Budget and Personnel Committee

BUDGET MEETING BUDGET AND PERSONNEL COMMITTEE THURSDAY, DECEMBER 2, 2021 10:00 AM 1

1. CALL TO ORDER 2. ROLL CALL 3. COMMUNICATIONS Members of the Public may address the Budget/Personnel Committee on matters not appearing on the Budget/Personnel Committee Agenda at this time for up to three minutes. In order that the Budget/Personnel Committee Secretary may later identity the speaker in the minutes of the meeting, it is helpful if the speakers state their names. Public comments regarding items on the scheduled agenda will be heard at the time the item is being considered by the Budget/Personnel Committee. 4. ORDER OF BUSINESS AGENDA BUDGET AND PERSONNEL COMMITTEE Budget Meeting - Thursday, December 2, 2021 10:00 AM THIS MEETING WILL BE HELD VIRTUALLY AND IS COMPLIANT WITH ASSEMBLY BILL (“AB”) 361, SIGNED INTO LAW ON SEPTEMBER 16, 2021, WHICH AMENDS GOVERNMENT CODE SECTION 54953 TO PROVIDE AUTHORITY FOR PUBLIC AGENCIES TO HOLD VIRTUAL MEETINGS DURING A PROCLAIMED STATE OF EMERGENCY AND REMAIN IN COMPLIANCE WITH THE BROWN ACT (GOV. CODE §§ 54950 ET SEQ.). TO PARTICIPATE IN THE ZOOM MEETING LIVE: https://us02web.zoom.us/j/4614728829 Meeting ID: 461 472 8829 To participate telephonically by calling the number below: (669) 900-6833 Meeting ID: 461 472 8829# If prompted to enter a participant ID, press # How to submit written Public Comments: If any member of the public would like to provide written comments at the meeting, please do as set forth below. Written: All comments received before 8:00 am the day of the meeting will be posted on the City’s website as “Correspondence” under the relevant agenda item and provided to the City Council members at the meeting. Please email your comments to: connie@sandcityca.org. Read Aloud During the Meeting: Email your comments to connie@sandcityca.org when the Mayor opens the public comment period for the relevant agenda item; please indicate the agenda item and title in your email subject line. If you want your comment read aloud, prominently write “Read Aloud at Meeting” at the top of the email and your comments will be read into the record (not to exceed three minutes at staff’s cadence). DURING EACH MEETING, members of the public may participate by calling and speaking live during the designated time(s), subject to time limits that may be imposed pursuant to the Brown Act at the number provided above. 2

4a. Approval of Sand City Budget/Personnel Committee Meeting Minutes, November 9, 2021 11.09.21 Budget.Personnel Committee Meeting Minutes.pdf 4b. Review of the Fiscal Year 2020/2021 Draft Audit Financial Report.cover letter.pdf Financial Statements Year Ended June 30, 2021.pdf 4c. Consideration of Police Fleet Maintenance Staff Report. Vehicle Inventory and Sustainability Plan.pdf 4d. Consideration of Bicycle Patrol Funding Staff Report. Bicycle Patrol.pdf 5. CLOSED SESSION 5a. Budget/Personnel Committee to adjourn to Closed Session regarding: 1) Closed session pursuant to Cal. Gov Code § 54957.6 (Conference with Labor Negotiator): Agency designated representatives: City Attorney, Vibeke Norgaard Unrepresented employee: City Clerk 2) Closed session pursuant to Cal. Gov Code § 54957.6 (Conference with Labor Negotiator): Agency designated representatives: City Attorney Vibeke Norgaard Unrepresented employee: Public Works Foreman 3) Closed session pursuant to Cal. Gov Code § 54957.6 (Conference with Labor Negotiator): Agency designated representatives: City Attorney Vibeke Norgaard Unrepresented employee: Finance Specialist 4) Closed Session pursuant to Cal. Gov. Code § 54957.6 Position: City Manager 6. ADJOURNMENT The current agenda is available in PDF format on our website at: www.sandcity.org If you have a request for a disability-related modification or accommodation, including auxiliary aids or services, which will allow you to participate in a Sand City public meeting, please call the City Clerk at (831) 394-3054 extension 220, or give your written request to the City Clerk at 1 Pendergrass Way, Sand City, CA 93955 at least 48 hours prior to the scheduled meeting to allow the City Clerk time to arrange for the requested modification or accommodation. 3

