2021 Popular Annual Financial Report - Fiscal Year ended June 30, 2021

City of Vallejo, California

popular Annual financial report FISCAL YEAR ENDED JUNE 30, 2021

Photo: Cyndi Combs

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Vallejo, where dreams are made

Welcome to the city of vallejo’s popular annual financial report

Contents To our readers

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City profile

5

City Council

6

City Council priority setting

6

Department heads

7

Vallejo by the numbers

8

Economic outlook

10

Government-wide financial analysis

12

General Fund overview

16

General Fund revenues

17

General Fund expenditures

20

General Fund balance

21

Long-range financial forecast

22

Water Fund

24

Cash and investments

26

Long-term obligations

28

Capital assets

30

Visit us on the web cityofvallejo.net

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Popular Annual Financial Report

Rekha Nayar Finance Director

to our readers

It is our pleasure to present you with the Popular Annual Financial Report (PAFR) for the fiscal year ended June 30, 2021. This report was prepared to provide interested readers an easy to understand summary of our financial activities in an informative and objective manner. Included in this report are an overview of the City’s economic outlook, an analysis of the City’s financial position and key financial information concerning the City’s investments, capital assets and long term obligations.

While most of the information in this report is drawn from the financial information appearing in the Annual Comprehensive Financial Report (ACFR), as of June 30, 2021, it is important to note that the financial information in this PAFR is presented for the Primary Government, General Fund, and Water Fund on a non-GAAP basis. This means that it contains condensed financial information and does not provide all of the necessary financial statements and note disclosures required by Generally Accepted Accounting Principles (GAAP) for governmental entities. It is not intended to replace the full financial statements and note disclosures contained in the ACFR, as the ACFR is a more detailed and complete financial presentation prepared in conformance with

LOOKING FOR THE CITY’S ANNUAL BUDGET AND OTHER FINANCIAL DOCUMENTS

City of vallejo, california department of finance

GAAP, and was audited by the City’s independent auditors, receiving an unmodified (clean and fairly stated) opinion.

We are very pleased to announce that last year’s PAFR received the Award for Outstanding Achievement in Popular Annual Financial Reporting from the Government Finance Officers Association (GFOA).

Both the PAFR and ACFR are available for public viewing at the Finance Department and online at cityofvallejo.net. We hope you enjoy reading this report and invite you to access our audited ACFR online for more detailed information.

We welcome your questions, comments and suggestions regarding the information in this report.

You can contact us at the City of Vallejo, Finance Department, at 555 Santa Clara Street, Vallejo, CA 94590, Tel. (707) 648-4592.

Respectfully submitted,

Rekha Nayar, CPA Finance Director

Visit the City’s website at cityofvallejo.net

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cityofvallejo.net

The GFOA established the Popular Annual Financial Reporting Awards Program (PAFR Program) in 1991 to encourage and assist state and local governments to extract information from their annual comprehensive financial report to produce high quality popular annual financial reports specifically designed to be readily accessible and easily understandable to the general public and other interested parties without a background in public finance and then to recognize individual governments that are successful in achieving that goal.

Achieving financial excellence

Government finance Officers Association Award for outstanding achievement 4

City of vallejo, california department of finance

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city profile

Located in Northern California, 30 miles northeast of San Francisco, 60 miles southwest of Sacramento, 70 miles north of Silicon Valley, and 385 miles north of Los Angeles, Vallejo is the largest city in Solano County and the tenth most populous city in the San Francisco Bay Area.

A BRIEF HISTORY

The City of Vallejo is a municipality incorporated in March 1868, under the laws of the State of California.

It operates under a City Charter originally adopted in 1911 and last amended in November 2013. The Charter provides for a CouncilManager form of government in which the City Manager recommends policy, program and budget priorities to the City Council, which in turn develops legislation and policies to direct the City.

The City Manager, appointed by the City Council, serves as the chief executive officer. The City Attorney, also appointed directly by the City Council, provides timely, efficient and high quality legal services, advice and support to the City Council and the City Administration.

Vallejo is home to several critical regional entities including Touro University, a private non-profit health professions graduate school, the California State University Maritime Academy, the only maritime academy on the West Coast, and the Vallejo Center campus of Solano County Community College.

Six Flags Discovery Kingdom, a combined marine life and wildlife theme park with various roller coasters and other amusement rides, is an exciting local destination and business partner of the City. The park opened in 1986 and draws countless visitors to the area, boosting the local economy.

