elected governing board, a governing board appointed by a higher level of government, or a jointly appointed board, and there is a potential for the organization to provide specific financial benefits to, or impose specific financial burdens on the primary government. Blended Component Units Management determined that the following entities should be reported as blended component units based on the criteria above. Although the following entities are legally separate from the City, they have been “blended” as though they are part of the City because the component units’ governing bodies are substantially the same as the City’s and there is a financial benefit or burden relationship between the City and the component units; and management of the City has operational responsibilities for the component units; and/or the component units provide services entirely, or almost entirely, to the City or otherwise exclusively, or almost exclusively, benefits the City, even though they do not provide services directly to it. The Seal Beach Public Financing Authority (the “Authority”) was formed May 8, 2000, pursuant to Articles 1 through 4 of Chapter 5, Division 7, Title 1 of the California Government Code, to create a joint exercise of powers authority between the City and the former Seal Beach Redevelopment Agency. The City Council of the City is the governing board. Management of the primary government has operational responsibility for the blended component unit. The Authority was formed to undertake the financing of public capital improvements. On June 12, 2017, the City Council adopted Resolution No. 6741, to create the Parking Authority, and the Parking Authority became a new member to the Authority. On the same date, the Successor Agency Board of Directors adopted Resolution No. SA 17-3, approving the Successor Agency’s withdrawal of its Authority membership. On June 28, 2017, the Oversight Board to the Successor Agency adopted Resolution No. OB17-03, approving such withdrawal. Resolution No. OB17-03 became effective upon the State of California Department of Finance’s approval, received by the Successor Agency on August 18, 2017. The Authority does not issue separate financial statements. City of Seal Beach Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2024 46 Note 1 – Summary of Significant Accounting Policies (Continued) A. Financial Reporting Entity (Continued) Blended Component Units (Continued) The Seal Beach Parking Authority (the “Parking Authority”) was formed on June 12, 2017, pursuant to the Part 2 of Division 18 of the California Streets and Highway Code. The Parking Authority is governed by the Board of Directors which is the City Council of the City of Seal Beach. The Parking Authority is blended into the general fund. The Parking Authority does not issue separate financial statements. The Seal Beach Cable Communications Foundation (the “Foundation”) was organized under the laws of the State of California on August 27, 1984, to foster and promote civic advancement through activities related to cable communications, community promotion, and other public services deemed appropriate by the foundation. The Foundation is governed by a board of directors consisting of seven members, all appointed by the City Council of the City of Seal Beach. The Foundation is blended with the City as a special revenue fund. The Foundation does not issue separate financial statements. B. Basis of Accounting and Measurement Focus The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for by providing a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures or expenses, as appropriate. City resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. Government-Wide Financial Statements The government-wide financial statements are presented on an “economic resources” measurement focus and the accrual basis of accounting. Accordingly, all of the City’s assets, deferred outflows of resources, liabilities, and deferred inflows of resources, including capital assets, as well as infrastructure assets, and long-term liabilities, are included in the accompanying Statement of Net Position. The Statement of Activities presents changes in net position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. Fiduciary activities of the City are not included in these statements. Certain types of transactions are reported as program revenues for the City in three categories:  Charges for services  Operating grants and contributions  Capital grants and contributions Certain eliminations have been made in regards to interfund activities, payables and receivables. All internal balances in the statement of net position have been eliminated. In the statement of activities, internal service fund transactions have been included in the governmental activities. The following interfund activities have been eliminated:  Due from and to other funds, which are short-term loans within the primary government  Except between Governmental and Business-Type Activities, transfers in and out, which are flows of assets between funds without the requirement for repayment City of Seal Beach Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2024 47 Note 1 – Summary of Significant Accounting Policies (Continued) B. Basis of Accounting and Measurement Focus (Continued) Governmental Fund Financial Statements (Continued) All governmental funds are accounted for on a spending, or “current financial resources” measurement focus and the modified accrual basis of accounting. Accordingly, only current assets, current liabilities, and deferred inflows of resources are included on the balance sheet. The statement of revenues, expenditures and changes in fund balances presents increases (revenue and other financing sources) and decreases (expenditures and other financing uses) in fund balances. Under the modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available to finance expenditures of the current period. Revenues are recorded when received in cash, except those revenues subject to accrual (generally 60 days after year-end) which are recognized when measurable and available. The primary revenue sources that have been treated as susceptible to accrual by the City are property taxes, intergovernmental revenues and other taxes. Business license fees are recorded as received. Expenditures are recorded in the accounting period in which the related fund liability is incurred. An exception to this general rule is principal and interest on long-term debt which is recognized when due. Reconciliations of the fund financial statements to the government-wide financial statements are provided to explain the differences. The City reports the following major Governmental Funds: General Fund – The General Fund is the City’s principal operating fund. It accounts for all revenues and expenditures used to finance the traditional services associated with a municipal government except those required to be accounted for in another fund. Citywide Grants Special Revenue Fund – The Citywide Grants Special Revenue Fund is used to account for various Federal and State grants that are restricted to expenditures for specific projects or purposes. Capital Projects and Equipment Capital Projects Fund – To account for major capital projects with various revenues sources but exclude the Water and Sewer Capital Improvement Fund. These sources get transferred into the Capital Projects and Equipment Projects Fund. Proprietary Fund Financial Statements Proprietary Fund Financial Statements include a Statement of Net Position, a Statement of Revenues, Expenses and Changes in Net Position, and a Statement of Cash Flows for each major Proprietary Fund. Proprietary funds are accounted for using the "economic resources" measurement focus and the accrual basis of accounting. Accordingly, all assets, deferred outflows of resources, liabilities (whether current or noncurrent), and deferred inflows of resources are included on the Statement of Net Position. The Statement of Revenues, Expenses and Changes in Fund Net Position presents increases (revenues) and decreases (expenses) in total Net Position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. In these funds, receivables have been recorded as revenue and provisions have been made for uncollectible amounts. City of Seal Beach Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2024 48 Note 1 – Summary of Significant Accounting Policies (Continued) B. Basis of Accounting and Measurement Focus (Continued) Proprietary Fund Financial Statements (Continued) Operating revenues in the proprietary funds are those revenues that are generated from the primary operations of the fund. All other revenues are reported as non-operating revenues. Operating expenses are those expenses that are essential to the primary operations of the fund. All other expenses are reported as non-operating expenses. The City reports the following major Proprietary Funds: Water Utility Enterprise Fund – This fund accounts for the capital, operation and maintenance of the City’s water distribution system. Sewer Utility Enterprise Fund – This fund accounts for the financial transactions of the City’s wastewater collection system. A separate column representing internal service funds is also presented in these statements. However, internal service balances and activities have been combined with the governmental activities in the Government-Wide Financial Statements. The City has a Vehicle Replacement Internal Service Fund and an Information Technology Internal Service Fund that provides services directly to other City funds. Fiduciary Fund Financial Statements Fiduciary fund financial statements include a Statement of Net Position and a Statement of Changes in Fiduciary Net Position. The City’s fiduciary funds represent custodial funds. The custodial funds are accounted for on the full accrual basis of accounting where the assets associated with the activity are controlled by the City and the assets are not derived 1) solely from the government’s own-source revenues or 2) from government-mandated nonexchange transactions or voluntary nonexchange transactions. The City reports the following fiduciary fund: Custodial Funds – To accounts for assets for the benefit of individuals and the City does not have administrative involvement with the assets or direct financial involvement with the assets or for the benefit of organizations or other governments that are not part of the City. In addition, the assets are not derived from the City’s provision of goods or services to those individuals, organizations, or other governments. The custodial funds account for the deposits for individuals and organizations and the debt service and related expenses for the Heron Pointe and Pacific Gateway Community Facility Districts. C. Cash and Investments The City’s cash and cash equivalents are comprised of cash on hand, demand deposits, and short-term investments with original maturity of three months or less from the date of acquisition. All cash and investments of proprietary funds are held in the City’s investment pool. These cash pools have the general characteristics of a demand deposit account, therefore, all cash and investments in the proprietary funds are considered cash and cash equivalents for statement of cash flows purposes. City of Seal Beach Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2024 49 Note 1 – Summary of Significant Accounting Policies (Continued) D. Fair Value Measurement Investments, unless otherwise specified, recorded at fair value in the financial statements, are categorized based upon the level of judgment associated with the inputs used to measure their fair value. The three levels of the fair value measurement hierarchy are described below:  Level 1 – Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date.  Level 2 – Inputs, other than quoted prices included in Level 1, that are observable for the assets or liabilities through corroboration with market data at the measurement date.  Level 3 – Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the assets or liabilities at the measurement date. E. Property Taxes Receivable Property tax revenue is recognized in the fiscal year for which the taxes have been levied providing they become available. Available means due, or past due and receivable within the current period and collected within the current period or expected to be collected soon enough thereafter (not to exceed 60 days) to be used to pay liabilities in the current period. Under California law, property taxes are assessed and collected by the counties at up to 1% of assessed value, plus other increases approved by the voters. The property taxes go into a pool, and are then allocated to the cities based on complex formulas. The property tax calendar is as follows: Lien Date: January 1 Levy Date: July 1 Due Date: First Installment - November 1 Second Installment - February 1 Delinquent Date: First Installment - December 11 Second Installment - April 11 F. Lease Receivable The City is a lessor for leases of land and buildings and recognizes leases receivable and deferred inflows of resources in the financial statements. Variable payments based on future performance or usage of the underlying asset are not included in the measurement of the lease receivable. At the commencement of a lease, the lease receivable is measured at the present value of payments expected to be received during the lease term. The City established a threshold of $50,000 for lease receivables. Subsequently, the lease receivable is reduced by the principal portion of lease payments received. The deferred inflows of resources are initially measured as the initial amount of the lease receivable, adjusted for lease payments received at or before the lease commencement date. Subsequently, the deferred inflows of resources are recognized as revenue over the life of the lease term in a systematic and rational method. The City used the interest method of revenue recognition. City of Seal Beach Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2024 50 Note 1 – Summary of Significant Accounting Policies (Continued) F. Lease Receivable (Continued) Key estimates and judgments include how the City determines (1) the discount rate it uses to discount the expected lease receipts to present value, (2) lease term, and (3) lease receipts.  The City uses incremental borrowing rate (IBR) provided by the financial institution at July 1, 2021 for existing leases or the current rate at the time a new lease is executed.  The lease term includes the noncancelable period of the lease plus any option periods that are likely to be exercised.  Lease receipts included in the measurement of the lease receivable are composed of fixed payments from the lessee. The City monitors changes in circumstances that would require a remeasurement of its lease and will remeasure the lease receivable and deferred inflows of resources if certain changes occur that are expected to significantly affect the amount of the lease receivable. G. Prepaid Items Prepaid items are payments made to vendors for services that will benefit periods beyond the fiscal year ended. The City uses the consumption method to account for prepaid items. H. Interfund Transactions Transactions between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as “due from/to other funds” (i.e., current portion of interfund loans). These are typically routine and temporary cash flow assistance from the General Fund to other funds in advance of receiving grant funds or other types of revenue. Transactions which move resources from a fund receiving revenue to the fund through which the resources are expended are recorded as transfers. I. Capital Assets Capital assets, which include land, buildings, improvements, equipment, furniture, and infrastructure assets (e.g., roads, sidewalks, and similar items), are recorded at historical cost or estimated historical if purchased or constructed. Donated capital assets are valued at the estimated acquisition value on the date donated. City policy has set the capitalization threshold for reporting capital assets with an initial, individual cost of more than $5,000 and an estimated useful life of one year or more. The City defines infrastructure as the basic physical assets that allow the City to function. The assets include street network, street appurtenances, and storm drains. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. City of Seal Beach Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2024 51 Note 1 – Summary of Significant Accounting Policies (Continued) I. Capital Assets (Continued) The City established a threshold to recognize a right-to-use including lease asset or subscription-based information technology arrangements (“SBITA”) asset (“subscription assets”) in the government-wide financial statements and proprietary fund financial statements right-to-use asset over $5,000. Lease assets are recorded at the amount of the initial measurement of the lease liabilities and adjusted by any lease payments made to the lessor at or before the commencement of the lease term, less any lease incentives received at or before the commencement of the lease term along with any initial direct costs that are ancillary charges necessary to place the lease assets into service. Lease assets are amortized using the straight-line method over the shorter of the lease term or the useful life of the underlying asset, unless the lease contains a purchase option that the City has determined is reasonably certain of being exercised. In this case, the lease asset is amortized over the useful life of the underlying asset. Subscription assets are recorded at the amount of the initial measurement of the SBITA liabilities (“subscription liabilities”) and adjusted by any subscription payments to the SBITA vendor at or before the commencement of the subscription term, less any incentives received from the SBITA vendor at or before the commencement of the subscription term along with subscription implementation costs. Subscription assets are amortized over the shorter of the subscription term or the useful life of the underlying IT assets. All other capital assets used in operations are depreciated over their estimated useful using the straight-line method. The lives used for depreciation purposes are as follows: Assets Years Building and Improvements 20-99 Machinery and Equipment 5-50 Vehicles 4-10 Infrastructure 20-60 J. Unearned and Unavailable Revenue Unearned revenue is reported for transactions for which revenue has not yet been earned. Typical transactions recorded as unearned revenues in the government-wide and fund financial statements are grant revenues received in advance. In the governmental fund financial statements, unavailable revenue is reported when transactions have not yet met the revenue recognition criteria based on the modified accrual basis of accounting. The City reports unavailable revenue when an asset is reported in governmental fund financial statements but the revenue is not collected within the availability period (within 60 days of year-end). K. Compensated Absences Payable City employees have vested interest in varying levels of vacation, sick leave and compensatory time based on their length of employment. It is the policy of the City to pay all accumulated vacation pay and all or a portion of sick pay when an employee retires or terminates. The long-term amount is included as a liability in the governmental activities of the government-wide financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements. All of the liability for compensated absences applicable to proprietary funds is reported in those funds. City of Seal Beach Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2024 52 Note 1 – Summary of Significant Accounting Policies (Continued) L. Claims Payable When it is probable that a claim liability has been incurred at year-end and the amount of the loss can be reasonably estimated, the City records the estimated loss, net of any insurance coverage under its self- insurance program. Small dollar claims and judgments are recorded as expenditures when paid. The City's self-insurance program is administered through California Joint Powers Insurance Authority (CJPIA), which is described in Note 8 to the financial statements. The Authority is a public entity risk pool. Claims losses recorded in the Authority include both current claims and incurred but not reported claims (IBNR). Deposits to the Authority are recorded by the City as insurance expenditures in the General Fund when paid. These deposits are subject to retrospective adjustment. Favorable claims experience in prior years results in a refund of deposits from the Authority and such refunds, if any, are recorded as prepaid items in the General Fund since they will be used to offset future deposit requirements. Adverse claims experience in prior years results in the payment of additional deposits and such deposits, if any, are recorded as insurance expenditures when incurred. M. Pensions For purposes of measuring the aggregate net pension liability, deferred outflows of resources and deferred 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 the plans. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with benefit terms. Investments are reported at fair value. The following timeframes are used for pension reporting: Valuation Date June 30, 2022 Measurement Date June 30, 2023 Measurement Period July 1, 2022 to June 30, 2023 Gains and losses related to changes in total pension liability and fiduciary net position are recognized in pension expense systematically over time. The first amortized amounts are recognized in pension expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to pensions and are to be recognized in future pension expense. The amortization period differs depending on the source of the gain or loss. The difference between projected and actual earnings is amortized straight-line over 5 years. All other amounts are amortized straight-line over the average expected remaining service lives of all members that are provided with benefits (active, inactive, and retired) as of the beginning of the measurement period. Pension liabilities are liquidated principally by General Fund for the governmental activities. N. Other Postemployment Benefits For purposes of measuring the net other postemployment benefits (“OPEB)” liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB 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 the plans. For this purpose, benefit payments are recognized when due and payable in accordance with benefit terms. Investments are reported at fair value. City of Seal Beach Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2024 53 Note 1 – Summary of Significant Accounting Policies (Continued) N. Other Postemployment Benefits (Continued) The following timeframes are used for OPEB reporting: Valuation Date June 30, 2023 Measurement Date June 30, 2023 Measurement Period July 1, 2022 to June 30, 2023 Gains and losses related to changes in total OPEB liability and fiduciary net position are recognized in OPEB expense systematically over time. The first amortized amounts are recognized in OPEB expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to OPEB and are to be recognized in future OPEB expense. The amortization period differs depending on the source of the gain or loss. The difference between projected and actual earnings is amortized straight-line over 5 years. All other amounts are amortized straight-line over the average expected remaining service lives of all members that are provided with benefits (active, inactive, and retired) as of the beginning of the measurement period. OPEB liabilities are liquidated principally by General Fund for the governmental activities. O. Deferred Outflows/Inflows of Resources The financial statements report separate sections for deferred outflows of resources, and deferred inflows of resources, when applicable. Deferred Outflows of Resources represent a consumption of net assets that applies to future periods. Deferred Inflows of Resources represent an acquisition of net assets that applies to future period. P. Long-Term Liabilities Long-term debt and other long-term liabilities are reported as liabilities in the Statement of Net Position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Q. Lease Liabilities The City recognizes lease liabilities with an initial, individual value of $5,000 or more with a lease term greater than one year in the government-wide and proprietary fund financial statements. Variable payments based on future performance of the lessee or usage of the underlying asset are not included in the measurement of the lease liability. At the commencement of a lease, the City initially measures the lease liability at the present value of payments expected to be made during the lease term. Subsequently, the lease liability is reduced by the principal portion of lease payments made. Key estimates and judgments related to leases include how the City determines (1) the discount rate it uses to discount the expected lease payments to present value, (2) lease term, and (3) lease payments. City of Seal Beach Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2024 54 Note 1 – Summary of Significant Accounting Policies (Continued) Q. Lease Liabilities (Continued)  The City uses incremental borrowing rate provided by the financial institution or the current rate at the time a new lease is executed.  The lease term includes the noncancellable period of the lease. Lease payments included in the measurement of the lease liability are composed of fixed payments and purchase option price that the City is reasonably certain to exercise.  Lease payments included in the measurement of the lease payable is composed of fixed payments to the lessor. The City monitors changes in circumstances that would require a remeasurement of its lease and will remeasure any lease asset and liability if certain changes occur that are expected to significantly affect the amount of the lease liability. R. Subscription Liabilities The City recognizes subscription liabilities with an initial, individual value of $5,000 or more with a subscription term greater than one year in the government-wide and proprietary fund financial statements. Variable payments based on future performance of the City, usage of the underlying IT assets, or number of user seats are not included in the measurement of the subscription liability. At the commencement of a subscription, the City initially measures the subscription liability at the present value of payments expected to be made during the subscription term. Subsequently, the subscription liability is reduced by the principal portion of subscription payments made. Key estimates and judgments related to subscription liabilities include how the City determines (1) the discount rate it uses to discount the expected subscription payments to present value, (2) subscription term, and (3) subscription payments.  The City uses incremental borrowing rate provided by the financial institution at July 1, 2022 for existing subscription or the current rate at the time a new subscription is executed.  The subscription term includes the noncancellable period of the SBITA. Subscription payments included in the measurement of the subscription liability are composed of fixed payments. The City monitors changes in circumstances that would require a remeasurement of its SBITA and will remeasure any subscription asset and liability if certain changes occur that are expected to significantly affect the amount of the subscription liability. S. Net Position In the government-wide financial statements and proprietary fund financial statements, net position is classified as follows: Net Investment in Capital Assets – This component of net position consists of capital assets, net of accumulated depreciation, capital related debt, deferred charges, and retention payable. City of Seal Beach Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2024 55 Note 1 – Summary of Significant Accounting Policies (Continued) S. Net Position (Continued) Restricted – This component of net position consists of restricted assets reduced by liabilities and deferred inflows of resources related to those assets. Unrestricted – This component of net position is the amount of the assets, deferred outflows of resources, liabilities, and deferred inflows of resources that are not included in the determination of net investment in capital assets or the restricted component of net position. When expenses are incurred for purposes for which both restricted and unrestricted components of net position are available, the City’s practice is to apply the restricted component of net position first, then use the unrestricted component of net position as needed. T. Fund Balances In the governmental fund financial statements, fund balances are classified as follows: Nonspendable – Nonspendable fund balances include amounts that cannot be spent because they are not in a spendable form, such as unrestricted loans receivable or prepaid items, or because resources legally or contractually must remain intact. Restricted – Restricted fund balances are the portion of fund balance that have externally enforceable limitations on their usage through legislation or limitations imposed by creditors, grantor, laws and regulations of other governments or enabling legislation. Committed – Committed fund balances are self-imposed limitations by the highest level of decision-making authority, namely the City Council, prior to the end of the reporting period. City Council adoption of a resolution is required to commit resources or to rescind the commitment. Assigned – Assigned fund balances are limitations imposed by management based on the intended use of the funds. Modifications or rescissions of the constraints can be removed by the same type of action that limited the use of the funds. Assignment of resources can be done by the highest level of decision making or by a committee or official designated for that purpose. The City Council has authorized the Finance Director for that purpose. Unassigned – Unassigned fund balances represent the residual net resources in excess of the other classifications. The General Fund is the only fund that reports a positive unassigned fund balance amount. In other governmental funds, it is not appropriate to report a positive unassigned fund balance amount. However, in governmental funds other than General Fund, if expenditures incurred for specific purposes exceed the amounts that are restricted, committed, or assigned to those purposes, it may be necessary to report a negative unassigned fund balance in that fund. When expenditures are incurred for purposes for which both restricted and unrestricted fund balances are available, the City’s practice is to apply restricted fund balances first, then use unrestricted fund balances as needed. When expenditures are incurred for purposes where only unrestricted fund balances are available, the City uses the unrestricted resources in the following order, except for instances wherein an ordinance specifies the fund balance: committed, assigned, then unassigned. City of Seal Beach Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2024 56 Note 1 – Summary of Significant Accounting Policies (Continued) U. Use of Estimates The preparation of the basic financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. V. Tax Abatement Tax abatement is a reduction in tax revenues that results from an agreement between one or more governments and an individual or entity in which (a) one or more governments promise to forgo tax revenues to which they are otherwise entitled and (b) the individual or entity promises to take a specific action after the agreement has been entered into that contributes to economic development or otherwise benefits the governments or the citizens of those governments. City policy has set the threshold for disclosing tax abatement agreements greater than $50,000. W. Implementation of New GASB Pronouncements During fiscal year ended June 30, 2024, the City has implemented the following new GASB Pronouncements: GASB Statement No. 100 – In June 2022, GASB issued Statement No. 100, Accounting Changes and Error Corrections – an Amendment of GASB Statement No. 62. The primary objective of this Statement is to enhance accounting and financial reporting requirements for accounting changes and error corrections to provide more understandable, reliable, relevant, consistent, and comparable information for making decisions or assessing accountability. Note 2 – Cash and Investments The City maintains a cash and investment pool, which includes cash balances and authorized investments of all funds. The City had the following cash and investments at June 30, 2024: Government-Wide Statement of Statement of Fiduciary Net Position Net Position Total Cash and investments 61,867,345$ 646,737$ 62,514,082$ Restricted cash and investment with fiscal agent 36,429 1,026,002 1,062,431 Total cash and investments 61,903,774$ 1,672,739$ 63,576,513$ The City’s cash and investments at June 30, 2024 in more detail: Petty cash 9,000$ Demand deposits 1,707,073 Restricted cash 36,429 Investments 61,824,011 Total cash and investments 63,576,513$ City of Seal Beach Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2024 57 Note 2 – Cash and Investments (Continued) A. Demand Deposits The carrying amounts of the City’s demand deposits were $1,707,073 at June 30, 2024. Bank balances at that date were $2,223,911, the total amount of which was insured or collateralized with accounts held by the pledging financial institutions in the City’s name as discussed below. The California Government Code requires California banks and savings and loan associations to secure the City’s cash deposits by pledging securities as collateral. This Code states that collateral pledged in this manner shall have the effect of perfecting a security interest in such collateral superior to those of a general creditor. Thus, collateral for cash deposits is considered to be held in the City’s name. The fair value of pledged securities must equal at least 110% of the City’s cash deposits. California law also allows institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the City’s total cash deposits. The City may waive collateral requirements for cash deposits, which are fully insured up to $250,000 by the Federal Deposit Insurance Corporation (“FDIC”). The City, however, has not waived the collateralization requirements. B. Investments Authorized by the California Government Code and the City's Investment Policy The table below identifies the investment types that are authorized by the City's investment policy and the California Government Code. The table also identifies certain provisions of the California Government Code (or the City's investment policy, if 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 Authorized Investment Type Maturity Portfolio* One Issuer* U.S. Treasury securities None 100% None U.S. agency and U.S. government sponsored enterprise securities 5 years 20% None Obligation of the State of California or any local agency 5 years 100% None Registered treasury notes or bonds of any of the 49 states in addition to California 5 years 100% None Bankers' acceptance 180 days 40% 5% Commercial paper 270 days 25% 10% Nonnegotiable certificate of deposit 5 years 100% None Negotiable certificate of deposit 5 years 30% None Medium term notes 5 years 30% 5% Asset-Backed Securities 5 years 20% None Supranationals 5 years 30% None Money market mutual funds 5 years 20% 5% Local Agency Investment Fund (LAIF) None 100%50 Million/account *The table is based on state law requirements or investment policy requirements, whichever is more restrictive. City of Seal Beach Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2024 58 Note 2 – Cash and Investments (Continued) C. Investments Authorized by Debt Agreements Investments of debt proceeds held by bond trustee 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 following table 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, and concentration of credit risk. Maximum Maximum Maximum Percentage of Investment in Authorized Investment Type Maturity Portfolio* One Issuer* U.S. Treasury securities None None None U.S. agency and U.S. government sponsored enterprise securities None None None Bankers' acceptance 180 days None 30% Commercial paper 270 days None None Money market mutual funds 5 years None None Investment contracts 30 years None None Local Agency Investment Fund (LAIF) None None None D. Fair Value Measurement At June 30, 2024, investments are reported at fair value. The following table presents the fair value measurement of investments on a recurring basis and the levels within the fair value hierarchy in which the fair value measurements fall at June 30, 2024: Quoted Prices in Active Markets for Significant Other Identical Assets Observable Inputs Investment Type Value (Level 1) (Level 2) Investments: US Treasury bonds/notes 13,898,614$ 13,898,614$ -$ U.S. government sponsored enterprise securities 7,750,014 - 7,750,014 Asset-backed securities 1,412,797 - 1,412,797 Municipal bonds 796,705 - 796,705 Corporate notes 4,457,885 - 4,457,885 Negotiable certificates of deposit 278,960 - 278,960 Bank notes 525,037 - 525,037 Total investments subject to fair value measurement 29,120,012 13,898,614$ 15,221,398$ Investments measured at amortized cost: Local Agency Investment Fund (LAIF) 31,677,998 Investments held with fiscal agents: Money market funds 1,026,001 Total investments 61,824,011$ Fair Value Measurement Investments in municipal bonds/notes, U.S. government sponsored enterprise securities, asset-backed securities and corporate notes are valued based on institutional bond quotes. Investments in negotiable certificates of deposits are valued based on certificate of deposits pricing. City of Seal Beach Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2024 59 Note 2 – Cash and Investments (Continued) E. Risk Disclosures 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 is, 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. The sensitivity of the fair values of the City's investments (including investments held by bond trustees) to market interest rate fluctuations is as follows: Investment Type Amount Less than 1 1 to 2 2 to 3 3 to 4 4 to 5 Investments: US Treasury bonds/notes 13,898,614$ -$ 6,392,834$ 2,607,724$ 4,026,312$ 871,744$ U.S. government sponsored enterprise securities 7,750,014 149,356 2,019,395 892,278 912,123 3,776,862 Asset-backed securities 1,412,797 - 18,572 247,166 235,056 912,003 Municipal bonds 796,705 533,869 262,836 - - - Corporate notes 4,457,885 737,056 652,166 974,536 690,685 1,403,442 Negotiable certificates of deposit 278,960 - - 278,960 - - Bank notes 525,037 - - - 525,037 - LAIF 31,677,998 31,677,998 - - - - Investments with Fiscal Agent: Money market funds 1,026,001 1,026,001 - - - - Total investments 61,824,011$ 34,124,280$ 9,345,803$ 5,000,664$ 6,389,213$ 6,964,051$ Investment Maturities (in Years) City of Seal Beach Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2024 60 Note 2 – Cash and Investments (Continued) E. Risk Disclosures (Continued) 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 or the City's investment policy, or debt agreements, and the actual rating as of fiscal year end for each investment type. Minimum Legal Investment Type Rating Total AAA AA- to AA+ A- to A+ Unrated Investments: US Treasury bonds/notes N/R 13,898,614$ 13,898,614$ -$ -$ -$ U.S. government sponsored enterprise securities A 7,750,014 7,750,014 - - - Asset-backed securities AA 1,412,797 1,412,797 - - - Municipal bonds N/R 796,705 191,348 605,357 - - Corporate notes A 4,457,885 748,133 1,051,786 2,657,966 - Negotiable certificates of deposit N/R 278,960 - 278,960 - - Bank notes N/R 525,037 - 281,977 243,060 - LAIF N/A 31,677,998 - - - 31,677,998 Investments with Fiscal Agent: Money market funds N/R 1,026,001 1,026,001 - - - Total investments 61,824,011$ 25,026,907$ 2,218,080$ 2,901,026$ 31,677,998$ N/R - Not required by the City's investment policy N/A - Not applicable Concentration of Credit Risk The investment policy of the City contains no limitations on the amount that can be invested in any one issuer beyond that stipulated by the California Government Code. 