BUDGET MEETING BUDGET AND PERSONNEL COMMITTEE THURSDAY, DECEMBER 2, 2021 10:00 AM 1

1. CALL TO ORDER 2. ROLL CALL 3. COMMUNICATIONS Members of the Public may address the Budget/Personnel Committee on matters not appearing on the Budget/Personnel Committee Agenda at this time for up to three minutes. In order that the Budget/Personnel Committee Secretary may later identity the speaker in the minutes of the meeting, it is helpful if the speakers state their names. Public comments regarding items on the scheduled agenda will be heard at the time the item is being considered by the Budget/Personnel Committee. 4. ORDER OF BUSINESS AGENDA BUDGET AND PERSONNEL COMMITTEE Budget Meeting - Thursday, December 2, 2021 10:00 AM THIS MEETING WILL BE HELD VIRTUALLY AND IS COMPLIANT WITH ASSEMBLY BILL (“AB”) 361, SIGNED INTO LAW ON SEPTEMBER 16, 2021, WHICH AMENDS GOVERNMENT CODE SECTION 54953 TO PROVIDE AUTHORITY FOR PUBLIC AGENCIES TO HOLD VIRTUAL MEETINGS DURING A PROCLAIMED STATE OF EMERGENCY AND REMAIN IN COMPLIANCE WITH THE BROWN ACT (GOV. CODE §§ 54950 ET SEQ.). TO PARTICIPATE IN THE ZOOM MEETING LIVE: https://us02web.zoom.us/j/4614728829 Meeting ID: 461 472 8829 To participate telephonically by calling the number below: (669) 900-6833 Meeting ID: 461 472 8829# If prompted to enter a participant ID, press # How to submit written Public Comments: If any member of the public would like to provide written comments at the meeting, please do as set forth below. Written: All comments received before 8:00 am the day of the meeting will be posted on the City’s website as “Correspondence” under the relevant agenda item and provided to the City Council members at the meeting. Please email your comments to: connie@sandcityca.org. Read Aloud During the Meeting: Email your comments to connie@sandcityca.org when the Mayor opens the public comment period for the relevant agenda item; please indicate the agenda item and title in your email subject line. If you want your comment read aloud, prominently write “Read Aloud at Meeting” at the top of the email and your comments will be read into the record (not to exceed three minutes at staff’s cadence). DURING EACH MEETING, members of the public may participate by calling and speaking live during the designated time(s), subject to time limits that may be imposed pursuant to the Brown Act at the number provided above. 2

4a. Approval of Sand City Budget/Personnel Committee Meeting Minutes, November 9, 2021 11.09.21 Budget.Personnel Committee Meeting Minutes.pdf 4b. Review of the Fiscal Year 2020/2021 Draft Audit Financial Report.cover letter.pdf Financial Statements Year Ended June 30, 2021.pdf 4c. Consideration of Police Fleet Maintenance Staff Report. Vehicle Inventory and Sustainability Plan.pdf 4d. Consideration of Bicycle Patrol Funding Staff Report. Bicycle Patrol.pdf 5. CLOSED SESSION 5a. Budget/Personnel Committee to adjourn to Closed Session regarding: 1) Closed session pursuant to Cal. Gov Code § 54957.6 (Conference with Labor Negotiator): Agency designated representatives: City Attorney, Vibeke Norgaard Unrepresented employee: City Clerk 2) Closed session pursuant to Cal. Gov Code § 54957.6 (Conference with Labor Negotiator): Agency designated representatives: City Attorney Vibeke Norgaard Unrepresented employee: Public Works Foreman 3) Closed session pursuant to Cal. Gov Code § 54957.6 (Conference with Labor Negotiator): Agency designated representatives: City Attorney Vibeke Norgaard Unrepresented employee: Finance Specialist 4) Closed Session pursuant to Cal. Gov. Code § 54957.6 Position: City Manager 6. ADJOURNMENT The current agenda is available in PDF format on our website at: www.sandcity.org If you have a request for a disability-related modification or accommodation, including auxiliary aids or services, which will allow you to participate in a Sand City public meeting, please call the City Clerk at (831) 394-3054 extension 220, or give your written request to the City Clerk at 1 Pendergrass Way, Sand City, CA 93955 at least 48 hours prior to the scheduled meeting to allow the City Clerk time to arrange for the requested modification or accommodation. 3