Vallejo was the site of Mare Island Naval Shipyard, the first United States Naval base established on

the Pacific Ocean. Established in 1853, the shipyard began building ships the following year. More than 500 naval vessels were constructed and thousands were overhauled prior to the base closure in 1996.

The Waterfront and Mare Island redevelopment is a community effort; input from residents help shape the future of what could become the most important economic generator of the city.

The City’s Ferry Terminal and ferry service have served as a model for the rest of the Bay Area, helping make Vallejo a transportation and commuter hub for the North and East Bay. Six Flags Discovery Kingdom, local restaurants and the Downtown Farmer’s Market help make Vallejo the vibrant community it is today.

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Vallejo City council The City of Vallejo’s governing body is elected by the citizens in a general, popular election. The Mayor, elected by the community at-large to a 4-year term, acts as the formal representative of the City and presides over Council meetings.

Robert H. McConnell Mayor

Six Councilmembers are elected on a nonpartisan basis. The Councilmembers serve for staggered 4-year terms, with three Councilmembers elected every two years. In July 2019 the City Council voted to move to elections “by-district,” instead of having Councilmembers voted on by the at-large community.

Due to the staggering of terms, beginning with the November 2020 election, three of the six districts chose their representative. In November 2022 election, the remaining three districts will vote for their Councilmember, leading each district to have its own dedicated representative.

Council Priority Setting Rozzana Verder-Aliga Vice Mayor

Mina Loera-Diaz Council member

The Vallejo City Council FY2021-22 goal setting workshop was held on May 5 and 6, 2021. This meeting was open to the public via Zoom and was facilitated by Urban Strategies Council.

This is a key event for organizational management and an important step in the annual budget process.

The five high level goals for the City’s 2021-22 Fiscal Year are: 1. Housing Affordability + Homelessness

Hakeem Brown Council member

Cristina Arriola Council member

2. Youth Development Initiatives 3. Advancement of Economic Development Opportunities 4. Improve the quality of life for Vallejoans 5. Improve Public Safety

Katy Miessner Council member

Pippin Dew Council member

Get Involved Participate in Vallejo City Council Meetings

Photo: Luis Perez-Casasola

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Apply.

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Volunteer.

Vision statement

Stay Informed.

We facilitate connections and collaboration amongst a diverse community to inspire collective pride and vision for a better Vallejo.

about vallejo The City of Vallejo provides its residents a broad range of services including public safety (police and fire), public works (landscape and street maintenance, traffic management), economic development (building regulation and planning), and affordable housing.

Enterprise Funds within the city provide water, marina, parking, golf and high speed fiber-optic internet services.

Other public agencies also provide public services such as wastewater, parks and recreation services, libraries and education within the City’s boundaries.

A variety of Boards, Commissions, and Committees assist the City Council in serving the Vallejo community. These bodies identify specific needs and problems within their purview. Each body meets on a regular basis and each meeting is open to the public. The length of member terms and the interval of appointments vary.

CITY MANAGER

Greg Nyhoff

City Attorney

Veronica A.F. Nebb

CITY CLERk

Dawn Abrahamson

Department heads

Anne Cardwell Assistant City Manager Rekha Nayar Finance Director Vacant Human Resources Director Shawny Williams Police Chief Vacant Fire Chief Terrance Davis Public Works Director Michael Malone Water Director Gillian Hayes Planning & Development Services Director Naveed Ashraf Chief Innovation Officer Photo: Ronald Becker 7

Vallejo by the numbers Vallejo has a total of 3,582 businesses. In 2021, the leading industries in Vallejo were healthcare and social services, accommodation and food services and other services.

Major Area Employers

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Authorized Full-Time City Employees (FTE)

# of Employees (approx.)

Kaiser Permanente Medical Center

4,023

Six Flags Discovery Kingdom

1,500

Vallejo Unified School District

1,124

Sutter Solano Medical Center

634

City of Vallejo

541

Touro University California

530

Cal Maritime Academy

145

Meyer Corp

340

Safeway (3 locations)

315

Costco

266

Fiscal Year FY 15-16

544.75

FY 16-17

551.35

FY 17-18

565.5

FY 18-19

587

FY 19-20

629

FY 20-21

647

FY 21-22

640

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Vallejo by the numbers

The City continues to focus on economic development with a commitment to advance job growth.