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 government 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. At June 30, 2024, the City deposits (bank balances were insured by the Federal Depository Insurance Corporation up to $250,000 and the remaining balances were collateralized under California law. City of Seal Beach Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2024 61 Note 2 – Cash and Investments (Continued) E. Risk Disclosures (Continued) For investments identified herein as held by bond trustee, the bond trustee selects the investment under the terms of the applicable trust agreement, acquires the investment, and holds the investment on behalf of the reporting government. F. Investment in Local Agency Investment Fund (“LAIF”) The City is a participant in LAIF, which is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. As of June 30, 2024, the City had $31,677,998 invested in LAIF. LAIF is reported at amortized cost, which approximates fair value. Note 3 – Lease Receivable Lease receivables consists of agreements with other for the right–to–use of the underlying assets for land and buildings owned by the City at various locations for cell tower use and business use, respectively. The remaining terms of the business agreements range from 2 to 34 years and the cell towers range from 3 to 24 years. The incremental borrowing rates used was 1.5%. For the year ended June 30, 2024, the City recognized $342,714 in lease revenue and $155,389 in lease interest revenue for General Fund. The outstanding lease receivable is in the amount of $10,112,627 in the General Fund. The future receipts for the lease receivables, including interest, are as follows: Year ending June 30, Principal Interest Total 2025 355,053$ 149,865$ 504,918$ 2026 350,753 144,460 495,213 2027 292,970 139,671 432,641 2028 300,058 135,643 435,701 2029 319,269 130,719 449,988 2030-2034 1,630,227 582,120 2,212,347 2035-2039 2,116,365 442,581 2,558,946 2040-2044 1,692,180 294,602 1,986,782 2045-2049 1,424,852 166,599 1,591,451 2050-2054 947,574 88,824 1,036,398 2055-2058 683,326 16,150 699,476 10,112,627$ 2,291,234$ 12,403,861$ City of Seal Beach Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2024 62 Note 4 – Interfund Transactions A. Due From/To Other Funds At June 30, 2024, the City had the following due from/to other funds: Due To Other Funds Fund Nonmajor Governmental Funds Total 166,556 Due From Other Funds General Fund 1,006,816$ 840,260$ The above amounts resulted from deficits in the pooled cash account. B. Transfers During the year ended June 30, 2024, the City had the following transfers: Capital Projects and Equipment Nonmajor General Capital Projects Governmental Transfers out Fund Fund Funds Total General Fund -$ 3,971,319$ 442,713$ 4,414,032$ Citywide Grants Special Revenue Fund - 98,305 - 98,305 Nonmajor Governmental Funds 109,000 - - 109,000 Total 109,000$ 4,069,624$ 442,713$ 4,621,337$ Transfers in Transfers of $109,000 from Nonmajor Governmental Funds were made to the General Fund for non-capital expenditures. The General Fund and Citywide Grants Special Revenue Fund transferred $3,971,319 and $98,305, respectively, to the Capital Projects and Equipment Capital Projects Fund to pay for capital projects. The General Fund transferred $442,713 to the Nonmajor Governmental for debt service-related and administrative costs. City of Seal Beach Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2024 63 Note 5 – Capital Assets The summary of changes in governmental activities capital assets for the year ended June 30, 2024 is as follows: Balance July 1, 2023 Balance (As Restated) Additions Deletions June 30, 2024 Capital assets not being depreciated: Land 20,319,847$ -$ -$ 20,319,847$ Intangible asset-land easement 900,000 - - 900,000 Construction in progress 3,070,206 5,788,757 - 8,858,963 Total capital assets not being depreciated 24,290,053 5,788,757 - 30,078,810 Capital assets being depreciated: Buildings and improvements 16,712,471 - - 16,712,471 Machinery and equipment 4,463,872 60,893 (145,557) 4,379,208 Vehicles 3,731,925 165,239 (209,204) 3,687,960 Infrastructure 92,853,900 - - 92,853,900 Total capital assets being depreciated 117,762,168 226,132 (354,761) 117,633,539 Less accumulated depreciation for: Buildings and improvements (8,462,899) (408,304) - (8,871,203) Machinery and equipment (2,815,664) (235,791) - (3,051,455) Vehicles (2,354,631) (310,609) 212,046 (2,453,194) Infrastructure (44,102,549) (1,880,523) - (45,983,072) Total accumulated depreciation (57,735,743) (2,835,227) 212,046 (60,358,924) Total capital assets being depreciated, net 60,026,425 (2,609,095) (142,715) 57,274,615 Intangible assets being amortized: Right of use - leased vehicles 363,368 - - 363,368 Right of use - leased equipment 110,331 - - 110,331 Righ tof use - subscription asset 949,058 - - 949,058 Total intangible assets being amortized 1,422,757 - - 1,422,757 Less accumulated amortization for: Right of use - leased vehicles (81,392) (81,586) - (162,978) Right of use - leased equipment (71,566) (35,783) - (107,349) Righ tof use - subscription asset (242,963) (256,302) - (499,265) Total accumulated amortization (395,921) (373,671) - (769,592) Total intangible assets being amortized, net 1,026,836 (373,671) - 653,165 Total governmental activities 85,343,314$ 2,805,991$ (142,715)$ 88,006,590$ Depreciation and amortization expense was charged to functions/programs of governmental activities for the year ended June 30, 2024 as follows: General government 353,822$ Public safety 446,305 Community development 135,805 Public works 2,006,602 Internal service funds 266,364 Total 3,208,898$ City of Seal Beach Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2024 64 Note 5 – Capital Assets (Continued) The summary of changes in business-type activities capital assets for the year ended June 30, 2024 is as follows: Balance July 1, 2023 Balance (As Restated) Additions Deletions June 30, 2024 Capital assets not being depreciated: Construction in progress-water 2,258,277$ 408,760$ (6,334)$ 2,660,703$ Construction in progress-sewer 533,989 83,099 - 617,088 Total capital assets not being depreciated 2,792,266 491,859 (6,334) 3,277,791 Capital assets being depreciated: Buildings and improvements - water 73,284 - - 73,284 Machinery and equipment - water 644,596 - - 644,596 Machinery and equipment - sewer 829,189 - - 829,189 Vehicles - water 297,295 205,732 - 503,027 Vehicles - sewer 382,670 - - 382,670 Infrastructure - water 34,337,305 44,746 - 34,382,051 Infrastructure - sewer 38,622,844 - - 38,622,844 Total capital assets being depreciated 75,187,183 250,478 - 75,437,661 Less accumulated depreciation for: Buildings and improvements - water (73,284) - - (73,284) Machinery and equipment - water (526,140) (12,793) - (538,933) Machinery and equipment - sewer (330,432) (19,306) - (349,738) Vehicles - water (223,735) (32,783) - (256,518) Vehicles - sewer (382,670) - - (382,670) Infrastructure - water (20,043,289) (435,419) - (20,478,708) Infrastructure - sewer (22,149,864) (942,318) - (23,092,182) Total accumulated depreciation (43,729,414) (1,442,619) - (45,172,033) Total capital assets being depreciated, net 31,457,769 (1,192,141) - 30,265,628 Intangible assets being amortized: Right of use - subscription asset - water 197,421 - - 197,421 Right of use - subscription asset - sewer 159,816 - - 159,816 Total intangible assets being amortized 357,237 - - 357,237 Less accumulated amortization for: Right of use - subscription asset - water (38,899) (47,404) - (86,303) Right of use - subscription asset - sewer (34,094) (34,869) - (68,963) Total accumulated amortization (72,993) (82,273) - (155,266) Total intangible assets being amortized, net 284,244 (82,273) - 201,971 Total business-type activities 34,534,279$ (782,555)$ (6,334)$ 33,745,390$ Depreciation expense was charged to functions/programs of business-type activities for the year ended June 30, 2024 as follows: Water Utility 528,399$ Sewer Utility 996,493 Total 1,524,892$ City of Seal Beach Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2024 65 Note 6 – Long-Term Liabilities A. Governmental Activities Summary of changes in long-term liabilities for governmental activities for the year ended June 30, 2024 is as follows: Balance July 1, 2023 Balance Due within Due in more (As Restated) Additions Deletions June 30, 2024 One Year than One Year Private Placement 2009 Lease Revenue Bonds 315,000$ -$ (315,000)$ -$ -$ -$ Direct Borrowing Municipal Finance Corporation 218,963 - (218,963) - - - Lease Liabilities De Lage Landen 39,298 - (36,252) 3,046 3,046 - Enterprise Fleet 287,813 - (80,587) 207,226 81,803 125,423 Subscriptions Subscription liabilities 694,445 - (238,590) 455,855 244,413 211,442 Claims payable 175,046 - (3,843) 171,203 34,241 136,962 Compensated absences 1,395,423 718,642 (659,355) 1,454,710 325,249 1,129,461 Total 3,125,988$ 718,642$ (1,552,590)$ 2,292,040$ 688,752$ 1,603,288$ Classification The General Fund has been used to liquidate the majority of the liability for compensated absences. 2009 Series Lease Revenue Bonds On January 14, 2009, the City issued 2009 Series Lease Revenue Bonds for the purpose of financing the construction of a new fire station in the City in the amount of $6,300,000. Interest rate on the bonds is 3.71%. Annual installments are due April 15, 2009 through January 15, 2024. During the year ended June 30, 2024, the bonds were fully paid off. Municipal Finance Corporation Loan On May 8, 2014, the City entered into a Lease with Option to Purchase agreement with Municipal Finance Corporation relating to a capital project to be performed by Climatec LLC in the amount of $1,546,931. Interest rate on the loan is 3.40%. During the year ended June 30, 2024, the loan was fully paid off. De Lage Landen Lease Payable On August 27, 2019, the City entered into a 60-month lease agreement with De Lage Landen Public Finance LLC for 22 copy machines for a monthly lease payment in the amount of $4,612. Lease payments are due on the 1st of each month. Interest on the copy machines accrues at 1.5% annum. In the event of default, the lease shall be deemed terminated. Outstanding lease liabilities at June 30, 2024 was in the amount of $3,046. Future lease payments under the lease payable are as follows: Year Ending June 30, Principal Interest Total 2025 3,046$ 4$ 3,050$ City of Seal Beach Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2024 66 Note 6 – Long-Term Liabilities (Continued) A. Governmental Activities (Continued) Enterprise Fleet On October 25, 2021, the City entered into a 60-month lease agreement with Enterprise Fleet Management for 3 vehicles for a total monthly lease payment in the amount of $3,202. As of June 30, 2023 the City leased a total of 6 vehicles with terms of 48-month for a total monthly lease payment in the amount of $7,030. Lease payments are due on the 1st of each month. Interest accrues at 1.5% annum. In the event of default, the lease shall be deemed terminated. Outstanding lease liabilities at June 30, 2024 was in the amount of $207,226. Future lease payments under the lease payable are as follows: Year Ending June 30, Principal Interest Total 2025 81,803$ 2,548$ 84,351$ 2026 83,038 1,312 84,350 2027 42,385 190 42,575 Total 207,226$ 4,050$ 211,276$ Subscription Liabilities The City entered into subscription agreements with various vendors for software. The agreements expire from July 19, 2025 to February 8, 2027 with interest rates ranging 2.35 percent to 2.80 percent. Outstanding subscription liabilities at June 30, 2024 was in the amount of $455,855. The future subscription payments are as follows: Year Ending June 30, Principal Interest Total 2025 244,413$ 11,326$ 255,739$ 2026 104,397 5,362 109,759 2027 107,045 2,714 109,759 Total 455,855$ 19,402$ 475,257$ City of Seal Beach Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2024 67 Note 6 – Long-Term Liabilities (Continued) B. Business-Type Activities Summary of changes in long-term liabilities for business-type activities for the year ended June 30, 2024 is as follows: Balance Balance Due within Due in more July 1, 2023 Additions Deletions June 30, 2024 One Year than One Year Private Placement 2011 Sewer Revenue Refunding Bonds 1,385,000$ -$ (205,000)$ 1,180,000$ 215,000$ 965,000$ Direct Borrowing Sewer Capital Improvement Project #1 1,346,932 - (134,760) 1,212,172 138,264 1,073,908 Sewer Capital Improvement Project #2 1,009,707 - (80,470) 929,237 82,563 846,674 West Orange County Water Board Loan 401,073 - (42,218) 358,855 126,654 232,201 Subscriptions Subscription liabilities - water 151,186 - (42,639) 108,547 43,751 64,796 Subscription liabilities - sewer 126,428 - (30,430) 95,998 31,201 64,797 Compensated absences 113,874 149,667 (136,392) 127,149 28,963 98,186 Total 4,534,200$ 149,667$ (671,909)$ 4,011,958$ 666,396$ 3,345,562$ Classification 2011 Sewer System Revenue Refunding Bonds On March 2, 2011, the City issued 2011 Sewer System Revenue Refunding Bonds in the amount of $3,310,000 to pay off the 2000 Sewer System Certificates of Participation. The 2000 Sewer System Certificates of Participation were issued to provide for improvements to the City’s sewer system. Interest rate on the 2011 Sewer System Revenue Refunding Bonds is 4.8%, and the outstanding balance of the 2011 Sewer System Revenue Refunding Bonds at June 30, 2024 was $1,180,000. In the event of a default the City may be required to pay all principal components of the unpaid installment payments, together with accrued interest at the overdue rate from the preceding interest payment date which will become immediately due and payable. The annual debt service requirements are as follows: Year ending June 30, Principal Interest Total 2025 215,000$ 54,120$ 269,120$ 2026 225,000 43,680 268,680 2027 235,000 32,760 267,760 2028 245,000 21,360 266,360 2029 260,000 9,360 269,360 Total 1,180,000$ 161,280$ 1,341,280$ City of Seal Beach Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2024 68 Note 6 – Long-Term Liabilities (Continued) B. Business-Type Activities (Continued) Sewer Capital Improvement Project Loan #1 On April 6, 2011, the City entered into an agreement with the Clean Water State Revolving Fund Control Board for construction of the Sewer Capital Improvement project. The City may borrow up to $2,644,356 or the eligible costs of the project, whichever is less. As of June 30, 2024, the City had drawn down the entire loan fund. The loan has an interest rate of 2.6% with maturities through 2031. The outstanding balance at June 30, 2024 was $1,212,172. In the event of default, the Clean Water State Revolving Fund Control Board may sue the City as it deems necessary to compel the payment of the loan. The annual debt service requirements are as follows: Year ending June 30, Principal Interest Total 2025 138,264$ 31,516$ 169,780$ 2026 141,859 27,922 169,781 2027 145,547 24,233 169,780 2028 149,331 20,449 169,780 2029 153,214 16,566 169,780 2031-2032 483,957 25,381 509,338 Total 1,212,172$ 146,067$ 1,358,239$ Sewer Capital Improvement Project Loan #2 On April 6, 2011, the City entered into an agreement with the Clean Water State Revolving Fund Control Board for construction of the Sewer Capital Improvement project. The City may borrow up to $2,125,112 or the eligible costs of the project, whichever is less. At June 30, 2024, the State Water Resources Control Board had disbursed $1,652,742. The loan has an interest rate of 2.6% with maturities through 2031. The outstanding balance at June 30, 2024 was $929,237. In the event of default, the Clean Water State Revolving Fund Control Board may sue the City as it deems necessary to compel the payment of the loan. The annual debt service requirements are as follows: Year ending June 30, Principal Interest Total 2025 82,563$ 24,160$ 106,723$ 2026 84,709 22,014 106,723 2027 86,912 19,811 106,723 2028 89,171 17,551 106,722 2029 91,490 15,233 106,723 2031-2034 494,392 39,222 533,614 Total 929,237$ 137,991$ 1,067,228$ City of Seal Beach Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2024 69 Note 6 – Long-Term Liabilities (Continued) B. Business-Type Activities (Continued) West Orange County Water Board Loan On December 11, 2017, the City entered into financial participation agreement with the West Orange County Water Board (the “WOCWB”) for relocation of the City’s allocated 14.3% ownership in the waterline. The City’s portion of project costs was in the amount of $894,928. The repayments are due quarterly on the first of the month commencing June 1, 2018. The interest rate ranges from 1.414% to 5.314% with maturity date on March 1, 2028. The outstanding balance at June 30, 2024 was $358,855. The annual debt service requirements are as follows: Year ending June 30, Principal Interest Total 2025 126,654$ 15,222$ 141,876$ 2026 84,436 6,764 91,200 2027 84,436 4,370 88,806 2028 63,329 1,302 64,631 Total 358,855$ 27,658$ 386,513$ Subscription Liabilities The City entered into subscription agreements with various vendors for software. The agreements expire from July 19, 2025 to February 8, 2027 with interest rates ranging 2.35 percent to 2.80 percent. Outstanding subscription liabilities at June 30, 2024 was in the amount of $204,545. The future subscription payments are as follows: Year Ending June 30, Principal Interest Total 2025 74,952$ 5,220$ 80,172$ 2026 63,985 3,287 67,272 2027 65,608 1,664 67,272 Total 204,545$ 10,171$ 214,716$ City of Seal Beach Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2024 70 Note 7 – Non-City Obligations A. Heron Pointe Community Facilities District No. 2002-01 The Heron Pointe Community Facilities District No. 2002-01 was formed to finance public facilities improvements within Heron Pointe. The debt service payments on the bonds will be included on property tax bills within community facilities district and will be collected by the City and then forwarded to the paying agent. A reserve fund was established in which the City may make withdrawals enough to cover any delinquent payments on the reassessments. The City has no liability for the bonds beyond the amount held in the reserve fund. The bonds are not secured by the general taxing power of the City, county, state, or any political subdivision of the state nor have the City, county, state, or any political subdivision thereof pledged its full faith and credit for the repayment thereof. Since the City has no liability for these bonds, the reserve fund and debt service monies are stored in the Agency Fund and the debt is not included in the financial statements. The outstanding balance at June 30, 2024, was $2,360,000. B. Pacific Gateway Business Center Community Facilities District No. 2005-01 The Pacific Gateway Business Center Community Facilities District No. 2005-01 was formed to finance public facilities within the Pacific Gateway. The debt service payments on the bonds will be included on property tax bills within the community facilities district and will be collected by the City and then forwarded to the paying agent. A reserve fund was established in which the City may make withdrawals enough to cover any delinquent payments on the reassessments. The City has no liability for the bonds beyond the amount held in the Reserve Fund. The bonds are not secured by the general taxing power of the City, county, state, or any political subdivision of the state nor have the City, county, state, or any political subdivision thereof pledged its full faith and credit for the repayment thereof. Since the City has no liability for these bonds, the reserve fund and debt service monies are stored in the Agency Fund and the debt is not included in the financial statements. The outstanding balance at June 30, 2024, was $6,410,000. Note 8 – Risk Management and Self Insurance Program A. Description of Self-Insurance Pool Pursuant to Joint Powers Agreement The City of Seal Beach (the “City”) is a member of the California Joint Powers Insurance Authority (the “Authority”). The Authority is composed of 126 California public entities and is organized under a joint powers agreement pursuant to California Government Code §6500 et seq. The purpose of the Authority is to arrange and administer programs for the pooling of self-insured losses, to purchase excess insurance or reinsurance, and to arrange for group purchased insurance for property and other lines of coverage. The California JPIA began covering claims of its members in 1978. Each member government has an elected official as its representative on the Board of Directors. The Board operates through a nine-member Executive Committee. B. Primary Self-Insurance Programs of the Authority Each member pays an annual contribution at the beginning of the coverage period. The total funding requirement for primary self-insurance programs is based on an actuarial analysis. Costs are allocated to individual agencies based on payroll and claims history, relative to other members of the risk-sharing pool. City of Seal Beach Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2024 71 Note 8 – Risk Management and Self Insurance Program (Continued) B. Primary Self-Insurance Programs of the Authority (Continued) Primary Liability Program Claims are pooled separately between police and general government exposures. (1) The payroll of each member is evaluated relative to the payroll of other members. A variable credibility factor is determined for each member, which establishes the weight applied to payroll and the weight applied to losses within the formula. (2) The first layer of losses includes incurred costs up to $100,000 for each occurrence and is evaluated as a percentage of the pool’s total incurred costs within the first layer. (3) The second layer of losses includes incurred costs from $100,000 to $500,000 for each occurrence and is evaluated as a percentage of the pool’s total incurred costs within the second layer. (4) Incurred costs from $500,000 to $50 million, are distributed based on the outcome of cost allocation within the first and second loss layers. The overall coverage limit for each member, including all layers of coverage, is $50 million per occurrence. Subsidence losses also have a $50 million per occurrence limit. The coverage structure is composed of a combination of pooled self-insurance, reinsurance, and excess insurance. Additional information concerning the coverage structure is available on the Authority’s website: https://cjpia.org/coverage/risk-sharing-pools/. Primary Workers' Compensation Program Claims are pooled separately between public safety (police and fire) and general government exposures. (1) The payroll of each member is evaluated relative to the payroll of other members. A variable credibility factor is determined for each member, which establishes the weight applied to payroll and the weight applied to losses within the formula. (2) The first layer of losses includes incurred costs up to $75,000 for each occurrence and is evaluated as a percentage of the pool’s total incurred costs within the first layer. (3) The second layer of losses includes incurred costs from $75,000 to $200,000 for each occurrence and is evaluated as a percentage of the pool’s total incurred costs within the second layer. (4) Incurred costs from $200,000 to statutory limits are distributed based on the outcome of cost allocation within the first and second loss layers. For 2023-24 the Authority’s pooled retention is $1 million per occurrence, with reinsurance to statutory limits under California Workers’ Compensation Law. Employer’s Liability losses are pooled among members to $1 million. Coverage from $1 million to $5 million is purchased through reinsurance policies, and Employer’s Liability losses from $5 million to $10 million are pooled among members. C. Purchased Insurance Pollution Legal Liability Insurance The City participates in the pollution legal liability insurance program which is available through the Authority. The policy covers sudden and gradual pollution of scheduled property, streets, and storm drains owned by the City. Coverage is on a claims-made basis. There is a $250,000 deductible. The Authority has an aggregate limit of $20 million. Property Insurance The City participates in the all-risk property protection program of the Authority. This insurance protection is underwritten by several insurance companies. City property is currently insured according to a schedule of covered property submitted by the City to the Authority. City property currently has all-risk property insurance protection in the amount of $65,774,028. There is a $10,000 deductible per occurrence except for non-emergency vehicle insurance which has a $2,500 deductible. City of Seal Beach Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2024 72 Note 8 – Risk Management and Self Insurance Program (Continued) C. Purchased Insurance (Continued) Crime Insurance The City purchases crime insurance coverage in the amount of $3,000,000 with a $2,500 deductible. The fidelity coverage is provided through the Authority. D. Adequacy of Protection During the past three fiscal years, none of the above programs of protection experienced settlements or judgments that exceeded pooled or insured coverage. There were also no significant reductions in pooled or insured liability coverage in 2023-24. E. Claims Activity Claims expenses and liabilities are reported when it is probable that a loss has occurred and the amount of that loss can be reasonably estimated. There were workers’ compensation claims that remained outstanding for claims occurred prior to joining the Authority. At June 30, 2024, the amount of these liabilities was $171,203. A summary of the changes in claims liabilities for the past three fiscal years is as follows: Current Year Claims and Balance Changes in Claim Balance Workers' Compensation Beginning of Year Estimates Payments End of Year 2021-2022 297,295$ -$ (34,126)$ 263,169$ 2022-2023 263,169 - (88,123) 175,046 2023-2024 175,046 - (3,843) 171,203 Note 9 – Defined Benefit Pension Plans A. General Information about the Pension Plan Plan Description The City contributes to the California Public Employees’ Retirement System (“CalPERS”), a cost-sharing multiple-employer defined benefit pension plan. CalPERS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. CalPERS acts as a common investment and administrative agent for participating public entities within the State of California. Benefit provisions and all other requirements are established by State statute and City ordinance. Copies of the CalPERS annual financial report may be obtained from https://www.calpers.ca.gov/page/forms-publications. City of Seal Beach Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2024 73 Note 9 – Defined Benefit Pension Plans (Continued) A. General Information about the Pension Plan (Continued) Employees Covered by Benefit Terms At June 30, 2022, the following employees were covered by the benefit terms: Misc Misc PEPRA Safety Safety Fire Safety Police PEPRA Other Safety PEPRA Active employees 28 29 32 - 11 1 Transferred and terminated employees 35 9 4 - - - Separated 29 4 5 - 2 - Retired Employees and Beneficiaries 150 1 96 37 - - Total 242 43 137 37 13 1 Benefit Provided CalPERS provide retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. Classic miscellaneous members become eligible for service retirement upon attainment of age 55 with at least 5 years of credited service. PEPRA miscellaneous members become eligible for service retirement upon attainment of age 62 with at least 5 years of service. Classic safety members become eligible for service retirement upon attainment of age 50 with at least five years of service. PEPRA safety members become eligible for service retirement upon attainment of age 57 with at least five years of service. The service retirement benefit is a monthly allowance equal to the product of the benefit factor, years of service, and final compensation. The final compensation is the monthly average of the member's highest 36 full-time equivalent monthly pay. Following are the benefit provisions for each plan: Miscellaneous Rate PEPRA Miscellaneous Safety Rate PEPRA Safety Plan* Rate Plan Plan* Rate Plan Hire date Prior to January 1, 2013 Prior to January 1, 2013 Benefit formula 2% @ 55 2% @ 62 3% @ 50 2.7% @ 57 Benefit vesting schedule 5 years service 5 years service 5 years service 5 years service Benefit payments monthly for life monthly for life monthly for life monthly for life Retirement age minimum 50 yrs minimum 52 yrs minimum 50 yrs minimum 50 yrs Monthly benefits, as a % of eligible compensation 1.426% - 2.418%, 50 yrs - 63+ yrs, respectively 1.000% - 2.500%, 52 yrs - 67+ yrs, respectively 3.000%, 50+ yrs 2.000%-2.7000%, 52 yrs - 57+ yrs, respectively * Closed to new entrants Cost-sharing Rate Plans Participants are eligible for non-industrial disability retirement if they become disabled and have at least 5 years of credited service. There is no special age requirement. The standard non-industrial disability retirement benefit is a monthly allowance equal to 1.8 percent of final compensation, multiplied by service. Industrial disability benefits are not offered to miscellaneous employees. City of Seal Beach Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2024 74 Note 9 – Defined Benefit Pension Plans (Continued) A. General Information about the Pension Plan (Continued) Benefit Provided (Continued) An employee's beneficiary may receive the basic death benefit if the employee dies while actively employed. The employee must be actively employed with the City to be eligible for this benefit. An employee's survivor who is eligible for any other pre-retirement death benefit may choose to receive that death benefit instead of this basic death benefit. The basic death benefit is a lump sum in the amount of the employee's accumulated contributions, where interest is currently credited at 6 percent per year, plus a lump sum in the amount of one month's salary for each completed year of current service, up to a maximum of six months' salary. For purposes of this benefit, one month's salary is defined as the member's average monthly full-time rate of compensation during the 12 months preceding death. Upon the death of a retiree, a one-time lump sum payment of $500 will be made to the retiree's designated survivor(s), or to the retiree's estate. Benefit terms provide for annual cost-of-living adjustments to each employee’s retirement allowance. Beginning the second calendar year after the year of retirement, retirement and survivor allowances will be annually adjusted on a compound basis by 2 percent. Contributions Section 20814(c) of the California Public Employees’ Retirement Law (“PERL”) requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through CalPERS’ annual actuarial valuation process. The actuarially determined rate is based on the estimated amount necessary to pay the Plan's allocated share of the risk pool's costs of benefits earned by employees during the year, and any unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. For the measurement period ended June 30, 2023 (the measurement date), the contribution rates were as follows: Miscellaneous Rate PEPRA Miscellaneous Safety Rate PEPRA Safety Plan* Rate Plan Plan* Rate Plan Required employee contribution rates 7.00% 7.25% 9.00% 13.75% Required employer contribution rates 11.61% 7.76% 25.64% 13.66% * Closed to new entrants Cost-sharing Rate Plans City of Seal Beach Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2024 75 Note 9 – Defined Benefit Pension Plans (Continued) B. Pension Liabilities, Pension Expenses, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pension Actuarial Methods and Assumptions Used to Determine Total Pension Liability The June 30, 2022 valuation was rolled forward to determine June 30, 2023 total pension liability based on the following actuarial methods and assumptions: Actuarial Cost Method Actuarial Assumptions: Discount Rate 6.90% Inflation 2.30% Salary Increases Mortality Rate Table1 Post Retirement Benefit Increase Contract COLA up to 2.3% until Purchasing Power Protection Allowance Floor on Purchasing Power applies, 2.3% thereafter Derived using CalPERS’ Membership Data for all Funds Entry age normal in accordance with requirements of GASB 68 Varies by Entry Age and Service 1The mortality table used was developed based on CalPERS-specific data. The probabilities of mortality are based on the 2021 CalPERS Experience Study and Review of Actuarial Assumptions. Mortality rates incorporate full generational mortality improvement using 80% of Scale MP-2020 published by the Society of Actuaries. For more details on this table, please refer to the 2021 experience study report from November 2021 that can be found on the CalPERS website. Change of Assumption In 2023, there were no changes in assumptions. Long-term Expected Rate of Return The long-term expected rate of return on pension plan investments was determined using a building-block method in which expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations. Using historical returns of all of the funds’ asset classes, expected compound (geometric) returns were calculated over the next 20 years using a building-block approach. The expected rate of return was then adjusted to account for assumed administrative expenses of 10 basis points. City of Seal Beach Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2024 76 Note 9 – Defined Benefit Pension Plans (Continued) B. Pension Liabilities, Pension Expenses, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pension (Continued) Long-term Expected Rate of Return (Continued) The expected real rates of return by asset class are as follows: Assumed Asset Asset Class1 Allocation Real Return1,2 Global Equity - Cap-weighted 30.00% 4.54% Global Equity - Non-Cap-weighted 12.00% 3.80% Private Equity 13.00% 7.28% Treasury 5.00% 0.27% Mortgage-backed Securities 5.00% 0.50% Investment Grade Corporates 10.00% 1.56% High Yield 5.00% 2.27% Emerging Market Debt 5.00% 2.48% Private Debt 5.00% 3.57% Real Assets 15.00% 3.21% Leverage -5.00% -0.59% 100.00% 1 An expected inflation of 2.30% used for this period. 2 Figures are based on the 2021 Asset Liability Management study. Discount Rate The discount rate used to measure the total pension liability was 6.90%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of the City’s Proportionate Share of the Net Pension Liability to Changes in the Discount Rate The following presents the City’s proportionate share of the net pension liability of the Plan as of the measurement date, calculated using the discount rate of 6.90%, as well as what the City’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1 percentage-point lower (5.90%) or 1 percentage-point higher (7.90%) than the current rate: Discount Rate Current Discount Discount Rate - 1% (5.90%) Rate (6.90%) + 1% (7.90%) Miscellaneous 25,575,504$ 17,825,226$ 11,446,082$ Safety 49,553,147$ 34,643,664$ 22,454,100$ Plan's Net Pension Liability/(Asset) City of Seal Beach Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2024 77 Note 9 – Defined Benefit Pension Plans (Continued) B. Pension Liabilities, Pension Expenses, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pension (Continued) Pension Plan Fiduciary Net Position Detail information about the plan’s fiduciary net position is available in the separately issued CalPERS financial report and can be obtained from CalPERS’ website under Forms and Publications. Proportionate Share of Net Pension Liability and Pension Expense The following table shows the plan’s proportionate share of the risk pool collective net pension liability over the measurement period: Plan Total Plan Fiduciary Net Pension Pension Liability Net Position Liability/(Asset) Miscellaneous Balance at: 6/30/22 (Valuation date) 55,349,318$ 38,532,294$ 16,817,024$ Balance at: 6/30/23 (Measurement date) 57,305,152 39,479,926 17,825,226 Net Changes during 2022-2023 1,955,834 947,632 1,008,202 Safety Balance at: 6/30/22 (Valuation date) 104,384,046$ 71,895,974$ 32,488,072$ Balance at: 6/30/23 (Measurement date) 108,683,799 74,040,135 34,643,664 Net Changes during 2022-2023 4,299,753 2,144,161 2,155,592 Increase (Decrease) The following is the approach established by the plan actuary to allocate the net pension liability and pension expense to the individual employers within the risk pool. (1) In determining a cost-sharing plan’s proportionate share, total amounts of liabilities and assets are first calculated for the risk pool as a whole on the valuation date (June 30, 2022). The risk pool’s fiduciary net position (“FNP”) subtracted from its total pension liability (“TPL”) determines the net pension liability (“NPL”) at the valuation date. (2) Using standard actuarial roll forward methods, the risk pool TPL is then computed at the measurement date (June 30, 2023). Risk pool FNP at the measurement date is then subtracted from this number to compute the NPL for the risk pool at the measurement date. For purposes of FNP in this step and any later reference thereto, the risk pool’s FNP at the measurement date denotes the aggregate risk pool’s FNP at June 30, 2023 less the sum of all additional side fund (or unfunded liability) contributions made by all employers during the measurement period (2022-2023). (3) The individual plan’s TPL, FNP and NPL are also calculated at the valuation date. TPL is allocated based on the rate plan’s share of the actuarial accrued liability. FNP is allocated based on the rate plan’s share of the fair value assets. (4) Two ratios are created by dividing the plan’s individual TPL and FNP as of the valuation date from (3) by the amounts in step (1), the risk pool’s total TPL and FNP, respectively. City of Seal Beach Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2024 78 Note 9 – Defined Benefit Pension Plans (Continued) B. Pension Liabilities, Pension Expenses, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pension (Continued) Proportionate Share of Net Pension Liability and Pension Expense (Continued) (5) The plan’s TPL as of the Measurement Date is equal to the risk pool TPL generated in (2) multiplied by the TPL ratio generated in (4). The plan’s FNP as of the Measurement Date is equal to the FNP generated in (2) multiplied by the FNP ratio generated in (4) plus any additional side fund (or unfunded liability) contributions made by the employer on behalf of the plan during the measurement period. (6) The plan’s NPL at the Measurement Date is the difference between the TPL and FNP calculated in (5). Deferred outflows of resources, deferred inflows of resources, and pension expense is allocate based on the City’s share of contributions during measurement period. The City’s proportionate share of the net pension liability was as follows: Miscellaneous Safety June 30, 2022 0.14559% 0.28126% June 30, 2023 0.14288% 0.27770% Change - Increase (Decrease) -0.00271% -0.00356% The amortization period differs depending on the source of the gain or loss. The difference between projected and actual earnings is amortized over 5-years straight line. All other amounts are amortized straight-line over the average expected remaining service lives of all members that are provided with benefits (active, inactive and retired) as of the beginning of the measurement period. The expected average remaining service lifetime (“EARSL”) is calculated by dividing the total future service years by the total number of plan participants (active, inactive, and retired) in the risk pool. The EARSL for risk pool for the 2022-2023 measurement period is 3.8 years, which was obtained by dividing the total service years of 600,538 (the sum of remaining service lifetimes of the active employees) by 160,073 (the total number of participants: active, inactive, and retired). City of Seal Beach Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2024 79 Note 9 – Defined Benefit Pension Plans (Continued) B. Pension Liabilities, Pension Expenses, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pension (Continued) Proportionate Share of Net Pension Liability and Pension Expense (Continued) For the year ended June 30, 2024, the City recognized pension expense for the miscellaneous and safety plans in the amounts of $2,319,975 and $ $13,423,015, respectively. At June 30, 2024, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred outflows Deferred inflows Deferred outflows Deferred inflows of Resources of Resources of Resources of Resources Contribution after measurement date 1,781,962$ -$ 4,296,096$ -$ Changes of assumptions 1,076,190 - 2,021,853 - Difference between expected and actual experience 910,610 (141,257) 2,543,486 (217,749) Difference between projected and actual earning on pension plan investments 2,886,066 - 4,740,983 - Differences in proportions - (646,150) 94,671 (187,311) Difference between City contributions and proportionate share of contributions 65,768 (242,951) - (31,032) Total 6,720,596$ (1,030,358)$ 13,697,089$ (436,092)$ Miscellaneous Safety Deferred outflows of resources related to pensions resulting from the City’s contributions made subsequent to the measurement date in the amount of $1,781,962 and $4,296,096 for the miscellaneous and safety plans, respectively, will be recognized as a reduction of the collective net pension liability in the year ending June 30, 2025. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Measurement Period Ended June 30, Miscellaneous Safety 2024 952,864$ 2,805,066$ 2025 683,488 2,070,718 2026 2,189,110 3,956,789 2027 82,814 132,328 2028 - - Thereafter - - 3,908,276$ 8,964,901$ Deferred Outflows/ (Inflows) of Resources Note 10 – Other Postemployment Benefits (“OPEB”) Plan A. General Information about the OPEB Plan Plan Description The City provides postretirement medical benefits to employees who retire directly from the City under CalPERS under a single-employer defined benefit post-employment benefits plan. Eligible retirees can continue participation in the City medical plans (“PEMHCA”). For miscellaneous retirees, the City contributes up to a capped dollar amount which varies by bargaining unit, medical coverage, and years of service. For police safety retirees, the City contribution rate varies by date of hire and date of retirement. City of Seal Beach Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2024 80 Note 10 – Other Postemployment Benefits (“OPEB”) Plan A. General Information about the OPEB Plan (Continued) Benefits Provided Future Retirees are eligible for PEMCHA minimum medical benefits ($151 per month in 2024) if they retire at Age 50 and above. For legacy hires, reimbursements are generally subject to a maximum, which varies by bargaining group and service years. Dependents are eligible to enroll subject to service year requirements. Employees Covered by Benefit Term Active employees 107 Active employees waiving coverage - Inactive employees, spouses, or beneficiaries currently receiving benefit payments 76 Total 183 Contributions The City makes contributions based on an actuarially determined rate. B. Net OPEB Liability The City's net OPEB liability is based on a roll-forward of the June 30, 2023 valuation with liabilities and assets measured as of June 30, 2023. Actuarial Assumptions The total OPEB liability in the June 30, 2023 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified: Actuarial Cost Method Actuarial Assumptions: Inflation 2.30% Salary increases Investment rate of return 5.10% Healthcare cost trend rates 7.4% (non-Medicare) / 4.2% (Medicare) in 2023, decreasing gradually to an ultimate rate of 4.14% by 2075. Mortality rate Entry age normal level percentage of salary Base salary increases in year one: 2.80% Base salary increases in subsequent years: 2.80% Additional merit-based increases based on CalPERS. Derived using CalPERS’ Membership Data for all Funds. City of Seal Beach Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2024 81 Note 10 – Other Postemployment Benefits (“OPEB”) Plan (Continued) B. Net OPEB Liability (Continued) Discount Rate The discount rate used to measure the total OPEB liability was 6.00%. The projection of cash flows used to determine the discount rate assumed that the City contribution will be made at rates equal to the actuarially determined contribution rates. Based on those assumptions, the OPEB plan's fiduciary net position was projected to cover all future OPEB payments. Therefore, the discount rate was set equal to the long-term expected rate of return. Expected Long-Term Rates of Return Target Allocation CERBT - Projected Real Asset Class Strategy 1 Rates of Return 1 Global Equity 49.0% 4.56% Global Fixed Income 23.0% 1.56% REITs 20.0% 4.06% TIPS 5.0% -0.08% Commodities 3.0% 1.22% 100.0% 1An expected inflation of 2.3% used for this period C. Changes in the Net OPEB Liability Total OPEB Fiduciary Net Net OPEB Liability Position Liability Balances as of June 30, 2021 13,421,076$ 7,129,788$ 6,291,288$ Changes during the measurement period: Service cost 285,492 - 285,492 Interest 800,414 - 800,414 Differences between expected and actual experience (1,305,093) - (1,305,093) Change of assumptions (915,746) - (915,746) Contributions: Employer - 981,209 (981,209) Employee - - - Net investment income - 460,154 (460,154) Benefit payments, including refunds of employee Contributions (732,718) (732,718) - Administrative expenses - (3,561) 3,561 Other Additions/Deductions - (1,204) 1,204 Net changes during measurement period 2021-2022 (1,867,651) 703,880 (2,571,531) Balances as of June 30, 2022 (Measurement Date) 11,553,425$ 7,833,668$ 3,719,757$ Increase (Decrease) City of Seal Beach Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2024 82 Note 10 – Other Postemployment Benefits (“OPEB”) Plan (Continued) C. Changes in the Net OPEB Liability (Continued) Sensitivity of the Net OPEB Liability to Changes in the Discount Rate The net OPEB liability of the City, as well as what the City's net OPEB liability would be if it were calculated using a discount rate that is one percentage point lower (5.00%) or one percentage point higher (7.00%) follows: Discount Rate Current Discount Discount Rate - 1% (5.00%) Rate (6.00%) + 1% (7.00%) 4,997,881$ 3,719,757$ 2,635,487$ Net OPEB Liability/(Asset) Sensitivity of the Net OPEB Liability to Changes in the Healthcare Cost Trend Rates The net OPEB liability of the City, as well as what the City's net OPEB liability would be if it were calculated using healthcare cost trend rates that are one percentage point lower or one percentage point higher than current healthcare cost trend rates follows: Healthcare 1% Decrease Cost Trend Rate 1% Increase 2,737,012$ 3,719,757$ 4,853,593$ Net OPEB Liability/(Asset) D. OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB For the year ended June 30, 2024, the City recognized an OPEB expense of $470,727. At June 30, 2024, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Deferred outflows Deferred inflows of Resources of Resources OPEB contribution after measurement date 965,337$ -$ Changes of assumptions 592,403 (825,335) Difference between expected and actual experience 69,828 (1,270,191) Difference between projected and actual earning on OPEB plan investments 464,739 - Total 2,092,307$ (2,095,526)$ City of Seal Beach Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2024 83 Note 10 – Other Postemployment Benefits (“OPEB”) Plan (Continued) D. OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB (Continued) Deferred outflows of resources related to OPEB resulting from City’s contributions subsequent to the measurement date in the amount of $965,337 will be recognized as a reduction of the net OPEB liability in the year ending June 30, 2025. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows: Measurement Period Ending June 30, Deferred Outflows/ (Inflows) of Resources 2024 (149,040) 2025 (150,780) 2026 135,651 2027 (105,668) 2028 (481,204) Thereafter (217,515) (968,556)$ Note 11 – Net Investment in Capital Assets Net investment in capital assets at June 30, 2023 is reported as follows: Governmental Business-Type Activities Activities Water Utility Sewer Utility Total capital assets, net 88,006,590$ 33,745,390$ 17,027,336$ 16,718,054$ Deferred loss on refunding debt - 60,352 - 60,352 Retention payable (266,604) (36,802) (36,802) - Capital related debt (666,127) (3,884,809) (467,402) (3,417,407) Net investment in capital assets 87,073,859$ 29,884,131$ 16,523,132$ 13,360,999$ Enterprise Fund City of Seal Beach Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2024 84 Note 12 – Classification of Fund Balances At June 30, 2024, fund balances are classified in the governmental funds as follows: Capital Projects Citywide Grants and Equipment Nonmajor General Special Revenue Capital Projects Governmental Fund Fund Fund Funds Total Nonspendable: Prepaid items 2,978,558$ -$ -$ -$ 2,978,558$ Restricted: Waste Management 43,950 - - - 43,950 Parking In-lieu 67,100 - - - 67,100 I-405 Corridor Improvements 1,198,184 - - - 1,198,184 Supplemental Law Enforcement - - - 83,707 83,707 Detention Center - - - 28,341 28,341 Police Asset Forefeiture - - - 364,276 364,276 Air Quality Improvements - - - 33,792 33,792 Parks Improvement - - - 55,301 55,301 Traffic Impact - - - 199,803 199,803 State Gasoline Tax - - - 2,263,979 2,263,979 Measure M2 - - - 1,188,796 1,188,796 Community Development Block Grant - - - 73,249 73,249 Landscape District - - - 725,242 725,242 Heron Pointe - - - 73,631 73,631 Pacific Gateway - - - 173,874 173,874 Seal Beach Cable - - - 562,850 562,850 SB 1 - - - 1,354,995 1,354,995 City Debt Service - - - 662,234 662,234 Total restricted 1,309,234 - - 7,844,070 9,153,304 Committed: Fiscal Policy 10,533,627 - - - 10,533,627 Economic Contingency 1,750,000 - - - 1,750,000 Capital Project Improvement 10,940,781 - 87,347 - 11,028,128 Total committed 23,224,408 - 87,347 - 23,311,755 Assigned: Community Development 952,983 - - - 952,983 Pier Restaurant 1,792,805 - - - 1,792,805 Compensated Absences 1,303,166 - - - 1,303,166 Encumbrance for public works 503,187 - - - 503,187 Encumbrance for police 1,274,810 - - - 1,274,810 Encumbrance for community development 30,657 - - - 30,657 Other 856,463 - - - 856,463 Total assigned 6,714,071 - - - 6,714,071 Unassigned (deficit)5,242,784 (761,934) - - 4,480,850 Total fund balances 39,469,055$ (761,934)$ 87,347$ 7,844,070$ 46,638,538$ City of Seal Beach Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2024 85 Note 13 – Commitments and Contingencies A. Commitments The City had no material commitments as of June 30, 2024. B. Contingencies The City is a defendant in a number of lawsuits, which have arisen in the normal course of business. While substantial damages are alleged in some of these actions, their outcome cannot be predicted with certainty. C. Grants Amounts received or receivable from granting agencies are subject to audit and adjustment by grantor agencies. While no matters of noncompliance were disclosed by the audit of the financial statements or single audit of the Federal grant programs, grantor agencies may subject grant programs to additional compliance tests, which may result in disallowed costs. In the opinion of management, future disallowances of current or prior grant expenditures, if any, would not have a material adverse effect on the financial position of the City. Note 14 – Individual Fund Disclosure Funds with deficit fund balances at June 30, 2024 are as follows: Deficit Citywide Grants Special Revenue Fund (761,934)$ The City plans to eliminate the deficit fund balances with amounts due from grantors. The following funds exceeded appropriation amounts for the year ended June 30, 2024: Expenditures in Excess of Appropriations Expenditures Appropriations Nonmajor Governmental Funds: Street Lighting Special Revenue Fund 209,500$ 234,361$ (24,861)$ Heron Pointe Special Revenue Fund 8,100 9,177 (1,077) City of Seal Beach Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2024 86 Note 15 – Prior Period Adjustments A. Government-Wide Financial Statements The City had the following prior period adjustments for the government-wide beginning net position at July 1, 2023: Governmental Business-Type Activities Activities Total Net position as perviously reported at July 1, 2023 96,905,348$ 44,667,100$ 141,572,448$ Depreciable capital assets, net of accumulated depreciation (1,999,346) 233,535 (1,765,811) Correction of accounts receivable recognized in prior year 142,094 - 142,094 Correction of business license revenue received 262,201 - 262,201 Net position as restated at July 1, 2023 95,310,297$ 44,900,635$ 140,210,932$ B. Governmental Fund Financial Statements The beginning fund balance was restated as following: Citywide Grants Police Grants Total Special Revenue Special Revenue Governmental General Fund Fund Fund Funds Fund balance as perviously reported at July 1, 2023 37,324,451$ (696,382)$ (76,072)$ (772,454)$ Correction of accounts receivable recognized in prior year - 98,181 43,920 142,101 Correction of business license revenue received 262,201 - - - Fund balance as restated at July 1, 2023 37,586,652$ (598,201)$ (32,152)$ (630,353)$ C. Enterprise Fund Financial Statements The beginning net position was restated as following: Total Water Utility Sewer Utility Enterprise Funds Net position as perviously reported at July 1, 2023 20,383,261$ 24,283,839$ 44,667,100$ Depreciable capital assets, net of accumulated depreciation 62,802 170,733 233,535 Net position as restated at July 1, 2023 20,446,063$ 24,454,572$ 44,900,635$ D. Internal Service Fund Financial Statements The beginning net position was restated as following: Vehicle Total Replacement Internal Service Fund Fund Net position as perviously reported at July 1, 2023 700,842$ 700,842$ Depreciable capital assets, net of accumulated depreciation 143,713 143,713 Net position as restated at July 1, 2023 844,555$ 844,555$ REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED) 87 This page intentionally left blank. 88 Variance with Final Budget Actual Positive Original Final Amounts (Negative) Revenues: Taxes 34,145,100$ 34,945,100$ 36,002,178$ 1,057,078$ Licenses and permits 723,000 723,000 939,640 216,640 Intergovernmental 90,000 1,711,218 1,789,580 78,362 Charges for services 6,556,000 6,387,816 6,674,619 286,803 Use of money and property 914,500 914,500 2,844,020 1,929,520 Fines and forfeitures 2,005,100 1,505,100 1,402,597 (102,503) Contributions 32,000 32,000 24,471 (7,529) Miscellaneous 208,800 208,800 661,060 452,260 Total revenues 44,674,500 46,427,534 50,338,165 3,910,631 Expenditures: Current: General government 7,832,098 8,146,456 7,374,474 771,982 Public safety 24,852,184 25,035,757 24,716,603 319,154 Community development 2,783,324 2,863,324 2,325,464 537,860 Community services 1,407,775 1,442,775 1,399,938 42,837 Public works 8,018,362 9,345,254 7,304,526 2,040,728 Capital outlay 837,000 837,000 510,685 326,315 Debt service: Principal retirement 85,107 85,107 493,805 (408,698) Interest and fiscal charges 6,700 6,700 25,235 (18,535) Total expenditures 45,822,550 47,762,373 44,150,730 3,611,643 Revenues over (under) expenditures (1,148,050) (1,334,839) 6,187,435 7,522,274 Other Financing Sources (Uses): Transfers in 191,200 850,700 109,000 (741,700) Transfers out (13,903,555) (14,466,555) (4,414,032) 10,052,523 Total other financing sources (uses)(13,712,355) (13,615,855) (4,305,032) 9,310,823 Net change in fund balance (14,860,405)$ (14,950,694)$ 1,882,403 16,833,097$ Fund Balance: Beginning of year 37,586,652 End of year 39,469,055$ City of Seal Beach Required Supplementary Information (Unaudited) For the Year Ended June 30, 2024 Budgeted Amounts Budgetary Comparison Schedule – General Fund 89 Variance with Final Budget Actual Positive Original Final Amounts (Negative) Revenues: Intergovernmental 1,931,497$ 1,869,388$ 801,754$ (1,067,634)$ Total revenues 1,931,497 1,869,388 801,754 (1,067,634) Expenditures: Current: Public safety - 100,000 40,000 60,000 Community development 40,000 40,000 - 40,000 Public works 109,000 996,891 156,575 840,316 Capital outlay 1,509,163 1,509,163 670,607 838,556 Total expenditures 1,658,163 2,646,054 867,182 1,778,872 Revenues over (under) expenditures 273,334 (776,666) (65,428) 711,238 Other Financing Uses: Transfers out - - (98,305) (98,305) Net change in fund balance 273,334$ (776,666)$ (163,733) 612,933$ Fund Balance (Deficit): Beginning of year, as restated (Note 15) (598,201) End of year (761,934)$ Budgeted Amounts City of Seal Beach Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Citywide Grants Special Revenue Fund For the Year Ended June 30, 2024 90 City of Seal Beach Required Supplementary Information (Unaudited) Notes to the Budgetary Comparison Schedule For the Year Ended June 30, 2024 Budgetary Control and Accounting Policy The City prepares its budgets on the basis of estimated revenues and expenditures and, accordingly, the budget amounts included in the accompanying financial statements are presented on a basis substantially consistent with generally accepted accounting principles. Encumbrance accounting is utilized during the fiscal year, whereby purchase orders, contracts and other commitmentsare recorded in order to control appropriations. However, at fiscal year end, all appropriations lapse. Accordingly, encumbrances are cancelled and generally are re-appropriated as part of the following year’s budget. Encumbrances are not included in reported expenditures. Annual budgets are adopted for the General Fund, Special Revenue Funds, Debt Service Funds, and Capital Projects Funds. In fiscal year 2023-24, no budget was adopted for the Detention Center Special Revenue Fund. The City Council approves total budgeted appropriations and any amendments to appropriations throughout the year. The budgetary level of control for all governmental fund types is the fund level. The City Manager has the discretion to transfer appropriations between departments within a fund, but transfers between funds must be approved by the City Council. 91 Measurement Date June 30, 2023 June 30, 2022 June 30, 2021 June 30, 2020 June 30, 2019 City's Proportion of the Net Pension Liability 0.14288% 0.14559% 0.17295% 0.13777% 0.12949% City's Proportionate Share of the Net Pension Liability 17,825,226$ 16,817,024$ 9,353,495$ 14,411,297$ 13,320,233$ City's Covered Payroll 5,535,460$ 5,164,779$ 5,162,753$ 5,243,738$ 4,721,968$ City's Proportionate Share of the Net Pension Liability as a Percentage of its Covered Payroll 322.02% 325.61% 181.17% 274.83% 282.09% Plan's Proportionate Share of the Fiduciary Net Position as a Percentage of the Total Pension Liability 69.62% 69.62% 82.21% 71.73% 73.26% Measurement Date June 30, 2023 June 30, 2022 June 30, 2021 June 30, 2020 June 30, 2019 City's Proportion of the Net Pension Liability 0.27770% 0.28126% 1.09047% 0.26123% 0.25611% City's Proportionate Share of the Net Pension Liability 34,643,664$ 32,488,072$ 18,526,366$ 28,423,181$ 26,243,693$ City's Covered Payroll 6,331,975$ 6,401,398$ 5,805,955$ 5,607,704$ 5,137,216$ City's Proportionate Share of the Net Pension Liability as a Percentage of its Covered Payroll 547.12% 507.52% 319.09% 506.86% 510.85% Plan's Proportionate Share of the Fiduciary Net Position as a Percentage of the Total Pension Liability 68.88% 68.88% 79.77% 70.11% 71.27% California Public Employees' Retirement System ("CalPERS") Miscellaneous Plan California Public Employees' Retirement System ("CalPERS") Safety Plan City of Seal Beach Required Supplementary Information (Unaudited) Schedule of the City's Proportionate Share of the Net Pension Liability and Related Ratios For the Year Ended June 30, 2024 Last Ten Fiscal Years 92 Measurement Date June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014 City's Proportion of the Net Pension Liability 0.12641% 0.12396% 0.12144% 0.11333% 0.11644% City's Proportionate Share of the Net Pension Liability 12,180,833$ 12,293,741$ 10,508,345$ 7,778,736$ 7,245,313$ City's Covered Payroll 4,713,200$ 4,385,712$ 4,226,024$ 4,710,212$ 4,503,370$ City's Proportionate Share of the Net Pension Liability as a Percentage of its Covered Payroll 258.44% 280.31% 248.66% 165.15% 160.89% Plan's Proportionate Share of the Fiduciary Net Position as a Percentage of the Total Pension Liability 75.18% 75.11% 76.88% 82.15% 83.18% Measurement Date June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014 City's Proportion of the Net Pension Liability 0.25383% 0.24294% 0.24301% 0.23685% 0.19002% City's Proportionate Share of the Net Pension Liability 24,459,736$ 24,093,096$ 21,027,509$ 16,257,122$ 11,823,793$ City's Covered Payroll 4,833,363$ 4,200,942$ 4,454,998$ 4,734,950$ 4,290,168$ City's Proportionate Share of the Net Pension Liability as a Percentage of its Covered Payroll 506.06% 573.52% 472.00% 343.34% 275.60% Plan's Proportionate Share of the Fiduciary Net Position as a Percentage of the Total Pension Liability 72.12% 72.09% 73.44% 78.58% 81.42% California Public Employees' Retirement System ("CalPERS") Miscellaneous Plan California Public Employees' Retirement System ("CalPERS") Safety Plan City of Seal Beach Required Supplementary Information (Unaudited) Schedule of the City's Proportionate Share of the Net Pension Liability and Related Ratios (Continued) For the Year Ended June 30, 2024 Last Ten Fiscal Years 93 Fiscal year 2023-24 2022-23 2021-22 2020-21 2019-20 Actuarially Determined Contribution 1,781,962$ 1,731,376$ 1,575,633$ 1,443,709$ 1,275,186$ Contribution in Relation to the Actuarially Determined Contribution (1,781,962) (1,731,376) (1,575,633) (1,443,709) (1,275,186) Contribution Deficiency (Excess) -$ -$ -$ -$ -$ Covered Payroll 5,690,453$ 5,535,460$ 5,164,779$ 5,162,753$ 5,243,738$ Contributions as a Percentage of Covered Payroll 31.31% 31.28% 30.51% 27.96% 24.32% Fiscal year 2023-24 2022-23 2021-22 2020-21 2019-20 Actuarially Determined Contribution 4,296,096$ 3,915,610$ 3,642,820$ 3,231,920$ 2,882,385$ Contribution in Relation to the Actuarially Determined Contribution (4,296,096) (3,915,610) (3,642,820) (3,231,920) (2,882,385) Contribution Deficiency (Excess) -$ -$ -$ -$ -$ Covered Payroll 6,509,270$ 6,331,975$ 6,401,398$ 5,805,955$ 5,607,704$ Contributions as a Percentage of Covered Payroll 66.00% 61.84% 56.91% 55.67% 51.40% California Public Employees' Retirement System ("CalPERS") Safety Plan Changes of Assumptions: In 2023, there were no changes. In 2022, the acounting discount rate reduced from 7.15 percent to 6.90 percent. In 2021, 2020, and 2019, there were no changes. In 2018, demographic assumptions and inflation rate were changed in accordance to the CalPERS Experience Study and Review of Actuarial Assumptions December 2017. There were no changes in the discount rate. In 2017, the accounting discount rate reduced from 7.65 percent to 7.15 percent. In 2016, there were no changes. In 2015, amounts reported reflect an adjustment of the discount rate from 7.5 percent (net of administrative expense) to 7.65 percent (without a reduction for pension plan administrative expense.) In 2014, amounts reported were based on the 7.5 percent discount rate. Benefit Changes: There were no changes to benefit terms. 2 Includes one year’s payroll growth using 2.80 percent payroll assumption for fiscal year 2023-24. Notes to Schedule: City of Seal Beach Required Supplementary Information (Unaudited) Schedule of Contributions - Pensions For the Year Ended June 30, 2024 Last Ten Fiscal Years California Public Employees' Retirement System ("CalPERS") Miscellaneous Plan 94 Fiscal year 2018-19 2017-18 2016-17 2015-16 2014-15 Actuarially Determined Contribution 1,076,211$ 911,168$ 791,754$ 709,945$ 734,255$ Contribution in Relation to the Actuarially Determined Contribution (1,076,211) (911,168) (791,754) (709,945) (734,255) Contribution Deficiency (Excess) -$ -$ -$ -$ -$ Covered Payroll 4,721,968$ 4,713,200$ 4,385,712$ 4,226,024$ 4,710,212$ Contributions as a Percentage of Covered Payroll 22.79% 19.33% 18.05% 16.80% 15.59% Fiscal year 2018-19 2017-18 2016-17 2015-16 2014-15 Actuarially Determined Contribution 2,509,250$ 2,127,080$ 1,748,129$ 1,608,716$ 1,476,452$ Contribution in Relation to the Actuarially Determined Contribution (2,509,250) (2,127,080) (1,748,129) (1,608,716) (1,476,452) Contribution Deficiency (Excess) -$ -$ -$ -$ -$ Covered Payroll 5,137,216$ 4,833,363$ 4,200,942$ 4,454,998$ 4,734,950$ Contributions as a Percentage of Covered Payroll 48.84% 44.01% 41.61% 36.11% 31.18% Changes of Assumptions: In 2023, there were no changes. In 2022, the acounting discount rate reduced from 7.15 percent to 6.90 percent. In 2021, 2020, and 2019, there were no changes. In 2018, demographic assumptions and inflation rate were changed in accordance to the CalPERS Experience Study and Review of Actuarial Assumptions December 2017. There were no changes in the discount rate. In 2017, the accounting discount rate reduced from 7.65 percent to 7.15 percent. In 2016, there were no changes. In 2015, amounts reported reflect an adjustment of the discount rate from 7.5 percent (net of administrative expense) to 7.65 percent (without a reduction for pension plan administrative expense.) In 2014, amounts reported were based on the 7.5 percent discount rate. City of Seal Beach Required Supplementary Information (Unaudited) For the Year Ended June 30, 2024 Last Ten Fiscal Years Schedule of Contributions - Pensions (Continued) Notes to Schedule: California Public Employees' Retirement System ("CalPERS") Safety Plan California Public Employees' Retirement System ("CalPERS") Miscellaneous Plan Benefit Changes: There were no changes to benefit terms. 95 Measurement period June 30, 2023 June 30, 2022 June 30, 2021 June 30, 2020 June 30, 2019 Total OPEB liability Service cost 285,492$ 250,120$ 269,955$ 253,910$ 262,452$ Interest 800,414 805,675 771,486 751,631 736,104 Differences between expected and actual experience (1,305,093) (140,904) 122,199 (109,256) (109,256) Changes of assumption (915,746) 738,472 113,616 (49,484) (49,484) Benefit payments (732,718) (742,658) (720,545) (516,782) (419,956) Implicit rate subsidy fulfilled - - - - (136,833) Net change in total OPEB liability (1,867,651) 910,705 556,711 330,019 283,027 Total OPEB liability, beginning 13,421,076 12,510,371 11,953,660 11,623,641 11,340,614 Total OPEB liability, ending (a)11,553,425$ 13,421,076$ 12,510,371$ 11,953,660$ 11,623,641$ OPEB fiduciary net position Contributions: Employer - City's contribution 981,209$ 985,606$ 963,042$ 588,400$ 710,200$ Employer - Implicit subsidy - - - - 136,833 Net investment income 460,154 (1,069,356) 1,663,551 360,219 324,350 Other additions - - - - - Benefit payments (732,718) (742,658) (720,545) (516,782) (419,956) Implicit rate subsidy fulfilled - - - - (136,833) Administrative expense (3,561) (2,016) (2,291) (2,768) (1,095) Other deductions (1,204) - - - - Net change in plan fiduciary net position 703,880 (828,424) 1,903,757 429,069 613,499 Plan fiduciary net position, beginning 7,129,788 7,958,212 6,054,455 5,625,386 5,011,887 Plan fiduciary net position, ending (b)7,833,668 7,129,788 7,958,212 6,054,455 5,625,386 Plan net OPEB liability - ending (a) - (b)3,719,757$ 6,291,288$ 4,552,159$ 5,899,205$ 5,998,255$ Plan's fiduciary net position as a percentage of the total OPEB liability 67.80% 53.12% 63.61% 50.65% 48.40% Covered payroll 12,003,945$ 11,640,947$ 10,959,848$ 10,666,519$ 9,923,172$ Net OPEB liability as a percentage of covered payroll 30.99% 54.04% 41.53% 55.31% 60.45% 1 Historical information is presented only for measurement periods for which GASB 75 is implemented. City of Seal Beach Required Supplementary Information (Unaudited) Schedule of Changes in Net Other Postemployment Benefits Liability and Related Ratios For the Year Ended June 30, 2024 Last Ten Fiscal Years Other Postemployment Benefits ("OPEB") 96 Measurement period June 30, 2018 June 30, 20171 Total OPEB liability Service cost 275,665$ 267,961$ Interest 786,251 752,721 Differences between expected and actual experience - - Changes of assumption (413,262) - Benefit payments (406,031) (454,685) Implicit rate subsidy fulfilled (123,043) (114,993) Net change in total OPEB liability 119,580 451,004 Total OPEB liability, beginning 11,221,034 10,770,030 Total OPEB liability, ending (a)11,340,614$ 11,221,034$ OPEB fiduciary net position Contributions: Employer - City's contribution 720,871$ 567,185$ Employer - Implicit subsidy 123,043 114,993 Net investment income 346,820 411,482 Other additions 3,763 - Benefit payments (406,031) (454,685) Implicit rate subsidy fulfilled (123,043) (114,993) Administrative expense (2,323) (1,995) Other deductions (5,765) - Net change in plan fiduciary net position 657,335 521,987 Plan fiduciary net position, beginning 4,354,552 3,832,565 Plan fiduciary net position, ending (b)5,011,887 4,354,552 Plan net OPEB liability - ending (a) - (b)6,328,727$ 6,866,482$ Plan's fiduciary net position as a percentage of the total OPEB liability 44.19% 38.81% Covered payroll 9,518,945$ 8,807,230$ Net OPEB liability as a percentage of covered payroll 66.49% 77.96% Other Postemployment Benefits ("OPEB") 1 Historical information is presented only for measurement periods for which GASB 75 is implemented. City of Seal Beach Required Supplementary Information (Unaudited) Schedule of Changes in Net Other Postemployment Benefits Liability and Related Ratios (Continued) For the Year Ended June 30, 2024 Last Ten Fiscal Years 97 Fiscal year end 2023-242 3 2022-23 2021-22 2020-21 2019-20 Actuarially determined contribution2 905,303$ 810,473$ 679,537$ 794,339$ 763,351$ Contribution in relation to the actuarially determined contribution2 (974,611) (981,209) (985,606) (963,041) (867,112) Contribution deficiency/(excess) (69,308)$ (170,736)$ (306,069)$ (168,702)$ (103,761)$ Covered-employee payroll3 12,340,055$ 12,003,945$ 11,640,947$ 10,959,848$ 10,666,519$ Contributions as a percentage of covered-employee payroll 7.90% 8.48% 8.47% 8.79% 8.13% Notes to Schedule: Valuation date: Actuarial cost method: Inflation: Assumed payroll growth: Healthcare cost trend: Rate of return on assets: Mortality: City of Seal Beach Required Supplementary Information (Unaudited) Schedule of Contributions - Other Postemployment Benefits For the Year Ended June 30, 2024 Last Ten Fiscal Years 7.40% (non-Medicare) / 4.20% (Medicare), trending down to 4.14% by 2075 5.10% Other Postemployment Benefits ("OPEB") 1 Historical information is presented only for measurement periods for which GASB 75 is implemented. 2 The June 30, 2021 actuarial valuation provided the actuarially determined contributions for fiscal year ended June 30, 2023. 3 Includes one year’s payroll growth using 2.80 percent payroll assumption from fiscal year 2022-23. Based on assumptions for Public Agency Miscellaneous and Police members published in the December 2017 CalPERS Experience Study Methods and assumptions used to determine contribution rates: June 30, 2023 Entry age normal, level percent of pay 2.30% per year 2.80% year one and thereafter 98 Fiscal year end 2018-19 2017-18 2016-171 Actuarially determined contribution2 755,936$ 833,241$ 812,317$ Contribution in relation to the actuarially determined contribution2 (847,033) (843,914) (682,178) Contribution deficiency/(excess) (91,097)$ (10,673)$ 130,139$ Covered-employee payroll3 9,923,172$ 9,518,945$ 8,807,230$ Contributions as a percentage of covered-employee payroll 8.54% 8.87% 7.75% Other Postemployment Benefits ("OPEB") 1 Historical information is presented only for measurement periods for which GASB 75 is implemented. City of Seal Beach Required Supplementary Information (Unaudited) Schedule of Contributions - Other Postemployment Benefits (Continued) For the Year Ended June 30, 2024 Last Ten Fiscal Years 99 This page intentionally left blank. 100 SUPPLEMENTARY INFORMATION 101 This page intentionally left blank. 102 Variance with Final Budget Actual Positive Original Final Amounts (Negative) Revenues: Charges for services -$ -$ 22,840$ (22,840)$ Total expenditures - - 22,840 (22,840) Expenditures: Current: General government 315,301 349,176 98,146 251,030 Public safety 536,145 593,747 167,177 426,570 Public works 3,363,215 3,724,545 1,047,870 2,676,675 Capital outlay 9,089,195 10,065,701 2,831,905 7,233,796 Total expenditures 13,303,856 14,733,169 4,145,098 10,588,071 Revenues over (under) expenditures (13,303,856) (14,733,169) (4,122,258) 10,565,231 Other Financing Sources: Transfers in 13,303,855 13,866,855 4,069,624 (9,797,231) Net change in fund balance (1)$ (866,314)$ (52,634) 813,680$ Fund Balance: Beginning of year 139,981 End of year 87,347$ Budgeted Amounts City of Seal Beach Schedule of Revenues, Expenditures, and Change in Fund Balance - Budget and Actual Capital Projects and Equipment Capital Projects Fund For the Year Ended June 30, 2024 103 This page intentionally left blank. 104 City Debt Service Debt Service Fund : To account for resources that are restricted for the payments of long-term debt. Pacific Gateway Special Revenue Fund : To account for property taxes that are restricted for costs related to the maintenance of parks, parkways and open space within the District (Landscape Maintenance). SB 1 Special Revenue Fund : To account for revenue received from the City's 1/2-cent per gallon gas tax and new vehicle registration taxes restricted for a wide range of transportation improvement projects. Seal Beach Cable Special Revenue Fund: To account for revenues derived from PEGS fees which provide for channel capacity to be restricted for public, education, or government use. Heron Pointe Special Revenue Fund : To account for the construction and acquisition of certain public street improvements, water and sanitary sewer improvements, dry utility improvements, park and landscaping improvements. Landscape District Special Revenue Fund : To account for property taxes that are restricted for costs related to the maintenance of parks, parkways and open space within the Community Facility District 2002-02 (Landscape Maintenance). NONMAJOR GOVERNMENTAL FUNDS Detention Center Special Revenue Fund : To account for funds initially funded by monies seeded from the previous jail services vendor. The revenues also derived from sales of commissary items to the prisoners for their benefit. Police Asset Forfeiture Special Revenue Fund: To accounts for revenues derived from monies and property seized in Federal, State, and Local drug-related incidents. Street Lighting Special Revenue Fund : To account for property taxes that are restricted for the maintenance of streetlights and to finance the electricity used by the streetlights. Police Grants Special Revenue Fund : To account for various grants including the Urban Area Security Initiative (UASI), the Office of Traffic Safety (OTS) DUI grant reimburses funds advanced by the City for DUI enforcement, the Bullet Proof Vest Protection (BVP) grant which provides matching funds that are restricted for the purchase of bullet-resistant vests, the Alcohol Beverage Control (ABC) grant and the Justice Assistance Grant (JAG). Supplemental Law Enforcement Special Revenue Fund : To account for funds received from the State under the State Citizens Option for Public Safety Program. Certain procedures are required to be implemented prior to the use of the funds, and the funds cannot be used to supplant existing funding for law enforcement. Air Quality Improvement Special Revenue Fund : To accounts for supplemental vehicle license fee revenue distributed to Cities by the South Coast Air Quality Management District pursuant to Assembly Bill 2766. Expenditures are restricted for programs that will reduce air pollution by reducing, directly or indirectly, mobile source emission pollutants. Park Improvement Special Revenue Fund : To account for the Quimby Act Fees received by developers that are restricted for the improvement of parks and recreation facilities. Traffic Impact Special Revenue Fund : To account for fair-share based fees that will serve to offset, or mitigate, the traffic impacts caused by new development. State Gasoline Tax Special Revenue Fund : To accounts for locally shared gas tax monies collected by the State. Expenditures are restricted for repair, construction, maintenance and right-of-way acquisitions relating to streets and highways. Measure M2 Special Revenue Fund : To account for restricted funds for transportation improvements through the Measure M Transportation Investment Plan (M2) such as major improvement plans target Orange County freeways, streets and roads, transit and environmental programs. Community Development Block Grant (CDBG) Special Revenue Fund: To account for for funds provided by Federal Housing and Urban Development restricted for a wide variety of unique community development needs. 105 Supplemental Street Law Detention Police Asset Lighting Enforcement Center Forfeiture ASSETS Cash and investments 18,178$ 89,193$ 28,341$ 365,997$ Receivables: Accounts - - - - Taxes 830 - - - Total assets 19,008$ 89,193$ 28,341$ 365,997$ LIABILITIES, DEFERRED INFLOW OF RESOURCES, AND FUND BALANCES Liabilities: Accounts payable 19,008$ 5,486$ -$ -$ Accrued liabilities - - - 1,721 Due to other funds - - - - Retentions payable - - - - Total liabilities 19,008 5,486 - 1,721 Fund Balances: Restricted - 83,707 28,341 364,276 Total fund balances - 83,707 28,341 364,276 Total liabilities, deferred inflow of resources, and fund balances 19,008$ 89,193$ 28,341$ 365,997$ (Continued) Special Revenue City of Seal Beach Combining Balance Sheet June 30, 2024 Nonmajor Governmental Funds 106 Air Quality Park Traffic State Improvement Improvement Impact Gasoline Tax ASSETS Cash and investments 33,792$ 55,301$ 199,803$ 2,207,712$ Receivables: Accounts - - - - Taxes - - - 60,095 Total assets 33,792$ 55,301$ 199,803$ 2,267,807$ LIABILITIES, DEFERRED INFLOW OF RESOURCES, AND FUND BALANCES Liabilities: Accounts payable -$ -$ -$ 3,828$ Accrued liabilities - - - - Due to other funds - - - - Retentions payable - - - - Total liabilities - - - 3,828 Fund Balances: Restricted 33,792 55,301 199,803 2,263,979 Total fund balances 33,792 55,301 199,803 2,263,979 Total liabilities, deferred inflow of resources, and fund balances 33,792$ 55,301$ 199,803$ 2,267,807$ (Continued) Special Revenue City of Seal Beach Combining Balance Sheet (Continued) June 30, 2024 Nonmajor Governmental Funds 107 Community Development Police Landscape Measure M2 Block Grant Grants District ASSETS Cash and investments 1,458,345$ 67,990$ 145,247$ 732,974$ Receivables: Accounts 89,000 5,259 34,072 - Taxes - - - - Total assets 1,547,345$ 73,249$ 179,319$ 732,974$ LIABILITIES, DEFERRED INFLOW OF RESOURCES, AND FUND BALANCES Liabilities: Accounts payable 342,282$ -$ -$ 7,264$ Accrued liabilities - - 12,763 468 Due to other funds - - 166,556 - Retentions payable 16,267 - - - Total liabilities 358,549 - 179,319 7,732 Fund Balances: Restricted 1,188,796 73,249 - 725,242 Total fund balances 1,188,796 73,249 - 725,242 Total liabilities, deferred inflow of resources, and fund balances 1,547,345$ 73,249$ 179,319$ 732,974$ (Continued) City of Seal Beach Special Revenue Nonmajor Governmental Funds Combining Balance Sheet (Continued) June 30, 2024 108 Pacific Seal Beach Heron Pointe Gateway Cable SB 1 ASSETS Cash and investments 73,677$ 178,007$ 537,882$ 1,451,132$ Receivables: Accounts - - 24,968 - Taxes - 307 - 52,544 Total assets 73,677$ 178,314$ 562,850$ 1,503,676$ LIABILITIES, DEFERRED INFLOW OF RESOURCES, AND FUND BALANCES Liabilities: Accounts payable 46$ 4,128$ -$ 109,898$ Accrued liabilities - 312 - - Due to other funds - - - - Retentions payable - - - 38,783 Total liabilities 46 4,440 - 148,681 Fund Balances: Restricted 73,631 173,874 562,850 1,354,995 Total fund balances 73,631 173,874 562,850 1,354,995 Total liabilities, deferred inflow of resources, and fund balances 73,677$ 178,314$ 562,850$ 1,503,676$ (Continued) City of Seal Beach Combining Balance Sheet (Continued) June 30, 2024 Nonmajor Governmental Funds Special Revenue 109 Debt Service Total Other City Debt Governmental Service Funds ASSETS Cash and investments 662,234$ 8,305,805$ Receivables: Accounts - 153,299 Taxes - 113,776 Total assets 662,234$ 8,572,880$ LIABILITIES, DEFERRED INFLOW OF RESOURCES, AND FUND BALANCES Liabilities: Accounts payable -$ 491,940$ Accrued liabilities - 15,264 Due to other funds - 166,556 Retentions payable - 55,050 Total liabilities - 728,810 Fund Balances: Restricted 662,234 7,844,070$ Total fund balances 662,234 7,844,070 Total liabilities, deferred inflow of resources, and fund balances 662,234$ 8,572,880$ (Concluded) City of Seal Beach Combining Balance Sheet (Continued) Nonmajor Governmental Funds June 30, 2024 110 Supplemental Street Law Detention Police Asset Lighting Enforcement Center Forfeiture Revenues: Taxes 139,856$ -$ -$ -$ Intergovernmental - 186,159 - 360,984 Charges for services - - - - Use of money and property - 3,048 - 74 Contributions - - - - Total revenues 139,856 189,207 - 361,058 Expenditures: Current: General government - - - - Public safety - 239,522 - - Community development - - - - Public works 234,361 - - - Capital outlay - - - - Debt service: Principal - - - - Interest and fiscal charges - - - - Total expenditures 234,361 239,522 - - Revenues over (under) expenditures (94,505) (50,315) - 361,058 Other Financing Sources (Uses): Transfers in 94,452 - - - Transfers out - - - - Total other financing sources (uses)94,452 - - - Net change in fund balances (53) (50,315) - 361,058 Fund Balance (Deficit): Beginning of year, as restated (Note 15) 53 134,022 28,341 3,218 End of year -$ 83,707$ 28,341$ 364,276$ (Continued) Special Revenue For the Year Ended June 30, 2024 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances City of Seal Beach Nonmajor Governmental Funds 111 Air Quality Park Traffic State Improvement Improvement Impact Gasoline Tax Revenues: Taxes -$ -$ -$ -$ Intergovernmental 16,301 - - 698,355 Charges for services - - - - Use of money and property 374 1,199 4,331 44,218 Contributions - - - - Total revenues 16,675 1,199 4,331 742,573 Expenditures: Current: General government - - - - Public safety - - - - Community development - - - - Public works - - - 3,332 Capital outlay - - - 133,310 Debt service: Principal - - - - Interest and fiscal charges - - - - Total expenditures - - - 136,642 Revenues over (under) expenditures 16,675 1,199 4,331 605,931 Other Financing Sources (Uses): Transfers in - - - - Transfers out - - - (30,000) Total other financing sources (uses)- - - (30,000) Net change in fund balances 16,675 1,199 4,331 575,931 Fund Balance (Deficit): Beginning of year, as restated (Note 15) 17,117 54,102 195,472 1,688,048 End of year 33,792$ 55,301$ 199,803$ 2,263,979$ (Continued) Special Revenue City of Seal Beach Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (Continued) For the Year Ended June 30, 2024 Nonmajor Governmental Funds 112 Community Development Police Landscape Measure M2 Block Grant Grants District Revenues: Taxes -$ -$ -$ 137,685$ Intergovernmental 558,612 349,591 232,200 - Charges for services - - - - Use of money and property 33,207 - - 15,531 Contributions - - - - Total revenues 591,819 349,591 232,200 153,216 Expenditures: Current: General government - - - - Public safety - - 345,295 - Community development - 216,655 - 85,687 Public works - - - - Capital outlay 961,053 - - - Debt service: Principal - - - - Interest and fiscal charges - - - - Total expenditures 961,053 216,655 345,295 85,687 Revenues over (under) expenditures (369,234) 132,936 (113,095) 67,529 Other Financing Sources (Uses): Transfers in - - 145,247 - Transfers out - - - (31,400) Total other financing sources (uses)- - 145,247 (31,400) Net change in fund balances (369,234) 132,936 32,152 36,129 Fund Balance (Deficit): Beginning of year, as restated (Note 15) 1,558,030 (59,687) (32,152) 689,113 End of year 1,188,796$ 73,249$ -$ 725,242$ (Continued) Special Revenue Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (Continued) Nonmajor Governmental Funds City of Seal Beach For the Year Ended June 30, 2024 113 Pacific Seal Beach Heron Pointe Gateway Cable SB1 Revenues: Taxes -$ 86,763$ -$ -$ Intergovernmental - - - 638,573 Charges for services - - 93,847 - Use of money and property - - 12,698 40,143 Contributions 15,000 25,000 5,000 - Total revenues 15,000 111,763 111,545 678,716 Expenditures: Current: General government - - 73,544 - Public safety - - - - Community development 9,177 62,344 - - Public works - - - - Capital outlay - - - 907,329 Debt service: Principal - - - - Interest and fiscal charges - - - - Total expenditures 9,177 62,344 73,544 907,329 Revenues over (under) expenditures 5,823 49,419 38,001 (228,613) Other Financing Sources (Uses): Transfers in - - - - Transfers out (1,600) (26,000) (20,000) - Total other financing sources (uses)(1,600) (26,000) (20,000) - Net change in fund balances 4,223 23,419 18,001 (228,613) Fund Balance (Deficit): Beginning of year, as restated (Note 15) 69,408 150,455 544,849 1,583,608 End of year 73,631$ 173,874$ 562,850$ 1,354,995$ (Continued) City of Seal Beach Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (Continued) For the Year Ended June 30, 2024 Special Revenue Nonmajor Governmental Funds 114 Debt Service Total Other City Debt Governmental Service Funds Revenues: Taxes -$ 364,304$ Intergovernmental - 3,040,775 Charges for services - 93,847 Use of money and property 21,624 176,447 Contributions - 45,000 Total revenues 21,624 3,720,373 Expenditures: Current: General government - 73,544 Public safety - 584,817 Community development - 373,863 Public works - 237,693 Capital outlay - 2,001,692 Debt service: Principal 315,000 315,000 Interest and fiscal charges 8,845 8,845 Total expenditures 323,845 3,595,454 Revenues over (under) expenditures (302,221) 124,919 Other Financing Sources (Uses): Transfers in 203,014 442,713 Transfers out - (109,000) Total other financing sources (uses)203,014 333,713 Net change in fund balances (99,207) 458,632 Fund Balance (Deficit): Beginning of year, as restated (Note 15) 761,441 7,385,438 End of year 662,234$ 7,844,070$ (Concluded) City of Seal Beach Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (Continued) Nonmajor Governmental Funds For the Year Ended June 30, 2024 115 Variance with Final Budget Actual Positive Original Final Amounts (Negative) Revenues: Taxes 141,000$ 141,000$ 139,856$ (1,144)$ Total revenues 141,000 141,000 139,856 (1,144) Expenditures: Current: Public works 209,500$ 209,500$ 234,361$ (24,861)$ Total expenditures 209,500 209,500 234,361 (24,861) Revenues over (under) expenditures (68,500) (68,500) (94,505) (26,005) Other Financing Sources: Transfers in 68,500 68,500 94,452 25,952 Net change in fund balance -$ -$ (53) (53)$ Fund Balance: Beginning of year 53 End of year -$ City of Seal Beach Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual For the Year Ended June 30, 2024 Budgeted Amounts Street Lighting Special Revenue Fund 116 Variance with Final Budget Actual Positive Original Final Amounts (Negative) Revenues: Intergovernmental 157,500$ 157,500$ 186,159$ 28,659$ Use of money and property 1,000 1,000 3,048 2,048 Total revenues 158,500 158,500 189,207 30,707 Expenditures: Current: Public safety 214,950 244,950 239,522 5,428 Total expenditures 214,950 244,950 239,522 5,428 Net change in fund balance (56,450)$ (86,450)$ (50,315) 36,135$ Fund Balance: Beginning of year 134,022 End of year 83,707$ Budgeted Amounts City of Seal Beach Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Supplemental Law Enforcement Special Revenue Fund For the Year Ended June 30, 2024 117 Variance with Final Budget Actual Positive Original Final Amounts (Negative) Revenues: Intergovernmental 100,000$ 100,000$ 360,984$ 260,984$ Use of money and property 200 200 74 (126) Total revenues 100,200 100,200 361,058 260,858 Expenditures: Current: Public safety 294,035 294,035 - 294,035 Total expenditures 294,035 294,035 - 294,035 Net change in fund balance (193,835)$ (193,835)$ 361,058 554,893$ Fund Balance: Beginning of year 3,218 End of year 364,276$ Budgeted Amounts City of Seal Beach Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Police Asset Forfeiture Special Revenue Fund For the Year Ended June 30, 2024 118 Variance with Final Budget Actual Positive Original Final Amounts (Negative) Revenues: Intergovernmental 30,000$ 30,000$ 16,301$ (13,699)$ Use of money and property 100 100 374 274 Total revenues 30,100 30,100 16,675 (13,425) Expenditures: Current: Public works 30,000 30,000 - 30,000 Total expenditures 30,000 30,000 - 30,000 Net change in fund balance 100$ 100$ 16,675 16,575$ Fund Balance: Beginning of year 17,117 End of year 33,792$ Budgeted Amounts City of Seal Beach Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Air Quality Improvement Special Revenue Fund For the Year Ended June 30, 2024 119 Variance with Final Budget Actual Positive Original Final Amounts (Negative) Revenues: Use of money and property 400$ 400$ 1,199$ 799$ Total revenues 400 400 1,199 799 Net change in fund balance 400$ 400$ 1,199 799$ Fund Balance: Beginning of year 54,102 End of year 55,301$ Budgeted Amounts City of Seal Beach Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Park Improvement Special Revenue Fund For the Year Ended June 30, 2024 120 Variance with Final Budget Actual Positive Original Final Amounts (Negative) Revenues: Use of money and property 1,100$ 1,100$ 4,331$ 3,231$ Total revenues 1,100 1,100 4,331 3,231 Net change in fund balance 1,100$ 1,100$ 4,331 3,231$ Fund Balance: Beginning of year 195,472 End of year 199,803$ Budgeted Amounts City of Seal Beach Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Traffic Impact Special Revenue Fund For the Year Ended June 30, 2024 121 Variance with Final Budget Actual Positive Original Final Amounts (Negative) Revenues: Intergovernmental 726,958$ 726,958$ 698,355$ (28,603)$ Use of money and property 8,500 8,500 44,218 35,718 Total revenues 735,458 735,458 742,573 7,115 Expenditures: Current: Public works 3,000 3,000 3,332 (332) Capital outlay 2,550,110 2,600,110 133,310 2,466,800 Total expenditures 2,553,110 2,603,110 136,642 2,466,468 Revenues over (under) expenditures (1,817,652) (1,867,652) 605,931 2,473,583 Other Financing Uses: Transfers out (30,000) (30,000) (30,000) - Net change in fund balance (1,847,652)$ (1,897,652)$ 575,931 2,473,583$ Fund Balance: Beginning of year 1,688,048 End of year 2,263,979$ Budgeted Amounts City of Seal Beach Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual State Gasoline Tax Special Revenue Fund For the Year Ended June 30, 2024 122 Variance with Final Budget Actual Positive Original Final Amounts (Negative) Revenues: Intergovernmental 501,688$ 501,688$ 558,612$ 56,924$ Use of money and property 7,000 7,000 33,207 26,207 Total revenues 508,688 508,688 591,819 83,131 Expenditures: Capital outlay 2,065,414 2,065,414 961,053 1,104,361 Total expenditures 2,065,414 2,065,414 961,053 1,104,361 Net change in fund balance (1,556,726)$ (1,556,726)$ (369,234) 1,187,492$ Fund Balance: Beginning of year 1,558,030 End of year 1,188,796$ Budgeted Amounts City of Seal Beach Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Measure M2 Special Revenue Fund For the Year Ended June 30, 2024 123 Variance with Final Budget Actual Positive Original Final Amounts (Negative) Revenues: Intergovernmental 333,400$ 333,400$ 349,591$ 16,191$ Total revenues 333,400 333,400 349,591 16,191 Expenditures: Current: Community development 333,400 333,400 216,655 116,745 Total expenditures 333,400 333,400 216,655 116,745 Net change in fund balance -$ -$ 132,936 132,936$ Fund Balance: Beginning of year (59,687) End of year 73,249$ Budgeted Amounts City of Seal Beach Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Community Development Block Grant Special Revenue Fund For the Year Ended June 30, 2024 124 Variance with Final Budget Actual Positive Original Final Amounts (Negative) Revenues: Intergovernmental 369,000$ 514,570$ 232,200$ (282,370)$ Total revenues 369,000 514,570 232,200 (282,370) Expenditures: Current: Public safety 391,496 537,066 345,295 191,771 Total expenditures 391,496 537,066 345,295 191,771 Revenues over (under) expenditures (22,496) (22,496) (113,095) (90,599) Other Financing Uses: Transfers in - - 145,247 145,247 Net change in fund balance (22,496)$ (22,496)$ 32,152 54,648$ Fund Balance (Deficit): Beginning of year, as restated (Note 15) (32,152) End of year -$ Budgeted Amounts City of Seal Beach Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Police Grants Special Revenue Fund For the Year Ended June 30, 2024 125 Variance with Final Budget Actual Positive Original Final Amounts (Negative) Revenues: Taxes 140,000$ 140,000$ 137,685$ (2,315)$ Use of money and property 5,000 5,000 15,531 10,531 Total revenues 145,000 145,000 153,216 8,216 Expenditures: Current: Community development 103,375 103,375 85,687 17,688 Total expenditures 103,375 103,375 85,687 17,688 Revenues over (under) expenditures 41,625 41,625 67,529 25,904 Other Financing Uses: Transfers out (31,400) (31,400) (31,400) - Net change in fund balance 10,225$ 10,225$ 36,129 25,904$ Fund Balance: Beginning of year 689,113 End of year 725,242$ Budgeted Amounts City of Seal Beach Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Landscape District Special Revenue Fund For the Year Ended June 30, 2024 126 Variance with Final Budget Actual Positive Original Final Amounts (Negative) Revenue: Contributions 15,000$ 15,000$ 15,000$ -$ Total revenues 15,000 15,000 15,000 - Expenditures: Current: Community development 8,100 8,100 9,177 (1,077) Total expenditures 8,100 8,100 9,177 (1,077) Revenues over (under) expenditures 6,900 6,900 5,823 (1,077) Other Financing Uses: Transfers out (1,600) (1,600) (1,600) - Net change in fund balance 5,300$ 5,300$ 4,223 (1,077)$ Fund Balance: Beginning of year 69,408 End of year 73,631$ Budgeted Amounts City of Seal Beach Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Heron Pointe Special Revenue Fund For the Year Ended June 30, 2024 127 Variance with Final Budget Actual Positive Original Final Amounts (Negative) Revenues: Taxes 66,300$ 66,300$ 86,763$ 20,463$ Contributions 25,000 25,000 25,000 - Total revenues 91,300 91,300 111,763 20,463 Expenditures: Current: Community development 75,637 75,637 62,344 13,293 Public works 38 38 - 38 Total expenditures 75,675 75,675 62,344 13,331 Revenues over (under) expenditures 15,625 15,625 49,419 33,794 Other Financing Uses: Transfers out (26,000) (26,000) (26,000) - Net change in fund balance (10,375)$ (10,375)$ 23,419 33,794$ Fund Balance: Beginning of year 150,455 End of year 173,874$ Budgeted Amounts City of Seal Beach Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Pacific Gateway Special Revenue Fund For the Year Ended June 30, 2024 128 Variance with Final Budget Actual Positive Original Final Amounts (Negative) Revenues: Charges for services 110,000$ 110,000$ 93,847$ (16,153)$ Use of money and property 3,500 3,500 12,698 9,198 Contributions - - 5,000 5,000 Total revenues 113,500 113,500 111,545 (1,955) Expenditures: Current: General government 145,000 145,000 73,544 71,456 Total expenditures 145,000 145,000 73,544 71,456 Revenues over (under) expenditures (31,500) (31,500) 38,001 69,501 Other Financing Uses: Transfer out (20,000) (20,000) (20,000) - Net change in fund balance (51,500)$ (51,500)$ 18,001 69,501$ Fund Balance: Beginning of year 544,849 End of year 562,850$ Budgeted Amounts City of Seal Beach Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Seal Beach Cable Special Revenue Fund For the Year Ended June 30, 2024 129 Variance with Final Budget Actual Positive Original Final Amounts (Negative) Revenues: Intergovernmental 623,988$ 623,988$ 638,573$ 14,585$ Use of money and property 6,000 6,000 40,143 34,143 Total revenues 629,988 629,988 678,716 48,728 Expenditures: Capital outlay 1,128,278 1,203,278 907,329 295,949 Total expenditures 1,128,278 1,203,278 907,329 295,949 Net change in fund balance (498,290)$ (573,290)$ (228,613) 344,677$ Fund Balance: Beginning of year 1,583,608 End of year 1,354,995$ Budgeted Amounts City of Seal Beach Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual SB1 Special Revenue Fund For the Year Ended June 30, 2024 130 Variance with Final Budget Actual Positive Original Final Amounts (Negative) Revenues: Use of money and property 2,000$ 2,000$ 21,624$ 19,624$ Total revenues 2,000 2,000 21,624 19,624 Expenditures: Debt service: Principal retirement 315,000 315,000 315,000 - Interest and fiscal charges 9,000 9,000 8,845 155 Total Expenditures 324,000 324,000 323,845 155 Revenues over (under) expenditures (322,000) (322,000) (302,221) 19,779 Other Financing Sources (USES): Transfers in 324,000 324,000 203,014 (120,986) Transfers out - (659,500) - 659,500 Total other financing sources (uses)324,000 (335,500) 203,014 538,514 Net change in fund balance 2,000$ (657,500)$ (99,207) 558,293$ Fund Balance: Beginning of year 761,441 End of year 662,234$ Budgeted Amounts City of Seal Beach Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual City Debt Service Fund For the Year Ended June 30, 2024 131 This page intentionally left blank. 