AGENDA ITEM 4a. Approval of Sand City Budget/Personnel Committee Meeting Minutes, November 9, 2021 4

_____________________________________________________________________________________________ 11.09.21 Budget/Personnel Committee Meeting Minutes MINUTES BUDGET AND PERSONNEL COMMITTEE Budget Meeting - Tuesday, November 9, 2021 2:00 PM As allowed per Assembly Bill (AB361), this meeting was conducted in person and by teleconference AGENDA ITEM 1, CALL TO ORDER The Budget/Personnel meeting was called to order at 2:01 p.m. by Committee Chair Carbone. AGENDA ITEM 2, ROLL CALL Members Present: Committee Member Mary Ann Carbone Committee Member Kim Cruz Staff Present: City Manager, Aaron Blair City Clerk/Committee Secretary Connie Horca City Attorney, Vibeke Norgaard AGENDA ITEM 3, COMMUNICATIONS 2:02 p.m. Committee Member Carbone opened the floor for public comment. There were no comments from the Public in person, via writing or through telecommunications. 2:02 p.m. Committee Member Carbone closed the floor for public comment. AGENDA ITEM 4, ORDER OF BUSINESS 4a. Approval of February 22, 2021 Budget/Personnel Meeting Minutes 4b. Approval of May 17, 2021 Budget/Personnel Committee Meeting Minutes Motion to approve the February 22 and May 17, 2022 Budget/Personnel Committee Meeting Minutes was made by Committee Member Cruz, seconded by Chair Carbone. There was consensus of the Committee to approve the minutes by a roll call vote. AGENDA ITEM 5, CLOSED SESSION 2:04 P.M. Floor opened to Public Comment and seeing none, was closed to Public Comment. 5

_____________________________________________________________________________________________ 11.09.21 Budget/Personnel Committee Meeting Minutes 2:05 P.M. 5a. Budget/Personnel Committee to adjourn to Closed Session regarding: 1) Public employment pursuant to Cal. Gov. Code section 54957. Position: City Manager AGENDA ITEM 6, ADJOURNMENT There was consensus of the Budget/Personnel Committee to adjourn the meeting at 2:35 P.M. to the next regularly scheduled Budget/Personnel Committee meeting to be announced. _______________________________ Connie Horca, City Clerk 6

_____________________________________________________________________________________________ 11.09.21 Budget/Personnel Committee Meeting Minutes Budget and Personnel Committee Minutes 11.09.21 Budget Meeting 2 7

AGENDA ITEM 4b. Review of the Fiscal Year 2020/2021 Draft Audit 8

DATE The Honorable Mayor and City Council City of Sand City Sand City, California We are pleased to present this report related to our audit of the basic financial statements and compliance of the City of Sand City (the City) for the year ended June 30, 2021. This report summarizes certain matters required by professional standards to be communicated to you in your oversight responsibility for the City of Sand City’s financial and compliance reporting process. Also included is a summary of recently issued accounting standards that may affect future financial reporting by the City of Sand City. Generally accepted auditing standards (AU-C 260, The Auditor’s Communication with Those Charged with Governance) require the auditor to promote effective two-way communication between the auditor and those charged with governance. Consistent with this requirement, the following summarizes our responsibilities regarding the financial statement audit as well as observations arising from our audit that are, significant and relevant to your responsibility to oversee the financial reporting process. Our Responsibilities with regard to the Financial Statement Audit Our responsibilities under auditing standards generally accepted in the United States of America and Government Auditing Standards, issued by the Comptroller General of the United States have been described to you in our arrangement letter dated April 15, 2021. Our audit of the financial statements does not relieve management or those charged with governance of their responsibilities, which are also described in this letter. Overview of the Planned Scope and Timing of the Financial Statement Audit We have issued a separate communication dated April 15, 2021 regarding the planned scope and timing of our audit and have discussed with you our identification of and planned audit response to significant risks of material misstatement. Accounting Policies and Practices Preferability of Accounting Policies and Practices Under generally accepted accounting principles, in certain circumstances, management may select among alternative accounting practices. In our view, in such circumstances, management has selected the preferable accounting practice. 9