Public Safety 6 Police + 6 Fire Stations

Vallejo Admirals

Health Care + Social Services 805 Establishments 7,286 jobs

419 Establishments 4,078 jobs

Retail

Vallejo Marinas Municipal + Glen Cove

Golf Clubs Hiddenbrooke + Blue Rock Springs

Accommodation + Food Services Other Services

251 Establishments 3,081 jobs

472 Establishments 2,834 jobs 9

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Economic Outlook

Prior to the onset of the COVID-19 pandemic, the city was experiencing a cross-sector upward trend.

Unemployment in Vallejo had dipped below 4%, its lowest point in a quarter-century, and nearly 1000 jobs have been created across the city since January 2018. In March 2020, the Governor of California announced a stay-at-home order state-wide to mitigate the impact on the healthcare system. This order shut down all non-essential businesses and seriously impacted the service industry (hospitality, restaurants, health clubs, etc.) The city also closed City Hall, allowing non-essential employees to work remotely. As the state recovers from the pandemic, the city is also moving towards normalization with more in-person meetings and returning employees to their offices on flex schedules.

The economic impact has been felt throughout the city, impacting large and small businesses alike. In April 2020, the unemployment rates in Solano County spiked at a high of 14.9%, and unemployment in Vallejo rose to 16.6%. These challenging numbers were reduced slightly by the Federal CARES act funding and the gradual reopening of businesses in the summertime. Our small businesses are still feeling the economic impact created by the pandemic, but there are encouraging signs for further recovery in the coming year. As we look to 2022, there is some hope that some normalization can occur for our citizens, 10

but predicting the future of our economy is still challenging.

Even amid a pandemic, and through 2021, Bay Area real estate is still trending positively – leading to a continual upward movement in property values.

Vallejo continues to be an affordable location and an up-and-coming Bay Area city for young professionals and working-class families. A healthy housing stock, new residential development projects, and the ease of commute to San Francisco via the ferry put Vallejo in a prime position to offer home seekers a unique opportunity to settle down in a region that can otherwise be cost-prohibitive for many.

During the pandemic and current economic rebound, the city has negatively impacted revenue sources.

Even with some positive signs of development opportunities, some of the looming fiscal challenges include rising costs for employee salaries and benefits that threaten nearly all small businesses in California municipalities. In addition, critical pieces of city infrastructure are aging rapidly and will require significant capital expenditures to remedy those issues. In the following year, the city will focus on supporting small businesses, retaining jobs, streamlining new development, planning for future infrastructure, and updating the city’s economic development strategic plan.

TOP 10 PRINCIPAL PROPERTY TAX PAYERS TAXPAYER

TAXABLE ASSESSED VALUE

Centro Watt Property Owner II

% OF TOTAL CITY TAXABLE

$ 117,426,440

0.98%

Park Management Corporation

98,316,386

0.82%

WRPV XIII BV Vallejo LLC

65,892,952

0.55%

Prime Ascot LP

64,199,866

0.53%

Invitation Homes Inc.

57,234,992

0.48%

Colony Starwood Homes

53,041,110

0.44%

The Nimitz Group

42,711,514

0.36%

Sundance-Vallejo

37,927,301

0.32%

MG Sterling Village Apartments GWP LP

34,032,233

0.28%

Seabridge LLC

33,540,565

0.28%

$ 604,323,359

5.03%

Top Ten Totals

Currently, Mare Island is home to over 100 businesses with over 3,000 jobs

Vallejo continues to be an affordable location and an up-and-coming Bay Area city.

Vallejo Fairview Developers/Lewis Group received approval for an expanded Costco and 178 new single-family homes on the Cooke property.

Invest in Vallejo

Apply for a business license here

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Government-wide FINANCIAL Analysis The Statement of Net Position (Statement) presents information on the City’s assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator as to whether the City’s financial position is improving or weakening. The Statement reflects the fact that the City’s net position increased by $22.9 million in the current fiscal year. This overall increase is a combination of an increase of $14.6 million from governmental activities like general administration, public safety, public works, housing, and economic development and an increase of $8.3 million from business-type activities including operations of our water system, parking program, marina, golf course, and fiber network.

CURRENT AND OTHER ASSETS are cash and items expected to be converted into cash within one year.

CAPITAL ASSETS are the City’s long-term investments in land, buildings, improvements, infrastructure, vehicles and equipment. These assets are used to provide services to the community, consequently, these assets are not available for future spending.

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DEFERRED OUTFLOWS OF RESOURCES represent the consumption/addition of net assets related to the City’s pension and OPEB liabilities, and other bonded debt applicable to the future.

