city of atwater packet 5-13-19.pdfc) march 9, 2015 – regular meeting . d) may 26, 2015 – regular...

CITY OF ATWATER CITY COUNCIL

AGENDA

Council Chambers

750 Bellevue Road

Atwater, California May 13, 2019 5:00 PM CALL TO ORDER: ROLL CALL:

Ambriz ____, Cale ____, Raymond ____, Vierra ____, Creighton ____ CLOSED SESSION: Adjourn to Conference Room A • Conference with Labor Negotiator – Government Code Section 54957.6.

Agency Negotiators: City Manager Waterman, City Attorney White, and Human Resources Director Del Real; Bargaining Unit: AFSCME Local 2703 – Miscellaneous Unit

• Pursuant to Government Code Section 54957, Public Employee Evaluation; Titles: City Manager and City Attorney

REGULAR SESSION: (Council Chambers) 6:00 PM

CALL TO ORDER: PLEDGE OF ALLEGIANCE TO THE FLAG:

INVOCATION: Invocation by Police Chaplain Mead ROLL CALL: Ambriz ____, Cale ____, Raymond ____, Vierra ____, Creighton ____ MAYOR OR CITY ATTORNEY REPORT OUT FROM CLOSED SESSION:

City Council Agenda for Meeting of May 13, 2019

SUBSEQUENT NEED ITEMS: (The City Clerk shall announce any requests for items requiring immediate action subsequent to the posting of the agenda. Subsequent need items require a two-thirds vote of the members of the City Council present at the meeting.)

APPROVAL OF AGENDA AS POSTED OR AS AMENDED: (This is the time for the City Council to remove items from the agenda or to change the order of the agenda.)

Staff’s Recommendation: Motion to approve agenda as posted or as amended. CEREMONIAL MATTERS: Certificates: • B. K. Welding

Staff’s Recommendation: That Mayor Creighton present a certificate of appreciation to Brad Kessler of B. K. Welding for the sign in the City Council Chambers.

• Firefighter, Reserve Firefighter, and Fire Dispatcher of the Year

Staff’s Recommendation: That Mayor Creighton and CAL FIRE/Atwater City Fire Division Chief Rahn recognize Firefighter of the Year, Apparatus Engineer Adam Seward; Reserve Firefighter of the Year, Thomas King; and Fire Dispatcher of the Year, Jennifer Carter.

• Police Officer and Public Safety Dispatcher of the Year

Staff’s Recommendation: That Mayor Creighton and Police Chief Salvador recognize Police Officer of the Year, Reserve Police Officer Michael Friedberg; and Public Safety Dispatcher of the Year, Kathy Mathis.

PRESENTATIONS: • Buhach Colony High School Debate Team

• ENGIE Services regarding a solar and battery storage project at the

Wastewater Treatment Plant CONSENT CALENDAR:

NOTICE TO THE PUBLIC

Background information has been provided on all matters listed under the Consent Calendar, and these items are considered to be routine. All items under the Consent Calendar are normally approved by one motion. If discussion is requested on any item, that item will be removed from the Consent Calendar for separate action.


WARRANTS:

1. May 13, 2019

Staff’s Recommendation: Approval of warrants as listed. MINUTES: (Audit and Finance Committee) 2. a) January 12, 2015 – Regular meeting

b) February 9, 2015 – Regular meeting c) March 9, 2015 – Regular meeting d) May 26, 2015 – Regular meeting e) June 22, 2015 – Regular meeting f) September 28, 2015 – Regular meeting g) October 26, 2015 – Regular meeting h) December 14, 2015 – Regular meeting i) February 25, 2019 – Regular meeting

Staff’s Recommendation: Acceptance of minutes as listed.

RESOLUTIONS: 3. Approving and ratifying Side Letter of Agreement with AFSCME representing

Miscellaneous Bargaining Unit (City Manager Waterman and Human Resources Director Del Real)

Staff’s Recommendation: Adoption of Resolution No. 3086-19 approving and ratifying Side Letter of Agreement, in a form approved by the City Attorney, between the City of Atwater and American Federation of State, County, and Municipal Employees, Local 2703, Council 57, AFL-CIO representing the Miscellaneous Bargaining Unit, pertaining to certain terms and conditions of employment; and authorizes and directs the City Manager to execute the Agreement on behalf of the City.

4. Authorizing grant application submittal to San Joaquin Valley Air Pollution Control District for Emergency Vehicle Replacement Program (CAL FIRE/Atwater City Fire Battalion Chief Slate)

Staff’s Recommendation: Adoption of Resolution No. 3085-19 authorizing a grant application submittal to the San Joaquin Valley Air Pollution Control District for the Public Benefit (Emergency Vehicle Replacement Program) Grant Program and authorizes and directs the City Manager to execute all documents related to the grant submission and implementation, if awarded, on behalf of the City.


ORDINANCES (WAIVING SECOND READING AND ADOPTION): 5. Waiving the second reading and adopting Ordinance No. CS 1013 approving

zone change for Aspenwood Subdivision (Legacy Estates) located east of Shaffer Road, southeast of Santa Fe Drive, and north of Camellia Drive (Senior Planner Thompson, VVH)

Staff’s Recommendation: Waives the second reading and adopts Ordinance No. CS 1013 approving Zone Change No. 19-2 changing the zoning designation of a 39 lot subdivision, Aspenwood Subdivision (Legacy Estates) located east of Shaffer Road, southeast of Santa Fe Drive, and north of Camellia Drive to Low Density Residential (R-1)(10).

ANNUAL PETITIONS AND COMMUNICATIONS: 6. Request from CAL FIRE/Atwater City Fire Department for MDA “Boot Drive”

(CAL FIRE/Atwater City Fire Battalion Chief Slate)

Staff’s Recommendation: Approval of request from CAL FIRE/Atwater City Fire Department for annual Muscular Dystrophy Association (MDA) “Boot Drive” from 7:00 AM to 1:00 PM on Saturday, May 25, 2019.

7. Request from Atwater Pentecost Association for assistance with Annual

Festival procession (Cesar Avila, President)

Staff’s Recommendation: Approval of request from Atwater Pentecost Association, contingent upon receipt of current liability certificate, for assistance with their Annual Festival procession on Sunday, June 30, 2019, leaving Atwater Pentecost Club (APC) at 8:30 AM down Third Street, right onto Broadway Avenue, right onto Winton Way proceeding to Saint Anthony’s Church and returning to APC down Winton Way, left onto Grove Avenue, and right onto Third Street.

FUNDING AND BUDGET MATTERS: 8. Acceptance of Audited Financial Statements for the Fiscal Year ended June 30,

2018 (JJACPA Senior Accountant Jones and Accountant II Tejeda)

Staff’s Recommendation: Motion to accept the Audited Financial Statements for the Fiscal Year ended June 30, 2018 and to direct the City Manager to file the Statements with the State of California Controller’s Office and to the various financial institutions as appropriate; or Motion to approve staff’s recommendation as presented.

City Council Agenda for Meeting of May 13, 2019 PUBLIC HEARINGS: 9. Ordinance approving Central Cal Brothers, Inc. Development Agreement

regarding Cannabis Business Pilot Program for property located at 664 Railroad Avenue, Atwater (City Attorney White)

Staff’s Recommendation: Open the public hearing and take any testimony given; Close the public hearing; and Motion to waive the first reading and introduce Ordinance No. CS 1008 approving Central Cal Brothers, Inc. Development Agreement, in a form approved by the City Attorney, regarding Cannabis Business Pilot Program for property located at 664 Railroad Avenue, Atwater; and authorizing and directing the City Manager to execute the Agreement on behalf of the City; or Motion to approve staff’s recommendation as presented.

10. Ordinance approving MJI, LLC Development Agreement regarding Cannabis

Business Pilot Program for property located at 460 Airpark Road, Atwater (City Attorney White)

Staff’s Recommendation: Open the public hearing and take any testimony given; Close the public hearing; and Motion to waive the first reading and introduce Ordinance No. CS 1010 approving MJI, LLC Development Agreement, in a form approved by the City Attorney, regarding Cannabis Business Pilot Program for property located at 460 Airpark Road, Atwater; and authorizing and directing the City Manager to execute the Agreement on behalf of the City; or Motion to approve staff’s recommendation as presented.

MAYOR AND CITY MANAGER’S REPORT: 11. Update on the Merced County Association of Governments One Voice 2019

Advocacy Trip – Washington, DC REPORTS AND PRESENTATIONS FROM STAFF: 12. State of the Atwater Fire Department presentation (CAL FIRE/Atwater City Fire

Battalion Chief Slate)

City Council Agenda for Meeting of May 13, 2019 COMMENTS FROM THE PUBLIC: CITY COUNCIL MATTERS: Discussion and possible action regarding the hours of operation for the Bloss Home grounds and gardens

Staff’s Recommendation: That the City Council, by motion, provide staff with direction regarding the hours of operation for the Bloss Home grounds and gardens.

City Council comments

CLOSED SESSION:

Continuation of Closed Session if necessary ADJOURNMENT:

CERTIFICATION: I, Lucy Armstrong, City Clerk of the City of Atwater, do hereby certify that a copy of the foregoing agenda was posted at City Hall a minimum of 72 hours prior to the meeting. _______________________________ LUCY ARMSTRONG CITY CLERK SB 343 NOTICE In accordance with California Government Code Section 54957.5, any writing or document that is a public record, relates to an open session agenda item and is distributed less than 72 hours prior to a regular meeting will be made available for public inspection in the office of the City Clerk at City Hall during normal business hours at 750 Bellevue Road. If, however, the document or writing is not distributed until the regular meeting to which it relates, then the document or writing will be made available to the public at the location of the meeting, as listed on this agenda at 750 Bellevue Road.

NOTICE TO THE PUBLIC

At this time any person may comment on any item which is not on the agenda. You may state your name and address for the record; however, it is not required. Action will not be taken on an item that is not on the agenda. If it requires action, it will be referred to staff and/or placed on a future agenda. Please limit comments to a maximum of three (3) minutes.


In compliance with the federal Americans with Disabilities Act of 1990, upon request, the agenda can be provided in an alternative format to accommodate special needs. If you require special accommodations to participate in a City Council, Commission or Committee meeting due to a disability, please contact the City Clerk’s Office a minimum of three (3) business days in advance of the meeting at (209) 357-6204. You may also send the

request by email to [email protected].

mailto:[email protected]

1 2 3 4

5 6 7 8 9 10 11

12 13 14 15 16 17 18

19 20 21 22 23 24 25

26 27 28 29 30 31

City Holiday Audit & Finance

~ May 2019 ~

4:30 PM

1:30 - 3:30 PM

Memorial Day

1 day 6:00 PM Trash pick up delayed City Council Meeting -

Committee Meeting - City Hall closed

Notes:

City Hall closed Merced County District 3

"Mobile" Office Hours -

Supervisor McDaniel

6:00 PM & Resources Commission City Hall closed

Meeting - 6:00 PM

City Council Meeting - Community Development

Meeting - 5:00 PM City Hall closed Special City Council

12:00 PM @ City Hall

Prayer Walk

Sunday Monday Tuesday Wednesday Thursday Friday

National Day of Prayer City Hall closed

Saturday

10:00 AM

1

2 3 4 5 6 7 8

9 10 11 12 13 14 15

16 17 18 19 20 21 22

23 24 25 26 27 28 29

Sunday Monday Tuesday Wednesday Thursday Friday

Saturday

City Hall closed

City Council Meeting -

6:00 PM City Hall closed

City Hall closed Planning Commission

Meeting - 6:00 PM

Supervisor McDaniel City Hall closed

Audit & Finance Merced County District 3

~ June 2019 ~

6:00 PM City Council Meeting - 1:30 - 3:30 PM30 4:30 PM "Mobile" Office Hours - Committee Meeting -

WARRANTS SUMMARY FOR MAY 13, 2019

TOTAL OF WARRANTS (FROM WARRANT REPORT) ADDITIONAL WARRANTS ( THESE AMOUNTS ARE NOT INCLUDED IN TOTAL WARRANTS)

1 s 1,180,108.33 1

DATE I DESCRIPTION AMOUNT 4/17/2019IPrewrittens included in this current warrant run. 5/1/2019 PERS Health - MAY 2019

4/30/2019 PERS Retirement EFT 4/3/19-4/17 /19 4/29/2019 AFLAC- APR 2019 4/29/2019 Retiree Medical Reimbursement- MAY 2019 4/29/2018 Prewritten missed last warrant run (BNY)

TOTAL ADDITIONAL WARRANTS

$ (23,115.92) $68,625.15 $39,950.94

$834.74 $25,099.72

$367,467.20 $ 478,861.83

GRAND TOTAL OF WARRANTS PAID----------------------------------------------------------------------- $1,658,970.16

I INFORMATIONAL ONLY ( INCLUDED IN THE TOTAL WARRANTS TOTAL)

!DATE I DESCRIPTION {AMOUNT 4/25/2019 Net Payroll 4/25/2019 Federal Taxes 4/25/2019 State Taxes 4/25/2019 Payroll Deductions

$135,547.96 $47,573.76 $5,393.87 $1,704.34

$188,515.59

TOTAL INFORMATIONAL WARRANTS $190,219.93 ~

Accounts Payable Checks for Approval

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75(, Bellevue Roact, .Allo\tater CA 96301

Check Number Check Date Fund Name Account Name Vendor Name Void Amount

11298 04/17/2019 General Fund Miscellaneous Union Dues AFSCME DISTRICT COUNCIL 57 112.45 11298 04/17/2019 General Fund Miscellaneous Union Dues AFSCME DISTRICT COUNCIL 57 595.99

Check Total: 708.44 11299 04/17/2019 General Fund Garnishments FRANCHISE TAX BOARD 100.00 11299 04/17/2019 General Fund Garnishments FRANCHISE TAX BOARD 110.00

Check Total: 210.00 11300 04/17/2019 General Fund Pre-Paid Legal PRE-PAID LEGAL SERVICES 20.93 11300 04/17/2019 General Fund Pre-Paid Legal PRE-PAID LEGAL SERVICES 7.98

Check Total: 28.91 11301 04/17/2019 General Fund Garnishments STATE DISBURSEMENT UNIT 367.38 11301 04/17/2019 General Fund Garnishments STATE DISBURSEMENT UNIT 345.23

Check Total: 712.61 11302 04/17/2019 General Fund Deferred Compensation VANTAGEPOINT TRANSFER AGT-457 50.00

Check Total: 50.00 11303 04/29/2019 Employee Benefits Fund Health Insurance, Retirees DAVID CHURCH 568.82

Check Total: 568.82 11304 04/29/2019 Employee Benefits Fund Health Insurance, Retirees GARY FRAGO 277.87

Check Total: 277.87 11305 04/29/2019 Employee Benefits Fund Health Insurance, Retirees BOBBY GREGORY 1,249.82

Check Total: 1,249.82 11306 04/29/2019 Employee Benefits Fund Health Insurance, Retirees RENE MENDOZA 398.69

Check Total: 398.69

AP-Checks for Approval (5/8/2019 - 1:31 PM) Page 1


11307 04/29/2019 Employee Benefits Fund Health Insurance, Retirees MIKE STANFORD 589.71

Check Total: 589.71 11308 04/29/2019 Employee Benefits Fund Health Insurance, Retirees BILL SWALLEY 44.43

Check Total: 44.43 I 1309 04/30/2019 General Fund Miscellaneous Union Dues AFSCME DISTRICT COUNCIL 57 590.37 11309 04/30/2019 General Fund Miscellaneous Union Dues AFSCME DISTRICT COUNCIL 57 112.45

Check Total: 702.82

I 1310 04/30/2019 General Fund Garnishments FRANCHISE TAX BOARD 100.00 11310 04/30/2019 General Fund Garnishments FRANCHISE TAX BOARD 110.00

Check Total: 2I0.00 11311 04/30/2019 General Fund Pre-Paid Legal PRE-PAID LEGAL SERVICES 7.98 I 1311 04/30/2019 General Fund Pre-Paid Legal PRE-PAID LEGAL SERVICES 20.93

Check Total: 28.91 11312 04/30/2019 General Fund Garnishments STATE DISBURSEMENT UNIT 367.38 11312 04/30/2019 General Fund Garnishments STATE DISBURSEMENT UNIT 345.23

Check Total: 712.61 11313 04/30/2019 General Fund Deferred Compensation VANTAGEPOINT TRANSFER AGT-457 50.00

Check Total: 50.00 11314 05/01/2019 Measure V 20% AlternativeModes Project Retention FBD VANGUARD CONSTRUCTION, INC. -506.72 11314 05/01/2019 Gas Tax/Street Improvement Project Retention FBD VANGUARD CONSTRUCTION, INC. -131.10 11314 05/01/2019 Gas Tax/Street Improvement Buhach Rd Sidewalk Infill FBD VANGUARD CONSTRUCTION, INC. 2,622.00 11314 05/01/2019 Traffic Circulation Fund Buhach Rd Sidewalk Infill FBD VANGUARD CONSTRUCTION, INC. 3,000.00 11314 05/01/2019 Measure V 20% AlternativeModes Buhach Rd Sidewalk Infill FBD VANGUARD CONSTRUCTION, INC. 10,134.44 11314 05/01/2019 General Fund Capital Project Retention FBD VANGUARD CONSTRUCTION, INC. -84.40 11314 05/01/2019 General Fund Capital Buhach Rd Sidewalk Infill FBD VANGUARD CONSTRUCTION, INC. 1,688.06 11314 05/01/2019 Traffic Circulation Fund Project Retention FBD VANGUARD CONSTRUCTION, INC. -150.00

Check Total: 16,572.28

--- --- Report Total: 23,115.92



User: Printed:

jdaniel 5/8/2019 - 1:30 PM

Af~ater C,,,nu1un11t· J•, ul,· f 'if\ ~rlfh•

760 Bellevue R.ow, /\11.o\lator Cl\ $!5.301

Check Number Check Date Fund Name Account Name Vendor Name Void Amount I

113157 05/13/2019 General Fund Building Permits A PLUS SERVICES HEATING & AIR 102.00 I 1315 05/13/2019 General Fund SB 1473 A PLUS SERVICES HEATING & AIR 1.00

11316/

Check Total: 103.00 05/13/2019 General Fund Office Supplies ABS PRESORT, INC. 750.66

I 1316 05/13/2019 General Fund Professional Services ABS PRESORT, INC. I ,669.87 11316 05/13/2019 General Fund Office Supplies ABS PRESORT, INC. 2,900.00

11317/

Check Total: 5,320.53 05/13/2019 Gas Tax/Street Improvement Special Departmental Expense ACE PIPE & STEEL 39.95

1131✓. Check Total: 39.95

05/13/2019 Sanitation Enterprise Solid Waste Collectn/Disposal ALLIED WASTE SERVICES #917 216,036.79

Check Total: 216,036.79 11319/ 05/13/2019 General Fund Fire Marshal Supplies ALLIED WEST PRINTING 116.86

11320/

Check Total: I 16.86

05/13/2019 General Fund Towing Fees ALLWAYS TOWING, L.L.C. 200.00 11320 05/13/2019 General Fund Towing Fees ALLWAYS TOWING, L.L.C. 350.00 11320 05/13/2019 General Fund Towing Fees ALLWAYS TOWING, L.L.C. 350.00

1132/

Check Total: 900.00

05/13/2019 General Fund Special Departmental Expense ANIMAL MEDICAL CENTER 32.00

11322/

Check Total: 32.00

05/13/2019 General Fund Communications AT & T MOBILITY 209.25

11323/

Check Total: 209.25

05/13/2019 General Fund Communications AT and T - CALNET3 113.32 I 1323 05/13/2019 Northwood Village LD Communications AT and T - CALNET3 20.72 11323 05/13/2019 Meadow View LD Communications AT and T - CALNET3 20.48

AP-Checks for Approval (5/8/2019 - 1:30 PM) Page I


11323 05/13/2019 Water Enterprise Fund Communications AT and T - CALNET3 225.73 I 1323 05/13/2019 Sewer Enterprise Fund Communications AT and T - CALNET3 309.89 11323 05/13/2019 Internal Service Fund Communications AT and T - CALNET3 519.96

Check Total: 1,210.10 1132j/ 05/13/2019 General Fund Special Departmental Expense ATWATER MEDICAL GROUP 206.00

11325/ Check Total: 206.00 I

05/13/2019 Water Enterprise Fund Professional Services BC LABORATORIES INC. 144.00 11325 05/13/2019 Water Enterprise Fund Professional Services BC LABORATORIES INC. 60.00 11325 05/13/2019 Water Enterprise Fund Professional Services BC LABORATORIES INC. 144.00 11325 05/13/2019 1,2,3-TCP Fund Professional Services BC LABORATORIES INC. 4,170.00 11325 05/13/2019 Water Enterprise Fund Professional Services BC LABORATORIES INC. 144.00 11325 05/13/2019 Water Enterprise Fund Professional Services BC LABORATORIES INC. 144.00 11325 05/13/2019 Water Enterprise Fund Professional Services BC LABORATORIES INC. 144.00

1132/ Check Total: 4,950.00

05/13/2019 Internal Service Fund Professional Services BOB'S REFRIGERATION 98.00

11327/ Check Total: 98.00

05/13/2019 Water Enterprise Fund Uniform & Clothing Expense BOOT BARN 151.54

11328/ Check Total: 151.54

05/13/2019 General Fund Deposits BRASS RING AMUSEMENTS 524.00 11328 05/13/20 I 9 Water Enterprise Fund Water Service Charges BRASS RING AMUSEMENTS -7.00 11328 05/13/2019 General Fund Deposits BRASS RING AMUSEMENTS 524.00 11328 05/13/2019 Water Enterprise Fund Water Service Charges BRASS RING AMUSEMENTS -5.00

• Check Total: 1,036.00 11329/ 05/13/2019 Gas Tax/Street Improvement Special Departmental Expense CAL FARM SERVICES 9.69 11329 05/13/2019 General Fund Special Departmental Expense CAL FARM SERVICES 35.56

1133;; Check Total: 45.25

05/13/2019 General Fund SB 1473 CALIFORNIA BUILDING STANDARDS COMMI 321.00 11330 05/13/2019 General Fund Building Permits CALIFORNIA BUILDING STANDARDS COMMI -32.10

11331/ Check Total: 288.90

05/13/2019 General Fund Memberships & Subscriptions CALIFORNIA PEACE OFFICER'S ASSOCIATIO1' 300.00

11332/ Check Total: 300.00

05/13/2019 Internal Service Fund Special Departmental Expense CENTRAL SANITARY SUPPLY 1,079.00

AP-Checks for Approval (5/8/2019 - I :30 PM) Page 2


11332 05/13/2019 Internal Service Fund Special Departmental Expense CENTRAL SANITARY SUPPLY 37.45

11333/ Check Total: 1,116.45

05/13/2019 Risk Management Fund Professional Services CHURCHWELL WHITE, LLP 4,632.04 11333 05/13/2019 General Fund Professional Services CHURCHWELL WHITE, LLP 7,036.80 I 1333 05/13/2019 Water Enterprise Fund Professional Services CHURCHWELL WHITE, LLP 3,647.09 11333 05/13/2019 Sewer Enterprise Fund Professional Services CHURCHWELL WHITE, LLP 3,172.09 11333 05/13/2019 General Fund Professional Services CHURCHWELL WHITE, LLP 11,717.96 11333 05/13/2019 Sanitation Enterprise Professional Services CHURCHWELL WHITE, LLP 3,172.08 11333 05/13/2019 General Fund Professional Services CHURCHWELL WHITE, LLP 1,343.40 11333 05/13/2019 General Fund Professional Services CHURCHWELL WHITE, LLP 675.00

11334/ Check Total: 35,396.46

05/13/2019 Internal Service Fund Communications COMCAST CABLE 13.27


05/13/2019 Gas Tax/Street Improvement Special Departmental Expense CONSOLIDATED ELECTRICAL DISTRIBUTOR! 306.37 11335 05/13/2019 Gas Tax/Street Improvement Special Departmental Expense CONSOLIDATED ELECTRICAL DISTRIBUTOR~ 339.30

---

11336/ Check Total: 645.67

05/13/2019 General Fund Special Departmental Expense COOK'S COMMUNICATIONS 32.16


05/13/2019 General Fund Professional Services COVANTA ENERGY, LLC 164.25

1133✓ Check Total: 164.25 05/13/2019 General Fund Inspection Fees CSG CONSULTANTS, INC. 3,898.50

11338 05/13/2019 General Fund Plan Check Fees CSG CONSULTANTS, INC. 1,077.15

113391

Check Total: 4,975.65 05/13/2019 General Fund Special Departmental Expense DELTA WIRELESS & NETWORK SOLUTIONS 524.41

11339 05/13/2019 General Fund Communications DELTA WIRELESS & NETWORK SOLUTIONS 1,490.00 ---

11340/ Check Total: 2,014.41

05/13/2019 General Fund SMITax DEPT. OF CONSERVATION 873.64 11340 05/13/2019 General Fund Building Permits DEPT. OF CONSERVATION -43.68

1134/.

Check Total: 829.96 05/13/2019 General Fund Professional Services DEPT. OF JUSTICE 245.00

Check Total: 245.00



11342/ 05/13/2019 Internal Service Fund Operations & Maintenance E.H. WACHS 949.48

1134✓ Check Total: 949.48

05/13/2019 General Fund Uniform & Clothing Expense ELITE UNIFORMS 322.40 11343 05/13/2019 General Fund Uniform & Clothing Expense ELITE UNIFORMS 440.52 11343 05/13/2019 General Fund Uniform & Clothing Expense ELITE UNIFORMS 54.11

113~/ Check Total: 817.03

05/13/2019 General Fund Training EMBASSY CONSULTING SERVICES LLC 198.00

11345/ Check Total: 198.00

05/13/2019 Gas Tax/Street Improvement Special Departmental Expense FASTENAL COMPANY 120.79 11345 05/13/2019 Gas Tax/Street Improvement Special Departmental Expense FASTENAL COMPANY 3.71 11345 05/13/2019 Water Enterprise Fund Special Departmental Expense FASTENAL COMPANY 66.86 11345 05/13/2019 Internal Service Fund Operations & Maintenance FASTENAL COMPANY 113.67 1134~ 05/13/2019 Water Enterprise Fund Special Departmental Expense FASTENAL COMPANY 57.71 11345 05/13/2019 Water Enterprise Fund Special Departmental Expense FASTENAL COMPANY 43.69 11345 05/13/2019 Internal Service Fund Special Departmental Expense FASTENAL COMPANY 203.60 11345 05/13/2019 Water Enterprise Fund Uniform & Clothing Expense FASTENAL COMPANY 2.81 11345 05/13/2019 Water Enterprise Fund Special Departmental Expense FASTENAL COMPANY 24.70 11345 05/13/2019 Water Enterprise Fund Uniform & Clothing Expense FASTENAL COMPANY 23.40 11345 05/13/2019 Water Enterprise Fund Special Departmental Expense FASTENAL COMPANY 51.36

11346/ Check Total: 712.30

05/13/2019 General Fund Office Supplies FEDERAL EXPRESS 641.93


05/13/2019 Water Enterprise Fund Special Departmental Expense FERGUSON ENTERPRISES INC. #690 1,496.62

11348/ Check Total: 1,496.62

05/13/2019 Internal Service Fund Operations & Maintenance DONALD GARCIA 346.91

11349/ Check Total: 346.91

05/13/2019 Internal Service Fund Operations & Maintenance GARTON TRACTOR INC 53.56 11349 05/13/2019 Internal Service Fund Operations & Maintenance GARTON TRACTOR INC 58.29

11350/ Check Total: 111.85

05/13/2019 Water Enterprise Fund Special Departmental Expense GRAINGER, INC. 145.44

11351/' Check Total: 145.44

05/13/2019 General Fund Special Departmental Expense HORIZON 10.45

AP-Checks for Approval (5/8/2019 - 1 :30 PM) Page 4


I 1351 05/13/2019 Gas Tax/Street Improvement Special Departmental Expense HORIZON 139.08 11351 05/13/2019 Gas Tax/Street Improvement Special Departmental Expense HORIZON 373.91 11351 05/13/2019 General Fund Special Departmental Expense HORIZON 189.27 11351 05/13/2019 General Fund Special Departmental Expense HORIZON 194.33

11352/

Check Total: 907.04 05/13/2019 General Fund Special Departmental Expense INGRAHAM TROPHIES 205.68

11353/

Check Total: 205.68

05/13/2019 Internal Service Fund Operations & Maintenance INTERSTATE TRUCK CENTER 5,033.65 11353 05/13/2019 Internal Service Fund Professional Services INTERSTATE TRUCK CENTER 4,342.30 11353 05/13/2019 Internal Service Fund Operations & Maintenance INTERSTATE TRUCK CENTER 244.97 11353 05/13/2019 Internal Service Fund Professional Services INTERSTATE TRUCK CENTER 688.16

11354) Check Total: 10,309.08

05/13/2019 General Fund Communications JD SANDERS COMPANY 750.00

11355(

Check Total: 750.00 05/13/2019 General Fund Professional Services JOBS AVAILABLE 702.00

11356/

Check Total: 702.00

05/13/2019 Internal Service Fund Operations & Maintenance KELLOGG'S SUPPLY 15.93 11356 05/13/2019 Internal Service Fund Operations & Maintenance KELLOGG'S SUPPLY 58.82

11357/

Check Total: 74.75

05/13/2019 Internal Service Fund Operations & Maintenance L.N. CURTIS & SONS 1,675.63

1135✓ Check Total: 1,675.63

05/13/2019 Internal Service Fund Operations & Maintenance LATTA'S AUTO SUPPLY 7.56 11358 05/13/2019 Sewer Enterprise Fund Special Departmental Expense LATTA'S AUTO SUPPLY 4.22 11358 05/13/2019 General Fund Special Departmental Expense LATTA'S AUTO SUPPLY 44.37

11359/

Check Total: 56.15

05/13/2019 General Fund Training BLAINE LOPES 250.00

1136o/

Check Total: 250.00

05/13/2019 General Fund Office Supplies MAILFINANCE 1,606.53

1136/.


05/13/2019 General Fund Special Departmental Expense JANELL MARTIN 31.96



Check Total: 31.96

11362 / 05/13/2019 Internal Service Fund Operations & Maintenance MCAULEY MOTORS 54.59 11362 05/13/2019 Internal Service Fund Operations & Maintenance MCAULEY MOTORS 108.71 11362 05/13/2019 Internal Service Fund Operations & Maintenance MCAULEY MOTORS 344.72

11363/

Check Total: 508.02

05/13/2019 Internal Service Fund Operations & Maintenance MCCOY TRUCK TIRE SERVICE 1,609.04

11364/


05/13/2019 General Fund Coed Volleyball MERCED AREA SPORTS OFFICIALS, INC 429.00 11364 05/13/2019 General Fund Youth Basketball MERCED AREA SPORTS OFFICIALS, INC 953.00 11364 05/13/2019 General Fund Coed Volleyball MERCED AREA SPORTS OFFICIALS, INC 429.00 11364 05/13/2019 General Fund Coed Volleyball MERCED AREA SPORTS OFFICIALS, INC 429.00 11364 05/13/2019 General Fund Coed Volleyball MERCED AREA SPORTS OFFICIALS, INC 429.00 11364 05/13/2019 General Fund Coed Volleyball MERCED AREA SPORTS OFFICIALS, INC 363.00 11364 05/13/2019 General Fund Coed Spring Softball MERCED AREA SPORTS OFFICIALS, INC 150.00 11364 05/13/2019 General Fund Men's Spring Softball MERCED AREA SPORTS OFFICIALS, INC 175.00

1136/


05/13/2019 Internal Service Fund Operations & Maintenance MERCED CHEVROLET 8.13

Check Total: 8.13

11366/ 05/13/2019 General Fund Training MERCED COMMUNITY COLLEGE DISTRICT 23.00

11367/

Check Total: 23.00

05/13/2019 Internal Service Fund Special Departmental Expense MERCED IRRIGATION DISTRICT 125.04 11367 05/13/2019 Internal Service Fund Special Departmental Expense MERCED IRRIGATION DISTRICT 48.96

11368/

Check Total: 174.00

05/13/2019 Sewer Enterprise Fund Special Departmental Expense MERCED SUN STAR-LEGALS 200.00 11368 05/13/2019 General Fund Printing & Advertising MERCED SUN STAR-LEGALS 200.00

11369/

Check Total: 400.00

05/13/2019 Internal Service Fund Operations & Maintenance MERCED TRUCK & TRAILER INC. 8.29

1137/

Check Total: 8.29

05/13/2019 Internal Service Fund Operations & Maintenance MOORE'S AUTOMOTIVE LLC 777.00 11370 05/13/2019 Internal Service Fund Professional Services MOORE'S AUTOMOTIVE LLC 990.10




11371/ 05/13/2019 General Fund Castle Park Rental MOVIMIENTO FAMILIAR CRISTIANO 200.00

Check Total: 200.00 11372/ 05/13/2019 General Fund Professional Services MUNISERVICES LLC 396.00

11373/ Check Total: 396.00

05/13/2019 General Fund Special Departmental Expense NATION & BADILLA INVESTIGATIONS 800.00

11374/ Check Total: 800.00

05/13/2019 General Fund Office Supplies NEOFUNDS BY NEOPOST 1,000.00

11375/ Check Total: 1,000.00

05/13/2019 General Fund Special Departmental Expense OCCUTEST 96.00 11375 05/13/2019 General Fund Training OCCUTEST 45.00 11375 05/13/2019 Gas Tax/Street Improvement Training OCCUTEST 45.00 11375 05/13/2019 General Fund Training OCCUTEST 45.00

l137J Check Total: 231.00

05113/2019 General Fund Office Supplies THE OFFICE CITY 199.99

11377/

Check Total: 199.99 05/13/2019 Internal Service Fund Operations & Maintenance O'REILLY AUTO PARTS 170.73

11377 05/13/2019 Internal Service Fund Operations & Maintenance O'REILLY AUTO PARTS 9.48 11377 05/13/20 I 9 Internal Service Fund Operations & Maintenance O'REILLY AUTO PARTS 317.56 11377, 05/13/2019 Internal Service Fund Operations & Maintenance O'REILLY AUTO PARTS 53.40 11377 05/13/2019 Internal Service Fund Operations & Maintenance O'REILLY AUTO PARTS -317.56 11377 05/13/2019 Internal Service Fund Operations & Maintenance O'REILLY AUTO PARTS 33.03 11377 05/13/2019 Internal Service Fund Operations & Maintenance O'REILLY AUTO PARTS 2.39 11377 05/13/2019 Internal Service Fund Special Departmental Expense O'REILLY AUTO PARTS 7.89 11377 05/13/2019 Internal Service Fund Operations & Maintenance O'REILLY AUTO PARTS 152.81 11377 05/13/2019 Internal Service Fund Operations & Maintenance O'REILLY AUTO PARTS 49.28 11377 05/13/2019 Internal Service Fund Operations & Maintenance O'REILLY AUTO PARTS 219.00 11377 05/13/2019 Internal Service Fund Operations & Maintenance O'REILLY AUTO PARTS 274.28 11377 05/13/2019 Internal Service Fund Operations & Maintenance O'REILLY AUTO PARTS 47.06 11377 05/13/2019 Internal Service Fund Operations & Maintenance O'REILLY AUTO PARTS 14.06 11377 05/13/2019 Internal Service Fund Operations & Maintenance O'REILLY AUTO PARTS -155.86 11377 05/13/20 I 9 Internal Service Fund Operations & Maintenance O'REILLY AUTO PARTS 17.16 11377 • 05/13/2019 Internal Service Fund Operations & Maintenance O'REILLY AUTO PARTS 194.74 11377 05/13/2019 Internal Service Fund Operations & Maintenance O'REILLY AUTO PARTS 136.37 11377 05/13/20 I 9 Internal Service Fund Operations & Maintenance O'REILLY AUTO PARTS 10.27 11377 05/13/2019 Internal Service Fund Operations & Maintenance O'REILLY AUTO PARTS 301.50 11377 05/13/2019 Internal Service Fund Operations & Maintenance O'REILLY AUTO PARTS 93.14



11377 05/13/2019 Internal Service Fund Operations & Maintenance O'REILLY AUTO PARTS 27.77 11377 05/13/2019 General Fund Small Tools O'REILLY AUTO PARTS 16.23 11377 05/13/2019 Sewer Enterprise Fund Special Departmental Expense O'REILLY AUTO PARTS 17.30

11378/ Check Total: 1,692.03

05/13/2019 Internal Service Fund Operations & Maintenance OWEN EQUIPMENT SALES 1,862.89 11378 05/13/2019 Internal Service Fund Operations & Maintenance OWEN EQUIPMENT SALES 2,719.92

1!379/ Check Total: 4,582.81

05/13/2019 Internal Service Fund Utilities PACIFIC GAS & ELECTRIC 38.76 11379 05/13/2019 General Fund Utilities PACIFIC GAS & ELECTRIC 136.73 11379 05/13/2019 Water Enterprise Fund Utilities PACIFIC GAS & ELECTRIC 23,700.42 11379 05/13/2019 Gas Tax/Street Improvement Utilities PACIFIC GAS & ELECTRIC 92.72 11379 05/13/2019 General Fund Utilities PACIFIC GAS & ELECTRIC 129.82 I 1379 05/13/2019 Sewer Enterprise Fund Utilities PACIFIC GAS & ELECTRIC 33,516.76

1138j Check Total: 57,615.21

05/13/2019 Internal Service Fund Special Departmental Expense PRESTON'S LOCK & KEY 10.83 I 1380 05/13/2019 Internal Service Fund Special Departmental Expense PRESTON'S LOCK & KEY 10.83 11380 05/13/2019 Internal Service Fund Special Departmental Expense PRESTON'S LOCK & KEY 36.24 11380 05/13/2019 Internal Service Fund Special Departmental Expense PRESTON'S LOCK & KEY 23.82 11380 05/13/2019 Internal Service Fund Special Departmental Expense PRESTON'S LOCK & KEY 5.41 !!380 05/13/2019 Internal Service Fund Special Departmental Expense PRESTON'S LOCK & KEY 70.83 11380 05/13/2019 Internal Service Fund Special Departmental Expense PRESTON'S LOCK & KEY 48.16 11380 05/13/2019 Internal Service Fund Office Supplies PRESTON'S LOCK & KEY 16.24 11380 05/13/2019 Internal Service Fund Operations & Maintenance PRESTON'S LOCK & KEY 22.00 11380 05/13/2019 Internal Service Fund Special Departmental Expense PRESTON'S LOCK & KEY 17.32 11380 05/13/2019 Internal Service Fund Special Departmental Expense PRESTON'S LOCK & KEY 20.57

ll381/ Check Total: 282.25

05/13/2019 1,2,3-TCP Fund Professional Services PROVOST & PRITCHARD CONSULTING GROU 378.00


05/13/2019 General Fund Castle Park Rental TERESA PULIDO 200.00

11383/ Check Total: 200.00

05/13/2019 General Fund Professional Services LESA RASMUSSEN 52.50 11383 05/13/2019 General Fund Professional Services LESA RASMUSSEN 61.95

1138~/ Check Total: 114.45

05/13/2019 General Fund Rents & Leases RAY MORGAN COMPANY 185.62 I 1384 05/13/2019 General Fund Rents & Leases RAY MORGAN COMPANY 14.84

AP-Checks for Approval (5/8/20 I 9 - I :30 PM) Page 8


ll384 05/13/2019 General Fund Rents & Leases RAY MORGAN COMPANY 365.32 11384 05/13/2019 General Fund Rents & Leases RAY MORGAN COMPANY 547.20 11384 05/13/2019 Water Enterprise Fund Rents & Leases RAY MORGAN COMPANY 135.53 11384 05/13/2019 Sewer Enterprise Fund Rents & Leases RAY MORGAN COMPANY 135.52 11384 05/13/2019 General Fund Rents & Leases RAY MORGAN COMPANY 365.32 11384 05/13/2019 General Fund Rents & Leases RAY MORGAN COMPANY 14.84 11384 • 05/13/2019 General Fund Rents & Leases RAY MORGAN COMPANY 365.32 11384 05/13/2019 General Fund Rents & Leases RAY MORGAN COMPANY 365.32 11384 05/13/2019 General Fund Rents & Leases RAY MORGAN COMPANY 185.61 I 1384 05/13/2019 General Fund Rents & Leases RAY MORGAN COMPANY 14.84 I 1384 05/13/2019 General Fund Rents & Leases RAY MORGAN COMPANY 335.86 11384 05/13/2019 General Fund Rents & Leases RAY MORGAN COMPANY 14.84 I 1384 05/13/2019 General Fund Rents & Leases RAY MORGAN COMPANY 14.90

11385/ Check Total: 3,060.88

05/13/2019 Internal Service Fund Operations & Maintenance RAZZARI FORD\MAZDA 301.79

11386/ Check Total: 301.79

05/13/2019 General Fund Professional Services REGIONAL GOVERNMENT SERVICES 742.02


05/13/2019 Section 125 Medical Deposits Section 125 STEPHANIE RUIZ 258.80

1138✓ Check Total: 258.80 05/13/2019 Gas Tax/Street Improvement Special Departmental Expense SAFE-T-LITE 80.65

11388 05/13/2019 Sewer Enterprise Fund Special Departmental Expense SAFE-T-LITE 204.92


05/13/2019 Internal Service Fund Professional Services SAN JOAQUIN PEST CONTROL 25.00 11389 05/13/2019 Internal Service Fund Professional Services SAN JOAQUIN PEST CONTROL 33.00 11389 05/13/2019 Internal Service Fund Professional Services SAN JOAQUIN PEST CONTROL 25.00 11389 05/13/2019 Internal Service Fund Professional Services SAN JOAQUIN PEST CONTROL 28.00 11389 . 05/13/2019 Internal Service Fund Professional Services SAN JOAQUIN PEST CONTROL 64.00 11389 05/13/2019 Internal Service Fund Professional Services SAN JOAQUIN PEST CONTROL 18.00 11389 05/13/2019 Internal Service Fund Professional Services SAN JOAQUIN PEST CONTROL 58.00 11389 05/13/2019 Internal Service Fund Professional Services SAN JOAQUIN PEST CONTROL 38.00 11389 05/13/2019 Internal Service Fund Professional Services SAN JOAQUIN PEST CONTROL 25.00


05/13/2019 General Fund Training JOHN SLATE 250.00 11390 , 05/13/2019 General Fund Training JOHN SLATE 250.00



11391/ Check Total: 500.00

05/13/2019 General Fund Building Permits SPECIALTY ROOFING 408.00 113'11 05/13/2019 General Fund SB 1473 SPECIALTY ROOFING 1.00 11391 05/13/2019 General Fund SMITax SPECIALTY ROOFING 1.79

11392/ Check Total: 410.79

05/13/2019 General Fund Special Departmental Expense STAGE STOP GUN SHOP 336.00

11393/ Check Total: 336.00

05/13/2019 General Fund Special Departmental Expense STAPLES BUSINESS ADVANTAGE 71.43 11393 05/13/2019 General Fund Special Departmental Expense STAPLES BUSINESS ADVANTAGE 51.29 11393 05/13/2019 General Fund Special Departmental Expense STAPLES BUSINESS ADVANTAGE 143.95 11393 05/13/2019 General Fund Special Departmental Expense STAPLES BUSINESS ADVANTAGE 268.85 11393 05/13/2019 General Fund Special Departmental Expense STAPLES BUSINESS ADVANTAGE 14.06 11393 05/13/2019 General Fund Office Supplies STAPLES BUSINESS ADVANTAGE 15.14 11393 05/13/2019 General Fund Special Departmental Expense STAPLES BUSINESS ADVANTAGE 63.15 11393 05/13/2019 General Fund Special Departmental Expense STAPLES BUSINESS ADVANTAGE 63.43 1139'3 05/13/2019 General Fund Special Departmental Expense STAPLES BUSINESS ADVANTAGE 155.34 11393 05/13/2019 General Fund Office Supplies STAPLES BUSINESS ADVANTAGE 44.59


05/13/2019 General Fund Special Departmental Expense STERJCYCLE, INC. 30.25


05/13/2019 General Fund Uniform & Clothing Expense JUAN SUFUENTES 68.55

Check Total: 68.55 11396/ 05/13/2019 Water Enterprise Fund Special Departmental Expense SUPERIOR POOL PRODUCTS LLC 11.38


05/13/2019 General Fund Building Permits SWAN POOLS 796.00 I 1397 05/13/2019 General Fund SB 1473 SWAN POOLS 3.00 11397 05/13/2019 General Fund SMITax SWAN POOLS 6.53

11398/ Check Total: 805.53

05/13/2019 General Fund Capital Juniper Ped/Bike Path Infill TAYLOR BACKHOE SERVICE, INC. 134,484.03 11398 05/13/2019 General Fund Capital Project Retention TAYLOR BACKHOE SERVICE, INC. -6,724.20 11398 05/13/2019 Measure V 20% AlternativeModes Juniper Ped/Bike Path Infill TAYLOR BACKHOE SERVICE, INC. 17,423.83 11398 05/13/2019 Measure V 20% AlternativeModes Project Retention TAYLOR BACKHOE SERVICE, INC. -871.19



11399 /

Check Total: 144,312.47 05/13/2019 Internal Service Fund Operations & Maintenance TESEI PETROLEUM, INC. 3,402.32

11399 05/13/2019 Internal Service Fund Operations & Maintenance TESEI PETROLEUM, INC. 9,852.10

11400/ Check Total: 13,254.42

05/13/2019 Water Enterprise Fund Special Departmental Expense THATCHER COMPANY OF CALIFORNIA, INC 1,967.97 11400, 05/13/2019 Water Enterprise Fund Special Departmental Expense THATCHER COMPANY OF CALIFORNIA, INC -750.00

1140✓ Check Total: 1,217.97 05/13/2019 Internal Service Fund Operations & Maintenance TIRE DISTRIBUTION SYSTEMS INC. 104.65

11402/ Check Total: 104.65

05/13/2019 Information Technology Fund Special Departmental Expense TM PROS 9,009.58 11402 • 05/13/2019 Information Technology Fund Professional Services TM PROS 11,580.00

11403/ Check Total: 20,589.58

05/13/2019 Risk Management Fund Special Departmental Expense TPX COMMUNICATIONS 5,527.28

11404/ Check Total: 5,527.28

05/13/2019 Price Annexation LMA Uniform & Clothing Expense UNIFIRST CORPORATION 17.19 11404 05/13/2019 Sandlewood Square LMA Uniform & Clothing Expense UNIFIRST CORPORATION 1.91 11404 05/13/2019 Pajaro Dunes LMA Uniform & Clothing Expense UNIFIRST CORPORATION 1.06 11404 05/13/2019 Redwood Estates LMA Uniform & Clothing Expense UNIFIRST CORPORATION 1.95 ..