132 INTERNAL SERVICE FUND FINANCIAL STATEMENTS 133 This page intentionally left blank. 134 Vehicle Information Replacement Technology Fund Fund Total ASSETS Current Assets: Cash and investments 122,263$ 36,982$ 159,245$ Accounts receivable 14,612 - 14,612 Total current assets 136,875 36,982 173,857 Noncurrent Assets: Depreciable capital assets, net of accumulated depreciation 582,469 - 582,469 Intangible capital assets, net of accumulated amortization 200,390 - 200,390 Total capital assets 782,859 - 782,859 Total noncurrent assets 782,859 - 782,859 Total assets 919,734 36,982 956,716 LIABILITIES Current Liabilities: Accounts payable - 11,619 11,619 Long-term debt, due within one year 81,803 - 81,803 Total current liabilities 81,803 11,619 93,422 Noncurrent Liabilities: Long-term debt, due in more than one year 125,423 - 125,423 Total Noncurrent Liabilities 125,423 - 125,423 Total Liabilities 207,226 11,619 218,845 NET POSITION Net investment in capital assets 575,633 - 575,633 Unrestricted 136,875 25,363 162,238 Total Net Position 712,508$ 25,363$ 737,871$ City of Seal Beach Combining Statement of Net Position Internal Service Funds June 30, 2024 135 Vehicle Information Replacement Technology Fund Fund Total OPERATING REVENUES: Charges from user departments 137,000$ -$ 137,000$ Total operating revenues 137,000 - 137,000 OPERATING EXPENSES: Operating expenses 977 59,534 60,511 Amortization and depreciation expenses 266,364 - 266,364 Total operating expenses 267,341 59,534 326,875 OPERATING (LOSS)(130,341) (59,534) (189,875) NONOPERATING INCOME: Gain on sale of assets 2,059 - 2,059 Interest payments (3,765) - (3,765) Total nonoperating income (1,706) - (1,706) CHANGES IN NET POSITION (132,047) (59,534) (191,581) NET POSITION: Beginning of year, as restated (Note 15) 844,555 84,897 929,452 End of year 712,508$ 25,363$ 737,871$ City of Seal Beach Combining Statement of Revenues, Expenses, and Changes in Net Position Internal Service Funds For the Year Ended June 30, 2024 136 Vehicle Information Replacement Technology Fund Fund Total CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers and users 122,388$ -$ 122,388$ Cash paid to suppliers for goods and services (15,021) (63,321) (78,342) Net cash provided by (used in) operating activities 107,367 (63,321) 44,046 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Proceed on disposal of assets 15,403 - 15,403 Principal paid on long-term debt (80,587) - (80,587) Interest paid on long-term debt (3,765) - (3,765) Net cash used in capital and related financing activities (68,949) - (68,949) Net change in cash and cash equivalents 38,418 (63,321) (24,903) CASH AND CASH EQUIVALENTS: Beginning of year 83,845 100,303 184,148 End of year 122,263$ 36,982$ 159,245$ Reconciliation of Operating (Loss) to Net Cash Provided By (Used in) Operating Activities: Operating (loss) (130,341)$ (59,534)$ (189,875)$ Adjustments to reconcile operating (loss) to net cash (used in) operating activities: Amortization and depreciation expenses 266,364 - 266,364 Changes in assets and liabilities: (Increase)/decrease in accounts receivables (14,612) - (14,612) Increase/(decrease) in accounts payable (14,044) (3,787) (17,831) Net cash provided by (used in) operating activities 107,367$ (63,321)$ 44,046$ City of Seal Beach Combining Statement of Cash Flows Internal Service Funds For the Year Ended June 30, 2024 137 This page intentionally left blank. 138 CUSTODIAL FUNDS FINANCIAL STATEMENTS 139 This page intentionally left blank. 140 Community Community Facilities Facilities District District - Heron Deposits Heron Pointe Pacific Gateway Total ASSETS: Cash and investments 269,020$ 131,203$ 246,514$ 646,737$ Receivables: Accounts 736 - - 736 Taxes - 2,269 2,015 4,284 Restricted investments with fiscal agents - 272,152 753,850 1,026,002 Total Assets 269,756 405,624 1,002,379 1,677,759 LIABILITIES: Interest payable - 29,549 67,175 96,724 Total Liabilities - 29,549 67,175 96,724 NET POSITION: Restricted for: Individual, organization and other government 269,756$ 376,075$ 935,204$ 1,581,035$ City of Seal Beach Combining Statement of Fiduciary Net Position Custodial Funds June 30, 2024 141 Community Community Facilities Facilities District District - Heron Deposits Heron Pointe Pacific Gateway Total ADDITIONS: Assessment revenue collected -$ 267,271$ 568,839$ 836,110$ Investment income - 16,932 42,812 59,744 Total additions - 284,203 611,651 895,854 DEDUCTIONS: Return of deposits 12,939 - - 12,939 Payment of special assessment district debt service - 260,663 555,969 816,632 Total deductions 12,939 260,663 555,969 829,571 Change in net position (12,939) 23,540 55,682 66,283 NET POSITION: Beginning of year 282,695 352,535 879,522 1,514,752 End of year 269,756$ 376,075$ 935,204$ 1,581,035$ Custodial Funds For the Year Ended June 30, 2024 City of Seal Beach Combining Statement of Changes in Fiduciary Net Position 142 STATISTICAL SECTION 143 This page intentionally left blank. 144 Page These schedules contain trend information to help the reader understand how the City's financial performance and well-being have changed over time.146-155 These schedules contain information to help the reader assess the factors affecting the City's ability to generate its property and sales taxes.156-159 These schedules present information to help the reader assess the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in the future.160-166 These schedules offer demographic and economic indicators to help the reader understand the environment within which the City's financial activities take place and to help make comparisons over time and with other governments.167-168 These schedules contain information about the City's operations and resources to help the reader understand how the City's financial information relates to the services the City provides and the activities it performs.169-172 Demographic and Economic Information Operating Information Statistical Section Description of Statistical Section Contents City of Seal Beach For the Year Ended June 30, 2024 This part of the City of Seal Beach annual comprehensive financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the government’s overall financial health. Financial Trends Revenue Capacity Debt Capacity 145 2015 2016 2017 2018 2019 Governmental activities: Net investment in capital assets, 74,296,935$ 73,939,948$ 72,399,752$ 72,667,466$ 87,071,592$ Restricted 3,842,792 3,866,679 4,587,081 4,207,675 4,825,412 Unrestricted 4,097,282 4,713,193 (3,660,561) (4,911,027) (9,873,029) Total governmental activities net position 82,237,009$ 82,519,820$ 73,326,272$ 71,964,114$ 82,023,975$ Business-type activities: Net investment in capital assets, 34,451,074$ 34,145,069$ 33,109,258$ 31,663,486$ 32,937,448$ Restricted - - 25,082 25,082 Unrestricted 12,470,553 13,544,158 12,625,701 14,709,960 13,656,457 Total business-type activities net position 46,921,627$ 47,689,227$ 45,734,959$ 46,398,528$ 46,618,987$ Primary government: Net investment in capital assets, 108,748,009$ 108,085,017$ 105,509,010$ 104,330,952$ 120,009,040$ Restricted 3,842,792 3,866,679 4,587,081 4,232,757 4,850,494 Unrestricted 16,567,835 18,257,351 8,965,140 9,798,933 3,783,428 Total primary government net position 129,158,636$ 130,209,047$ 119,061,231$ 118,362,642$ 128,642,962$ Source: Finance Department, City of Seal Beach. Fiscal Year Last Ten Fiscal Years (accrual basis of accounting) City of Seal Beach Net Position by Component 146 2020 2021 2022 2023 2024 Governmental activities: Net investment in capital assets, 84,530,565$ 85,059,375$ 84,447,535$ 85,686,837$ 87,073,859$ Restricted 7,601,451 7,201,479 8,759,394 10,354,192 9,915,238 Unrestricted (11,716,752) (9,239,218) (10,011,404) 864,319 3,470,267 Total governmental activities net position 80,415,264$ 83,021,636$ 83,195,525$ 96,905,348$ 100,459,364$ Business-type activities: Net investment in capital assets, 31,473,936$ 30,784,313$ 30,111,234$ 29,928,878$ 29,884,131$ Restricted 25,082 25,082 25,082 25,082 25,082 Unrestricted 13,930,796 14,359,332 14,386,432 14,713,140 13,623,652 Total business-type activities net position 45,429,814$ 45,168,727$ 44,522,748$ 44,667,100$ 43,532,865$ Primary government: Net investment in capital assets, 116,004,501$ 115,843,688$ 114,558,769$ 115,615,715$ 116,957,990$ Restricted 7,626,533 7,226,561 8,784,476 10,379,274 9,940,320 Unrestricted 2,214,044 5,120,114 4,375,028 15,577,459 17,093,919 Total primary government net position 125,845,078$ 128,190,363$ 127,718,273$ 141,572,448$ 143,992,229$ Source: Finance Department, City of Seal Beach. Fiscal Year City of Seal Beach Net Position by Component (Continued) Last Ten Fiscal Years (accrual basis of accounting) 147 2015 2016 2017 2018 2019 Expenses: Governmental activities: General government 6,551,584$ 6,264,368$ 5,894,947$ 6,161,230$ 6,479,347$ Public safety 16,022,465 16,972,880 19,867,060 19,877,068 21,497,362 Community development 1,393,712 1,100,110 1,218,902 1,593,008 1,499,652 Community services 1,129,300 1,036,627 995,468 964,634 945,425 Public works 7,862,892 6,956,443 6,992,604 7,367,882 7,752,351 Interest on long-term debt 444,132 349,652 342,951 225,675 143,040 Total governmental activities expenses 33,404,085 32,680,080 35,311,932 36,189,497 38,317,177 Business-type activities: Water utility 4,037,798 4,102,228 4,977,160 4,668,618 4,909,193 Sewer utility 1,661,225 1,676,651 2,639,043 2,539,783 2,523,366 Total business-type activities expenses 5,699,023 5,778,879 7,616,203 7,208,401 7,432,559 Total primary government expenses 39,103,108 38,458,959 42,928,135 43,397,898 45,749,736 Program revenues: Governmental activities: Charges for services: General government 1,820,019 2,074,448 1,913,909 2,062,987 1,913,201 Public safety 2,132,176 1,521,220 2,045,589 1,903,530 1,907,577 Community development 186,858 192,878 217,486 300,640 597,318 Community services 1,020,316 1,015,517 707,813 733,456 840,428 Public works 1,937,305 1,832,289 2,105,747 2,398,039 2,556,857 Operating contributions and grants 2,768,435 2,122,139 1,721,167 2,334,480 2,588,454 Capital grants and contributions 20,000 10,000 174,685 79,175 9,777,900 Total governmental activities program revenues 9,885,109 8,768,491 8,886,396 9,812,307 20,181,735 Business-type activities: Charges for services: Water utility 4,556,001 4,261,566 4,782,468 5,097,807 4,851,274 Sewer utility 2,765,357 2,466,869 2,784,942 2,928,885 2,854,208 Total business-type activities program revenues 7,321,358 6,728,435 7,567,410 8,026,692 7,705,482 Total primary government program revenues 17,206,467 15,496,926 16,453,806 17,838,999 27,887,217 Net revenues (expenses): Governmental activities (23,518,976) (23,911,589) (26,425,536) (26,377,190) (18,135,442) Business-type activities 1,622,335 949,556 (48,793) 818,291 272,923 Total net revenues (expenses) (21,896,641)$ (22,962,033)$ (26,474,329)$ (25,558,899)$ (17,862,519)$ Source: Finance Department, City of Seal Beach. City of Seal Beach Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) Fiscal Year 148 2020 2021 2022 2023 2024 Expenses: Governmental activities: General government 6,868,616$ 7,231,812$ 8,604,149$ 6,778,212$ 7,833,713$ Public safety 24,079,442 23,326,808 26,912,192 20,062,949 26,932,724 Community development 1,581,361 2,283,377 3,043,960 1,836,054 2,722,452 Community services 866,786 1,139,731 1,991,897 263,478 1,208,181 Public works 11,180,509 8,290,658 9,086,138 8,487,999 10,766,275 Interest on long-term debt 88,274 57,902 61,160 36,443 34,336 Total governmental activities expenses 44,664,988 42,330,288 49,699,496 37,465,135 49,497,681 Business-type activities: Water utility 5,444,834 6,033,692 6,064,434 5,250,934 7,127,839 Sewer utility 3,035,447 2,651,801 2,323,027 2,292,687 3,353,390 Total business-type activities expenses 8,480,281 8,685,493 8,387,461 7,543,621 10,481,229 Total primary government expenses 53,145,269 51,015,781 58,086,957 45,008,756 59,978,910 Program revenues: Governmental activities: Charges for services: General government 1,207,956 1,486,575 1,129,039 1,069,669 1,252,570 Public safety 2,124,798 2,361,646 2,547,127 2,282,044 1,976,293 Community development 231,087 221,140 434,955 499,835 508,638 Community services 700,877 985,542 1,244,430 1,221,628 1,328,884 Public works 2,732,164 2,596,848 2,842,031 3,588,535 4,199,836 Operating contributions and grants 3,442,883 4,287,922 9,362,550 4,165,836 4,231,563 Capital grants and contributions 30,707 10,692 655 889 1,199 Total governmental activities program revenues 10,470,472 11,950,365 17,560,787 12,828,436 13,498,983 Business-type activities: Charges for services: Water utility 4,268,610 4,957,483 5,824,338 5,759,925 6,289,312 Sewer utility 3,007,958 2,885,699 2,432,441 2,371,663 2,422,870 Total business-type activities program revenues 7,276,568 7,843,182 8,256,779 8,131,588 8,712,182 Total primary government program revenues 17,747,040 19,793,547 25,817,566 20,960,024 22,211,165 Net revenues (expenses): Governmental activities (34,194,516) (30,379,923) (32,138,709) (24,636,699) (35,998,698) Business-type activities (1,203,713) (842,311) (130,682) 587,967 (1,769,047) Total net revenues (expenses) (35,398,229)$ (31,222,234)$ (32,269,391)$ (24,048,732)$ (37,767,745)$ Source: Finance Department, City of Seal Beach. City of Seal Beach Changes in Net Position (Continued) Last Ten Fiscal Years (accrual basis of accounting) Fiscal Year 149 2015 2016 2017 2018 2019 General revenues and other changes in net position: Governmental activities: Taxes: Property taxes 10,050,815$ 10,408,505$ 11,012,246$ 11,180,197$ 11,481,535$ Sales tax 4,246,080 4,228,730 4,379,341 4,303,618 5,546,264 Franchise taxes 1,163,595 955,922 1,016,938 1,059,581 1,097,774 Utility users taxes 4,646,434 4,445,180 4,177,713 4,186,554 4,061,031 Transient occupancy taxes 1,525,723 1,655,376 1,693,515 1,666,996 1,631,445 Other taxes 344,789 197,166 190,510 163,277 227,978 Motor vehicle in lieu, unrestricted 10,659 9,960 11,235 13,102 12,473 Use of money and property 725,720 1,004,572 425,014 300,817 1,692,720 Other 356,749 536,175 214,219 1,762,390 2,065,583 Transfers 378,500 378,500 378,500 378,500 378,500 Extraordinary Gain(loss) 694,585 - - - - Total governmental activities 24,143,649 23,820,086 23,499,231 25,015,032 28,195,303 Business-type activities: Use of money and property 109,575 176,437 167,661 223,778 326,036 Other 3,698 20,107 - - - Transfers (378,500) (378,500) (378,500) (378,500) (378,500) Extraordinary Gain(loss) - - - - - Total business-type activities (265,227) (181,956) (210,839) (154,722) (52,464) Total primary government 23,878,422 23,638,130 23,288,392 24,860,310 28,142,839 Changes in net position: Governmental activities 624,673 (91,503) 23,499,231 25,015,032 10,059,861 Business-type activities 1,357,108 767,600 (210,839) (154,722) 220,459 Total primary government 1,981,781$ 676,097$ 23,288,392$ 24,860,310$ 10,280,320$ Source: Finance Department, City of Seal Beach. Fiscal Year Changes in Net Position (Continued) Last Ten Fiscal Years (accrual basis of accounting) City of Seal Beach 150 2020 2021 2022 2023 2024 General revenues and other changes in net position: Governmental activities: Taxes: Property taxes 12,358,059$ 12,926,895$ 13,428,911$ 14,468,211$ 15,473,159$ Sales tax 9,108,334 10,146,964 11,443,583 11,666,838 11,494,982 Franchise taxes 1,034,280 1,067,098 1,101,243 1,175,046 1,236,189 Utility users taxes 3,941,877 4,129,727 4,508,593 5,349,003 5,510,087 Transient occupancy taxes 1,298,707 878,165 1,670,504 1,922,823 1,919,725 Other taxes 724,854 720,807 757,421 1,104,573 732,341 Motor vehicle in lieu, unrestricted 21,133 19,070 28,238 25,874 31,179 Use of money and property 1,862,213 151,196 (1,428,396) 781,761 2,673,147 Other 1,463,177 3,270,753 69,001 1,118,893 2,076,956 Transfers 376,483 (324,379) 733,500 733,500 - Extraordinary Gain(loss) - - - - - Total governmental activities 32,189,117 32,986,296 32,312,598 38,346,522 41,147,765 Business-type activities: Use of money and property 391,016 256,845 218,203 289,885 401,277 Other - - - - - Transfers (376,483) 324,379 (733,500) (733,500) - Extraordinary Gain(loss) - - - - - Total business-type activities 14,533 581,224 (515,297) (443,615) 401,277 Total primary government 32,203,650 33,567,520 31,797,301 37,902,907 41,549,042 Changes in net position: Governmental activities (2,005,399) 2,606,373 173,889 13,709,823 5,149,067 Business-type activities (1,189,180) (261,087) (645,979) 144,352 (1,367,770) Total primary government (3,194,579)$ 2,345,286$ (472,090)$ 13,854,175$ 3,781,297$ Source: Finance Department, City of Seal Beach. Fiscal Year (accrual basis of accounting) Changes in Net Position (Continued) Last Ten Fiscal Years City of Seal Beach 151 2015 2016 2017 2018 2019 General Fund: Nonspendable 666,102$ 682,859$ 2,877$ 32,495$ 33,795$ Restricted - - 12,277 5,266 5,419 Committed - - - - - Assigned 7,623,994 7,610,286 7,478,281 8,289,150 10,152,504 Unassigned 21,711,517 20,811,037 19,770,202 17,491,623 11,922,370 Total general fund 30,001,613$ 29,104,182$ 27,263,637$ 25,818,534$ 22,114,088$ All other governmental funds: Nonspendable -$ -$ -$ -$ -$ Restricted 3,842,792 3,866,679 4,131,203 4,110,558 4,819,993 Assigned - - - - - Unassigned (525,408) (51,254) (184,908) (34,159) (425,639) Total all Other government funds: 3,317,384$ 3,815,425$ 3,946,295$ 4,076,399$ 4,394,354$ Source: Finance Department, City of Seal Beach City of Seal Beach Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) 152 2020 2021 2022 2023 2024 General Fund: Nonspendable 41,776$ 2,069,748$ 51,506$ 42,705$ 2,978,558$ Restricted 2,190,469 2,046,356 2,034,271 1,935,127 1,309,234 Committed 17,067,216 17,546,968 23,523,980 25,322,120 23,224,408 Assigned 4,370,059 4,704,595 4,853,380 5,097,455 6,714,071 Unassigned 3,509,871 3,629,265 3,885,769 4,927,044 5,242,784 Total general fund 27,179,391$ 29,996,932$ 34,348,906$ 37,324,451$ 39,469,055$ All other governmental funds: Nonspendable -$ -$ -$ -$ -$ Restricted 5,410,982 5,037,618 6,167,958 7,477,277 7,844,070 Assigned - - - - 87,347 Unassigned (671,694) (373,870) (554,027) (692,160) (761,934) Total all Other government funds: 4,739,288$ 4,663,748$ 5,613,931$ 6,785,117$ 7,169,483$ Source: Finance Department, City of Seal Beach City of Seal Beach Fund Balances of Governmental Funds (Continued) Last Ten Fiscal Years (modified accrual basis of accounting) 153 2015 2016 2017 2018 2019 Revenues: Taxes 23,114,876$ 22,828,144$ 23,368,371$ 24,021,668$ 25,903,080$ Licenses and permits 1,377,131 1,304,924 1,234,590 1,480,971 1,416,737 Intergovernmental 1,725,127 1,388,056 744,904 1,530,815 857,923 Charges for services 3,961,691 4,214,690 5,349,083 4,586,949 4,878,405 Use of money and property 725,720 1,004,572 426,418 347,117 1,772,775 Fines and forfeitures 1,146,509 1,110,606 152,845 1,089,515 946,048 Contributions from other governments 330,885 283,222 180,511 55,765 45,994 Miscellaneous 375,588 537,777 492,245 520,420 2,319,864 Total revenues 32,757,527 32,671,991 31,948,967 33,633,220 38,140,826 Expenditures Current: General government 5,462,668 5,351,130 5,673,309 5,757,859 6,169,490 Public safety 15,811,773 16,378,416 17,395,965 18,148,871 19,240,608 Community development 1,362,308 1,175,339 1,186,081 1,488,921 1,446,025 Community services 1,129,497 1,075,282 1,004,690 954,018 942,804 Public works 5,631,015 4,862,058 4,586,373 4,967,066 5,160,373 Capital outlay 4,578,308 2,645,823 1,506,476 2,567,080 7,378,774 Debt service: Principal retirement 1,337,573 1,490,150 2,162,379 1,640,521 1,754,905 Interest and fiscal charges 441,040 355,819 353,322 231,779 152,863 Total expenditures 35,754,182 33,334,017 33,868,595 35,756,115 42,245,842 Excess (deficiency) of revenue over (under) expenditures (2,996,655) (662,026) (1,919,628) (2,122,895) (4,105,016) Other financing sources (uses): Transfers in 7,012,848 5,602,944 4,472,129 5,714,614 9,381,712 Transfers out (6,919,381) (5,340,308) (4,262,176) (4,906,717) (8,663,187) Proceeds on sale of assets - - - - - Total other financing sources (uses) 93,467 262,636 209,953 807,897 718,525 Net change in fund balances (2,903,188)$ (399,390)$ (1,709,675)$ (1,314,998)$ (3,386,491)$ Debt service as a percentage of noncapital expenditures 5.7% 6.0% 7.8% 5.6% 5.5% Source: Finance Department, City of Seal Beach City of Seal Beach Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) 154 2020 2021 2022 2023 2024 Revenues: Taxes 27,481,580$ 31,711,229$ 34,976,825$ 37,716,674$ $36,366,482 Licenses and permits 844,274 771,615 926,792 1,027,232 939,640 Intergovernmental 4,330,159 2,195,977 6,754,322 1,622,005 5,632,109 Charges for services 4,684,076 4,853,170 5,118,769 5,821,082 6,791,306 Use of money and property 2,003,529 235,061 (1,197,815) 811,518 3,020,467 Fines and forfeitures 1,239,154 1,816,837 1,871,227 1,435,250 1,402,597 Contributions from other governments 60,942 106,528 76,817 77,023 69,471 Miscellaneous 2,995,022 3,431,013 240,917 1,291,231 661,060 Total revenues 43,638,736 45,121,430 48,767,854 49,802,015 54,883,132 Expenditures Current: General government 6,083,705 6,713,025 7,597,539 7,671,076 7,546,164 Public safety 20,921,107 21,895,428 23,892,990 24,570,207 25,508,597 Community development 1,408,699 2,203,834 2,185,707 2,218,015 2,699,327 Community services 852,664 1,131,906 1,174,593 1,219,014 1,399,938 Public works 6,672,230 5,748,811 6,884,360 6,625,681 8,746,664 Capital outlay 1,729,166 3,439,241 1,875,596 3,609,554 6,014,889 Debt service: Principal retirement 494,370 496,920 532,556 789,974 808,805 Interest and fiscal charges 88,612 70,479 55,856 36,651 34,080 Total expenditures 38,250,553 41,699,644 44,199,197 46,740,172 52,758,464 Excess (deficiency) of revenue over (under) expenditures 5,388,183 3,421,788 4,568,657 3,061,843 2,124,668 Other financing sources (uses): Transfers in 4,141,526 2,858,654 2,697,577 4,359,511 4,621,337 Transfers out (4,119,472) (3,657,439) (1,964,077) (3,274,623) (4,621,337) Proceeds on sale of assets - 119,000 - - - Total other financing sources (uses) 22,054 (679,785) 733,500 1,084,888 - Net change in fund balances 5,410,237$ 2,742,003$ 5,302,157$ 4,146,731$ 2,124,668$ Debt service as a percentage of noncapital expenditures 1.6% 1.5% 2.4% 1.9% 1.8% City of Seal Beach Changes in Fund Balances of Governmental Funds (Continued) Last Ten Fiscal Years (modified accrual basis of accounting) Source: Finance Department, City of Seal Beach 155 Fiscal Year Taxable Taxable Total Ended Assessed Secured Assessed Direct Tax June 30 Secured Unsecured Value (Note 1) Unsecured Value Rate 2015 4,709,232,207 182,551,480 4,891,783,687 556,548,983 3,863,246 560,412,229 1.00% 2016 4,795,647,822 285,081,875 5,080,729,697 530,597,248 32,693,247 563,290,495 1.00% 2017 4,978,010,106 152,713,169 5,130,723,275 300,533,393 2,090,757 302,624,150 1.00% 2018 5,237,420,910 128,598,670 5,366,019,580 309,374,617 2,150,646 311,525,263 1.00% 2019 5,475,552,225 150,040,128 5,625,592,353 320,174,015 2,103,366 322,277,381 1.00% 2020 5,817,854,806 159,142,122 5,976,996,928 363,940,344 3,281,367 367,221,711 1.00% 2021 6,051,396,970 155,640,583 6,207,037,553 375,196,393 5,389,789 380,586,182 1.00% 2022 6,253,516,508 145,853,857 6,399,370,365 414,507,317 7,059,017 421,566,334 1.00% 2023 6,688,389,755 162,820,842 6,851,210,597 - - - 1.00% 2024 7,106,450,551 184,902,698 7,291,353,249 - - - 1.00% GENERAL NOTE: Source: County of Orange, Auditor - Controller Assessed Valuations Detail In 1978 the voters of the State of California passed Proposition 13 which limited property taxes to a total maximum rate of 1% based upon the assessed value of the property being taxed. Each year, the assessed value of property may be increased by an "inflation factor" (limited to a maximum increase of 2%). With few exceptions, property is only re-assessed at the time it is sold to a new owner. At that point, the new assessed value is reassessed at the purchase price of the property sold. The assessed valuation data shown above represents the only data currently available with respect to the actual market value of taxable property and is subject to the limitations described above. City of Seal Beach Assessed Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years City Redevelopment Agency Note 1: Fiscal Year ending June 30, 2022 is the last year tax increment within the former Seal Beach RDA boundaries will be received. For Fiscal Year ended June 2023, per Resolution of the Orange Countywide Oversight Board No. 22-001 Successor Agency to the Seal Beach Redevelopment Agency was dissolved. Beginning with Fiscal Year ending June 30, 2023, the city receives the property tax per AB 8 process. 156 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 City Direct Rates: City Direct Rate - Basic Levy 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 Overlapping Rates: Orange County Bonds 0.04719 0.06135 0.06001 0.06072 0.05881 0.05509 0.06379 0.05996 0.05880 0.04565 Metropolitan Water District 0.00350 0.00350 0.00350 0.00350 0.00350 0.00350 0.00350 0.00350 0.00350 0.00350 Other Districts 0.07468 0.07779 0.07367 0.09803 0.16561 0.13116 0.14183 0.12906 0.13106 0.11733 Total Direct & Overlapping Rates 1.12537 1.14264 1.13718 1.16225 1.22792 1.18975 1.20912 1.19252 1.19336 1.16648 GENERAL NOTES: Source: HdL, County of Orange, Auditor-Controller City of Seal Beach Direct and Overlapping Property Tax Rates Last Ten Fiscal Years In 1978, California voters passed Proposition 13 which sets the property tax rate at a 1.00% fixed amount. This 1.00% is shared by all taxing agencies for which the subject property resides within. In addition to the 1.00% fixed amount, property owners are charged taxes as a percentage of assessed property values for the payment of any voter- approved bonds. The City receives only a portion of this basic 1% levy. Overlapping rates are those of local and county governments that apply to property owners within the City. Not all overlapping rates apply to all city property owners. 157 Percent of Percent of Total City Total City Taxable Taxable Taxable Taxable Assessed Assessed Assessed Assessed Taxpayer Value Value Value Value Seal Beach Mutual 1,294,241,561$ 17.75% 705,534,817$ 14.42% Boeing 140,089,705 1.92% 117,865,436 2.41% CPT Shops at Rossmoor LLC 139,807,209 1.92% 127,841,584 2.61% ASN Long Beach LLC 133,524,816 1.83% 167,006,959 3.41% Terra Funding-Bixby Ranch LLC 100,943,739 1.38% 85,385,900 1.75% Ranch Town Center LLC 51,472,089 0.71% 43,478,340 0.89% AL United States Seal Beach Senior Housing LP 45,184,721 0.62% 47,219,048 0.97% OE 1729 Apollo CT LLC 36,108,000 0.50% OXY Long Beach Inc 33,106,386 0.45% 152,315,621 3.11% Farmers and Merch Bank 32,670,999 0.45% DCOR LLC 51,205,140 1.05% Hellman Properties 33,122,715 0.68% 2,007,149,225$ 27.53% 1,530,975,560$ 31.30% Source: HDL Coren & Cone City of Seal Beach Current Year and Ten Years Ago Principal Property Taxpayers 2024 2015 158 Fiscal Taxes Levied Collections in Year Ended for the Percent Subsequent Percent June 30 Fiscal Year Amount of Levy Years Amount of Levy 2015 7,037,415 6,821,353 97.93% 73,362 10,295,379 98.63% 2016 7,477,860 7,201,613 97.36% 81,860 10,278,216 98.14% 2017 7,858,469 7,623,300 97.85% 65,706 10,776,371 98.45% 2018 8,244,985 8,056,409 98.35% 75,788 11,292,740 98.93% 2019 8,681,340 8,278,388 95.36% 74,350 8,352,738 96.21% 2020 9,424,684 9,274,535 98.41% 81,504 9,356,039 99.27% 2021 9,740,869 9,591,161 98.46% 101,723 9,692,884 99.51% 2022 10,134,749 9,961,155 98.29% 95,453 10,056,608 99.23% 2023 10,819,610 10,662,521 98.55% 107,920 10,770,441 99.55% 2024 11,423,367 11,227,941 98.29% 144,439 11,372,380 99.55% Source: Orange County Tax Ledger City of Seal Beach Property Tax Levies and Collections Last Ten Fiscal Years Total Collections to Date Collected within the Fiscal Year of Levy 159 Fiscal Year Pension Fire Total Ended Obligation Station Governmental June 30 Leases Bonds Bonds Climatec Subscriptions Activities 2015 - 4,411,000 3,675,000 1,488,358 - 9,574,358 2016 - 3,461,000 3,255,000 1,368,208 - 8,084,208 2017 - 2,414,000 2,835,000 672,829 - 5,921,829 2018 - 1,263,000 2,415,000 603,308 - 4,281,308 2019 - - 1,995,000 531,403 - 2,526,403 2020 - - 1,575,000 457,033 - 2,032,033 2021 - - 1,155,000 380,113 - 1,535,113 2022 237,517 - 735,000 300,555 949,058 2,222,130 2023 327,111 - 315,000 218,963 694,445 1,555,519 2024 210,272 - - - 455,855 666,127 Notes: Details regarding the City's outstanding debt can be found in the notes to the financial statements. *Data not readily available. Source: Finance Department, City of Seal Beach Governmental Activities City of Seal Beach Last Ten Fiscal Years Ratios of Outstanding Debt by Type 160 Fiscal Year Sewer 2011 Sewer Total Total Percentage Debt Ended Water Board Installment State Revolving Business-type Primary of Personal Per June 30 Loan Agreement Agreement Subscriptions Activities Government Income 1 Capita 1 2015 - 2,705,000 3,893,311 - 6,598,311 16,172,669 * 697 2016 - 2,565,000 3,718,034 - 6,283,034 14,367,242 * 613 2017 - 2,420,000 3,538,201 - 5,958,201 11,880,030 * 483 2018 872,555 2,270,000 3,353,690 - 6,496,245 10,777,553 * 398 2019 783,064 2,110,000 3,164,384 - 6,057,448 8,583,851 * 345 2020 654,381 1,940,000 2,970,155 - 5,564,536 7,596,569 * 304 2021 569,945 1,765,000 2,770,876 - 5,105,821 6,640,934 * 266 2022 485,509 1,580,000 2,566,416 357,237 4,989,162 7,211,292 * 290 2023 401,073 1,385,000 2,356,639 277,614 4,420,326 5,975,845 * 241 2024 358,855 1,180,000 2,141,409 204,545 3,884,809 4,550,936 * 187 Notes: Details regarding the City's outstanding debt can be found in the notes to the financial statements. 1See the schedule of Demographic and Economic Statistics for personal income and population data. *Data not readily available. Source: Finance Department, City of Seal Beach Business-type Activities City of Seal Beach Ratios of Outstanding Debt by Type (Continued) Last Ten Fiscal Years 161 Fiscal Year Private Percent of Ended Placement Total Assessed Per June 30 Bonds Bonds Bonds Value 1 Capita 2015 - 8,086,000 8,086,000 0.15% 329 2016 - 6,716,000 6,716,000 0.12% 273 2017 - 4,507,180 5,249,000 0.10% 213 2018 - 2,937,013 2,937,013 0.05% 118 2019 - 1,995,000 1,995,000 0.03% 80 2020 - 1,575,000 1,575,000 0.02% 63 2021 - 1,155,000 1,155,000 0.02% 46 2022 - 735,000 735,000 0.01% 30 2023 - 315,000 315,000 0.00% 13 2024 - - - 0.00% - NOTES: 1Assessed value has been used because the actual value of taxable property is not readily available in the State of California. City of Seal Beach Last Ten Fiscal Years Ratio of General Bonded Debt Outstanding General bonded debt is debt payable with governmental fund resources and general obligation bonds recorded in enterprise 162 2022-23 Assessed Valuation:$7,289,725,900 Total Debt City’s Share of OVERLAPPING TAX AND ASSESSMENT DEBT: 6/30/2024 % Applicable (1)Debt 6/30/24 Metropolitan Water District $18,210,000 0.19% $34,235 Coast Community College District 886,956,084 2.906 25,774,944 North Orange Jt. Community College District 291,560,678 1.141 3,326,707 Los Alamitos Unified School District School Facilities Improvement District No. 1 215,670,227 48.383 104,347,726 Huntington Beach Union High School District 137,329,998 0.001 1,373 Ocean View School District 150,895,000 0.003 4,527 City of Seal Beach Community Facilities District No. 2002-1 2,360,000 100 2,360,000 City of Seal Beach Community Facilities District No. 2005-1 6,410,000 100 6,410,000 TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT $142,259,512 DIRECT AND OVERLAPPING GENERAL FUND DEBT: Orange County General Fund Obligations $440,385,000 0.95% $4,170,446 Orange County Board of Education Certificates of Participation 10,030,000 0.947 94,984 Coast Community College District Certificates of Participation 1,075,000 2.906 31,240 Coast Community College District Pension Obligation Bonds 925,000 2.906 26,881 Los Alamitos Unified School District Certificates of Participation 30,432,816 53.609 16,314,728 Huntington Beach Union High School District General Fund Obligations 51,436,090 0.001 514 Ocean View School District General Fund Obligations 12,725,000 0.003 382 North Orange County Regional Occupation Program Certificates of Participation 7,350,000 4.377 321,710 City of Seal Beach 4,550,936 100 4,550,936 TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT $25,511,821 COMBINED TOTAL DEBT $167,771,333 (2) (1) The percentage of overlapping debt applicable to the city is estimated using taxable assessed property value. Applicable percentages were estimated by determining the portion of the overlapping district's assessed value that is within the boundaries of the city divided by the district's total taxable assessed value. (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations. Ratios to 2023-24 Assessed Valuation: Total Overlapping Tax and Assessment Debt 1.95% Total Direct Debt 0.06% Combined Total Debt 2.30% June 30, 2024 Schedule of Direct and Overlapping Debt City of Seal Beach 163 2015 2016 2017 2018 2019 Debt limit 817,720,762$ 846,747,277$ 820,537,899$ 860,757,686$ 892,030,484$ Total net debt applicable to limit - - - - - Legal debt margin 817,720,762$ 846,747,277$ 820,537,899$ 860,757,686$ 892,030,484$ Total debt applicable to the limit as a percentage of debt limit 0.0% 0.0% 0.0% 0.0% 0.0% Note: 1Under state finance law, the City of Seal Beach's outstanding general obligation debt should not exceed 15 percent of total assessed property value. By law, the general obligation debt subject to the limitation may be offset by amounts set aside for repaying general obligation bonds. Source: Orange County Tax Assessor's Office City of Seal Beach Legal Debt Margin Information Last Ten Years 164 2020 2021 2022 2023 2024 Debt limit 952,282,846$ 930,063,188$ 960,333,816$ 1,028,618,366$ 1,093,458,885$ Total net debt applicable to limit - - - - - Legal debt margin 952,282,846$ 930,063,188$ 960,333,816$ 1,028,618,366$ 1,093,458,885$ Total debt applicable to the limit as a percentage of debt limit 0.0% 0.0% 0.0% 0.0% 0.0% Legal Debt Margin Calculation for Fiscal Year 2024 Assessed Valuation 7,289,725,900$ Debt percentage 1 15% Debt limit 1,093,458,885$ Debt applicable to limit - Legal debt margin 1,093,458,885$ Note: 1Under state finance law, the City of Seal Beach's outstanding general obligation debt should not exceed 15 percent of total assessed property value. By law, the general obligation debt subject to the limitation may be offset by amounts set aside for repaying general obligation bonds. Source: Orange County Tax Assessor's Office City of Seal Beach Legal Debt Margin Information (Continued) Last Ten Years 165 Fiscal Year Ended Tax June 30 Increment Principal Interest Coverage 2015 1,084,135 515,000 204,269 1.51 2016 1,329,344 545,000 177,413 1.84 2017 1,218,363 575,000 148,759 1.68 2018 1,125,053 600,000 118,302 1.57 2019 1,198,637 635,000 86,013 1.66 2020 234,102 605,000 53,078 0.36 2021 530,978 160,000 32,519 2.76 2022 - - - - 2023 - - - - 2024 - - - - Source: Finance Department, City of Seal Beach Last Ten Fiscal Years Pledged-Revenue Coverage City of Seal Beach Debt Service Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. 2000 Tax Allocation Refunding Bonds The bonds were fully paid off during the year ended June 30, 2021. 166 Personal Per Capita Calendar Income Personal Unemployment Year Population (in thousands) Income Rate 2014 24,586 1,074,777 43,715 4.8% 2015 25,078 1,141,053 45,500 3.9% 2016 24,890 1,164,182 46,773 3.5% 2017 25,984 1,199,969 46,181 3.2% 2018 25,073 1,277,436 50,948 3.3% 2019 24,992 1,370,609 54,841 3.2% 2020 24,443 1,398,936 57,232 8.2% 2021 24,846 1,426,979 57,432 6.0% 2022 24,647 1,538,564 62,423 3.4% 2023 24,350 1,649,508 67,741 3.9% Sources: HDL Coren & Cone City of Seal Beach Demographic and Economic Statistics Last Ten Calendar Years 167 Business Business Name 2023 2014 Category 76 X X Service Stations Bed Bath & Beyond X Home Furnishings Boeing X Transporation-Non-Auto Burlington X Family Apparel Chevron X X Service Stations Chevron X X Service Stations Chevron X Service Stations Chick Fil A X Quick-Service Restaurants CVS Pharmacy X X Drug Stores Energy Tubulars X X Petroleum Prod/Equip EVLO Energy Storage X Energy/Utilities Hoff's Hut X Casual Dining Home Goods X X Home Furnishings In N Out Burgers X X Quick-Service Restaurants Kohls X X Department Stores Marshalls X X Family Apparel Mobil X X Service Stations Old Ranch Country Club X X Leisure/Entertainment Original Parts Group X Automotive Supply Stores Pavillions X X Grocery Stores Liquor Petsmart X X Specialty Stores Ralphs X X Grocery Stores Liquor Roger Dunn Golf Shop X X Sporting Goods/Bike Stores Seal Beach Chevron X Service Stations Spaghettini X X Fine Dining Sprouts Farmers Market X Grocery Stores Staples X Office Supplies/Furniture Target X X Discount Dept Stores Toys R Us X Specialty Stores Ulta Beauty X X Specialty Stores Walts Wharf X X Fine Dining 2023 Percent of Calendar Year Total Paid by Top 25 Accounts = 56.01% 2014 Percent of Calendar Year Total Paid by Top 25 Accounts = 61.92% Firms Listed Alphabetically: Period January - December Source: Hinderliter, de Llamas & Associates, State Board of Equalization, CDTFA, State Controller's Office City of Seal Beach Current Year and Nine Years Ago Top 25 Sales Tax Producers 168 Function 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024* General government 14.64 14.34 15.92 13.00 13.48 13.48 14.75 21.35 21.25 21.82 Public safety 79.13 74.12 77.19 78.50 79.82 79.82 80.78 82.05 86.90 84.02 Public works 10.94 4.97 3.98 6.00 5.00 5.00 17.99 17.99 17.69 17.30 Community development/Services 18.16 17.25 16.53 13.60 14.76 14.76 13.88 13.50 12.44 17.22 Water 13.80 13.82 12.60 12.90 13.15 13.15 8.90 8.90 7.45 8.60 Sewer 5.91 7.11 7.69 6.71 6.89 6.89 5.86 5.86 6.99 6.56 Total 128.26 142.58 131.61 133.91 130.71 133.10 142.16 149.65 152.72 155.52 Source: Finance Department, City of Seal Beach *Position count includes contracted employees in Community Development Total full-time equivalents exclude Commissioners and Reserve Officers but includes Council Members Fiscal Year Last Ten Fiscal Years Full-Time and Part-Time City Employees by Function City of Seal Beach 169 2015 2016 2017 2018 2019 Police: Arrests 798 790 781 854 787 Parking citations issued 21,043 19,264 18,319 19,929 17,663 Public works: Street centerline miles resurfaced 2 1 - 1 1 Number of public right of way permits issued 151 184 259 231 253 Number of street related service requests 45 40 68 109 92 Parks and recreation: Number of recreation classes 781 680 710 1,070 1,100 Number of facility rentals 2,633 557 585 1,030 1,045 Water: Number of water meters replaced 57 76 56 49 49 Acre feet of water used 3,540 3,208 3,259 3,208 3,360 Sewer: Number of feet of sewer cleaned 253,099 217,619 - 217,619 154,000 Number of catch basins cleaned 434 458 216 216 216 Source: City of Seal Beach Fiscal Year City of Seal Beach Operating Indicators by Function Last Ten Fiscal Years 170 2020 2021 2022 2023 2024 Police: Arrests 709 806 1,429 809 1,010 Parking citations issued 20,913 28,644 29,658 24,841 22,985 Public works: Street centerline miles resurfaced 4 3 1 1 4 Number of public right of way permits issued 242 232 213 213 250 Number of street related service requests 44 39 258 258 300 Parks and recreation: Number of recreation classes 790 1,113 955 828 752 Number of facility rentals 690 314 1,020 773 1,765 Water: Number of water meters replaced 104 154 89 89 98 Acre feet of water used 3,276 3,471 3,086 3,086 3,331 Sewer: Number of feet of sewer cleaned 146,619 126,563 190,569 190,569 105,607 Number of catch basins cleaned 216 217 218 218 454 Source: City of Seal Beach Last Ten Fiscal Years Operating Indicators by Function (Continued) City of Seal Beach Fiscal Year 171 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Police: Stations 2222222222 Patrol units 34 34 34 34 34 34 34 34 34 34 Public works: Streets (center line miles) 43 43 43 43 43 43 43 43 43 43 Sidewalk (miles) 86 86 86 86 86 86 86 86 86 86 Signalized intersections 23 23 23 23 23 23 23 22 22 22 Parks and recreation: Parks 10 10 10 10 10 10 10 13 13 13 Community centers 3333333555 Water: Water pipe (miles) 72 72 72 72 72 72 72 72 72 72 Reservoirs 2222222222 Sewer Sanitary sewers (miles)37 37 37 37 37 37 37 37 37 37 Storm sewers (miles)4444444444 Sewer lift/pump stations 7777777666 Source: City of Seal Beach City of Seal Beach Capital Asset Statistics by Function Last Ten Fiscal Years Fiscal Year 172 TTHHEE CCIITTYY OOFF SSEEAALL BBEEAACCHH PPRROOVVIIDDEESS EEXXCCEELLLLEENNTT CCIITTYY SSEERRVVIICCEESS TTOO EENNHHAANNCCEE TTHHEE QQUUAALLIITTYY OOFF LLIIFFEE AANNDD TTOO PPRREESSEERRVVEE OOUURR SSMMAALLLL TTOOWWNN CCHHAARRAACCTTEERR.. THE CITY OF SEAL BEACH PROVIDES EXCELLENT CITY SERVICES TO ENHANCE THE QUALITY OF LIFE AND TO PRESERVE OUR SMALL TOWN CHARACTER. TTHHEE CCIITTYY OOFF SSEEAALL BBEEAACCHH VVAALLUUEESS:: EEXXCCEELLLLEENNTT CCUUSSTTOOMMEERR SSEERRVVIICCEE MMUUTTUUAALL RREESSPPEECCTT TTEEAAMMWWOORRKK PPRROOFFEESSSSIIOONNAALLIISSMM HHOONNEESSTT &&EETTHHIICCAALL BBEEHHAAVVIIOORR THE CITY OF SEAL BEACH VALUES: EXCELLENT CUSTOMER SERVICE MUTUAL RESPECT TEAMWORK PROFESSIONALISM HONEST & ETHICAL BEHAVIOR City of Seal Beach Seal Beach, California Independent Accountants’ Report on Applying Agreed-Upon Procedures to Appropriations Limit Schedule For the Year Ending June 30, 2024 200 E. Sandpointe Avenue, Suite 600 Santa Ana, California 92707 INDEPENDENT ACCOUNTANTS’ REPORT ON APPLYING AGREED-UPON PROCEDURES To the Honorable Mayor and Members of City Council of the City of Seal Beach Seal Beach, California We have performed the procedures enumerated below to the accompanying appropriation limit schedule of the City of Seal Beach, California (the “City”) for the year ending June 30, 2024. The management of the City is responsible for the Appropriations Limit Schedule. The City has agreed to and acknowledged that the procedures performed are appropriate to meet the intended purpose in meeting the requirements of Section 1.5 of Article XIII-B of the California Constitution, which was agreed to by the City and the League of California Cities (as presented int eh publication entitled Agreed-upon Procedures Applied to the Appropriations Limitation Prescribed by Article XIII-B of the California Constitution). This report may not be suitable for any other purpose. The procedures performed may not address all the items of interest to a user of this report and may not meet the needs of all users of this report and, as such, users are responsible for determining whether the procedures performed are appropriate for their purposes. The procedures performed and associated findings are as follows: 1. We obtained the completed worksheets used by the City to calculate its appropriations limit for the year ending June 30, 2024, and verified that the limit and annual calculation factors were adopted by resolution of the City Council. We also verified that the population and inflation options were selected by a recorded vote of the City Council. Finding: No exceptions were noted as a result of our procedures. 