LIABILITIES are debt or obligations that the City must pay.

DEFERRED INFLOWS OF RESOURCES are the acquisition of net assets applicable to future reporting periods.

NET INVESTMENT IN CAPITAL ASSETS represents the City’s net investment in capital assets net of accumulated depreciation and related debt. The RESTRICTED portion is subject to externally imposed restrictions for activities such as capital projects, debt service, and community development and is not available for general operations. The UNRESTRICTED portion is available for general operations.

Mare Island Brewery Taproom

Photo: Michael Sparks

Statement of Net Position as of June 30, 2021 and 2020 (in Millions)

FY 20/21 Current assets and other assets

FY 19/20

Increase/ (Decrease)

%

$ 91.1

38%

$ 331.1

$ 240.0

Capital assets

465

460.1

4.9

1%

Deferred outflows of resources

40.7

37.1

3.6

10%

836.8

737.2

99.6

14%

75.4

55.2

20.2

37%

466.9

405.3

61.6

15%

6.6

11.6

(5.0)

-43%

548.9

472.1

76.8

16%

393.3

391.4

3.9

1%

98.1

92.2

5.9

6%

(205.5)

(218.6)

13.1

-6%

$ 287.9

$ 265.0

$ 22.9

9%

Total assets and deferred outflow of resources Current and other liabilities Non-current liabilities Deferred inflows of resources Total liabilities and deferred inflows of resources Net investment in capital assets Restricted Unrestricted TOTAL NET POSITION

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Government-wide Financial Analysis Cont...

The City’s Statement of Activities is shown on page15 (in millions) for FY 2021 and 2020. The Statement of Activities summarizes by major revenue and expense categories the receipt and expenditure of funds during the year for governmental and business-type activities.

The total cost of all services this year was $218.3 million, with the amount for all governmental activities totaling $170.6 million. Related program revenues covered $79.0 million (46%), resulting in a net cost of $91.6 million. The City paid for the remaining portion of governmental activities with taxes (some of which could only be used for certain purposes) and other revenues, such as interest, general entitlements, the sale of property, and transfers. The cost for business-type activities this year was $47.7 million. Revenues received to offset these activities include charges for services of $55.3 million and $0.4 million from operating grants, capital grants, and transfers.

The following is a brief description of the key items included in the statement of activities.

REVENUES

organizations for the purpose of financing the operating and capital costs of special programs such as the City’s housing programs.

TAXES include property, sales and transaction, franchise, utility user, transient occupancy, business license and other taxes, as described in the General Fund Revenues section of this PAFR.

EXPENSES

ADMINISTRATION includes the City Council, City Manager, Risk Management, Human Resources, City Attorney, City Clerk, Information Technology, Finance and non-departmental programs.

PLANNING AND DEVELOPMENT SERVICES includes the Planning and Building Divisions.

COMMUNITY DEVELOPMENT includes Economic Development and Housing.

POLICE AND FIRE includes Patrol, Dispatch, Investigations, Crime Prevention, Code Enforcement, Fire Suppression and Prevention.

CHARGES FOR SERVICES are revenues collected for services provided to the public, with the majority being water service charges.

PUBLIC WORKS includes Maintenance of Trees, Streets, Parks, Facilities, Sewer, Building and Equipment, and Assessment Districts.

GRANTS AND CONTRIBUTIONS represent funding received from other governments and

WATER accounts for the City’s three water treatment plants.

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MARINA accounts for the City’s marina operations.

GOLF accounts for the City’s golf operations.

Structure and surface lots.

FIBER OPTIC accounts for operation of the City’s new municipal fiber network.

VALLEJO STATION PARKING accounts for operation of the City’s Vallejo Station Parking

Statement of Activities as of June 30, 2021 and 2020 (in Millions)

FY 20/21

Increase / (Decrease)

FY 19/20

REVENUES Charges for service

$ 81.4

$ 74.3

$ 7.1

53.3

41.9

11.4

Taxes

101.1

92.8

8.3

Other

5.4

10.7

(5.3)

241.2

219.7

21.5

10.5

10.7

(0.2)

4.0

4.6

(0.60)

Community Development

35.5

31.6

3.9

Fire

34.6

34.9

(0.3)

Police

56.1

54.9

1.2

Public Works

29.5

31.9

(2.4)

Water

40.6

38.6

2.0

Marina

2.1

3.3

(1.2)