05/13/2019 Cottage Gardens ST & LMA Uniform & Clothing Expense UNIFIRST CORPORATION 11404 0.25 11404 05/13/2019 Silva Ranch LNDSCP Uniform & Clothing Expense UNIFIRST CORPORATION 2.73 11404 05/13/2019 Mello Ranch LNDSCP Uniform & Clothing Expense UNIFIRST CORPORATION 2.75 I 1404, 05/13/2019 Juniper Meadows LNDSCP Uniform & Clothing Expense UNIFIRST CORPORATION 0.09 11404 05/13/2019 Camellia Meadows LNDSCP Uniform & Clothing Expense UNIFlRST CORPORATION 0.56 11404 05/13/2019 Stone Creek LNDSCP Uniform & Clothing Expense UNIFIRST CORPORATION 3.40 11404 • 05/13/2019 America West LNDSCP Uniform & Clothing Expense UNIFIRST CORPORATION 0.24 11404 05/13/2019 Bell Crossing LNDSCP Uniform & Clothing Expense UNIFIRST CORPORATION 3.42 11404 05/13/2019 Atwater South LNDSCP Uniform & Clothing Expense UNIFIRST CORPORATION 2.75 11404 05/13/2019 Mello Ranch 2 LNDSCP Uniform & Clothing Expense UNIFIRST CORPORATION 2.37 11404

. 05/13/2019 Meadow View LNDSCP Uniform & Clothing Expense UNIFIRST CORPORATION 2.33

11404 05/13/2019 Aspenwood Lndscp Uniform & Clothing Expense UNIFIRST CORPORATION 0.69 11404 05/13/2019 Applegate Ranch Lndscp Uniform & Clothing Expense UNIFIRST CORPORATION 0.25 11404 05/13/2019 Simon Annexation LNDSCP Uniform & Clothing Expense UNIFIRST CORPORATION 0.05 11404 • 05/13/2019 Internal Service Fund Special Departmental Expense UNIFIRST CORPORATION 99.96 11404. 05/13/20 I 9 Water Enterprise Fund Uniform & Clothing Expense UNIFIRST CORPORATION 220.95 11404 05/13/2019 Sewer Enterprise Fund Uniform & Clothing Expense UNIFIRST CORPORATION 233.24 11404 05/13/2019 Gas Tax/Street Improvement Uniform & Clothing Expense UNIFIRST CORPORATION 118.53



11404 05/13/2019 Sanitation Enterprise Uniform & Clothing Expense UNIFIRST CORPORATION 39.42 11404 05/13/2019 Internal Service Fund Uniform & Clothing Expense UNIFIRST CORPORATION 27.81

Check Total: 783.90 11405/ 05/13/2019 General Fund Life Insurance Payable UNUM LIFE INSURANCE 1,570.62 I 1405 05/13/2019 General Fund Life Insurance Payable UNUM LIFE INSURANCE 161.08

11406/ Check Total: 1,731.70

05/13/2019 Water Enterprise Fund Professional Services VALLEY UTILITIE CONSTRUCTION, INC. 1,200.00

11407/ Check Total: 1,200.00

05/13/2019 General Fund Building Permits VERENGO INC. 271.00

11408/ Check Total: 271.00

05/13/2019 General Fund Communications VERIZON WIRELESS 436.94

Check Total: 436.94 11409/ 05/13/2019 Employee Benefits Fund Vision Insurance VISION SERVICE PLAN (CA) 1,110.95 I 1409 05/13/2019 Employee Benefits Fund Vision Insurance VISION SERVICE PLAN (CA) 905.37 11409 05/13/2019 Employee Benefits Fund Vision Insurance VISION SERVICE PLAN (CA) 1,496.71

11410/ Check Total: 3,513.03

05/13/2019 Sewer Enterprise Fund Special Departmental Expense WARD ENTERPRISES 10.07 11410 05/13/2019 Internal Service Fund Special Departmental Expense WARD ENTERPRISES 17.21 11410 05/13/2019 Internal Service Fund Special Departmental Expense WARD ENTERPRISES 10.77


05/13/2019 Water Enterprise Fund Special Departmental Expense WATERFORD IRRJGATION SUPPLY, INC 25.41 I 14Il 05/13/2019 Water Enterprise Fund Special Departmental Expense WATERFORD IRRIGATION SUPPLY, INC 6.20 11411 05/13/2019 Gas Tax/Street Improvement Special Departmental Expense WATERFORD IRRIGATION SUPPLY, INC 8.79 11411 05/13/2019 Water Enterprise Fund Special Departmental Expense WATERFORD IRRJGATION SUPPLY, INC 153.82 11411 05/13/2019 DBCP Settlement Installation-New Water Meters WATERFORD IRRIGATION SUPPLY, INC 52.16

11412/ Check Total: 246.38

05/13/2019 Water Enterprise Fund Utilities WGL ENERGY SYSTEMS, INC 5,625.48 11412 05/13/2019 Internal Service Fund Utilities WGL ENERGY SYSTEMS, INC 1,899.50 I 1412 05/13/2019 Water Enterprise Fund Utilities WGL ENERGY SYSTEMS, INC 19,768.64

--- 1141/

Check Total: 27,293.62 05/13/2019 General Fund Small Tools WINTON HARDWARE 398.62

11413 05/13/2019 Internal Service Fund Special Departmental Expense WINTON HARDWARE 11.50


Check Number Check Date Fund Name

11413" 05/13/2019 Water Enterprise Fund 11413 05/13/2019 Internal Service Fund 11413 05/13/2019 Gas Tax/Street Improvement 11413 05/13/2019 Water Enterprise Fund

11414/ 05/13/2019 Internal Service Fund

Account Name Vendor Name Void Amount

Special Departmental Expense Special Departmental Expense Special Departmental Expense Special Departmental Expense

Operations & Maintenance

WINTON HARDWARE WINTON HARDWARE WINTON HARDWARE WINTON HARDWARE

29.25 12.92 86.18 8.59

Check Total: X-ERGON

547.06 276.42

Check Total: 276.42

Report Total: 603,373.41



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76() Bellevue Road, .AllA13ter CA $63(J1


0 05/13/2019 Sewer Enterprise Fund Cash with Fiscal Agent THE BANK OF NEW YORK MELLON 73,333.33 0 05/13/2019 Sewer Enterprise Fund Cash with Fiscal Agent THE BANK OF NEW YORK MELLON 202,882.29 0 05/13/2019 Sewer Enterprise Fund Cash with Fiscal Agent THE BANK OF NEW YORK MELLON 49,583.33 0 05/13/2019 Sewer Enterprise Fund Cash with Fiscal Agent THE BANK OF NEW YORK MELLON 45,172.40

243 /


05/13/2019 Sewer Enterprise Fund Rents & Leases A & A PORTABLES, INC. 224.95

244 /

Check Total: 224.95

05/13/2019 Sewer Enterprise Fund Special Departmental Expense BIG CREEK LUMBER COMPANY 90.16 244 05/13/2019 Sewer Enterprise Fund Special Departmental Expense BIG CREEK LUMBER COMPANY 81.36 244 05/13/2019 Sewer Enterprise Fund Special Departmental Expense BIG CREEK LUMBER COMPANY 67.87 244 05/13/2019 Sewer Enterprise Fund Uniform & Clothing Expense BIG CREEK LUMBER COMPANY 25.16

Check Total: 264.55

245/ 05/13/2019 Sewer Enterprise Fund Small Tools CAL FARM SERVICES 355.52

246/

Check Total: 355.52

05/13/2019 Sewer Enterprise Fund Special Departmental Expense FASTENAL COMPANY 3.26

246 05/13/2019 Sewer Enterprise Fund Uniform & Clothing Expense FASTENAL COMPANY 54.21

247/

Check Total: 57.47

05/13/2019 Sewer Enterprise Fund Machinery & Equipment INDUSTRIAL ELECTRICAL COMPANY 12,424.59 247. 05/13/2019 Sewer Enterprise Fund Machinery & Equipment INDUSTRIAL ELECTRICAL COMPANY 451.21


248 f 05/13/2019 Sewer Enterprise Fund Special Departmental Expense O'REILLY AUTO PARTS 8.65

249/

Check Total:. 8.65

05/13/2019 Sewer Enterprise Fund Special Departmental Expense SAFE- T-LITE 204.92

Check Total: 204.92

AP-Checks for Approval (5/8/2019 - I :31 PM) Page I


250/ 05/13/2019 Sewer Enterprise Fund Utilities SIEMENS FINANCIAL SERVICES, INC. 14,707.90

25i' /


05/13/2019 Sewer Enterprise Fund Special Departmental Expense Smith & Loveless Inc. 491.01

25il Check Total: 491.01

05/13/2019 Sewer Enterprise Fund Professional Services VEOLIA WATER NORTH AMERICA OPERATINC 153,273.12

-- 253/


05/13/2019 Sewer Enterprise Fund Special Departmental Expense WATERFORD IRRIGATION SUPPLY, INC 22.15

254/

Check Total: 22.15

05/13/2019 Sewer Enterprise Fund Small Tools WINTON HARDWARE 161.61

Check Total: 161.61

Report Total: 553,619.00


Check Number Check Date Fund Name Account Name

--- 250/ 05/13/2019 Sewer Enterprise Fund Utilities

251 / 05/13/2019 Sewer Enterprise Fund Special Departmental Expense

252°/ 05/13/2019 Sewer Enterprise Fund Professional Services

253/ 05/13/2019 Sewer Enterprise Fund Special Departmental Expense

254/ 05/13/2019 Sewer Enterprise Fund Small Tools

Vendor Name Void Amount

SIEMENS FINANCIAL SERVICES, INC.

Smith & Loveless Inc. Check Total:

Check Total: VEOLIA WATER NORTH AMERICA OPERATINC

Check Total: WATERFORD IRRIGATION SUPPLY, INC

14,707.90

14,707.90 491.01

491.01 153,273.12

153,273.12 22.15

Check Total: WINTON HARDWARE

22.15 161.61

Check Total: 161.61

4flµv Report Total: 553,619.00


CITY OF ATWATER

AUDIT AND FINANCE COMMITTEE

REGULAR MEETING MINUTES

January 12, 2015

CALL TO ORDER:

The City of Atwater Audit and Finance Committee met in regular session this date at 3:32 PM in the City Council Chambers, City Hall, 750 Bellevue Road, Atwater, California; Council Member Bergman presiding.

ROLL CALL:

Present:

Absent: Staff Present: Public:

Council Member Bergman, City Treasurer Heller, Council Member Vineyard None Finance Operations Manager Deal Adela Saenz, Tony Shukle, Eric Lee, Bill Barkman

APPROVAL OF MINUTES:

Regular meeting of December 8, 2014.

MOTION: City Treasurer Heller moved to approve the minutes of the regular meeting of December 8, 2014. The motion was seconded by Council Member Bergman and the vote was: Ayes: Bergman, Heller, Vineyard; Noes: None; Absent: None. The motion carried.

COMMENTS FROM THE PUBLIC:

Notice to the public was read.

Bill Barkman came forward to request that a member of the public possessing a financial background be added to the Audit and Finance Committee.

Audit and Finance Committee Minutes for January 12, 2015 Page 2

REPORTS:

Verbal Report from the CAL Fire Battalion Chief (Pimentel)

Fire Apparatus Purchase

CAL Fire Battalion Chief Pimentel reported that the new vehicle has been purchased without equipment. Additional funds, (87,000) are required to purchase the necessary equipment. CAL Fire Battalion Chief Pimentel answered questions the committee members had regarding the Fire Apparatus Purchase.

Reports from the Finance Operations Manager (Deol)

Mid Year Budget Review

Finance Operations Manager Deol provided the committee members with a copy of the City of Atwater Fiscal Year 2014-15 Mid Year Budget Review Proposed Budget Adjustments. Finance Operations Manager Deol answered questions the committee members had regarding the Mid Year Budget Review.

COMMITTEE MEMBERS COMMENTS:

City Treasurer Heller reported that the December 2014 Treasurer Report will be presented at the next Audit and Finance Committee Meeting for February 9, 2015. He also reported that the property taxes in the amount of 1. 6 million were received today.

FUTURE AGENDA ITEMS:

ADJOURNMENT:

The meeting adjourned at 4:02 PM.

CHERYLBARBOA RECORDING SECRETARY

CITY OF ATWATER



February 9, 2015

CALL TO ORDER:


ROLL CALL:

Present:

Absent: Staff Present:

Public:

Council Member Bergman, City Treasurer Heller, Council Member Vineyard None Finance Operations Manager Deal, Interim Public Works Director Faretta, Water Division Manager/Chief Operator Shaw, CAL Fire Battalion Chief Pimentel Adela Saenz

ELECTION OF CHAIR FOR 2015:

MOTION: Council Member Bergman moved to elect Council Member Vineyard as chairperson of the Audit and Finance Committee for the 2015 calendar year. The motion was seconded by City Treasurer Heller and the vote was: Ayes: Heller, Bergman, Vineyard; Noes: None; Absent: None. The motion carried.

Regular meeting of December 8, 2014.

MOTION: City Treasurer Heller moved to approve the minutes of the regular meeting of December 8, 2014 as amended. The motion was seconded by Council Member Bergman and the vote was: Ayes: Heller, Bergman, Vineyard; Noes: None; Absent: None. The motion carried.

Audit and Finance Committee Minutes for February 9. 2015 Page 2



Adela Saenz came forward to ask about the December 4, 2014 Merced Sun Star article "State Audit Criticizes Atwater". Staff answered that the State of California wants the City of Atwater to change the cost allocation methodology regarding the gas tax.

BUSINESS:

Treasurer Report December 2014

MOTION: Council Member Bergman moved to recommend this item be reviewed and accepted. The motion was seconded by Committee Chair Council Member Vineyard and the vote was: Ayes: Heller, Bergman, Vineyard; Noes: None; Absent: None. The motion carried.

REPORTS:

Reports from the Finance Operations Manager (Deal)

Final Mid Year Budget Review

Finance Operations Manager Deal provided the committee members with a copy of the City of Atwater Fiscal Year 2014-15 General Fund Revenue by Category and City of Atwater General Fund Budget Summary, and City of Atwater Fiscal Year 2014-15 Mid Year Budget Review Proposed Budget Adjustments. Additionally, Finance Operations Manager Deal provided the committee members with a copy of the Fiscal Year 2015-16 Budget Calendar. Finance Operations Manager Final Mid Year Budget Review.



ADJOURNMENT:



CITY OF ATWATER



March 9, 2015

CALL TO ORDER:


ROLL CALL:

Present: Absent: Staff Present:

Public:

Council Member Bergman, City Treasurer Heller Committee Chair Council Member Vineyard Finance Operations Manager Deol, Financial Consultant Zenoni Adela Saenz, Joe Arch, JJCPA Firm

Regular meeting of February 9, 2015.

MOTION: City Treasurer Heller moved to approve the minutes of the regular meeting of February 9, 2015. The motion was seconded by Council Member Bergman and the vote was: Ayes: Heller, Bergman; Noes: None; Absent: Vineyard. The motion carried.



Adela Saenz came forward to ask about the midyear adjustment of $10,000. Staff answered that a request was made for more funds to repair cracks in the cement channel walls at the New Waste Water Treatment Plant and $25,000 was requested to install the monitoring well.

Audit and Finance Committee Minutes for March 9. 2015 Page 2

BUSINESS:

REPORTS:

Reports from the Finance Operations Manager (Deel)

Audited Financial Statements FY Ending June 30, 2014

Financial Consultant Zenoni provided the committee members with a copy of the City of Atwater Audited Financial Statements June 30, 2014, and gave a brief report. Financial Consultant Zenoni introduced Joe Arch of the JJCPA Firm. Joe Arch provided the committee members with a copy of the City of Atwater Communication with Those Charged with Governance and Communication of Internal Control Related Matters June 30, 2014 and answered any questions the committee members had regarding his report.



ADJOURNMENT:



CITY OF ATWATER



May 26, 2015

CALL TO ORDER:


ROLL CALL:

Present:


Council Member Bergman, City Treasurer Heller, Committee Chair Council Member Vineyard None Financial Consultant Zenoni TonyShukle

Regular meeting of March 9, 2015.

MOTION: City Treasurer Heller moved to approve the minutes of the regular meeting of March 9, 2015. The motion was seconded by Council Member Bergman and the vote was: Ayes: Heller, Bergman, Vineyard; Noes: None; Absent: None; The motion carried.



Tony Shukle, 2949 Hillcrest Street came forward to comment about recycling for the residents of the City of Atwater. Committee Member Bergman suggested that Mr. Shukle come the City Council Meeting tonight and bring the recycling issue up during the public forum so the recycling can be added to the City Council Agenda.

Audit and Finance Committee Minutes for May 26. 2015 Page 2

BUSINESS:

REPORTS:

Reports from the Financial Consultant (Zenoni)

Annual Review of Investment Policy

Financial Consultant Zenoni provided the committee members with a copy of the City of Atwater Statement Investment Policy Fiscal Year 2015-16, and gave a brief report, and answered any questions the committee members had regarding his report.

Inter-fund Loan Repayment Schedule Update

Financial Consultant Zenoni provided the committee members with a copy of the City of Atwater Inter-Fund Advance and Loan Policy, and gave a brief report, and answered any questions the committee members had regarding his report.

MOTION: City Treasurer Heller moved to recommend this item be reviewed and accepted. The motion was seconded by Committee Chair Council Member Vineyard and the vote was: Ayes: Heller, Bergman, Vineyard; Noes: None; Absent: None. The motion carried.

Fiscal Year 2014-2015 Audit Schedule

Financial Consultant Zenoni provided the committee members with a copy of the City of Atwater Interim Schedule Request June 30, 2015, and gave a brief report, and answered any questions the committee members had regarding his report.

Fiscal Year 2015-16 Budget

Financial Consultant Zenoni provided the committee members with a copy of the City of Atwater Budgeted Personnel Summary, and gave a brief report, and answered any questions the committee members had regarding his report.



ADJOURNMENT:



CITY OF ATWATER



June 22, 2015

CALL TO ORDER:


ROLL CALL:

Present:


Council Member Bergman, City Treasurer Heller, Committee Chair Council Member Vineyard None Financial Consultant Zenoni None

Regular meeting of May 26, 2015.

MOTION: City Treasurer Heller moved to approve the minutes of the regular meeting of May 26, 2015. The motion was seconded by Council Member Bergman and the vote was: Ayes: Heller, Bergman, Vineyard; Noes: None; Absent: None; The motion carried.


No public in attendance.

BUSINESS:

Audit and Finance Committee Minutes for June 22. 2015 Page 2

REPORTS:

Reports from the Financial Consultant (Zenoni)

Appropriations Limit Calculation

Financial Consultant Zenoni provided the committee members with a copy of the City of Atwater Appropriations Limitations, and gave a brief report, and answered any questions the committee members had regarding his report.

CalPERS Actuarial Valuation - Side Fund Liability

Financial Consultant Zenoni provided the committee members with a copy of the City of Atwater Ca/PERS Side Fund, and gave a brief report, and answered any questions the committee members had regarding his report.

MOTION: City Treasurer Heller moved to recommend this item be reviewed and accepted. The motion was seconded by Committee Chair Council Member Bergman and the vote was: Ayes: Heller, Bergman, Vineyard; Noes: None; Absent: None. The motion carried.



ADJOURNMENT:


JENNIFER DANIEL RE CORDI NG SECRETARY

CITY OF ATWATER



September 28, 2015

CALL TO ORDER:


ROLL CALL:

Present:


Council Member Bergman, City Treasurer Heller, Council Member Vineyard None Finance Director Deol Adela Saenz

Regular meeting of July 27, 2015.

MOTION: City Treasurer Heller moved to approve the minutes of the regular meeting of July 27, 2015. The motion was seconded by Council Member Bergman and the vote was: Ayes: Heller, Bergman, Vineyard; Noes: None; Absent: None. The motion carried.


No comments from the public.

REPORTS:

Reports from the Finance Director (Deol)

General Fund Budget Summary

Audit and Finance Committee Minutes for September 28. 2015 Page 2

Finance Operations Manager Deo/ provided the committee members with a copy of the City of Atwater General Fund Budget Summary, and gave a brief report, and answered any questions the committee members had regarding her report.



ADJOURNMENT:


JENNIFER DANIEL RECORDING SECRETARY

crrv OF ATWATER



October 26, 2015

CALL TO ORDER:


ROLL CALL:

Present:


Council Member Bergman, City Treasurer Heller, Council Member Vineyard None Finance Director Deal None

Regular meeting of September 28, 2015.

MOTION: City Treasurer Heller moved to approve the minutes of the regular meeting of September 28, 2015. The motion was seconded by Council Member Bergman and the vote was: Ayes: Heller, Bergman, Vineyard; Noes: None; Absent: None. The motion carried.



REPORTS:

Audit and Finance Committee Minutes for October 26. 2015 Page 2


1. Financial Update: Revenue Comparison for Four months of FY 2014-15 and FY 2015-16.

2. Utilities Rate Study for Sewer 3. CALPERS Side Funding: Selection of Financial Advisor

Finance Director Deol provided the committee members with a copy of the City of Atwater Financial Update and gave a brief report, and answered any questions the committee members had regarding her report.



ADJOURNMENT:



CITY OF ATWATER



December 14, 2015

CALL TO ORDER:

The City of Atwater Audit and Finance Committee met in special session this date at 3:30 PM in the City Council Chambers, City Hall, 750 Bellevue Road, Atwater, California; Council Member Bergman presiding.

ROLL CALL:

Present:


Council Member Bergman, City Treasurer Heller, Council Member Vineyard None Finance Director Deol None

Regular meeting of October 26, 2015.

MOTION: City Treasurer Heller moved to approve the minutes of the regular meeting of October 26, 2015. The motion was seconded by Council Member Bergman and the vote was: Ayes: Heller, Bergman, Vineyard; Noes: None; Absent: None. The motion carried.



REPORTS:

Audit and Finance Committee Minutes for December 14. 2015 Page 2


1. Financial Update (a) Fund Balance (b) Measure H (c) Five Years Financial Forecast

3. CalPERS Side Fund Restructure Options - Presentation prepared by NHA Advisors, LLC

Finance Director Deol provided the committee members with a copy of the City of Atwater Financial Update and gave a brief report, and answered any questions the committee members had regarding her report. Eric Scriven from NHA Advisors gave a brief report, and answered any questions the committee members had.



ADJOURNMENT:



GITY OF ATWATER


ACTION MINUTES

February 25,2019

REGULAR SESSION (Council Chambers)

The City of Atwater Audit and Finance Committee met in Regular Sessíon úfir.sdate at 4:26 PM in the City Council Chambers located at the Atvvater Civic Center,750 Bellevue Road, Atwater, California.

ROLL CALL:

Present:Absent:Staff Present:

Committee Members Ambriz, Heller, VierraNoneCity Manager Waterman (4:30 PM), Finance Director Deol(4:35 PM), Deputy City Clerk Del Real, Recording SecretaryPerez

Deputy City Clerk Del Real announced some housekeeping items that need to bepertormed before the meeting can commence. Sfie recommended that the firstorder of business be úo selecf a Chair and a Vice Chair. ln order to do so, asuöseguent need item is necessary.

SUBSEQUENT NEED ITEMS:

Recording Secretary Perez announced a subseguent need item requiringimmediate action subseguent to the posting of the agenda: reorganization of theAudit and Finance Committee, specifically the selection of a Chair and a ViceChair.

MOTION: Commiltee Member Vierra moved to add to the agenda thereorganization of the Audit and Finance Committee, specifically the selection of aChair and a Vice Chair. The motion was seconded by Committee Member Vierraand the vote was: Ayes: Vierra, Ambriz, Heller; lVoes.' None; Absent: None. Themotion passed.

IT AND FINANCE COMMITTEE RE

MOTION: Committee Member Vierra moved úo selecú Commiltee Member Vierraas Chair of the Audit and Finance Committee. The motion was seconded byCommiltee Member Ambriz and the vote was: Ayes: Ambriz, Heller, Vierra; Âloes,'None; Absent: None. The motion passed.

MOTION: Committee Member Heller moved úo selecf Committee Member Ambrizas Vice Chair of the Audit and Finance Committee. The motion was seconded byChair Vierra and the vote was: Ayes: Heller, Ambriz, Vierra; lVoes.' None; Absent:None. The motion passed.

Deputy City Clerk Del Real Ieft the meeting at 4:35 PM.

MINUTES

November 13,2018 - Regular meeting

MOTION: Chair Vierra moved to approve the minutes as lrsúed. The motion wasseconded by Vice Chair Ambriz and the vote was: Ayes: Ambriz, Heller, Vierra;Âloes.' None; Absent: None; The motion passed.



No one came fotward to speak at this time.

BUSINESS:

Treasurer's Report - January 31,2019

MOTION: Chair Vierra moved to receive the Treasurer's Report and recommendacceptance by the City Council. The motion was seconded by Vice Chair Ambrizand the vote was: Ayes: Ambriz, Heller, Vierra; l\loes,' None; Absent: None. Themotion passed.

C¡tV nu¿¡t an¿ ¡¡nan

REPORTS

Reports from Finance Director Deol

Financial Update

Finance Director Deol provided an update regarding the Fiscal Year 2018-19Budget including a General Fund budget summary.

Discussion for new time and day to hold Audit and Finance Committee Meeting

MOTION: Chair Vierra moved to change the regular Audit and Finance CommitteeMeeting time from 4:00 PM to 4:30 PM. The motion was seconded by Vice ChairAmbriz and the vote was: Ayes: Vierra, Heller, Ambriz; l\loes.' None; Absent:None. The motion passed.

COMMITTEE MEMBER COMMENTS:

Committee Member updates and comments

Committee Member Heller had nothing to repoft.

Vice Chair Ambriz had nothing to repoñ.

Chair Vierra had nothing to report.


No future agenda items were requested at this time.

ADJOURNMENT:

The meeting adjourned at 4:40 PM to the next regularly scheduled meeting ofMarch 25,2019.

LL

VierraAudit and Finance Committee Chair

By: Gloria Perez,Recording Secretary

CITY COUNCIL AGENDA REPORT

MEETING DATE: May 13, 2019 TO: Mayor and City Council FROM: Lori Waterman, City Manager Jeanna Del Real, Human Resources Director SUBJECT: Resolution approving and ratifying Side Letter of Agreement

with AFSCME representing Miscellaneous Bargaining Unit

RECOMMENDED COUNCIL ACTION: It is recommended that City Council: 1. Adopt Resolution No. 3086-19 approving and ratifying Side Letter of Agreement,

in a form approved by the City Attorney, between the City of Atwater and American Federation of State, County, and Municipal Employees, Local 2703, Council 57, AFL-CIO representing the Miscellaneous Bargaining Unit, pertaining to certain terms and conditions of employment; and

2. Authorize and direct the City Manager to execute the Agreement on behalf of the City.

I. BACKGROUND: The City of Atwater (“City”) and the American Federation of State, County, and Municipal Employees (“AFSCME”), Local 2703, Council 57, AFL-CIO representing the Miscellaneous Unit (“Union”) entered into its most recent Memorandum of Understanding (MOU) on July 1, 2014. The term of the current MOU expired on June 30, 2017. The City’s negotiating team began meeting with the Union on April 18, 2017. Negotiations were put on hold after the June 20, 2017 labor negotiations meeting until the Fiscal Year 2017-18 budget was adopted. Negotiations resumed on October 25, 2017. On November 1, 2017, AFSCME and the City reached a tentative agreement; however, it was voted down by the Union members.

CITY COUNCIL

Paul Creighton, Mayor Danny Ambriz John Cale Brian Raymond Cindy Vierra

Agenda Report – Resolution No. 3086-19 (Side Letter Agreement) Page 2

II. ANALYSIS: The negotiating team continued discussions with AFSCME. The City was notified that the Miscellaneous Unit was interested in proceeding separately from the Clerical Unit. Another tentative agreement was reached on March 20, 2019 with the following substantive changes to the MOU: Union Membership language changes to comply with new laws relative to employee statutory rights; changes to work week which eliminates the mandatory furloughs beginning next fiscal year; an additional week of vacation accruals for employees who have 20+ years of service; an increase in standby pay from $1.50 per hour to $2.00 per hour; allowing employees to remove Memoranda of Counseling from their employee files that are more than one year old provided that the employee has had no further incidents of any kind; a one-time retention bonus; and extending the term of the MOU through June 30, 2022. Other non-substantive changes were limited to clean up language consistent with the sick leave law and leave taken under the Family Medical Leave Act (FMLA) and the California Family Rights Act (CFRA), and clarifications regarding Temporary Upgrades and Required Certifications. All changes are outlined in the Side Letter of Agreement, attached to the Resolution. III. FISCAL IMPACTS: The fiscal impacts associated with the Side Letter of Agreement were included in Fiscal Year 2018/19 budget. IV. LEGAL REVIEW: The City Attorney’s office has reviewed the Side Letter of Agreement. V. INTERDEPARTMENTAL COORDINATION: The City Manager, the Human Resources Department, and the City Attorney’s Office have worked together and coordinated this item to present to the City Council for action. The Side Letter of Agreement was presented to the Union members on April 1, 2019. The City received notice on April 24, 2019 that a majority of the members voted in favor (12 – 7) of ratifying the Agreement. VI. PUBLIC PARTICIPATION: The public will have an opportunity to provide comments on this item prior to City Council action. VII. STEPS FOLLOWING APPROVAL: Upon approval of the Side Letter Agreement, staff will route for signatures and implement the terms of the Agreement.

Agenda Report – Resolution No. 3086-19 (Side Letter Agreement) Page 3

Submitted and Approved by: _______________________________________________ Lori Waterman, City Manager Submitted by: _______________________________________________ Jeanna Del Real, Human Resources Director Attachments:

1. Resolution No. 3086-19 2. Exhibit A to Resolution – Side Letter Agreement

CITY COUNCIL

OF THE CITY OF ATWATER

RESOLUTION NO. 3086-19

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ATWATER APPROVING AND RATIFYING SIDE LETTER OF AGREEMENT WITH AMERCIAN FEDERATION OF STATE, COUNTY, AND MUNICIPAL EMPLOYEES (AFSCME), REPRESENTING MISCELLANEOUS BARGAINING UNIT

WHEREAS, the American Federation of State, County, and Municipal Employees (“AFSCME”), Local 2703, Council 57, AFL-CIO represents the Miscellaneous employees of the City of Atwater (“City”); and WHEREAS, the term of the current Memorandum of Understanding (“MOU”) between the City and AFCME expired on June 30, 2017; and WHEREAS, on April 18, 2017, representatives from AFSCME and the City's management team began the process of working together to reach an agreement on a new contract; and WHEREAS, the representatives have reached a tentative agreement to the terms set forth in the proposed Side Letter Agreement applying certain amendments to the Miscellaneous Unit MOU, including extending the term to June 30, 2022. The City was notified on April 24, 2019 that a majority of the Miscellaneous Unit voted to ratify the proposed Side Letter of Agreement. NOW THEREFORE, BE IT RESOLVED, that the City Council of the City of Atwater does hereby approve and ratify the Side Letter Agreement, EXHIBIT "A" attached hereto and made a part herein. BE IT FURTHER RESOLVED, that the City Council of the City of Atwater does hereby authorize and direct the City Manager to sign any documents and to take any necessary measures required to implement the provisions of the Miscellaneous MOU affected by the Side Letter Agreement upon review by the City Attorney.

Resolution No. 3086-19 Page 2 The foregoing resolution is hereby adopted this 13th day of May 2019. AYES: NOES: ABSENT: APPROVED _____________________________ PAUL CREIGHTON, MAYOR ATTEST: ______________________________ LUCY ARMSTRONG, CITY CLERK

SIDE LETTER OF AGREEMENT BETWEEN THE CITY OF ATWATER (“CITY”) AND AMERICAN FEDERATION OF STATE, COUNTY AND MUNICIPAL EMPLOYEES, LOCAL 2703, COUNCIL 57, AFL-CIO (“UNION”) REPRESENTING THE MISCELLANEOUS UNIT, PERTAINING TO CERTAIN TERMS AND CONDITIONS OF EMPLOYMENT

The City and AFSCME (Union) have reached agreement concerning certain matters pertaining to terms and conditions of employment for employees covered under memoranda of understanding as they may apply to the Union. The parties specifically agree that effective May 13, 2019 the existing language in certain Sections of each MOU shall be replaced, in total, with the following language: Article 3: UNION MEMBERSHIP Section 3.2: New Hires City shall notify the Union, in writing, of all new hires within seven (7) days after the initial hire date. The information provided shall contain name, job title, department, work location, work, home, and personal cellular phone numbers, personal email on file with the City and home address. Notwithstanding the foregoing, City shall not disclose the personal email address, cellular and/or home phone number and/or home address of any employee who submits a written request that such information remain private. The City shall provide a list of all previously stated information for all employees working for the City in the covered classifications at least once every 120 days (January 1, May 1 and September 1 of every year), with the exception of those employees who have requested in writing that the information remain private. When a new employee orientation/on boarding is scheduled, the Union will receive an invitation to such at least ten (10) days in advance of scheduled date of orientation/on boarding unless there is an unforeseeable urgent need requiring a shorter notice period, pursuant to California Government Code section 3556. City will allow the Union to meet with new employees hired into the bargaining unit for a total of 30 minutes during the employee orientation. Payment of dues shall be by payroll deduction, after the City receives written authorization from the Union to make these deductions. Payroll deductions for new members authorizing dues deduction will become effective the first of the pay period following the date of written authorization by the Union to the City. Payment of dues shall be by payroll deduction. Upon receipt of written certification by the Union that an employee has signed a deduction authorization, the City will deduct the appropriate dues or fees from the employee’s pay, as established and as may be changed from time to time by the Union and will remit such dues or fees to the Union. Employee requests to cancel or change deductions must be directed to the Union, rather than City. Payroll deductions will cease or be modified upon receipt of written

Side Letter of Agreement, AFSCME; May 13, 2019 Page 2 certification from the Union that the employee has revoked or modified the deduction authorization for dues or fees. Payroll deductions for new members authorizing dues deduction will become effective the first of the pay period following City’s receipt of the written certification of authorization. Revocations or modifications of authorizations will become effective the first of the pay period following City’s receipt of the written certification of revocation or modification. Neither the City nor the Union will discriminate against any unit member because of the exercise of their statutory rights. In accordance with Government Code 1157.12, the Union agrees to hold the City harmless from all claims, demands, suits or other forms of liability that may arise against City for or on account of any deduction made from the wages of such employees pursuant to this MOU. Section 3.3 Voluntary Contributions to “AFSCME PEOPLE” The City agrees to deduct from the paycheck of all employees, who have elected to contribute and are covered by this Memorandum of Understanding, voluntary contributions to AFSCME PEOPLE (Public Employees Organized to Promote Legislative Equality). The Union shall notify the City of the monthly amounts designated by each contributor/employee that are to be deducted from his/her paycheck on a semi-monthly basis for each period worked. The employee shall make the designation for the voluntary contribution. The City shall transmit to AFSCME Local 2703 on a semi-monthly basis in one (1) check the total amount deducted along with a roster indicating the name of each employee on whose behalf a deduction is made and the amount deducted from that employee’s paycheck. Delete Section 3.4 in its entirety (Mandatory Compliance) Renumber Sections 3.5 – 3.14 accordingly Article 6: Salaries, Section 6.1: Salary Ranges Delete Sections A and B in their entirety and replace with: Effective in the current pay period following adoption of a Resolution ratifying this MOU by the City Council, members in the AFSCME labor group shall receive a 1.5% salary increase. Article 7: Work Week, Section 7.2: Scheduling A. All Regular Full-Time employees shall be required to take twenty-six (26)

furlough days per fiscal year. Contingent upon adoption of a balanced fiscal year 2019/20 budget and the assumption that the City can reasonably sustain a balanced budget in subsequent years, furloughs shall be eliminated effective the

Side Letter of Agreement, AFSCME; May 13, 2019 Page 3

later of 1) the first pay period in fiscal year 2019/20 or 2) the adoption of the 2019/20 budget with no furloughs.

B. Employees shall be entitled to two (2) days off per work week. Notwithstanding the foregoing, the City and the Union have agreed to a compressed work schedule consisting of a four (4) day work week, with Regular Full-Time employees working nine (9) hours each day, thereby creating a work week consisting of 36 hours of work. Upon elimination of the twenty-six (26) furlough days per fiscal year, employees will return to a five (5) day work week, Monday through Friday, with Regular Full-Time employees working eight (8) hours each day.

Section 8.3: Vacation B. Accrual Rates

Regular Full-Time employees accrue vacation at the following rates: Date of Hire - Year 4 3.33 hours per qualifying pay period Years 5 – 9 5 hours per qualifying pay period Years 10 -19 6.67 hours per qualifying pay period Years 20 and up 8.33 hours per qualifying pay period

Section 8.5: Sick Leave A. General Rules

6. An employee who knows that he/she will need to be absent from his/her regular duties or responsibilities in advance of the date on which the leave is to be taken shall notify his/her Supervisor as soon as the employee becomes aware of the need for leave. When the need to use sick leave is not foreseeable, the employee shall notify his/her Supervisor as soon as practicable. In all cases, the employee must complete a Personnel Action Form (PAF).

B. Accrual Rates

There are twenty-four (24) pay periods during each calendar year in which employees accrue sick leave. Eligible employees accrue sick leave during each pay period in which the employee is on paid status at the rates set forth in this Section. 1. Regular Full-Time Employees – Regular Full-Time employees accrue paid

sick leave at the rate of one (1) hour of paid sick leave for every twenty (20) hours worked in a pay period, up to eighty (80) hours worked in a pay period. Employees who work eighty-one (81) to one hundred twenty (120) hours in a


pay period do not earn additional paid sick leave. Employees who work more than one hundred twenty (120) hours in pay period earn an additional one (1) hour of paid sick leave for every thirty (30) hours worked above the one hundred twenty (120) hours in the pay period. The paid sick leave accrual schedule for Regular Full-Time employees is illustrated in the following chart:

Hours Worked or on Paid Status* Per Pay Period

Hours of Sick Leave Accrued Per Pay Period

1-20 hours worked 1 hour accrued

21-40 hours worked 2 hours accrued



120-plus hours worked 1 additional hour is accrued for every 30 hours worked over 120; e.g. 5 hours total will be accrued after 150 hours worked

* Paid Status includes hours worked or compensated using any accrued leave. While an employee is receiving a non-City paid benefit (such as workers’ compensation or disability) and employee has elected to supplement said benefit with accruals during any pay period, employee shall accrue sick leave according to the chart above based on the number of hours compensated using accrued leave. All leave donated under the “Catastrophic Leave” section of this MOU is excluded from this section. Employees shall not accrue sick leave on donated leave.

2. All Other Employees covered under this MOU – All employees other than

Regular Full-Time employees accrue paid sick leave at the rates shown in the following chart:

Hours Worked or on Paid Status* Per Pay Period

Hours of Sick Leave Accrued Per Pay Period

1-26 hours worked 1 hour accrued



79-plus hours worked 1 additional hour for every 30 hours worked over 79; e.g. 4 hours total will accrue after


109 hours worked

See above for definition of “Paid Status.” ARTICLE 9: OTHER COMPENSATION Section 9.0: One-time Retention Bonus Retention Bonus Effective the pay period following ratification by the Association and the City Council, every regular full-time member shall receive a one-time retention bonus in the amount of $500. Every regular reduced hour member shall receive a one-time retention bonus ($500 pro-rated) based on regular work hours as indicated in appointing Personnel Action Form. 9.2: Standby Pay A. Employees on standby shall receive compensation at the rate of $2.00 per hour

for every hour that the employee is on standby, except those hours which the employee is called back to work. When an employee is called back to work, compensation shall be determined based upon the parameters set forth in Section 9.3.

9.8: Uniform and Safety Equipment A. …

B. … C. … D. The City shall provide Occupational Safety and Health Administration (OSHA)

approved personal protective equipment and training for employees who are required to work in a hazardous work environment (as defined by OSHA).

Section 9.10: Temporary Upgrade When an employee is assigned by a Department Director to perform duties in addition to those that fall within the employee’s job description, the employee shall receive a salary increase of up to ten percent (10%) during the pay period that the employee is actually performing the additional duties on an hour by hour basis. If an employee is not regularly performing the duties of the assignment (defined as performing the duties more than 50% of the time), assignment pay shall be given on an hour for hour basis. If an employee is out of work as a result of an industrial injury, a non-industrial injury, or for any other reason, the employee’s assignment pay shall be suspended effective the beginning of the pay period following the last day the employee worked. Assignment pay shall be reinstated

Side Letter of Agreement, AFSCME; May 13, 2019 Page 6 the first pay period following the return of the employee to work provided that the employee is cleared to perform the assignment. The actual amount of the salary increase shall be based upon the quantity and quality of the additional duties being performed, as determined in the sole discretion of the City Manager. Section 9.11: Required Certification If a test or required training for renewal of a mandatory certification or license is only offered during the normal working hours of an employee, and such certification or license is required by the City for the employee's job classification, the City will pay costs directly related to taking the required test or participating in the required training including registration fees, course materials, and travel expenses in accordance with the City’s Travel Policy. The employee must take the test or participate in the required training at the site which is closest to Atwater and must give sufficient advance notice to permit the City to cover the employee's absence. If the test or required training is offered outside of the normal working hours of an employee, the employee shall have the option to switch their day off to the day of the test or required training within the same workweek on a day that falls after the test or required training. When an employee is given time off with pay to take the test or participate in the required training, the time spent by the employee to take the test or participate in the training shall not count as hours worked for purposes of computing overtime. If the employee elects not to switch his/her day off with the date of the test or required training, the employee shall not be paid for the time spent taking the test or participating in the test or the required training. Section 12.1: General rules Related to Disciplinary Action A. … B. At the employee’s request, Memorandums of Counseling and Written

Reprimands more than one (1) year old shall be removed from the employee’s personnel file following issuance of the employee’s performance evaluation that year provided no further incidents of any kind have occurred.

C. Medical examination and/or fitness for duty examinations …… Article 15, Section 15.1: Leave of Absence without Pay A leave of absence without pay may be granted to an employee provided the employee has first used all accruals. All requests for leaves of absence without pay, regardless of length, shall be submitted to the City Manager. Such leaves shall not exceed a period of twelve (12) weeks unless a finding of unusual and special circumstances is made and granting the leave will not cause an undue hardship on the City. This section shall not apply to qualifying leave under the definition of the Family Medical Leave Act (FMLA) and California Family Rights Act (CFRA). Subject to the law, employees are entitled to paid or unpaid leave and do not require City Manager

Side Letter of Agreement, AFSCME; May 13, 2019 Page 7 approval. Employees exercising leave under this section must follow the City’s FMLA/CFRA policy. ARTICLE 22: TERM OF AGREEMENT A. This MOU shall be effective July 1, 2017 and shall remain in full force and effect

through June 30, 2022. B. ….