2. For the accompanying Appropriations Limit Schedule, we added the prior year’s limit to the total adjustments, and agreed the resulting amount to the current year’s limit. Finding: No exceptions were noted as a result of our procedures. 3. We verified the current year information presented in the accompanying Appropriations Limit Schedule to corresponding information in worksheets used by the City. Finding: No exceptions were noted as a result of our procedures. 4. We verified the appropriations limit presented in the accompanying Appropriations Limit Schedule to the appropriations limit adopted by the City Council. Finding: No exceptions were noted as a result of our procedures. To the Honorable Mayor and Members of City Council of the City of Seal Beach Seal Beach, California Page 2 2 We were engaged by the City to perform this agreed-upon procedures engagement and conducted our engagement in accordance with attestation standards established by the American Institute of Certified Public Accountants. We were not engaged to and did not conduct an examination or review engagement, the objective of which would be the expression of an opinion or conclusion, respectively, on the accompanying Appropriations Limit Schedule. Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements related to our agreed-upon procedures engagement. This report is intended solely for the information and use of the City Council and the management of the City and is not intended to be and should not be used by anyone other than these specified parties. However, this report is a matter of public record and its distribution is not limited. Santa Ana, California January 3, 2024 City of Seal Beach Appropriations Limit Schedule For the Year Ending June 30, 2024 3 Amount Source A. Appropriations Limit from FY 2022-2023 35,968,448$ Prior year appropriation adopted by the City B. Adjustment Factors: 1. Growth in City Population 1.0444 California Department of Finance 2. Per Capita Cost of Living converted to a ratio 1.0072 California Department of Finance 3. Adjustment Factor 1.0519 (B1 * B2) C. Annual Adjustment Increase 1,867,470$ {(B3-1)} * A} D. Other Adjustments 1. Loss responsibility (-)- N/A 2. Transfer to private (-)- N/A 3. Transfer to fees (-)- N/A 3. Assumed responsibility (+)- N/A E. Total Adjustments 37,835,918$ (C+D) F. Appropriations Limit FY 2023-2024 37,835,918$ (A+E) See Accompanying Notes to Appropriations Limit Schedule. City of Seal Beach Notes to Appropriations Limit Schedule For the Year Ending June 30, 2024 4 Note 1 – Purpose of Limited Procedures Review Under Article XIIIB of the California Constitution (the Gann Spending Limitation Initiative), California governmental agencies are restricted as to the amount of annual appropriations from proceeds of taxes. Effective for years beginning on or after July 1, 1990, under Section 1.5 of Article XIIIB, the annual calculation of the appropriations limit is subject to agreed upon procedures in connection with the annual audit. Note 2 – Method of Calculation Under Section 10.5 of Article XIIIB, for fiscal years beginning on or after July 1990, the appropriations limit is required to be calculated based on the limit for the fiscal year 1986-87, adjusted for the inflation and population factors discussed in Notes 3 and 4 below. Note 3 – Population Factors A California governmental agency may use as its population factor either the annual percentage change of the jurisdiction’s own population or the annual percentage change in population of the county where the jurisdiction is located. The factor adopted by the City for the year ending June 30, 2024, represents the annual percentage change in population for the City. Note 4 – Inflation factors A California governmental agency may use as its inflation factor either the annual percentage change in the 4th quarter per capita personal income (which percentage is supplied by the California Department of Finance) or the percentage change in the local assessment roll from the preceding year due to the change of local nonresidential construction. The factor adopted by the City for the year ending June 30, 2024, represents the annual percentage change in per capital personal income. Note 5 – Other Adjustments A California government agency may be required to adjust its appropriations limit when certain events occur, such as the transfer of responsibility for municipal services to, or from, another government agency or private entity. The City had no such adjustments for the year ending June 30, 2024. Agenda Item E AGENDA STAFF REPORT DATE:February 24, 2025 TO:Honorable Mayor and City Council THRU:Patrick Gallegos, Interim City Manager FROM:Alexa Smittle, Community Development Director SUBJECT:Amendment 1 to the Professional Special Counsel Services Agreement with Telecom Law Firm, P.C. ________________________________________________________________ SUMMARY OF REQUEST: That the City Council adopt Resolution 7617: 1. Approving Amendment 1 to the Professional Special Counsel Services Agreement with Telecom Law Firm, P.C. to approve an increase in compensation of $30,000 for professional legal and general telecommunications services for a revised total not-to-exceed amount of $70,000, and a 12-month extension to expire on June 30, 2026; and, 2. Directing the Interim City Manager to execute Amendment 1 on behalf of the City. BACKGROUND AND ANALYSIS: On August 10, 2023, the City entered into a Special Counsel Services (SCS) agreement with Telecom Law Firm, P.C. (TLF) to provide specialized legal services focused on telecommunications law within the city’s wireless facilities. TLF's expertise has been invaluable in helping the City navigate wireless communications regulations and infrastructure development. The City maintains 11 wireless facilities located on City-owned property, four of which are currently undergoing review with TLF to update lease agreements. The initial agreement allocated $40,000 for TLF to provide professional legal services in municipal telecommunications law and related issues. The proposed SCS amendment would augment the project scope to support the continued legal services. The amendment would add an additional $30,000 for a total project budget of $70,000. This increase reflects the anticipated demand for additional support for the wireless facilities sites that require modifications. In addition, the amendment would extend the contract expiration date by twelve months, to June 30, 2026. Page 2 2 0 0 4 All costs associated with TLF can be recouped directly from the wireless facility leaseholders. This is typically done at the end of a transaction, either through a directly billed fee or through a signing bonus. The City has already recovered all TLF costs associated with completed transactions and will continue to ensure these fees are ultimately paid by the wireless facility leaseholders. The extended timeline and increased budget will provide the City with the essential support needed for ongoing and future wireless facility lease negotiations. ENVIRONMENTAL IMPACT: The proposed Agreement is exempt from the California Environmental Quality Act (“CEQA”) pursuant to Section 15061(b)(3) of the State CEQA Guidelines which states that CEQA only applies to projects that have potential for causing a significant effect on the environment. Approval of the professional services agreement will not have a significant effect on the environment. LEGAL ANALYSIS: The City Attorney has reviewed and approved as to form. FINANCIAL IMPACT: Adequate funding is available for Fiscal Year 2024-2025 in account 217-300-0377- 51280. The remaining funding requirements will be addressed in the Fiscal Year 2025-2026 Budget. STRATEGIC PLAN: This item is not applicable to the Strategic Plan. RECOMMENDATION: That the City Council adopt Resolution 7617: 1. Approving Amendment 1 to the Professional Special Counsel Services Agreement with Telecom Law Firm, P.C. to approve an increase in compensation of $30,000 for professional legal and general telecommunications services for a revised total not-to-exceed amount of $70,000, and a 12-month extension to expire on June 30, 2026; and, 2. Directing the Interim City Manager to execute Amendment 1 on behalf of the City. Page 3 2 0 0 4 SUBMITTED BY: NOTED AND APPROVED: Alexa Smittle Patrick Gallegos Alexa Smittle, Community Development Director Patrick Gallegos, Interim City Manager Prepared by: Megan Coats, Management Analyst ATTACHMENTS: A. Resolution 7617 B. Amendment 1 to the Professional Special Counsel Services Agreement with Telecom Law Firm, P.C. C. Original Professional Special Counsel Services Agreement with Telecom Law Firm, P.C. RESOLUTION 7617 A RESOLUTION OF THE SEAL BEACH CITY COUNCIL APPROVING AND AUTHORIZING AMENDMENT 1 TO THE PROFESSIONAL SPECIAL COUNSEL SERVICES AGREEMENT WITH TELECOM LAW FIRM, P.C. WHEREAS, the City of Seal Beach (City) and Telecom Law Firm, P.C. (Consultant) are parties to that certain Professional Special Counsel Services Agreement dated August 10, 2023, for specialized legal services focused on telecommunications law within the city’s wireless facility sites (collectively the “Agreement”); and, WHEREAS, the City currently maintains 11 wireless facility sites that are undergoing review to ensure compliance; and, WHEREAS, the initial agreement allocated funding for professional legal services in general municipal law, telecommunications law, and related issues; and, WHEREAS, additional support is required for wireless facility sites for modifications, necessitating an increase in the project budget and an extension of the contract expiration date. NOW, THEREFORE, THE SEAL BEACH CITY COUNCIL DOES HEREBY RESOLVE: Section 1. The City Council hereby approves Amendment 1 to the Professional Special Counsel Services Agreement with Telecom Law Firm, P.C., extending the Term through June 30, 2026, and approving an increase in compensation of $30,000 for professional legal and general telecom services, for a revised total not-to-exceed amount of $70,000. Section 2. The Council hereby directs the Interim City Manager to execute Amendment 1 on behalf of the City. PASSED, APPROVED, and ADOPTED by the Seal Beach City Council at a regular meeting held on the 24th day of February 2025 by the following vote: AYES: Council Members NOES: Council Members ABSENT: Council Members ABSTAIN: Council Members 9 8 5 0 Lisa Landau, Mayor ATTEST: Gloria D. Harper, City Clerk STATE OF CALIFORNIA } COUNTY OF ORANGE } SS CITY OF SEAL BEACH } I, Gloria D. Harper, City Clerk of the City of Seal Beach, do hereby certify that the foregoing resolution is the original copy of Resolution 7617 on file in the office of the City Clerk, passed, approved, and adopted by the City Council at a regular meeting held on the 24th day of February 2025. Gloria D. Harper, City Clerk PROFESSIONAL SERVICES AGREEMENT Amendment 1 for Special Counsel Services Relating to Telecommunications Law and Related Issues Between City of Seal Beach 211 - 8th Street Seal Beach, CA 90740 & Telecom Law Firm, P.C. 17252 Hawthorne Blvd., #438 Torrance, CA 90504 This Amendment 1, dated February 24, 2025, amends that certain agreement (Agreement) made as of August 10, 2023 by and between the City of Seal Beach (City), a California charter city, and Telecom Law Firm, P.C. (Special Counsel). 2 of 3 RECITALS A. City and Special are parties to the Agreement, pursuant to which Special Counsel provides legal services relating to telecommunications law and related issues. B. On May 14, 2024, City’s City Manager exercised one administration extension to extend the term of the agreement to June 30, 2025. C. City and Special Counsel wish to amend the Agreement for Special Counsel to continue providing such services through June 30, 2026 and to increase Special Counsel’s not-to-exceed compensation by $30,000. AMENDMENT NO. 1 NOW, THEREFORE and in consideration of the foregoing and of the mutual covenants and promises herein set forth, the parties agree to amend the Agreement as follows: Section 1. Section 4 (Term; Extensions) of the Agreement is hereby amended to read as follows: “Term, Extensions. Unless earlier terminated or extended, the term of this Agreement will be from August 10 . 2023 to and through June 30, 2026. By mutual written agreement, the Parties may extend this agreement for up to three additional one year terms with the first one year extension term commencing on June 30, 2026.” Section 2. Section 6 (Compensation) of the Agreement is hereby amended to read as follows: “Compensation. City shall compensate Special Counsel for the performance of the Services at the rates shown on Exhibit " A" up to a maximum of $70, 000. No other compensation for the Services will be allowed except for items covered by subsequent amendments to this Agreement.” Section 3. Except as expressly modified or supplemented by this Amendment 1, all other provisions of the Agreement shall remain unaltered and in full force and effect. Section 4. The person executing this Amendment 1 on behalf of Special Counsel warrants that he or she is fully authorized to execute this Amendment 1 on behalf of said Party, and that by his or her execution, Special Counsel is formally bound to the provisions of this Amendment 1. AGREEMENT FOR SPECIAL COUNSEL SERVICES Telecom Law Firm, P.C.] Ain THIS AGREEMENT is made and ent red into as of the lJ' day of 2023, and effective as of - iQ , 2023 (the Effective Date"3 y and between the City of Seal Beach ("City"), municipal corporation of the State of California and Telecom Law Firm, P.C. ("Special Counsel") (collectively, the "Parties"). RECITALS A. City requires the professional legal services of attorneys who are experienced in general municipal law focused on telecommunications law and related issues. B. Special Counsel has the necessary experience and history in providing professional legal services and advice related to wired and wireless telecommunications law including, but not limited to, those areas specifically required by the City. C. The Special Counsel will provide City with transactional and advisory services only; any litigation -related services will require a separate agreement. D. The Parties intend this to be a privileged legal services agreement between a law firm (Special Counsel) and its client (City). NOW, THEREFORE, in consideration of these recitals and the mutual covenants contained herein, the Parties agree as follows: AGREEMENT 1. Incorporation. The RECITALS are incorporated into this Agreement by this reference. 2. Scope of Work. City retains Special Counsel to perform, and Special Counsel agrees to render, those services associated with telecommunications law and related issues (the "Services") in accordance with this Agreement's terms and conditions. Special Counsel designates Dr. Jonathan L. Kramer (CA SBN 244074) and Mr. Robert C. May III (CA SBN 291483) as the Attorneys jointly responsible to direct or perform this Scope of Work. 3. Standard of Performance. While performing the Services, Special Counsel will exercise the reasonable professional care and skill customarily exercised by reputable members of the California State Bar practicing in telecommunications law related to wireless facilities including leasing, fiber optic networks, two-way radio networks, point-to-point microwave systems, and construction, municipal operations, and enforcements related to those services, and will use reasonable diligence and judgment while exercising its professional skill and expertise. 4. Term Extensions. Unless earlier terminated or extended, the term of this Agreement will be from August 10 . 2023 to and through June 30, 2024. By mutual written agreement, the Parties may extend this agreement for up to three additional one year terms with the first one year extension term commencing on July 1, 2024. 5. Time is ofthe Essence. Time is of the essence for each and every provision of this Agreement. 6. Compensation. City shall compensate Special Counsel for the performance of the Services at the rates shown on Exhibit "A" up to a maximum of $40,000. No other compensation for the Services will be allowed except for items covered by subsequent amendments to this Agreement. T. Reimbursable Expenses. Special Counsel shall be entitled to reimbursement for all reasonable and necessary expenses incurred from outside vendors related to performance of the Services. Unless agreed upon by Special Council and City, reimbursable expenses exclude electronic legal research, bill preparation and presentation, and general overhead costs. 8. Advancement of Costs. Special Counsel will advance expenses and costs incurred on behalf of the City under this Agreement in an amount not exceeding $500 per month. If costs will exceed $500 per month, those costs shall be paid directly by City or shall be advanced to Special Counsel pursuant to a separate letter agreement. 9. Payment for Services. Special Counsel shall submit itemized monthly invoices to the City accounting for the Services provided and costs incurred pursuant to the terms of this Agreement. Each monthly invoice shall bill in one-tenth (1110) hour increments and shall include the total hours performed to date. Minimum billing requirements are unacceptable to the City and invoice shall charge only for actual time spent. Payment will occur only after receipt by City of invoices sufficiently detailed that clearly set forth by date, the type of work performed, the specific subject of work performed, or legal research performed, and the time spent on a task. City shall make payment to Special Counsel within thirty (30) days of receipt of the invoice, except for those specific items on the invoice which are contested or questioned and returned by City, with written explanation, within thirty (30) days of receipt of the invoice. Special Counsel shall provide to City, a written response to any statement contested or questioned and further, upon request of City, provide City with any and all documents related to the service or costs. No charge shall be made for time expended in providing this information to the City. Special Counsel shall invoice Client monthly for the Services and costs incurred. The form of invoice shall include a cover summary sheet containing only the "attorney services" and the amount being billed therefore; the "costs advanced" and the amount being billed therefore; and a total for all services and costs invoiced. Attached to the summary sheet shall be the detailed backup information which, as to "attorney services", sets forth the dates services were performed; the initials of the attorney performing said services; the hourly rate attributable thereto; the hours or minutes being invoiced, and the total invoiced costs of attorney services. As to "costs advanced', the detailed back up information shall set forth the dates the costs were incurred, the type of cost incurred; and the total of advance costs incurred. 10. Status of Special Counsel. Special Counsel will perform the Services in Special Counsel's own way as an independent contractor and in pursuit of Special Counsel's independent calling, and not as an employee of City. The persons used by Special Counsel to provide services under this Agreement will not be considered employees of City for any purposes. The payment made to Special Counsel pursuant to the Agreement will be the full and complete compensation to which Special Counsel is entitled. City will not make any federal or state tax withholdings on behalf of Special Counsel or its agents, employees, or subcontractors. 2 contributions on behalf of Special Counsel or its employees or subcontractors. Special Counsel agrees to indemnify City within thirty (30) days for any tax, retirement contribution, social security, overtime payment, unemployment payment or workers' compensation payment, including, but not limited to, those based on any provision of the Federal Affordable Care Act which City may be required to make on behalf of Special Counsel or any agent, employee, or subcontractor of Special Counsel for work done under this Agreement. At the City's election, City may deduct the indemnification amount from any balance owing to Special Counsel. 11. Subcontracting. Special Counsel will not subcontract any portion of the Services without prior written approval of City Attorney or his/her designee. If Special Counsel subcontracts any of the Services, Special Counsel will be fully responsible to City for the acts and omissions of Special Counsel's subcontractor and of the persons either directly or indirectly employed by the subcontractor, as Special Counsel is for the acts and omissions of persons directly employed by Special Counsel. Nothing contained in this Agreement will create any contractual relationship between any subcontractor of Special Counsel and City. Special Counsel will be responsible for payment of subcontractors. Special Counsel will bind every subcontractor and every subcontractor of a subcontractor by the terms of this Agreement applicable to Special Counsel's work unless specifically noted to the contrary in the subcontract and approved in writingbyCity. 12. Other Special Counsels. The City reserves the right to employ other special counsels in connection with the Services. 13. Indemnification. Special Counsel will indemnify and hold harmless City and its officers, agents, employees and volunteers from and against all claims, damages, losses and expenses including attorney fees arising out of the performance of the Services to the extent they are caused by the willful misconduct or negligent act or omission of the Special Counsel, any subcontractor, anyone directly or indirectly employed by any of them or anyone for whose acts any of them may be liable. The Parties expressly agree that any reasonable payment, attorney's fee, cost or expense City incurs or makes to or on behalf of an injured employee under the City's self- administered workers' compensation is included as a loss, expense or cost for the purposes of this section to the extent such injury is caused by willful misconduct or negligent act or omission of Special Counsel, and that this section will survive the expiration or early termination of the Agreement. 14. Insurance. Special Counsel will obtain and maintain for the duration of the Agreement and any and all amendments, insurance against claims for injuries to persons or damage to property which may arise out of or in connection with performance of the Services by Special Counsel or Special Counsel's agents, representatives, employees or subcontractors. The insurance will be obtained from an insurance carrier admitted and authorized to do business in the State of California. The insurance carrier is required to have a current Best's Key Rating of not less than "A:VlU' 13.1 Coverages and Limits. Special Counsel will maintain the types of coverages and minimum limits indicated below, unless Risk Manager or City Manager, in consultation with the City Attorney approves a lower amount. These minimum amounts of coverage will not constitute any limitations or cap on Special Counsel's indemnification obligations under this Agreement. City, its officers, agents, volunteers and employees make no representation that the limits of the insurance specified to be carried by Special Counsel pursuant 3 to this Agreement are adequate to protect Special Counsel. If Special Counsel believes that any required insurance coverage is inadequate, Special Counsel will obtain such additional insurance coverage, as Special Counsel deems adequate, at Special Counsel's sole expense. 13.1.1 Commercial General Liability Insurance $1,000,000 combined single -limit per occurrence for bodily injury, personal injury and property damage. If the submitted policies contain aggregate limits, general aggregate limits will apply separately to the work under this Agreement or the general aggregate will be twice the required per occurrence limit. 13.1.2 Automobile Liability. $1,000,000 combined single -limit per accident for bodily injury and property damage. 13.1.3 Workers' Compensation and Employer's Liabiliy. Workers' Compensation limits as required by the California Labor Code and Employer's Liability limits of 1,000,000 per accident for bodily injury. Workers' Compensation and Employer's Liability insurance will not be required if Special Counsel has no employees and provides, to City's satisfaction, a declaration stating this. 13.1.4 Professional Liability. Errors and omissions liability appropriate to Special Counsel's profession with limits of not less than $1,000,000 per claim. 13.2 Additional Provisions. Special Counsel will ensure that the policies of insurance required under this Agreement contain, or are endorsed to contain, the following provisions: 13.2.1 For Commercial General Liability Insurance, City, its officers, agents, volunteers and employees will be named as additional insureds. 13.2.2 Special Counsel will obtain occurrence coverage, excluding Professional Liability, which will be written as claims -made coverage. 13.2.3 This insurance will be in force during the life of the Agreement and any extensions of it and will not be canceled without thirty (30) days prior written notice to City sent pursuant to the notice provisions of this Agreement. 13.3 Providing Certificates of Insurance and Endorsements Prior to City's execution of this Agreement, Special Counsel will furnish certificates of insurance and endorsements to City. 13.4 Failure to Maintain Coverage. If Special Counsel fails to maintain any of these insurance coverages, then City will have the option to declare Special Counsel in breach, or may purchase replacement insurance or pay the premiums that are due on existing policies in order to maintain the required coverages. Special Counsel is responsible for any payments made by City to obtain or maintain insurance and City may collect these payments from Special Counsel or deduct the amount paid from any sums due Special Counsel under this Agreement. 13.5 Submission of Insurance Policies. City reserves the right to require, at any time, complete and certified copies of any or all required insurance policies and endorsements. 4 13.6 Primary Coverage. For any claims related to the Services and this Agreement, the Special Counsel's insurance coverage will be primary insurance with respect to City, its officers, agents, volunteers and employees. Any insurance or self-insurance maintained by City for itself, its officers, agents, volunteers and employees, will be in excess of Special Counsel's insurance and not contributory with it. 13.7 Reduction in Coverage/Material Changes. Special Counsel will notify City thirty (30) days prior to any reduction in any of the insurance coverage required pursuant to this Agreement or any material changes to the respective insurance policies. 15. Conflict Waiver. Actual or possible conflict sometimes arises between existing or potential clients. Special Counsel may be required to ask for a conflict waiver in that event. Special Counsel asks for City's understanding and cooperation if Special Counsel requests a conflict waiver in order to undertake or continue representation of another client in manner that will not be specifically detrimental or adverse to City. 16. Maintenance of Records. Special Counsel will maintain complete and accurate records with respect to costs incurred under this Agreement. All such records will be clearly identifiable. Special Counsel will allow a representative of City during normal business hours to examine, audit, and make transcripts or copies of such records and any other such documents created pursuant to this Agreement. Special Counsel will allow inspection of all work, data, documents, proceedings, and activities related to the Agreement for a period of three (3) years from the date of final payment under this Agreement. 17. Ownership of Documents. All work product produced by Special Counsel or its agents, employees, and subcontractors pursuant to this Agreement is the property of City. Special Counsel will provide City with the final version of all briefs, filings, legal memos and work product produced by Special Counsel within a reasonable time, not to exceed ten (10) days, after the work product is made final. In the event this Agreement is terminated, all work product produced by Special Counsel or its agents, employees and subcontractors pursuant to this Agreement will be delivered to City pursuant to the termination clause of this Agreement. Special Counsel will have the right to make copies of the work product for Special Counsel's records. 18. Notices. The name of the persons who are authorized to give written notices or to receive written notice on behalf of City and on behalf of Special Counsel under this Agreement. For City: City of Seal Beach Attn: OvW M" 211 Eighth Street Seal Beach, CA 90740 For Special Counsel: Telecom Law Firm, P.C. Attn: CLIENT NOTICES 3570 Camino del Rio N., Suite 102 San Diego, CA 92108 Except as otherwise stated, all notices to be provided or that may be provided under this Agreement must be in writing and delivered by regular or certified mail. Notices are effective upon actual receipt or actual rejection. Each party will notify the other immediately of any changes of address that would require any notice or delivery to be directed to another address. 5 19. Avoidance of Conflict of Interest. Special Counsel warrants that it has no known financial interest in the subject matter of this Agreement, other than the compensation to be provided for the Services. Special Counsel further warrants that it will comply with all California State Bar Rules of Professional Conduct, including those relating to interests adverse to a client and representing adverse interests. 20. General Compliance with Laws. Special Counsel will keep fully informed of federal, state and local laws and ordinances and regulations which in any manner affect those employed by Special Counsel, or in any way affect the performance of the Services by Special Counsel. Special Counsel will at all times observe and comply with these laws, ordinances, and regulations and will be responsible for the compliance of the Services with all applicable laws, ordinances and regulations. 21. Discrimination and Harassment Prohibited. Special Counsel will comply with all applicable local, state and federal laws and regulations prohibiting discrimination and harassment. 22. Termination of Services. City may terminate Services at any time by delivery to Special Counsel of written notice. After receiving such notice, Special Counsel will cease providing the Services. Special Counsel will cooperate with City in the orderly transfer of all related files and records to City or City's new counsel. Special Counsel may terminate the Services at any time with City's consent or for good cause. Good cause exists if (a) any statement is not paid within sixty (60) days of its date; b) City fails to meet any other obligation under this Agreement and continue in that failure for fifteen (15) days after Special Counsel send written notice to City; (c) City has misrepresented or failed to disclose material facts to Special Counsel, refused to cooperate with Special Counsel, refused to follow Special Counsel's advice on a material mater, or otherwise made Special Counsel's representation unreasonably difficult; or (d) any other circumstance exists in which ethical rules of the legal profession mandate or permit Special Counsel's termination, including situations where a conflict of interest arises. Termination of the Services, whether by City or by Special Counsel, will not relieve the obligation of City to pay for the Services rendered and costs incurred before the Services formally ceased. 23. Covenants Against Contingent Fees. Special Counsel warrants that Special Counsel has not employed or retained any company or person, other than a bona fide employee working for Special Counsel, to solicit or secure this Agreement, and that Special Counsel has not paid or agreed to pay any elected official or employee of City, nor any company or person. 24. Claims and Lawsuits. By signing this Agreement, Special Counsel agrees that any Agreement claim submitted to City must be asserted as part of the Agreement process as set forth in this Agreement and not in anticipation of litigation or in conjunction with litigation. Special Counsel acknowledges that if a false claim is submitted to City by Special Counsel, it may be considered fraud and Special Counsel may be subject to criminal prosecution. Special Counsel acknowledges that California Government Code sections 12650 et seq., the False Claims Act applies to this Agreement and, provides for civil penalties where a person knowingly submits a false claim to a public entity. C.1 25. Jurisdiction and Venue. Any action at law or in equity brought by either of the Parties for the purpose of enforcing a right or rights provided for by this Agreement will be tried in a court of competent jurisdiction in the County of Orange, State of California, and the Parties waive all provisions of law providing for a change of venue in these proceedings to any other county. 26. Successors and Assigns. It is mutually understood and agreed that this Agreement will be binding upon the Parties and their respective successors. Neither this Agreement nor any part of it nor any monies due or to become due under it may be assigned by Special Counsel without the prior consent of City. Notwithstanding the prior sentence, Special Counsel expects to reform itself into a limited liability partnership or other new lawful association of lawyers during the term of this Agreement. So long as Dr. Jonathan L. Kramer and Mr. Robert May III remain the controlling principals of the reformed entity, upon written notice of such reformation to City by Special Counsel, City shall approve the assignment of this agreement to the new entity under the terms and conditions set forth herein. 27. Paragraph Headings. Paragraph headings as used herein are for convenience only and will not be deemed to be a part of such paragraphs and will not be construed to change the meaning thereof. i 28. Entire Agreement. This Agreement embodies the entire Agreement and understanding between the Parties relating to the subject matter of it. In case of conflict, the terms of this Agreement supersede any and all prior written or oral agreement, order or understanding. Neither this Agreement nor any of its provisions may be amended, modified, waived or discharged except in writing signed by both Parties. Balance of page intentionally left blank] 7 29. Authority. The individuals executing this Agreement and the instruments referenced in it on behalf of a Party represents and warrants to the other Party that the signer has the legal power, right and actual authority to bind its Party to the terms and conditions of this Agreement. IT IS SO AGREED by SPECIAL COUNSEL: Telecom Law Firm, P.C. By: DI Jonathan L. Kramer, Esq. ident and Senior Partner 1.1 CITY:. City of Seal Beach, California Was161a, 1", Me, iii Mir ATTEST: By: Gloria D. APPROVED AS TO FORM: 'iLUUN By: Nicholas Ghirelli, Esq , City Attorney GENERAL TELECOM SERVICES] EXHIBIT "A" Discounted Public Agency Hurly Work Fees Partners $350.00 per hour Senior Associate Attorneys $300.00 per hour Associate Attorneys/Of Counsels $280.00 per hour Paralegals $120.00 per hour Legal Assistants $ 70.00 per hour All time billed in 10 -minute increments. Travel Time portal to portal is billed at 60% of the hourly rate shown above. Expenses billed at cost. Each of the hourly rates shown in this Exhibit A automatically increase by three percent (3%) upon each anniversary of the Effective Date of this Agreement. END OF EXHIBIT A] Agenda Item F AGENDA STAFF REPORT DATE:February 24, 2025 TO:Honorable Mayor and City Council THRU:Patrick Gallegos, Interim City Manager FROM:Iris Lee, Director of Public Works SUBJECT:Approving the FY 2025-2026 West Orange County Water Board Budget ________________________________________________________________ SUMMARY OF REQUEST: That the City Council adopt Resolution 7618 approving the FY 2025-2026 West Orange County Water Board budget of $1,683,800, of which the City’s proportionate agency contribution is $286,771. BACKGROUND AND ANALYSIS: The West Orange County Water Board (WOCWB) is a joint powers authority comprised of the Cities of Garden Grove, Huntington Beach, Westminster, and Seal Beach. WOCWB owns and operates the OC-9 and OC-35 pipelines for the purpose of importing water from the Municipal Water District of Orange County (MWDOC) and transporting it to the member cities. The proposed FY 2025-2026 WOCWB budget is $1,683,800. The City’s proportionate contribution is $286,771, which includes the operating cost and debt service payments for the OC-35 realignment project reimbursement agreement with Orange County Transportation Authority (OCTA). FY 2025-2026 Budget Operating Cost $169,283 OC-35 Relocation Payment $117,488 TOTAL $286,771 The operating cost reflects a $215 decrease compared to the FY 2024-2025 budget; however, the OC-35 Relocation Payment is anticipated to increase by $20,000 due to fluctuations in interest rates. The loan interest rates are equal to the State of California Surplus Money Investment Fund (SMIF). All member cities must approve the WOCWB budget prior to April 16, 2025. Page 2 2 0 0 5 ENVIRONMENTAL IMPACT: This item is not subject to the California Environmental Quality Act (CEQA) pursuant to Section 15061(b)(3) of the state CEQA Guidelines because it can be seen with certainty that adoption of the FY 2025-2026 WOCWB budget will not have a significant effect on the environment. LEGAL ANALYSIS: The City Attorney has approved the resolution as to form. FINANCIAL IMPACT: The City’s proportionate share of $286,771 will be budgeted into the FY 2025-2026 Water Maintenance and Operations Budget. STRATEGIC PLAN: This item is not applicable to the Strategic Plan. RECOMMENDATION: That the City Council adopt Resolution 7618 approving the FY 2025-2026 West Orange County Water Board budget of $1,683,800, of which the City’s proportionate agency contribution is $286,771. SUBMITTED BY: NOTED AND APPROVED: Iris Lee Patrick Gallegos Iris Lee, Director of Public Works Patrick Gallegos, Interim City Manager ATTACHMENTS: A. Resolution 7618 B. FY 2025-2026 WOCWB Budget RESOLUTION 7618 A RESOLUTION OF THE SEAL BEACH CITY COUNCIL APPROVING THE WEST ORANGE COUNTY WATER BOARD FISCAL YEAR 2025-26 BUDGET WHEREAS, the City is a member of the West Orange County Water Board (WOCWB) joint powers authority; and, WHEREAS, the City jointly owns the WOCWB water pipeline conveyance system with the Cities of Garden Grove, Huntington Beach, and Westminster; and, WHEREAS, the FY 2025-26 WOCWB budget is $1,683,800, of which the City’s proportionate agency contribution is $286,771. NOW, THEREFORE, THE SEAL BEACH CITY COUNCIL DOES HEREBY RESOLVE: Section 1. The City Council hereby approves the proposed FY 2025-26 West Orange County Water Board budget of $1,683,800, of which the City’s proportionate agency contribution is $286,771. PASSED, APPROVED AND ADOPTED by the Seal Beach City Council at a regular meeting held on the 24th day of February 2025 by the following vote: AYES: Council Members NOES: Council Members ABSENT: Council Members ABSTAIN: Council Members Lisa Landau, Mayor ATTEST: Gloria D. Harper, City Clerk STATE OF CALIFORNIA } COUNTY OF ORANGE } SS CITY OF SEAL BEACH } I, Gloria D. Harper, City Clerk of the City of Seal Beach, do hereby certify that the foregoing resolution is the original copy of Resolution 7618 on file in the office of the City Clerk, passed, approved, and adopted by the Seal Beach City Council at a regular meeting held on the 24th day of February 2025. Gloria D. Harper, City Clerk FISCAL YEAR 2025/26 PROPOSED BUDGET AGENCY CONTRIBUTIONS ACCOUNT NUMBER AGENCY OWNERSHIP PERENTAGE FY 25/26 COST 50800508.46610 Huntington Beach 56.1 $664,112 50800508.46620 Garden Grove 4.2 $49,720 50800508.46630 Seal Beach 14.3 $169,283 50800508.46640 Westminster 25.4 $300,685 Totals 100.0 $1,183,800 50800508.46610 Huntington Beach 56.1 $382,512 50800508.46620 Garden Grove* 4.2 $0 50800508.46630 Seal Beach 14.3 $117,488 50800508.46640 Westminster* 25.4 $0 Totals 100.0 $500,000 50800508.46610 Huntington Beach 56.1 $1,046,624 50800508.46620 Garden Grove* 4.2 $49,720 50800508.46630 Seal Beach 14.3 $286,771 50800508.46640 Westminster* 25.4 $300,685 Total Budget $1,683,800 Operating Budget (Including Cathodic Protection) Sixth Year OC-35 Relocation Project Loan Payment Total Adopted Budget *Garden Grove and Westminster have paid off their portions of the loan January 9, 2025 Agenda Item G AGENDA STAFF REPORT DATE:February 24, 2025 TO:Honorable Mayor and City Council THRU:Patrick Gallegos, Interim City Manager FROM:Iris Lee, Director of Public Works SUBJECT:Notice of Completion for the North Seal Beach Community Center, CIP BG2501 ________________________________________________________________ SUMMARY OF REQUEST: That the City Council adopt Resolution 7619: 1. Accepting the North Seal Beach Community Center Project, by MDJ Management, LLC in the amount of $404,023.76; and, 2. Directing the City Clerk to file a “Notice of Completion” with the Orange County Clerk-Recorder within 15 days from the date of acceptance and to release retention 35 days after recordation of the Notice of Completion contingent upon no claims being filed on the Project. BACKGROUND AND ANALYSIS: On January 22, 2024, the City Council adopted Resolution 7481, approving the application for grant funds through the Community Development Block Grant (CDBG) program, to apply upgrades to the North Seal Beach Community Center Project, CIP BG2501 (Project), and to accept any funds awarded through the program. On August 12, 2024, the City Council adopted Resolution 7553, awarding a Public Works Agreement to MDJ Management, LLC (MDJ) for the Project. The Project implemented a comprehensive remodel of the North Seal Beach Community Center (NSBCC), addressing issues of accessibility, functionality, and sustainability. The grant funds were used to upgrade interior and exterior lighting to energy-efficient fixtures; reconfigure the kitchen to consolidate appliances for energy efficiency and create a better working space for senior meal programs; enhance operable exterior doors to encourage outdoor usage and extend usable space and capacity; upgrade doors from single pane to dual pane glass for increased efficiency and resiliency; rehabilitate restrooms to include low-flow, water efficient fixtures; and implement Americans with Disabilities Act (ADA) compliant upgrades to increase and improve equitable access for all. ADA Page 2 2 0 0 6 improvements included removing the walls around the drinking fountain for wheelchair accessibility, replacing sliding doors with swinging doors to remove trip hazards, and eliminating trip hazards in the entryway. The Project has been completed and inspected to the satisfaction of the City Engineer. It is requested that the City Council formally accept the Project and direct staff to file a Notice of Completion with the Orange County Clerk Recorder’s Office and release the retention 35 days after recordation of the Notice of Completion contingent upon no claims being filed on the Project. ENVIRONMENTAL IMPACT: This item complies with all requirements of the California Environmental Quality Act (CEQA) and is categorically exempt under Section 15301 Class 1 Subsection (d) as the work involves restoration or rehabilitation of existing facilities. LEGAL ANALYSIS: The City Attorney has reviewed and approved the resolution as to form. FINANCIAL IMPACT: Four change orders were issued due to unforeseen conditions encountered during the project. These included, but were not limited to, the removal of an old air conditioning unit causing the kitchen ceiling to sag, termite repair and treatment for the exterior beams, and the sealing of the fascia along with the installation of downspouts to prevent water from entering the building. The table below presents the breakdown of the Project’s construction costs: Description Amount Total Base Bid $319,221.89 Contract Change Orders $ 84,801.87 Project Cost $ 404,023.76 STRATEGIC PLAN: This item is not applicable to the Strategic Plan. RECOMMENDATION: That the City Council adopt Resolution 7619: 1. Accepting the North Seal Beach Community Center rehabilitation, by MDJ Management, LLC in the amount of $404,023.76; and, Page 3 2 0 0 6 2. Directing the City Clerk to file a “Notice of Completion” with the Orange County Clerk-Recorder within 15 days from the date of acceptance and to release retention 35 days after recordation of the Notice of Completion contingent upon no claims being filed on the Project. SUBMITTED BY: NOTED AND APPROVED: Iris Lee Patrick Gallegos Iris Lee, Director of Public Works Patrick Gallegos, Interim City Manager Prepared by: Kathryne Cho, Deputy Director of Public Works/City Engineer ATTACHMENTS: A. Resolution 7619 B. Notice of Completion RESOLUTION 7619 A RESOLUTION OF THE SEAL BEACH CITY COUNCIL ACCEPTING COMPLETION OF THE NORTH SEAL BEACH COMMUNITY CENTER PROJECT, CIP BG2501, BY MDJ MANAGEMENT, LLC., AND DIRECTING THE FILING OF A NOTICE OF COMPLETION FOR THE PROJECT THE SEAL BEACH CITY COUNCIL DOES HEREBY RESOLVE: Section 1. The City accepts the completion of the North Seal Beach Community Center Project, CIP BG2501 by MDJ Management, LLC in the amount of $404,023.76; and, Section 2. The City Clerk is hereby directed to file a “Notice of Completion” for the Project with the Orange County Clerk-Recorder within fifteen (15) days of the date of this resolution and to release retention 35 days after the recordation of the Notice of Completion contingent upon no claims being filed on the Project. PASSED, APPROVED AND ADOPTED by the Seal Beach City Council at a regular meeting held on the 24th day of February 2025 by the following vote: AYES: Council Members NOES: Council Members ABSENT: Council Members ABSTAIN: Council Members Lisa Landau, Mayor ATTEST: Gloria D. Harper, City Clerk STATE OF CALIFORNIA } COUNTY OF ORANGE } CITY OF SEAL BEACH } I, Gloria D. Harper, City Clerk of the City of Seal Beach, do hereby certify that the foregoing resolution is the original copy of Resolution 7619 on file in the office of the City Clerk, passed, approved, and adopted by the City Council at a regular meeting held on the 24th day of February 2025. Gloria D. Harper, City Clerk RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO CITY OF SEAL BEACH Attn: City Clerk 211 - 8th Street Seal Beach, CA 90740 Space of above this line for Recorder’s use. *** No Recording Fee Pursuant to Government Code Sections 6103 and 27383 **** NOTICE OF COMPLETION Notice pursuant to Civil Code Section 9204, must be filed within 15 days after completion. Notice is hereby given that: 1. The undersigned is owner or corporate officer of the owner of the interest or estate stated below in the property hereinafter described: 2. The full name of the owner is: City of Seal Beach. 