Golf

4.2

3.3

0.90

Vallejo Station Parking

0.8

1.4

(0.6)

--

--

--

0.4

0.4

218.3

215.6

2.7

0.1

(0.1)

Grants and Contributions

Total Revenues EXPENSES Administration Planning & Development Services

Fiber Optic Other Total Expenses Transfers and Special Items Change in net position

22.9

4.2

18.7

Net Position - Beginning

265.0

260.8

4.2

$ 287.9

$ 265.0

$ 22.9

Net Position - Ending

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General Fund Overview The City’s General Fund is the chief operating fund of the City. The General Fund typically accounts for about 50% of the City’s total revenues. The remainder of the revenues consist of various Special Funds which are restricted in purpose and Enterprise Funds’ user fees.

REVENUES

The General Fund is distinct from other funds because it is the only source of unrestricted funds that can be allocated, at the discretion of the City Council, for any municipal purpose.

“

... that can be allocated, at the discretion of the City Council, for any municipal purpose.

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General Fund

Non-General Fund

TOTAL

$ 120.6

$ 120.6

$ 241.2

General Fund 50%

The actual General Fund revenues for FY 202021 were $120.6 million, which exceeded both the original and final budgeted estimates for the fiscal year. Overall City-wide revenues for FY 2020-21 totaled $241.2 million.

The General Fund is distinct from other funds because it is the only source of unrestricted funds ...

Citywide Revenue for the year ended june 30, 2021 (in millions)

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Non-General Fund 50%

General Fund revenues By the end of the current fiscal year, General Fund revenues exceeded expenditures and other financing uses (transfer out), and the fund balance increased to $40.4 million from $28.3 million in the prior fiscal year.

General Fund for the year ended june 30, 2021 (in millions)

Original Budget

Final Budget

Actual Amounts

REVENUES Total Revenues

$ 103.2

$ 110.0

$ 120.6

$ 105.0

$ 111.4

$ 103.9

(5.0)

(4.7)

(4.6)

$ (6.80)

$ (6.1)

12.1

EXPENDITURES Total Expenditures Other Financing Sources (Uses) Net Change in Fund Balances Fund balance, July 1

28.3

Fund balance, June 30

$ 40.4 Photo: J. Daughtry Artwork: Miro Salazar

Mare Island Causeway Bridge Trolls Under the Bridge Mural

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General Fund revenues cont...

General Fund revenue budget and actual for the year ended june 30, 2021

Original Budget

(in millions) Taxes

$ 83.8

Final Budget

Actual Amounts

$ 89.7

$ 99.1

License, Permits, and Fees

3.9

2.8

3.2

Fines and Forfeitures

1.6

1.1

0.9

Intergovernmental

3.3

6.0

5.3

Use of Money and Property

1.7

1.5

3.0

Charges for Service

8.3

8.3

8.6

Other

0.6

0.6

0.5

$ 110.0

$ 120.6

$ 103.2

General Fund revenues are comprised of the above seven major revenue categories. The following graphs show revenue trends of the City’s two major tax revenues for FY 2020-21 when compared to prior years.

PROPERTY TAX ($21.8M)

PROPERTY TAX IN LIEU (MVLF) ($11.5M)

$22 $20 MILLIONS

$18 $17 $15

PROPERTY TAX

$13 $12

PROPERTY TAX IN LIEU (MVLF)

$10 $8 FY 16-17

FY 17-18

FY 18-19

FY 19-20

FY 20-21

Property Tax and Property Tax in Lieu (MVLF) together increased $1.0 million, or 4%, to $33.3 million as the City continued to see strong growth year-after-year due to the steady rise of property values.

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City of vallejo, california department of finance

SALES TAX INCLUDING MEASURE B/V ($37.2M)

MILLIONS

$38.0 $36.0 $34.0 $32.0 $30.0 $28.0 FY 16-17

FY 17-18

FY 18-19

FY 19-20

FY 20-21

Sales and transaction tax revenues increased by $5.6 million, or 18%, to $37.2 million. The growth is due to increased sales tax revenue as a result of California’s new online sales tax collection law, AB 147, and increased online shopping.

learn more about AB 147 Existing state sales and use tax laws impose a tax on retailers measured by the gross receipts from the sale of tangible personal property sold at retail in this state or on the storage, use, or other consumption in this state of tangible personal property purchased from a retailer for storage, use, or other consumption in this state.