C. ….

D. Replace existing language with the following: During the Term of this MOU,

either party retains the right to reopen the MOU for any reason. This may occur only once in each calendar year. Negotiations shall begin no later than thirty (30) days from the date of receipt of the request.

All other terms and conditions of the current agreement will remain in full force and effect through June 30, 2022. FOR THE UNION: FOR THE CITY: ______________________________ ________________________________ Mary McWatters, Business Agent Lori Waterman, City Manager AFSCME Local 2703, Council 57, FL-CIO City of Atwater MISCELLAENOUS GROUP REPRESENTATIVE: _______________________________ ________________________________ Ryan Ward Jeanna Del Real Water Operator II Human Resources Director City of Atwater City of Atwater ________________________________ Douglas White City Attorney City of Atwater


MEETING DATE: May 13, 2019 TO: Mayor and City Council FROM: John Slate, Battalion Chief SUBJECT: Resolution authorizing grant application submittal to San

Joaquin Valley Air Pollution Control District for the Emergency Vehicle Replacement Program

RECOMMENDED COUNCIL ACTION: It is recommended that City Council: • Adopt Resolution No. 3085-19 authorizing a grant application submittal to the San

Joaquin Valley Air Pollution Control District for the Public Benefit (Emergency Vehicle Replacement Program) Grant Program and authorizes and directs the City Manager to execute all documents related to the grant submission and implementation, if awarded, on behalf of the City.

I. BACKGROUND: The City is constantly looking for new and innovative ways to deliver service to the residents of Atwater. This request is consistent with those objectives. The San Joaquin Valley Air Pollution Control District (SJVAPCD) provides incentive funding to Municipalities to replace existing in-use emergency vehicles with new reduced-emission replacement vehicles. Funding is on a first-come basis and must meet specific program criteria and deemed eligible by SJVAPCD staff. The Atwater City Fire Department must own the new vehicle for a five (5) year period and maintain replacement value insurance for the vehicle, submit reports on vehicle usage and other relevant activity data throughout the project life to the SJVAPCD. The grant pays for emergency vehicles as described in the California Vehicle Code 165 including fire apparatus, pumpers, ladder trucks and water tenders. Participants

CITY COUNCIL


Agenda Report – Resolution No. 3085-19 Page 2

must render existing replacement vehicle permanently inoperable in accordance with established district criteria. II. ANALYSIS: The Department seeks to leverage grant funding from the San Joaquin Valley Air Pollution Control District to purchase one (1) new fire apparatus with a gross vehicle weight rating over 14,000 lbs. This emergency vehicle will provide enhanced efficiency for the drivers, while controlling the impact of one (1) older emergency vehicle on the air basin. Projects will be funded up to 80% of the eligible cost, not to exceed $30,000 per ton of emissions reduced. For vehicles that are designated in disadvantaged communities of low income communities, projects will be funded up to 90% of eligible costs not to exceed $30,000 per ton of emissions reduced. The City qualifies as a disadvantaged community. Participant must submit log books, maintenance records and proof of annual miles traveled in the emergency vehicle to be replaced. The amount of funding provided per emergency vehicle is expected to vary significantly based on specific vehicle miles traveled, fuel usage and age of vehicle. III. FISCAL IMPACTS: It is not yet known how much the City will be awarded to replace the existing emergency vehicles that are currently in use. The SJVAPCD is still in the process of determining the structure of this grant application. Staff will have to determine if the amount of funding offered to the City to replace the existing emergency equipment is fiscally responsible for the City. Should the City be awarded grant funding, staff will bring back a budget amendment to provide for the revenue and the expenditure.

IV. STEPS FOLLOWING APPROVAL:

Upon approval, the City Manager will execute the grant application and any necessary documents related to the grant application on behalf of the City.

Submitted by:_______________________________________________ John Slate, Battalion Chief Approved by: _______________________________________________ Lori Waterman, City Manager Attachment: Resolution No. 3085-19

CITY COUNCIL


RESOLUTION NO. 3085-19

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ATWATER AUTHORIZING GRANT APPLICATION SUBMITTAL TO SAN JOAQUIN VALLEY AIR POLLUTION CONTROL DISTRICT EMERGENCY VEHICLE REPLACEMENT PROGRAM

WHEREAS, the San Joaquin Valley Air Pollution Control District (SJAVPCD) is seeking applications to provide incentives to replace existing in-use emergency vehicles with new reduced-emission replacement vehicles; and WHEREAS, the purpose of the Emergency Vehicle Replacement Program is to provide local public agencies opportunities to replace existing in-use emergency vehicles with new reduced emission replacement emergency vehicles which will provide a direct benefit to Valley residents; and WHEREAS, the City of Atwater is proposing submittal of an application for purchasing one (1) reduced-emission emergency vehicle on behalf of the City. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Atwater does hereby authorize the submission of a grant application to the SJVAPCD for the Public Benefit (Emergency Vehicle Replacement Program) to request funding for the purchase of one (1) new reduced-emission fire apparatus. BE IT FURTHER RESOLVED that the City Council of the City of Atwater does hereby authorize and direct the City Manager to sign and submit the application along with all required necessary documentation and all documents required to implement the Emergency Vehicle Replacement Program on behalf of the City, if awarded.

Resolution No. 3085-19 Page 2

The foregoing resolution is hereby adopted this 13th day of May 2019. AYES: NOES: ABSENT: APPROVED: ________________________________ PAUL CREIGHTON, MAYOR ATTEST: _______________________________ LUCY ARMSTRONG, CITY CLERK

CITY COUNCIL


ORDINANCE NO. CS 1013

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ATWATER APPROVING ZONE CHANGE NO. 19-1 CHANGING THE ZONING DESIGNATION OF A 39 LOT SUBDIVISION, ASPENWOOD SUBDIVISION (LEGACY ESTATES), TO LOW DENSITY RESIDENTIAL (R-1)(10) LOCATED EAST OF SHAFFER, SOUTHEAST OF SANTA FE AND NORTH OF CAMELLIA DRIVE

WHEREAS, on March 20, 2019 the Community Development and Resource Commission (“CDRC” of the City of Atwater reviewed Zone Change No. 19-1 as submitted by FQC Inc, requesting to change the land designation of a 39 lot subdivision commonly referred to as “Aspenwood Subdivision” from Planned Development 28 (PD-28) to Low Density Residential (R-1)(10). This site is located east of Shaffer, southeast of Santa Fe and North of Camellia Drive; and WHEREAS, the CDRC of the City of Atwater made the recommendation to the City Council to amend the zoning for this project; and WHEREAS, this project was found by the CDRC to be categorically exempt from the provisions of the California Environmental Quality Act (CEQA) 15305 “class 5”; and WHEREAS, the site can accommodate the proposed use and not have a detrimental effect on the health, safety, and welfare of the neighborhood nor have any adverse effect on the community. NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF ATWATER AS FOLLOWS: Section 1: Pursuant to Section 17.44.060 (D)(1) of the Atwater Municipal Code, the City Council of the City of Atwater does hereby amend the zoning map of the City and approves Zone Change No. 19-1 to reflect this subdivision as Low Density Residential, R-1-10 subject to the development standards as adopted for this district and further pursuant to provisions of said code section referenced above do serve notice of the following conditions to any prospective property owner of the limitations of this entitlement as follows:

Ordinance No. CS 1013 Page 2

1. That the owner/developer of any lot or lots within this project shall comply with the most current California Code of Regulations Title 24, parts 1 through 12, the most current Health and Safety Codes and the most current Fire and Life Safety Codes, all along with the California State Amendments. All building permit applications received by the City of Atwater Building Division on or after January 1, 2015, shall comply with parts 1 through 10 and part 12 of the 2016 edition of the California Code of Regulations Title 24.

2. All plans generated shall be generated by an Architect or Engineer licensed within

the State of California. 3. That the developer/applicant for each unit shall control dust during the course of

construction. 4. That the applicant/developer shall cause to be planted street tree(s) approved by

the Parks Division of the Public Works Department as part of the landscaping plan for each unit.

5. That the applicant/developer for each unit shall install, consistent with City

ordinance, front, and exterior side-yard landscaping equipped with 7-day automatic irrigation systems prior to the issuance of certificate of occupancy.

6. That the applicant/developer for each unit shall apply to the Public Works

Department for connection to City Water and Sewer and pay all costs associated with connection. All other utilities are the sole responsibility of the applicant/developer and the payment of all fees.

7. That the applicant/developer for each unit shall install a water meter meeting the

standards established by the Public Works Department. 8. That any improvement within the public rights of way are subject to the contractor

first obtaining an encroachment permit. Construction shall conform to all adopted City standards.

9. That the applicant/developer shall make visible from the street the site address. 10. That the applicant/developer shall comply and conform to the Residential Design

Guidelines for the City of Atwater adopted April 11, 2011. 11. That no two story units shall be allowed on lots that abut the railroad tracks, on lots

that abut the commercial parcel to the north, or on lots that abut Shaffer Road. 12. That the applicant/developer shall comply with the adopted resolutions for the

Tentative Subdivision Map for this project.


13. That if the project is not served by a master discharge agreement with the Merced Irrigation District, that the applicant/developer shall execute any and all documents with the District to ensure proper discharge of storm water and the payment of all fees.

14. That the applicant/developer shall pay to the City $58.42 dollars per capita per

year for impact to County services (per City/County Revenue Tax Sharing Agreement) in addition the Public Safety Service District.

15. That the applicant/developer shall agree to pay fees associated with any and all

maintenance districts established for the project. 16. That the applicant/developer shall agree to pay fees associated with any

Community Facilities District formed in support of the project. 17. The applicant or applicant’s successor in interest shall indemnify and defend and

hold harmless the City of Atwater, its agents, officers and employees from any and all claims, actions, or proceedings against the City of Atwater, its agents, officer and employees to attack, set aside, void or annul any approval by the City of Atwater and its advisory agency appeal board or legislative body concerning this application, which action is brought within applicable statutes of limitation. The City of Atwater shall promptly notify the applicant or applicant’s successor in interest of any claim or proceedings and shall cooperate fully in the defense. If the city fails to do so, the applicant or applicants successor in interest shall not thereafter be responsible to defend, indemnify or hold the City harmless. This condition may be placed on any plans or other documents pertaining to this application.

Section 2: Notice of the public hearing regarding Zone Change No. 19-1 was published in a newspaper of general circulation and notices of the public hearing were mailed to all interested parties and property owners within 300 feet of the property, according to the most recent assessor’s roll. Section 3: Environmental impacts for the project have been reviewed and assessed by the City pursuant to the California Environmental Quality Act (CEQA) (Public Resources Code section 21000 et seq.; California Code of Regulations title 14, section 15000 et seq.). The project is categorically exempt from CEQA pursuant to Section 15305 “class 5.” of Title 14 of the California Code of Regulations applicable to minor alterations in land use limitations. Section 4: If any section, subsection, sentence, clause, phrase, or word of this Ordinance is for any reason held by a court of competent jurisdiction to be unconstitutional or invalid for any reason, such decision shall not affect the validity of the remaining portions of the Ordinance. The City Council of the City of Atwater hereby declares that it would have passed this Ordinance and each section, subsection, sentence, clause, phrase, and word


thereof, irrespective of the fact that any one or more section(s), subsection(s), sentence(s), clause(s), phrase(s), or word(s) be declared invalid. Section 5: This ordinance shall take effect and be in force thirty (30) days after the date of its passage and the City Clerk shall certify to the adoption of this ordinance and shall cause the same to be published in the Atwater Signal within fifteen (15) days from the adoption hereof. INTRODUCED: May 6, 2019 ADOPTED: AYES: NOES: ABSENT: APPROVED: ________________________________ PAUL CREIGHTON, MAYOR ATTEST: _________________________________ LUCY ARMSTRONG, CITY CLERK

Kim Bengtson-Jennings

From: Sent: To: Subject: Attachments:

Slate, John@CALFI RE <[email protected]> Thursday, April 18, 2019 10:17 PM Kim Bengtson-Jennings Atwater City MDA Boot Drive May 25th MDA How your doanations make a difference (1 ).pdf

Kim,

This years MDA fill the boot will be held on May 25th, 2019. We will use the same locations and engine rotations as last year. I attached a document that explains how all MDA proceeds are spent. Last year Atwater City Fire Department raised $3,699.69 and all proceeds went to the MDA. Lunch for the participants will be provided by a MDA representative to each location site. Start time will be 0700 - 1300. ·

Atwater Location: Five corners, Truck 42 & Engine 41, Team leader Blaine Lopes.

Santa Nella Location: Highway 33 X 1-5 (Taco bell area) Engine 71, Engine 72 and one Los Banos B engine, Team leader Roger Cervantes

Gustine Location: Highway 33 X 140 Engine 74 and one Los Banos B engine, Team leader Pat Borelli

McKee/ Merced Location: Highway 59 N X Bellevue Road Engine 85 (Round robin rotations with 81 and 86} Team leader Ralph Gladwin

Livingston Location: Winton Parkway X Joseph Gallo Drive Engine 96, Team leader Dave Bates.

Thanks,

John Slate Battalion Chief CAL FIRE/ Atwater City Fire Department Madera-Mariposa-Merced Unit 699 Bro-culw~ Ave-: Atwater CciU{orV\,Ui(, 95301 Cell: (209)761-6520

From: Kim Bengtson-Jennings <[email protected]> Sent: Wednesday, April 17, 2019 6:52 PM To: Slate, John@CALFIRE Subject: Re: Boot Drive

Warning: this message is from an external user and should be treated with caution. Please send me information regarding this year's MDA "Boot Drive" for the packet.

Thanks,

Kim Bengtson-Jennings Deputy City Clerk/Human Resources Analyst City of Atwater 750 Bellevue Road Atwater, CA 95301 (209) 357-6204

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SPECIAL OUTDOOR EVENTS APPLICATION/PERMIT

STAFF APPROVAL __ _.....- ... ,,.-~-•<.-<•~·

CHECKLIST: Application Recei d: \C • •

Permit o. j _ ~ Prior to submitting your application, please confirm by checking (✓) the boxes bel wf!\1t~HiiJotlf~i~@JU RCES have been completed.

,RI) Have you completed the "Description of Event" below and signed the application on Page 3? (Incomplete information may delay your application.)

~) Have you allowed at least 3-4 weeks prior to the event for your application to be approved?

rii, Have you obtained the required insurance, and do you have proof of that insurance to submit with your application? (See "Insurance" section on Page 3 for details)

.kP Has the Indemnification Agreement on Page 2 of this application been signed by an authorized representative of the sponsoring organization?

After obtaining approval from the City, but prior to the event, please make sure you have done the following:

D Have you read the conditions of approval and is your event prepared to abide by all conditions?

□ Have you given Atwater Public Works Department notice of the proposed street closure?

D Have you arranged for "Special Event" City Refuse Service by calling 357-6730?

D Have you made arrangements for supplying any necessary electricity to your event? (Plugging outlets into City light poles is NOT allowed unless prior approval is obtained. Please call City Public Works at 357-6370 for additional information.)

D If you are selling alcohol at your event, have you obtained an Alcoholic Beverage Control (ABC) license or permit for this event?

DESCRIPTION OF EVENT:

APPLICANT/EVENT SP~SOR

coNTAcT PERsoN Lesa r An I c. ADDRESS 'J..]0 ] s()H n: g (2-f., A-1,,,.Ja..-t,e 1 E-MAIL e.0,11:1}0. lftl./@.sk.?c~lnbq L, 11,-e..-f· DESCRIPTION OF EVENT (include equipment, obstructions, etc., to be placed in the encroachment area)

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Special Outdoor Events Application -- Page 1

DESCRIPTION OF EVENT (Continued):

THIS EVENT WILL SELL OR SERVE ALCOHOL: Yes X No

ESTIMATED NUMBER OF PEOPLE IN ATTENDANCE: ........ "=.._O_D_·· _ DATE(S) AND JTIMES. OF USE (include time for setup and takedown as well as event time): civ1r 9,0 fi ni.v, - . ;30 ff!"\

(PLEASE ATTACH A MAP TO IDENTIFY PARADE ROUTES, STREET CLOSURES, AND ANY OBSTRUCTIONS TO BE PLACED WITHIN THE RIGHT-OF-WAY)

If this event requires closure of street, please see below.

LIST ALL STREETS PROPOSED FOR CLOSURE:

STANDARD CONDITIONS FOR STREET/PARKING LOT CLOSURES:

1. Event Sponsor must remove all equipment, trash and debris generated by the event prior to the expiration of the permit.

2. Supervision/security shall be provided by event sponsor to ensure the safety of event participants and the public if required by the Police Department.

3. Event Sponsor shall be responsible for insuring that all vendors involved with the event obtain a City of Atwater business license (if needed).

4. The applicant shall arrange and pay for special event City Refuse service by contacting Public Works at (209) 357-6370.

5. The applicant shall comply with the Indemnification and Insurance provisions as outlined on Page 3 of this application.

6. Event sponsor shall provide and maintain a minimum 22-foot-wide emergency vehicle access path into and through the closure area at all times via movable barriers. Fire hydrant access shall not be blocked at any time whatsoever.

(Additional conditions may be imposed as deemed necessary)

INDEMNIFICATION: Event Sponsor shall indemnify, protect, defend, save and hold City, its officers, employees, agents, and volunteers harmless from any and all claims or causes of action for death or injury to persons, or damage to property resulting from intentional or negligent acts, errors, or omissions of Event Sponsor or Event Sponsor's officers, employees, agents, volunteers, and participants during performance of the Event, or from any violation of any federal, state, or municipal law or ordinance, to the extent caused, in whole or in part, by the willful misconduct, negligent acts, or omissions of Event Sponsor or its officers, employees, agents, volunteers, or participants, or resulting from the negligence of the City, its officers, employees, agents, and volunteers, except for loss caused solely by the gross negligence of the City. Acceptance by City of insurance certificates and endorsements required for this Event does not relieve Event Sponsor from liability under this indemnification and hold harmless clause. This indemnification and hold harmless clause shall apply to any damages or claims for damages whether or not such insurance policies shall have been determined to apply.


..

INSURANCE: Prior to engaging in the event, Event Sponsor shall complete and file with the City a special events, general liability and automobile policy naming the City and its officers, agents, and employees as additional insured, must be submitted to the City prior to the event. This certificate shall provide that thirty (30) days written notice of cancellation shall be given to the City, in a minimum amount of one million dollars ($1,000,000) per occurrence and two million dollars ($2,000,000) aggregate, with the City of Atwater named as an additional insured party.

Please submit application and insurance certificate to:

City of Atwater Attn: Jeanna Del Real, Risk Manager City Clerk/Human Resources Department 750 Bellevue Road Atwater, CA 95301

(209) 356-3177 (Fax) [email protected] (Email)

REFUSAL OR REVOCATION OF PERMIT: Failure to comply with any law, rule or regulation applicable to the use of said streets shall be grounds to revoke any such permit and, in such circumstances, the Chief of Police shall immediately revoke said permit. The Event Sponsor or permit holder, in such case, shall have the right to appeal said revocation to the City Council.

The undersigned declares under penalty of perjury that he/she has the authority to sign for and bind the Event Sponsor to the conditions imposed by the City upon the granting of this Application.

Signature: .4/4 Print Name: UsC-tc A .... 1! . ., D t --, ,,., . ...,, I a a e: ,s -.,z:..,r-... 1

OFFICE USE

APPLICATION APPROVED SUBJECT TO CONDITIONS

BY DATE _ Human Resources/Risk Management Department (357-6204)

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Atwater Pentecost Association P.O. Box 331, Atwater CA 95301

March 27, 2019

Dear Atwater City Counsel,

The Atwater Pentecost Association was founded in 1911 in the city of Atwater, California. It is a non-profit organization which serves our community. Throughout the year our organization organizes several events that preserve the Portuguese culture, heritage and traditions. On June 30, 2019, we have our annual festival that includes a ceremonial parade from the APC Hall to St. Anthony's Church; and then a return parade back to the APC grounds for a public feeding of sopas for the community.

Our committee would like to request permission from the Atwater City Counsel to conduct our annual parade route on June 30, 2019 as noted below.

8:00 AM - Parade formation in front of the APC Hall - 1420 Third St. Atwater, Ca.

8:30 AM - Parade route begins to St. Anthony's Church from the APC Hall. Route to be as follows (APC 1420 Third St, to Broadway, to Winton Way, to St. Anthony's Church).

11:15 AM - Parade return route to the APC Hall from St. Anthony's Church. Route to be as follows (St. Anthony's Church, to Winton Way, to Grove, to Third St, to the APC Hall).

The Atwater Pentecost Committee thanks the Atwater City Counsel in advance for considering our annual parade request. Please contact me at 209-355-8062 for any additional requested information.

2019 - President of Atwater Pentecost

CITY OF ATWATER, CALIFORNIA

ANNUAL FINANCIAL REPORT

FOR THE FISCAL YEAR ENDED

JUNE 30, 2018

Prepared by:

Finance Department

This page intentionally left blank.

City of Atwater, California Basic Financial Statements For the year ended June 30, 2018 Table of Contents

i

Page

Table of Contents .................................................................................................................................. i Letter of Transmittal ........................................................................................................................... v Organization Chart ......................................................................................................................... viii List of Officials .................................................................................................................................... ix

Independent Auditors’ Report ........................................................................................................... 1 Management’s Discussion and Analysis (Required Supplementary Information) ....................... 3 Basic Financial Statements:

Government-Wide Financial Statements: Statement of Net Position ........................................................................................................ 19 Statement of Activities ............................................................................................................ 20

Fund Financial Statements:

Governmental Funds: Balance Sheet ................................................................................................................................ 24 Reconciliation of Governmental Funds Balance Sheet to the Statement of Net position ........................................................................................................ 25 Reconciliation of Fund Basis Balance Sheet to Government-wide Statement of Net position – Governmental Activities ............................................................. 26 Statement of Revenues, Expenditures, and Changes

in Fund Balances – Governmental Funds ................................................................................ 27 Reconciliation of Fund Basis Statements to Government-wide Statement of Activities ............................................................................................................ 28 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities ............................... 29

Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual – General Fund ................................................................. 30 Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual – Measure H Special Revenue Fund ................................ 31

FINANCIAL SECTION

INTRODUCTORY SECTION

City of Atwater, California Basic Financial Statements For the year ended June 30, 2018 Table of Contents, Continued

ii

Page Basic Financial Statements, Continued:

Fund Financial Statements, Continued:

Proprietary Funds: Statement of Net position – Proprietary Funds .............................................................................. 34 Statement of Revenues, Expenses, and Changes in Fund Net position – Proprietary Funds ..................................................................................................................... 36 Statement of Cash Flows – Proprietary Funds .............................................................................. 38

Fiduciary Activities: Statement of Fiduciary Net position – Fiduciary Activities .......................................................... 42 Statement of Changes in Fiduciary Net position – Private Purpose Trust Funds .......................... 43

Notes to Basic Financial Statements .......................................................................................... 48

Required Supplementary Information: Schedule of Contributions – Miscellaneous Plan .......................................................................... 96 Schedule of Contributions – Safety Plan ....................................................................................... 97 Schedule of City’s Proportionate Share of Net Pension Liability – Miscellaneous Plan .............. 98 Schedule of City’s Proportionate Share of Net Pension Liability – Safety Plan ........................... 99 Schedule of Changes in the Net OPEB Liability and Related Ratios…………………………...100 Net OPEB Liability Schedule of Contributions…………………………………………………101

Other Supplemental Information:

Combining and Individual Fund Financial Statements and Schedules:

Nonmajor Governmental Funds: Combining Balance Sheet ............................................................................................................ 105 Combining Statement of Revenues, Expenditures, and Changes

in Fund Balances .................................................................................................................... 106

Nonmajor Special Revenue Funds: Combining Balance Sheet ............................................................................................................ 110

Combining Statement of Revenues, Expenditures, and Changes in Fund Balances .................................................................................................................... 114 Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget to Actual – Police Grants .......................................................................................... 117 Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget to Actual – Gas Tax ................................................................................................... 118 Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget to Actual – Local Transportation .............................................................................. 119 Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget to Actual – Facility Impact Fee Revolving ............................................................... 120

City of Atwater, California Basic Financial Statements For the year ended June 30, 2018 Table of Contents, Continued

iii

Page Combining and Individual Fund Financial Statements and Schedules, Continued:

Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget to Actual – Community Development Block Grants ................................................ 121 Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget to Actual – CDBG Program Income ......................................................................... 122

Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget to Actual – Home Investment Partnership Program ................................................. 123

Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget to Actual – Housing Authority .................................................................................. 124

Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget to Actual – Bloss Estate ............................................................................................ 125

Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget to Actual – Narcotics Program .................................................................................. 126

Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget to Actual – Neighborhood Stabilization .................................................................... 127

Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget to Actual – Applegate Interchange ............................................................................ 128

Combining Balance Sheet – Maintenance District Special Revenue Funds ............................... 130 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – Maintenance District Special Revenue Funds ....................................... 138 Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget to Actual – Maintenance District Special Revenue Funds ................................ 145-174

Internal Service Funds: Combining Statement of Net position – Internal Service Funds ................................................ 176 Combining Statement of Revenues, Expenses, and Changes

in Net position – Internal Service Funds .............................................................................. 178 Combining Statement of Cash Flows – Internal Service Funds ................................................. 180

Agency: Combining Statement of Assets and Liabilities – Agency Funds .............................................. 182 Combining Statement of Changes in Assets and Liabilities– Agency Funds ............................ 183

Other Supplemental Information: Schedule of Debt Service Coverage ........................................................................................... 186

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 ..................................................... 187

iv


May 9, 2019

To the Honorable Mayor and Members of the City Council and Citizens of the City of Atwater:

We are pleased to submit the City of Atwater's Annual Financial Report for the fiscal year ended June 30, 2018. The financial statements are presented in conformity with generally accepted accounting principles (GAAP) and audited in accordance with generally accepted auditing standards. It is the policy of the Council that a licensed certified public accountant conducts an annual audit at the end of each fiscal year and issue a complete set of financial statements to be submitted to them.

Management is responsible for the completeness and reliability of the information contained in this report, based on a comprehensive framework of internal control that has been established for this purpose. We believe the data presented in this report is accurate in all material respects and all statements and disclosures necessary for the reader to obtain a thorough understanding of the City's financial activities have been included.

Management of the City has established an internal control framework that is designed both to protect the City's assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the City's financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the City's framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatements.

While traditionally addressed to the governing body of the City, this report is intended to provide relevant financial information to the citizens of the City of Atwater, City staff, creditors, investors, and other concerned readers. We encourage all readers to contact the Finance Department with any questions or comments concerning this report.

The City's financial statements have been audited by JJACPA, Inc., a firm of certified public accountants. The goal of the independent audit is to provide reasonable assurance that the financial statements of the City for the fiscal year ended June 30, 2018, are free of material misstatements. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Based upon the audit, the independent auditors concluded that there was reasonable basis for rendering an unqualified opinion, which states that the City's financial statements for the fiscal year ended June 30, 2018, are fairly presented in conformity with GAAP. 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 statements in the form of Management's Discussion and Analysis (MD&A). This letter of transmittal is designed to complement MD&A and should be read in conjunction with it. The City's MD&A can be found immediately following the report of the independent auditors.

Profile of the City of Atwater

The City of Atwater was incorporated in 1922 and is located on State Route 99 in Merced County, California in a 6 square mile area approximately 8 miles west-northwest of Merced. The City has a current population of 29,397. The City of Atwater operates under a Council-Manager form of government and provides municipal services that include public safety, public works, community development and parks and recreation. In addition, the City provides water, wastewater and solid waste collection services in the form of enterprise activities. This report includes all funds of the City of Atwater and its blended component unit, the Successor Agency of the Atwater Redevelopment Agency, for which the City is financially accountable.

The City Council establishes annual budgets for the General Fund, Proprietary Funds, and all Special Revenue Funds. Budgetary control is legally maintained at the fund level for these funds. Department heads submit budget requests to the City Manager. The City Manager prepares an estimate of revenues and prepares recommendations for the next year's budget. The preliminary budget may or may not be amended by the City Council and is adopted by resolution by the City Council on or before June 30 in accordance with the municipal code.

The Atwater City Council consists of five members, elected at-large to four-year overlapping terms. Council members must be residents of the City. The Mayor conducts the City Council meetings and represents the City on ceremonial occasions. The City Council serves as the policy board for the City of Atwater and provides policy direction, establishes goals, and sets priorities for the City government. In addition to serving as the policy makers for the community, the City Council also is responsible for numerous land use decisions within its borders, including the General Plan. The City .Council appoints the City Manager, City Attorney, and all members of advisory boards, commissions, and committees.

Local Economy

The City of Atwater has begun a recovery from the recent nationwide economic recession. The City's principal general fund revenue sources are property tax and sales tax which account for almost 46 percent of total General Fund revenue. Property and sales tax revenues have increased and the City's housing market has continued to strengthen.

Financial Information

During the past fiscal year, there were no changes to the City's financial policies or items in which policies impacted the financial information or presentation. Information concerning significant accounting policies affecting the finances of the City is summarized in the Notes to the Financial Statements.

Acknowledgements

The preparation of this Annual Financial Report could not be accomplished without the efficient and dedicated service of the entire staff of the Finance Department and the auditing firm of JJACPA, Inc. I would also like to express my appreciation to the members of the City Council and the various departments for their cooperation and support in planning and conducting the financial operations of the City during the fiscal year.

Respectfully Submitted,

Lori Waterman City Manager

City of Atwater, California Basic Financial Statements For the year ended June 30, 2018 Organization Chart

viii

City of Atwater

Organizational Chart

City of Atwater, California Basic Financial Statements For the year ended June 30, 2018 List of Officials

ix

James Price, Mayor

James Vineyard, Mayor Pro Tem

Brian Raymond, Council Member

Paul Creighton, Council Member

Cindy Vierra, Council Member

Lori Waterman, City Manager/Interim Community Development Director

Don Hyler III, City Clerk

Jim Heller, City Treasurer

Churchwell White LLP, City Attorney

Brian Shaw, Interim Public Works Director

Jeanna Del Real, Human Resources Director

Lakhwinder Deol, Finance Director

Armando Echevarria, Interim Police Chief

CITY OFFICIALS

CITY COUNCIL

x


7080 Donlon Way, Suite 204, Dublin, CA 94568 ● phone (925) 556-6200 ● fax: (510) 217-5930 1102 South Main Street, #1, Fort Bragg, CA 95437 ● phone (707) 964-6325

www.jjacpa.com

INDEPENDENT AUDITOR’S REPORT To the Honorable Mayor and City Council City of Atwater Atwater, California Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, the aggregate remaining fund information, and the budgetary comparison information of the City of Atwater, California (City), as of and for the year ended June 30, 2018, 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.

Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, the aggregate remaining fund information, and the budgetary comparison information of the City, as of June 30, 2018, 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.

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 3–16, the City’s Schedules of Contributions, Pensions on pages 96-97, the Schedules of the City’s Proportionate Share of the Net Pension Liability on pages 98-99, the Schedule of Changes in the Net OPEB Liability and Ratios on page 100, and the Net OPEB Liability Schedule of Contributions on page 101, 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 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 nonmajor fund financial statements and the introductory section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements are the responsibility of management and were derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund financial statements is fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory section 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. Implementation of New Accounting Standards As disclosed in the Note 1 to the financial statements, the City implemented GASB Statement No. 75, “Accounting and Financial Reporting for Postemployment Benefits Other than Pensions,” during the fiscal year 2018. Our opinion is not modified with respect to this matter. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated May 9, 2019 on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering City’s internal control over financial reporting and compliance.

]]TVcT? \ÇvA May 9, 2019 JJACPA, Inc. Dublin, CA

City of Atwater, California Basic Financial Statements For the year ended June 30, 2018 Management’s Discussion and Analysis

3

This section provides a narrative overview and analysis of the financial activities of the City of Atwater (City) for the fiscal year ended June 30, 2018. It should be read in conjunction with the accompanying transmittal letter and basic financial statements. FINANCIAL HIGHLIGHTS The City’s total net position decreased by about $11.5 million over the course of this year’s

operations after conducting all City operations and programs. This decrease was mainly due to the implementation of new OPEB standards. The assets of the City exceeded its liabilities by $27.2 million at the end of the 2018 fiscal year. The City's Long-term liabilities increased by $17.5 million due to pension obligation and OPEB obligation changes.

The City ended the fiscal year with a $21.3 million unrestricted net position reported in the

business-type activities. The total net position of business-type activities increased by $5.7 million compared to the 2017 fiscal year.

Overall City-wide revenues from all governmental and business-type activities increased by almost $4 million compared to the 2017 fiscal year. Most of the increase resulted from increases in sales tax revenue and enterprise fund charges for services.

The City’s total net capital asset balance for governmental activities was $20.7 million and $83.2

million for business-type activities. OVERVIEW OF THE ANNUAL FINANCIAL REPORT This Annual Financial Report is in two major parts: 1) Introductory section, which includes the Transmittal Letter and general information; and, 2) Financial section, which includes the Management’s Discussion and Analysis (this part), the Basic

Financial Statements, which include the Government-wide and the Fund Financial Statements along with the notes to these financial statements, and Combining and Individual Fund Financial Statements and Schedules.

City of Atwater, California Basic Financial Statements For the year ended June 30, 2018 Management’s Discussion and Analysis, continued

4

OVERVIEW OF THE ANNUAL FINANCIAL REPORT, Continued The Basic Financial Statements The Basic Financial Statements are comprised of the Government-wide Financial Statements and the Fund Financial Statements; these two sets of financial statements provide two different views of the City’s financial activities and financial position. Government-wide Financial Statements The Government-wide Financial Statements provide a broad overview of the City’s activities as a whole and comprise the Statement of Net position and the Statement of Activities. The Statement of Net position provides information about the financial position of the City as a whole, including all its capital assets and long-term liabilities on the full accrual basis, similar to that used by corporations. The Statement of Activities provides information about all the City’s revenues and all its expenses, also on the full accrual basis, with the emphasis on measuring net revenues or expenses of each the City’s programs. The Statement of Activities explains in detail the change in Net position for the year. All of the City’s activities are grouped into Governmental Activities and Business-type activities, as explained below. All the amounts in the Statement of Net position and the Statement of Activities are separated into Governmental Activities and Business-type Activities in order to provide a summary of these two activities of the City as a whole. ♦ Governmental activities – All of the City’s basic services are considered to be governmental

activities, including general government, public safety, highways and streets, urban redevelopment and housing, community services, and general administration. These services are supported by general City revenues such as taxes and by specific program revenues such as developer fees.

♦ Business-type activities – All the City’s enterprise activities are reported here, including Water,

Sewer, and Sanitation Funds. Unlike governmental services, these services are supported by charges paid by users based on the amount of the service they use.

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


5

OVERVIEW OF THE ANNUAL FINANCIAL REPORT, Continued Fund Financial Statements, Continued Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the Government-wide Financial Statements. However, unlike the Government-wide Financial Statements, Governmental Fund Financial Statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements. Because the focus of the Governmental Fund Financial Statements is narrower than that of the Government-wide Financial Statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the Government-wide Financial Statement. By doing so, readers may better understand the long-term impact of the government’s near-term financial decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The Governmental Fund Financial Statements provide detailed information about each of the City’s most significant funds, called major funds. The concept of major funds, and the determination of which are major funds, was established by GASB Statement No. 34 and replaces the concept of combining like funds and presenting them as one total. Instead, each major fund is presented individually, with all nonmajor funds summarized and presented only in a single column. Subordinate schedules present the detail of these nonmajor funds. Major funds present the major activities of the City for the year, and may change from year to year as a result of changes in the pattern of the City’s activities. For the fiscal year ended June 30, 2018, the City’s major funds are as follows: GOVERNMENTAL FUNDS:

General Fund Measure H Special Revenue Fund

PROPRIETARY FUNDS:

Water Enterprise Fund Sewer Enterprise Fund Sanitation Enterprise Fund


6

OVERVIEW OF THE ANNUAL FINANCIAL REPORT, Continued Fund Financial Statements, Continued For the fiscal year ended June 30, 2018, the City adopted annual appropriated budgets for all governmental funds. Proprietary funds. The City maintains Enterprise-type and Internal Service proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the Government-wide Financial Statements. The City uses enterprise funds to account for Water, Sewer, and Sanitation activities. Internal service funds are an accounting methodology used to accumulate and allocate costs internally among the City’s various functions. The City uses internal service funds to account for its fleet of vehicles and its information technology assets. Proprietary funds provide the same type of information as the Government-wide Financial Statements, only in more detail. The proprietary fund financial statements provide separate information for all of these operations. Notes to the Basic Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the Government-wide and Fund Financial Statements. The notes to the basic financial statements can be found on pages 48–88 of this report. Combining and Individual Fund Financial Statements and Schedules The combining statements referred to earlier in connection with nonmajor governmental funds are presented immediately following the notes to the financial statements. Combining and individual fund statements can be found on pages 99–178 of this report.


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GOVERNMENT-WIDE FINANCIAL ANALYSIS As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. In the case of the City, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $27,158,903 (net position) as of June 30, 2018. The Summary of Net position as of June 30, 2018 and 2017 follows:

Govern- Business- Govern- Business-mental type mental type

Activities Activities Total Activities Activities Total

Current and other assets 11,597,446$ 33,531,721$ 45,129,167$ 9,715,561$ 25,227,912$ 34,943,473$ Noncurrent assets 24,801,611 83,184,971 107,986,582 26,588,495 86,838,824 113,427,319 Deferred outflows of resources 9,625,930 - 9,625,930 7,966,543 - 7,966,543

Total assets and deferred outflows of resources 46,024,987 116,716,692 162,741,679 44,270,599 112,066,736 156,337,335

Current and other liabilities 1,864,308 2,664,099 4,528,407 2,798,494 3,475,287 6,273,781 Long-term liabilities 52,284,571 74,883,950 127,168,521 34,353,400 75,358,897 109,712,297 Deferred inflows of resources 3,626,902 - 3,626,902 1,708,472 - 1,708,472

Total liabilities and deferred inflows of resources 57,775,781 77,548,049 135,323,830 38,860,366 78,834,184 117,694,550

Net position:Net investment in

capital assets 20,686,416 8,376,434 29,062,850 22,473,300 11,553,243 34,026,543 Restricted 5,682,967 9,209,071 14,892,038 4,654,997 5,845,523 10,500,520 Unrestricted (deficit) (38,120,177) 21,583,138 (16,537,039) (21,718,064) 15,833,786 (5,884,278)

Total net position (11,750,794)$ 39,168,643$ 27,417,849$ 5,410,233$ 33,232,552$ 38,642,785$

20172018Summary of Net Position

Overall, total net position decreased by approximately $11.5 million mainly due to the implementation of new OPEB standards. The total net position of governmental activities decreased by approximately $17.1 million and total net position for business-type activities increased by approximately $5.7 million. Restricted net position increased by approximately $4.4 million and unrestricted net position decreased by approximately $10.9 million.


8

GOVERNMENT-WIDE FINANCIAL ANALYSIS, Continued Revenues The City’s total revenues for governmental and business-type activities were $41,640,139 for the fiscal year ended June 30, 2018. Significant revenues for the City for fiscal year 2017-18 were derived from charges for services (61%), grants and contributions (4%), property taxes and assessments (11%) and sales and use tax (14%). The following discusses variances in key revenues from the prior fiscal year for governmental and business-type activities:

1. Charges for Services. Charges for services increased by $2,062,625 or 8.8% due mainly to increased operating revenue in the water, sewer and sanitation enterprise funds.

2. Property Taxes and Assessments. Property tax revenue increased by $277,108 or 6.7%. This

is due primarily to higher property values.

3. Sales and Use Tax. Sales tax revenue increased by $864,646 or 18%. This results from a continued improvement in the local economy.


9

GOVERNMENT-WIDE FINANCIAL ANALYSIS, Continued The change in net position for the fiscal years ended June 30, 2018, and 2017, follows:

Govern- Business- Govern- Business-mental type mental type

Activities Activities Total Activities Activities Total

Revenues:Program revenues:

Charges for services 2,704,488$ 22,772,232$ 25,476,720$ 2,419,905$ 20,994,190$ 23,414,095$ Grants and contributions:

Operating 1,777,239 16,240 1,793,479 2,598,832 121,690 2,720,522 Capital 1,269,373 - 1,269,373 234,991 - 234,991

General revenues:Property taxes

and assessments 4,439,025 - 4,439,025 4,161,917 - 4,161,917 Transient occupancy taxes 56,949 - 56,949 61,626 - 61,626 Sales and use tax 5,645,702 - 5,645,702 4,781,056 - 4,781,056 Franchise taxes 804,354 - 804,354 769,960 - 769,960 Other taxes 1,354,821 - 1,354,821 1,067,401 - 1,067,401 Intergovernmental 476,395 - 476,395 277,518 - 277,518 Use of money and property 157,458 165,852 323,310 41,106 105,309 146,415 Other 11 - 11 11,237 - 11,237

Total revenues 18,685,815 22,954,324 41,640,139 16,425,549 21,221,189 37,646,738

Expenses:Governmental activities:

General government 5,290,473 - 5,290,473 4,092,002 - 4,092,002 Public safety 9,576,763 - 9,576,763 4,859,799 - 4,859,799 Highways and streets 3,272,362 - 3,272,362 2,754,777 - 2,754,777 Urban redevelopment and housing 459,970 - 459,970 497,674 - 497,674 Community services 504,473 - 504,473 456,469 - 456,469 Interest and fiscal charges 14,708 - 14,708 48,839 - 48,839

Business-type activities:Water - 3,971,155 3,971,155 - 3,537,697 3,537,697 Sewer - 10,081,365 10,081,365 - 9,471,224 9,471,224 Sanitation - 3,072,286 3,072,286 - 2,967,832 2,967,832

Total expenses 19,118,749 17,124,806 36,243,555 12,709,560 15,976,753 28,686,313

Change in net position before transfers (432,934) 5,829,518 5,396,584 3,715,989 5,244,436 8,960,425

Transfer from Successor Agency 53,934 - 53,934 43,671 - 43,671 Transfers 152,373 (152,373) - 152,375 (152,375) -

Change in net position (226,627) 5,677,145 5,450,518 3,912,035 5,092,061 9,004,096

Net position:Beginning of year 5,410,233 33,232,552 38,642,785 1,498,198 28,140,491 29,638,689

Adjustment (16,934,400) - (16,934,400) - - - Beginning, as adjusted (11,524,167) 33,232,552 21,708,385 1,498,198 28,140,491 29,638,689 End of year (11,750,794)$ 38,909,697$ 27,158,903$ 5,410,233$ 33,232,552$ 38,642,785$

20172018Changes in Net Position


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GOVERNMENT-WIDE FINANCIAL ANALYSIS, Continued Expenses Governmental and business-type activity expenses of the City for the year totaled $36,243,555. Governmental activity expenses totaled $19,118,749 or 53% of total expenses. Business-type activities incurred $17,124,806 or 47% of total expenses during the fiscal year. Public safety costs represented 50% of total governmental activities expenses. Governmental Activities The following table shows the cost of each of the City’s major programs and the net cost of the programs. Net cost is the total cost less fees and other direct revenue generated by the activities. The net cost reflects the financial burden that was placed on the City’s taxpayers by each of the programs. The total cost of services and the net cost of services for the fiscal years ended June 30, 2018, and 2016, are as follows:

Total Cost Net Cost Total Cost Net Costof Services of Services of Services of Services

General government 5,290,473$ 3,559,228$ 4,092,002$ 2,690,669$ Public safety 9,576,763 8,442,997 4,859,799 3,240,644 Highway and streets 3,272,362 812,462 2,754,777 848,981

Urban revelopment and housing 459,970 337,054 497,674 497,674 Community services 504,473 201,200 456,469 129,025 Interest on long-term debt 14,708 14,708 48,839 48,839

Total 19,118,749$ 13,367,649$ 12,709,560$ 7,455,832$

2018 2017

FY 2017 included an accounting adjustment related to GASB 68 public safety pension obligations which caused a decrease in total costs of services.