City of Sand City DATE Page 2 of 3 Adoption of, or Change in, Accounting Policies Management has the ultimate responsibility for the appropriateness of the accounting policies used by the City. The policies adopted by the City for the current fiscal year are as follows: In January 2017, GASB issued Statement No. 84, Fiduciary Activities. This Statement establishes criteria for identifying fiduciary activities of all state and local governments. The focus of the criteria generally is on (1) whether a government is controlling the assets of the fiduciary activity and (2) the beneficiaries with whom a fiduciary relationship exists. Separate criteria are included to identify fiduciary component units and postemployment benefit arrangements that are fiduciary activities. The objective of this Statement is to improve guidance regarding the identification of fiduciary activities for accounting and financial reporting purposes and how those activities should be reported. Necessary changes were made to the notes to the financial statements. Recently Issued Accounting Standards In June 2017, GASB issued Statement No. 87, Leases. The requirements of this Statement are effective for fiscal years beginning after June 15. 2021. At this time the City is not certain of the effect of the adoption of Statement No. 87 will have on the financial statements. In January 2020, GASB issued Statement No. 92 Omnibus 2020. The requirements of this Statement are effective for reporting periods beginning after June 15, 2021. At this time the City is not certain of the effect of the adoption of Statement No. 87 will have on the financial statements. In May 2020, GASB issued Statement No. 96 Subscription-Based Information Technology Arrangements. The requirements of this Statement are effective for fiscal years beginning after June 15, 2022, and all reporting periods thereafter. At this time the City is not certain of the effect of the adoption of Statement No. 87 will have on the financial statements. In June 2020, GASB issued Statement No. 97 Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans—an amendment of GASB Statements No. 14 and No. 84, and a supersession of GASB Statement No. 32. The requirements of this Statement that are related to the accounting and financial reporting for Section 457 plans are effective for fiscal years beginning after June 15, 2021. At this time the City is not certain of the effect of the adoption of Statement No. 87 will have on the financial statements. Significant or Unusual Transactions We did not identify any significant or unusual transactions or significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus. Management Judgments and Accounting Estimates Accounting estimates are an integral part of the preparation of financial statements and are based upon management’s current judgment. The process used by management encompasses their knowledge and experience about past and current events and certain assumptions about future events. You may wish to monitor throughout the year the process used to compute and record these accounting estimates. The significant accounting estimates reflected in the City of Sand City’s June 30, 2021 financial statements include the cost and liability/(asset) of other post- employment benefits and the pension. 10

City of Sand City DATE Page 3 of 3 Audit Adjustments and Uncorrected Misstatements Audit adjustments proposed by us and recorded by the City of Sand City are shown on the attached “Adjusting Journal Entries”. There were no uncorrected misstatements. Disagreements with Management We encountered no disagreements with management over the application of significant accounting principles, the basis for management’s judgments on any significant matters, the scope of the audit or significant disclosures to be included in the financial statements. Consultations with Other Accountants We are not aware of any consultations management had with other accountants about accounting or auditing matters. Significant Issues Discussed with Management No significant issues arising from the audit were discussed with or were the subject of correspondence with management. Significant Difficulties Encountered in Performing the Audit We did not encounter any significant difficulties in dealing with management during the audit. Letter Communicating Significant Deficiencies and Material Weaknesses in Internal Control over Financial Reporting When significant deficiencies and material weaknesses are identified during our audit of the financial statements, we are required to communicate them to you in writing. For the year ended June 30, 2021 a letter was not required. Certain Written Communications between Management and Our Firm We have requested certain representations from management that are included in the management representation letter dated DATE. This report is intended solely for the information and use of the City Council and management and is not intended to be and should not be used by anyone other than these specified parties. It will be our pleasure to respond to any questions you have regarding this report. We appreciate the opportunity to continue to be of service to the City of Sand City. Sincerely, Hayashi Wayland 11