Click here to learn more

Photo: James L. 19

General Fund Expenditures The City’s General Fund supports police, fire, development, public works, and administrative services to the City’s 117,846 residents, other City programs, businesses, and visitors.

During FY 2020-21, the General Fund expended $90.5 million in labor costs for 482.50 authorized fulltime positions.

Total expenditures were $7.5 million below the final appropriations, mainly the result of departments’ diligence in holding nonessential positions vacant and controlling services and supplies spending.

General Fund Expenditure budget and actual for the year ended june 30, 2021 (in millions)

Legislative and Advisory

Original Budget

Final Budget

$ 0.2

$ 0.3

$ 0.2

Executive

6.2

6.2

4.8

Finance

2.3

2.3

1.6

Human Resources

2.4

2.4

2.0

Law

1.5

1.7

1.2

Planning and Development Services

4.1

4.1

3.5

Fire Services

29.3

30.7

29.0

Police Services

50.6

53.3

49.2

9.4

9.3

6.2

(1.5)

0.6

5.9

Debt Service - Principal

0.5

0.5

0.3

TOTAL EXPENDITURES

$ 105.0

$ 111.4

$ 103.9

Public Works Non-Departmental

police and fire Police and Fire expenditures make up 75% of the total General Fund expenditures.

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Actual Amounts

General Fund Balance To measure the General Fund’s liquidity, it is useful to compare the unassigned fund balance to total fund expenditure. As of June 30, 2021, the General Fund had a total fund balance of $40.4 million, $12.1 million higher than prior year. This increase included the $18.2 million year-end surplus and was offset by the $6.1 million setaside adjustments made by the City for PARS trust fund investment earnings and additional funding for general liability and homelessness programs. Of the total fund balance, unassigned fund balance was $21.7 million, which represents 18% of the subsequent year’s General Fund annual operating budget (including Measure B programs).

General Fund Balance for Year Ended June 30, 2021 and 2020 (in Millions)

$ 25 $21.7

$ 20 $18.0

$ 15 $11.3

$ 10 $7.2

The four components of the City of Vallejo General Fund balance as of June 30, 2021 are: NONSPENDABLE FUND BALANCE Items that do not represent available, spendable resources even though they are a component of assets. These include resources that inherently cannot be spent such as prepaid rent or the long-term portion of loans receivable.

RESTRICTED FUND BALANCE Items that are subject to enforceable legal restrictions such as: restrictions imposed by constitution, creditors, or laws and regulations that require the resources are used only for specific purposes.

$5.4

$5 $2.0

$2.2 $0.9

$0

Nonspendable

Restricted

FY 20-21

Assigned

Unassigned

FY 19-20

ASSIGNED FUND BALANCE Items the City intends for these amounts to be used for a specific purpose, but they are neither restricted nor committed.

UNASSIGNED FUND BALANCE Items that represent residual amounts that have not been restricted, committed or assigned.

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Long-Range Financial forecast The City regularly utilizes the General Fund long-term financial forecast to help plan for ...

The City regularly utilizes the General Fund long-term financial forecast to help plan for the future by providing an understanding of available funding while evaluating financial risks and identifying future commitments and resource demands. The table on page 23 provides the current five-year view of the City’s fiscal condition and incorporates both operating and capital needs in the community.

While the City operates with a structurally balanced budget in fiscal year 2021-22, overall, the City is currently projecting deficits for beyond FY 2021-22. This is primarily due to rising pension, health care and general liability costs.

Get Involved Find out how you can attend an Economic Vitality Commission meeting by clicking here and look for an EVC meeting agenda.

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The key to retaining our future fiscal stability lies in continuing our focus on economic development activities that generate new revenues. The City is always seeking program efficiencies and savings across the organization in order to address the ongoing budgetary challenges mentioned above.

In addition, the City’s Capital Improvement Program (CIP) is planned for five years and analyzed using City-specific prioritization criteria. This is updated regularly to reflect changing needs, funding availability and removal of projects which have been completed. The CIP budget for 2021-22 is $26 million. Funding comes from multiple sources, including General Fund transfers, fees, grants and bond proceeds.

City of vallejo, california department of finance

“

The key to retaining our future fiscal stability lies in continuing our focus on economic development activities that generate new revenues.