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GOVERNMENT-WIDE FINANCIAL ANALYSIS, Continued Governmental Activities, Continued Revenues by source for the fiscal years ended June 30, 2018, and 2017, are as follows:

Charges for services

$2,704,488 14.5%

Operating grants$1,777,239

9.5%

Capital grants$1,269,373

6.8%

Property taxes$4,439,025

23.8%

Transient occupancy taxes

$56,949 0.3%

Sales and use tax$5,645,702

30.2%

Franchise fees$804,354

4.3%

Other taxes$1,354,821

7.3%

Intergovernmental$476,395

2.5%

Use of money and property$157,458

0.8%

Other general$11

0.0%

Revenues by Source - Governmental Activities 2017

Charges for services

$2,419,905 14.7%

Operating grants$2,598,532

15.8%

Capital grants$234,991

1.4%

Property taxes$4,161,917

25.3%

Transient occupancy taxes

$61,626 0.4%

Sales and use tax$4,781,056

29.1%

Franchise fees$769,960

4.7%

Other taxes$1,067,401

6.5%

Intergovernmental$277,518

1.7%

Use of money and property$41,106 0.3%

Other general$11,237 0.1%

Revenues by Source - Governmental Activities 2017


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GOVERNMENT-WIDE FINANCIAL ANALYSIS, Continued Business-type Activities Business-type activities increased the City’s net position by $5,677,145. The City has three business-type activities: Water, Sewer, and Sanitation Operations. The operating revenues and expenses for the business-type activities for the fiscal years ended June 30, 2018 and 2017 are as follows:

$-

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

Water Sewer Sanitation

Operating revenues

Operating expenses

$-

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

Water Sewer Sanitation

Operating revenues

Operating expenses

Operating Revenues and Expenses Business-type Activities

2018

Operating Revenues and Expenses Business-type Activities

2017


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GOVERNMENT-WIDE FINANCIAL ANALYSIS, Continued Business-type Activities, Continued The revenues by source for the business-type activities for the fiscal years ended June 30, 2018, and 2017, are as follows:

Charges for services,

20,994,190 , 98.93%

Investment earnings, 105,309 ,

0.50%

Intergovernmental, 121,690 , 0.57%

Revenues by Source - Business-type Activities2017

Charges for services,

22,772,232 , 99.21%

Investment earnings, 165,852 ,

0.72%

Operating Grants and Contributions,

16,240 , 0.07%

Revenues by Source - Business-type Activities 2018


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GOVERNMENT-WIDE FINANCIAL ANALYSIS, Continued Financial Analysis of the Government’s Funds The City of Atwater uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The fund financial statements focus on individual parts of the City government, reporting the City’s operations in more detail than the government-wide financial statements. Governmental Funds. The City’s governmental funds provide information on near-term inflows, outflows, and balances of spending resources. At the fiscal year ended June 30, 2018, the City’s governmental funds reported combined fund balances of $12,136,419. This represents an increase of $2,987,853 or 33% from the prior fiscal year. The increase is due mainly to increased revenue from sales taxes and charges for services. The General Fund is the chief operating fund of the City. At the fiscal year ended June 30, 2018, the General Fund had a negative fund balance of $1,452,296. This deficit fund balance improved by $903,616 from the prior fiscal year as the City continued to slowly recover from the economic recession. Special Revenue Funds. The City’s special revenue funds include the Measure H major fund, gas tax funds, grant funds, facility impact fee funds, maintenance districts and other nonmajor funds. As of June 30, 2018, the special revenue funds had a combined fund balance of $13,588,715. Capital Projects Funds. The City’s capital projects funds consist of the general and performance bond nonmajor funds. As of June 30, 2018, the capital project funds had a combined fund balance of $4,180. Proprietary Funds. The City maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statement. The City uses enterprise funds to account for its water, sewer and sanitation operations. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City’s various functions. The City uses the internal service funds to account for its building and equipment maintenances, as well as employee benefits fund. The City’s proprietary funds net position increased by $5,677,145 for enterprise funds and decreased by $24,031 for internal service funds in the fiscal year ended June 30, 2018. For the enterprise funds, the increase was due mainly to increased revenue in the water, sewer and sanitation funds. The decrease in the internal service funds net position was mainly the result of decrease in interdepartmental charges. Fiduciary Funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not available to support the City’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds.


15

GOVERNMENT-WIDE FINANCIAL ANALYSIS, Continued General Fund Budgetary Highlights General Fund actual revenues totaled $12.9 million which was 101.5 percent of the amended budget estimate. General Fund expenditures totaled $13.3 million or 96.4 percent of the approved amended budget. The General Fund fund balance deficit decreased by $903,616 during the fiscal year ended June 30, 2018 from a negative $2,355,912 to a negative $1,452,296. Capital Assets The City’s investment in capital assets for its governmental and business-type activities as of June 30, 2018 amounted to $103,871,387. This investment in capital assets includes land, construction in progress, costs for buildings and improvements, infrastructure, roads, and equipment.

2018 2017 2018 2017 2017 2016

Land 323,223$ 323,223$ 764,902$ 764,902$ 1,088,125$ 1,088,125$ Construction in progress 582,488 462,714 437,533 317,479 1,020,021 780,193 Buildings and improvements 6,040,390 6,587,896 79,478,152 82,910,192 85,518,542 89,498,088 Infrastructure 801,555 823,725 - - 801,555 823,725 Roads 10,416,112 11,787,230 - - 10,416,112 11,787,230 Equipment 2,522,648 2,488,512 2,504,384 2,846,251 5,027,032 5,334,763

Total 20,686,416$ 22,473,300$ 83,184,971$ 86,838,824$ 103,871,387$ 109,312,124$

Governmental Activities TotalsBusiness-type Activities

The June 30, 2018 balance reflects a reduction of $5,440,737 from the prior year. This reduction is mainly the result of depreciation in buildings and improvements, infrastructure, roads and equipment. More detail of the capital assets and current activity can be found in the notes to the financial statements on page 54 for significant accounting policies and Note 4 on pages 65 and 66 for other capital asset information.


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GOVERNMENT-WIDE FINANCIAL ANALYSIS, Continued Economic Outlook The City of Atwater is located in central California in Merced County. While this area was severely impacted by the economic recession, the City has seen a recent increase in economic activity with increases in property and sales tax revenue and an increased interest in development activity. The local job market remains slow with unemployment in Atwater at 8 percent and the County-wide unemployment rate of 8.3 percent (December 2018 figures). Over the past several years, the City implemented a number of difficult cost saving and revenue measures which has stabilized the City’s financial situation. The adopted budget for Fiscal Year 2017-18 is a balanced budget with sufficient revenues anticipated to be available to fund the current level of reduced operating costs. The City Council has taken action to provide for the future stability of the City’s water and sanitation systems by approving an orderly series of rate adjustments to ensure that funding is available to continue to provide quality utility service to the citizens and business of this community. The citizens of the City of Atwater, in 2013, approved a sales tax measure, Measure H, which is providing much needed funding for enhanced public safety costs. Requests for Information This Annual Financial Report is intended to provide citizens, taxpayers, investors, and creditors with a general overview of the City’s finances. If you have any questions about this report, need additional financial information, or would like to obtain component unit financial statements, contact the City of Atwater Finance Department, 750 Bellevue Road, Atwater, CA 95301, or visit the City’s web page at www.atwater.org.

BASIC FINANCIAL STATEMENTS

17


18

City of Atwater, CaliforniaStatement of Net Position

June 30, 2018

Governmental Business-typeActivities Activities Total

ASSETSCurrent assets:

Cash and investments 12,312,607$ 19,338,793$ 31,651,400$ Restricted cash and investments - 9,209,071 9,209,071 Receivables:

Accounts 2,237,376 1,931,206 4,168,582 Internal balances (3,052,651) 3,052,651 - Prepaid items 100,114 - 100,114

Total current assets 11,597,446 33,531,721 45,129,167 Noncurrent assets:

Advances to Fiduciary Activities/Successor Agency 259,265 - 259,265 Investment in land held for resale 3,855,930 - 3,855,930 Capital assets:

Nondepreciable 905,711 1,202,435 2,108,146 Depreciable 19,780,705 81,982,536 101,763,241 Total noncurrent assets 24,801,611 83,184,971 107,986,582 Total assets 36,399,057 116,716,692 153,115,749 DEFERRED OUTFLOWS OF RESOURCES

Pension plan 9,019,930 - 9,019,930 OPEB 606,000 - 606,000

Total assets and deferred outflows 46,024,987$ 116,716,692$ 162,741,679$

LIABILITIESCurrent liabilities:

Accounts payable and accrued liabilities 1,413,044$ 561,375$ 1,974,419$ Interest payable - 393,614 393,614 Deposits payable 177,571 425,622 603,193 Compensated absences - current portion 47,574 15,474 63,048 Other liabilities 150,972 - 150,972 Due within one year 75,147 1,268,014 1,343,161

Total current liabilities 1,864,308 2,664,099 4,528,407 Noncurrent liabilities:

Long-term liabilities:Compensated absences 686,435 75,413 761,848 Due after one year 406,685 74,808,537 75,215,222 Net pension obligation 27,538,451 - 27,538,451 Net OPEB obligation 23,653,000 - 23,653,000 Total noncurrent liabilities 52,284,571 74,883,950 127,168,521 Total liabilities 54,148,879 77,548,049 131,696,928

DEFERRED INFLOWS OF RESOURCESUnavailable revenue 21,093 - 21,093 Pension plan 1,097,809 - 1,097,809 OPEB 2,508,000 - 2,508,000

Total deferred inflows of resources 3,626,902 - 3,626,902 NET POSITION

Net investment in capital assets 20,686,416 8,376,434 29,062,850 Restricted 5,682,967 9,209,071 14,892,038 Unrestricted (deficit) (38,120,177) 21,583,138 (16,537,039)

Total net position (11,750,794) 39,168,643 27,417,849

Total liabilities, deferred inflows and net position 46,024,987$ 116,716,692$ 162,741,679$

The accompanying notes are an integral part of these basic financial statements.

19

City of Atwater, CaliforniaStatement of Activities

For the year ended June 30, 2018

Operating CapitalCharges for Grants and Grants and

Functions/Programs Expenses Services Contributions ContributionsPrimary government:Governmental activities:

General government 5,290,473$ 1,679,685$ 51,560$ -$ Public safety 9,576,763 240,871 892,895 - Highways and Streets 3,272,362 572,288 618,239 1,269,373Urban redevelopment and housing 459,970 - 122,916 - Community services 504,473 211,644 91,629 - Interest and fiscal charges 14,708 - - -

Total governmental activities 19,118,749 2,704,488 1,777,239 1,269,373 Business-type activities:

Water 3,971,155 5,955,000 16,240 - Sewer 9,822,419 12,542,476 - - Sanitation 3,072,286 4,274,756 - -

Total business-type activities 16,865,860 22,772,232 16,240 -

Total primary government 35,984,609$ 25,476,720$ 1,793,479$ 1,269,373$

General revenues: Taxes:

Property taxes, levied for general purposesTransient occupancy taxSales taxesFranchise feesOther taxes

IntergovernmentalUse of money and propertyOther general revenues

Total general revenuesTransfer from Successor AgencyTransfers

Total general revenues and transfers

Special item:Gain (Loss) on refunding of debtChange in net positionNet position:

Beginning of yearAdjustments

Beginning, as adjustedEnd of year

Program Revenues


20

Governmental Business-TypeActivities Activities Totals

(3,559,228)$ -$ (3,559,228)$ (8,442,997) - (8,442,997)

(812,462) - (812,462) (337,054) - (337,054) (201,200) - (201,200)

(14,708) - (14,708)

(13,367,649) - (13,367,649)

- 2,000,085 2,000,085 - 2,720,057 2,720,057 - 1,202,470 1,202,470 - 5,922,612 5,922,612

(13,367,649)$ 5,922,612$ (7,445,037)$

4,439,025 - 4,439,025 56,949 - 56,949

5,645,702 - 5,645,702 804,354 - 804,354

1,354,821 - 1,354,821 476,395 - 476,395 157,458 165,852 323,310

11 - 11 12,934,715 165,852 13,100,567

53,934 - 53,934 152,373 (152,373) -

13,141,022 13,479 13,154,501

- - - (226,627) 5,936,091 5,709,464

5,410,233 33,232,552 38,642,785 (16,934,400) - (16,934,400) (11,524,167) 33,232,552 21,708,385 (11,750,794)$ 39,168,643$ 27,417,849$

Net (Expense) Revenue andChanges in Net Position

21


22

Fund

Governmental Funds: Governmental funds are used for taxes and grants.

General

FUND FINANCIAL STATEMENTS

Description

Primary operating fund of the City; accounts for all activitiesexcept those legally or administratively required to be accountedfor in other funds.

Accounts for Measure H, a voter approved sales tax measure, toprovide enhanced public safety costs.

MAJOR FUNDS

Measure H Special Revenue Fund

23

City of Atwater, CaliforniaBalance Sheet

Governmental Funds

June 30, 2018

NonmajorGeneral Measure H Governmental

Fund Special Revenue Funds TotalsASSETS

Cash and investments 981,142$ 492,548$ 8,986,132$ 10,459,822$ Receivables:

Taxes 366,850 - 37,647 404,497 Interest 680 3,154 26,218 30,052 Intergovernmental - - 589,982 589,982 Other receivable 886,800 311,075 3,136 1,201,011

Prepaid items 44,719 - - 44,719 Due from other funds - - 261,594 261,594 Advance to Successor Agency Private Purpose Trust - - 259,265 259,265 Investment in land held for resale - - 3,855,930 3,855,930

Total assets 2,280,191$ 806,777$ 14,019,904$ 17,106,872$

LIABILITIES, DEFERRED INFLOWS AND FUND BALANCES

Liabilities:Accounts payable and accrued liabilities 1,227,360$ 17,979$ 61,233$ 1,306,572$ Due to other funds 2,288,250 - 1,025,995 3,314,245 Deposits payable 65,905 - 111,666 177,571 Other liabilities 150,972 - - 150,972

Total liabilities 3,732,487 17,979 1,198,894 4,949,360

Deferred inflows of resources:Unavailable revenue - - 21,093 21,093

Total deferred inflows of resources: - - 21,093 21,093

Total Liabilities and deferred inflows 3,732,487 17,979 1,219,987 4,970,453

Fund balances (Deficit):Nonspendable

Prepaid items 44,719 - - 44,719 Investment in land held for resale - - 3,855,930 3,855,930

Restricted - - 5,682,967 5,682,967 Assigned - 788,798 3,547,832 4,336,630 Unassigned (deficit) (1,497,015) - (286,812) (1,783,827)

Total fund balances (deficit) (1,452,296) 788,798 12,799,917 12,136,419

balances 2,280,191$ 806,777$ 14,019,904$ 17,106,872$


Major Funds

24

City of Atwater, CaliforniaReconciliation of the Governmental Funds Balance Sheet

to the Statement of Net Position

June 30, 2018

Total fund balances reported on the governmental funds balance sheet 12,136,419$

19,742,348

Compensated absences (717,826)$ Capital leases (481,832) Net Pension obligation (27,538,451) Net OPEB obligation (23,653,000) (52,391,109)

Deferred outflows - Pension 9,019,930 Deferred inflows - Pension (1,097,809) Deferred outflows - OPEB 606,000

Deferred inflows - OPEB (2,508,000) 6,020,121

Current assets 1,920,014 Noncurrent assets 944,068 Accounts payable and accrued liabilities (107,525) Noncurrent liabilities (15,130) 2,741,427

Net Position of governmental activities (11,750,794)$


Internal services funds are used by management to charge the costs of certainactivities, such as information technology, to individual funds. The assets andliabilities of the internal service funds are:

Amounts reported for governmental activities in the Statement of Net Position aredifferent because:

Long-term liabilities are not due and payable in the current period and,therefore, are not reported in the governmental funds balance sheet.

Capital assets used in governmental activities are not current financialresources and, therefore, are not reported in the governmental funds balance

Pension and OPEB obligations result in deferred inflows and outflows ofresources derived from the actuarial value of contributions, assets and liabilities

25

City of Atwater, CaliforniaReconciliation of Fund Basis Balance Sheet to Government-wide Statement of Net Position

Governmental Activities

June 30, 2018

Governmental InternalFunds Changes Services Statement of

Balance Sheet Reclassifications in GAAP Balances Net PositionASSETS

Current assets:Cash and investments 10,459,822$ -$ -$ 1,852,785$ 12,312,607$ Receivables:

Taxes 404,497 - - - 404,497 Interest 30,052 - - 4,746 34,798 Intergovernmental 589,982 - - - 589,982 Other receivable 1,201,011 - - 7,088 1,208,099

Due from other funds 261,594 (261,594) - - - Internal balances - (3,052,651) - - (3,052,651) Prepaid items 44,719 - - 55,395 100,114

Total current assets 12,991,677 (3,314,245) - 1,920,014 11,597,446 Noncurrent assets:

Advances to Fiduciary Activities/Successor Agency 259,265 - - - 259,265 Investment in land held for resale 3,855,930 - - - 3,855,930 Capital assets, net - - 19,742,348 944,068 20,686,416

Total noncurrent assets 4,115,195 - 19,742,348 944,068 24,801,611 Total assets 17,106,872 (3,314,245) 19,742,348 2,864,082 36,399,057

DEFERRED OUTFLOWS OF RESOURCESPension plan - - 9,019,930 - 9,019,930 OPEB - - 606,000 - 606,000

Total assets and deferred outflows of resources 17,106,872$ (3,314,245)$ 29,368,278$ 2,864,082$ 46,024,987$

LIABILITIES AND DEFERRED INFLOWS OF RESOURCESCurrent liabilities:

Accounts payable and accrued liabilities 1,306,572$ -$ -$ 106,472$ 1,413,044$ Due to other funds 3,314,245 (3,314,245) - - - Deposits payable 177,571 - - - 177,571 Due within one year - capital leases - - 75,147 - 75,147 Compensated absences - current portion - - 46,521 1,053 47,574 Other liabilities 150,972 - - - 150,972

Total current liabilities 4,949,360 (3,314,245) 121,668 107,525 1,864,308 Noncurrent liabilities:

Long-term liabilities:Compensated absences - - 671,305 15,130 686,435 Due after one year - capital leases - - 406,685 406,685 Net Pension obligation - - 27,538,451 - 27,538,451 Net OPEB obligation - - 23,653,000 - 23,653,000 Total noncurrent liabilities - - 52,269,441 15,130 52,284,571

Total liabilities 4,949,360 (3,314,245) 52,391,109 122,655 54,148,879 DEFERRED INFLOWS OF RESOURCES

Unavailable revenue 21,093 - - - 21,093 Pension - - 1,097,809 - 1,097,809 OPEB - - 2,508,000 2,508,000 Total liabilities and deferred inflows 4,970,453 (3,314,245) 55,996,918 122,655 57,775,781

FUND BALANCES/NET POSITIONFund balances:

Nonspendable 3,900,649 (3,900,649) - - - Restricted 5,682,967 (5,682,967) - - - Assigned 4,336,630 (4,336,630) - - - Unassigned (deficit) (1,783,827) 1,783,827 - - -

Net position: - Net investment in capital assets - - 19,742,348 944,068 20,686,416 Restricted - - 5,682,967 - 5,682,967 Unrestricted - 12,136,419 (52,053,955) 1,797,359 (38,120,177)

Total fund balances/net position 12,136,419 - (26,628,640) 2,741,427 (11,750,794)

Total liabilities, deferred inflows and net position 17,106,872$ (3,314,245)$ 29,368,278$ 2,864,082$ 46,024,987$


26

City of Atwater, CaliforniaStatement of Revenues, Expenditures, and Changes in Fund Balances

Governmental Funds


OtherGeneral Measure H Governmental

Fund Special Revenue Funds TotalsREVENUES:Taxes and assessments 5,971,797$ 1,936,464$ 1,778,785$ 9,687,046$ Licenses and permits 370,390 - - 370,390 Fines and forfeitures 52,694 - - 52,694 Intergovernmental 3,483,233 - 1,910,887 5,394,120 Use of money and property 277,157 6,942 128,266 412,365 Charges for services 2,115,142 - - 2,115,142 Reimbursements 610,028 - 7,104 617,132 Other revenues 20,488 - 16,438 36,926

Total revenues 12,900,929 1,943,406 3,841,480 18,685,815

EXPENDITURES:Current:

General government 3,177,211 - 135 3,177,346 Public safety 8,691,370 679,916 14,303 9,385,589 Highways and Streets 944,334 - 760,001 1,704,335 Urban redevelopment and housing - - 579,970 579,970 Community services 504,473 - - 504,473

Capital outlay - - 584,640 584,640 Debt service:

Principal - 73,208 - 73,208 Interest and fiscal charges - 14,708 - 14,708

Total expenditures 13,317,388 767,832 1,939,049 16,024,269

REVENUES OVER (UNDER)EXPENDITURES (416,459) 1,175,574 1,902,431 2,661,546

OTHER FINANCING SOURCES (USES):Proceeds from sale of capital assets 120,000 - - 120,000 Transfers from Successor Agency 53,934 - - 53,934 Transfers in 1,250,495 - 130,629 1,381,124 Transfers out (104,354) (1,100,000) (24,397) (1,228,751)

Total other financing sources (uses) 1,320,075 (1,100,000) 106,232 326,307

Net change in fund balances 903,616 75,574 2,008,663 2,987,853

FUND BALANCES (Deficit):Beginning of year (2,355,912) 713,224 10,791,254 9,148,566

End of year (1,452,296)$ 788,798$ 12,799,917$ 12,136,419$

Major Funds


27

City of Atwater, CaliforniaReconciliation of Fund Basis Statements to Government-wide Statement of Activities


Compensated Capital

Absences/ Asset Government-

Fund Based Debt Internal (Additions)/ OPEB GASB 68 wide

Functions/Programs Totals Service Service Depreciation Retirements Obligation Pension Totals

Governmental activities:

General government 3,177,346$ (69,628)$ (91,818)$ 612,323$ -$ 867,000$ 795,250$ 5,290,473$

Public safety 9,385,589 - - 191,174 - - - 9,576,763

Highways and Streets 1,704,335 - - 1,395,418 172,609 - - 3,272,362

Urban redevelopment and housing 459,970 - - - - - - 459,970

Parks and recreation 504,473 - - - - - - 504,473

Capital outlay 584,640 - - - (584,640) - -

Debt service/Interest 87,916 (73,208) - - - - - 14,708

Total governmental activities 15,904,269$ (142,836)$ (91,818)$ 2,198,915$ (412,031)$ 867,000$ 795,250$ 19,118,749$


28

City of Atwater, CaliforniaReconciliation of the Statement of Revenues, Expenditures, and Changes in

Fund Balances of Governmental Funds to the Statement of Activities


Net change in fund balances - total governmental funds 2,987,853$

Capital asset purchases capitalized 412,031$ Depreciation expense (2,198,915) (1,786,884)

Debt principal payments 73,208

Change in compensated absences 69,628 69,628

Net Pension obligation (795,250) Net OPEB obligation (867,000)

115,849

(24,031) 91,818

Change in Net Position of governmental activities (226,627)$

Some receivables are deferred in the governmental funds because the amounts do not represent current financial resources that are recognized under the accrual basis in the Statement of Activities.


Amounts reported for governmental activities in the Statement of Activities are differentbecause:

Some expenses reported in the Statement of Activities do not require the use of currentfinancial resources and, therefore, are not reported as expenditures in governmentalfunds:

Repayment of debt principal is an expenditure in the governmental funds, but therepayment reduces long-term liabilities in the Statement of Net Position:

Governmental funds report capital outlays as expenditures while governmentalactivities report depreciation expense to allocate those expenditures over the life of the

Certain employee benefit obligations are recorded on a pay-as-you-go basis in thegovernmental funds, but are accrued as liabilities in the Statement of Net Position:

Internal services funds are used by management to charge the costs of certain activities, such as building maintenance, to individual funds. The change in Net Position of the Internal Service Funds of ($24,031) are included in the governmental activities in the government-wide Statement of Net Position plus amounts due to the change in net investment in capital assets of $115,849 reported above for capital assets.

29

City of Atwater, CaliforniaStatement of Revenues, Expenditures, and Changes in Fund Balances -

Budget to Actual - General Fund and Measure H Special Revenue Fund


Variance w/FinalPositive

Original Final Actual (Negative)REVENUES:

Taxes and assessments 7,075,436$ 5,783,485$ 5,971,797$ 188,312$ Licenses and permits 173,300 308,225 370,390 62,165 Fines and forfeitures 48,000 48,000 52,694 4,694 Intergovernmental 458,250 3,192,376 3,483,233 290,857 Use of money and property 242,914 221,675 277,157 55,482 Charges for services 1,842,648 2,438,110 2,115,142 (322,968) Reimbursements 816,000 593,198 610,028 16,830 Other revenues 94,000 123,500 20,488 (103,012)

Total revenues 10,750,548 12,708,569 12,900,929 192,360


General government 2,047,154 3,287,486 3,177,211 110,275 Public safety 7,640,165 8,846,534 8,691,370 155,164 Highways and Streets 1,270,173 1,131,573 944,334 187,239 Community services 623,626 543,868 504,473 39,395

Capital outlay 9,882 - - - Debt service:

Principal - - - - Interest and fiscal charges - - - -

Total expenditures 11,591,000 13,809,461 13,317,388 492,073

REVENUES OVER (UNDER)EXPENDITURES (840,452) (1,100,892) (416,459) 684,433

OTHER FINANCING SOURCES (USES):Proceeds from sale of capital assets - - 120,000 120,000 Transfers from Successor Agency - - 53,934 53,934 Transfers in 902,375 1,256,157 1,250,495 (5,662) Transfers out (50,000) (297,622) (104,354) 193,268

Total other financing sources (uses) 852,375 958,535 1,320,075 361,540

Net change in fund balances 11,923 (142,357) 903,616 1,045,973

FUND BALANCES (Deficit):Beginning of year (2,355,912) (2,355,912) (2,355,912) -

End of year (2,343,989)$ (2,498,269)$ (1,452,296)$ 1,045,973$

General Fund

Budgeted Amounts


30


Original Final Actual (Negative)

1,250,000$ 1,807,326$ 1,936,464$ 129,138$ - - - - - - - - - - - - - - 6,942 6,942 - - - - - - - - - - - -

1,250,000 1,807,326 1,943,406 136,080

- - - - 449,242 851,902 679,916 171,986

- - - - - - - - - - - -

130,000 87,916 73,208 14,708 - - 14,708 (14,708)

579,242 939,818 767,832 171,986

670,758 867,508 1,175,574 308,066

- - - - - - - - - - - -

(731,657) (1,100,000) (1,100,000) -

(731,657) (1,100,000) (1,100,000) -

(60,899) (232,492) 75,574 308,066

713,224 713,224 713,224 -

652,325$ 480,732$ 788,798$ 308,066$

Measure H Special Revenue Fund

Budgeted Amounts

31


32

Fund

Major Funds:

Water Fund

Sewer Fund

Sanitation Fund

ENTERPRISE FUNDS

Description

Accounts for the operation and maintenance of the City’s watertreatment and distribution system.

Accounts for the operation and maintenance of the City’swastewater treatment plant and collection facilities.

Accounts for all activities associated with the operation andmaintenance of providing solid waste services.

33

City of Atwater, CaliforniaStatement of Net Position

Proprietary Funds

June 30, 2018

Water SewerASSETS

Current assets:Cash and investments 5,686,711$ 11,596,044$ Restricted cash and investments - 9,209,071 Receivables:

Accounts 892,348 727,720Interest 20,240 32,284

Due from other funds - 5,425,138 Prepaid expenses - -

Total current assets 6,599,299 26,990,257 Noncurrent assets:

Capital assets, net 4,703,544 78,304,585Total noncurrent assets 4,703,544 78,304,585

Total Assets 11,302,843$ 105,294,842$

LIABILITIES AND NET POSITIONCurrent liabilities:

Accounts payable 271,099$ 175,385$ Accrued payroll 25,111 17,616Due to other funds 173,689 - Interest payable - 393,614Deposits payable 368,684 56,938Compensated absences - current portion 8,931 6,437Due within one year - 1,268,014

Total current liabilities 847,514 1,918,004 Noncurrent liabilities:

Compensated absences 62,340 13,073Due after one year - 74,808,537

Total noncurrent liabilities 62,340 74,821,610

Total liabilities 909,854 76,739,614

Net Position:Net investment in capital assets 4,703,544 3,496,048 Restricted - 9,209,071 Unrestricted (Deficit) 5,689,445 15,850,109

Total net position 10,392,989 28,555,228

Total liabilities and net position 11,302,843$ 105,294,842$


34

GovernmentalActivitiesInternal

Sanitation Totals Service Funds

2,056,038$ 19,338,793$ 1,852,785$ 9,209,071 -

252,928 1,872,996 7,088 5,686 58,210 4,746

- 5,425,138 - - - 55,395

2,314,652 35,904,208 1,920,014

176,842 83,184,971 944,068 176,842 83,184,971 944,068

2,491,494$ 119,089,179$ 2,864,082$

70,150$ 516,634$ 98,005$ 2,014 44,741 8,467

2,198,798 2,372,487 - - 393,614 - - 425,622 -

106 15,474 1,053 - 1,268,014 -

2,271,068 5,036,586 107,525

- 75,413 15,130 - 74,808,537 - - 74,883,950 15,130

2,271,068 79,920,536 122,655

176,842 8,376,434 944,068 - 9,209,071 -

43,584 21,583,138 1,797,359 220,426 39,168,643 2,741,427

2,491,494$ 119,089,179$ 2,864,082$

35

City of Atwater, CaliforniaStatement of Revenues, Expenses, and Changes in Fund Net Position

Proprietary Funds


Water SewerOPERATING REVENUES:

Charges for service 4,624,744$ 12,302,448$ Interdepartmental charges - - Other operating revenue 1,330,256 240,028

Total operating revenues 5,955,000 12,542,476

OPERATING EXPENSES:Salaries and benefits 967,956 577,022Contractual services 623,245 2,053,944Materials and supplies 140,163 73,629Repairs and maintenance - - Utilities 818,250 873,812Insurance - - Taxes and fees - - Other operating costs 827,096 1,175,285Depreciation 593,738 3,266,479

Total operating expenses 3,970,448 8,020,171

OPERATING INCOME (LOSS) 1,984,552 4,522,305

NONOPERATING REVENUES (EXPENSES):Bond issuance costs - (1,990,413) Intergovernmental revenues (expenses) 16,240 - Interest revenue 54,637 104,834Interest expense (707) 188,165

Total non-operating revenues, net 70,170 (1,697,414)

NET INCOME BEFORE TRANSFERS 2,054,722 2,824,891

Transfers in - - Transfers out (152,373) -

Total transfers (152,373) -

CHANGE IN NET POSITION 1,902,349 2,824,891

NET POSITION (DEFICIT):Beginning of year 8,490,640 25,730,337

End of year 10,392,989$ 28,555,228$


36



4,274,756$ 21,201,948$ -$ - - 2,366,269 - 1,570,284 51,280

4,274,756 22,772,232 2,417,549

53,905 1,598,883 215,201 2,592,860 5,270,049 474,802

709 214,501 845 - - 382,028 - 1,692,062 - - - 1,042,438 - - 105,322

418,791 2,421,172 122,511 6,021 3,866,238 111,925

3,072,286 15,062,905 2,455,072

1,202,470 7,709,327 (37,523)

- (1,990,413) - - 16,240 -

6,381 165,852 13,492 - 187,458 -

6,381 (1,620,863) 13,492

1,208,851 6,088,464 (24,031)

- - - - (152,373) - - (152,373) -

1,208,851 5,936,091 (24,031)

(988,425) 33,232,552 2,765,458

220,426$ 39,168,643$ 2,741,427$

37

City of Atwater, CaliforniaStatement of Cash Flows

Proprietary Funds


Water SewerCASH FLOWS FROM OPERATING ACTIVITIES:

Cash received from customers/users for services provided 5,481,207$ 12,797,920$ Cash received from interfund services provided - - Cash payments to suppliers for goods and services (2,275,523) (4,533,181) Cash payments to employees for services (988,794) (573,009)

Net cash provided by operating activities 2,216,890 7,691,730

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:Transfers received (paid) (239,217) 827,231 Intergovernmental activities 16,240 -

Net cash used by noncapital financing activities (222,977) 827,231

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:Capital grants received - - Acquisition and construction of capital assets (113,502) (43,235) Proceeds from issuance of long-term debt - 77,962,033 Principal paid on long term debt - (78,460,281) Interest paid on long term debt (707) (70,782) Bond issuance costs - (1,990,413)

Net cash (used) by capital and related financing activities (114,209) (2,602,678)

CASH FLOWS FROM INVESTING ACTIVITIES:Investment income received 41,495 81,279

Net cash provided by investing activities 41,495 81,279

Net increase (decrease) in cash and cash equivalents 1,921,199 5,997,562

CASH AND CASH EQUIVALENTS:Beginning of year 3,765,512 14,807,553

End of year 5,686,711$ 20,805,115$

Presentation in Statement of Net Position:Cash and investments 5,686,711$ 11,596,044$ Restricted cash and investments - 9,209,071

5,686,711$ 20,805,115$

Reconciliation of income from operations to netcash provided by operating activities:

Operating income (loss) 1,984,552$ 4,522,305$ Adjustments to reconcile operating income to net cash provided by operating activities:

Depreciation 593,738 3,266,479 (Increase) decrease in current assets:

Accounts receivable (473,793) 255,444 Prepaid expenses - 148,194

Increase (decrease) in liabilities:Accounts payable 80,520 (504,705) Accrued payroll (5,990) (419) Deposits payable 52,711 - Compensated absences (14,848) 4,432

Net cash provided by operating activities 2,216,890$ 7,691,730$

There were no noncash investing, capital, or financing activities affecting recognized assets and liabilities for the year ended June 30, 2018.


38



4,332,473$ 22,611,600$ -$ - - 2,412,489

(3,153,050) (9,961,754) (2,188,631) (53,856) (1,615,659) (214,000)

1,125,567 11,034,187 9,858

(549,699) 38,315 - - 16,240 -

(549,699) 54,555 -

- (55,648) (212,385) 3,924

77,962,033 - - (78,460,281) - - (71,489) -

(1,990,413) - (55,648) (2,772,535) 3,924

2,056 124,830 10,461 2,056 124,830 10,461

522,276 8,441,037 24,243

1,533,762 20,106,827 1,828,542

2,056,038$ 28,547,864$ 1,852,785$

2,056,038$ 19,338,793$ 1,852,785$ - 9,209,071 -

2,056,038$ 28,547,864$ 1,852,785$

1,202,470$ 7,709,327$ (37,523)$

6,021 3,866,238 111,925

57,717 (160,632) (5,060) - 148,194 1,436

.(140,690) (564,875) (62,121)

39 (6,370) 430 - 52,711 -

10 (10,406) 771

1,125,567$ 11,034,187$ 9,858$

39


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Fund

Private Purpose Trust Fund

Successor Agency - Former Atwater Community Development Agency

Section 125 Medical

Section 125 Dependent Care

Community FacilityDistrict #1

Agency Funds

Agency Funds account for assets held by the City in a purely custodial capacity.

Accounts for activity related to the City's Section 125 Medical Program administered by a third party.

Accounts for activity related to the City's Section 125 Dependent Care Program administered by a third party.

Accounts for activity related to the CFD#1 debt issuance for which the City is not obligated to repay.

FIDUCIARY ACTIVITIES

Accounts for funds collected and disbursed for the dissolution of the former Atwater Development Agency related to Administration and Retirement of enforceable obligations

Private Purpose Trust Funds are used for resources held for other individuals and entities in a manner similar to private enterprise.

Description

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City of Atwater, CaliforniaStatement of Fiduciary Net Position

Fiduciary Activities

June 30, 2018

Successor AgencyFormer Atwater

CommunityDevelopment

Agency Agency Funds

Current assets:Cash and investments 412,287$ 95,884$ Cash and investments with trustee/fiscal agent 266,477 - Interest receivable 1,097 272Loans/notes receivable 111,437 - Prepaid items 269 -

Total current assets 791,567 96,156

Property, plant and equipment 1,155,151 - Less accumulated depreciation (273,475) -

Property, plant, and equipment, net 881,676 -

Total assets 1,673,243$ 96,156$

LIABILITIES AND NET POSITION

Current liabilities:Accounts payable and accrued liabilities 2,202$ -$ Due to others - 96,156 Due within one year 645,000 -

Total current liabilities 647,202 96,156 Long-term liabilities:

Advance from governmental funds/activities 259,265 - Due after one year 6,525,000 -

Total long-term liabilities 6,784,265 -

Total liabilities 7,431,467 96,156$

Net Position (Deficit):Net investment in capital assets (6,288,324)Net position held in trust for

Redevelopment Dissolution 530,100 Total Net Position (deficit) (5,758,224)

Total liabilities and net position 1,673,243$


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City of Atwater, CaliforniaStatement of Changes in Fiduciary Net Position

Private Purpose Trust Funds


Successor Agency Former Atwater

CommunityDevelopment

Agency

ADDITIONS:Property taxes 653,908$ Investment income 44,496Other additions 6,827

Total operating revenues 705,231

DEDUCTIONS:Urban redevelopment and housing 207,367Costs of issuance 223,646Depreciation and amortization 61,945Transfer to City of Atwater 53,934

Total operating expenses 546,892

CHANGE IN FIDUCIARY NET POSITION 158,339 NET POSITION (DEFICIT):

Beginning of year (5,916,563)

End of year (5,758,224)$


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44

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NOTES TO BASIC FINANCIAL STATEMENTS

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City of Atwater, California Basic Financial Statements For the year ended June 30, 2018 Index to Notes to Basic Financial Statements

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Page Note 1 - Summary of Significant Accounting Policies .................................................................... 48

Financial Reporting Entity ............................................................................................................. 48 Basis of Presentation ...................................................................................................................... 49 Measurement Focus ....................................................................................................................... 51 Basis of Accounting ....................................................................................................................... 51 Assets, Liabilities, and Equity ....................................................................................................... 52 Revenues, Expenditures, and Expenses ......................................................................................... 57 Budgetary Accounting ................................................................................................................... 59

Note 2 – Cash and Investments ......................................................................................................... 60 Note 3 – Accounts Receivable ........................................................................................................... 64 Note 4 – Capital Assets ...................................................................................................................... 65 Note 5 – Accounts Payable and Accrued Liabilities ....................................................................... 67 Note 6 – Long-term Liabilities .......................................................................................................... 67 Note 7 – Net Position/Fund Balances ............................................................................................... 73 Note 8 – Interfund Transactions ...................................................................................................... 75 Note 9 – Risk Management ............................................................................................................... 76 Note 10 – Public Employee Retirement System .............................................................................. 77 Note 11 – Other Post-Employment Benefits .................................................................................... 82 Note 12 – Successor Agency for Assets of Former Redevelopment Agency ................................. 87 Note 13 – Commitments and Contingencies .................................................................................... 90 Note 14 – New Accounting Pronouncements ................................................................................... 90 Note 15 – Management’s Plan of Operations .................................................................................. 92

City of Atwater, California Notes to Basic Financial Statements For the year ended June 30, 2018

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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Atwater (City) was incorporated in 1922, under the laws and regulations of the State of California (State). The City operates under a City Council/Manager form of government and provides the following services: public safety (Police), highways and streets, solid waste, storm water utility, public improvements, planning and zoning, and general administration. The financial statements of the City have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the standard-setting body for governmental accounting and financial reporting. On June 15, 1987, GASB issued a codification of the existing Governmental Accounting and Financial Reporting Standards which, along with subsequent GASB pronouncements (Statements and Interpretations), constitutes GAAP for governmental units. The City applies all GASB pronouncements to its activities. Financial Reporting Entity The City operates as a self-governing local government unit within the State. It has limited authority to levy taxes and has the authority to determine user fees for the services that it provides. The City’s main funding sources include sales taxes, other intergovernmental revenue from state and federal sources, user fees, and federal and state financial assistance. The financial reporting entity consists of (a) the primary government, the City, (b) organizations for which the primary government is financially accountable, and (c) other organizations for which the primary government is not accountable, but for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity’s financial statements to be misleading or incomplete. Financial accountability is defined as the appointment of a voting majority of the component unit’s board, and either (a) the City has the ability to impose its will on the organization, or (b) there is a potential for the organization to provide a financial benefit to or impose a financial burden on the City. As required by GAAP, these financial statements present the government and its component units, entities for which the government is considered to be financially accountable. These component units are reported on a blended basis. Blended component units, although legally separate entities, are, in substance, part of the government’s operations and so data from these units are combined with data of the primary government. The financial statements of the individual component units, if applicable as indicated below, may be obtained by writing to the City of Atwater, Finance Department, 750 Bellevue Road, Atwater, CA 95301.

City of Atwater, California Notes to Basic Financial Statements, Continued For the year ended June 30, 2018

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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Basis of Presentation Government-Wide Financial Statements The statement of net position and statement of activities display information about the reporting government as a whole. They include all funds of the reporting entity except for fiduciary funds. The statements distinguish between governmental and business-type activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange revenues. Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided by a given function or segment, 2) operating grants and contributions, and 3) capital grants and contributions restricted to the operating or capital requirements of a specific function or segment. All taxes and internally dedicated resources are reported as general revenues rather than program revenues. Fund Financial Statements Fund financial statements of the reporting entity are organized into funds, each of which is considered to be a separate accounting entity. Each fund is accounted for by providing a separate set of self-balancing accounts, which constitute its assets, liabilities, fund equity, revenues, and expenditures/expenses. Funds are organized into three major categories: governmental, proprietary, and fiduciary. An emphasis is placed on major funds within the governmental and proprietary categories. A fund is considered major if it is the primary operating fund of the City or meets the following criteria:

a. Total assets, liabilities, revenues, or expenditures/expenses of that individual governmental fund are at least ten percent of the corresponding total for all funds of that category or type; and

b. Total assets, liabilities, revenues, or expenditures/expenses of the individual

governmental fund are at least five percent of the corresponding total for all governmental funds combined.

The City reports the following major funds:

GOVERNMENTAL FUNDS: • General Fund • Measure H Special Revenue

PROPRIETARY FUNDS: • Water Enterprise Fund • Sewer Enterprise Fund • Sanitation Enterprise Fund


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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Basis of Presentation, Continued Descriptions of these funds are included on the divider page preceding the Governmental and Enterprise Funds Balance Sheets. The funds of the financial reporting entity are described below: Governmental Funds General Fund The General Fund is used to account for resources traditionally associated with the City which are not required legally or by sound financial management to be accounted for in another fund. From this fund are paid the City’s general operating expenditures, the fixed charges, and the capital costs that are not paid through other funds. Special Revenue Funds The Special Revenue Funds are used to account for specific revenues that are legally or otherwise restricted to expenditures for particular purposes. Capital Project Funds The Capital Project Funds are used to account for financial resources used for the acquisition or construction of major capital facilities other than those financed by proprietary funds. Proprietary Funds Enterprise Funds Enterprise Funds are used to account for operations that are financed and operated in a manner similar to private business enterprises. Costs are financed or recovered primarily through user charges. Internal Service Funds Internal Service Funds are used to account for financial transactions related to the City’s Insurance, Building Maintenance and Information Technology activities. These services are provided to other departments or agencies of the City on a cost reimbursement basis.


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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Fiduciary Funds Private Purpose Trust Funds Private Purpose Trust Funds account for resources held for other individuals or entities in a manner similar to private enterprise. Agency Funds Agency Funds account for assets held by the City in a purely custodial capacity. Since agency funds are custodial in nature, they do not involve the measurement of results of operations and are not presented in the government-wide financial statements. Measurement Focus Measurement focus is a term used to describe which transactions are recorded within the various financial statements. On the government-wide Statement of Net position and the Statement of Activities, governmental and business-type activities are presented using the economic resources measurement focus. The accounting objectives of this measurement focus are the determination of net income, financial position, and cash flows. All assets and liabilities (whether current or noncurrent) associated with their activities are reported. Fund equity is classified as Net position, which serves as an indicator of financial position. In the fund financial statements, the “current financial resources” measurement focus is used for governmental funds. Only current financial assets and liabilities are generally included on their balance sheets. Their operating statements present sources and uses of available spendable financial resources during a given period. These funds use fund balance as their measure of available spendable financial resources at the end of the period. The enterprise funds and private purpose trust funds utilize an “economic resources” measurement focus. The accounting objectives of this measurement focus are the determination of net income, financial position, and cash flows. Enterprise fund and private purpose trust funds equity is classified as net position. Agency funds are not involved in the measurement of results of operations; therefore, measurement focus is not applicable to them. Basis of Accounting In the government-wide Statement of Net position and Statement of Activities, governmental and business-type activities are presented using the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when the liability is incurred or economic asset used. Revenues, expenses, gains, losses, assets, and liabilities resulting from exchange and exchange-like transactions are recognized when the exchange takes place.