3. The address of the owner is: 211 – 8th Street, Seal Beach, CA 90740. 4. The nature of the interest or estate of the owner is: In Fee. The City of Seal Beach. 5. A work of improvement on the property hereinafter is described as substantially completed on December 6, 2024. The work was North Seal Beach Community Center, CIP BG2501. 6. The name of the contractor(s), if any, for such improvement was: MDJ Management, LLC. 7. The date of the Contract Award was August 12, 2024. 8. The property on which said work of improvement was completed in the City of Seal Beach, County of Orange, State of California, and is described as follows: 3333 Saint Cloud Drive, Seal Beach, CA. Date: _______________ _________________________________________ Iris Lee, Director of Public Works, City of Seal Beach Signature of owner or corporate officer of owner named in paragraph 2 or agent. VERIFICATION I, the undersigned, say: Iris Lee (Director of Public Works) declarant of the foregoing notice of completion; have read said notice of completion and know the contents thereof; the same is true of my own knowledge. I declare under penalty of perjury the foregoing is true and correct. Executed on _____________________, 2025, at Seal Beach, California. (Date of Signature) _________________________________________ Iris Lee, Director of Public Works, City of Seal Beach Agenda Item H AGENDA STAFF REPORT DATE:February 24, 2025 TO:Honorable Mayor and City Council THRU:Patrick Gallegos, Interim City Manager FROM:Iris Lee, Director of Public Works SUBJECT:Approving and Authorizing Amendment 2 to the Professional Services Agreement with Raftelis Financial Consultants, Inc. for Water and Wastewater Financial Planning Services ________________________________________________________________ SUMMARY OF REQUEST: That the City Council adopt Resolution 7620: 1. Approving Amendment 2 to the Professional Services Agreement with Raftelis Financial Consultants, Inc. dated June 12, 2023, as previously amended by Amendment 1 dated March 25, 2024, to provide additional Water and Wastewater Financial Planning Services; increase compensation for such additional services by $51,527 for a revised total contract not-to-exceed amount of $187,294; and extend the term to December 31, 2025; and, 2. Authorizing and directing the Interim City Manager to execute Amendment 2 on behalf of the City; and, 3. Authorizing the Interim City Manager to approve unforeseen additional work requests, up to the total not-to-exceed amount of $10,000. BACKGROUND AND ANALYSIS: The City’s water and sewer utilities are funded by fees collected through adopted water and sewer service charges (Enterprise Funds). The rates that customers pay on their utility bills must fund the operating costs, capital improvements, and reserves. Water and sewer rates must be periodically reviewed to ensure rates are set to provide adequate revenue. These studies are performed in accordance with Proposition 218 requirements. On February 22, 2021, City Council adopted Resolutions 7114 and 7115 adjusting the water and sewer rates, respectively. These resolutions led to the Page 2 2 0 0 7 implementation of five incremental annual rate adjustments, beginning in July 2021, with the final adjustment having occurred in January 2025. In early 2023 an assessment of the current five-year financial plan was conducted, revealing the need for water and sewer rate adjustments. The assessment identified several key factors impacting the Enterprise Funds’ financial stability and long-term infrastructure needs: 1. Fluctuations in water sales due to erratic weather patterns; 2. Underestimated inflation factors in the original rate structure projections; 3. Increased water purchasing costs; 4. Increased operating and capital expenditures due to labor and material shortages and overall pricing increases; 5. Depletion of cash reserves due to capital spending originally slated to be funded through bond proceeds; 6. Deferred critical capital improvement needs on aging infrastructure. In response to these findings, City Council adopted Resolution 7416 on June 12, 2023, awarding a Professional Services Agreement to Raftelis Financial Consultants, Inc. (Raftelis) to provide water and wastewater financial planning services in a not-to-exceed amount of $82,415, and authorizing the City Manager to approve additional work requests in the amount of $5,000. The water and wastewater financial plan and proposed rate adjustment findings were presented to City Council on December 11, 2023. On the same night, City Council adopted Resolution 7472 setting a public hearing date on February 12, 2024, that was subsequently continued to February 26, 2024. At the close of the public hearing, the City Council concluded the pending majority protest proceedings and took no further action to adopt the rate adjustments. City Council directed staff to further examine the rates and re-notice the public pursuant to Proposition 218 at a later date. Accordingly, City Council adopted Resolution 7500 on March 25, 2024, approving Amendment 1 to the Professional Services Agreement with Raftelis, authorizing the additional services, and increasing compensation by $48,352. As work resumed, it became apparent that a substantial reevaluation was needed to accurately account for updated expenditures and revenue losses, integrate utility account updates, incorporate potential external funding sources to mitigate rate impacts, develop various rate scenarios, and comply with relevant legislation (e.g., AB 755 and AB 2577). The process essentially constitutes the development of a new financial plan, incorporating enhanced outreach efforts aimed at re-engaging the public. Accordingly, Raftelis submitted a proposal dated January 29, 2025, for the additional support work in the amount of $51,527. Additionally, staff recommends authorizing the Interim City Manager to approve additional work requests in a not- to-exceed amount of $10,000. Page 3 2 0 0 7 ENVIRONMENTAL IMPACT: This item is not subject to the California Environmental Quality Act (CEQA) pursuant to Section 15061(b)(3) of the state CEQA Guidelines because it can be seen with certainty that approval of a professional services agreement amendment with Raftelis Financial Consultants, Inc. and will not have a significant effect on the environment. LEGAL ANALYSIS: The City Attorney has approved the agreement and resolution as to form. FINANCIAL IMPACT: Additional costs associated with Amendment 2 will be expensed from the Water and Sewer operation funds. Sufficient funding for this item is available in the adopted FY 2024-25 Budget. Description Amount Water O&M – 501-500-0900-51280 $ 25,763.50 Sewer O&M – 503-500-0925-51280 $ 25,763.50 Contingency – Water O&M – 501-500-0900-51280 $ 5,000.00 Contingency – Sewer O&M – 503-500-0925-51280 $ 5,000.00 Total $ 61,527.00 STRATEGIC PLAN: This item is not applicable to the Strategic Plan. RECOMMENDATION: That the City Council adopt Resolution 7620: 1. Approving Amendment 2 to the Professional Services Agreement with Raftelis Financial Consultants, Inc. dated June 12, 2023, as previously amended by Amendment 1 dated March 25, 2024, to provide additional Water and Wastewater Financial Planning Services; increase compensation for such additional services by $51,527 for a revised total contract not-to-exceed amount of $187,294; and extend the term to December 31, 2025; and, 2. Authorizing and directing the Interim City Manager to execute Amendment 2 on behalf of the City; and, Page 4 2 0 0 7 3. Authorizing the Interim City Manager to approve unforeseen additional work requests, up to the total not-to-exceed amount of $10,000. SUBMITTED BY: NOTED AND APPROVED: Iris Lee Patrick Gallegos Iris Lee, Director of Public Works Patrick Gallegos, Interim City Manager Prepared by: Sean Sabo, Management Analyst ATTACHMENTS: A. Resolution 7620 B. Amendment 2 with Raftelis Financial Consultants, Inc. C. Amendment 1 with Raftelis Financial Consultants, Inc. D. Agreement with Raftelis Financial Consultants, Inc. RESOLUTION 7620 A RESOLUTION OF THE SEAL BEACH CITY COUNCIL APPROVING AN AUTHORIZING THE INTERIM CITY MANAGER TO EXECUTE AMENDMENT 2 TO THE PROFESSIONAL SERVICES AGREEMENT WITH RAFTELIS FINANCIAL CONSULTANTS, INC. TO PROVIDE WATER AND WASTEWATER FINANCIAL PLANNING SERVICES WHEREAS, the City owns and operates a water system and wastewater system; and, WHEREAS, the water and wastewater systems are funded by utility rate-generated revenues; and, WHEREAS, the water and wastewater utility rates must be periodically reviewed to ensure they are properly set to fund operations and capital needs; and, WHEREAS, climate conditions, material and labor shortages, and critical infrastructure needs have significantly impacted revenue and expenditures; and, WHEREAS, on June 12, 2023, the City Council adopted Resolution 7416 approving a Professional Services Agreement with Raftelis Financial Consultants, Inc. (Raftelis) to provide water and wastewater financial planning services in the amount of $82,415, and authorizing the City Manager to approve work payment requests in the amount of $5,000; and, WHEREAS, on March 25, 2024, the City Council adopted Resolution 7500 approving Amendment 1 to the Professional Services Agreement with Raftelis to provide additional support services; increasing Raftelis’s compensation for such services by $48,352, for a revised not-to-exceed amount of $135,767; and, WHEREAS, the City desires to amend the Agreement with Raftelis to provide additional support services; increase Raftelis’s compensation for such services by $51,527, for a revised not-to-exceed amount of $187,294; authorize the Interim City Manager to approve any unforeseen additional work requests, up to a not-to-exceed amount of $10,000; and extend the term to December 31, 2025. NOW, THEREFORE, THE SEAL BEACH CITY COUNCIL DOES HEREBY RESOLVE: Section 1. The City Council hereby approves Amendment 2 to the Agreement dated June 12, 2023, as previously amended by Amendment 1 dated March 25, 2024 between the City of Seal Beach and Raftelis Financial Consultants, Inc. (i) to authorize Raftelis to provide additional water and 9 8 6 2 wastewater financial planning services; (ii) to increase Raftelis’s compensation by $51,527 for the additional services, for a revised total contract not-to-exceed amount of $187,294; and (iii) to extend the Agreement term to December 31, 2025. Section 2. The City Council hereby authorizes and directs the Interim City Manager to execute Amendment 2. Section 3. The City Council hereby authorizes the Interim City Manager to approve unforeseen additional work requests in connection with the Agreement in the cumulative not-to-exceed amount of $10,000. PASSED, APPROVED, and ADOPTED by the Seal Beach City Council at a regular meeting held on the 24th day of February 2025 by the following vote: AYES: Council Members NOES: Council Members ABSENT: Council Members ABSTAIN: Council Members Lisa Landau, Mayor ATTEST: Gloria D. Harper, City Clerk STATE OF CALIFORNIA } COUNTY OF ORANGE } CITY OF SEAL BEACH } I, Gloria D. Harper, City Clerk of the City of Seal Beach, do hereby certify that the foregoing resolution is the original copy of Resolution 7620 on file in the office of the City Clerk, passed, approved, and adopted by the City Council at a regular meeting held on the 24th day of February 2025. Gloria D. Harper, City Clerk 1 AMENDMENT NO. 2 PROFESSIONAL SERVICES AGREEMENT for Water and Wastewater Financial Planning Services between City of Seal Beach 211 - 8th Street Seal Beach, CA 90740 & Raftelis Financial Consultants, Inc. 227 West Trade Street, Suite 1400 Charlotte, NC 28202 (704) 373-1199 This Amendment No. 2, dated February 24, 2025, amends that certain Professional Services Agreement dated June 12, 2023, as previously amended by Amendment No. 1 by and between the City of Seal Beach , a California charter city, and Raftelis Financial Consultants, Inc North Carolina corporation. 2 RECITALS A. City and Consultant are parties to the Agreement, as amended by Amendment No. 1, and previously extended to December 31, 2024, pursuant to which Consultant provides professional water and wastewater financial planning services. B. City and Consultant wish to amend the Agreement by this Amendment No. 2 to (i) provide additional Water and Wastewater Financial Planning Services; (ii) increase compensation for such additional services by $51,527 for a revised total contract not-to-exceed amount of $187,294; and (iii) extend the term to December 31, 2025. AMENDMENT NO. 2 NOW, THEREFORE and in consideration of the foregoing and of the mutual covenants and promises herein set forth, the parties agree to amend the Agreement as follows: Section 1. Subsection 1.1.1 of Section 1.0 (Scope of Services) of the Agreement is hereby amended in its entirety to read as follows: 1.1.1 Consultant shall provide those additional services set forth in the attached Exhibit A-2, which are hereby incorporated by this reference. To the extent there is any conflict between Exhibit A, Exhibit A-1, Exhibit A-2, this Agreement as amended by Amendment No. 1, and this Agreement as amended by Amendment No. 2, this Agreement as amended by the provisions of Amendment No. 2 Section 2. Section 2.0 (Term) of this Agreement is hereby amended to read as follows: The term of this Agreement was originally effective as of June 12, ) and shall remain in full force and effect until December 31, 2025, unless sooner terminated as provided in Section 5.0 of this Section 3. Section 3.0 (Consultant amended in its entirety to read as follow: 3.1. City will pay Consultant in accordance with the hourly rates shown on the fee schedule set forth in Exhibits A, A-1 and A-2 for Services, but in no event will the City pay more than $187,294 (One-Hundred Eighty-Seven Thousand Two Hundred Ninety-Four Dollars and 00/100) for the Term. Any additional work authorized by the City pursuant to Section 1.5 and this subsection will be compensated in accordance with the fee schedule set forth in Exhibits A, A-1, and A-2. The Interim City Manager may approve, in writing, an additional expenditure of up to the not-to-exceed amount of $10,000 for the Term for unforeseen additional work requests. 3 Section 4through 35.0, inclusive, of the Agreement are hereby modified to include the Agreement dated June 12, 2023, Amendment No. 1 dated March 25, 2024, and this Amendment No. 2 dated February 24, 2025 as if all those terms are fully set forth therein. Section 5. Except as expressly modified or supplemented by this Amendment No. 2, all other provisions of the Agreement, as amended by Amendment No. 1, shall remain unaltered and in full force and effect. In the event of a conflict between the Agreement, Amendment No. 1, and this Amendment No. 2, the provisions of this Amendment No. 2 shall control. Section 6. The persons executing this Amendment No. 2 on behalf of Consultant each warrant that he or she is each duly authorized to execute this Amendment No. 2 on behalf of said Party and that by his or her execution, Consultant is formally bound to the provisions of this Amendment No. 2. 5 EXHIBIT A-2 Additional Services RAFTELIS 1 445 S. Figueroa Street, Suite 1925, Los Angeles, CA 90071 www.raftelis.com January 29, 2025 Ms. Iris Lee, Public Works Director City of Seal Beach 211 Eighth Street, Seal Beach, CA 90740 Subject: Water and Wastewater Financial Plan Amendment #2 Dear Mrs. Lee, This proposal is to complete the Water and Sewer Rate Study. We previously submitted a contract amendment request to complete the study and raise the contract to the amount shown in line 1 in the table below. We used a portion of this amendment to update the study with additional CIP scenarios. After this (prior) update, the study was postponed. Therefore, funds remain as of our December billing cycle, as shown in line 3 of the below table. Line 2 includes all time to be billed up until the end of December. Line 4 is our estimate to complete the study and line 5 is the net increase to the contract. The estimated scope to complete the study is discussed below. Since time has passed, we will update the O&M and CIP expenses, reserve balances and customer water use. We will meet with staff to review the financial plan and present results to City Council. Gina DePinto will lead our efforts to: 1.Update the City Website 2.Develop social media calendar and content 3.Develop CIP Project Fact Sheets 4.Develop New Content, Infographics and Presentations, 5.Public Notice Creation, 6.Direct Two Community Engagement Events A more detailed scope and fee is provided below. We enjoy working with you and your staff and believe it will lead to financially viable utilities. Sincerely, Steve Gagnon, PE (AZ) Vice President P: 714 351 2013; E: sgagnon@raftelis.com RAFTELIS 2 2025 Seal Beach Water and Sewer Rate Study Completion Task 1. Update the Financial Plan and Rates Raftelis will update the financial plan model with the latest O&M expenses, water use, CIP expenses and reserve balances. We will summarize the assumptions in a PowerPoint presentation. MEETINGS: Meetings are in Task 2 DELIVERABLES: Financial Plan model in Microsoft Excel Task 2. Review Financial Plan Results with City Staff Raftelis will update the financial plan model with the latest O&M expenses, water use, CIP expenses and reserve balances. We will summarize the assumptions in a PowerPoint presentation. MEETINGS: Two web meetings with City Staff Task 3. As Needed Support for Rate Study Questions The City received several inquiries and questions during the past two rate studies. Raftelis can assist with answering questions as needed. MEETINGS: Web meetings if needed DELIVERABLES: Written responses via email Task 4. Two City Council Presentations Raftelis will present study results and answer questions at two City Council meetings. We anticipate the first meeting will be to present results and solicit Council feedback and prepare them to provide direction at the second council meeting. MEETINGS: Two in-person City Council Meetings DELIVERABLES: Presentations in PowerPoint Task 5. Update the Prior Report and Include Text for AB 755 We will update the prior report with the new financial plan and rates and include text to satisfy AB 755 which seeks to quantify the cost to sever the highest water users (top 10% of water users). MEETINGS: If required DELIVERABLES: Rate Study report in Microsoft Word RAFTELIS 3 Task 6. Respond to Objections, Prepare Presentation to Summarize Objections and Responses and Present to City Council Raftelis will respond to AB2257 objections during the response period. The City will respond directly to objectors if it deems it needs to respond. We assume one round of objections and responses. Raftelis will also summarize the objections and responses, prepare a presentation and present the summary to City Council. We have assumed this City Council meeting will occur separate from the public hearing and that the objection process will end at this meeting. The Council will then advise if clarifications are needed, whether to leave rates as is, or conclude the objection process. The responses to objections MEETINGS: Up to three web meetings to discuss responses DELIVERABLES: PowerPoint presentation with summary of objections and responses Task 7. Website Updates and Maintenance Raftelis will update and maintain the rate study website, which includes regularly reviewing content, design, and functionality to ensure it remains accurate, engaging, and user-friendly. Updates and announcements will be added as the rate study progresses. Collaboration with City staff will ensure the website continues to align with project goals and effectively serves its audience. MEETINGS: One virtual meeting; may be combined with other tasks DELIVERABLES: Updated microsite and ongoing updates and maintenance Task 8. Develop Social Media Calendar and Content Raftelis will develop a social media plan to inform and engage the community about the need to adjust water and sewer rates. The task includes developing posts tailored to various platforms that explain complex topics like rate structures, funding needs, and infrastructure improvements in a clear and relatable way. The plan will include a calendar to guide City staff as they plan and schedule posts strategically to align with key milestones, public meetings, and decision points in the study. Content will include using existing videos and FAQs and development of new engaging visuals and infographics to enhance understanding and draw interest. The content should encourage community feedback, address common questions, and highlight the benefits of the study to ensure transparency and build trust with residents. Beyond the rate study, we encourage the City to employ an ongoing social media campaign to feature projects, initiatives, services, and staff on the job to humanize City government and feature Public Works employees as they strive to ensure high quality, uninterrupted water and sewer services. MEETINGS: One virtual meeting to review strategy, content, and implementation DELIVERABLES: Social media calendar and draft content Task 9. Develop CIP Project Fact Sheet(s) Raftelis will develop a fact sheet highlighting key capital improvement projects to inform customers and consumers about critical infrastructure initiatives. The fact sheet will outline essential details such as project necessity, community benefits, and anticipated budgets and timelines. This tool is vital for building RAFTELIS 4 public understanding and support, especially for projects tied to funding decisions, rate adjustments, and significant community impact. By presenting information in a clear, visually engaging format, the fact sheet fosters transparency and ensures consistent messaging across various communication channels, aiding in effective stakeholder engagement and decision-making. The fact sheet(s) will be designed for digital posting online and for printed handouts. MEETINGS: One virtual meeting to plan content; City staff to provide content and images DELIVERABLES: A digital and print-ready fact sheet Task 10. Develop New Content, Infographics, and Presentations Raftelis will develop materials and content to build awareness, engage residents in the process, and address misinformation that can be included on the website and in materials, presentations, social media, and in the Proposition 218 Notice. With input from the City, materials may include two press releases, an Op-Ed, direct mail piece, newsletter content for the City Manager and Council, and a video script to recap the 2023-24 rate study and announce the new process and schedule. Without using a professional videographer/producer, Raftelis will guide City staff to record the brief video update using a smart phone. MEETINGS: One virtual meeting to review content and plan implementation DELIVERABLES: Two draft press releases, an Op-Ed, direct mail piece, newsletter content for the City Manager and Council, and a video script for City staff to recap the 2023-24 rate study and announce the new process and schedule Task 11. Proposition 218 Notice Development Raftelis will develop a redesigned Proposition Hearing to clearly stand apart from the Notice issued in December 2023. The content will include all statutorily required elements, along with strategic communications messages to ensure it properly communicates the need and justification for rate increases and the public is given tools to understand the impacts to their individual bills. Beyond satisfying legal requirements, the goal of the Notice will be to describe the ongoing public process that went into the recommendations and make the case for why adoption is critical and invite customers and residents to participate in the community engagement events. -to-read design that will encourage customers and the public to read the information and have a broader understanding of the issues. Our pricing includes the development of a print-ready PDF. The City will assume responsibility for the mailing list, printing, and postage. As envisioned, the Notice will be a folded self-mailer, which will velope. We budgeted time to include the process for AB2257 objections in the Prop 218 notice. MEETINGS: Two virtual meetings to discuss and review content DELIVERABLES: Draft and Final Prop 218 Public Notice as printer ready files and a digital PDF for the website RAFTELIS 5 Task 12. Community Engagement Events (2) We recommend holding two community engagement events (workshop, meeting, or open house) at neutral locations, such as a library, school, or church instead of in Council Chambers to set a tone of repeat of last year and that the City is going out to residents instead of asking them to come to you. Additionally, we recommend offering one event on a weeknight and another on a Saturday to accommodate different schedules. Subject matter experts would present or be available to address topics like rates 101, specific proposed rates, utility operations and infrastructure, bonding and debt finance, state and federal grants and loans, water/wastewater legislation and the regulatory environment, and public and fire safety. Depending on the format and logistics, Raftelis would facilitate Q&A and potentially collect question/comment cards upfront to address questions before breaking into one-on-one conversations, such as open house style. MEETINGS: Up to three virtual planning meetings, and two in-person outreach events DELIVERABLES: Logistics support, facilitation, FAQs, outreach event materials to include up to six new display posters and comment or survey cards Proposed Schedule Action/Task Date (2025) Update Website and Refresh the Webinar Video January 17 Publicly Announce Restart of Rate Study (website, social media, press release) January 20 Draft Prop 218 Content DUE February 5 City Council Workshop February 10 City Council Authorization of Prop 218 Process February 24 City and Legal Review/Approval of Prop 218 Content DUE February 28 Prop 218 Design March 3-11 City Legal Review of Prop 218 Notice DUE March 18 Prop 218: Finalize Notice, Send to Printer March 19-20 Postmark Prop 218 Notice March 28 (latest date to postmark) RAFTELIS 6 (begin 45-day period) Community Engagement Event #1 April 23 or 30 (Wednesday) Community Event #2 April 26 or May 3 (Saturday) Public Hearing May 12 Effective Date July 1, 2025 RAFTELIS 7 Proposed Fee Raftelis proposes to complete the scope of work outlined above on a time-and-materials basis for the fee shown below. The following table shows our proposed fee based on our hourly rate and estimated hours. PM GD SC MS CS Total 1. Update the Financial Plan & Rates with Revised Water Use, O&M Expenses and CIP 14 18 32 $9,080 2. Webmeetings to Present Financial Plan Results and Finalize Rates with City Staff 2 6 6 12 $3,540 3. As Needed Support for Rate Study Questions and Analysis 6 4 10 $3,130 4. Two City Council Presentations 2 12 4 16 $5,581 5. Update the Prior Report Including AB 755 - The Cost to Serve High Water Users 14 32 46 $11,950 6. Summarize and Respond to Objections, Present to City Council for AB2257 at a Separate Meeting 22 3 6 31 $10,615 7. Website Updates and Maintenance 1 6 14 20 $4,350 8. Develop Social Media Calendar and Content 1 1 1 4 8 13 $3,316 9. Develop CIP Project Fact Sheet(s)1 6 10 16 $3,880 10. Develop New Content, Inforgraphics, and Presentations 1 12 12 $3,660 11. Propostion 218 Notice Development, Including Text for AB2257 2 2 8 4 14 28 $6,550 12. Facilitate Community Engagement Events (incl. Public Hearing)3 2 12 16 28 $9,641 11 5 89 55 74 18 28 264 $375 $295 $195 $195 $170 $33,375 $16,225 $14,430 $3,510 $4,760 $72,300 $72,300 $2,994 $75,294 Remaining Funds $23,767 Contract Amendment $51,527 SG - Project Manager, Steve Gagnon, PE (AZ) GD - Communications Staff, Gina DePinto, APR SC - Staff Consultants MS - Makenna Sturgeon CS - Creative Services Tasks Virtual Meetings Number of In-Person Meetings Total Fees & Expenses Total Fees Total Expenses Total Fees & Expenses 1 AMENDMENT NO. 1 PROFESSIONAL SERVICES AGREEMENT for Water and Wastewater financial Planning Services between City of Seal Beach 211 - 8th Street Seal Beach, CA 90740 & Raftelis Financial Consultants, Inc. 227 West Trade Street, Suite 1400 Charlotte, NC 28202 (704) 373-1199 This Amendment No. 1, dated March 25, 2024, amends that certain agreement (“Agreement”) dated June 12, 2023, by and between the City of Seal Beach (“City”), a California charter city, and Raftelis Financial Consultants, Inc. (“Consultant”), a North Carolina corporation. 2 RECITALS A. City and Consultant are parties to the Agreement pursuant to which Consultant provides professional water and wastewater financial planning services. B. Effective June 12, 2023, City and Consultant entered into an Agreement for Consultant to provide professional water and wastewater financial planning services term ending June 30, 2024. C. City and Consultant wish to amend the Agreement by this Amendment No. 1 to (i) provide additional Water and Wastewater Financial Planning Services; (ii) increase compensation for such additional services by $48,352 for a revised total contract not-to-exceed amount of $135,767; and (iii) extend the term to December 31, 2024. AMENDMENT NO. 1 NOW, THEREFORE and in consideration of the foregoing and of the mutual covenants and promises herein set forth, the parties agree to amend the Agreement as follows: Section 1. Section 1.0 (Scope of Services) of this Agreement is hereby amended to add subsection 1.1.1 to read as follows: “1.1.1 Consultant shall provide those additional services set forth in the attached Exhibit A-1, which are hereby incorporated by this reference. To the extent there is any conflict between Exhibit A, Exhibit A-1, Exhibit B, and this Agreement as amended by Amendment No. 1, this Agreement as amended by Amendment No. 1 shall control.” Section 2. Section 2.0 (Term) of this Agreement is hereby amended to read as follows: “2.1 The term of this Agreement was originally effective as of June 12, 2023 (the “Effective Date”) and shall remain in full force and effect until December 31, 2024, unless sooner terminated as provided in Section 5.0 of this Agreement.” Section 3. Section 3.0 (Consultant’s Compensation) of the Agreement is hereby amended in its entirety to read as follow: “3.1. City will pay Consultant in accordance with the hourly rates shown on the fee schedule set forth in Exhibits A and A-1 for Services, but in no event will the City pay more than $135,767 for the Term. Any additional work authorized by the City pursuant to Section 1.5 will be compensated in accordance with the fee schedule set forth in Exhibits A and A-1.” 3 Section 4. All references to the term “Agreement” throughout Sections 1.0 through 35.0, inclusive, of the Agreement are hereby modified to include the Agreement dated June 12, 2023, and this Amendment No. 1 dated March 25, 2024, as if all those terms are fully set forth therein. Section 5. Except as expressly modified or supplemented by this Amendment No. 1, all other provisions of the Agreement shall remain unaltered and in full force and effect. In the event of a conflict between the provisions of this Amendment No. 1 and the provisions of the Agreement, the provisions of this Amendment No. 1 shall control. Section 6. The persons executing this Amendment No. 1 on behalf of Consultant each warrant that he or she is each duly authorized to execute this Amendment No. 1 on behalf of said Party and that by his or her execution, Consultant is formally bound to the provisions of this Amendment No. 1 4 IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to be executed and attested by their proper officers thereunto: CITY OF SEAL BEACH By: Jill R. Ingram, City Manager Attest: By: Gloria D. Harper, City Clerk Approved as to Form: By: Nicholas Ghirelli, City Attorney CONSULTANT: Raftelis Financial Consultants, Inc., a North Carolina corporation By: Peiffer A. Brandt Chief Executive Officer By: Chirstine McIntyre Secretary (Please note, two signatures required for corporations pursuant to California Corporations Code Section 313 from each of the following categories: (i) the chairperson of the board, the president or any vice president, and (ii) the secretary, any assistant secretary, the chief financial officer or any assistant treasurer of such corporation.) cc Digitally signed by cc DN: cn=cc gn=cc c=US United States l=US United States Reason: I am the author of this document Location: Date: 2024-03-12 15:01-04:00 5 EXHIBIT A-1 Additional Services RAFTELIS 1 445 S. Figueroa Street, Suite 1925, Los Angeles, CA 90071 www.raftelis.com March 7, 2024 Ms. Iris Lee Public Works Director City of Seal Beach 211 Eighth Street Seal Beach, CA 90740 Subject: Water and Wastewater Financial Plan Amendment #1 Dear Mrs. Lee, This proposal is to continue and amend the contract for the Water and Wastewater Financial Plan started in June of 2023. This amendment includes additional work due to the continuation of the study; the scope items are: 1) a Council study session, 2) a future public hearing, 3) time for anticipated additional questions, modeling or presentation efforts, 4) time for the effort to comply with AB 755 if we need to revise the study, 5) edit and redesign the notice to accommodate a folded self-mailer, and assist with noticing procedures, 6) plan and implement up to two community meetings/open houses, 7) update materials (website, press releases social media, fliers) and develop additional materials for the community meetings (display posters), 8) planning meetings and check-in phone calls and, 9) a budget of up to $1,000 for reimbursables such as printing costs, materials and supplies and refreshments/snacks for open houses. The time and costs associated with each item are shown in the table below. Although a challenging study, we enjoy working with you and your staff and hope that it will lead to financially viable utilities. Sincerely, Steve Gagnon, PE (AZ) Vice President P: 714 351 2013 E: sgagnon@raftelis.com RAFTELIS 2 Propose Fee Raftelis proposes to complete the scope of work outlined above on a time-and-materials basis for the fee shown below. The following table shows our proposed fee based on our hourly rate and estimated hours. PM CS SC GD Total 1. Stakeholder Questions and Additional Meetings 18 8$2,863 2. Future Public Hearing due to Re-noticing 18 2 10$3,233 3. Rate Study Questions and Additional Modeling as Needed 18 8 26 $7,780 4. Report Section and Modeling for AB 755 36 9$2,160 5. Rate Study Workshop 10 12 2 24 $6,060 6. Public Hearing Notice 118 615$3,530 7. Two Community Meetings/Open Houses 21412 4 30$9,106 8. Develop & Update Materials (website, social media, press release, flier)222 6 30$7,660 9. Planning Meetings and Checkins 10 8 8 16 $4,960 10. Budget for Reimbursables (Printing, Materials, etc.)$1,000 11 4 72 50 32 14 168 $340 $260 $175 $160 $24,480 $13,000 $5,600 $2,240 $45,320 $45,320 $3,032 $48,352 PM - Project Manager, Steve Gagnon, PE (AZ) CS - Communications Staff, Gina DePinto, APR SC - Staff Consultants GD- Graphic Designer Seal Beach Financial Plan Tasks Virtual Meetings Number of In-Person Meetings Total Fees & Expenses Total Fees Total Expenses Total Fees & Expenses PROFESSIONAL SERVICES AGREEMENT for Water and Wastewater Financial Planning Services between City of Seal Beach 211 - 8th Street Seal Beach, CA 90740 N Raftelis Financial Consultants, Inc. 227 West Trade Street, Suite 1400 Charlotte, NC 28202 704) 373-1199 This Professional Service Agreement ("the Agreement") is made as of June 12, 2023 the "Effective Date"), by and between Raftelis Financial Consultants, Inc. Consultant'), a North Carolina corporation, and the City of Seal Beach ("City"), a California charter city, (collectively, "the Parties"). RECITALS A. City desires certain professional water and wastewater financial planning services. B. Pursuant to the authority provided by its City Charter and Seal Beach Municipal Code § 3.20.025(C), City desires to retain Consultant as an independent contractor to provide professional water and wastewater financial planning services. C. Consultant represents that the principal members of its firm are qualified professionals and are fully qualified to perform the professional services contemplated by this Agreement by virtue of its experience, and the training, education and expertise of its principals and employees. D. City desires to retain Consultant as an independent contractor and Consultant desires to serve City to perform those services in accordance with the terms and conditions of this Agreement. NOW THEREFORE, in consideration of the Parties' performance of the promises, covenants, and conditions stated herein, the Parties hereto agree as follows. AGREEMENT 1.0 Scope of Services 1.1. Consultant shall provide those services (collectively "Services") set forth in the Scope of Services attached hereto as Exhibit A and incorporated herein by this reference. To the extent that there is any conflict between Exhibit A and this Agreement, this Agreement shall control. 1.2. Consultant shall perform all Services under this Agreement in accordance with the standard of care generally exercised by like professionals under similar circumstances and in a manner reasonably satisfactory to City at the time and place the Services are performed. 1.3. In performing this Agreement, Consultant shall comply with all applicable provisions of federal, state, and local law. 1.4. As a material inducement to City to enter into this Agreement, Consultant hereby represents that it has the experience necessary to undertake the Services to be provided. In light of such status and experience,. The City relies upon the skill of Consultant, and Consultant's staff, if any, to do and perform the Services in a skillful, competent, and professional manner, and Consultant and Consultant's staff, shall perform the Services in such manner. Consultant shall, at all times, meet or exceed any and all applicable professional 2of19 standards of care. The acceptance of Consultant's work by the City shall not operate as a release of Consultant from such standard of care and workmanship. 1.5. Consultant will not be compensated for any work performed not specified in the Scope of Services unless the City authorizes such work in advance and in writing. The City Manager may authorize extra work to fund unforeseen conditions up to the amount approved at the time of award by the City Council. Payment for additional work in excess of this amount requires prior City Council authorization. 2.0 Term 2.1. The term of this Agreement shall commence on June 12, 2023, and shall remain in full force and effect until June 30, 2024, unless sooner terminated as provided in Section 5.0 of this Agreement. 3.0 Consultant's Compensation 3.1. City will pay Consultant in accordance with the hourly rates shown on the fee schedule set forth in Exhibit A for the Services but in no event will the City pay more than the total not -to -exceed amount of $82,415.00 (Eight Two Thousand Four Hundred Fifteen dollars and 00/100) for the Term. 4.0 Method of Payment 4.1. Consultant shall submit to City monthly invoices for all Services rendered pursuant to this Agreement. Such invoices shall be submitted within 15 days of the end of the month during which the Services were rendered and shall describe in detail the Services rendered during the period, the days worked, number of hours worked, the hourly rates charged, and the Services performed for each day in the period. City will pay Consultant within 30 days of receiving Consultant's invoice. City will not withhold any applicable federal or state payroll and other required taxes, or other authorized deductions from payments made to Consultant. 4.2. Upon 24-hour notice from City, Consultant shall allow City or City's agents or representatives to inspect at Consultant's offices during reasonable business hours all records, invoices, time cards, cost control sheets and other records maintained by Consultant in connection with this Agreement. City's rights under this Section 4.2 shall survive for three (3) years following the termination of this Agreement. ' 3of19 5.0 Termination 5.1. This Agreement may be terminated by City, without cause, or by Consultant based on reasonable cause, upon giving the other party written notice thereof not less than 30 days prior to the date of termination. 5.2. This Agreement may be terminated by City upon 10 days' notice to Consultant if Consultant fails to provide satisfactory evidence of renewal or replacement of comprehensive general liability insurance as required by this Agreement at least 20 days before the expiration date of the previous policy. 6.0 Party Representatives 6.1. The City Manager is the City's representative for purposes of this Agreement. 6.2. Steve Gagnon is the Consultant's primary representative for purposes of this Agreement. Steve Gagnon shall be responsible during the term of this Agreement for directing all activities of Consultant and devoting sufficient time to personally supervise the Services hereunder. Consultant may not change its representative without the prior written approval of City, which approval shall not be unreasonably withheld. 7.0 Notices 7.1. All notices permitted or required under this Agreement shall be deemed made when personally delivered or when mailed 48 hours after deposit in the United States Mail, first class postage prepaid and addressed to the party at the following addresses: To City: City of Seal Beach 211 -8th Street Seal Beach, California 90740 Attn: City Manager To Consultant: Raftelis Financial Consultants, Inc. 227 West Trade Street Charlotte, NC 28202 Attn: Steve Gagnon 7.2. Actual notice shall be deemed adequate notice on the date actual notice occurred, regardless of the method of service. 