General Fund Long-Term Forecast Through fiscal year 25/26 (in millions)

Revenues/ Transfers In Expenses/ Transfers Out (Deficit)/ Surplus for Year Ending Available Balance

FY 21/22

FY 22/23

FY 23/24

FY 24/25

FY 25/26

Adopted

Projected

Projected

Projected

Projected

$ 120.0

$ 124.5

$ 126.3

$ 129.8

$ 131.4

120.0

126.6

127.4

129.9

131.3

(2.1)

(1.1)

(0.1)

0.1

$ 15.9

$ 14.8

$ 14.7

$ 14.8

$ 18.0

DID YOU KNOW ...

THE CITY OF VALLEJO HAS AN ECONOMIC VITALITY COMMISSION?

Photo: Memories By McKinley

The Economic Vitality Commission (EVC) aims to advise the city council on issues that can enhance job growth and increase private investment in Vallejo and review and assist with updates and the implementation of the economic development element of the City’s general plan. The EVC also helps with business retention and attraction activities in Vallejo.

Looking for our annual budget?

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Water Fund The Water Fund is one of the City’s five enterprise funds. The enterprise funds’ measurement focus is income determination, financial position, and cash flows. These funds are used to finance and account for the acquisition, operation, and maintenance of the City’s water facilities and services which are supported primarily by user charges. The following is a brief analysis of the four-year trends of the City’s Water Fund.

The Water Department mission is to provide high quality water service to our customers in a safe, reliable, sustainable, and fiscally responsible manner. The City of Vallejo Water System exists to ensure that the City’s water customers receive drinking water that meets all water regulations and required standards and that sufficient water is available at all times for fire suppression. The department continued to meet its mission during FY 2020-21 while responding to the challenges brought on by the COVID-19 pandemic.

The Water Fund is used to account for the production and distribution of water to residents and businesses located within the City. Water service is also provided outside the City limits to Travis Air Force Base and to the City’s Lakes Water

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System area in unincorporated Solano and Napa Counties.

In FY 2020-21, the biggest single investment in the Water System in decades was made when the City issued Water Revenue Bonds Series 2021A with bond proceeds of $52M, providing $51.3M for needed capital improvements. In addition, Water staff successfully secured $2.4M in grant funding for advanced metering infrastructure, as well as support for improvements at Lake Curry, and also for emergency generators.

Total net position of the Water Fund at June 30, 2021 was $68.1 million, up $8.8 million from the previous year. This amount includes an unrestricted net position of $7.1 million which may be used to support the Water Fund’s operating and capital requirements. The Water Fund generated $49.7 million in total revenues during the year to support $40.9 million in total expenses for an overall net increase in net position of $8.8 million. The rate structures adopted in 2017 and 2019 continued to help the water fund meet its short-term operational and fiscal obligations.

In FY 2020-21, the biggest single investment in the Water System in decades was made when the City issued Water Revenue Bonds Series 2021A with bond proceeds of $52M, providing $51.3M for needed capital improvements.

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Water Funds Four year trends through fiscal year 20/21 (in millions) FY 17/18

Revenues/ Transfers In Expenses/ Transfers Out (Deficit)/ Surplus for Year

FY 18/19

FY 19/20

FY 20/21

$ 41.0

$ 43.6

$ 46.3

$ 49.7

40.8

37.7

38.6

40.9

0.2

5.9

7.7

8.8

FLEMING HILL TREATMENT PLANT

The Vallejo Water Department provides administrative, engineering, water treatment, and maintenance support for the City’s potable (drinking) water treatment and distribution.

VWD’s stringent criteria and regulations ensure that they meet or exceed all regulations set forth

by the California Department of Public Health and the U.S. Environmental Protection Agency.

In addition, the VWD works with the community and local schools to provide education related to conservation and rebate programs.

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cash and investments The City’s investments are in compliance with the City’s investment policy, which emphasizes safety, liquidity and return on its investments. The portion of the portfolio not invested in the California Local Agency Investment Fund (LAIF) is invested with the City’s investment advisor. The City also held $27.6 million in bank balances and $82.3 million was held by fiscal agents as of June 30, 2021. Also, as of this date all of the City’s rated investments are rated “A” or higher. See Note 2 in the City’s FY 2020-21 ACFR for additional information regarding the City’s investments.