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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Basis of Accounting, Continued In the fund financial statements, governmental funds are presented on the modified accrual basis of accounting. Under this modified accrual basis of accounting, revenues are recognized when “measurable and available.” Measurable means knowing or being able to reasonably estimate the amount. Available means the amount is collectible within the current period or soon enough thereafter to pay current liabilities. The City considers all revenues reported in the governmental funds to be available if the revenues are collected within 60 days after year end, with the exception of grant revenues and Transportation Development Act (TDA) revenues. Grant revenues are considered to be available if collected within 180 days and TDA revenues are considered to be available if collected within 90 days of the end of the current fiscal period. Property taxes, franchise taxes, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal year. All other revenue items are considered to be measurable and available only when cash is received by the government. Expenditures (including capital outlay) are recorded when the related fund liability is incurred. The enterprise funds and agency funds utilize the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when the liability is incurred or economic asset used. Operating revenues in the fund 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. Assets, Liabilities, and Equity Cash Deposits and Investments The City’s cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition. The City pools cash and investments from all funds for the purpose of increasing income through investment activities. Highly liquid money market investments with maturities of one year or less at time of purchase are stated at amortized cost. All other investments are stated at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. Market value is used as fair value for those securities for which market quotations are readily available.


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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Assets, Liabilities, and Equity, Continued Interfund Receivables and Payables During the course of operations, numerous transactions occur between individual funds that may result in amounts owed between funds. Those related to goods and services type transactions are classified as “due to and from other funds.” Long-term interfund loans (noncurrent portion) are reported as “advances from and to other funds.” Interfund receivables and payables between funds within governmental activities are eliminated in the Statement of Net position. See Note 9 for details of interfund transactions, including receivables and payables at year-end. Receivables In the government-wide statements, receivables consist of all revenues earned at year-end and not yet received. Major receivable balances for the governmental activities include property taxes, sales and use taxes, utility user taxes, intergovernmental subventions, interest earnings, and expense reimbursements. In the fund financial statements, material receivables in governmental funds include revenue accruals such as property tax, sales tax, utility user tax, and intergovernmental subventions since they are usually both measurable and available. Non-exchange transactions collectible but not available, such as property tax, are deferred in the fund financial statements in accordance with the modified accrual basis, but not deferred in the government-wide financial statements in accordance with the accrual basis. Interest and investment earnings are recorded when earned only if paid within 60 days since they would be considered both measurable and available. The loans receivable are recorded in the fund statements, but are deferred to indicate they do not represent current financial resources. The loans are recognized when advanced in the government-wide statements. The City’s experience is that all accounts receivable are collectible; therefore an allowance for doubtful accounts is unnecessary. Prepaid Items Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. In the governmental fund financial statements, prepaid items are offset with a reservation of fund balance for long-term assets to indicate they do not constitute current resources available for appropriation.


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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Assets, Liabilities, and Equity, Continued Capital Assets The City's assets are capitalized at historical cost or estimated historical cost, if actual is unavailable, except for donated Capital Assets which are recorded at their estimated fair value at the date of donation. Policy has set the capitalization threshold for reporting at $5,000 for non-infrastructure capital assets and $25,000 for infrastructure capital assets. Government-Wide Statements Public domain (infrastructure) capital assets include roads, bridges, curbs and gutters, streets, sidewalks, drainage systems, and lighting systems. The accounting treatment of property, plant and equipment (capital assets) depends on whether the assets are used in governmental fund operations or proprietary fund operations and whether they are reported in the government-wide or fund financial statements. Depreciation of all exhaustible capital assets is recorded as an allocated expense in the Statement of Activities, with accumulated depreciation reflected in the Statement of Net position. Depreciation is provided over the assets’ estimated useful lives using the straight-line method of depreciation. No depreciation is recorded in the year of acquisition or in the year of disposition. The range of estimated useful lives by type of asset is as follows:

Buildings and improvements 5 – 40 years Landscaping 30 years Roadway improvements 40 years Signage 25 years Sidewalks, curbs, and gutters 40 years Leasehold improvements 5 years Storm drain pipes/structures 40 years Machinery and equipment 3 – 5 years Traffic signal devices 5 – 40 years Vehicles 3 years

Fund Financial Statements In the fund financial statements, capital assets used in governmental fund operations are accounted for as capital outlay expenditures of the governmental fund upon acquisition. Capital assets used in proprietary fund operations are accounted for the same way as in the government-wide statements.


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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Deferred outflows/inflows of resources

In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/ expenditure) until then. The government only has one item that qualifies for reporting in this category. It is the deferred charge on refunding reported in the government-wide statement of net position. A deferred charge on refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt.

In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The government has only one type of item, which arises only under a modified accrual basis of accounting that qualifies for reporting in this category. Accordingly, the item, unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from two sources: property taxes and special assessments. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available.

Compensated Absences

Employees accrue vacation, sick, holiday, and compensatory time off benefits. City employees have vested interests in the amount of accrued time off, with the exception of sick time, and are paid on termination. Also, annually an employee may elect to be compensated for 40 to 120 hours of unused annual leave depending upon their length of service. All vacation pay is accrued when incurred in the government-wide and proprietary financial statements. A liability for these amounts is reported in the governmental funds only if they have matured, for example, as a result of employee resignations or retirements and is currently payable. The City had no employee resignations or retirements for which compensated absences should be accrued in governmental funds at year-end. The general fund is typically used to liquidate compensated absences.

Pensions

For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Local Government of Example's California Public Employees' Retirement System (CaIPERS) plans (Plans) and additions to/deductions from the Plans' fiduciary net position have been determined on the same basis as they are reported by CaIPERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.


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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued

Other Postemployment Benefits (OPEB)

For purposes of measuring the net 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 City’s plan (OPEB Plan) and additions to/deductions from the OPEB Plan’s fiduciary net position have been determined on the same basis. For this purpose, benefit payments are recognized when currently due and payable in accordance with the benefit terms. Investments are reported at fair value. Generally accepted accounting principles require that the reported results must pertain to liability and asset information within certain defined timeframes. For this report, the following timeframes are used:

Valuation Date June 30, 2017 Measurement Date June 30, 2017 Measurement Period July 1, 2016 to June 30, 2017

Prior Period Adjustment

Due to the City’s adoption of GASB 75, net position was adjusted at June 30, 2018. The following is a reconciliation of the total net position as previously reported at July 1, 2017 to the restated net position.


Net Position at June 30, 2017 5,410,233$ Adjustment:

Adoption of GASB 75, OPEB (16,934,400) Total Adjustments (16,934,400) Net Position at July 1, 2017. as adjusted (11,524,167)$

Equity Classification

Government-Wide Statements

Equity is classified as net position and is displayed in three components:

a. Net investment in capital assets – consists of capital assets, including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets.

b. Restricted net position – consists of net position with constraints placed on the use by external groups such as creditors, grantors, contributors, or bylaws or regulations of other governments or law through constitutional provisions or enabling legislation.

c. Unrestricted net position – all other net position that do not meet the definition of “restricted” or “net investment in capital assets.”


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Assets, Liabilities, and Equity, Continued

Fund Financial Statements

Governmental fund equity is classified as fund balance. Fund balance is classified as nonspendable, restricted, committed, assigned, or unassigned. Proprietary fund equity is classified the same as in the government-wide statements. The classifications for governmental funds are defined as follows for the City:

Nonspendable Fund Balance –

Assets that will never convert to cash (prepaid items, inventory). Assets that will not convert to cash soon enough to affect the current period (long-term notes or

loans receivable). Resources that must be maintained intact pursuant to legal or contractual requirements (the

principal of an endowment).

Restricted Fund Balance –

Resources that are subject to externally enforceable legal restrictions imposed by parties altogether outside the government (creditors, grantors, contributors and other governments).

Resources that are subject to limitations imposed by law through constitutional provisions or enabling legislation (Gas Tax).

Committed Fund Balance –

Self-imposed limitations set in place prior to the end of the period (encumbrances, economic contingencies and uncertainties).

Limitation at the highest level of decision-making (Council) that requires formal action at the same level to remove.

Council resolution is required to be taken to establish, modify or rescind a fund balance commitment

Assigned Fund Balance –

Amounts in excess of nonspendable, restricted and committed fund balance in funds other than the general fund automatically are reported as assigned fund balance.

Assigned amounts for a specific purpose are as authorized by the City’s City Treasurer through its fund balance policy.

Unassigned Fund Balance –

Residual net resources Total fund balance in the general fund in excess of nonspendable, restricted, committed, and

assigned fund balance (surplus). Excess of nonspendable, restricted, and committed fund balance over total fund balance

(deficit).


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Revenues, Expenditures, and Expenses

Property Tax

Property taxes in the State of California are administered for all local agencies at the county level and consist of secured, unsecured, and utility tax rolls. The following is a summary of major policies and practices relating to property taxes.

Property Valuations – are established by the Assessor of the County of Merced (County) for the secured and unsecured property tax rolls; the utility property tax rolls are valued by the State Board of Equalization. Under the provisions of Article XIIIA of the State Constitution (Proposition 13 adopted by voters on June 6, 1978) properties are assessed at 100% of full value. From this base of assessment, subsequent annual increases in valuation are limited to a maximum of 2%. However, increases to full value are allowed for property improvements or upon change in ownership. Personal property is excluded from these limitations, and is subject to annual reappraisal.

Tax Levies – are limited to 1% of full value which results in a tax rate of $1.00 per $100 assessed valuation, under the provisions of Proposition 13. Tax rates for voter-approved indebtedness are excluded from this limitation.

Tax Levy Dates – are attached annually on January 1 proceeding the fiscal year for which the taxes are levied. The fiscal year begins July 1 and ends June 30 of the following year. Taxes are levied on both real and unsecured personal property as it exists at that time. Liens against real estate, as well as the tax on personal property, are not relieved by subsequent renewal or change in ownership.

Tax Collections – are the responsibility of the County Tax Collector. Taxes and assessments on secured and utility rolls which constitute a lien against the property, may be paid in two installments: The first is due on November 1 of the fiscal year and is delinquent if not paid by December 10; and the second is due on March 1 of the fiscal year and is delinquent if not paid by April 10. Unsecured personal property taxes do not constitute a lien against real property unless the taxes become delinquent. Payment must be made in one installment, which is delinquent if not paid by August 31 of the fiscal year. Significant penalties are imposed by the County for late payments.

The County levies, bills, and collects property taxes and special assessments for the City. Property taxes levied are recorded as revenue when received, in the fiscal year of levy, due to the adoption of the “alternate method of property tax distribution”, known as the Teeter Plan, by the City and the County. The Teeter Plan authorizes the Auditor/Controller of the County to allocate 100% of the secured property taxes billed, but not yet paid. The County remits tax monies to the City in three installments as follows:

50 percent remitted in December 45 percent remitted in April 5 percent remitted in June


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Interfund Transfers

Resources are reallocated between funds by reporting them as interfund transfers. For the purposes of the Statement of Activities, all interfund transfers between individual governmental funds have been eliminated.

Budgetary Accounting

The City Council establishes budgets for the General Fund and all Special Revenue Funds, except for certain Special Revenue Funds for which expenditures are controlled by grant funding or by assessments received. Budgetary control is legally maintained at the fund level for these funds. Department heads submit budget requests to the City Manager. The City Manager prepares an estimate of revenues and prepares recommendations for the next year’s budget. The preliminary budget may or may not be amended by the City Council and is adopted by resolution by the City Council on or before June 30 in accordance with the municipal code.

The City Council may amend the budget by motion during the fiscal year. Only the Council can authorize transfers between funds and approve inter-fund loans. The City Manager is authorized to transfer budgeted amounts within a fund without formal council action or approval. The City Manager is authorized to increase expenditures in relation to revenues in funds receiving assigned revenues without approval by the City Council.

Expenditures may not legally exceed appropriations at the fund level, which is the legal level of control. Supplemental appropriations, which increase appropriations, may be made during the fiscal year. There were no material supplemental appropriations made for the fiscal year ended June 30, 2018. Budget information is presented for the General and budgeted Special Revenue Funds in the fund financial statements. The budget information is presented on a basis consistent with generally accepted accounting principles. Appropriations, except open project appropriations, and unexpended grant appropriations, lapse at the end of each fiscal year.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Actual results could differ from those estimates.

Reclassifications

Certain amounts have been reclassified to provide for comparable results on a year to year basis.


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2. CASH AND INVESTMENTS At June 30, 2018, the City’s pooled cash and investments, classified by maturity, consisted of the following stated at fair value:

FairCash, cash equivalents and investments pooled <1 1 to 3 3 to 5 Deposits Market Value

Pooled cash, at fair valueCash in bank -$ -$ -$ 18,649,086$ 18,649,086 Petty cash - - - 450 450

Total pooled items - - - 18,649,536 18,649,536

Pooled investments, at fair market valueCentral San Joaquin Valley Risk Management

Authority (CSJVRMA) investment pool 1,081,060 - - - 1,081,060 State of California Local Agency Investment Fund 21,904,523 - - - 21,904,523

Total pooled investments 22,985,583 - - - 22,985,583 Total cash, cash equivalents and investments pooled 22,985,583$ -$ -$ 18,649,536$ 41,635,119$

Amounts reported in:Governmental activities 12,312,607$ Business-type activities 19,338,793 Business-type activities - Restricted 9,209,071 Fiduciary activities 508,171 Fiduciary activities - Restricted 266,477 Total 41,635,119$

Maturities (in years)

Investment Type Fair Value

CSJVRMA investment pool 1,081,060$ LAIF 21,904,523

Total fair value 22,985,583$


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2. CASH AND INVESTMENTS, Continued California statutes authorize cities to invest idle or surplus funds in a variety of credit instruments as provided for in the California Government Code, Section 53600, Chapter 4 – Financial Affairs. The table below identifies the investment types that are authorized for the City by the California Government Code (or the City’s investment policy, where more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. The table does not address investments of debt proceeds held by bond trustees that are governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code of the City’s investment policy. During the year ended June 30, 2018, the City’s permissible investments included the following instruments:

Maximum MaximumMaximum Percentage Investment

Authorized Investment Type Maturity of Portfolio in One IssuerBankers' Acceptances 180 days 40% NoneCertificates of Deposits 180 days 20% NoneNegotiable Certificates of Deposit 180 days 30% NoneCommercial Paper 180 days 15% NoneState of California Local Agency

Investment Fund (State Pool) N/A Unlimited $50 Million per entityMedium Term Notes 5 years 30% NoneMoney Market Funds N/A Unlimited NonePassbook Savings and Money Market

Accounts (Insured) None Unlimited NoneU.S. Treasury Obligations None Unlimited NoneU.S. Government Agency Issues None Unlimited NoneRepurchase Agreements 30 days 10% NoneMortgage pass-through and

asset backed securities 5 years 20% None Investment of debt proceeds held by bond trustees are governed by provisions of the debt agreements, rather than the general provisions of the California Government Code or the City’s investment policy. The table below identifies the investment types that are authorized for investments held by bond trustees. The table also identifies certain provisions of these debt agreements that address interest rate risk, credit risk, and concentration of credit risk.


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2. CASH AND INVESTMENTS, Continued

Maximum MaximumMaximum Percentage Investment

Authorized Investment Type Maturity of Portfolio in One IssuerU.S. Treasury Obligations None None NoneU.S. Agency Securities None None NoneCommercial Paper 270 days None NoneMoney Market Mutual Funds N/A None NoneInvestment Contracts None None NoneLocal Agency Investment Fund (State Pool) N/A None NoneCertificates of Deposit with Banks

and Savings and Loans None None NoneMunicipal Obligations None None None

Interest rate risk –Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the City manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations. Credit risk – As of June 30, 2018, the City’s investments in money market funds were rated AAA by Standard & Poor’s and Fitch Ratings, and Aaa by Moody’s Investors Service. The State of California Local Agency Investment Fund is not rated. Concentration of credit risk – The City’s investment policy does not allow for an investment in any one issuer that is in excess of five percent of the government’s total investments. The investments made by the City Treasurer are limited to those allowable under State statutes as incorporated into the City’s Investment Policy, which is accepted annually by the City Council. There were no concentrations in any one issuer for the year. The City participates in an investment pool managed by the State of California titled Local Agency Investment Fund (LAIF) which has invested 2.67% of the pool funds in Structured Notes and Asset-Backed Securities. LAIF's investments are subject to credit risk with the full faith and credit of the State of California collateralizing these investments. In addition, these Structured Notes and Asset-Backed Securities are subject to market risk as to changes in interest rates.


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2. CASH AND INVESTMENTS, Continued Custodial credit risk – deposits. For deposits, this is the risk that, in the event of a bank failure, the City’s deposits may not be returned. The City’s Investment Policy addresses custodial credit risk, which follows the Government Code. At June 30, 2018, the carrying amount of the City’s deposits was $18,649,086 and the balances in financial institutions were $18,649,086. Of the balance in financial institutions, $250,000 was covered by federal depository insurance and $18,399,086 was collateralized as required by State law (Government Code Section 53630), by the pledging financial institution with assets held in a common pool for the City and other governmental agencies, but not in the name of the City. As of June 30, 2018, the City’s investments were held by the City’s custodial agent, but not in the City’s name, and were insured up to specified limits by the Securities Investor Protection Corporation (SIPC) and supplemental private insurance up to a limit of $150 million. Custodial credit risk – investments. For investments, this is the risk that, in the event of the failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside counterparty. For the investments maintained by the City, no security was uninsured or unregistered or held by a brokerage firm which is also the counterparty for the security. Investment in LAIF LAIF is stated at amortized cost, which approximates fair value. The LAIF is a special fund of the California State Treasury through which local governments may pool investments. The total fair value amount invested by all public agencies in LAIF is $22,548,942 thousand of which the City had a balance of $21,904,523, which approximated market value and was managed by the State Treasurer. Of the total invested, 97.33% was invested in non-derivative financial products and 2.67% in structured notes and asset-backed securities. The Local Investment Advisory Board (Board) has oversight responsibility for LAIF. The Board consists of five members as designated by State statute. The fair value of the City’s investment in this pool is reported in the accompanying financial statements at amounts based upon the City’s pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis.


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3. ACCOUNTS RECEIVABLE Accounts receivable consisted of the following at June 30, 2018:

Governmental Business-type FiduciaryActivities Activities Activities Total

Accounts receivable -$ 1,872,996$ -$ 1,872,996$ Taxes and assessments receivable 404,497 - - 404,497 Interest receivable 34,798 58,210 1,369 94,377 Intergovernmental 589,982 - - 589,982 Other 1,208,099 - - 1,208,099 Loans/Notes receivable - - 111,437 111,437

Total accounts receivable 2,237,376$ 1,931,206$ 112,806$ 4,281,388$

These amounts resulted in the following concentrations in receivables:

Other Governments 13.82% Financial 2.10% Individuals/Business 43.86% Other 40.22%

Amounts do not indicate a significant concentration (greater than 25%) with any single individual, business or agency.


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4. CAPITAL ASSETS Governmental capital asset activity for the year ended June 30, 2018, was as follows:

Balance Adjustments/ BalanceJuly 1, 2017 Additions Deletions Transfers June 30, 2018

Governmental activitiesNondepreciable assets:

Land 323,223$ -$ -$ -$ 323,223$ Construction in Progress 462,714 197,191 - (77,417) 582,488

Total nondepreciable assets 785,937 197,191 - (77,417) 905,711

Depreciable assets:Buildings and improvements 15,066,829 - - - 15,066,829 Infrastructure 1,164,766 - - - 1,164,766 Roads 51,498,077 - - - 51,498,077 Equipment 7,277,841 348,964 - (46,924) 7,579,881

Total depreciable assets 75,007,513 348,964 - (46,924) 75,309,553 Total 75,793,450 546,155 - (124,341) 76,215,264

Accumulated depreciation:Buildings and improvements (8,478,933) (547,506) - - (9,026,439) Infrastructure (341,041) (22,170) - - (363,211) Roads (39,710,847) (1,371,118) - - (41,081,965) Equipment (4,789,329) (258,121) - (9,783) (5,057,233)

Total accumulated depreciation (53,320,150) (2,198,915) - (9,783) (55,528,848)

Net depreciable assets 21,687,363 (1,849,951) - (56,707) 19,780,705

Total net capital assets 22,473,300$ (1,652,760)$ -$ (134,124)$ 20,686,416$

Depreciation expense for capital assets was charged to functions as follows:

General government 612,323$ Public safety 191,174 Highways and streets 1,395,418

Total 2,198,915$


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4. CAPITAL ASSETS, Continued Business-type capital asset activity for the year ended June 30, 2018, was as follows:

Balance Adjustments/ BalanceJuly 1, 2017 Additions Deletions Transfers June 30, 2018

Business-type activitiesNondepreciable assets:

Land 764,902$ -$ -$ -$ 764,902$ Construction in Progress 317,479 120,195 - (141) 437,533

Total nondepreciable assets 1,082,381 120,195 - (141) 1,202,435

Depreciable assets:Buildings and improvements 109,935,546 - - - 109,935,546 Equipment 10,235,483 92,190 - 141 10,327,814

Total depreciable assets 120,171,029 92,190 - 141 120,263,360 Total 121,253,410 212,385 - - 121,465,795

Accumulated depreciation:Buildings and improvements (27,025,354) (3,432,040) - - (30,457,394) Equipment (7,389,232) (434,198) - - (7,823,430)

Total accumulated depreciation (34,414,586) (3,866,238) - - (38,280,824)

Net depreciable assets 85,756,443 (3,774,048) - 141 81,982,536

Total net capital assets 86,838,824$ (3,653,853)$ -$ -$ 83,184,971$

Depreciation expense for capital assets was charged to functions as follows:

Water 593,738$ Sewer 3,266,479 Sanitation 6,021

3,866,238$


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5. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities consisted of the following at June 30, 2018:

Governmental Business-type FiduciaryActivities Activities Activities Total

Accounts payable 1,079,726$ 516,634$ 2,202$ 1,598,562$ Accrued payroll and related liabilities 333,318 44,741 - 378,059

Total 1,413,044$ 561,375$ 2,202$ 1,976,621$

These amounts resulted in the following concentrations in payables:

Vendors 80.9% Employees 19.1%

Amounts do not indicate a significant concentration (greater than 25%) with any single vendor or employee. 6. LONG-TERM LIABILITIES

The following is a summary of changes in long-term liabilities for governmental activities for the year ended June 30, 2018:

Balance Balance Due WithinJuly 1, 2017 Additions Retirements June 30, 2018 One Year

Governmental Activities:Compensated absences 802,866$ -$ (68,857)$ 734,009$ 47,574$ Capital lease obligations 555,040 - (73,208) 481,832 75,147

Total governmental activities 1,357,906$ -$ (142,065)$ 1,215,841$ 122,721$


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6. LONG-TERM LIABILITIES, Continued The following is a summary of changes in long-term liabilities for business-type activities for the year ended June 30, 2018:


Business-type Activities:

2008 Wastewater Revenue Refunding Bonds 17,405,000$ -$ (17,405,000)$ -$ -$ Deferred loss on refunding (867,339) - 867,339 - -

2010 Wastewater Revenue Bonds 50,430,000 - (50,430,000) - - Unamortized bond premium 353,971 - (353,971) - -

2011 Wastewater Revenue Bonds 9,195,000 - (9,195,000) - -

Unamortized bond discount (90,881) - 90,881 - -

2017A Wastewater Revenue Refunding Bonds - 56,600,000 (1,795,000) 54,805,000 835,000

Unamortized bond premium - 5,618,924 (183,953) 5,434,971 (200,676)

Unamortized underwriting discount - (509,400) 18,063 (491,337) 18,193

2018A Wastewater Revenue Refunding Bonds - 16,255,000 - 16,255,000 540,000

Unamortized bond premium - 143,804 - 143,804 (5,136)

Unamortized underwriting discount - (146,295) - (146,295) 5,225

Capital lease obligation 149,048 - (73,640) 75,408 75,408 Compensated absences 101,293 (10,406) 90,887 15,474

Total business-type activities 76,676,092$ 77,962,033$ (78,470,687)$ 76,167,438$ 1,283,488$


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6. LONG-TERM LIABILITIES, Continued

Governmental Activities:

Capital Lease Obligations

The City of Atwater has entered into two separate lease agreements as lessee for financing the acquisition of five patrol vehicles valued at $194,276 and ladder fire truck valued at $783,751. The interest rates on the leases are 1.98% and 2.65%, respectively. The patrol vehicles have a 5 year estimated useful life and the ladder truck has a 15-year estimated useful life. Title reverts to the City after payment of the minimum lease payments, and, therefore, have been recorded at the present value of future minimum lease payments.

Year Ending

June 30,

Principal Interest

2019 75,147$ 12,768$

2020 77,139 10,777

2021 79,183 8,733

2022 81,281 6,635

2023 83,435 4,481

2024 85,647 2,270

Total 481,832$ 45,664$

Due within one year 75,147$ 12,768$

Due after one year 406,685 32,896

Total 481,832$ 45,664$

Capital Lease


Business-type Activities

2008 Wastewater Revenue Refunding Bonds (Sewer)

In May 2008, the Atwater Public Financing Authority issued its 2008 Wastewater Revenue Refunding Bonds in the amount of $20,020,000, to provide funds: (i) to finance the acquisition and construction of certain improvements to the Wastewater System; (ii) to fund a debt service reserve fund for the 2008 Bonds; and (iii) to pay cost of issuance of the 2008 Bonds. The term of this agreement ends on May 1, 2038. Each payment includes interest at an annual rate between 4.5 and 5.0%. Interest on the bonds is payable on May 1 and November 1 of each year. Principal of the bonds is payable on May 1 of each year beginning May 1, 2012. This bond is the refunding of the 2003 Water Revenue Refunding Bonds. These bonds were defeased by the 2017A Wastewater Revenue Refunding Bonds.


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2010 Wastewater Revenue Bonds (Sewer)

In January 2010, the Atwater Public Financing Authority issued its 2010 Wastewater Revenue Bonds in the amount of $54,345,000, to provide funds: (i) to finance the acquisition and construction of certain improvements to the Wastewater System; (ii) to fund a debt service reserve fund for the 2010 Bonds; and (iii) to pay cost of issuance of the 2010 Bonds. The term of this agreement ends on May 1, 2045. Each payment includes interest at an annual rate between 4.0 and 5.25%. Interest on the bonds is payable on May 1 and November 1 of each year. Principal of the bonds is payable on May 1 of each year beginning May 1, 2011. These bonds were defeased by the 2017A Wastewater Revenue Refunding Bonds.

2011 Wastewater Revenue Bonds (Sewer)

In April 2011, the Atwater Public Financing Authority issued its 2011 Wastewater Revenue Bonds in the amount of $10,000,000, to provide funds: (i) to finance the acquisition and construction of certain improvements to the Wastewater System; (ii) to pay the premium for a reserve surety bond for the 2011 bonds; and (iii) to pay the cost of issuing the 2011 Bonds. The term of this agreements ends on May 1, 2045. Each payment includes interest at an annual rate between 2.00% and 6.125%. Interest on the bonds is payable on May 1 and November 1 of each year. Principal of the bonds is payable on May 1 of each year beginning May 1, 2012. These bonds were defeased by the 2018A Wastewater Revenue Refunding Bonds.

2017A Wastewater Revenue Refunding Bonds (Sewer)

In August 2017, the City issued the 2017A Wastewater Revenue Refunding Bonds in the amount of $56,600,000 to defease the 2008 Wastewater Revenue Refunding Bonds and the 2010 Wastewater Revenue Bonds by placing funds in separate escrow accounts to prepay the obligations. Each payment includes interest at an annual rate between 3.125% to 5.000%. Interest on the bonds is payable on May 1 and November 1 of each year. Principal of the bonds is payable on May 1 of each year beginning May 1, 2018. The bonds fully mature on May 1, 2045. An original issue premium of $5,618,924 and an underwriting discount of $509,400 was included in the sales of the bonds.

2018A Wastewater Revenue Refunding Bonds (Sewer) In April 2018, the City issued the 2018A Wastewater Revenue Refunding Bonds in the amount of $16,255,000 to defease the 2011 Wastewater Revenue Bonds by placing funds in an escrow account to prepay the obligation. Each payment includes interest at an annual rate between 2.75% to 4.00%. Interest on the bonds is payable on May 1 and November 1 of each year. Principal of the bonds is payable on May 1 of each year beginning May 1, 2019, Interest payments began on November 1, 2018. The bonds fully mature on May 1, 2038. An original issue premium of $2,064,063 and an underwriting discount of $146,295 was included in the sales of the bonds.


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Capital Lease Obligation

The City of Atwater has entered into a lease agreement as lessee for financing the acquisition of a Vac-Con Sewer and Storm Drain Cleaner valued at $365,560. The interest rate on the lease is 2.40%. The cleaner has a 5 year estimated useful life. Title reverts to the City after payment of the minimum lease payments, and, therefore, has been recorded in the Sewer Fund at the present value of future minimum lease payments.

Year Ending

June 30,

Principal Interest

2019 75,408$ 1,810$

Total 75,408$ 1,810$


Due after one year - -

Total 75,408$ 1,810$

Capital Lease

Business-type Activities


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6. LONG-TERM LIABILITIES, Continued Future debt service for business-type activities at June 30, 2018 is as follows for all debt except compensated absences:

Year Ending

June 30,

Principal Interest Principal Interest Principal Interest

2019 835,000$ 2,476,338$ 540,000$ 600,139$ 1,375,000$ 3,076,477$

2020 880,000 2,434,588 595,000 542,069 1,475,000 2,976,657

2021 925,000 2,389,588 615,000 524,219 1,540,000 2,913,807

2022 965,000 2,344,338 635,000 505,769 1,600,000 2,850,107

2023 1,020,000 2,296,088 660,000 480,369 1,680,000 2,776,457

2024-2028 5,880,000 10,666,190 3,715,000 1,993,130 9,595,000 12,659,320

2029-2033 7,470,000 9,099,940 4,360,000 1,351,612 11,830,000 10,451,552

2034-2038 9,155,000 7,405,438 5,135,000 568,276 14,290,000 7,973,714

2039-2043 18,825,000 4,464,250 - - 18,825,000 4,464,250

2044-2045 8,850,000 467,250 - - 8,850,000 467,250

Total 54,805,000$ 44,044,008$ 16,255,000$ 6,565,583$ 71,060,000$ 50,609,591$

Due within one year 835,000$ 2,476,338$ 540,000$ 600,139$ 1,375,000$ 3,076,477$

Due after one year 53,970,000 41,567,670 15,715,000 5,965,444 69,685,000 47,533,114

Total 54,805,000$ 44,044,008$ 16,255,000$ 6,565,583$ 71,060,000$ 50,609,591$

Year Ending

June 30,

Premium Discount Premium Discount

2019 (200,676)$ 18,193$ (73,717)$ 5,225$

2020 (200,676) 18,193 (73,717) 5,225

2021 (200,676) 18,193 (73,717) 5,225

2022 (200,676) 18,193 (73,717) 5,225

2023 (200,676) 18,193 (73,717) 5,225

2024-2028 (1,003,380) 90,965 (368,585) 26,125

2029-2033 (1,003,380) 90,965 (368,585) 26,125

2034-2038 (1,003,380) 90,965 (368,585) 26,125

2039-2043 (1,003,380) 90,965 (368,585) 26,125

2044-2045 (418,071) 36,512 (153,565) 10,881

Total (5,434,971)$ 491,337$ (1,996,490)$ 141,506$

Due within one year (200,676)$ 18,193$ (73,717)$ 5,225$

Due after one year (5,234,295) 473,144 (1,922,773) 136,281

Total (5,434,971)$ 491,337$ (1,996,490)$ 141,506$

2018A Wastewater Revenue

Refunding Bonds


Refunding Bonds


Refunding Bonds


Refunding Bonds Totals


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7. NET POSITION/ FUND BALANCES Net position

Governmental Business-type Fiduciary

Activities Activities Activities Total

Net investment in capital assets 20,686,416$ 8,376,434$ (6,288,324)$ 22,774,526$ Restricted 5,682,967 9,209,071 - 14,892,038 Unrestricted (deficit) (38,120,177) 21,583,138 530,100 (16,006,939)

Total (11,750,794)$ 39,168,643$ (5,758,224)$ 21,659,625$

Restricted balances are for the same purposes as fund balance restrictions because external

restriction requirements are the same. See descriptions of the restrictions below.

Fund Balance

Nonspendable and Restricted fund balance consisted of the following at June 30, 2018:

Nonspendable:Prepaid items 44,719$ Investment in land held for resale 3,855,930

Total Nonspendable 3,900,649$

Restricted:Governmental Funds:

Gas Tax 1,059,572$ Facility Impact Fee 4,159,219 HOME Investment Partnership Program 250,350 Neighborhood Stabilization 213,826

Total Restricted 5,682,967$

The following describe the purpose of each nonspendable, restricted, and committed category used by the City:

Nonspendable

Prepaid items - used to segregate that portion of fund balance to indicate that prepaid amounts do not represent available, spendable resources even though they are components of assets.

• Investment in land held for resale – includes properties held for the purpose of redevelopment either through resale or conversion to public use, which do not represent available, spendable resources even though they are components of assets.


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7. NET POSITION/ FUND BALANCES, Continued

Restricted

• Gas Tax – represents amounts restricted for street maintenance purposes as defined in Sections 2105, 2106, 2107 and 2107.5 of the Streets and Highway Code.

Facility Impact Fee – represents amounts restricted to capital projects through AB1600.

HOME Investment Partnership Program – represents amounts restricted for the City’s HOME revolving loan program as this program is supported by specific grants requiring the restriction.

Neighborhood Stabilization – represents restricted amounts received from Federal Grants for neighborhood revitalization programs.

Deficit fund balances consisted of the following:

As ofJune 30, 2018

Major Funds:Governmental Funds:

General Fund 1,497,015$ Nonmajor Special Revenue Funds:

Local Transportation 15,300 Community Development Block Grants 12,441 Maintenance District Funds:

Northwood Village 42,558 Wildwood Estates 11,220 Woodview Garland 8,617 Sierra Parks 31,974 Price Annexation 65,186 Airport Business Park 2,794

General Capital Projects 96,722 Total Governmental Funds 1,783,827$

Fiduciary Funds:Successor Agency Private Purpose Trust 5,758,224$

The above deficit fund balances have occurred due to the spending of funds prior to the receipt of revenues (cost reimbursements). The Fund balances will be restored in the near future as revenues are received.


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8. INTERFUND TRANSACTIONS

Due to and from balances result from the time lag between the dates that (1) interfund goods and services are provided or reimbursable expenditures occur, (2) transactions are recorded in the accounting system, and (3) payments between funds are made.

Due to and due from other funds consisted of the following as of June 30, 2018:

Due from Due to Other Funds Other Funds

Governmental FundsMajor Funds:

General Fund -$ 2,288,250$ Total Major Funds - 2,288,250 Nonmajor Special Revenue Funds:

Police Grants - 334,550 Local Transportation - 417,410 Community Development Block Grants - 12,441 Maintenance Districts:

Northwood Village - 42,365 Orchard Park Estates 94,086 - Wildwood Estates - 11,189 Woodview Garland - 8,609 Sierra Parks - 31,923 Shaffer Lakes East 64,891 - Price Annexation - 64,891 Airport Business Park - 2,759 Silva Ranch 2,759 -

Total Maintenance Districts 161,736 161,736 Total Non-major Special Revenue Funds 161,736 926,137 Capital Projects Funds

General - 99,858 Performance Bond 99,858

Total Non-major Capital Projects Funds 99,858 99,858 Total Governmental Funds 261,594 3,314,245

Proprietary FundsWater - 173,689 Sewer 5,425,138 - Sanitation - 2,198,798

Total Proprietary Funds 5,425,138 2,372,487

Total 5,686,732$ 5,686,732$


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8. INTERFUND TRANSACTIONS, Continued

Transfers are used to (1) move revenues from the fund that statute or budget requires to collect them to the fund that statute or budget requires to expend them, and (2) use unrestricted revenues collected in the general fund to finance various programs accounted for in other funds in accordance with budgetary authorizations.

Transfers consisted of the following at June 30, 2018:

Transfers In Transfers OutGovernmental FundsMajor Funds:

General Fund 1,250,495$ 104,354$ Measure H Fund - 1,100,000 Total Major Funds 1,250,495 1,204,354

Non-major Funds:Special Revenue Funds:

Facility Impact Fee - 24,397 Measure V 24,397 - Maintenance Districts 104,352 - Total Non-major Special Revenue Funds 128,749 24,397

Capital Projects Funds:General 1,880 -

Total Non-major Capital Projects Funds 1,880 - Total Non-major Funds 130,629 24,397 Total Governmental Funds 1,381,124 1,228,751

Proprietary FundsWater - 152,373 Total Proprietary Funds - 152,373 Total Transfers 1,381,124$ 1,381,124$

The Water Fund transfer from proprietary funds to governmental funds was to fund programs paid for by General Fund resources. 9. RISK MANAGEMENT

The City participates with other public entities in a joint venture under a joint powers agreement which establishes the Central San Joaquin Valley Risk Management Authority (CSJVRMA). The relationship between the City and CSJVRMA is such that CSJVRMA is not a component unit of the City for financial reporting purposes. The City is covered for the first $1,000,000 of each general liability claim and $500,000 of each worker’s compensation claim through the CSJVRMA. The City has the right to receive dividends or the obligation to pay assessments based on a formula which, among other expenses, charges the City’s account for liability losses under $50,000 and worker’s compensation losses under $100,000. The CSJVRMA participates in an excess pool which provides worker’s


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9. RISK MANAGEMENT, Continued compensation coverage from $500,000 to $4,500,000 and purchases excess insurance above the $5,000,000 to the statutory limit.

The CSJVRMA is a consortium of fifty-four (54) cities in San Joaquin Valley, California. It was established under the provisions of California Government Code Section 6500 et. seq. The CSJVRMA is governed by a Board of Directors, which meets 3-4 times per year, consisting of one member appointed by each member city. The day-to-day business is handled by a management group employed by the CSJVRMA.

At the termination of the joint venture agreement and after all claims has been settled, any excess or deficit will be divided among the cities in proportion to the aggregate amount of contribution made by each. The financial position results of operations of CSJVRMA are as follows for June 30, 2018, the most recent available:

Total assets 110,234,633$ Total liabilities 92,209,231 Total equities 18,025,402 Total revenues 46,669,852 Total expenses 46,619,021 Revenues over (under) expenses 50,831

10. PUBLIC EMPLOYEES’ RETIREMENT SYSTEM

General Information about the Pension Plans

Plan Descriptions - All qualified permanent and probationary employees are eligible to participate in the City's separate Safety (police and fire) and Miscellaneous (all other) Employee Pension Plans, cost-sharing multiple employer defined benefit pension plans administered by the California Public Employees' Retirement System (CaIPERS). Benefit provisions under the Plans are established by State statute and City resolution. CalPERS issues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website. Benefits Provided - CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full time employment. Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for non-duty disability benefits after 10 years of service. The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost of living adjustments for each plan are applied as specified by the Public Employees' Retirement Law.


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10. PUBLIC EMPLOYEES’ RETIREMENT SYSTEM, Continued The Plans' provisions and benefits in effect at June 30, 2018, are summarized as follows:

Miscellaneous

Miscellaneous - Second Tier PEPRA Miscellaneous

Hire date

Prior to November 25, 2011

November 25, 2011 toJanuary 1, 2013

On or after January 1, 2013

Benefit formula 3% @ 60 2% @ 60 2% @ 62Benefit vesting schedule 5 years service 5 years service 5 years serviceBenefit payments monthly for life monthly for life monthly for lifeRetirement age 50 - 60 50 - 63 52 - 67Monthly benefits, as a % of eligible compensation 2.0% to 3.0% 1.092% to 2.418% 1.0% to 2.5%Required employee contribution rates 8% 7% 6.25%

Required employer contribution rates 14.003% 7.200% 6.533%

Safety PEPRA Safety - Police

Hire date

Prior to January 1, 2013

On or after January 1, 2013

Benefit formula 3% @ 50 2.7% @ 57Benefit vesting schedule 5 years service 5 years serviceBenefit payments monthly for life monthly for lifeRetirement age 50 50 - 57Monthly benefits, as a % of eligible compensation 3.00% 2.0% to 2.7%Required employee contribution rates 9% 13%

Required employer contribution rates 21.815% 12.95%

Contributions -Section 20814(c) of the California Public Employees' Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. Funding contributions for both Plans are determined annually on an actuarial basis as of June 30 by CaIPERS. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. For the year ended June 30, 2018, the contributions recognized as part of pension expense for each Plan were as follows:

Miscellaneous Safety

Contributions - employer 1,174,464$ 1,718,382$


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10. PUBLIC EMPLOYEES’ RETIREMENT SYSTEM, Continued

Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions

As of June 30, 2018, the City reported net pension liabilities for its proportionate shares of the net pension liability of each Plan as follows:

Proportionate Shareof Net Pension Liability

Miscellaneous 12,732,963$ Safety 14,805,488 Total Net Pension Liability 27,538,451$

The City's net pension liability for each Plan is measured as the proportionate share of the net pension liability. The net pension liability of each of the Plans is measured as of June 30, 2017, and the total pension liability for each Plan used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2016 rolled forward to June 30, 2017 using standard update procedures. The City's proportion of the net pension liability was based on a projection of the City's long-term share of contributions to the pension plans relative to the projected contributions of all participating employers, actuarially determined. The City’s proportionate share of the net pension liability for each Plan as of June 30, 2017 and 2018 was as follows:

Miscellaneous Safety

Proportion - June 30, 2017 0.33348% 0.26617%Proportion - June 30, 2018 0.32300% 0.24778%Change - Increase (Decrease) -0.01048% -0.01839%

For the year ended June 30, 2018, the City recognized pension expense of $2,735,672. At June 30, 2018, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Outflows Deferred Inflow

of Resources of ResourcesPension contributions subsequent to measurement date 2,892,846$ -$ Differences between actual and expected experience 133,832 207,286 Changes in assumptions 3,283,819 251,226 Net differences between projected and actual earnings on plan investments 728,348 -

Differences between employers actual and allocated contributions 1,589,741 406,788 Change in Employer's Proportion 391,344 232,509 Total 9,019,930 1,097,809

$2,892,846 reported as deferred outflows of resources related to contributions subsequent to the measurement date that will be recognized as a reduction of the net pension liability in the year ended June 30, 2018. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:


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Year Ended30-Jun

2019 1,589,777 2020 2,400,040 2021 1,468,590 2022 (429,134) 2023 -

Thereafter - 5,029,273

Actuarial Assumptions -The total pension liabilities in the June 30, 2017 actuarial valuations were determined using the following actuarial assumptions: Actuarial Assumptions

Actuarial cost method Entry-age normal cost method

Actuarial assumptions:

Discount rate 7.15%

Inflation 2.75%

Salary increases Varies by entry age and service

Mortality Rate Table Derived using CalPERS’ Membership Data for all Funs

Post-retirement benefit increase Contract COLA up to 2.75% until purchasing power protection allowance floor on purchasing power applies, 2.75% thereafter.

The underlying mortality assumptions and all other actuarial assumptions used in the June 30, 2016 valuation were based on the results of an actuarial experience study for the period from 1997 to 2015. Further details of the Experience Study can be found on the CalPERS website.

Discount Rate -The discount rate used to measure the total pension liability was 7.15% for the Plan. To determine whether the municipal bond rate should be used in the calculation of a discount rate for the plan, CalPERS stress tested plans that would most likely result in a discount rate that would be different from the actuarially assumed discount rate. Based on the testing, none of the tested plans run out of assets. Therefore, the current 7.15 percent discount rate is adequate and the use of the municipal bond rate calculation is not necessary. The long term expected discount rate of 7.15 percent will be applied to all plans in the Public Employees Retirement Fund (PERF). The stress test results are presented in a detailed report that can be obtained from the CalPERS website.

According to Paragraph 30 of Statement 68, the long-term discount rate should be determined without reduction for pension plan administrative expense. The discount rate was changed from 7.65 percent (net of administrative expense) to 7.15 percent to correct for an adjustment to exclude administrative expense.


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CalPERS is scheduled to review all actuarial assumptions as part of its regular Asset Liability Management (ALM) review cycle that is scheduled to be completed in February 2018. Any changes to the discount rate will require Board action and proper stakeholder outreach. For these reasons, CalPERS expects to continue using a discount rate net of administrative expenses for GASB 67 and 68 calculations through at least the 2017-18 fiscal year. CalPERS will continue to check the materiality of the difference in calculation until such time as we have changed our methodology.

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

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

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

Asset Class

NewStrategic

AllocationReal Return

Years 1 - 10 (a)

Real Return

Years 11+ (b)

Global Equity 47% 4.90% 5.38%Global Fixed Income 19% 0.80% 2.27%Inflation Sensitive 6% 0.60% 1.39%Private Equity 12% 6.60% 6.63%Real Estate 11% 2.80% 5.21%Infrastructure and Forestland 3% 3.90% 5.36%Liquidity 2% -0.55% -0.90% Total 100%

(a) An expected inflation of 2.5% used for this period.(b) An expected inflation of 3.0% used for this period.