8.0 Permits and Licenses Consultant and all of Consultant's employees and other personnel shall obtain and maintain during the Agreement term all necessary licenses, permits and 4of19 certificates required by law for the provision of the Services under this Agreement, including a business license as required by the Seal Beach Municipal Code. 9.0 Independent Contractor 9.1. Consultant is an independent contractor and not an employee of the City. All work or other Services provided pursuant to this Agreement shall be performed by Consultant or by Consultant's employees or other personnel under Consultant's supervision. Consultant will determine the means, methods, and details by which Consultant's employees and other personnel will perform the Services. Consultant shall be solely responsible for the satisfactory work performance of all personnel engaged in performing the Services and compliance with the customary professional standards. 9.2. All of Consultant's employees and other personnel performing any of the Services under this Agreement on behalf of Consultant shall also not be employees of City and shall at all times be under Consultant's exclusive direction and control. Consultant and Consultant's personnel shall not supervise any of City's employees; and City's employees shall not supervise Consultant's personnel. Consultant's personnel shall not wear or display any City uniform, badge, identification number, or other information identifying such individual as an employee of City; and Consultant's personnel shall not use any City e-mail address or City telephone number in the performance of any of the Services under this Agreement. Consultant shall acquire and maintain at its sole cost and expense such vehicles, equipment and supplies as Consultant's personnel require to perform any of the Services required by this Agreement. Consultant shall perform all Services off of City premises at locations of Consultant's choice, except (1) as otherwise required for the performance of Services on City real property, vehicles or equipment; (2) as otherwise may from time to time be necessary in order for Consultant's personnel to receive projects from City, review plans on file at City, pick up or deliver any work product related to Consultant's performance of any Services under this Agreement, or (3) as may be necessary to inspect or visit City locations and/or private property to perform such Services. City may make a computer available to Consultant from time to time for Consultant's personnel to obtain information about or to check on the status of projects pertaining to the Services under this Agreement. 9.3. Consultant shall be responsible for and pay all wages, salaries, benefits and other amounts due to Consultant's personnel in connection with their performance of any Services under this Agreement and as required by law. Consultant shall be responsible for all reports and obligations respecting such additional personnel, including, but not limited to: Social Security taxes, other retirement or pension benefits, income tax withholding, unemployment insurance, disability insurance, and workers' compensation insurance. Notwithstanding any other agency, State, or federal policy, rule, regulation, statute or ordinance to the contrary, Consultant and any of its officers, employees, agents, and 5of19 subcontractors providing any of the Services under this Agreement shall not become entitled to, and hereby waive any claims to, any wages, salaries, compensation, benefit or any incident of employment by City, including but not limited to, eligibility to enroll in, or reinstate to membership in, the California Public Employees Retirement System ("PERS") as an employee of City, and entitlement to any contribution to be paid by City for employer contributions or employee contributions for PERS benefits. 9.4. Consultant shall indemnify and hold harmless City and its elected and appointed officials, officers, employees, servants, designated volunteers, and agents serving as independent contractors in the role of City officials, from liability, damages, claims, costs and expenses to the extent caused by Consultant's personnel practices. or to the extent arising from, caused by or relating to the violation by Consultant of any of the provisions of this Section 9.0. In addition to all other remedies available under law, City shall have the right to offset against the amount of any fees due to Consultant under this Agreement any amount due to City from Consultant as a result of Consultant's failure to promptly pay to City any reimbursement or indemnification arising under this Section. This duty of indemnification is in addition to Consultant's duty to defend, indemnify and hold harmless as set forth in any other provision of this Agreement. . 10.0 PERS Compliance and Indemnification 10.1. General Requirements. The Parties acknowledge that City is a local agency member of PERS, and as such has certain pension reporting and contribution obligations to PERS on behalf of qualifying employees. Consultant agrees that, in providing its employees and any other personnel to City to perform any work or other Services under this Agreement, Consultant shall assure compliance with the Public Employees' Retirement Law ("PERL"), commencing at Government Code § 20000, as amended by the Public Employees' Pension Reform Act of 2013 ("PEPRA" ),. and the regulations of PERS. Without limitation to the foregoing, Consultant shall assure compliance with regard to personnel who have active or inactive membership in PERS and to those who are retired annuitants and in performing this Agreement shall not assign or utilize any of its personnel in a manner that will cause City to be in violation of the PERL, PEPRA or any other applicable retirement laws and regulations. 10.2. Indemnification. Consultant shall defend indemnify and hold harmless City, and its City and its elected and appointed officials, officers, employees, servants, designated volunteers, and agents serving as independent contractors in the role of City officials, from liability, damages, claims, costs and expenses of any nature to the extent arising from, caused by, or relating to Consultant's violation of any provisions of this Section 10.0. This duty of indemnification ,is in addition to Consultant's duty to defend, indemnify and hold 6of19 harmless as set forth in any other provision of this Agreement. Consultant's indemnification and obligations under this Section shall survive the expiration or termination of this Agreement. 11.0 Confidentiality 11.1. Consultant covenants that all data, reports, documents, surveys, studies, drawings, plans, maps, models, photographs, images, video files, media, discussion, or other information (collectively "Data & Documents") developed or received by Consultant or provided for performance of this Agreement are deemed confidential and shall not be disclosed by Consultant without prior written authorization by City. City shall grant such authorization if applicable law requires disclosure. Consultant, its officers, employees, agents, or subcontractors shall not without written authorization from the City Manager or unless requested in writing by the City Attorney, voluntarily provide declarations, letters of support, testimony at depositions, response to interrogatories or other information concerning the Services performed under this Agreement or relating to any project or property located within the City. Response to a subpoena or court order shall not be considered "voluntary," provided Consultant gives City notice of such court order or subpoena. 11.2. Consultant shall promptly notify City should Consultant, its officers, employees, agents or subcontractors be served with any summons, complaint, subpoena, notice of deposition, request for documents, interrogatories, request for admissions or other discovery request, court order or subpoena from any party regarding this Agreement and the work performed thereunder or with respect to any project or property located within the City. City may, but has no obligation to, represent Consultant or be present at any deposition, hearing or similar proceeding. Consultant agrees to cooperate fully with City and to provide City with the opportunity to review any response to discovery requests provided by Consultant. However, City's right to review any such response does not imply or mean the right by City to control, direct or rewrite the response. 11.3. Consultant's covenants under this Section shall survive the termination or expiration of this Agreement. 12.0 Ownership of Documents and Work Product 12.1. All Data & Documents shall be and remain the property of City without restriction or limitation upon its use, duplication or dissemination by City. All Data & Documents shall be considered "works made for hire," and all Data & Documents and any and all intellectual property rights arising from their creation, including, but not limited to, all copyrights and other proprietary rights, shall be and remain the property of City without restriction or limitation upon their use, duplication or dissemination by City. Consultant shall not obtain or attempt to obtain copyright protection as to any Data & Documents. 7of19 12.2. Consultant hereby assigns to City all ownership and any and all intellectual property rights to the Data & Documents that are not otherwise vested in City pursuant to the paragraph directly above this one. 12.3. Consultant warrants and represents that it has secured all necessary licenses, consents or approvals to use any instrumentality, thing or component as to which any intellectual property right exists, including computer software, used in the rendering of the Services and the production of all Written Products produced under this Agreement, and that City has full legal title to and the right to reproduce the Data & Documents. Consultant shall defend, indemnify and hold City, and its elected and appointed officials, officers, employees, servants, attorneys, designated volunteers, and agents serving as independent contractors in the role of City officials, harmless from any loss, claim or liability in any way related to a claim that City's use of any of the Data & Documents is violating federal, state or local laws, or any contractual provisions, or any laws relating to trade names, licenses, franchises, copyrights, patents or other means of protecting intellectual property rights and/or interests in products or inventions. Consultant shall bear all costs arising from the use of patented, copyrighted, trade secret or trademarked documents, materials, equipment, devices or processes in connection with its provision of the Services and Data & Documents produced under this Agreement. In the event the use of any of the Written Products or other deliverables hereunder by City is held to constitute an infringement and the use of any of the same is enjoined, Consultant, at its expense, shall: (1) secure for City the right to continue using the Data & Documents and other deliverables by suspension of any injunction, or by procuring a license or licenses for City; or (2) modify the Data & Documents and other deliverables so that they become non -infringing while remaining in compliance with the requirements of this Agreement. These covenants shall survive the expiration and/or termination of this Agreement. 12.4. Upon expiration or termination of the Agreement, Consultant shall deliver to City all Data & Documents and other deliverables related to any Services performed pursuant to this Agreement without additional cost or expense to City. If Consultant prepares a document on a computer, Consultant shall provide City with said document both in a printed format and in an electronic format that is acceptable to City. 13.0 Subcontractors No portion of this Agreement shall be subcontracted without the prior written approval of the City. Consultant is fully responsible to City for the performance of any and all subcontractors. 14.0 Prohibition Against Assignment or Delegation 8of19 Consultant shall not assign any of its rights or delegate any of its duties under this Agreement, either in whole or in part, without City's prior written consent. Any purported assignment or delegation in violation of this Section shall be void and without effect, and shall entitle City to terminate this Agreement. As used in this Section, "assignment' and "delegation" means any sale, gift, pledge, hypothecation, encumbrance or other transfer of all or any portion of the rights, obligations, or liabilities in or arising from this Agreement to any person or entity, whether by operation of law or otherwise, and regardless of the legal form of the transaction in which the attempted transfer occurs. 15.0 Inspection and Audit of Records Consultant shall maintain complete and accurate records with respect to all Services and other matters covered under this Agreement, including but expressly not limited to, all Services performed, salaries, wages, invoices, time cards, cost control sheets, costs, expenses, receipts and other records with respect to this Agreement. Consultant shall maintain adequate records on the Services provided in sufficient detail to permit an evaluation of all Services in connection therewith. All such records shall be clearly identified and readily accessible. At all times during regular business hours, Consultant shall provide City with access to such records without charge, and the right to examine and audit the same and to make copies and transcripts as City deems necessary, and shall allow inspection of all program data, information, documents, proceedings and activities and all other matters related to the performance of the Services under this Agreement. Consultant shall retain all financial and program service records and all other records related to the Services and performance of this Agreement for at least three (3) years after expiration, termination or final payment under this Agreement, whichever occurs later. City's rights under this Section 15.0 shall survive for three (3) years after expiration, termination or final payment under this Agreement, whichever occurs later. 16.0 Safety Requirements All work performed under this Agreement shall be performed in such a manner as to provide safety to the public and to meet or exceed the safety standards outlined by CAL OSHA and other applicable state and federal laws. City may issue restraint or cease and desist orders to Consultant when unsafe or harmful acts are observed or reported relative to the performance of the Services. Consultant shall maintain the work sites free of hazards to persons and property resulting from its operations. Consultant shall immediately report to the City any hazardous condition noted by Contractor. 9of19 17.0 Insurance 17.1. General Requirements. Consultant shall not commence work under this Agreement until it has provided evidence satisfactory to the City that Consultant has secured all insurance required under this Section. 17.2. Minimum Scope and Limits of Insurance. Consultant shall, at its sole cost and expense, procure, maintain and keep in full force and effect for the duration of the Agreement, insurance against claims for injuries to persons or damages to property that may arise from or in connection with the performance of this Agreement, as follows: 17.2.1. Commercial General Liability Insurance: Consultant shall maintain limits no less than $2,000,000 per occurrence for bodily injury, personal injury and property damage; and if Commercial General Liability Insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to this Agreement/location or the general aggregate limit shall be twice the required occurrence limit: Coverage shall be at least as broad as the latest version of Insurance Services Office Commercial General Liability coverage (occurrence form CG 0001). If Consultant is a limited liability company, the commercial general liability coverage shall be amended so that Consultant and its managers, affiliates, employees, agents and other persons necessary or incidental to its operation are insureds; 17.2.2. Automobile Liability Insurance: Consultant shall maintain limits no less than $1,000,000 per accident for bodily injury and property damage. Coverage shall be at least as broad as Automobile Liability: Insurance Services Office Business Auto Coverage form number CA 0001, code 1 (any auto). 17.2.3. Workers' Compensation Insurance in the amount required by law; and Employer's Liability: $1,000,000 per accident and in the aggregate for bodily injury or disease; 17.2.4. Professional Liability (or Errors and Omissions) Liability, with minimum limits of $1,000,000 per claim/aggregate. If a "claims made" policy is provided, then the policy shall be endorsed to provide an extended reporting period of not less than three years. 17.3. Acceptability of Insurers. The Insurance policies required under this Section shall be placed with insurers with a current A.M. Best's rating no less than A:VIII, licensed to do business in California, and satisfactory to the City. 10 of 19 17.4. Additional Insured. 17.4.1. For general liability insurance, City, its elected and appointed officials, officers, employees, agents, designated volunteers and those City agents acting as independent contractors in the role of City officials shall be covered as additional insureds with respect to the services or operations performed by or on behalf of the Consultant, including materials, parts or equipment furnished in connection with such work. 17.4.2. For automobile liability, City, its elected and appointed officials, officers, employees, agents, designated volunteers and those City agents serving as independent contractors in the role of City officials, shall be covered as additional insureds with respect to the ownership, operation, maintenance, use, loading or unloading of any auto owned, leased, hired or borrowed by the Consultant or for which the Consultant is responsible. 17.4.3. These additional insured provisions shall also apply to any excess/umbrella liability policies. 17.5. Cancellations or Modifications to Coverage. The insurance policies shall contain the following provisions, or Consultant shall provide endorsements on forms supplied or approved by City to state: (1) coverage shall not be suspended, voided, reduced or canceled except after 30 days prior written notice by certified mail, return receipt requested, has been given to City; 2) any failure to comply with reporting or other provisions of the policies, including breaches of warranties, shall not affect coverage provided to City, its elected and appointed officials, officers, employees, agents, designated volunteers, and those City agents serving as independent contractors in the role of City officials; f 17.6. Primary and Non -Contributing. Coverage shall be primary insurance as respects the City, its elected and appointed officials, officers, employees, agents, designated volunteers designated volunteers and agents serving as independent contractors in the role of City officials, or if excess, shall stand in an unbroken chain of coverage excess of the Consultant's scheduled underlying coverage and that any insurance or self-insurance maintained by the City, its elected and appointed officials, officers, employees, agents. designated volunteers designated volunteers and agents serving as independent contractors in the role of City officials, shall be excess of the Consultant's insurance and shall not be called upon to contribute with it; 17.7. Separation of Insureds. All insurance required by this Section shall contain standard separation of insureds provisions and shall not contain any special limitations on the scope of protection afforded to City, its elected and appointed officials, officers, employees, agents, designated volunteers and those City agents serving as independent contractors in the role of City officials. 11 of 19 17.8. Deductibles and Self -Insured Retentions. Any deductibles or self- insured retentions shall be declared to and approved by City. Consultant guarantees that, at the option of City, either: (1) the insurer shall reduce or eliminate such deductibles or self-insured retentions as respects City, its elected and appointed officials, officers, employees, agents, designated volunteers and those City agents serving as independent contractors in the role of City officials; or (2) Consultant shall procure a bond guaranteeing payment of losses and related investigation costs, claims and administrative and defense expenses. 17.9. Waiver of Subrogation. Each insurance policy required by this Agreement shall expressly waive the insurer's right of subrogation against City and its elected and appointed officials, officers, employees, agents, designated volunteers and those City agents serving as independent contractors in the role of City officials. Consultant hereby waives all rights of subrogation against City. 17.10. City Remedy for Noncompliance. If Consultant does not maintain the policies of insurance required under this Section in full force and effect during the term of this Agreement, or in the event any of Consultant's policies do not comply with the requirements under this Section, City may either immediately terminate this Agreement or, if insurance is available at a reasonable cost, City may, but has no duty to, take out the necessary insurance and pay, at Consultant's expense, the premium thereon. Consultant shall promptly reimburse City for any premium paid by City or City may withhold amounts sufficient to pay the premiums from payments due to Consultant. 17.11. Evidence of Insurance. Prior to the performance of Services under this Agreement, Consultant shall furnish City with original certificates of insurance and all original endorsements evidencing and effecting the coverages required under this Section on forms satisfactory to and approved by City. The certificates and endorsements for each insurance policy shall be signed by a person authorized by that insurer to bind coverage on its behalf, and shall be on forms provided by City if requested. Consultant may provide complete, certified copies of all required insurance policies to City. Consultant shall maintain current endorsements on file with City's Risk Manager. All certificates and endorsements shall be received and approved by the City before work commences. City reserves the right to require complete, certified copies of all required insurance policies, at any time. Consultant shall also provide proof to City that insurance policies expiring during the term of this Agreement have been renewed or replaced with other policies providing at least the same coverage. Consultant shall furnish such proof at least two weeks prior to the expiration of the coverages. 17.12. Indemnity Requirements Not Limiting. Procurement of insurance by Consultant shall not be construed as a limitation of Consultant's liability or as full performance of Consultant's duty to indemnify City under Section 18.0. 12 of 19 17.13. Broader Coverage/Higher Limits. If Consultant maintains broader coverage and/or higher limits than the minimums required above, City requires and shall be entitled to the broader coverage and/or the higher limits maintained by Consultant. Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be available to City. 17.14. Subcontractor Insurance Requirements. Consultant shall require each of its subcontractors that perform Services under this Agreement to maintain; insurance coverage that meets all of the requirements of this Section. 18.0 Indemnification, Hold Harmless, and Duty to Defend 18.1. Indemnities. 18.1.1. To the fullest extent permitted by law, Consultant shall, at its sole cost and expense, protect, defend, hold harmless and indemnify City and its elected and appointed officials, officers, attorneys, agents, employees, designated volunteers, successors, assigns and those City agents serving as independent contractors in the role of City officials (collectively "Indemnitees" in this Section 18.0), from and against any and all damages, costs, expenses, liabilities, claims, demands, causes of action, proceedings, judgments, penalties, bid protests, stop notices, liens and losses of any nature whatsoever, including but not limited to fees of accountants, attorneys and other professionals, and all costs associated therewith, and the payment of all consequential damages collectively "Liabilities"), in law or equity, whether actual, alleged or threatened, which arise out of, pertain to, or relate to the negligent acts or omissions or willful misconduct of Consultant, its officers, agents, servants, employees, subcontractors, materialmen, suppliers, or contractors, or their officers, agents, servants or employees (or any entity or individual that Consultant shall bear the legal liability thereof) in the performance of this Agreement, including the Indemnitees' active or passive negligence, except for Liabilities arising from the sole negligence or willful misconduct of the Indemnitees, as determined by final arbitration or court decision or by the agreement of the Parties. Consultant shall defend the Indemnitees in any action or actions filed in connection with any Liabilities with counsel approved by City, whose approval shall not be unreasonably withheld, and shall pay all costs and expenses, including all attorneys' fees and experts' costs actually incurred in connection with such defense. Consultant shall reimburse the Indemnitees for any and all legal expenses and costs incurred by the Indemnitees in connection therewith. 18.1.2. Consultant shall indemnify and hold harmless City in accordance with Sections 9.0 and 10.0. 18.2. Subcontractor Indemnification. Consultant shall obtain executed indemnity agreements with provisions identical to those in this Section 18.0 from 13 of 19 each and every subcontractor or any other person or entity involved by, for, with or on behalf of Consultant in the performance of this Agreement. If Consultant fails to obtain such indemnities, Consultant shall be fully responsible and indemnify, hold harmless and defend the Indemnitees from and against any and all Liabilities in law or equity, whether actual, alleged or threatened, which arise out of, are claimed to arise out of, pertain to, or relate to the acts or omissions of Consultant's subcontractor, its officers, agents, servants, employees, subcontractors, materialmen, contractors or their officers, agents, servants or employees (or any entity or individual that Consultant's subcontractor shall bear the legal liability thereof) in the performance of this Agreement, including the Indemnitees' active or passive negligence, except for Liabilities arising from the sole negligence or willful misconduct of the Indemnitees, as determined by final arbitration or court decision or by the agreement of the Parties. 18.3. Workers' Compensation Acts Not Limiting. Consultant's indemnification obligations under this Section, or any other provision of this Agreement, shall not be limited by the provisions of any workers' compensation act or similar act. Consultant expressly waives its statutory immunity under such statutes or laws as to City, its elected and appointed officers, officials, agents, employees, designated volunteers and those City agents serving as independent contractors in the role of City officials. 18.4. Insurance Requirements Not Limiting. City does not, and shall not, waive any rights that it may possess against Consultant because of the acceptance by City, or the deposit with City, of any insurance policy or certificate required pursuant to this Agreement. The indemnities and obligations in this Section shall apply regardless of whether or not any insurance policies are determined to be applicable to the Liabilities asserted against City or any of the other Indemnitees. 18.5. Survival of Terms. Consultant's indemnifications and obligations under this Section 18.0 shall survive the expiration or termination of this Agreement. 19.0 Non -Discrimination and Equal Employment Opportunity Consultant affirmatively represents that it is an equal opportunity employer. In the performance of this Agreement, Consultant shall not discriminate against any subcontractor, employee, or applicant for employment because of race, religion, color, national origin, handicap, ancestry, sex, gender, sexual orientation, gender identity, gender expression, marital status, national origin, ancestry, age, physical disability, mental disability, medical condition, genetic information, or any other basis prohibited by law. Consultant will take affirmative action to ensure that subcontractors and applicants are employed, and that employees are treated during employment, without regard to their race, color, religious creed, sex, gender, gender identity, gender expression, marital status, national origin, 14 of 19 ancestry, age, physical disability, mental disability, medical condition, genetic information or sexual orientation, or any other basis prohibited by law. 20.0 Labor Certification By its signature hereunder, Consultant certifies that it is aware of the provisions of Section 3700 of the California Labor Code that require every employer to be insured against liability for Workers' Compensation or to undertake self-insurance in accordance with the provisions of that Code, and agrees to comply with such provisions before commencing the performance of the Services. 21.0 Prevailing Wage and Payroll Records To the extent that this Agreement calls for services that, in whole or in part, constitute "public works" as defined in the California Labor Code, Consultant shall comply in all respects with all applicable provisions of the California Labor Code, including those set forth in Exhibit B, attached hereto and incorporated by reference herein. 22.0 Entire Agreement This Agreement contains the entire agreement of the Parties with respect to the subject matter hereof, and supersedes all prior negotiations, understandings, or agreements. This Agreement may only be modified by a writing signed by both Parties. 23.0 Severability The invalidity in whole or in part of any provisions of this Agreement shall not void or affect the validity of the other provisions of this Agreement. 24.0 doverning Law and Venue This Agreement shall be governed by and construed in accordance with the laws of the State of California, except that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be applied in interpreting this Agreement. Any dispute that arises under or relates to this Agreement (whether contract, tort or- both) shall be resolved in a superior court with geographic jurisdiction over the City of Seal Beach. 25.0 No Third Party Beneficiaries This Agreement is made solely for the benefit of the Parties to this Agreement and their respective successors and assigns, and no other person or entity shall be deemed to have any rights hereunder against either party by virtue of this Agreement. 15 of 19 26.0 Waiver No delay or omission to exercise any right, power or remedy accruing to City under this Agreement shall impair any right, power or remedy of City, nor shall it be construed as a waiver of, or consent to, any breach or default. No waiver of any breach, any failure of a condition, or any right or remedy under this Agreement shall be (1) effective unless it is in writing and signed by the Party making the waiver, (2) deemed to be a waiver of, or consent to, any other breach, failure of a condition, or right or remedy, or (3) deemed to constitute a continuing waiver unless the writing expressly so states. 27.0 Prohibited Interests; Conflict of Interest 27.1. Consultant covenants that it presently has no interest and shall not acquire any interest, direct or indirect, which may be affected by the Services, or which would conflict in any manner with the performance of the Services. Consultant further covenants that, in performance of this Agreement, no person having any such interest shall be employed by it. Furthermore, Consultant shall avoid the appearance of having any interest, which would conflict in any manner with the performance of the Services. Consultant shall not accept any employment or representation during the term of this Agreement which is or may likely make Consultant "financially interested" (as provided in California Government Code §§ 1090 and 87100) in any decision made by City on any matter in connection with which Consultant has been retained. 27.2. Consultant further warrants and maintains that it has not employed or retained any person or entity, other than a bona fide employee working exclusively for Consultant, to solicit or obtain this Agreement. Nor has Consultant paid or agreed to pay any person or entity, other than a bona fide employee working exclusively for Consultant, any fee, commission, gift, percentage, or any other consideration contingent upon the execution of this Agreement. Upon any breach or violation of this warranty, City shall have the right, at its sole and absolute discretion, to terminate this Agreement without further liability, or to deduct from any sums payable to Consultant hereunder the full amount or value of any such fee, commission, percentage or gift. 27.3. Consultant warrants and maintains that it has no knowledge that any officer or employee of City has any interest, whether contractual, non - contractual, financial, proprietary, or otherwise, in this transaction or in the business of Consultant, and that if any such interest comes to the knowledge of Consultant at any time during the term of this Agreement, Consultant shall immediately make a complete, written disclosure of such interest to City, even if such interest would not be deemed a prohibited "conflict of interest" under applicable laws as described in this Section. 28.0 Final Payment Acceptance Constitutes Release 16 of 19 The acceptance by Consultant of the final payment made under this Agreement shall operate as and be a release of City from all claims and liabilities for compensation to Consultant for anything done, furnished or relating to Consultant's work or services. Acceptance of payment shall be any negotiation of City's check or the failure to make a written extra compensation claim within ten calendar days of the receipt of that check. However, approval or payment by City shall not constitute, nor be deemed, a release of the responsibility and liability of Consultant, its employees, subcontractors and agents for the accuracy and competency of the information provided and/or work performed; nor shall such approval or payment be deemed to be an assumption of such responsibility or liability by City for any defect or error in the work prepared by Consultant, its employees, subcontractors and agents. 29.0 Corrections In addition to the indemnification obligations set forth above, Consultant shall correct, at its expense, all errors in the work which may be disclosed during City's review of Consultant's report or plans. Should Consultant fail to make such correction in a reasonably timely manner, such correction may be made by City, and the cost thereof shall be charged to Consultant. In addition to all other available remedies, City may deduct the cost of such correction from any retention amount held by City or may withhold payment otherwise owed Consultant under this Agreement up to the amount of the cost of correction. 30.0 Non Appropriation of Funds Payments to be made to Consultant by City for any Services performed within the current fiscal year are within the current fiscal budget and within an available, unexhausted fund. In the event that City does not appropriate sufficient funds for payment of Consultant's Services beyond the current fiscal year, this Agreement shall cover payment for Consultant's Services only to the conclusion of the last fiscal year in which City appropriates sufficient funds and shall automatically terminate at the conclusion of such fiscal year. 31.0 Mutual Cooperation 31.1. City's Cooperation. City shall provide Consultant with all pertinent Data, documents and other requested information as is reasonably available for Consultant's proper performance of the Services required under this Agreement. 31.2. Consultant's Cooperation. In the event any claim or action is brought against City relating to Consultant's performance of Services rendered under this Agreement, Consultant shall render any reasonable assistance that City requires. 32.0 Time of the Essence 17 of 19 Time is of the essence in respect to all provisions of this Agreement that specify a time for performance; provided, however, that the foregoing shall not be construed to limit or deprive a Party of the benefits of any grace or use period allowed in this Agreement. 33.0 Attorneys' Fees If either party commences an action against the other party, either legal, administrative or otherwise, arising out of or in connection with this Agreement, the prevailing party in such litigation shall be entitled to have and recover from the losing party all of its attorneys' fees and other costs incurred in connection therewith. 34.0 Exhibits All exhibits referenced in this Agreement are hereby incorporated into the Agreement as if set forth in full herein. In the event of any material discrepancy between the terms of any exhibit so incorporated and the terms of this Agreement, the terms of this Agreement shall control. 35.0 Corporate Authority The person executing this Agreement on behalf of Consultant warrants that he or she is duly authorized to execute this Agreement on behalf of said party and that by his or her execution, the Consultant is formally bound to the provisions of this Agreement. 18 of 19 IN WITNESS WHEREOF, the Parties hereto, through their respective authorized representatives have executed this Agreement as of the date and year first above written. CITY OF SEAL BEACH 9- &n"jn U.9R. . Ta Attest: M CONSULTANT: Raftelis Financial onsultants, Inc., a North Carolina orporation By: Peiffe A. Brandt C f Executive Officer Cm Christine McIntyre Secretary Approved as to Form: By: jg;i6 Nicholas R. Ghirelli, City Attorney case note, two signatures required ui corporations pursuant to California Corporations Code Section 393 from each of the following categories: (i) the chairperson of the board, the president or any vice president, and (ii). the secretary, any assistant secretary, the chief financial officer or any assistant treasurer of such corporation.) PROOF OF AUTHORITY TO BIND CONTRACTING PARTY REQUIRED 19 of 19 EXHIBIT A Consultant's Scope of Services R R A F T E LIS RAFTELIS May 30, 2023 Ms. Iris Lee Public Works Director City of Seal Beach 211 Eighth Street Seal Beach, CA 90740 Subject: Water and Wastewater Financial Plan Dear Mrs. Lee, Raftelis is pleased to submit this proposal for a water and wastewater financial plan. A financial plan is the first half of a rate study. The goal of a financial plan is to assess if your future expected revenue is sufficient to meet expenses over the next 5 to 10 years. We project expenses which include operating, capital, debt, and reserve funding expenses. Capital expenses may be funded through cash and/or debt. We also plan for reserves. If revenue is not sufficient, the financial plan proposes a series of revenue increases to meet expenses and reserve targets. As we discussed, we will not perform a cost -of -service study. A cost of service study allocates the City's revenue requirements to each customer class. A cost -of -service study was performed in the 2021 rate study and we can use the resulting rate structure from this study. Therefore, if our financial plan identifies a need for 10% additional revenue, we will increase all current rates by 10% to yield the additional required revenue. This letter proposal includes a scope of work. I will be the project manager assisted by a member of our financial consulting staff, and Gina DePinto, APR, who will lead the outreach efforts. Should you have any questions, please contact me using the contact information below. Sincerely, Steve Gagnon, PE (AZ) Vice President P.• 714 3512013 E. sgagnon@raftelis.com 445 S. Figueroa Street, Suite 1925, Los Angeles, CA 90071 www.raftelis.com, RAFTELIS Scope of Services Task 1: Project Management, Kick-off Meeting, QA/QC, Data Collection and Communication Check-in Meetings Note: We have assumed that staff meetings are virtual and City Council Meetings are in person. The kick-off meeting is used to perform our due diligence. As part of the kick-offmeeting, Raftelis will: 1. Discuss any items that you think may affect the City's future financial health such as: o large CIP projects o changes in revenue or expenses o changes in tax revenue o Inflation and the projection of future expenses including water purchase costs. 2. Identify objectives for the study. 3. Discuss the state of reserves and financial policies. 4. Discuss any data gaps or questions. 5. Review the schedule. This task also includes general project management, correspondence, billing, QA/QC, and data collection. Raftelis will prepare a data request and start preparing the financial model before the kick-off meeting. The time and cost associated with quality assurance/quality control (QA/QC) is also included in this task and includes a QA/QC review by a Sr. Analyst who is not involved with the project to review calculations and critique the approach. For the communications and outreach planning and implementation tasks over several months or longer, we typically schedule biweekly virtual check-in meetings of 30 minutes, so we are in regular touch about what we've learned, what we're doing, and whether anything about communications and outreach efforts needs to change. MEETINGS Kick-off meeting (in person) 30 -minute virtual check-in meetings (16 each virtual) primarily for communications and outreach tasks (Tasks 6-9) DELIVERABLES Data Request List Task 2: Water and Wastewater Financial Plan The financial plan assesses each utility's financial condition and suggests revenue adjustments to ensure long-term fiscal sustainability. We will analyze the prior financial plan and compare it to the proposed financial plan to assess why additional revenue increases are needed. It is likely a combination of the following factors: 1) Decreased water sales with the prior year drought and heavy rains in early 2023. 2) Low inflation factors used to project expenses. 3) Increased OCWD wholesale rates. 4) Higher capital expenses than projected. 5) Depletion of cash reserves due to capital spending that was originally planned to be funded through bond proceeds. 