Cash and investments as of june 30, 2021 Market Value Cash on hand Deposits Investments

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Percentage

$ 8,950

0%

27,621,592

10%

245,116,039

90%

$ 272,746,581

100%

investments as of june 30, 2021 Market Value

Percentage

Investment Type U.S. Government Agencies

$ 34,843,469

14%

32,907,682

13%

7,714,304

3%

Corporate Medium Term Notes

19,014,876

8%

Money Market Mutual Funds

82,667,667

34%

-

-

67,968,041

28%

$ 245,116,039

100%

U.S. Treasury Notes Asset Backed Securities

Municipal Bonds LAIF Total Market Value

By credit rating

By Maturity Date 32% 47%

14% 13%

20%

7%

66%

Less than 1 year

1 - 3 years

Not Rated

A1 to a3

Exempt

AA1 to AA3

1% AAA

3 - 5 years

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Long-term obligations The table on page 29 summarizes the City’s longterm obligations at June 30, 2021 and 2020.

Overall, the City’s long-term debt principal increased from $71.9 million at June 2020 to $121.3 million at June 2021. This $49.4 million increase is due to issuance of the 2021-A Water Revenue Bonds, which were issued to fund capital improvements to water infrastructure and facilities. Additional information about the City’s long-term debt can be found in Note 6 to the financial statements.

Claims and Judgments are reported at their present value using future investment yield assumptions of 3%. Refer to Note 13 to the financial statements for more information on the City’s claims payables.

retiree health obligations. In 2013, the City proactively made a supplemental contribution of $6.5 million to CalPERS to begin plan stabilization. In August 2017, the City established an Internal Revenue Code (IRC) Section115 Trust with the Public Agency Retirement Services (PARS) organization and made a total contribution including investment earning in the amount of $10.9 million as of June 30, 2021.

In fiscal year 2017-18, the City implemented new Other Post-Employment Benefits (other than pensions) standards in compliance with GASB Statement No. 75. In FY 20-21 the City reported a Net OPEB Liability of $16.0 million.

Compensated absences consists of vested vacation leave, sick leave, and compensatory time off.

The City’s total net pension liability with CalPERS for FY 2020-21 was $313 million, based upon a measurement date of June 30, 2020. This represents a 62% funding of the total pension liability of $818.2 million. The City has previously taken steps to mitigate both its CalPERS rate increase, and its OPEB 28

Photo: Sam Quinn - Carquinez Bridge

City of vallejo, california department of finance

Long-term obligations as of june 30, 2021 and 2020

% of Total

FY 19/20

% of Total

$ 2.3

0%

$ 2.5

1%

3.7

1%

0.7

0%

Revenue Bonds

83.5

17%

35.2

7%

Loans & Notes Payable

31.8

6%

33.5

7%

$121.3

25%

71.9

15%

Claims and Judgements

24.7

5%

19.0

4%

Compensated Absences

14.0

3%

13.9

3%

Net Pension Liability

313.3

64%

$ 300.0

61%

Net OPEB Obligation

16.0

3%

18.1

4%

100%

$ 422.9

100%

(in millions) Certificates of Participation Capital Lease Obligations

Subtotal Long-Term Debt

Total

FY 20/21

$ 489.3

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Capital Assets For FY 2020-21, the value of the City’s capital assets was $465.0 million. The City uses capital assets to perform and deliver various services to its residents.

The City completed and placed in service projects and various capital assets while adding to its construction in progress. Major capital asset events include street improvements, acquisition of a Motorola Radio System for Vallejo Police and Fire Departments, various pipeline replacement and repairs, equipment upgrades and repairs at treatment plants and pump stations. Governmental net capital assets increased by $7.3 million while business-type net capital assets decreased by $2.4 million due to depreciation. Overall, capital assets (net of depreciation) increased by $4.9 million during the year to $465.0 million at June 30, 2021.

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The City uses capital assets to perform and deliver various services to its residents.

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“

Capital Assets (net of depreciation) as of June 30, 2021 and 2020 (In millions) Governmental FY 20/21 Land

Business-Type

FY 19/20

FY 20/21

FY 19/20

Total FY 20/21

FY 19/20

$ 145.8

145.8

12.3

12.3

158.1

158.1

Building and improvement

73.5

79.0

27.8

29.0

101.3

108.0

Machinery and equipment

17.9

13.5

11.8

12.0

29.7

25.5

102.5

104.0

49.1

43.8

151.6

147.8

16.1

6.2

8.2

14.5

24.3

20.7

355.8

348.5

109.2

111.6

465.0

460.1

Infrastructure Construction in progress Total

Lake Curry Outlet Tower Vallejo Water Department

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cityofvallejo.net

City of Vallejo, California

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555 Santa Clara Street Vallejo, California 94590