City of Sand City AJE Year End: June 30, 2021 Adjusting Journal Entries Date: 7/1/2020 To 6/30/2021 Account No: AJE-01 To AJE-99 Number Date Name Account No Debit Credit Amount Chg Net Income (Loss) Net Income (Loss) Before Adjustments 973,552.00 AJE-01 6/30/2021 DEFERRED REVENUE 10-2050-00 GF01 41,878.00 AJE-01 6/30/2021 AB 1484 DISTRIB 10-4006-00 GF01 41,878.00 To reverse ROPS payments deferred in error. 41,878.00 41,878.00 41,878.00 1,015,430.00 AJE-02 6/30/2021 Grants Receivable 10-1105-00 GF01 43,964.00 AJE-02 6/30/2021 DEFERRED REVENUE 10-2050-00 GF01 116,594.00 AJE-02 6/30/2021 CDBG CALBRESE 10-4681-12 GF01F 50,603.00 AJE-02 6/30/2021 SUSTAIN GRANT 10-4757-11 GF01E 22,027.00 To adjust grants receivable, deferred revenue and revenue to actual. 116,594.00 116,594.00 (72,630.00) 942,800.00 158,472.00 158,472.00 (30,752.00) 942,800.00 11/17/2021 11:55 AM Page 1 12

CITY OF SAND CITY FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 AND INDEPENDENT AUDITORS’ REPORT 13

CITY OF SAND CITY Table of Contents Page Members of the City Council and Staff 1 Independent Auditors’ Report 2 – 3 Management’s Discussion and Analysis 4 – 10 Basic Financial Statements: Government-Wide Financial Statements: Statement of Net Position 11 Statement of Activities 12 Fund Financial Statements: Governmental Funds: Balance Sheet – Governmental Funds 13 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position 14 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds 15 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 16 Fiduciary Funds: Statement of Fiduciary Net Position 17 Statement of Changes in Fiduciary Net Position 18 Notes to the Basic Financial Statements 19 – 44 Required Supplementary Information: Schedule of Revenues, Expenditures and Changes in Fund Balance, Budget and Actual – General 45 Notes to Required Supplementary Information 46 Schedule of Proportionate Share of the Net Pension Liability 47 Schedule of Contributions – Pension 48 Schedule of Changes in the Net OPEB Liability/(Asset) and Related Ratios 49 Schedule of Contributions – OPEB 50 (i) 14

CITY OF SAND CITY Table of Contents (Continued) Page Report Required by Government Auditing Standards – 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 51 – 52 (ii) 15

CITY OF SAND CITY JUNE 30, 2021 Members of the City Council Name Office Term Expires Mary Ann Carbone Mayor December, 2022 Jerry Blackwelder Vice Mayor December, 2022 Elizabeth Sofer Council Member December, 2022 Gregory Hawthorne Council Member December, 2024 Kim Cruz Council Member December, 2024 City Staff Name Office Aaron Blair City Manager Brian Ferrante Chief of Police Vibeke Norgaard City Attorney 1 16

INDEPENDENT AUDITORS’ REPORT The Honorable Mayor and City Council City of Sand City Sand City, California Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the City of Sand City, as of and for the year ended June 30, 2021, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements 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 entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 2 17

Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the City of Sand City as of June 30, 2021, and the respective changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis on pages 4 through 10, the Budgetary Comparison Schedule on page 45, the Schedule of Proportionate Share of the Net Pension Liability on page 47, the Schedule of Contributions – Pension on page 48, the Schedule of Changes in the Net OPEB Liability/(Asset) and Related Ratios on page 49, and the Schedule of Contributions – OPEB on page 50 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated DATE on our consideration of the City of Sand 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 of Sand 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 of Sand City’s internal control over financial reporting and compliance. Salinas, California DATE 3 18

CITY OF SAND CITY MANAGEMENT’S DISCUSSION AND ANALYSIS JUNE 30, 2021 The discussion and analysis of the City of Sand City’s financial performance provides an overview and analysis of the City’s financial activities for the year ended June 30, 2021. It should be read in conjunction with the accompanying basic financial statements. FINANCIAL HIGHLIGHTS • The assets of the City of Sand City exceeded its liabilities at the close of the year ended June 30, 2021 by $29 million. However, $11 million is a net investment in capital assets, and $10 million is a noncurrent receivable due from the Successor Agency. • The City of Sand City’s total net position increased by $1.2 million. • The assets and liabilities include $542,222 that is due to TAMC in regard to a development project. • At the close of the year ended June 30, 2021, the City of Sand City’s governmental funds reported combined ending fund balances of $21 million, $10 million of which is a noncurrent receivable. The net change in fund balances was an increase of $1.8 million. OVERVIEW OF THE FINANCIAL STATEMENTS The discussion and analysis serve as an introduction to the City’s financial statements. The City’s financial statements are comprised of three components: 1) government-wide financial statements; 2) fund financial statements; an