6) Any other factors that increased expenses beyond those anticipated in the prior financial plan. RAFTELIS 3 Raftelis will project expenses and revenue over a 10 -year planning horizon. If desired, we can model two to three different financial plan scenarios reflecting different revenue adjustments based on capital investment and other expenses. As part of the financial plan we review and discuss typical reserves for operating, capital, and if applicable rate stabilization and emergency purposes. Our models include a dashboard with the following features: Flexibility to change assumptions such as water sales, CIP levels, debt issuance amounts, and revenue adjustments. Error flagging of results such as failure to meet debt coverage, unmet reserve targets, etc. Sensitivity analyses that can be viewed instantaneously. A sample model dashboard is shown below. la R FYE 2020 FYE 202f FYE 2022 FYE 2023 FYE 2024 FYE 2025 FYE 2029 Salectiorin_OPtiana —R—me Adjuatmsnta 3.7% 5.0% 5.0% 5.0% 5.0% O.ON. 0.0% Chert 3: Display Total Funds' AdjuatmantMonth Apdi April Apol' April April April APAI Display Years 5 Demand Reduction 0% 0% 0% 0% 0% 0% 0% Raftelis will develop Pass-through? FALSE Addrt Demand Factor 100% 100% 100% 100% 1007. loci. 100% RataRevenue Calcaiatod Patnbla Wutsr Salsa 17,936 AF 17,652AF 17,635 AF 17,719 AF 17,751 AF 17,7941 AF 17,817AF a customized Reryled Weter Saba Z,Ti6AF 2,993 AF 2.993AF 2.993AF 2,963 AF 2,993 AF Z,953AF ETpand(or Transyars and Proposed Debt OpDons; financial model that REVENUE ADJUSTMENTS & DEBT COVERAGE OPERATING FKANCIAL PLAN R—AGj,—Plo • A (Ripltt) —OSME-- —Putlu,MW—C— —O S—" incorporates a D.InCo.a.p. 96Pe) —DebtCo.xels ReP:eran+P6aw >T.s —R"e .R-- —`""' N— dashboard to allow am 350 U0 — — Prew bRearw 3m sro 6q _ _ _ _ _ _ - - - you to easily run 4.0x. 250 N scenarios and see the 2201m® ® impacts in real time. m 2aL +m 1dl Shown here is a tA+c anti Ila . o sample dashboard 9.az am amFYE =0M 3121 FTE 2071 FYE 20A FYE 9]24 FYE1020 FYE 5l21 FYE2022 FYE20t1 FTE 2014 that We developed CAPITAL PROJECTS FUNDING TOTALFUNDSBALANCE for another project. O lF— -W-1— Enarq a— — ssn4nane.Yncs l®ons Ratr Pative eONr _ _ Al.rimmSwire _• A4neebrca 370 122.1 M eem5Mo 38 5—M 100 — — — — — — — — — — — — — — — — — — — — — — — — — — — SZ $a0 375 SHAM 3%lAM leaSRAY $4a1M S515 11rfM 341aY --- 0 Sa1Y ss— sa FYE9120 FYE ]021 FYE Mn FYEN13 FYEMSA FYE 2010 FTE 1021 FYE 1021 FYEMS FYE 2024 We've assumed two virtual staff presentations to review the financial plan, solicit staff feedback and incorporate it into the financial plan. MEETINGS Two webinars to discuss the financial plan DELIVERABLES Financial Plan Model in Microsoft Excel Task 3: Three City Council Presentations We propose an introductory Council presentation to explain the need for additional revenue. The second workshop will show the financial plan results and the additional revenue increases needed. We will describe all assumptions that will include anticipated revenue based on water sales, inflationary assumptions, and water purchase costs. We have included a third workshop, if needed, to incorporate City Council feedback from the second workshop. RAFTELIS 4 MEETINGS Three City Council workshops DELIVERABLES Presentation materials in PowerPoint Task 4: Draft and Final Report Preparation Raftelis will prepare draft and final reports. The report will describe the assumptions used in projecting revenue and expenses and the revenue adjustments needed to meet expenses and reserve targets. MEETINGS Webinar or phone conferences as needed to discuss the Report DELIVERABLES Draft and Final Reports Task 5: Public Hearing Presentation To adopt the rates, the City must present the rates to the public at a public hearing. Raftelis will prepare a presentation and present study results at the public hearing. Our Project Managers, myself included, do this often and are accustomed to answering questions from the Council and members of the public. We assume this meeting will be in person. PLANNED MEETINGS: One public hearing presentation DELIVERABLES: Public hearing presentation in PowerPoint. Task 6: Community Meetings with Presentation We will help the City go beyond communicating with its stakeholders to ensure it also engages with them, meaningfully, through the study process before decisions are made. We propose that Raftelis will help coordinate and present at two community meetings or open houses to inform the public about the need to adjust rates. These are separate from publicly noticed City Council meetings, workshops, and hearings. Open houses allow convenient, one-on-one communication with customers in a low conflict setting, ensuring that customers can get their questions answered and that City staff can benefit from community feedback. This process can be highly collaborative and iterative; the feedback we receive from key stakeholders will help guide the overall direction of the study and inform the methodologies and options ultimately selected for the final rate proposal. Our presentation will be reviewed by our communications staff who are experts at developing clear, compelling, and consistent messages that build awareness and support with stakeholders. PLANNED MEETING(S): Web meetings as needed to discuss the messaging, meeting logistics, and presentation; two in-person community meetings or open houses DELIVERABLE(S): Presentation in PowerPoint Develop promotional materials including digital and print event notices, invitations, social media content, a press release, and direct mail postcard (printing and postage are not included) RAFTELIS o Recommend producing 8-10 graphic display/poster boards for use in the open houses o Logistical coordination and on-site facilitation of the open houses o Gathering feedback from participants o Compiling a summary report of feedback Task 7: Proposition 218 Public Notice Preparation While requirements of Proposition 218 notifications are easy to satisfy, too many municipalities and utilities miss the opportunity to educate and inform ratepayers. Over the years, Raftelis has designed countless Proposition 218 notifications that go beyond the minimum dictated by statute to deliver visually appealing pieces that customers want to read. We will draft the content and match the City's established brand guidelines to design custom graphics that support clear, positive messaging in the Notice. Once these arrive in mailboxes, customers will not only be properly notified but will understand the City's needs and be more likely to support rate adjustments. PLANNED MEETING(S): Web meetings as needed to discuss the public hearing notice DELIVERABLE(S): Draft notification language for the City's legal counsel's review/approval, designed notification with two rounds ofrevisions, and final press -ready PDF in English. As needed, the City will provide language translations to be included in the final designed Notice. Task 8: Communication and Outreach Plan Development As a first step in getting a comprehensive look at how we can build a strategy most effectively, Raftelis will conduct a two-hour in-person outreach kickoff meeting followed by a communications analysis to identify areas we can leverage. It's in our best interest to invite staff who participate in the City and Public Works Department communications assets to participate in the kickoff because we will review assets, obstacles, challenges, and opportunities with respect to communications and outreach to obtain a clear picture of your working environment and staff resources. We'll amass your internal and external stakeholders, communication materials, channels, and programs and evaluate what's working, or what may need a tweak. Doing so provides us with a foundation to build an effective plan. From there, Raftelis will develop an outreach plan that includes the following components: Situation analysis — this is a combination of internal research and input gathered in the kickoff workshop. Stakeholder identification — stakeholder mapping is inserted into the plan to show how key stakeholders are connected to the communication process. It also identifies special population communication needs such as necessary translation services, or community communication preferences. Communication channel identification - this section covers which communications channels will be used to reach stakeholders, such as the City's website, social media, printed and electronic materials, bills, direct mail, newsletters, and other available opportunities. Messaging platform — this provides messages about why rates are changing, how the results will be implemented, and potential impacts to customers for use in such materials as FAQs, infographics, website updates, bill inserts, etc. Internal communication strategies — this section will provide guidance to ensure all City staff are aware of the rates study and feel prepared and empowered to answer questions about it or where to direct stakeholders for information. Community engagement techniques — this section will identify the techniques we will recommend for community engagement to ensure key stakeholders from each customer group and the development community, potentially highly impacted customer groups, underrepresented populations, etc., all have an opportunity to provide input into decision making. RAFTELIS Traditional and social media strategies — this section will provide an approach to using local media and your social media platforms for reaching your community with information. Materials — this section will identify materials we recommend that we can develop for you to help us communicate such as newsletters, fact sheets, brochures, flyers, webpages, and an explainer video of legal rates setting. Success measures — this section will identify the outputs and outcomes we will use to measure project success. Implementation plan — this section ensures the Outreach Plan is accessible, usable, and practical. It identifies roles, responsibilities, materials, activities, and their due dates. We will refer to this document during project update calls. PLANNED MEETING(S): One in-person outreach kickoff meeting, two virtual meetings to review the draft Outreach Plan and receive feedback DELIVERABLE(S): Draft and Final Communications and Outreach Plan with message platform, FAQs, one press release, social media content Task 9: Materials Development Key messages developed as part of the Communications and Outreach Plan come to life when woven together into powerful communications pieces by Raftelis' strategic communicators and professional graphic designers. Visual representation of proposed rate changes in an easy -to -understand and accessible format significantly improves customer understanding ofrate structure changes that may impact customer bills. Raftelis can provide a suite of communications pieces to assist with communicating rate and rate structure changes in print, online, or in person. Exact materials will be determined in consultation with you, with specific estimates provided before expending time and materials. As a rough estimate, a brochure or fact sheet averages around $1,500 each. A 2 -minute explainer video is roughly $2,500-$5,000 depending on content and format (animation vs original b -roll, etc.). Generally, there are cost savings as more materials are produced using similar content and design. PLANNED MEETING(S): Web meetings as needed to discuss materials development DELIVERABLE(S): Materials as requested As proposed, hours built in for design and development of 2-3 products RAFTELIS Raftelis proposes to complete the scope of work outlined above on a time -and -materials basis for the fee shown below. The following table shows our proposed fee based on our hourly rate and estimated hours. The fee shows an optional task for a communications and outreach plan and materials development. St; - Statt Uansultants k Total Fees & Expenses GD- Graphic Designer i - — t j Number of Virtual In -Person Total Fees & Tasks Y Meetings Meetings PM CS SC GD Total Expenses 1. Project Management, Kick-off Meeting and 16 1 i 14 1'4 i 10 38' 10,593QA/QC, Communications .Check -ins 802.. Water and Wastewater Financial Plan 2 r j 24 56 18,760 r 3. Three City Council Presentations 3 20 3 6, 2 31 r 9,449 4. Draft and Final Reports i ; 10 34 44 f $9,790 5- Public Hearing Presentation11 8 4 2 14 4,363 6. Community Meetings with Presentation 2 t 2 1.0 14 lr 4 4. 1 32 d 1 $8,826 7. Proposition 218 Public Notice Preparation 2 i 2 12 t 1 10 26 5,825 8.. Communication & Outreach Plan 21' 1 30 i 6 37 9,533 i 1 9: Materials Development 4 11 10 1 12 24 5,275 28 8 t 990 87 114 34 325 340 260 175 160 30,600 22,620 19,950 73,170 Total Fees 73,170 PM - Project Manager, Steve Gagnon, PE (AZ) r CS - Communications Staff, Gina DePinto, APR i 1 Total Expenses 9,245 St; - Statt Uansultants k Total Fees & Expenses GD- Graphic Designer i - — RAFTELiS 8 Schedule A proposed schedule is shown below. It assumes that Raftelis will receive data by late July and that we will implement rates for January 2024. Notice to Proceed 1. Project Management, Kick-off Meeting and QA/QC, Communications Check -ins City Provides Requested Data 2. Water and Wastewater Financial Plan Kick-off Meeting 3. Three City Council Presentations 4. Draft and Final Reports 6. Public Hearing Presentation 6. Community Meetings with Presentation 7. Proposition 218 Public Notice Preparation Public Noticing Period 8. Communication & Outreach Plan 9: Materials Development JUN JUL AUG SEP OCT NOV DEC JAN 7k' 0 0 Q O O O 1.1 EXHIBIT B TERMS FOR COMPLIANCE WITH CALIFORNIA LABOR LAW REQUIREMENTS 1. This Agreement calls for services that, in whole or in part, constitute "public works" as defined in Division 2, Part 7, Chapter 1 (commencing with Section 1720) of the California Labor Code ("Chapter 1"). Further, Consultant acknowledges that this Agreement is subject to (a) Chapter 1 and (b) the rules and regulations established by the Department of Industrial Relations ("DIR") implementing such statutes. Therefore, as to those Services that are "public works", Consultant shall comply with and be bound by all the terms, rules and regulations described in 1(a) and 1(b) as though set forth in full herein. 2. California law requires the inclusion of specific Labor Code provisions in certain contracts. The inclusion of such specific provisions below, whether or not required by California law, does not alter the meaning or scope of Section 1 above. 3. Consultant shall be registered with the Department of Industrial Relations in accordance with California Labor Code Section 1725.5, and has provided proof of registration to City prior to the Effective Date of this Agreement. Consultant shall not perform work with any subcontractor that is not registered with DIR pursuant to Section 1725.5. Consultant and subcontractors shall maintain their registration with the DIR in effect throughout the duration of this Agreement. If Consultant or any subcontractor ceases to be registered with DIR at any time during the duration of the project, Consultant shall immediately notify City. 4. Pursuant to Labor Code Section 1771.4, Consultant's Services are subject to compliance monitoring and enforcement by DIR. Consultant shall post job site notices, as prescribed by DIR regulations. 5. Pursuant to Labor Code Section 1773.2, copies of the prevailing rate of per diem wages for each craft, classification, or type of worker needed to perform the Agreement are on file at City Hall and will be made available to any interested party on request. Consultant acknowledges receipt of a copy of the DIR determination of such prevailing rate of per diem wages, and Consultant shall post such rates at each job site covered by this Agreement. 6. Consultant shall comply with and be bound by the provisions of Labor Code Sections 1774 and 1775 concerning the payment of prevailing rates of wages to workers and the penalties for failure to pay prevailing wages. Consultant shall, as a penalty to City, forfeit 200.00 for each calendar day, or portion thereof, for each worker paid less than the prevailing rates as determined by the DIR for the work or craft in which the worker is employed for any public work done pursuant to this Agreement by Consultant or by any subcontractor. 7. Consultant shall comply with and be bound by the provisions of Labor Code Section 1776, which requires Consultant and each subcontractor to: keep accurate payroll records and verify such records in writing under penalty of perjury, as specified in Section 1776; certify and make such payroll records available for inspection as provided by Section 1776; and inform City of the location of the records. 8. Consultant shall comply with and be bound by the provisions of Labor Code Sections 1777.5, 1777.6 and 1777.7 and California Code of Regulations, Title 8, Section 200 et seq. concerning the employment of apprentices on public works projects. Consultant shall be responsible for compliance with these aforementioned Sections for all apprenticeable occupations. Prior to commencing work under this Agreement, Consultant shall provide City with a copy of the information submitted to any applicable apprenticeship program. Within 60 days after concluding work pursuant to this Agreement, Consultant and each of its subcontractors shall submit to City a verified statement of the journeyman and apprentice hours performed under this Agreement. 9. Consultant shall not perform work with any Subcontractor that has been debarred or suspended pursuant to California Labor Code Section 1777.1 or any other federal or state law providing for the debarment of contractors from public works. Consultant and subcontractors shall not be debarred or suspended throughout the duration of this Contract pursuant to Labor Code Section 1777.1 or any other federal or state law providing for the debarment of contractors from public works. If Consultant or any subcontractor becomes debarred or suspended during the duration of the project, Consultant shall immediately notify City. 10. Consultant acknowledges that eight hours labor constitutes a legal day's work. Consultant shall comply with and be bound by Labor Code Section 1810. Consultant shall comply with and be bound by the provisions of Labor Code Section 1813 concerning penalties for workers who work excess hours. Consultant shall, as a penalty to City, forfeit $25.00 for each worker employed in the performance of this Agreement by Consultant or by any subcontractor for each calendar day during which such worker is required or permitted to work more than eight hours in any one calendar day and 40 hours in any one calendar week in violation of the provisions of Division 2, Part 7, Chapter 1, Article 3 of the Labor Code. Pursuant to Labor Code Section 1815, work performed by employees of Consultant in excess of eight hours per day, and 40 hours during any one week shall be permitted upon public work upon compensation for all hours worked in excess of eight hours per day at not less than one and one-half times the basic rate of pay. 11. California Labor Code Sections 1860 and 3700 provide that every employer will be required to secure the payment of compensation to its employees. In accordance with the provisions of California Labor Code Section 1861, Consultant hereby certifies as follows: I am aware of the provisions of Section 3700 of the Labor Code which require every employer to be insured against liability for workers' compensation or to undertake self-insurance in accordance with the provisions of that code, and I will comply with such provisions before commencing the performance of the work of this contract." 12. For every subcontractor who will perform work on the project, Consultant shall be responsible for such subcontractor's compliance with Chapter 1 and Labor Code Sections 1860 and 3700, and Consultant shall include in the written contract between it and each subcontractor a copy of those statutory provisions and a requirement that each subcontractor shall comply with those statutory provisions. Consultant shall be required to take all actions necessary to enforce such contractual provisions and ensure subcontractor's compliance, including without limitation, conducting a periodic review of the certified payroll records of the subcontractor and upon becoming_ aware of the failure of the subcontractor to pay his or her workers the specified prevailing rate of wages. Consultant shall diligently take corrective action to halt or rectify any failure. 13. To the maximum extent permitted by law, Consultant shall indemnify, hold harmless and defend (at Consultant's expense with counsel reasonably acceptable to City) City, its officials, officers, employees, agents and independent contractors serving in the role of City officials, and volunteers from and against any demand or claim for damages, compensation, fines, penalties or other amounts arising out of or incidental to any acts or omissions listed above by any person or entity (including Consultant, its subcontractors, and each of their officials, officers, employees and agents) in connection with any work undertaken or in connection with the Agreement, including without limitation the payment of all consequential damages, attorneys' fees, and other related costs and expenses. All duties of Consultant under this Section shall survive the termination of the Agreement. rliantif• 1722AAq RAFTEFIN ACORD.. CERTIFICATE OF LIABILITY INSURANCE DATE (NNNDD/YYY`/) 6/15/2023 THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER. IMPORTANT: If the certificate holder is an ADDITIONAL INSURED, the policy(ies) must have ADDITIONAL INSURED provisions or be endorsed. If SUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer any rights to the certificate holder in lieu of such endorsement(s). USI Insurance Svcs, Charlotte 6100 Fairview Road Ste 1400 Charlotte, NC 28210 800 868-8834INSURER GUNIAPRODUCERNAME: I Brad ChristensenNAME: PHONE FAX AIC, No, Ext): AIC, No): E-MAILADDRESS: brad.christensen@usi.com INSURER(S) AFFORDING COVERAGE NAIC # A National Fire Insurance Co. of Hartford 20478 INSURED Raftelis Financial Consultants, Inc. 227 West Trade Street, Ste. 1400 Charlotte, NC 28202 INSURER B: Continental Insurance Company 35289 INSURER C: American Casualty Company of Reading PA 20427 INSURER D: Continental Casualty Company 20443 INSURERE: INSURER F: COVERAGES CERTIFICATE NUMBER: REVISION NUMBER: THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACTOR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. INSRLTR TYPE OF INSURANCE ADDLISUBR INSR WVD POLICY NUMBER POLICY EFF MIDD POLICY EXP D LIMITS A X COMMERCIAL GENERAL LIABILITY 6076000011 0112112023 01/21/202 EACH OCCURRENCE $1,000,000 PREMISES Ea occu nce 5500,000CLAIMS -MADE 1 OCCUR MED EXP (Any oneperson) 515,000 PERSONAL & ADV INJURY S1,000,000 GEN'L AGGREGATE LIMIT APPLIES PER: GENERAL AGGREGATE $2,000,000 PRODUCTS - COMP/OP AGG 52,000,000XPOLICY PRO- LOCJECT OTHER: D AUTOMOBILE LIABILITY BUA6076000025 1/21/2023 01/21/202 EDacctCNDSINGLELIMIT $1,000,000 BODILY INJURY (Per person) SANYAUTO BODILY INJURY (Per accident) SOWNEDSCHEDULED AUTOS ONLY AUTOS HIRED NON -OWNEDXAUTOSONLYXAUTOSONLY PROPERTY DAMAGE 5Peraccident 5 B X UMBRELLA LIAB X OCCUR CUE6076000039 1/21/2023 0112112024 EACH OCCURRENCE $5,000,000 AGGREGATE s5,000,000EXCESSLIABCLAIMS -MADE DED I X RETENTION 510000 S C WORKERS COMPENSATIONWC676000042ANDEMPLOYERS' LIABILITY N ANY PROPRIETOR/PARTNER/EXECUI YIN OFFICER/MEMBEREXCLUDED? Mandatory in NH) NIA WC676305637 1/21/2023 1/21/2023 01/21/202 0112112024 X PERTUT OTH - A PR E.L. EACH ACCIDENT $1,000,000 E.L. DISEASE - EA EMPLOYEE 31,000,000 E.L. DISEASE - POLICY LIMIT 51,000,000Ifyes, describe under DESCRIPTION OF OPERATIONS below D Professional 652071235 D112112023 0112112024 5,000,000 Aggregate 5,000,000 Occurrence 3/4/1994 Retro Date DESCRIPTION OF OPERATIONS/ LOCATIONS/ VEHICLES (ACORD 101, Additional Remarks Schedule, maybe attached if more space is required) The City of Seal Beach its elected and appointed officials, officers, employees, agents, designated volunteers and those City agents acting as independent contractors in the role of City officials shall be See Attached Descriptions) SHOULD ANY OFTHE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE City of Seal Beach THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN 211 - 8th Street ACCORDANCE WITH THE POLICY PROVISIONS. Seal Beach, CA 90740 AUTHORIZED REPRESENTATIVE 40ai,_L U 6d, W Tyt$t5-ZU 10 At-UKU L UKrUKH I IUM Mu IIyI Iu I U Ul vwu. ACORD 25 (2016103) 1 of 2 The ACORD name and logo are registered marks of ACORD S40414805/M39162930 LUSZZ I. DESCRIPTIONS. (Continued from Page 1) covered as additional insuredswith respect to General Liability, Automobile and Umbrella will follow form as per written contract. The coverage afforded to the Additional Insured is on a Primary and Non Contributory basis for General Liability, Automobile and Umbrella if required by written contract. Waiver of Subrogation applies to General Liability, Automobile, Workers Compensation and Umbrella policies in favor of the above listed Additional Insured per written contract. A 30 day notice of cancellation will be given except for non-payment of premium will be 10 days if required by written contract. SAGITTA 25.3 (2016103) 2 of 2 S40414805/M39162930 Agenda Item I AGENDA STAFF REPORT DATE:February 24, 2025 TO:Honorable Mayor and City Council THRU:Patrick Gallegos, Interim City Manager FROM:Michael Henderson, Chief of Police SUBJECT:Parking Enforcement Automated License Plate Reader (ALPR) and Supporting Equipment Refresh ________________________________________________________________ SUMMARY OF REQUEST: That the City Council adopt Resolution 7621: 1. Approving the expenditure of $214,479.37 for the reimplementation and refresh of the Seal Beach Parking ALPR system, CIP BG2401; and, 2. Authorizing the Interim City Manager to execute on behalf of the City all contracts and proposals, including any necessary extensions or amendments thereafter. BACKGROUND AND ANALYSIS: Parking enforcement and animal control are critical functions of the City of Seal Beach Police Department (Department). The Department relies heavily on Senior Community Service Officers (SCSOs) and Police Aides (PAs) to enforce local laws, provide animal control services, support patrol, and maintain order. Mobile (vehicle-mounted) license plate recognition (LPR) technology is the central pillar that the Department’s parking enforcement and animal control programs are built upon. Everything, from parking permit checks, the issuance of citations, and SCSO/PA responses to calls, rely upon complex, interconnected computer systems. In 2023, the Department’s operations resulted in approximately 22,900 citations. SCSOs and PAs handled over 6,000 service calls. However, ongoing equipment failures are significantly hampering the effectiveness of SCSOs and PAs. This decrease in efficiency is expected to worsen as equipment issues persist. If immediate action is not taken, Department staff anticipate several negative outcomes, including: Page 2 1 9 9 5 • A substantial decline in parking citations being issued and decrease in parking revenue • Increased response times for service calls • SCSO and PO safety issues due to failing equipment • Significant disruptions to animal control and jail services There are two (2) integrated mobile LPR companies, Genetec and Motorola Vigilant. The Department has utilized Genetec’s LPR since the initiation of the Department’s smart parking technology program in 2017. Staff recommends proceeding with a Genetec Distributor to optimize existing infrastructure and integrations. Due to the complex and customized nature of the associated Genetec equipment and software, staff recommends using a licensed Genetec distributor for these hardware and support services. Since some of the operational components are not compatible with outside vendors or other manufacturers, switching vendors would require a substantial cost increase to unnecessarily replace components to be compatible with other manufacturers. There are three (3) licensed Genetec distributors who support the West Coast region with the municipal, parking, and law enforcement experience who are qualified to support the City’s smart parking technology program. Introducing new vendors or hardware would needlessly complicate reimplementation efforts, slow down productivity, and increase costs. Additionally, the Department strives to maintain a degree of hardware consistency between patrol and parking fleet vehicles. This maximizes interoperability and simplifies maintenance. An Invitation to Bid was issued on October 16, 2024, and each of the three qualified (3) vendors submitted a proposal by the November 26, 2024 deadline. After a thorough review of the proposals and reference checks were completed, ComSonics’s proposal was selected. ComSonics’ proposal provides the most complete service agreement that includes support and overall coverage. This is critical to the success of the program because the additional cost allows us to conduct maintenance and repairs in a more cost-effective manner. Staff is recommending ComSonics due to its lower five-year cost projection, which includes change order requests, making them the lowest total bid. Additionally, ComSonic had excellent references including local agencies with similar needs to Seal Beach. ENVIRONMENTAL IMPACT: There is no environmental impact related to this item. Page 3 1 9 9 5 LEGAL ANALYSIS: The City Attorney has reviewed and approved as to form. FINANCIAL IMPACT: The funding has been set aside in the Revitalization Plan and was approved by the City Council at the Strategic Planning session on January 30, 2024. Sufficient funds have been allocated in the approved FY 2024-25 budget under capital project BG2401 Revitalization Plan account 301-500-0333-55000. ComSonics’ proposal total is not to exceed a total of $214,479.37 for the five-year period. Recurring costs, such as licensing fees and routine management costs outside of the established warranty and agreements, are to be budgeted for in the Department’s technology budget, which will be included in future years. STRATEGIC PLAN: This item is not applicable to the Strategic Plan. RECOMMENDATION: That the City Council adopt Resolution 7621: 1. Approving the expenditure of $214,479.37 for the reimplementation and refresh of the Seal Beach Parking ALPR system, CIP BG2401; and, 2. Authorizing the Interim City Manager to execute on behalf of the City all contracts and proposals, including any necessary extensions or amendments thereafter. SUBMITTED BY: NOTED AND APPROVED: Michael Henderson Patrick Gallegos Michael Henderson, Chief of Police Patrick Gallegos, Interim City Manager Prepared by: Chris Hendrix, Operations Bureau Lieutenant ATTACHMENTS: A. Resolution 7621 B. City of Seal Beach Invitation to Bid Genetec LPR 10162024 C. RFP (Request for Proposal) Responses D. City of Seal Beach Professional Services Agreement with ComSonic RESOLUTION 7621 A RESOLUTION OF THE SEAL BEACH CITY COUNCIL FOR APPROVAL OF EXPENDITURE OF FUNDS – PARKING ENFORCEMENT AUTOMATED LICENSE PLATE READER (ALPR) & SUPPORTING EQUIPMENT REFRESH WHEREAS, ALPR technology has proven to be a valuable tool to assist the Police Department with the enforcement of parking regulations as well as assisting in locating missing persons and identifying suspect(s) and suspect(s)’ vehicles related to crimes in the area; and, WHEREAS, on October 16, 2024, the City issued an Invitation to Bid for the ALPR and supporting equipment refresh, CIP BG2401 (Project); and, WHEREAS, on November 26, 2024, the Police Department received three (3) bids in response to the Invitation to Bid, and ComSonics submitted a bid in the amount of $214,479.37 after a thorough review of proposals and completion of background checks; and, WHEREAS, upon reviewing the Invitation to Bid and Instructions to Bidders, the bids submitted for the work to be performed pursuant to the Agreement and the plans and specifications, the City Council finds that ComSonics is a qualified firm to perform the Project. THE SEAL BEACH CITY COUNCIL DOES HEREBY RESOLVE: SECTION 1. The City Council hereby approves the plans and specifications for the Project. SECTION 2. Based on the recitals set forth above, the City Council hereby awards a Professional Services Agreement to ComSonics for the Project in the not-to-exceed amount of $214,479.37 and rejects all other bids. SECTION 3. The City Council hereby authorizes and directs the Interim City Manager to execute the Professional Services Agreement with ComSonics on behalf of the City. SECTION 4. The City Council hereby authorizes the Interim City Manager to approve payments for additional work requests in connection with the Project in the not-to-exceed amount of $214,479.37. PASSED, APPROVED, and ADOPTED by the Seal Beach City Council at a regular meeting held on the 24th day of February 2025 by the following vote: 9 8 0 9 AYES: Council Members NOES: Council Members ABSENT: Council Members ABSTAIN: Council Members Lisa Landau, Mayor ATTEST: Gloria D. Harper, City Clerk STATE OF CALIFORNIA } COUNTY OF ORANGE } SS CITY OF SEAL BEACH } I, Gloria D. Harper, City Clerk of the City of Seal Beach, do hereby certify that the foregoing resolution is the original copy of Resolution 7621 on file in the office of the City Clerk, passed, approved, and adopted by the City Council at a regular meeting held on the 24th day of February 2025. Gloria D. Harper, City Clerk ?aCouSoNtcs"1350 Port Republic Rd PO Box 1105 llarrisonburg, VA 2280'l 800-335-9681 oxt. 1243 lax 540-2137-2131 Customeri crty ol seal Beach (6) Onsne Crty LPR System 5 Y€ar Hadware Wananty Mike Nesselrodt Public Safety Accounts Manager mnesselrodl@comsonrcs.com !iE!!4r.0!-s9Es!j9 Auiovu* Sha@23 650nn Ciy KIT mdud.s 6a n ShaDZ3 dual p@ssing un( w[h Hodzo.aweni€l mo!n15. unng, LJSSGpS. in' v€hicl. maDri.q .nd G.n6tec Patollerx l'6nse. 2 CimeEs $d eme6 mounts includ6d s21 945 00 s102 702 60 AL],M,OFFLLNEMAP.NA Mapping Lcnse '.cludrng d.la forNonh amen@ - Per v6hrcle l@.se 2 Adva.r.oe Yeartv Fees G€.eleIM Advr.l5oe Ren.wal lor 1 AutoVuTM mobile sysrem @nn6cl'on ro Socunly CenG.' 1 y6ar (or rwo curc.i V qll.nr LPR unE)2 s312 00 pr.te Li.t Y.rnv subscnbri.n Fe. AU,PLATELINK.AASE,lY V.hicle @nnedio.s lor 1 Year Alos up Io 2 veh c es b seid daG ro lhe cloud 1o be shared 5l 35000 AU PLATEL]NK,1CAR 1Y Ano6 I vehi.le ro s6.d d3ta io the clold lo b6 sha€d PlaELink aa* is eou'6d Comsonics Mobil. lnst ll.rion.nd Mrinran.c6 A3! Com&nic V€h cl. lnsial alion and Tra'n'no 53,531 00 s2r 136 00 ComSo.iG PoEctManaoeme.l lo.e T'me Fee)$1 333 00 l S]s1 33400 Comslni6 ManEnen@ PlEn (1 Y6ar) Enend.d W.da nty Optio.s - 335 00 A!-K-c)(x- adva.ed swap wamnry s.ry c !@€d€ Lom etum 3.d reoar lor frst vea. ol sa e Ensd€d wamnt lo. AU-K-cr\x kir witrr Advan@ iopl@m6r @vo6gs - 4 Yeau addnDna @v.69e o@s rcl Ln lude lpdale lo.dvenc4d 6pla@m.nl lor y6ar 1 (we@.ty €n.or en€nd prstslh year an6r purch.s6) Thsinclud.s @v6E9e ol autovur v.hi.l€ hardwa.€. Gsn.bc PErrollerB sonw.6 upg..d6s a.d B.nomEd uodar6. cro4 rcr @vd icEhicle Ftr 5 s6:244 00 st7 301 52 Toralwitho exr€nded wam y s253.64 60 s214 479 X7 Tor.l with 5 yeaB ol adv.nc€d Pl.c.tunt Coverag€ Q uote C reated : 1 1 /26/2024 Q uote Ex p i res : 226/2025 Unn SRP otv Eneflded Pric6 [IHHIJJH:I Portable computer Systems,lnc.7i00 Vra Paseo Del sur Suite 202 Scottsdale AZ 852S8 United States PO# Quote #1736 11t25t2024 Note: This Quote is good and valid for 15 days beyond the Quote Date Eill ro ship ro TOTAL Kevin Edwards City of Seal Beach 2',1 1 8TH Sr Seal Beach CA 90740-6305 United States City of Seal Beach 211 8TH St Seal Beach CA 90740-6305 United States $198,299.79 Expir ati on D ate: 1 2125 12024 Shipping MethodTerms Deposit - 50% (LPR) Expiration Date 1212512024 Project Description Seal Beach - Overtime Kit Option Engineering services I Project management services for add on Mobile LPR project deployment, up to five mobile LPR vehicles. 6, Installation services for one mobile LPR vehicle with wheel imaging cameras. i Configuration services for add on mobrle LPR projects. Includes adding new units to exis(inq server environment and configuring add on hardware to match existing hardware specifications. 1 Remote training for Mobile LPR. Includes remote training session on LPR N4obile Vehicle software and hardware(up to five people participants) and remote web based training session on LPR Security Center software - Security Desk and Config Tool - (up to 10 particrpants). 1 Cost of technician to travel to provide on-site installation. This is a per trip charge; if technician is required to return to site for reasons outside of Route'l's conrrol, there wrll need to be additional trip charges. Subtotal: $16,950.00 Hardware and Software - Sensors and Data Acquisition 6 Autovua Sharpz3 OVERTIME Sinqle base KIT includes base unit, LPR module for up to 2 LPR cameras, hard" mount brackets, advanced GPS n-avigation with dead reckoning, POE aux camera option, 2 Tire Cameras, 2 LPR units and in-vehicle license. 6 Mapping License including data for North America 6 Routel consumables 1 Route 1 Shipping Via FEDEX or UPS 6 Extended Warranty for AU-K-OXX kit wrth Advance Replacement coveraqe - 4 Years addrtional coverage. Does not Include update to advanced replacement for year 1 (warranty cannot extend past 5th year after purchase). This includes coveraqe of Autovu vehicle hardware, Gene(ec Patroller software upgrades and Benomad updares. Does not cover in-vehicle PC. 6 AU-K-OXX- advanced swap warranty service upgrade from return and repair for first year of sale. subtotal: $153,094.62 support and Licenses 6 Genetec* Advantage for 1Autovu" mobile system connection to Security Center - 1 year. Sales Rep Elton Crawford Ponable Computer Svstems,lnc.7i00 Vra Paseo Del 5ur Suite 202 Scottsdale AZ 85258 lJnited States Quote TilRPPJ"H] Subtotal: #1736 11/25/2024 $t 2,300.00 $15,955.17 $198,299.79 ,] 1 6 Routel Comprehensive support for on Premise for one year. Routel Comprehensive Support - annual on site maintenance visit. Routel Comprehensive Support - one Mobile LPR vehicle for one year Tax (%) Total The below Terms of Sale are an integral part of this quote. ln order for this quote to be effective, the attached Terms of Sale must be agreed to. Customer Authorizing Party Signature: Date of Signature: EP EYEP SOLUTlONS,rr.rc Pricing OPIIoN 1 - PURCHASE YearT-LPRFleet Yeor 7 - Genetec Advontoge (S-yeor renewol) Part Number/Name Description aty Unit Price Extended Price AU-K-C223-850 City Kil (Add-On)2 $17,830.00 $3s,660.00 AU.K.CXX,EWRR-4Y Extended warranty for AU-K-cxx kit - return and reptace - 4 yearc (Add On) 2 $6,846.84 $13,693.68 AU.M.OFFLINEMAP- NA Mapping License (Add -On)2 $o.oo $o.oo Computing Kit Mounts and docking station, does not include CradtePoint, computer, antenna, etc (Add-On) 2 $1 ,87s.00 $3,750.00 AU-K-C223-850 Ciq Kft (Upgrade)4 $1 5,012.1 9 $60,048.76 AU-K-CXX.EWRR-4Y Extended Warranty for AU-K-CXX kit - return and replace -4 years (Upgrade) 4 $6,320.16 $25,280.64 GPS GPS unit + extension cabte 6 $i 29.09 $77 4.54 AU-PI 3RDPARryEXPO RTER-lX 3'd party exporter - 1 endpoint 1 $2,031.2s $2,031.25 GSC.l SDKDIXON RAPID LPR TOOL One (1) Genetec SDK connection for Dixon Resources Untimited with Rapid LPR Toot 1 $203.1 3 $203.13 Autovu Certif ication Certification tree. Travet not inctuded 2 $o.oo $o.oo lnsta ttation and Configuration 1 $42,000.00 $42,000.00 Freight '1 $r,ooo.oo $1,ooo.oo Support 1 $4,000.00 $4,ooo.oo AU-PLATELINK-BASE- 1Y PtateLink for 1 year includes 2 vehicles connections - per year 1 $338.82 $338.82 AU-PLATELINK-1 CAR- 1Y PtateLink for I year - per year per car 4 $225.88 $903.s2 Taxes 8.75% tax rate 1 $8,f7o.41 $8,170.41 Subtotat:$198,454.75 Part Number/Name Description aty Unit Price Extended Price Beinstatement Lapsed ADV- onty if 5 year purchased 1 $o.oo $o.oo 3450 Patmer Drive, Suite 4-191, Cameron Park, CA 95682 u,,..,tu,,.eyep-salutl ons.corn I sates@eyep-sotutions-com Phone: (9'16) 550-3170 | Fax: (530) 387-2106 I Prolect Management, on srte rnstallation, I on-site trarning, Patrotl.er conf iguration Per year. EP.EYEP SOLUTIONS,'*c Synergis Enterprise Reader $4s.s0 $ r ,592.50 ADV-CAI.4-E.5Y Omnicast Enterprise Reader 87 $r 45.44 $12,653.28 ADV-LPR.M.5Y Autovu mobiLe system 6 $568.75 $3,412.s0 subtotal:$17,6s8.28 Options Total Controct Volue 5 year contract value excluding options Part Number/Name Description Qty Unit Price Extended Price Support Per year .l $4,ooo.oo $4,000.00 AU.PLATELINK-BASE.l Y PtateLink for 1 year inctudes 2 vehicles connections - per yea r T $s38.82 $338.82 AU,PLATELIN K-1 CAR,l Y Piatelink for I year - per year per car 4 $22s.88 $e03.52 Annuat Subtotat:$5,242.34 Part Number/Name Description Qr/Unit Price Eltended Price Additionattrips Support or preventative maintena nce - as needed 1 $3,ooo.oo $3,ooo.oo Upgrade 5.9 to 5.11 T $4,400.00 $4,4oo.oo Part Number/Name Extended Price Year 1 (LPR Fteet)$r 98,454.75 Year (LPR Advantage - 5 year paid upfront)$17,6s8.28 Years 2-5 - totat $20,969.36 5 year Total:$237,082.39 3450 Patmer Drive, Suite 4-'19'l , Cameron Park, CA 95682 ww!t/.eyep-so{ulicns.cont I sates@eyep-solutions.com Phone: (916) 550-3'1 70 I Fax: (530) 387-21 06 Yeors 2-S (renewed annually) ADV-RDR-E-5Y I On-site upgrade - must be I combrned with LPR instal.tation trip. 4 of 24 1.6. Additional Services. Consultant will not be compensated for any work performed not specified in the Scope of Services unless City authorizes such work in advance and in writing. The City Manager may authorize extra work to fund unforeseen conditions up to the amount approved at the time of award by the City Manager. Payment for additional work in excess of this amount requires prior City Manager authorization. 2.0 Term The term of this Agreement shall commence on 02/24/2025, and shall remain in full force and effect until 02/24/2030, unless sooner terminated as provided in Section 5.0 of this Agreement. 3.0 Consultant’s Compensation In consideration of Consultant’s performance of the Services described in Section 1.0, City will pay Consultant in accordance with the hourly rates shown on the fee schedule set forth in Exhibit B for the Services but in no event will City pay more than the total not-to-exceed amount of $214,479.37 for the Term of this Agreement. Payment for any additional work authorized by City pursuant to Subsection 1.6 will be compensated in accordance with the fee schedule set forth in Exhibit B, and shall not exceed the cumulative amount established by the City Manager at the time of award for the Term. 4.0 Method of Payment Consultant shall submit to City monthly invoices for all Services rendered pursuant to this Agreement. Such invoices shall be submitted within 15 days of the end of the month during which the Services were rendered and shall describe in detail the Services rendered during the period, the days worked, number of hours worked, there would not be an hourly rate, except for out of warranty or relocation after initial install, and the Services performed for each day in the period. City will pay Consultant within 30 days of receiving Consultant’s invoice. City will not withhold any applicable federal or state payroll and other required taxes, or other authorized deductions from payments made to Consultant. 5.0 Termination 5.1. Termination by City. Seal Beach Police Department ALPR Parking Technology Refresh City Council Meeting February 24, 2025 Background •Mobile Automated License Plate Recognition (ALPR) has been utilized in Seal Beach since the initiation of the smart parking technology program in 2017 and (besides our people)is the central pillar that our parking enforcement and animal control programs are built upon •In 2019, the City was recognized for the innovative use of integrated parking technology (first end-to-end parking technology solution on the West Coast) •Throughout the City, parking is based on the license plate which optimizes the program and provides a more efficient operation Background •The current ALPR technology has exceeded the life cycle (impacting program effectiveness and reductions in parking revenue) •Budget allocation was authorized to proceed with an ALPR technology refresh for 6 vehicles •SBPD has direct experience with the 2 integrated mobile LPR companies (Genetec & Motorola) •Motorola failed to provide the support required by the City’s smart parking technology program Why Genetec? ●Complex & customized nature of the associated Genetec equipment and software ○Able to optimize existing infrastructure and integrations with continuity and consistency with patrol & parking fleet vehicles ○Simplifies maintenance and maximizes interoperability ●Switching vendors would require substantial increases to unnecessarily replace components and needlessly complicate reimplementation efforts (which would exceed budget allocation) Invitation to Bid •3 qualified, experienced and licensed Genetec distributors who support the West Coast region with municipal, parking and law enforcement experience were solicited on October 16, 2024 •The Invitation to Bid included a detailed scope of work, submission criteria and evaluation guidelines •Each distributor completed an onsite inspection of the existing infrastructure with Police Department staff the week of November 5, 2024 •Proposals were received from each distributor on November 26, 2024. Vendor Selection •Proposals were received from Route 1 (incumbent), Eye P Solutions and ComSonics •After thorough review of the proposals received, Route 1 and ComSonics were shortlisted and references were contacted •Existing concerns about responsiveness and consistency with Route 1 were confirmed by other agencies •ComSonics has provided the most cost-effective and complete proposal to the City that includes support and overall coverage Financial & Service Impact Impact to current revenue •In 2023,our operations resulted in approximately 22,900 citations.SCSOs PAs handled over 6,000 service calls.However,ongoing equipment failures are significantly hampering the effectiveness of SCSOs and PAs.This decrease in efficiency is expected to worsen as equipment issues persist. •We anticipate several negative outcomes if immediate action is not taken: 1.A substantial decline in parking revenue 2.Increased response times for service calls 3.SCSO and PO safety issues 4.Significant disruptions to Animal Control and Jail services Budget Allocation •The approved budget allocation for this project was $242,608 •ComSonics proposal is approximately $214,000 •Cost savings = Approximately $30,000 which can be invested in other aspects of the technology configuration •Recurring costs, such as licensing fees, and routine management costs outside of the established warranty and agreements are to be budgeted for in the Police Department technology budget. •We recommend that a portion of the annual parking revenue be set aside in anticipation of preventative maintenance and the inevitable technology updates and upgrades that will be required in the future. Questions? parking@sealbeachca.gov