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10. PUBLIC EMPLOYEES’ RETIREMENT SYSTEM, Continued Sensitivity of the 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 for each Plan, calculated using the discount rate for each Plan, 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 I-percentage point lower or I-percentage point higher than the current rate:

Current 1% Decrease Discount Rate 1% Increase

(6.15%) (7.15%) (8.15%)

Net Pension Liability as ofJune 30, 2018

Miscellaneous 17,745,508$ 12,732,963$ 8,581,482$ Safety 20,630,219 14,805,488 10,044,061

Total 38,375,727$ 27,538,451$ 18,625,543$

Pension Plan Fiduciary Net Position -Detailed information about each pension plan's fiduciary net position is available in the separately issued CalPERS financial reports.

11. OTHER POSTEMPLOYMENT BENEFITS Plan Description. The City of Atwater Retired Employees Healthcare Plan is a single-employer defined benefit healthcare plan administered by CalPERS. The City provides medical benefits to eligible retirees, their spouses and dependents. To earn this benefit, employees must have reached the age of fifty with five years of service to the City. The City provides coverage for surviving family members of an enrollee who dies while covered under the plan. Coverage for the enrolled family members then continues until any one of a specific set of circumstances occurs. The Retiree Health Plan does not issue a financial report. Funding Policy. The contribution requirements of plan members and the City are established and may be amended by the City Council. The required contribution is based on projected pay-as-you-go financing requirements. For fiscal year 2018, the City contributed $606,000 to the plan, the entire amount for current premiums. The City pays the full benefit cost of health care coverage premiums for retired members receiving benefits. The City does not pay for dental and vision insurance premiums for retiree. Those retirees wishing to be covered by dental and vision insurance benefits must pay 100% of the cost for the retirees and their dependents. At June 30, 2018, the following employees were covered by the benefit terms:

Active employees 83 Inactive employees or beneficiaries currently receiving benefits 59 Inactive employees entitled to, but not yet receiving benefits 24 Total Number of participants 166


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11. OTHER POSTEMPLOYMENT BENEFITS, Continued City Contribution to the Plan The Plan and its contribution requirements are established by Memoranda of Understanding with the applicable employee bargaining units and may be amended by agreements between the City and the bargaining units. The annual contribution is based on the actuarially determined contribution. For the fiscal year ended June 30, 2018, the City’s cash contributions were $606,000 cash benefit payments. Net OPEB Liability The City’s net OPEB liability was measured as of June 30, 2017 and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation dated June 30, 2016 that was rolled forward to determine the June 30, 2017 total OPEB liability, based on the following actuarial methods and assumptions:

Actuarial Valuation Date June 30, 2017 Contribution Policy No pre-fundingDiscount Rate 3.58% at June 30, 2017

(Bond Buyer 20-bond Index)2.85% at June 30, 2016(Bond Buyer 20-bond Index)

General Inflation 2.75% per annumMortality, Retirement, Disability, Termination

CalPERS 1997-2015 experience study

Mortality Improvement Mortality projected fully generational with Scale MP-17

Salary Increases Aggregate - 3.00% per annumMerit - Tables from CalPERS 1997-2015 Experience Study

Medical Trend Non-Medicare - 7.5% for 2019, decreasing to an ultimate rate of 4.0% in 2076 and later yearsMedicare - 6.5% for 2019, decreasing to an ultimate rate of 4.0% in 2076 and later years

Participation at Retirement

Actives & surviving spouse: Participating & Waived: -Percent of premium - 100% - PEMHCA minimum - 60%Retirees & surviving spouse: Participating - 100% Waived < 65 - 20% at 65 Waived > 65 - 0%

Actuarial Assumptions:


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11. OTHER POSTEMPLOYMENT BENEFITS, Continued The long-term expected rate of return on OPEB plan investments was determined using a building- block method in which expected future real rates of return (expected returns, net of OPEB plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:

Target AllocationCERBT Strategy 1

Asset Class ComponentGlobal Equity 57% 4.82%Fixed Income 27% 1.47%TIPS 5% 1.29%Commodities 3% 0.84%REITs 8% 3.76%

100%

Expected Real Rate of Return

Discount Rate The discount rate used to measure the total OPEB liability was 3.58 percent. The projection of cash flows used to determine the discount rate assumed that Authority contributions 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 be available to make all projected OPEB payments for current active and inactive employees and beneficiaries. Therefore, the long-term expected rate of return on OPEB plan investments was applied to all periods of projected benefit payments to determine the total OPEB liability.


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11. OTHER POSTEMPLOYMENT BENEFITS, Continued Changes in the OPEB Liability The changes in the net OPEB liability for the Plan are as follows:

Total OPEB Liability

Fiduciary Net Position

Net OPEB Liability

Balance at 6/30/2017* 25,315,000$ -$ 25,315,000$ Changes for the year

Service Cost 1,200,000 - 1,200,000 Interest 746,000 - 746,000 Difference between actual and expected experience - - - Assumption changes (2,981,000) - (2,981,000) Contributions - employer - 627,000 (627,000) Contributions - employee - - - Net investment income - - - Benefit payments (627,000) (627,000) - Administrative expenses - - -

Net Changes (1,662,000) - (1,662,000) Balance at 6/30/2018** 23,653,000$ -$ 23,653,000$

*Measurement date 6/30/2016

** Measurement date 6/30/2017

Sensitivity of the Net OPEB Liability to Changes in the Discount Rate The discount rate used for the fiscal year end 2018 is 3.58%. The following presents the net OPEB liability of the City if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate, for measurement period ended June 30, 2017:

1% Decrease Current Rate 1% IncreaseChange in Discount Rate 2.58% 3.58% 4.58%Net OPEB Liability 27,880,000$ 23,653,000$ 20,321,000$


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11. OTHER POSTEMPLOYMENT BENEFITS, Continued Sensitivity of the Net OPEB Liability to Changes in the Health Care Cost Trend Rates The following presents the net OPEB liability of the City if it were calculated using health care cost trend rates that are one percentage point lower or one percentage point higher than the current rate, for measurement period ended June 30, 2017 (Healthcare Cost Trend Rate was assumed to start at 7.5% and grade down to 4% for years 2076 and thereafter):

Change in Healthcare Cost Trend Rate 1% Decrease Current Trend 1% IncreaseNet OPEB Liability 19,926,000$ 23,653,000$ 28,467,000$

Recognition of Deferred Outflows and Deferred Inflows of Resources Gains and losses related to changes in total OPEB liability and fiduciary net position are recognized in OPEB expense systematically over time. Amounts are first 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 recognition period differs depending on the source of the gain or loss: Net difference between projected and actual earnings on OPEB plan investments All other amounts

5 years Expected average remaining service lifetime (EARSL) (6.0 Years at June 30, 2017)

OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB For the fiscal year ended June 30, 2018, the City recognized OPEB expense of $343,837. As of fiscal year ended June 30, 2018, the City reported deferred outflows of resources related to OPEB from the following sources:

Deferred Outflows of Resources

Deferred Inflows of Resources

Differences between expected and actual experience -$ -$

Changes in assumptions - -

Net difference between projected and actual earnings on plan invesments - 2,508,000

Employer contributions made subsequent to the measurement date 606,000 -

Total 606,000$ 2,508,000$


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11. OTHER POSTEMPLOYMENT BENEFITS, Continued The $606,000 reported as deferred outflows of resources related to contributions subsequent to the June 30, 2017 measurement date will be recognized as a reduction of the net OPEB liability during the fiscal year ending June 30, 2019. Other amounts reported as deferred outflows of resources related to OPEB will be recognized as expense as follows:

Fiscal Year Ended June 30,

Deferred Outflow/(Inflows) of

Resources2019 (473,000)$ 2020 (473,000) 2021 (473,000) 2022 (473,000) 2023 (473,000)

Thereafter (143,000)

12. SUCCESSOR AGENCY TRUST FOR ASSETS OF FORMER REDEVELOPMENT

AGENCY

On December 29, 2011, the California Supreme Court upheld Assembly Bill 1X 26 (“the Bill”) that provides for the dissolution of all redevelopment agencies in the State of California. This action impacted the reporting entity of the City of Atwater that previously had reported a redevelopment agency within the reporting entity of the City as a blended component unit.

The Bill provides that upon dissolution of a redevelopment agency, either the city or another unit of local government will agree to serve as the “successor agency” to hold the assets until they are distributed to other units of state and local government. On January 12, 2015, the City Council elected to become the Successor Agency for the former redevelopment agency in accordance with the Bill as part of City resolution number 112-10.

After enactment of the law on June 28, 2011, redevelopment agencies in the State of California cannot enter into new projects, obligations or commitments. Subject to the control of a newly established oversight board, remaining assets can only be used to pay enforceable obligations in existence at the date of dissolution (including the completion of any unfinished projects that were subject to legally enforceable contractual commitments).

In future fiscal years, successor agencies will only be allocated revenue in the amount that is necessary to pay the estimated annual installment payments on enforceable obligations of the former redevelopment agency until all enforceable obligations of the prior redevelopment agency have been paid in full and all assets have been liquidated.

The Bill directs the State Controller of the State of California to review the propriety of any transfers of assets between redevelopment agencies and other public bodies that occurred after January 1, 2011. If the public body that received such transfers is not contractually committed to a third party for the expenditure or encumbrance of those assets, the State Controller is required to order the available assets to be transferred to the public body designated as the successor agency by the Bill.


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12. SUCCESSOR AGENCY TRUST FOR ASSETS OF FORMER REDEVELOPMENT AGENCY, Continued

Management believes, in consultation with legal counsel, that the obligations of the former redevelopment agency due to the City are valid enforceable obligations payable by the successor agency trust under the requirements of the Bill. The City’s position on this issue is not a position of settled law and there is considerable legal uncertainty regarding this issue. It is reasonably possible that a legal determination may be made at a later date by an appropriate judicial authority that would resolve this issue unfavorably to the City.

After the date of dissolution, the assets and activities of the dissolved redevelopment agency are reported in a fiduciary fund (private-purpose trust fund) in the financial statements of the City. Long-term Liabilities The following is a summary of changes in long-term liabilities for the year ended June 30, 2018:


Trust Activities:1998 Tax Allocation Refunding Bonds -

Series A 965,000$ -$ (965,000)$ -$ -$ 2007 Taxable Housing Tax Allocation Refunding Bonds -

Series A 5,580,000 - (5,580,000) - - Series B 1,530,000 - (1,530,000) - -

Bond discount (69,686) - 69,686 - - 2017A & 2017 B Tax Allocation Refunding Bonds - - 7,524,000 (354,000) 7,170,000 645,000

Total trust fund debt 8,005,314$ 7,524,000$ (8,359,314)$ 7,170,000$ 645,000$

1998 Tax Allocation Refunding Bonds – Series A In April 1998, the Atwater Redevelopment Agency issued $2,600,000 Atwater Redevelopment Agency (Downtown Redevelopment Project) Tax Allocation Refunding Bonds, Series A. The proceeds of the bonds were used to provide moneys to the Agency to enable the Agency to: (i) generally finance redevelopment activities and specifically to refund certain outstanding obligations of the Atwater Public Financing Authority, (ii) fund a reserve fund, and (iii) pay the costs of issuance of the bonds. The final maturity date on the bonds is June 2022. Each payment includes interest at an annual rate between 4.9% and 5.5%. These bonds were defeased by the 2017AB Tax Allocation Refunding Bonds.


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12. SUCCESSOR AGENCY TRUST FOR ASSETS OF FORMER REDEVELOPMENT AGENCY, Continued 2007 Taxable Housing Tax Allocation Bonds – Series A In April 2007, the Atwater Redevelopment Agency issued $8,475,000 Atwater Redevelopment Agency Tax Allocation Bonds, Series A. The proceeds of the bonds were used to provide moneys to the Agency to enable the Agency to finance a variety of Agency projects. A portion of the bond proceeds was used to defease all of the outstanding 1998 B Bonds. The final maturity date on the bonds is June 2026. These bonds were defeased by the 2017AB Tax Allocation Refunding Bonds. 2007 Taxable Housing Tax Allocation Bonds – Series B In April 2007, the Atwater Redevelopment Agency issued $2,325,000 Atwater Redevelopment Project Taxable Housing Tax Allocation Bonds, Series B. The bond proceeds was used to by the Agency (i) finance low and moderate housing redevelopment activities in the Project Area, (ii) pay the premium for a debt service reserve fund surety bond to be deposited in a reserve fund for the bonds, and (iii) pay the costs of issuing the bonds. The final maturity date on the bonds is June 2026. These bonds were defeased by the 2017AB Tax Allocation Refunding Bonds.

2017 Tax Allocation Refunding Bonds – Series A and B In September 2017, the Successor Agency to the Atwater Redevelopment Agency issued $7,524,000 Tax Allocation Refunding Bonds, Series A, in the amount of $5,999,000 and Series B in the amount of $1,525,000. The were used to defease all of the outstanding 1998 A Bonds and the 2007, Series A and B Bonds. The final maturity date on the bonds is June 2026. Future debt service for Fiduciary Activities at June 30, 2018, is as follows:

Year Ending

June 30,

Principal Interest

2019 645,000$ 193,534$

2020 863,000 172,185

2021 883,000 146,080

2022 908,000 123,298

2023 931,000 99,872

2024-2026 2,940,000 152,969

Total 7,170,000$ 887,938$


Due after one year 6,525,000 694,404

Total 7,170,000$ 887,938$

2017 Series A & B

Tax Allocation Refunding Bonds

FiduciaryActivities


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13. COMMITMENTS AND CONTINGENCIES Litigation The City is involved in litigation incurred in the normal course of conducting City business. Although the outcome of these lawsuits is not presently determinable, in the opinion of the City’s counsel, the resolution of these matters will not have a material adverse effect on the financial condition of the City. Grants and Allocations Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor agencies, principally the federal and state government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures that may be disallowed by the grantor cannot be determined at this time, although the City expects such amounts, if any, to be immaterial. 14. NEW ACCOUNTING PRONOUNCEMENTS The GASB has issued Statement No. 75, “Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions”. The primary objective of this Statement is to improve accounting and financial reporting by state and local governments for postemployment benefits other than pensions (other postemployment benefits or OPEB). It also improves information provided by state and local governmental employers about financial support for OPEB that is provided by other entities. This Statement results from a comprehensive review of the effectiveness of existing standards of accounting and financial reporting for all postemployment benefits (pensions and OPEB) with regard to providing decision-useful information, supporting assessments of accountability and interperiod equity, and creating additional transparency. This Statement replaces the requirements of Statements No. 45, “Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions”, as amended, and No. 57, “OPEB Measurements by Agent Employers and Agent Multiple-Employer Plans”, for OPEB. Statement No. 74, “Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans”, establishes new accounting and financial reporting requirements for OPEB plans. The provisions in Statement 75 are effective for fiscal years beginning after June 15, 2017. The City implemented this statement, as applicable, to its financial statements for the year ended June 30, 2018. The GASB has issued Statement No. 81, “Irrevocable Split-Interest Agreements”. The objective of this Statement is to improve accounting and financial reporting for irrevocable split-interest agreements by providing recognition and measurement guidance for situations in which a government is a beneficiary of the agreement. Split-interest agreements are a type of giving agreement used by donors to provide resources to two or more beneficiaries, including governments. Split-interest agreements can be created through trusts—or other legally enforceable agreements with characteristics that are equivalent to split-interest agreements—in which a donor transfers resources to an intermediary to hold and administer for the benefit of a government and at least one other beneficiary. Examples of these types of agreements include charitable lead trusts, charitable remainder trusts, and life-interests in real estate. This Statement requires that a government that receives resources pursuant to an irrevocable split-interest agreement recognize assets, liabilities, and deferred inflows of resources at the inception of


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14. NEW ACCOUNTING PRONOUNCEMENTS, Continued Statement No. 81, “Irrevocable Split-Interest Agreements”, continued the agreement. Furthermore, this Statement requires that a government recognize assets representing its beneficial interests in irrevocable split-interest agreements that are administered by a third party, if the government controls the present service capacity of the beneficial interests. This Statement requires that a government recognize revenue when the resources become applicable to the reporting period. The requirements of this Statement are effective for financial statements for periods beginning after December 15, 2016, and should be applied retroactively. The City implemented this statement, as applicable, to its financial statements for the year ended June 30, 2018. The GASB has issued Statement No. 82, "Pension Issues-an amendment of GASB Statements No. 67, No. 68, and No. 73." The requirements of this Statement will take effect for financial statements starting with the fiscal year that ends June 30, 2018, except for the requirements of this Statement for the selection of assumptions in a circumstance in which an employer's pension liability is measured as of a date other than the employer's most recent fiscal year-end. In that circumstance, the requirements for the selection of assumptions will take effect for that employer in the first reporting period in which the measurement date of the pension liability is on or after June 15, 2017. The City implemented this statement, as applicable, to its financial statements for the year ended June 30, 2018.

The GASB has issued Statement No. 83 “Certain Asset Retirement Obligations” This Statement addresses accounting and financial reporting for certain asset retirement obligations (AROs). An ARO is a legally enforceable liability associated with the retirement of a tangible capital asset. A government that has legal obligations to perform future asset retirement activities related to its tangible capital assets should recognize a liability based on the guidance in this Statement. The requirements of this Statement will take effect for financial statement starting with the fiscal year that ends June 30, 2019. The City will implement this statement, as applicable, to its financial statements for the year ending June 30, 2019. The GASB has issued Statement No. 84 “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. The requirements of this Statement will take effect for financial statement starting with the fiscal year that ends December 31, 2019. The City will implement this statement, as applicable, to its financial statements for the year ending June 30, 2019. The GASB has issued Statement No. 85 “Omnibus 2017” The objective of this Statement is to address practice issues that have been identified during implementation and application of certain GASB Statements. This Statement addresses a variety of topics including issues related to blending component units, goodwill, fair value measurement and application, and postemployment benefits (pensions and other postemployment benefits [OPEB]). The requirements of this Statement will take effect for financial statement starting with the fiscal year that ends December 31, 2018. The City will implement this statement, as applicable, to its financial statements for the year ending June 30, 2019.


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14. NEW ACCOUNTING PRONOUNCEMENTS, Continued The GASB has issued Statement No. 86 “Certain Debt Extinguishment Issues” The primary objective of this Statement is to improve consistency in accounting and financial reporting for in-substance defeasance of debt by providing guidance for transactions in which cash and other monetary assets acquired with only existing resources—resources other than the proceeds of refunding debt—are placed in an irrevocable trust for the sole purpose of extinguishing debt. This Statement also improves accounting and financial reporting for prepaid insurance on debt that is extinguished and notes to financial statements for debt that is defeased in substance. The requirements of this Statement will take effect for financial statement starting with the fiscal year that ends December 31, 2018. The City will implement this statement, as applicable, to its financial statements for the year ending June 30, 2019. The GASB has issued Statement No. 87 “Leases” The objective of this Statement is to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments. This Statement increases the usefulness of governments’ financial statements by requiring recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. It establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Under this Statement, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources, thereby enhancing the relevance and consistency of information about governments’ leasing activities. The requirements of this Statement will take effect for financial statement starting with the fiscal year that ends December 31, 2020. The City will implement this statement, as applicable, to its financial statements for the year ending June 30, 2020. 15. MANAGEMENT’S PLAN OF OPERATIONS

General Fund

Two major sources of revenue to the City’s General Fund are property tax and sales tax. Both of these areas were significantly impacted by the economic downturn over the past several years. The effects of the housing downturn and financial market decline have reduced the City’s General Fund revenue base. This situation was further impacted by State action which reduced local revenues such as motor vehicle license fees and eliminated redevelopment agencies statewide. Rising labor costs through collective bargaining agreements and accounting changes such as reporting Other Post-Employment Benefits (OPEB) have further contributed to the structural imbalance. To address this situation, the City Council has taken action to begin to move the General Fund toward a balanced budget position. The City has worked with employees to reduce current operating costs through early retirements, layoffs and salary and benefit reductions. Actions have also been taken to increase various fees to generate additional revenue. These actions have significantly reduced the magnitude of the operating shortfall. A balanced General Fund budget was adopted for the 2018-19 fiscal year.


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15. MANAGEMENT’S PLAN OF OPERATIONS, Continued Sanitation Fund

Sanitation service in the City of Atwater is provided through a service contract with an outside vendor. That ten-year agreement was executed in 2003 and rates had not been adjusted at that time. This resulted in a deficit in the Sanitation Fund. To address this issue, the City Council formed a Sanitation Fund Committee to review options for addressing this issue. The City Council approved a five-year plan for annual rate increases in fiscal year 2012-13. As of June 30, 2018, the Sanitation Fund no longer has a deficit fund balance.

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REQUIRED SUPPLEMENTARY INFORMATION

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City of Atwater, CaliforniaRequired Supplementary Information - Schedule of Contributions

Miscellaneous Plan

Last 10 Fiscal Years*

2018 2017

Contractually required contribution (actuarially determined) 1,174,464$ 1,116,119$

Contributions in relation to the actuarially determined contributions 1,174,464 799,855

Contribution deficiency (excess) -$ 316,264$

Covered-employee payroll 2,286,138$ 2,442,521$

Contribution as a percentage of covered-employee payroll 51.37% 32.75%

Notes to Schedule1) Covered employee payroll represents compensation earnable and pensionable compensation. Only compensation earnable and pensionable compensation that would possibly go into the determination of retirement benefits are included.

* Due to a change in CalPERS reporting information, only 2017 was available. Additional years will be presented as they become available.

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City of Atwater, CaliforniaRequired Supplementary Information - Schedule of Contributions

Safety Plan


2018 2017

Contractually required contribution (actuarially determined) 1,718,382$ 1,619,553$

Contributions in relation to the actuarially determined contributions 1,718,382 845,462

Contribution deficiency (excess) -$ 774,091$

Covered-employee payroll 2,066,299$ 2,202,581$

Contribution as a percentage of covered-employee payroll 83.16% 38.39%



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City of Atwater, CaliforniaRequired Supplementary Information - Schedule of the City's Proportionate

Share of the Net Pension Liability

Miscellaneous Plan


2018 2017

Plan's Proportion of the Net Pension Liability/(Asset) 0.32300% 0.33345%

Plan's Proportionate Share of the Net Pension Liability/(Asset) 12,732,963$ 11,584,691$

Plan's Covered-Employee Payroll 2,286,138$ 2,442,521$

Plan's Proportionate Share of the Net Pension Liability/(Asset) as a Percentage of its Covered-Employee Payroll 17.95% 21.08%

Plan's Proportionate Share of the Fiduciary Net Position as a Percentage of the Plan’s Total Pension Liability 65.06% 75.87%

Plan's Proportionate Share of Aggregate Employer Contribution 897,081$ 799,855$



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City of Atwater, CaliforniaRequired Supplementary Information - Schedule of the City's Proportionate

Share of the Net Pension Liability

Safety Plan


2018 2017

Plan's Proportion of the Net Pension Liability/(Asset) 0.24778% 0.66170%

Plan's Proportionate Share of the Net Pension Liability/(Asset) 14,805,488$ 13,785,708$

Plan's Covered-Employee Payroll 2,066,299$ 2,202,581$

Plan's Proportionate Share of the Net Pension Liability/(Asset) as a Percentage of its Covered-Employee Payroll 13.96% 15.98%

Plan's Proportionate Share of the Fiduciary Net Position as a Percentage of the Plan’s Total Pension Liability 64.44% 72.69%

Plan's Proportionate Share of Aggregate Employer Contribution 925,711$ 845,462$



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City of Atwater, CaliforniaRequired Supplementary Information - Schedule of Changes in the Net OPEB Liability and Related Ratiosfor the Measurement Periods Ended June 30,

2017Total OPEB Liability

Service Cost 1,200,000$ Interest on the total OPEB liability 746,000 Differences between expected and actual experience - Changes of benefit terms - Changes of assumptions (2,981,000) Benefit payments (627,000) Net change in total OPEB liability (1,662,000)

Total OPEB liability ‐ beginning 25,315,000 Total OPEB liability ‐ ending (a) 23,653,000$

Plan fiduciary net positionContributions ‐ employer -$ Contributions ‐ employee - Actual investment income - Administrative expense - Net change in plan fiduciary net position -

Plan fiduciary net position ‐ beginning - Plan fiduciary net position ‐ ending (b) -$

Net OPEB liability ‐ ending (a) ‐ (b) 23,653,000$

Covered‐employee payroll 5,940,000$

Net OPEB liability as a percentage of covered‐employee payr 398.20%

Notes to Schedule1) GASB 75 requires presentation of the 10‐year history of changes in the Net OPEB Liability. However, since this is the initial year of implementation, only one year is currently available

100

City of Atwater, CaliforniaRequired Supplementary Information - Net OPEB Liability Schedule of Contributions

June 30, 2018

Fiscal Year Ended June 30, 2018

Actuarially Determined Contribution (ADC) 627,000$

Contributions in relation to the ADC 627,000 Contribution deficiency ( excess) -$

Covered-employee payroll 5,940,000$

Contributions as a percentage of covered-employee payroll 10.56%

Notes to Schedule

1)GASB 75 requires presentation of the 10‐year history of changes in the Net OPEB Liability. However, since this is the initial year of implementation, only one year is currently available

101


102

COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES

103

Fund Type

Special Revenue

City Capital Projects Fund

Performance Bond Capital Projects Fund

NON-MAJOR GOVERNMENTAL FUNDS

Description

These funds account for restricted revenues (for specifiedpurposes).

This fund accounts for construction or acquisition ofgovernmental capital assets (capital outlay).

This fund accounts for financial resources for the acquisition ofgeneral obligation bonds.

104

City of Atwater, CaliforniaCombining Balance Sheet

Nonmajor Governmental Funds

June 30, 2018

Special PerformanceRevenue Funds General Bond

ASSETS

Cash and investments 8,874,023$ -$ 112,109$ 8,986,132$ Receivables:

Taxes and assessments 37,647 - - 37,647 Interest 25,617 - 601 26,218 Intergovernmental 589,982 - - 589,982 Other receivable - 3,136 - 3,136

Due from other funds 161,736 - 99,858 261,594 Advance to Successor Agency 259,265 - - 259,265 Investment in land held for resale 3,855,930 - - 3,855,930

Total assets 13,804,200$ 3,136$ 212,568$ 14,019,904$

LIABILITIES, DEFERRED INFLOWSAND FUND BALANCES

Liabilities:Accounts payable and accrued liabilities 61,233$ -$ -$ 61,233$ Due to other funds 926,137 99,858 - 1,025,995 Deposits Payable - - 111,666 111,666

Total liabilities: 987,370 99,858 111,666 1,198,894

Deferred inflows of resources:Unavailable revenue 21,093 - - 21,093

Total deferred inflows of resources 21,093 - - 21,093

Total liabilities and deferred inflows 1,008,463 99,858 111,666 1,219,987

Fund Balances:Nonspendable 3,855,930 - - 3,855,930 Restricted 5,682,967 - - 5,682,967 Assigned 3,446,930 100,902 3,547,832 Unassigned (deficit) (190,090) (96,722) - (286,812)

Total fund balances 12,795,737 (96,722) 100,902 12,799,917

Total liabilities, deferred inflows and fund balances 13,804,200$ 3,136$ 212,568$ 14,019,904$

Funds TotalsNon-Major

Governmental Funds

Capital Projects Funds

105

City of Atwater, CaliforniaCombining Statement of Revenues, Expenditures and Changes in Fund Balances

Nonmajor Governmental Funds


Special PerformanceRevenue Funds General Bond

REVENUES:Taxes and assessments 1,778,785$ -$ -$ 1,778,785$ Intergovernmental 1,350,774 560,113 - 1,910,887 Use of money and property 126,640 - 1,626 128,266 Reimbursements 7,104 - - 7,104 Other revenues 12,502 3,936 - 16,438

Total revenues 3,275,805 564,049 1,626 3,841,480


General government 135 - 0 135 Public safety 14,303 0 - 14,303 Highways and Streets 760,001 - - 760,001 Urban redevelopment and housing 579,970 - - 579,970

Capital outlay 249,239 335,401 - 584,640 Total expenditures 1,603,648 335,401 - 1,939,049

REVENUES OVER (UNDER) EXPENDITURES 1,672,157 228,648 1,626 1,902,431

OTHER FINANCING SOURCES (USES):Transfers in 128,749 1,880 - 130,629 Transfers out (24,397) - - (24,397)

Total other financingsources (uses) 104,352 1,880 - 106,232

REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES AND OTHERFINANCING (USES) 1,776,509 230,528 1,626 2,008,663

FUND BALANCES:Beginning of year 11,019,228 (327,250) 99,276 10,791,254

End of year 12,795,737$ (96,722)$ 100,902$ 12,799,917$

Funds TotalsNon-Major

Governmental Funds

Capital Projects Funds

106

Fund

Police Grants

Gas Tax

Local Transportation Fund

Facility Impact Fee

Community Developent Block Grants

CDBG Program Income

HOME Investment Partnership Program

Housing Authority

Measure V

Narcotics Program

Neighborhood Stabilization

(continued)

These fees are received from developers to increase space and toimprove City buildings to mitigate the growth of the City.

Accounts for revenues and expenditures associated with theNarcotics Program.

Accounts for activities related to housing and the related Urbanredevelopment and housing Block Grant funding.

Accounts for activities related to housing and the related HomeProgram funding.

Accounts for Measure V, a voter approved sales tax measure, toprovide enhanced public safety costs.

Accounts for activities related to housing and the related Urban redevelopment and housing Block Grant funding program income.

Accounts for activities related to housing and the related Home Program funding.

NON-MAJOR SPECIAL REVENUE FUNDS

Description

Accounts accounts for local transportation funds restricted totransit, street, pedestrian, and bike purposes.

Accounts for revenues and expenditures associated withcommunity policing grants.

Accounts for funds received and expended for street maintenancepurposes as defined in Sections 2105, 2106, 2107, and 2107.5 ofthe Streets and Highway Code.

Accounts for revenues and expenditures associated with theredevelopment of abandoned and forclosed homes and residentialproperty.

107

Fund

Applegate Interchange

Maintenance Districts:

Northwood Village Camelia Estates

Orchard Parks Estates Juniper Meadows

Wildwood Estates Camelia Meadows

Woodview Garland Stone Creek

Shaffer Lakes West America West

Woodhaven Bell Crossing

Sierra Parks Atwater South

Shaffer Lakes East Beluga Court

Price Annexation Mello Ranch 2

Sandlewood Square Meadow View

Pajaro Dunes Aspenwood

Redwood Estates Applegate Ranch

Cottage Gardens Reserve

Airport Business Park CFD Districts

Silva Ranch

Mello Ranch

(concluded)

Accounts for funds collected for the maintenance districts shownwithin the City limits for which the City is obligated to maintain.

Accounts for revenues and expenditures associated with theApplegate Interchange.

NON-MAJOR SPECIAL REVENUE FUNDS, Continued

Description

108


109


Nonmajor Special Revenue Funds

June 30, 2018

FacilityPolice Gas Local ImpactGrants Tax Transportation Fee

ASSETS

Cash and investments 405,324$ 1,065,255$ 380,143$ 3,971,280$ Receivables:

Taxes and assessmentsInterest 1,150 3,291 1,084 11,010Intergovernmental 0 19,099 41,766 191,000Other receivable - - - -

Due from other funds - - - - Advance to Successor Agency - - - - Investment in land held for resale - - - -

Total assets 406,474$ 1,087,645$ 422,993$ 4,173,290$

LIABILITIES, DEFERRED INFLOWSAND FUND BALANCES

Liabilities:Accounts payable and accrued liabilities -$ 27,834$ -$ 14,071$ Due to other funds 334,550 - 417,410 -

Total liabilities: 334,550 27,834 417,410 14,071

Deferred inflows of resources:Unavailable revenue - 239 20,883 -

Total deferred inflows of resources - 239 20,883 -

Total liabilities and deferred inflows 334,550 28,073 438,293 14,071

Fund Balances:Nonspendable - - - - Restricted - 1,059,572 - 4,159,219Assigned 71,924 - - - Unassigned (deficit) - - (15,300) -

Total fund balances 71,924 1,059,572 (15,300) 4,159,219

Total liabilities deferred inflows and fund balances 406,474$ 1,087,645$ 422,993$ 4,173,290$

110

Community HOMEDevelopment CDBG Investment

Block Program Partnership Housing Measure Narcotics NeigborhoodGrants Income Program Authority V Program Stabilization

-$ 29,455$ 249,642$ 50,643$ 138,293$ 5,311$ 213,221$

31,639- 83 708 147 370 15 605- - - - - - - - - - - - - - - - - - - - - - - - 259,265 - - - - - - 3,855,930 -

-$ 29,538$ 250,350$ 4,165,985$ 170,302$ 5,326$ 213,826$

-$ -$ -$ 1,591$ -$ -$ -$ 12,441 - - - - - - 12,441 - - 1,591 -

- (29) - - - - (29) - - -

12,441 (29) - 1,591 - - -

- - - 3,855,930 - - - 250,350 - - - 213,826- 29,567 - 308,464 170,302 5,326 -

(12,441) - - - - - -

(12,441) 29,567 250,350 4,164,394 170,302 5,326 213,826

-$ 29,538$ 250,350$ 4,165,985$ 170,302$ 5,326$ 213,826$

(continued)

111


Nonmajor Special Revenue Funds, continued

June 30, 2018

MaintenanceApplegate District

Interchange FundsASSETS

Cash and investments 729,676$ 1,635,780$ 8,874,023$ Receivables:

Taxes and assessments - 6,008 37,647 Interest 2,071 5,083 25,617 Intergovernmental 338,117 589,982 Other receivable - -

Due from other funds - 161,736 161,736 Advance to Successor Agency - - 259,265 Investment in land held for resale - - 3,855,930

Total assets 731,747$ 2,146,724$ 13,804,200$

AND FUND BALANCES

Liabilities:Accounts payable and accrued liabilities -$ 17,737$ 61,233$ Due to other funds 161,736 926,137 Total liabilities: - 179,473 987,370

Deferred inflows of resources:Unavailable revenue - - 21,093

Total deferred inflows of resources - - 21,093

Total liabilities and deferred inflows - 179,473 1,008,463

Fund Balances:Nonspendable - - 3,855,930 Restricted - - 5,682,967 Assigned 731,747 2,129,600 3,446,930 Unassigned (deficit) - (162,349) (190,090)

Total fund balances 731,747 1,967,251 12,795,737

Total liabilities deferred inflows and fund balances 731,747$ 2,146,724$ 13,804,200$

(concluded)

Totals

112


113


Nonmajor Special Revenue Funds


FacilityPolice Gas Local ImpactGrants Tax Transportation Fee

REVENUES:Taxes and assessments -$ -$ -$ 1,101,971$ Intergovernmental 350 615,789 147,047 185,606 Use of money and property 3,164 9,203 2,911 28,170 Reimbursements - - - 7,104 Other revenues - 12,502 - -

Total revenues 3,514 637,494 149,958 1,322,851


General government - - - 135 Public safety 14,303 - - - Highways and Streets - 760,001 - - Urban redevelopment and housing - - - -

Capital outlay - 111,958 3,800 98,312 Total expenditures 14,303 871,959 3,800 98,447

REVENUES OVER (UNDER)EXPENDITURES (10,789) (234,465) 146,158 1,224,404

OTHER FINANCING SOURCES (USES):Transfers in - - - - Transfers out - - - (24,397)

Total other financingsources and uses - - - (24,397)

REVENUES AND OTHER FINANCINGSOURCES OVER (UNDER)EXPENDITURES AND OTHERFINANCING (USES) (10,789) (234,465) 146,158 1,200,007

FUND BALANCES (DEFICITS):Beginning of year 82,713 1,294,037 (161,458) 2,959,212

End of year 71,924$ 1,059,572$ (15,300)$ 4,159,219$

114

Community HOMEDevelopment CDBG Investment

Block Program Partnership Housing Measure Narcotics NeigborhoodGrants Income Program Authority V Program Stabilization

-$ -$ -$ -$ 145,267$ -$ -$ - - - 63,866 - - - - 233 60,792 394 638 41 1,636 - - - - - - - - - - - - - -

- 233 60,792 64,260 145,905 41 1,636

- - - - - - - - - - - - - - - - - - - - - - - - 15,061 - - - - - - - - - -

- - - 15,061 - - -

- 233 60,792 49,199 145,905 41 1,636

- - - - 24,397 - - - - - - - - -

- - - - 24,397 - -

- 233 60,792 49,199 170,302 41 1,636

(12,441) 29,334 189,558 4,115,195 - 5,285 212,190

(12,441)$ 29,567$ 250,350$ 4,164,394$ 170,302$ 5,326$ 213,826$

(continued)

115


Nonmajor Special Revenue Funds, continued


MaintenanceApplegate District

Interchange Funds TotalsREVENUES:Taxes and assessments 5,534$ 526,013$ 1,778,785$ Intergovernmental - 338,116 1,350,774 Use of money and property 5,599 13,859 126,640 Reimbursements - - 7,104 Other revenues - - 12,502

Total revenues 11,133 877,988 3,275,805


General government - - 135 Public safety - - 14,303 Highways and Streets - - 760,001 Urban redevelopment and housing - 564,909 579,970

Capital outlay - 35,169 249,239 Total expenditures - 600,078 1,603,648

REVENUES OVER (UNDER)EXPENDITURES 11,133 277,910 1,672,157

OTHER FINANCING SOURCES (USES):Transfers in - 104,352 128,749 Transfers out - - (24,397)

Total other financingsources and uses - 104,352 104,352

REVENUES AND OTHER FINANCINGSOURCES OVER (UNDER)EXPENDITURES AND OTHERFINANCING (USES) 11,133 382,262 1,776,509

FUND BALANCES (DEFICITS):Beginning of year 720,614 1,584,989 11,019,228

End of year 731,747$ 1,967,251$ 12,795,737$

(concluded)

116

City of Atwater, CaliforniaSchedule of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual

Police Grants Special Revenue Fund




Intergovernmental 217,216$ 14,338$ 350$ (13,988)$ Use of money and property - - 3,164 3,164

Total revenues 217,216 14,338 3,514 (10,824)


Public safety 266,685 14,338 14,303 35 Capital outlay - - 0 -

Total expenditures 266,685 14,338 14,303 35

REVENUES OVER (UNDER)EXPENDITURES (49,469) - (10,789) (10,789)

OTHER FINANCING SOURCES (USES):Transfers in 31,657 31,657 0 (31,657)

Total other financing sources (uses) 31,657 31,657 - (31,657)

Net change in fund balances (17,812) 31,657 (10,789) (42,446)

FUND BALANCES (DEFICITS):Beginning of year 82,713 82,713 82,713 -

End of year 64,901$ 114,370$ 71,924$ (42,446)$

Budgeted Amounts

117


Gas Tax Special Revenue Fund




Intergovernmental 1,127,099$ 1,127,099$ 615,789$ (511,310)$ Use of money and property - - 9,203 9,203 Other revenues - - 12,502 12,502

Total revenues 1,127,099 1,127,099 637,494 (489,605)


Highways and Streets 1,025,563 1,025,563 760,001 265,562 Capital outlay 493,946 493,946 111,958 381,988

Total expenditures 1,519,509 1,519,509 871,959 647,550

REVENUES OVER (UNDER)EXPENDITURES (392,410) (392,410) (234,465) 157,945

OTHER FINANCING SOURCES (USES):Transfers in - - 0 - Transfers out - - - -

Total other financing sources (uses) - - - -

Net change in fund balances (392,410) (392,410) (234,465) 157,945

FUND BALANCES:Beginning of year 1,294,037 1,294,037 1,294,037 -

End of year 901,627$ 901,627$ 1,059,572$ 157,945$

Budgeted Amounts

118


Local Transportation Special Revenue Fund




Intergovernmental -$ -$ 147,047$ 147,047$ Use of money and property - - 2,911 2,911 Other revenues - - - -

Total revenues - - 149,958 149,958


Highways and Streets - - - - Capital outlay - - 3,800 (3,800)

Total expenditures - - 3,800 (3,800)

REVENUES OVER (UNDER)EXPENDITURES - - 146,158 146,158

Net change in fund balances - - 146,158 146,158

FUND BALANCES (DEFICITS):Beginning of year (161,458) (161,458) (161,458) -

End of year (161,458)$ (161,458)$ (15,300)$ 146,158$

Budgeted Amounts

119


Facility Impact Fee Revolving Special Revenue Fund




Taxes and assessments 22,000$ 741,000$ 1,101,971$ 360,971$ Intergovernmental 10,500 10,500 185,606 175,106 Use of money and property 4,250 2,200 28,170 25,970 Reimbursements - 1,200 7,104 5,904

Total revenues 36,750 754,900 1,322,851 567,951


General government - - 135 (135) Capital outlay 343,000 644,259 98,312 545,947

Total expenditures 343,000 644,259 98,447 545,812

REVENUES OVER (UNDER)EXPENDITURES (306,250) 110,641 1,224,404 1,113,763

OTHER FINANCING SOURCES (USES):Transfers out - - (24,397) (24,397)

Total other financing sources (uses) - - (24,397) (24,397)

Net change in fund balances (306,250) 110,641 1,200,007 1,089,366


End of year 2,652,962$ 3,069,853$ 4,159,219$ 1,089,366$

Budgeted Amounts

120


Community Development Block Grants Special Revenue Fund




Intergovernmental -$ -$ -$ -$

Total revenues - - - -

EXPENDITURES:Current:Capital outlay - - - -

Total expenditures - - - -

REVENUES OVER (UNDER)EXPENDITURES - - - -

Net change in fund balances - - - -


End of year (12,441)$ (12,441)$ (12,441)$ -$

Budgeted Amounts

121


CDBG Program Income Special Revenue Fund




Use of money and property -$ -$ 233$ 233$

Total revenues - - 233 233


Urban redevelopment and housing - - - -


REVENUES OVER (UNDER)EXPENDITURES - - 233 233

OTHER FINANCING SOURCES (USES):Transfers out - - - -


Net change in fund balances - - 233 233


End of year 29,334$ 29,334$ 29,567$ 233$

Budgeted Amounts

122


HOME Investment Partnership Program Special Revenue Fund




Use of money and property -$ -$ 60,792$ 60,792$

Total revenues - - 60,792 60,792





OTHER FINANCING SOURCES (USES):Transfers in 0



FUND BALANCES:Beginning of year 189,558 189,558 189,558 -

End of year 189,558$ 189,558$ 250,350$ 60,792$

Budgeted Amounts

123


Housing Authority Special Revenue Fund




Intergovernmental -$ -$ 63,866$ 63,866$








End of year 4,115,195$ 4,115,195$ 4,179,061$ 63,866$

Budgeted Amounts

124


Measure V Special Revenue Fund




Taxes and assessments -$ 124,500$ 145,267$ 20,767$ Use of money and property - - 638 638

Total revenues - 124,500 145,905 21,405


General government - - - -


REVENUES OVER (UNDER)EXPENDITURES - 124,500 145,905 21,405

OTHER FINANCING SOURCES (USES):Transfers in - 24,397 24,397 -

Total other financing sources (uses) - 24,397 24,397 -

Net change in fund balances - 148,897 170,302 21,405

FUND BALANCES (DEFICITS):Beginning of year - - - -

End of year -$ 148,897$ 170,302$ 21,405$

Budgeted Amounts

125


Narcotics Program Special Revenue Fund




Fines and forfeitures -$ -$ -$ -$ Use of money and property - - 41 41



Public safety - - - -





End of year 5,285$ 5,285$ 5,326$ 41$

Budgeted Amounts

126


Neighborhood Stabilization Special Revenue Fund




Intergovernmental -$ -$ -$ -$ Use of money and property - - 1,636 1,636



Urban redevelopment and housing 0 0 - -





End of year 212,190$ 212,190$ 213,826$ 1,636$

Budgeted Amounts

127


Applegate Interchange Special Revenue Fund




Taxes and assessments -$ -$ 5,534$ 5,534$ Use of money and property - - 5,599 5,599



Highways and Streets - - - -





End of year 720,614$ 720,614$ 731,747$ 11,133$

Budgeted Amounts

128


129


Maintenance District Special Revenue Funds

June 30, 2018

OrchardNorthwood Parks Wildwood Woodview

Village Estates Estates GarlandASSETS

Cash and investments -$ 13,777$ -$ -$ Receivables:

Taxes and assessments - - - - Interest - 300 - -

Due from other funds - 94,086 - -

Total assets -$ 108,163$ -$ -$

LIABILITIES AND FUND BALANCES

Liabilities:Accounts payable 193$ 83$ 31$ 8$ Due to other funds 42,365 - 11,189 8,609

Total liabilities 42,558 83 11,220 8,617

Fund Balances (Deficits):Assigned - 108,080 - - Unassigned (deficit) (42,558) - (11,220) (8,617)

Total fund balances (42,558) 108,080 (11,220) (8,617)

Total liabilities and fund balances -$ 108,163$ -$ -$

130

Shaffer Lakes Sierra Shaffer Lakes Price Sandlewood Sub-West Woodhaven Parks East Annexation Square Totals

22,633$ 20,675$ -$ 33,442$ -$ 6,861$ 97,388$

- - - - 798 200 99861 57 - 267 - 37 722

- - - 64,891 - - 158,977

22,694$ 20,732$ -$ 98,600$ 798$ 7,098$ 258,085$

25$ 9$ 51 100$ 1,093$ 17$ 1,610$ - - 31,923 - 64,891 - 158,977

25 9 31,974 100 65,984 17 160,587

22,669 20,723 - 98,500 - 7,081 257,053 - - (31,974) - (65,186) - (159,555)

22,669 20,723 (31,974) 98,500 (65,186) 7,081 97,498

22,694$ 20,732$ -$ 98,600$ 798$ 7,098$ 258,085$

(continued)

131



June 30, 2018

AirportPajaro Redwood Cottage BusinessDunes Estates Gardens Park

ASSETS

Cash and investments 41,717$ 72,211$ 30,486$ -$ Receivables:

Taxes and assessments 92 68 - - Interest 134 204 103 - Intergovernmental - - 338,116

Due from other funds - - - -

Total assets 41,943$ 72,483$ 368,705$ -$


Liabilities:Accounts payable 13$ 95$ 105$ 35$ Due to other funds - - - 2,759

Total liabilities 13 95 105 2,794

Fund Balances:Assigned 41,930 72,388 368,600 - Unassigned (deficit) - - - (2,794)

Total fund balances 41,930 72,388 368,600 (2,794)

Total liabilities and fund balances 41,943$ 72,483$ 368,705$ -$

132

Silva Mello Camelia Juniper Camelia Sub-Ranch Ranch Estates Meadows Meadows Totals

120,011$ 133,298$ 26,801$ 4,926$ 49,984$ 479,434$

- - - - - 160 347 372 74 34 141 1,409

- - - 1 - 338,117 2,759 - - - - 2,759

123,117$ 133,670$ 26,875$ 4,961$ 50,125$ 821,879$

267$ 764$ 54$ 26$ 143$ 1,502$ - - - - - 2,759

267 764 54 26 143 4,261

122,850 132,906 26,821 4,935 49,982 820,412 - - - - - (2,794)

122,850 132,906 26,821 4,935 49,982 817,618

123,117$ 133,670$ 26,875$ 4,961$ 50,125$ 821,879$

(continued)

133



June 30, 2018

Stone America Bell AtwaterCreek West Crossing South

ASSETS

Cash and investments 206,079$ 68,708$ 21,893$ 198,085$ Receivables:

Taxes and assessments - - - - Interest 580 193 55 557


Total assets 206,659$ 68,901$ 21,948$ 198,642$


Liabilities:Accounts payable 601$ 206$ 490$ 962$ Due to other funds - - - -

Total liabilities 601 206 490 962

Fund Balances:Assigned 206,058 68,695 21,458 197,680Unassigned (deficit) - - - -

Total fund balances 206,058 68,695 21,458 197,680

Total liabilities and fund balances 206,659$ 68,901$ 21,948$ 198,642$

134

Beluga Mello Meadow Applegate Sub-Court Ranch 2 View Aspenwood Ranch Reserve Totals

5,553$ 238,594$ 155,916$ 102,111$ 28,305$ 12,973$ 1,038,217$

- - - - - - - 16 668 432 288 76 37 2,902

- - - - - - -

5,569$ 239,262$ 156,348$ 102,399$ 28,381$ 13,010$ 1,041,119$

-$ 842$ 389$ 244$ 373$ -$ 4,107$ - - - - - - -

- 842 389 244 373 - 4,107

5,569 238,420 155,959 102,155 28,008 13,010 1,037,012 - - - - - - -

5,569 238,420 155,959 102,155 28,008 13,010 1,037,012

5,569$ 239,262$ 156,348$ 102,399$ 28,381$ 13,010$ 1,041,119$

(continued)

135



June 30, 2018

Sub-CFD Districts Totals Totals

ASSETS

Cash and investments 20,741$ 20,741$ 1,635,780$ Receivables:

Taxes and assessments 4,850 4,850 6,008 Interest 50 50 5,083 Intergovernmental - - 338,117

Due from other funds - - 161,736

Total assets 25,641$ 25,641$ 2,146,724$


Liabilities:Accounts payable and accrued liabilities 10,518$ 10,518$ 17,737$ Due to other funds - - 161,736

Total liabilities 10,518 10,518 179,473

Fund Balances:Assigned 15,123 15,123 2,129,600 Unassigned (deficit) - (162,349)

Total fund balances 15,123 15,123 1,967,251

Total liabilities and fund balances 25,641$ 25,641$ 2,146,724$

(concluded)

136


137




OrchardNorthwood Parks Wildwood Woodview

Village Estates Estates GarlandREVENUES:Taxes and assessments -$ -$ -$ -$ Use of money and property - 813 - -

Total revenues - 813 - -


Urban redevelopment and housing 6,383 3,816 1,675 657 Capital outlay

Total expenditures 6,383 3,816 1,675 657

REVENUES OVER (UNDER)EXPENDITURES (6,383) (3,003) (1,675) (657)

OTHER FINANCING SOURCES (USES):Transfers in 6,303 3,749 1,651 642 Transfers out -

Total other financing sources and uses 6,303 3,749 1,651 642

REVENUES AND OTHER FINANCING SOURCESOVER (UNDER) EXPENDITURES AND OTHERFINANCING (USES) (80) 746 (24) (15)

FUND BALANCES (DEFICITS):Beginning of year (42,478) 107,334 (11,196) (8,602)

End of year (42,558)$ 108,080$ (11,220)$ (8,617)$

138

Shaffer Lakes Sierra Shaffer Lakes Price Sandlewood Sub-West Woodhaven Parks East Annexation Square Totals

-$ -$ 1$ -$ 25,567$ 4,078$ 29,646$ 168 155 - 724 (1) 101 1,960

168 155 1 724 25,566 4,179 31,606

1,765 886 1,857 7,471 58,598 5,263 88,371 13,752 1,530 15,282

1,765 886 1,857 7,471 72,350 6,793 103,653

(1,597) (731) (1,856) (6,747) (46,784) (2,614) (72,047)

1,728 864 1,840 7,321 24,904 1,788 50,790 - - - - - - -

1,728 864 1,840 7,321 24,904 1,788 50,790

131 133 (16) 574 (21,880) (826) (21,257)

22,538 20,590 (31,958) 97,926 (43,306) 7,907 118,755

22,669$ 20,723$ (31,974)$ 98,500$ (65,186)$ 7,081$ 97,498$

(continued)

139




AirportPajaro Redwood Cottage BusinessDunes Estates Gardens Park

REVENUES:Taxes and assessments 3,442$ 2,798$ -$ -$ Intergovernmental - - 338,116 - Use of money and property 363 551 280 -

Total revenues 3,805 3,349 338,396 -


Urban redevelopment and housing 2,157 6,218 3,352 1,739 Capital outlay 845 1,559 204 -


REVENUES OVER (UNDER)EXPENDITURES 803 (4,428) 334,840 (1,739)

OTHER FINANCING SOURCES (USES):Transfers in 1,164 1,456 433 1,731 Transfers out - - - -

Total other financing sources and uses 1,164 1,456 433 1,731

REVENUES AND OTHER FINANCING SOURCESOVER (UNDER) EXPENDITURES AND OTHERFINANCING (USES) 1,967 (2,972) 335,273 (8)

FUND BALANCES (DEFICITS):Beginning of year 39,963 75,360 33,327 (2,786)

End of year 41,930$ 72,388$ 368,600$ (2,794)$

140

Silva Mello Camelia Juniper Camelia Sub-Ranch Ranch Estates Meadows Meadows Totals

-$ -$ -$ 2,281$ -$ 8,521$ - - - - - 338,116

943 1,017 202 93 383 3,832

943 1,017 202 2,374 383 350,469

8,600 16,722 1,113 672 4,204 44,777 2,185 2,200 - 73 452 7,518

10,785 18,922 1,113 745 4,656 52,295

(9,842) (17,905) (911) 1,629 (4,273) 298,174

1,867 5,674 1,095 372 1,008 14,800 - - - - - -

1,867 5,674 1,095 372 1,008 14,800

(7,975) (12,231) 184 2,001 (3,265) 312,974

130,825 145,137 26,637 2,934 53,247 504,644

122,850$ 132,906$ 26,821$ 4,935$ 49,982$ 817,618$

(continued)

141




Stone America Bell AtwaterCreek West Crossing South

REVENUES:Taxes and assessments -$ -$ -$ -$ Use of money and property 1,577 525 158 1,520

Total revenues 1,577 525 158 1,520


Urban redevelopment and housing 13,897 4,220 13,662 23,410 Capital outlay 2,724 189 2,739 2,200


REVENUES OVER (UNDER)EXPENDITURES (15,044) (3,884) (16,243) (24,090)

OTHER FINANCING SOURCES (USES):Transfers in 4,566 1,539 5,964 6,092

Total other financing sources and uses 4,566 1,539 5,964 6,092

REVENUES AND OTHER FINANCING SOURCESOVER (UNDER) EXPENDITURES AND OTHERFINANCING (USES) (10,478) (2,345) (10,279) (17,998)

FUND BALANCES (DEFICITS):Beginning of year 216,536 71,040 31,737 215,678

End of year 206,058$ 68,695$ 21,458$ 197,680$

142

Beluga Mello Meadow Applegate Sub-Court Ranch 2 View Aspenwood Ranch Reserve Totals

-$ -$ -$ 5$ 1$ -$ 6$ 42 1,815 1,185 786 214 99 7,921

42 1,815 1,185 791 215 99 7,927

153 16,470 11,415 6,013 9,311 142 98,693 - 1,894 1,865 554 204 - 12,369

153 18,364 13,280 6,567 9,515 142 111,062

(111) (16,549) (12,095) (5,776) (9,300) (43) (103,135)

152 7,434 7,214 2,352 3,348 71 38,732

152 7,434 7,214 2,352 3,348 71 38,732

41 (9,115) (4,881) (3,424) (5,952) 28 (64,403)

5,528 247,535 160,840 105,579 33,960 12,982 1,101,415

5,569$ 238,420$ 155,959$ 102,155$ 28,008$ 13,010$ 1,037,012$

(continued)

143




Sub-CFD Districts Totals Totals

REVENUES:Taxes and assessments 487,840$ 487,840$ 526,013$ Intergovernmental - - 338,116 Use of money and property 146 146 13,859

Total revenues 487,986 487,986 877,988


Urban redevelopment and housing 333,068 333,068 564,909 Capital outlay - - 35,169

Total expenditures 333,068 333,068 600,078

REVENUES OVER (UNDER)EXPENDITURES 154,918 154,918 277,910

OTHER FINANCING SOURCES (USES):Transfers in 30 30 104,352 Transfers out - - -

Total other financing sources and uses 30 30 104,352

REVENUES AND OTHER FINANCING SOURCESOVER (UNDER) EXPENDITURES AND OTHERFINANCING (USES) 154,948 154,948 382,262

FUND BALANCES (DEFICITS):Beginning of year (139,825) (139,825) 1,584,989

End of year 15,123$ 15,123$ 1,967,251$

(concluded)

144


Northwood Village - Maintenance District Special Revenue Fund




Taxes and assessments -$ -$ -$ -$



Urban redevelopment and housing - - 6,383 (6,383)


REVENUES OVER (UNDER)EXPENDITURES - - (6,383) (6,383)

OTHER FINANCING SOURCES (USES):Transfers in - - 6,303 6,303 Transfers out - - -

Total other financing sources (uses) - - 6,303 6,303

Net change in fund balances - - (80) (80)


End of year (42,478)$ (42,478)$ (42,558)$ (80)$

Budgeted Amounts

145


Orchard Parks Estates - Maintenance District Special Revenue Fund




Taxes and assessments -$ -$ -$ -$ Use of money and property - - 813 813






OTHER FINANCING SOURCES (USES):Transfers in - - 3,749 3,749 Transfers out - - - -




End of year 107,334$ 107,334$ 108,080$ 746$

Budgeted Amounts

146


Wildwood Estates - Maintenance District Special Revenue Fund










Transfers in - 1,651 1,651 Transfers out -




End of year (11,196)$ (11,196)$ (11,220)$ (24)$

Budgeted Amounts

147


Woodview Garland - Maintenance District Special Revenue Fund







Urban redevelopment and housing - - 657 (657)



Transfers in 642 642 Transfers out -

Total other financing sources (uses) - - 642 642

Net change in fund balances - - (1,545) (1,545)


End of year (8,602)$ (8,602)$ (10,147)$ (1,545)$

Budgeted Amounts

148


Shaffer Lakes West - Maintenance District Special Revenue Fund










OTHER FINANCING SOURCES (USES):Transfers in - 1,728 1,728 Transfers out - - -




End of year 22,538$ 22,538$ 22,669$ 131$

Budgeted Amounts

149


Woodhaven - Maintenance District Special Revenue Fund








Total expenditures - - 886 (886)

REVENUES OVER (UNDER)EXPENDITURES - - (731) (731)

OTHER FINANCING SOURCES (USES):Transfers in 864 864 Transfers out 0 -




End of year 20,590$ 20,590$ 20,723$ 133$

Budgeted Amounts

150


Sierra Parks - Maintenance District Special Revenue Fund




Taxes and assessments -$ -$ 1$ 1$






Transfers in - 1,840 1,840 Transfers out - -




End of year (31,958)$ (31,958)$ (31,974)$ (16)$

Budgeted Amounts

151


Shaffer Lakes East - Maintenance District Special Revenue Fund







Urban redevelopment and housing - - 7,471 (7,471) Total expenditures - - 7,471 (7,471)


OTHER FINANCING SOURCES (USES):Transfers in - 7,321 7,321 Transfers out - 0 -




End of year 97,926$ 97,926$ 98,500$ 574$

Budgeted Amounts

152


Price Annexation - Maintenance District Special Revenue Fund




Taxes and assessments -$ -$ 25,567$ 25,567$ Use of money and property - - (1) (1)



Urban redevelopment and housing - - 58,598 (58,598) Capital outlay 13,752 (13,752)







End of year (43,306)$ (43,306)$ (65,186)$ (21,880)$

Budgeted Amounts

153


Sandalwood Square - Maintenance District Special Revenue Fund




Taxes and assessments -$ -$ 4,078$ 4,078$ Use of money and property - - 101 101






OTHER FINANCING SOURCES (USES):Transfers in 1,788 1,788 Transfers out - -




End of year 7,907$ 7,907$ 7,081$ (826)$

Budgeted Amounts

154


Pajaro Dunes - Maintenance District Special Revenue Fund







Urban redevelopment and housing - - 2,157 (2,157) Capital outlay 845 (845)







End of year 39,963$ 39,963$ 41,930$ 1,967$

Budgeted Amounts

155


Redwood Estates - Maintenance District Special Revenue Fund














End of year 75,360$ 75,360$ 72,388$ (2,972)$

Budgeted Amounts

156


Cottage Gardens - Maintenance District Special Revenue Fund




Taxes and assessments -$ -$ -$ -$ Intergovernmental 338,116 338,116$ Use of money and property - - 280 280

Total revenues - - 338,396 338,396





OTHER FINANCING SOURCES (USES):Transfers in 433 433 Transfers out - -




End of year 33,327$ 33,327$ 368,600$ 335,273$

Budgeted Amounts

157


Airport Business Park - Maintenance District Special Revenue Fund










Transfers in 1,731 1,731 Transfers out -




End of year (2,786)$ (2,786)$ (2,794)$ (8)$

Budgeted Amounts

158


Silva Ranch - Maintenance District Special Revenue Fund




Use of money and property -$ -$ 943$ 943$










End of year 130,825$ 130,825$ 122,850$ (7,975)$

Budgeted Amounts

159


Mello Ranch - Maintenance District Special Revenue Fund




Taxes and assessments -$ -$ -$ -$ Use of money and property - - 1,017 1,017










End of year 145,137$ 145,137$ 132,906$ (12,231)$

Budgeted Amounts

160


Camelia Estates - Maintenance District Special Revenue Fund














End of year 26,637$ 26,637$ 26,821$ 184$

Budgeted Amounts

161


Juniper Meadows - Maintenance District Special Revenue Fund







Urban redevelopment and housing - - 672 (672) Capital outlay - - 73 (73)



OTHER FINANCING SOURCES (USES):Transfers in - - 372 372 Transfers out - - - -




End of year 2,934$ 2,934$ 4,935$ 2,001$

Budgeted Amounts

162


Camelia Meadows - Maintenance District Special Revenue Fund













FUND BALANCES (DEFICIT):Beginning of year 53,247 53,247 53,247 -

End of year 53,247$ 53,247$ 49,982$ (3,265)$

Budgeted Amounts

163


Stone Creek - Maintenance District Special Revenue Fund







Urban redevelopment and housing - - 13,897 (13,897) Capital outlay - - 2,724 (2,724)







End of year 216,536$ 216,536$ 206,058$ (10,478)$

Budgeted Amounts

164


America West - Maintenance District Special Revenue Fund














End of year 71,040$ 71,040$ 68,695$ (2,345)$

Budgeted Amounts

165


Bell Crossing - Maintenance District Special Revenue Fund














End of year 31,737$ 31,737$ 21,458$ (10,279)$

Budgeted Amounts

166


Atwater South - Maintenance District Special Revenue Fund














End of year 215,678$ 215,678$ 197,680$ (17,998)$

Budgeted Amounts

167


Beluga Court - Maintenance District Special Revenue Fund







Urban redevelopment and housing - - 153 (153) Capital outlay -



OTHER FINANCING SOURCES (USES):Transfers in 152 152 Transfers out - -




End of year 5,528$ 5,528$ 5,569$ 41$

Budgeted Amounts

168


Mello Ranch 2 - Maintenance District Special Revenue Fund














End of year 247,535$ 247,535$ 238,420$ (9,115)$

Budgeted Amounts

169


Meadow View - Maintenance District Special Revenue Fund














End of year 160,840$ 160,840$ 155,959$ (4,881)$

Budgeted Amounts

170


Aspenwood - Maintenance District Special Revenue Fund




Taxes and assessments -$ -$ 5$ 5$ Use of money and property - - 786 786










End of year 105,579$ 105,579$ 102,155$ (3,424)$

Budgeted Amounts

171


Applegate Ranch - Maintenance District Special Revenue Fund




Taxes and assessments -$ -$ 1$ 1$ Use of money and property - - 214 214



Urban redevelopment and housing - - 9,311 (9,311) Capital outlay - 204 (204)







End of year 33,960$ 33,960$ 28,008$ (5,952)$

Budgeted Amounts

172


Reserve - Maintenance District Special Revenue Fund










OTHER FINANCING SOURCES (USES):Transfers in - 71 71 Transfers out - - - -




End of year 12,982$ 12,982$ 13,010$ 28$

Budgeted Amounts

173


CFD Districts - Maintenance District Special Revenue Fund




Taxes and assessments 448,000$ 448,000$ 487,840$ 39,840$ Use of money and property - - 146 146

Total revenues 448,000 448,000 487,986 39,986


Urban redevelopment and housing 423,833 423,833 333,068 90,765


REVENUES OVER (UNDER)EXPENDITURES 24,167 24,167 154,918 130,751

OTHER FINANCING SOURCES (USES):Transfers in - - 30 30 Transfers out - - - -


Net change in fund balances 24,167 24,167 154,948 130,781


End of year (115,658)$ (115,658)$ 15,123$ 130,781$

Budgeted Amounts

174

Fund Type

Building Maintenance

Employee Benefits

Risk Management Fund

Information Technology Fund

INTERNAL SERVICE FUNDS

Description

Accounts for all activities of the City's computer networks, thecosts of which are distributed among user departments usingequitable formulas.

Accounts for all activities of the City's self-insurance programs,the costs of which are distributed among designated userdepartments.

Accounts for the activities of building maintenance, custodial service, and building modification projects on a City-wide basis.

Accounts for all activities for employee benefits that are provided by the City.

175

City of Atwater, CaliforniaCombining Statement of Net Position

Internal Service Funds


Building Employee RiskMaintenance Benefits Management

ASSETS

Current assets:Cash and investments 663,578$ 732,251$ 331,840$ Receivables:

Accounts 6,582 506 - Interest 1,920 1,919 598

Prepaid expenses - - 3,750Total current assets 672,080 734,676 336,188

Noncurrent assets:Capital assets, net 584,703 - 77,382

Total noncurrent assets 584,703 - 77,382

Total assets 1,256,783$ 734,676$ 413,570$

LIABILITIES AND NET POSITION

Current liabilities:Accounts payable 42,663$ 9,428 43,214$ Accrued liabilities 6,838 1,629 - Unearned revenue - - - Compensated absences - current portion 1,053 - - Due within one year - capital lease payable - - -

Total current liabilities 50,554 11,057 43,214 Noncurrent liabilities:

Compensated absences 15,130 - - Total liabilities 65,684 11,057 43,214

Net Position:Net investment in capital assets 584,703 - 77,382 Unrestricted 606,396 723,619 292,974

Total net position 1,191,099 723,619 370,356

Total liabilities and net position 1,256,783$ 734,676$ 413,570$

176

InformationTechnology Totals

125,116$ 1,852,785$

- 7,088 309 4,746

51,645 55,395 177,070 1,920,014

281,983 944,068

281,983 944,068

459,053$ 2,864,082$

2,700$ 98,005$ - 8,467 - - - 1,053 - -

2,700 107,525

- 15,130 2,700 122,655

281,983 944,068 174,370 1,797,359 456,353 2,741,427

459,053$ 2,864,082$

177

City of Atwater, CaliforniaCombining Statement of Revenues, Expenses, and Changes in Net Position




OPERATING REVENUES:Interdepartmental charges 765,975$ 645,880$ 562,734$ Other 0 27,635 23,645

Total operating revenues 765,975 673,515 586,379

OPERATING EXPENSES:Salaries and benefits 215,201 - - Contractual services 64,224 1,750 175,816Materials and supplies 845 - - Repairs and maintenance 382,028 - - Insurance - 670,760 371,678Utilities 105,322 - - Other operating costs 3,996 - 11,491Depreciation 49,099 - 3,269

Total operating expenses 820,715 672,510 562,254

OPERATING INCOME (LOSS) (54,740) 1,005 24,125

NONOPERATING REVENUES (EXPENSES):Interest revenue 5,422 5,507 1,705

Total non-operating revenues (expenses) 5,422 5,507 1,705

NET INCOME (LOSS) BEFORE TRANSFERS (49,318) 6,512 25,830

Transfers in - - - Transfers out - - -

Total transfers - - -

Change in net position (49,318) 6,512 25,830

NET POSITION:Beginning of year 1,240,417 717,107 344,526

End of year 1,191,099$ 723,619$ 370,356$

178


391,680$ 2,366,269$ - 51,280

391,680 2,417,549

- 215,201 233,012 474,802

- 845 - 382,028 - 1,042,438 - 105,322

107,024 122,511 59,557 111,925

399,593 2,455,072

(7,913) (37,523)

858 13,492

858 13,492

(7,055) (24,031)

- - - - - -

(7,055) (24,031)

463,408 2,765,458

456,353$ 2,741,427$

179

City of Atwater, CaliforniaCombining Statement of Cash Flows




CASH FLOWS FROM OPERATING ACTIVITIES:

Cash received from interfund services provided 760,132$ 674,298$ 586,379$

Cash paid to suppliers for goods and services (642,130) (679,563) (528,273)

Cash paid to employees for services (214,000) - -

Net cash provided (used) by operating activities (95,998) (5,265) 58,106

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:

(Acquisition)/Disposal of capital assets 3,923 - -

Net cash (used) by capital and related financing activities 3,923 - -

CASH FLOWS FROM INVESTING ACTIVITIES:

Interest on investments 4,220 4,292 1,327

Net cash provided by investing activities 4,220 4,292 1,327

Net increase (decrease) in cash and cash equivalents (87,855) (973) 59,433

CASH AND CASH EQUIVALENTS:

Beginning of year 751,433 733,224 272,407

End of year 663,578$ 732,251$ 331,840$

Reconciliation of income from operations to net

cash provided (used) by operating activities:

Operating income (loss) (54,740)$ 1,005$ 24,125$

Adjustments to reconcile operating income

to net cash provided by operating activities:

Depreciation 49,099 - 3,269

(Increase) decrease in current assets:

Accounts receivable (5,843) 783 -

Prepaid expenses - 425 (3,750)

Increase (decrease) in liabilities:

Accounts payable (85,715) (7,478) 34,462

Accrued liabilities 430 - -

Compensated absences 771 - -

Net cash provided by operating activities (95,998)$ (5,265)$ 58,106$

180


391,680$ 2,412,489$

(338,665) (2,188,631)

- (214,000)

53,015 9,858

1 3,924

1 3,924

622 10,461

622 10,461

53,638 24,243

71,478 1,828,542

125,116$ 1,852,785$

(7,913)$ (37,523)$

59,557 111,925

- (5,060)

4,761 1,436

(3,390) (62,121)

- 430

- 771

53,015$ 9,858$

181

City of Atwater, CaliforniaCombining Statement of Assets and Liabilities

Agency Funds

June 30, 2018

Community

Sec 125 Sec 125 Facilities

Medical Dep Care District #1 Totals

ASSETS

Cash and investments 64$ 407$ 95,413$ 95,884$

Receivables:

Interest - - 272 272

Assessments - - - -

Due from other funds - - 407 407

Total assets 64$ 407$ 96,092$ 96,563$

LIABILITIES

Accounts payable and accrued liabilities -$ -$ -$ -$

Due to other funds - 407 - 407

Due to others 64 - 96,092 96,156

Total liabilities 64$ 407$ 96,092$ 96,563$

182

City of Atwater, CaliforniaCombining Statement of Changes in Assets and Liabilities

Agency Funds


Balance Balance

July 1, 2017 Additions Deductions June 30, 2018

SECTION 125 MEDICAL

ASSETS

Cash and investments 240$ 64$ (240)$ 64$


Total assets 240$ 64$ (240)$ 64$

LIABILITIES

Accounts payable and accrued liabilities -$ -$ -$ -$

Due to (from) others 240 64 (240) 64

Total liabilities 240$ 64$ (240)$ 64$

SECTION 125 DEPENDENT CARE

ASSETS

Cash and investments -$ 407$ -$ 407$

Total assets -$ 407$ -$ 407$

LIABILITIES

Due to other funds -$ 407$ -$ 407$

Due to (from) others - - - -

Total liabilities -$ 407$ -$ 407$

COMMUNITY FACILITIES DISTRICT #1

ASSETS

Cash and investments 73,985$ 95,413$ (73,985)$ 95,413$

Cash and investments held by trustees - - - -

Receivables:

Interest 25 272 (25) 272

Assessments 2,373 - (2,373) -

Due from other funds 407 407 (407) 407

Total assets 76,790$ 96,092$ (76,790)$ 96,092$

LIABILITIES

Accounts payable -$ -$ -$ -$

Due to (from) others 76,790 96,092 (76,790) 96,092

Total liabilities 76,790$ 96,092$ (76,790)$ 96,092$

(continued)

183

City of Atwater, CaliforniaCombining Statement of Changes in Assets and Liabilities

Agency Funds


Balance Balance

July 1, 2017 Additions Deductions June 30, 2018

TOTAL OF ALL AGENCY FUNDS

ASSETS

Cash and investments 74,225$ 95,884$ (74,225)$ 95,884$

Cash and investments held by trustees - - - -

Receivables:

Interest 25 272 (25) 272

Assessments 2,373 - (2,373) -

Due from other funds 407 407 (407) 407

Total assets 77,030$ 96,563$ (77,030)$ 96,563$

LIABILITIES

Accounts payable -$ -$ -$ -$

Due to other funds - 407 - 407

Due to (from) others 77,030 96,156 (77,030) 96,156

Total liabilities 77,030$ 96,563$ (77,030)$ 96,563$

(concluded)

184

SUPPLEMENTAL SCHEDULE

185

City of Atwater, CaliforniaSchedule of Debt Service Coverage

June 30, 2018 and 2017

2018 2017

Service charges 11,775,192$ 11,778,118$ Connection fees 527,256 313,413

Total service charges 12,302,448 12,091,531 Investment income 104,834 84,678Other income 3,336 -

Total miscellaneous revenue 108,170 84,678 Total Revenue 12,410,618$ 12,176,209$

Personnel costs 577,022 527,664Supplies (1) 82,912 89,332Professional Services (2) 1,614,393 1,581,209Wastewater Treatment Plant Mgmt. Service (3) 1,922,091 1,831,758Other Charges (1), (4) 389,256 456,251

Total Operations and Maintenance 4,585,674 4,486,214

Net Revenue Available For Debt Service 7,824,944$ 7,689,995$

Debt service:2008 Wastewater Bond 1,347,856$ 1,348,781$ 2010 Wastewater Bond 3,244,030 3,245,030 2011 Wastewater Bond 683,100 683,700

Total debt service 5,274,986$ 5,277,511$

Net Revenue After Debt Service

Calculated coverage 1.48 1.46

Meets covenant restrictions Yes Yes

Notes:(1) Includes Entries for Both Sewer Enterprise Fund and Wastewater Treatment Plant. Capital Expenses are funded by transfers from the Sewer Enterprise Capital Fund(2) Includes Communications, Utilities, Memberships, Subscriptions, Travel, Conference, Meetings, Training, Rents, Leases and Miscellaneous

(3) Paid to Private Operator(4) Includes Equipment, Streets, Water, Parks and Building Maintenance

collect rates and charges for the Wastewater System, respectively, which will be at least sufficient to yield "Net Revenues" equal to 120% of debt service (including the Installment Payments and debt service on other Parity Debt) coming due and payableduring such Fiscal Year.

186


www.jjacpa.com

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 Auditor’s Report

To the Honorable Mayor and City Council of the City of Atwater Atwater, 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, the financial statements of the governmental activities, the business-type activities, each major fund, the aggregate remaining fund information, and the budgetary comparison information of the City of Atwater (City), as of and for the year ended June 30, 2018, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated May 9, 2019.

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) to determine the 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 and therefore, material weaknesses or significant deficiencies may exist that have not been identified. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. We did identify certain deficiencies in internal control, described in the accompanying schedule of findings and responses as items 2018-01 that we consider to be significant deficiencies

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 determination of financial statement amounts. 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.

]]TVcT? \ÇvA May 9, 2019 JJACPA, Inc. Dublin, CA

CITY OF ATWATER

COMMUNICATION WITH THOSE CHARGED WITH GOVERNANCE AND COMMUNICATION OF INTERNAL CONTROL RELATED MATTERS

JUNE 30, 2018


www.jjacpa.com

May 9, 2019

City Council City of Atwater Atwater, California

We have audited the financial statements of City of Atwater (City) as of and for the year ended June 30, 2018 and have issued our report thereon dated May 9, 2019. Professional standards require that we advise you of the following matters relating to our audit.

Our Responsibility in Relation to the Financial Statement Audit

As communicated in our engagement letter dated July 3, 2018 our responsibility, as described by professional standards, is to form and express an opinion(s) about whether the financial statements that have been prepared by management with your oversight are presented fairly, in all material respects, in conformity with accounting principles generally accepted in the United States of America. Our audit of the financial statements does not relieve you or management of your respective responsibilities.

Our responsibility, as prescribed by professional standards, is to plan and perform our audit to obtain reasonable, rather than absolute, assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes consideration of internal control over financial reporting as a basis for designing 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 over financial reporting. Accordingly, as part of our audit, we considered the internal control of the City solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control.

We are also responsible for communicating significant matters related to the audit that are, in our professional judgment, relevant to your responsibilities in overseeing the financial reporting process. However, we are not required to design procedures for the purpose of identifying other matters to communicate to you.

Planned Scope and Timing of the Audit

We conducted our audit consistent with the planned scope and timing we previously communicated to you.

Compliance with All Ethics Requirements Regarding Independence

The engagement team, others in our firm, as appropriate, and our firm has complied with all relevant ethical requirements regarding independence.

Qualitative Aspects of the Entity’s Significant Accounting Practices Significant Accounting Policies Management has the responsibility to select and use appropriate accounting policies. A summary of the significant accounting policies adopted by the City is included in Note 1 to the financial statements. As described in Note 1 to the financial statements, during the year, the City changed its method of accounting for OPEB by adopting Governmental Accounting Standards Board (GASB) Statement No. 75, “Accounting and Financial Reporting for Postemployment Benefits Other than Pensions.” Accordingly, the cumulative effect of the accounting change as of the beginning of the year has been reported in the Statement of Activities. No matters have come to our attention that would require us, under professional standards, to inform you about (1) the methods used to account for significant unusual transactions and (2) the effect of significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus. Significant Accounting Estimates Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s current judgments. Those judgments are normally based on 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 markedly from management’s current judgments.

The most sensitive accounting estimates affecting the financial statements are useful lives of capital assets (“useful lives”).

Management’s estimate of the useful lives is based on experience with and observation of capital assets, by category (e.g. infrastructure) as well as industry standards, when applicable (i.e. buildings). We evaluated the key factors and assumptions used to develop the useful lives and determined that it is reasonable in relation to the basic financial statements taken as a whole. Financial Statement Disclosures Certain financial statement disclosures involve significant judgment and are particularly sensitive because of their significance to financial statement users. The most sensitive disclosures affecting the City’s financial statements relate to commitments and contingencies. Significant Difficulties Encountered during the Audit We encountered no significant difficulties in dealing with management relating to the performance of the audit. Uncorrected and Corrected Misstatements For purposes of this communication, professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that we believe are trivial, and communicate them to the appropriate level of management. Further, professional standards require us to also communicate the effect of uncorrected misstatements related to prior periods on the relevant classes of transactions, account balances or disclosures, and the financial statements as a whole and each applicable opinion unit. Management has corrected all identified misstatements In addition, professional standards require us to communicate to you all material, corrected misstatements that were brought to the attention of management as a result of our audit procedures. The following material misstatements that we identified as a result of our audit procedures were brought to the attention of, and corrected by, management:

Uncorrected and Corrected Misstatements, Continued For purposes of this communication, professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that we believe are trivial, and communicate them to the appropriate level of management. Further, professional standards require us to also communicate the effect of uncorrected misstatements related to prior periods on the relevant classes of transactions, account balances or disclosures, and the financial statements as a whole and each applicable opinion unit. Management has corrected all identified misstatements In addition, professional standards require us to communicate to you all material, corrected misstatements that were brought to the attention of management as a result of our audit procedures. The following material misstatements that we identified as a result of our audit procedures were brought to the attention of, and corrected by, management: To update pension disclosures for GASB 68 management made entries of $795,252 for the pension expense adjustment, $2,168,052 for the net pension obligation, $1,053,386 for the deferred outflows of resources and $319,414 for the deferred inflows of resources. To update other post-employment benefit (OPEB) disclosures for GASB 75 management made entries of $12,653,000 for the net OPEB obligation, and $867,000 for OPEB expense, $606,000 for the deferred outflows of resources and $16,934,400 for a prior period adjustment. Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter, which could be significant to the City’s financial statements or the auditor’s report. No such disagreements arose during the course of the audit. Representations Requested from Management We have requested certain written representations from management, which are included in an attached letter dated May 9, 2019. Management’s Consultations with Other Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters. Management informed us that, and to our knowledge, there were no consultations with other accountants regarding auditing and accounting matters. Other Significant Findings or Issues In the normal course of our professional association with the City, we generally discuss a variety of matters, including the application of accounting principles and auditing standards, operating and regulatory conditions affecting the City, and operational plans and strategies that may affect the risks of material misstatement. None of the matters discussed resulted in a condition to our retention as the entity’s auditors.

Communication of Internal Control Related Matters In planning and performing our audit of the financial statements, we considered the City’s internal control over financial reporting (internal control) to determine the 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 and was not designed to identify all deficiencies in internal control that might be deficiencies, significant deficiencies or material weaknesses. As indicated in Finding 2018-01, we identified a significant deficiency in internal control. This report 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,

]ÉáxÑ{ ]A TÜv{ JOSEPH J ARCH, CPA President/CEO JJACPA, INC

City of Atwater Schedule of Findings and Responses For the year ended June 30, 2018

Finding 2018-01 Significant Deficiency – General Fund Balance Deficits Condition: The City’s General Fund has had an ongoing deficit fund balance. In the last seven fiscal years, the City’s General Fund has expended more than revenue it has received. Effect: The General fund has had a deficit fund balance for the last six years:

Fiscal Year 2011: $(278,947) Fiscal Year 2012: $(3,913,630) Fiscal Year 2013: $(4,184,252) Fiscal Year 2014: $(4,152,128) Fiscal Year 2015: $(3,599,756) Fiscal Year 2016: $(2,837,357) Fiscal Year 2017: $(2,355,912) Fiscal Year 2018: $(1,452,296)

Cause: There is no management plan or policy in place to eliminate the deficit fund balance or an individual identified to monitor the deficit.

Criteria: California Government Code Section 13401 (a)(6) states Reports regarding the continuing adequacy of the systems of internal accounting and administrative control of each state agency are necessary to enable the executive branch, the Legislature, and the public to evaluate the agency's performance of its public responsibilities and accountability. Recommendation: We recommend the City implement a plan or policy to eliminate the deficit fund balance and appoint an individual to monitor the deficit. In addition, the City should produce monthly budget to actual reports, for at a minimum, the General Fund and provide them to the City Council, so financial decisions can be made in a timely manner. Responsible Officials’ Response: The City Council, in July 2014, approved a plan to eliminate the deficit fund balance. The City Council approved a repayment schedule for the General Fund to repay an inter-fund loan to the Sewer Fund over a period not to exceed fifteen years with the first scheduled payment to be made in July 2015. This will eliminate the negative fund balance. The City Manager monitors the City’s fiscal situation. In addition, the City Council is provided with quarterly budget to actual reports. This information is also reviewed in detail with the City’s Audit and Finance Committee.

May 9, 2019

CIVIC CENTER 750 BELLEVUE ROAD ATWATER, CALIFORNIA 95301

JJACPA, Inc. 7080 Donlon Way, Suite 204 Dublin, CA 94568-2787

Dear Mr. Arch:

This representation letter is provided in connection with your audit of the governmental activities, business-type activities, each major fund, the aggregate remaining fund information, and the budgetary comparison information of the City of Atwater, California (City) as of June 30, 2018 and for the year then ended, and the related notes to the financial statements, for the purpose of expressing opinions on whether the basic financial statements present fairly, in all material respects, the financial position, results of operations, and cash flows, where applicable, of the various opinion units of the City in conformity with accounting principles generally accepted for governments in the United States of America (U.S. GAAP).

Certain representations in this letter are described as being limited to matters that are material. Items are considered material, regardless of size, if they involve an omission or misstatement of accounting information that, in the light of surrounding circumstances, makes it probable that the judgment of a reasonable person relying on the information would be changed or influenced by the omission or misstatement.

We confirm that, to the best of our knowledge and belief, having made such inquiries as we considered necessary for the purpose of appropriately informing ourselves as of May 9, 2019:

Financial Statements

• We have fulfilled our responsibilities, as set out in the terms of the audit engagement dated July 3, 2018, for the preparation and fair presentation of the financial statements of the various opinion units referred to above in accordance with U.S. GAAP.

• We acknowledge our responsibility 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.

• We acknowledge our responsibility for the design, implementation, and maintenance of internal control to prevent and detect fraud.

• We acknowledge our responsibility for compliance with the laws, regulations, and provisions of contracts and grant agreements.

• We have reviewed, approved, and taken responsibility for the financial statements and related notes. • We have a process to track the status of audit findings and recommendations. • We have identified and communicated to you all previous audits, attestation engagements, and other

studies related to the audit objectives and whether related recommendations have been implemented. • Significant assumptions used by us in making accounting estimates, including those measured at fair

value, are reasonable. • Related party relationships and transactions have been appropriately accounted for and disclosed in

accordance with the requirements of U.S. GAAP. • All events subsequent to the date of the financial statements and for which U.S. GAAP requires

adjustment or disclosure have been adjusted or disclosed.

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• All component units, as well as joint ventures with an equity interest, are included and other joint ventures and related organizations are properly disclosed.

• All funds and activities are properly classified. • All funds that meet the quantitative criteria in GASB Statement No. 34, Basic Financial Statements-and

Management's Discussion and Analysis-for State and Local Governments, and GASB Statement No. 37, Basic Financial Statements-and Management's Discussion and Analysis-for State and Local Governments: Omnibus as amended, for presentation as major are identified and presented as such and all other funds that are presented as major are considered important to financial statement users.

• All components of net position, nonspendable fund balance, and restricted, committed, assigned, and unassigned fund balance are properly classified and, if applicable, approved.

• Our policy regarding whether to first apply restricted or unrestricted resources when an expense is incurred for purposes for which both restricted and unrestricted net position/fund balance are available is appropriately disclosed and net position/fund balance is properly recognized under the policy.

• All revenues within the statement of activities have been properly classified as program revenues, general revenues, contributions to term or permanent endowments, or contributions to permanent fund principal.

• All expenses have been properly classified in or allocated to functions and programs in the statement of activities, and allocations, if any, have been made on a reasonable basis.

• All interfund and intra-entity transactions and balances have been properly classified and reported. • Special items and extraordinary items have been properly classified and reported. • Deposit and investment risks have been properly and fully disclosed. • Capital assets, including infrastrncture assets, are properly capitalized, reported, and if applicable,

depreciated. • All required supplementary information is measured and presented within the prescribed guidelines. • With regard to investments and other instrnments reported at fair value:

- The underlying assumptions are reasonable and they appropriately reflect management's intent and ability to carry out its stated courses of action.

- The measurement methods and related assumptions used in determining fair value are appropriate in the circumstances and have been consistently applied.

- The disclosures related to fair values are complete, adequate, and in conformity with U.S. GAAP. - There are no subsequent events that require adjustments to the fair value measurements and

disclosures included in the financial statements.

Information Provided

• We have provided you with: Access to all information, of which we are aware that is relevant to the preparation and fair presentation of the financial statements of the various opinion units referred to above, such as records, documentation, meeting minutes, and other matters;

- Additional information that you have requested from us for the purpose of the audit; and - Unrestricted access to persons within the entity from whom you determined it necessary to obtain

audit evidence. • All transactions have been recorded in the accounting records and are reflected in the financial statements. • We have disclosed to you the results of our assessment of the risk that the financial statements may be

materially misstated as a result of fraud. • We have no knowledge of any fraud or suspected fraud that affects the entity and involves:

- Management; - Employees who have significant roles in internal control; or

Others where the fraud could have a material effect on the financial statements. • We have no knowledge of any allegations of fraud, or suspected fraud, affecting the entity's financial

statements communicated by employees, former employees, vendors, regulators, or others. • We have disclosed to you all known actual or possible litigation and claims whose effects should be

considered when preparing the financial statements and we have not consulted legal counsel concerning litigation or claims.

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• We have disclosed to you the identity of the entity's related parties and all the related party relationships and transactions of which we are aware.

• There have been no communications from regulatory agencies concerning noncompliance with or deficiencies in accounting, internal control, or financial reporting practices.

• The City has no plans or intentions that may materially affect the carrying value or classification of assets and liabilities.

• We have disclosed to you all guarantees, whether written or oral, under which the City is contingently liable.

• We have disclosed to you all significant estimates and material concentrations known to management that are required to be disclosed in accordance with GASB Statement No. 62 (GASB-62), Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AJCPA Pronouncements. Significant estimates are estimates at the balance sheet date that could change materially within the next year. Concentrations refer to volumes of business, revenues, available sources of supply, or markets or geographic areas for which events could occur that would significantly disrnpt normal finances within the next year.

• We have identified and disclosed to you the laws, regulations, and provisions of contracts and grant agreements that could have a direct and material effect on financial statement amounts, including legal and contractual provisions for reporting specific activities in separate funds.

• There are no: - Violations or possible violations of laws or regulations, or provisions of contracts or grant agreements

whose effects should be considered for disclosure in the financial statements or as a basis for recording a loss contingency, including applicable budget laws and regulations.

- Unasserted claims or assessments that our lawyer has advised are probable of assertion and must be disclosed in accordance with GASB-62.

- Other liabilities or gain or loss contingencies that are required to be accrned or disclosed by GASB-62 • The City has satisfactory title to all owned assets, and there are no liens or encumbrances on such assets

nor has any asset or future revenue been pledged as collateral, except as disclosed to you. • We have complied with all aspects of grant agreements and other contractual agreements that would have

a material effect on the financial statements in the event of noncompliance. We have reviewed, approved, and taken responsibility for the financial statements and related notes and an acknowledgment of the auditor's role in the preparation of this information. (This representation is required by footnote 28 to paragraph 3 .18 of Government Auditing Standards when the auditor has a role in preparing the trial balance and draft financial statements and related notes.)

- We have disclosed to you the nature of any subsequent events that provide additional evidence with respect to conditions that existed at the end of the reporting period that affect noncompliance during the reporting period.

Lori Waterman, City Manager

Teri Albrecht, Interim Finance Director

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MEETING DATE: May 13, 2019 TO: Mayor and City Council FROM: Douglas L White, City Attorney PREPARED BY: Douglas L White, City Attorney SUBJECT: Waiving first reading and introducing Ordinance No. CS 1008

approving a Development Agreement by and between the City of Atwater and Central Cal Brothers, Inc.

RECOMMENDED COUNCIL ACTION:

It is recommended that City Council: 1. Open the Public Hearing and take any testimony given regarding Ordinance No.

CS 1008; and 2. Waive first reading and introduce Ordinance No. CS 1008, approving a Development Agreement by and between the City of Atwater (“City”) and Central Cal Brothers, Inc. I. BACKGROUND: In November of 2016, the voters of California approved Proposition 64, entitled the “Control, Regulate and Tax Adult Use of Marijuana” (“AUMA”). AUMA legalized the adult-use, possession, and retail sale of cannabis by persons 21 years of age and older. On June 27, 2017, Governor Jerry Brown signed into law the Medicinal and Adult-Use Cannabis Regulation and Safety Act (“MAUCRSA”) which, combined with AUMA, creates a single regulatory scheme for both medicinal and adult-use cannabis businesses. MAUCRSA retains the provisions in AUMA that granted local jurisdictions control over whether businesses engaged in commercial cannabis activity may operate in their jurisdiction.

CITY COUNCIL

Paul Creighton, Mayor Danny Ambriz John Cale Brian Raymon Cindy Vierra

Agenda Report – Central Cal Brothers, Inc. Development Agreement Page 2

On October 23, 2017, the Atwater City Council (the “City Council”) adopted Ordinance No. CS 982 enacting cannabis regulations for cannabis businesses pursuant to AUMA and MAUCRSA. On May 14, 2018, the City Council adopted Ordinance CS 996 amending the City’s cannabis business regulations and establishing a Cannabis Business Pilot Program (the “Pilot Program”). The Cannabis Business Pilot Program allows for the regulation of cannabis businesses through a development agreement and a conditional use permit process. II. ANALYSIS: Following the adoption of the Pilot Program, the City issued and circulated a request for proposals (“RFP”). The purpose of the RFP was to form the basis for a selection process of qualified cannabis operators for participation in the Pilot Program. The RFP contemplated proposals for those license types allowed under the Cannabis Business Ordinance. Those businesses include cannabis dispensaries, manufacturing businesses, distribution, cultivation and testing facilities. The Development Agreement described below is a result of the RFP and subsequent negotiations between City staff and the developer. Central Cal Brothers, Inc. The City seeks to enter into a Development Agreement with Central Cal Brothers, Inc. Central Cal Brothers, Inc. has leased real property located at 664 Railroad Ave., Atwater, California, Assessor’s Parcel Number 003-170-009-000 (the “Property”), on which Central Cal Brothers, Inc. intends to operate a commercial cannabis retail business (the “Project”). The Property is zoned Business Park. Central Cal Brothers, Inc. has obtained the Property owner’s consent to operate the cannabis business on the Property. The major elements of the development agreement are summarized below:

• The term of the agreement is three (3) years.

• Central Cal Brothers, Inc. is required to begin operations no later than six (6) months after the development agreement and conditional use permit are in effect.

• The Project will provide Central Cal Brothers, Inc. with substantial private benefits that will place burdens upon the City infrastructure, services, and neighborhoods. Central Cal Brothers, Inc. will to offset these impacts through a monthly payment classified as a “Public Benefit” amount. The Public Benefit is designed and intended to offset or mitigate any potential impacts of the Project on the community.

• Central Cal Brothers, Inc. will pay to the City a Public Benefit of no less than $15,000 per month, or 5% of its gross receipts from its operations for the first year; $25,000 per month, or 5% of its gross receipts from its operations for the second year; and $40,000 or 5% of its gross receipts from its operations for the

Agenda Report – Central Cal Brothers, Inc. Development Agreement Page 3

third year. The first Public Benefit payment will be due following the first month Central Cal Brothers, Inc. begins operations.

• The Project will be subject to security protocols, including security cameras and an alarm system, odor control requirements, insurance requirements, and a waste management plan as required under the Atwater Municipal Code.

III. FISCAL IMPACTS: If the City Council adopts the ordinance, the City will have an agreement in place to offset any impacts the proposed cannabis business would have upon City services, infrastructure, and neighborhoods. Since the Public Benefit imposed upon the cannabis business scales upward with increased revenue and associated impacts, the Development Agreement ensures that any costs to the City associated with the cannabis business are adequately addressed. IV. PUBLIC PARTICIPATION: The public hearing for this item was duly noticed and published. V. LEGAL REVIEW: The City Attorney has prepared the development agreement. VI. ENVIRONMENTAL REVIEW: This project is categorically exempt under the California Environmental Quality Act Guidelines section 15301, existing facilities. VII. STEPS FOLLOWING APPROVAL: Upon second reading at a subsequent regular meeting and adoption of the proposed Ordinance, this Ordinance shall become effective thirty (30) days from and after its final passage and adoption. Approved by:_______________________________________________ Douglas L. White, City Attorney City Manager: ______________________________________________ Lori Waterman, City Manager Attachments:

1. Development Agreement 2. Ordinance No. CS 1008

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DEVELOPMENT AGREEMENT CITY OF ATWATER & CENTRAL CAL BROTHERS, INC.

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RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: City of Atwater 750 Bellevue Road Atwater, CA 95301 Attention: City Clerk

SPACE ABOVE THIS LINE FOR RECORDER'S USE

Recording Fee Exempt per Government Code §6103

DEVELOPMENT AGREEMENT

THIS DEVELOPMENT AGREEMENT (“Agreement”) is made and entered into

this ___________________ (____) day of _________________, 2019, by and between the CITY OF ATWATER, a C a l i f o r n i a municipal corporation (“City”), and CENTRAL CAL BROTHERS, INC., a California corporation (“Developer”). City and Developer may be referred to herein individually as a “Party” or collectively as the “Parties.” There are no other parties to this Agreement.

RECITALS A. On October 9, 2015, Governor Jerry Brown signed three bills into law (Assembly

Bill 266, Assembly Bill 243, and Senate Bill 643) which are collectively referred to as the Medical Cannabis Regulation and Safety Act (“MCRSA”). MCRSA establishes a statewide regulatory system for the cultivation, processing, transportation, testing, manufacturing, and distribution of medical marijuana to qualified patients and their primary caregivers.

B. On November 8, 2016, California voters enacted Proposition 64, the Control, Regulate and Tax Adult Use of Marijuana Act, also known as the Adult Use of Marijuana Act (“AUMA”), which establishes a comprehensive system to legalize, control, and regulate the cultivation, processing, manufacture, distribution, testing, and sale of nonmedical cannabis, including cannabis products, for use by adults 21 years and older, and to tax the growth and retail sale of cannabis for nonmedical use.

C. On June 27, 2017, Governor Jerry Brown signed into law the Medicinal and Adult-Use Cannabis Regulation and Safety Act (“MAUCRSA”), which creates a single regulatory scheme for both medicinal and adult-use cannabis businesses. MAUCRSA retains the provisions in MCRSA and AUMA that granted local jurisdictions control over whether businesses engaged in Commercial Cannabis Activity, as defined in Section 1.4 of this Agreement, may operate in a particular jurisdiction.

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D. On May 14, 2018, the Atwater City Council (“City Council”) adopted Ordinance No. CS 996, adding Atwater Municipal Code (“A.M.C.”) Chapter 5.60 to establish a Cannabis Business Pilot Program to regulate all cannabis businesses within the City.

E. Developer proposes to improve, develop, and use real property to operate a vertically cannabis business consisting of retail services, as defined below, in strict accordance with California Cannabis Laws, as defined in Section 1.4 of this Agreement and the A.M.C., as each may be amended from time to time.

F. To strengthen the public planning process, encourage private participation in comprehensive planning, and reduce the economic risk of development, the California Legislature adopted Government Code section 65864 et seq. (the “Development Agreement Statute”), which authorizes City and an individual with an interest in real property to enter into a development agreement that establishes certain development rights in real property that is subject to a development agreement application.

G. Developer submitted an application to the City Community Development Department for consideration of a development agreement for a cannabis business.

H. Developer has an agreement to lease that certain real property located at 664 Railroad Avenue, Atwater, California, in the County of Merced, Assessor’s Parcel Number 003-160-026-000, of which Developer intends to improve approximately twenty four thousand (24,000) square feet of space (the “Site”) to operate the Cannabis Business Project, more particularly described in the legal description attached hereto as Exhibit A (“Legal Description“) and the Cannabis Business Project Site Map attached hereto as Exhibit B.

I. Developer has leased the Site for the purpose of carrying out the Cannabis Business Project. A copy of the lease is attached hereto as Exhibit C, within satisfaction of the requirement of A.M.C. Chapter __. The legal owner of the Site is aware of, and agrees to, the Cannabis Business Project operating at the Site.

J. On April 17, the City Community Development and Resources Commission (“CDRC”), in a duly noticed and conducted public hearing, considered Developer’s application for this Agreement. At that public hearing, the CDRC recommended the City Council adopt Ordinance No. 2019-1008, which would allow Developer to operate the Cannabis Business Project at the Site.

K. On April 17, pursuant to Government Code section 65867.5 and following a duly noticed and conducted public hearing, the City Council reviewed, considered, adopted, and entered into this Agreement pursuant to Ordinance No. 2019-1008.

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L. This Agreement is entered into pursuant to the Development Agreement Statute.

M. City and Developer desire to enter into this Agreement to (i) facilitate the orderly development of the Site; (ii) create a physical environment that is consistent with and complements the City’s goals and visions; (iii) protect natural resources from adverse impacts; (iv) improve, upgrade, and create additional community facilities and infrastructure, enhance services, and assist in implementing the goals of the General Plan; and (vi) reduce the economic risk of development of the Site to both City and Developer.

N. The Parties intend, through this Agreement, to allow Developer to develop and operate the Cannabis Business Project in accordance with the terms of this Agreement.

O. The City Council has determined that this Agreement is consistent with City’s General Plan and has conducted all necessary proceedings in accordance with the A.M.C. for the approval of this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, the Parties do hereby agree as follows:

AGREEMENT

ARTICLE 1

GENERAL PROVISIONS

Section 1.1. Findings. City hereby finds and determines that entering into this Agreement furthers the public health, safety, and general welfare and is consistent with City’s General Plan, including all text and maps in the General Plan.

Section 1.2. Recitals. The Recitals above are true and correct and are hereby incorporated into and made a part of this Agreement. In the event of any inconsistency between the Recitals and the provisions of Articles 1 through 10 of this Agreement, the provisions of Articles 1 through 10 shall prevail.

Section 1.3. Exhibits. The following “Exhibits” are attached hereto and incorporated into this Agreement:

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Designation

Description

Exhibit A Cannabis Site Legal Description Exhibit B Cannabis Dispensary Site Map Exhibit C Site Lease Exhibit D Notice of Non-Performance

Penalty Exhibit E Indemnification Agreement Exhibit F Notice of Termination Exhibit G Assignment and Assumption

Agreement

Section 1.4. Definitions. In this Agreement, unless the context otherwise requires, the terms below have the following meaning:

(a) “Additional Insureds” has the meaning set forth in Section 6.1.

(b) “Additional Licenses” has the meaning set forth in Section 2.4.

(c) “Adult-use Cannabis” means a product containing cannabis, including, but not limited to, concentrates and extractions, intended for use by adults 21 years of age and older in California pursuant to the California Cannabis Laws.

(d) “Agreement” means this Development Agreement, inclusive of all Exhibits attached hereto.

(e) “Application” has the meaning set forth in Recital G.

(f) “Assignment and Assumption Agreement” has the meaning set forth in Section 10.1.

(g) “AUMA” means the Adult Use of Marijuana Act (Proposition 64) approved by California voters on November 8, 2016.

(h) “Authorized License” has the meaning set forth in Section 2.3.

(i) “Bureau” means the Bureau of Cannabis Control within the Department of Consumer Affairs, formerly named the Bureau of Marijuana Control, the Bureau of Medical Cannabis Regulation, and the Bureau of Medical Marijuana Regulation.

(j) “California Building Standards Codes” means the California Building Code, as amended from time to time, in Part 2, Volumes 1 and 2, as part of Title 24 of the California Code of Regulations, as may be adopted by the A.M.C.

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(k) “California Cannabis Laws” includes AUMA, MAUCRSA, CUA (as defined below), the Medical Marijuana Program Act of 2004 codified as Health and Safety Code sections 11362.7 through 11.62.83, and any other applicable laws that may be enacted or approved.

(l) “Cannabis” means all parts of the plant Cannabis sativa Linnaeus, Cannabis indica, or Cannabis ruderalis, whether growing or not; the seeds thereof; the resin, whether crude or purified, extracted from any part of the plant; and every compound, manufacture, salt, derivative, mixture, or preparation of the plant, its seeds, or resin. “Cannabis” also means the separated resin, whether crude or purified, obtained from cannabis. “Cannabis” does not include the mature stalks of the plant, fiber produced from the stalks, oil or cake made from the seeds of the plant, any other compound, manufacture, salt, derivative, mixture, or preparation of the mature stalks (except the resin extracted therefrom), fiber, oil, or cake, or the sterilized seed of the plant which is incapable of germination. For the purpose of this division, “cannabis” does not mean “industrial hemp” as defined by Section 11018.5 of the Health and Safety Code. Cannabis and the term “marijuana” may be used interchangeably.

(m) “Cannabis Business Pilot Program” means the cannabis business program established and authorized by A.M.C. Chapter 5.60.

(n) “Cannabis Business Project” means the vertically integrated cannabis business consisting of retail services operated by Developer on the Site pursuant to the Authorized License.

(o) “Cannabis Manufacturing Business” means a business engaged in commercial cannabis activity pursuant to a state approved Type 6 or 7 licenses, Type A and M licenses.

(p) “Cannabis product” means cannabis that has undergone a process whereby the plant material has been transformed into a concentrate, including, but not limited to, concentrated cannabis, or an edible or topical product containing cannabis or concentrated cannabis and other ingredients.

(q) “CEQA” means the California Environmental Quality Act, as set forth in Division 13 (Commencing with Section 21000) of the California Public Resources Code, and the CEQA Guidelines, as set forth in Title 14 (Commencing with Section 15000) of the California Code of Regulations.

(r) “City” means the City of Atwater, a municipal corporation having general police powers.

(s) “City Council” means the City of Atwater City Council, as defined in A.M.C. Section 1.04.020.

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(t) “City Manager” means the City Manager of the City of Atwater, or his or her designee, as described in A.M.C. Section 2-4.

(u) “Charged Party” has the meaning set forth in Section 8.1.

(v) “Charging Party” has the meaning set forth in Section 8.1.

(w) “Commercial Cannabis Activity” includes cultivation, possession, manufacture, processing, storing, laboratory testing, labeling, transporting, distribution, delivery, or sale of cannabis or a cannabis product that requires a state license pursuant to MAUCRSA.

(x) “Community Development and Resources Commission” means the City of Atwater Community Development and Resources Commission, as established by A.M.C. section 2.30.010.

(y) “Conditional Use Permit” means a conditional use permit issued by City pursuant to A.M.C. section 36-23.24.

(z) “CUA” means the Compassionate Use Act (Proposition 215) approved by California voters on November 5, 1996.

(aa) “Developer” means Central Cal Brothers, In., a California corporation. Developer also has the meaning set forth in Section 6.1.

(bb) “Development Agreement Statute” has the meaning set forth in Recital E.

(cc) “Exhibits” has the meaning set forth in Section 1.3.

(dd) "Gross Receipts from Operations" means total revenue actually received or receivable from operation of the Cannabis Business Project, including: all sales; the total amount of compensation actually received or receivable for the performance of any act or service, of whatever nature it may be, for which a charge is made or credit allowed whether or not such act or service is done as part of or in connection with the sale of materials, goods, wares, or merchandise; and gains realized from trading in stocks or bonds, interest discounts, rents, royalties, fees, commissions, dividends, or other remunerations, however designated. Included in "gross receipts" shall be all receipts, cash, credits, and property of any kind or nature, without any deduction therefrom on account of the cost of the property sold, the cost of materials used, labor or service costs, interest paid or payable, or losses or other expenses whatsoever, except that the following shall be excluded therefrom:

1. Cash discounts allowed and taken on sales;

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2. Credit allowed on property accepted as part of the purchase price and which property may later be sold, at which time the sales price shall be included as "gross receipts";

3. Any tax required by law to be included in or added to the purchase price and collected from the consumer or purchaser;

4. Such part of the sale price of property returned by purchasers upon rescission of a contract of sale as is refunded either in cash or by credit; and

5. Receipts of refundable deposits, except that such deposits when forfeited and taken into income of the business shall not be excluded.

The intent of this definition is to ensure that in calculating the payment required under Section 4.2, all sales of cannabis products through the Cannabis Business Project are captured. This definition shall therefore be given the broadest possible interpretation consistent with this intent.

(ee) “Indemnification Agreement” has the meaning set forth in Section 6.3.

(ff) “Major Amendment” means an amendment that shall have a material effect on the terms of this Agreement. A Major Amendment also has the meaning set forth in Section 2.4. Major Amendments shall require approval by the City Council.

(gg) “Marijuana” has the same meaning as cannabis and those terms may be used interchangeably.

(hh) “MAUCRSA” means the Medicinal and Adult-Use Cannabis Regulation and Safety Act, codified as Business and Professions Code section 26000 et seq., as may be amended from time to time.

(ii) “MCRSA” has the meaning set forth in Recital A.

(jj) “Ministerial Fee” or “Ministerial Fees” has the meanings set forth in Section 4.1.

(kk) “Minor Amendment” means a clerical amendment to this Agreement that shall not materially affect the terms of this Agreement and any amendment described as minor herein. A Minor Amendment also has the meaning set forth in Section 1.7.

(ll) “Mortgage” has the meaning set forth in Article 7.

(mm) “Non-Performance Penalty” has the meaning set forth in Section 4.3.

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(nn) “Notice of Non-Performance Penalty” has the meaning set forth in Section 4.3.

(oo) “Notice of Termination” has the meaning set forth in Section 9.1.

(pp) “Processing Costs” has the meaning set forth in Section 1.11.

(qq) “Project Litigation” has the meaning set forth in Section 10.7.

(rr) “Public Benefit” has the meaning set forth in Section 4.2.

(ss) “Public Benefit Amount” has the meaning set forth in Section 4.2.

(tt) “State Licensing Authority” means the state agency responsible for the issuance, renewal, or reinstatement of a state cannabis license, or the state agency authorized to take disciplinary action against a business licensed under the California Cannabis Laws.

(uu) “State Cannabis Regulations” means the regulations promulgated by the State Licensing Authority pursuant to the California Cannabis Laws (3 CCR § 8000 et seq., 17 CCR § 40100 et seq., 42 CCR 35000 et seq., or their respective successors).

(vv) “State Taxing Authority” has the meaning set forth in Section 4.2.

(ww) “Subsequent City Approvals” has the meaning set forth in Section 3.1.

(xx) “Term” has the meaning set forth in Section 1.7.

(yy) “Type 1A license” or “Specialty Indoor” means a state license issued by the Department of Agriculture pursuant to the California Cannabis Laws for indoor cultivation using exclusively artificial lighting of between 501 and 5,000 square feet of total canopy size on one premises.

(zz) “Type 2A license” or “Small Indoor” means a state license issued by the Department of Agriculture pursuant to the California Cannabis Laws for indoor cultivation using exclusively artificial lighting between 5,001 and 10,000 square feet, inclusive, of total canopy size on one premises.

(aaa) “Type 3A license” or “Indoor” means a state license issued by the Department of Agriculture pursuant to the California Cannabis Laws for indoor cultivation using exclusively artificial lighting between 10,001 and 22,000 square feet, inclusive, of total canopy size on one premises.

(bbb) “Type 4 license” or “Nursery” means a state license issued by the Department of Agriculture pursuant to the California Cannabis Laws for the cultivation of cannabis solely as a nursery.

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(ccc) “Type 6 license” or “Manufacturer 1” means a state license issued by the

Department of Public Health pursuant to the California Cannabis Laws for manufacturing sites that produce cannabis products using nonvolatile solvents.

(ddd) “Type 7 license” or “Manufacturer 2” means a state license issued by the Department of Public Health pursuant to the California Cannabis Laws for manufacturing sites that produce cannabis products using volatile solvents.

(eee) “Type 10 license” or “Retailer” means a state license issued by the Bureau

of Cannabis Control pursuant to the California Cannabis Laws for the retail sale of cannabis and cannabis products.

(fff) “Type 11 license” or “Distributor” means a state license issued by the Bureau of Cannabis Control pursuant to the California Cannabis Laws for the distribution of cannabis and cannabis products from manufacturer to dispensary.

(ggg) “Type 12 license” or “Microbusiness” means a state license issued by a State Licensing Authority pursuant to the California Cannabis Laws relating to cannabis cultivation, manufacturing, and distribution.

Section 1.5. Project is a Private Undertaking. The Parties agree that the Cannabis Business Project is a private development and that City has no interest therein, except as authorized in the exercise of its governmental functions. City shall not for any purpose be considered an agent of Developer or the Cannabis Business Project.

Section 1.6. Effective Date of Agreement. This Agreement shall become effective upon the date that the ordinance approving this Agreement becomes effective (the “Effective Date”).

Section 1.7. Term. The “Term” of this Agreement is three (3) years from the Effective Date, unless terminated or extended earlier, as set forth in this Agreement.

(a) Government Tolling or Termination. City may provide written notice to Developer to cease all Commercial Cannabis Activity, upon which Developer shall immediately comply, if City is required, directed, or believes, in its sole and absolute discretion, it must temporarily halt or terminate Commercial Cannabis Activity within the City to comply with federal or state law. If City temporarily halts this Agreement to comply with federal or state law, this Agreement shall be tolled for no longer than one (1) calendar year (the “Tolling Period”). Developer shall not accrue or be liable to City for any Ministerial Fees or Public Benefit Amount during the Tolling Period. Developer shall resume paying any applicable fees after the Tolling Period ends. City and Developer shall discuss in good faith the termination of this Agreement if the Tolling period exceeds one (1) calendar year to comply with federal or state law.

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(b) Developer Tolling or Termination. Developer may not temporarily halt or terminate this Agreement for any purpose without causing a default of this Agreement, except as otherwise allowed by this Agreement or by mutual agreement of the Parties.

Section 1.8. Priority of Enactment. In the event of a conflict between the various land use documents referenced in this Agreement, the Parties agree that the following sequence of approvals establishes the relative priority of the approvals, each approval superior to the approvals listed thereafter: (a) General Plan, (b) Agreement, (c) Conditional Use Permit, (d) Indemnification Agreement, and (e) Subsequent City Approvals.

Section 1.9. Amendment of Agreement. This Agreement shall be amended only by mutual consent of the Parties. All amendments shall be in writing. The City Council hereby expressly authorizes the City Manager to approve a Minor Amendment to this Agreement upon notification of the City Council. A Major Amendment to this Agreement shall be approved by the City Council. The City Manager shall, on behalf of City, have sole discretion for City to determine if an amendment is a Minor Amendment or a Major Amendment. Nothing in this Agreement shall be construed as requiring a noticed public hearing, unless required by law.

Section 1.10. Recordation of Development Agreement. The City Clerk shall cause a copy of this Agreement to be recorded against the title of the Site within ten (10) business days of the Effective Date.

Section 1.11. Funding Agreement for Processing Costs. Developer has deposited Twenty-Five Thousand Dollars ($25,000) with City to pay for all actual fees and expenses incurred by City that are related to the preparation and processing of this Agreement, including recording fees, publishing fees, staff time, and consultant and attorneys’ fees and costs (collectively, “Processing Costs”). The Processing Costs are refundable solely to the extent of non-expended Processing Costs. Developer shall be entitled to a refund of available Processing Costs only after City determines all financial obligations associated with the Cannabis Business Project have been received and paid by City.

(a) Apportionment of Processing Costs. If the amount deposited for purposes of Processing Costs is insufficient to cover all Processing Costs, Developer shall deposit with City such additional funds necessary, to pay for all Processing Costs within thirty (30) days. The failure to timely pay any such additional amounts requested by City shall be considered a material default of this Agreement and City may terminate this Agreement.

(b) Accounting. Developer may request, and City shall issue within a reasonable time not to exceed thirty (30) days, an accounting and written acknowledgement of Processing Costs paid to City.

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ARTICLE 2 DEVELOPMENT OF PROPERTY

Section 2.1. Vested Right of Developer. During the Term, in developing the Site consistent with the Cannabis Business Project described herein, Developer is assured that the development rights, obligation terms, and conditions specified in this Agreement, including, without limitation, the terms, conditions, and limitations set forth in the Exhibits, are fully vested in Developer and may not be modified or terminated by City except as set forth in this Agreement or with Developer’s written consent.

Section 2.2. Vested Right to Develop. In accordance with Section 2.1, Developer shall have the vested right to develop and use the Cannabis Business Project consistent with this Agreement, the Conditional Use Permit, and Subsequent City Approvals.

Section 2.3. Permitted Uses and Development Standards. Developer shall be authorized to develop, construct, and use the Site for Commercial Cannabis Activity consistent with the following license type (the “Authorized License”):

Type 10 Retailer Pursuant to this Agreement, Developer shall be permitted to use the Site consistent with the Authorized License for the Term of this Agreement and during the time Developer is applying for the Authorized License with the applicable State Licensing Authority. Developer shall begin operations of the Cannabis Business Project under the Authorized License within six (6) months of the issuance of a Conditional Use Permit or adoption of the operative ordinance approving this Agreement, whichever is later, unless Developer is prevented from doing so due to any event or circumstance set forth in section 8.6 of this Agreement. Notwithstanding the foregoing, Developer is required to apply for and obtain the Authorized License from the State of California. If the State Licensing Authority does not grant the Authorized License to Developer, Developer shall immediately cease Commercial Cannabis Activity and any other operations on the respective Site. Developer shall also, within thirty (30) days of receiving notice from the State Licensing Authority, notify City of the State Licensing Authority’s denial or rejection of the Authorized License. In this situation, this Agreement shall terminate immediately. The Parties intend for this Agreement and the Conditional Use Permit to serve as the definitive and controlling documents for all subsequent actions, discretionary or ministerial, relating to development of the Site and the Cannabis Business Project.

Section 2.4. Major Amendment to Permitted Uses. Developer may request to add to the Authorized License additional license types once that license is applied for or obtained from the appropriate State Licensing Authority (the “Additional Licenses”). Such request shall be a Major Amendment to this Agreement.

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Section 2.5. Conditional Use Permit. Prior to commencing operation of any Commercial Cannabis Activity on the Site, Developer shall obtain a Conditional Use Permit and any applicable Subsequent City Approvals for each location. Developer shall be required to comply with all provisions of the A.M.C. and any City rules and administrative guidelines associated with implementation of the Cannabis Business Pilot Program. Nothing in this Agreement shall be construed as limiting the ability of City to amend the A.M.C. or issue rules or administrative guidelines associated with implementation of the Cannabis Business Pilot Program or Developer’s obligation to strictly comply with the same.

Section 2.6. Subsequent Entitlements, Approvals, and Permits. Successful implementation of the Cannabis Business Project shall require Developer to obtain additional approvals and permits from City and other local and state agencies. City shall comply with CEQA in the administration of all Subsequent City Approvals. In acting upon any Subsequent City Approvals, City’s exercise of discretion and permit authority shall conform to this Agreement. Notwithstanding the foregoing, in the course of taking action on the Subsequent City Approvals, City will exercise discretion in adopting mitigation measures as part of the Conditional Use Permit. The exercise of this discretion is not prohibited or limited in any way by this Agreement. Nothing in this Agreement shall preclude the evaluation of impacts or consideration of mitigation measures or alternatives, as required by CEQA.

(a) Contemplated City Rules and Guidelines. City anticipates issuing additional rules and administrative guidelines associated with implementation of the Cannabis Business Pilot Program. City may establish requirements that are identical to or place a higher standard of care as existing provisions of the California Cannabis Laws, State Cannabis Regulations, or any amendments thereto. City reserves the right to adopt additional categories of rules or guidelines that are not listed in this Section as part of the Cannabis Business Pilot Program. Developer shall comply with any and all administrative guidelines adopted by City that govern or pertain to the Cannabis Business Project.

Section 2.7. Initiatives and Referenda. If any City ordinance, rule or regulation, or addition to the A.M.C. is enacted or imposed by a citizen-sponsored initiative or referendum after the Effective Date that would conflict with this Agreement, an associated Conditional Use Permit, Subsequent City Approvals, or reduce the development rights or assurances provided to Developer in this Agreement, such A.M.C. changes shall not be applied to the Site or the Cannabis Business Project; provided, however, the Parties acknowledge that City’s approval of this Agreement is a legislative action subject to referendum. City shall cooperate with Developer and shall undertake such reasonable actions as may be appropriate to ensure this Agreement remains in full force and effect and is implemented in accordance with its terms to the fullest extent permitted by state or federal law.

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Section 2.8. Regulation by Other Government Entities. Developer acknowledges that City does not have authority or jurisdiction over any other government entities’ ability to grant governmental approvals or permits or to impose a moratorium or other limitations that may negatively affect the Cannabis Business Project or the ability of City to issue a permit to Developer or comply with the terms of this Agreement. Any moratorium imposed by another government entity, including the State Licensing Authority, on City shall not cause City to be in breach of this Agreement.

Section 2.9. Developer’s Right to Rebuild. Developer may renovate portions of the Site any time within the Term of this Agreement consistent with the A.M.C. Any such renovation or rebuild shall be subject to all design, building code, and other requirements imposed on the Cannabis Business Project by this Agreement.

Section 2.10. Changes in California Building Standards Codes. Notwithstanding any provision of this Agreement to the contrary, development of the Cannabis Business Project shall be subject to changes occurring from time to time to the California Building Standards Codes.

Section 2.11. Changes Mandated by Federal or State Law. The Site and the Cannabis Business Project shall be subject to subsequently enacted state or federal laws or regulations that may preempt the A.M.C., or mandate the adoption or amendment of local regulations, or are in conflict with this Agreement or local rules or guidelines associated with the Cannabis Business Pilot Program. As provided in Section 65869.5 of the Development Agreement Statute, in the event state or federal laws or regulations enacted after the Effective Date prevent or preclude compliance with one or more provisions of this Agreement, such provisions shall be modified or suspended as may be necessary to comply with such state or federal laws or regulations. Upon discovery of a subsequently enacted federal or state law meeting the requirements of this Section, City or Developer shall provide the other Party with written notice of the state or federal law or regulation, and a written statement of the conflicts thereby raised with the provisions of the A.M.C. or this Agreement. Promptly thereafter, City and Developer shall meet and confer in good faith in a reasonable attempt to modify this Agreement, as necessary, to comply with such federal or state law or regulation, provided City shall not be obligated to agree to any modification materially increasing its obligations or materially adversely affecting its rights and benefits hereunder. In such discussions, City and Developer will attempt to preserve the terms of this Agreement and the rights of Developer derived from this Agreement to the maximum feasible extent while resolving the conflict. If City, in its judgment, determines it necessary to modify this Agreement to address such conflict, City shall have the right and responsibility to do so and shall not have any liability to Developer for doing so or be considered in breach or default of this Agreement. City also agrees to process, in accordance with the provisions of this Agreement, Developer’s proposed changes to, or election to terminate, the Cannabis Business Project that are necessary to comply with such federal or state law and that such proposed changes shall be conclusively deemed to

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be consistent with this Agreement without further need for any amendment to this Agreement.

Section 2.12. Health and Safety Emergencies. In the event that any future public health and safety emergencies arise with respect to the Cannabis Business Project contemplated by this Agreement, City agrees that it shall attempt, if reasonably possible as determined by City in its discretion, to address such emergency in a way that does not have a material adverse impact on the Cannabis Business Project. If City determines, in its discretion, that it is not reasonably possible to so address such health and safety emergency in a way that does not have a material adverse impact on the Cannabis Business Project, City may select an option which, in its discretion, minimizes, so far as reasonably possible, the impact on development and use of the Cannabis Business Project in accordance with this Agreement, while still addressing such health and safety emergency in a manner acceptable to City.

ARTICLE 3 ENTITLEMENT AND PERMIT PROCESSING, INSPECTIONS

Section 3.1. Subsequent City Approvals. City shall permit the development, construction, and conditionally permitted use contemplated in this Agreement. City agrees to timely grant, pursuant to the terms of this Agreement, the A.M.C. and any Subsequent City Approvals reasonably necessary to complete the goals, objectives, policies, standards, and plans described in this Agreement. The Subsequent City Approvals shall include any applications, permits, and approvals required to complete the improvements necessary to develop the Site, in general accordance with this Agreement (“Subsequent City Approvals”). Nothing herein shall require City to provide Developer with Subsequent City Approvals prior to, or without complying with, all of the requirements in this Agreement, the A.M.C., and any applicable state law.

Section 3.2. Timely Processing. City shall use its reasonable best efforts to process and approve, within a reasonable time, any Subsequent City Approvals or environmental review requested by Developer during the Term of this Agreement.

Section 3.3. Cooperation Between City and Developer. Consistent with the terms set forth herein, City agrees to cooperate with Developer, on a timely basis, in securing all permits or licenses that may be required by City or any other government entity with permitting or licensing jurisdiction over the Cannabis Business Project.

Section 3.4. Further Consistent Discretionary Actions. The exercise of City's authority and independent judgment is recognized under this Agreement, and nothing in this Agreement shall be interpreted as limiting City’s discretion or obligation to hold legally required public hearings. Except as otherwise set forth herein, such discretion and action taken by City shall, however, be consistent with the terms of this Agreement and not prevent, hinder, or compromise development or use of the Site as contemplated by the Parties in this Agreement.

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ARTICLE 4 PUBLIC BENEFIT, PROCESSING, AND OVERSIGHT

Section 4.1. Processing Fees and Charges. Developer shall pay to City those processing, inspection, plan checking, and monitoring fees and charges required by City which are in force and effect at the time those fees and charges are incurred (including any post-Effective Date increases in such fees and charges) for processing applications and requests for building permits, inspections, other permits, approvals and actions, and monitoring compliance with any permits issued or approvals granted or the performance of any conditions (each a “Ministerial Fee” and collectively, the “Ministerial Fees”).

Section 4.2. Public Benefit.

(a) The Parties acknowledge and agree that this Agreement, and the Cannabis Business Project, confers substantial private benefits upon Developer that will place burdens upon City infrastructure, services, and neighborhoods. Accordingly, the Parties intend to provide consideration to City to offset these impacts that commensurate with the private benefits conferred on Developer (the “Public Benefit”). In consideration of the foregoing, Developer shall remit to City as follows (the “Cannabis Business Public Benefit”):

Effective Date No Public Benefit Due.

First (1st) Business Day following the 1st Month in which Developer commences Commercial Cannabis Activity.

$15,000 or 5% of Gross Receipts from Operations each month, whichever is greater (“Tier 1 Amount”).

1st Business Day of the Thirteenth (13th) Month in which Developer commences Commercial Cannabis Activity.


1st Business Day of the Twenty-fifth (25th) Month in which Developer commences Commercial Cannabis Activity.


(b) Collectively, these tier amounts shall be known as the “Public Benefit

Amount”.

(c) Developer shall file an applicable statement that complies with the California State Board of Equalization, California Department of Tax and Fee Administration, or either’s successor agency (the “State Taxing Authority”) for sales tax purposes showing the true and correct amount of Gross Receipts from Operations of the Cannabis Business Project during the applicable time period. Developer shall provide a copy of such statement to City upon request by City.

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Section 4.3. Reporting. Developer shall provide City with copies of any reports provided to a State Licensing Authority within forty-five (45) days of that submission.

Any failure or refusal of Developer to provide any statement or report to City, the State Taxing Authority, or any other State Licensing Authority, as required within the time required, or to pay such sums due hereunder when the same are due and payable in accordance with the provisions of this Agreement, may constitute full and sufficient grounds for the revocation or suspension of the Conditional Use Permit.

Section 4.4. Records. Developer shall keep records of all Commercial Cannabis Activity in accordance with Chapter 16 (commencing with Section 26160) of Division 10 of the Business and Professions Code and the applicable State Cannabis Regulations. All records required by this Section shall be maintained and made available for City’s examination and duplication (physical or electronic) at the Site or at an alternate facility as approved in writing by the City Manager, or his or her designee.

Section 4.5. Penalty. Developer acknowledges that to ensure proper compliance with the terms of this Agreement and any applicable laws, City must engage in costly compliance review, inspections, and, if necessary, enforcement actions to protect the health, safety, and welfare of its residents. Penalty and interest provisions are necessary to assist City in compliance review and enforcement actions. If Developer fails to make any payment when due, as required by this Agreement, including the Public Benefit Amount, City may impose a “Non-Performance Penalty.” A Non-Performance Penalty of one percent (1%) shall be applied to all past due payments. City shall deliver to Developer a “Notice of Non-Performance Penalty,” attached hereto as Exhibit D. Payment of the Non-Performance Penalty shall be in a single installment due on or before a date fifteen (15) days following delivery of the Notice of Non-Performance Penalty.

Section 4.6. Interest on Unpaid Non-Performance Penalty. If Developer fails to pay the Non-Performance Penalty after City has delivered the Notice of Non-Performance Penalty, then, in addition to the principal amount of the Non-performance Penalty, Developer shall pay the City interest at the rate of eighteen percent (18%) per annum, computed on the principal amount of the Non-Performance Penalty, from a date fifteen (15) days following delivery of the Notice of Non-performance Penalty.

Section 4.7. Protections from City Tax. Notwithstanding Section 4.2, for the Term of this Agreement, Developer shall be exempt from any City tax, including a business license tax, on commercial cannabis businesses. Notwithstanding the foregoing, Developer and the Cannabis Business Project shall be subject to any and all taxes, assessments, or similar charges or fees of general applicability enacted by the federal government, state government, or County of Merced, including any tax applicable to an area greater than the City limits to which City may be a party (i.e., county tax sharing agreement).

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ARTICLE 5 PUBLIC FACILITIES, SERVICES, AND UTILITIES

City shall use the Public Benefit Amount to pay for the impact on and maintenance or improvement of City neighborhoods and the existing level of service of City infrastructure and services to accommodate for the Cannabis Business Project.

ARTICLE 6 INSURANCE AND INDEMNITY

Section 6.1. Insurance. Developer shall require all persons doing work on the Cannabis Business Project, including its contractors and subcontractors (collectively, “Developer” for purposes of this Article 6 only), to obtain and maintain insurance of the types and in the amounts described in this Article with carriers reasonably satisfactory to City.

(a) General Liability Insurance. Developer shall maintain commercial general liability insurance or equivalent form with a limit of not less than Two Million Dollars ($2,000,000) (or as otherwise approved, in writing, by City) per claim and Two Million Dollars ($2,000,000) each occurrence. Such insurance shall also:

(i) Name City, its elected and appointed councils, boards, commissions, officers, agents, employees, and representatives as “Additional Insureds” by endorsement with respect to performance of this Agreement. The coverage shall contain no special limitations on the scope of its protection afforded to the above-listed additional insured.

(ii) Be primary with respect to any insurance or self-insurance programs covering City, its officials, employees, agents, and representatives.

(iii) Contain standard separation of insured provisions.

(b) Automotive Liability Insurance. Developer shall maintain business automobile liability insurance or equivalent form with a limit of not less than One Million Dollars ($1,000,000) for each accident. Such insurance shall include coverage for owned, hired, and non-owned automobiles. Such insurance shall also:

(i) Name City, its elected and appointed councils, boards, commissions, officers, agents, employees, and representatives as Additional Insureds by endorsement with respect to performance of this Agreement. The coverage shall contain no special limitations on the scope of its protection afforded to the above-listed Additional Insureds.


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(c) Workers’ Compensation Insurance. Developer shall take out and maintain during the Term of this Agreement, workers’ compensation insurance for all of Developer’s employees employed at or on the Cannabis Business Project and in the case any of the work is subcontracted, Developer shall require any general contractor or subcontractor similarly to provide workers’ compensation insurance for such contractor’s or subcontractor’s employees, unless such employees are covered by the protection afforded by Developer. In case any class of employee engaged in work on the Cannabis Business Project is not protected under any workers’ compensation law, Developer shall provide and shall cause each contractor and subcontractor to provide adequate insurance for the protection of employees not otherwise protected. Developer hereby indemnifies City for any damage resulting from failure of Developer, its agents, employees, contractors, or subcontractors to take out or maintain such insurance. Workers’ compensation insurance with statutory limits, and employer’s liability insurance with limits of not less than One Million Dollars ($1,000,000) for each accident, shall be maintained by Developer.

Section 6.2. Other Insurance Requirements. Developer shall do all of the following:

(a) Prior to taking any actions under this Agreement, furnish City with properly executed certificates of insurance that clearly evidence all insurance required in this Article, including evidence that such insurance will not be canceled, allowed to expire, or materially reduced in coverage without thirty (30) days prior written notice to City.

(b) Provide to City, upon request and within seven (7) days of said request, certified copies of endorsements and policies and properly executed certificates of insurance evidencing the insurance required herein.

(c) Replace or require the replacement of certificates, policies, and endorsements for any insurance required herein expiring prior to the termination of this Agreement.

(d) Maintain all insurance required herein from the Effective Date of this Agreement to the earlier of the expiration of the Term or the mutual written termination of this Agreement.

(e) Place all insurance required herein with insurers licensed to do business in California with a current Best’s Key Rating Guide reasonably acceptable to City.

Section 6.3. Indemnity. To the fullest extent permitted by law, Developer shall defend, indemnify, and hold harmless City, and its agents, elected and appointed officials, officers, employees, consultants, and volunteers (collectively, “City’s Agents”) from any and all liability arising out of a claim, action, or proceeding against City, or City’s Agents, to attack, set aside, void, or annul an approval concerning the Cannabis

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Business Project, this Agreement, any applicable Conditional Use Permit, or Subsequent City Approvals related to the Cannabis Business Project. Developers shall execute the indemnification agreement (“Indemnification Agreement”) attached hereto as Exhibit E.

Section 6.4. Failure to Indemnify; Waiver. Failure by Developer to indemnify City, when required by this Agreement and the Indemnification Agreement, shall constitute a material breach of this Agreement and of any applicable Conditional Use Permit and Subsequent City Approvals, which shall entitle City to all remedies available under law, including, but not limited to, specific performance and damages. Failure to indemnify shall constitute grounds upon which City may rescind its approval of any applicable Conditional Use Permit. Developer’s failure to indemnify City shall be a waiver by Developer of any right to proceed with the Cannabis Business Project, or any portion thereof, and a waiver of Developer’s right to file a claim, action, or proceeding against City, or City’s Agents, based on City’s rescission or revocation of any Conditional Use Permit, Subsequent City Approvals, or City’s failure to defend any claim, action, or proceeding based on Developer’s failure to indemnify City.

Section 6.5. Waiver of Damages. Notwithstanding anything in this Agreement to the contrary, the Parties acknowledge that City would not have entered into this Agreement had it been exposed to liability for damages from Developer and, therefore, Developer hereby waives all claims for damages against City for breach of this Agreement. Developer further acknowledges that under the Development Agreement Statute, land use approvals (including development agreements) must be approved by the City Council and that, under law, the City Council's discretion to vote in any particular way may not be constrained by contract. Developer, therefore, waives all claims for damages against City in the event that this Agreement or any Project approval is: (1) not approved by the City Council; or (2) is approved by the City Council, but with new changes, amendments, conditions, or deletions to which Developer is opposed. Developer further acknowledges that, as an instrument which must be approved by ordinance, a development agreement is subject to referendum and that, under law, the City Council's discretion to avoid a referendum by rescinding its approval of the underlying ordinance may not be constrained by contract, and Developer waives all claims for damages against City in this regard.

ARTICLE 7 MORTGAGEE PROTECTION

This Agreement, once executed and recorded, shall be superior and senior to any lien placed upon the Site or any portion thereof following recording of this Agreement, including the lien of any deed of trust or mortgage (“Mortgage”). Notwithstanding the foregoing, no breach hereof shall defeat, render invalid, diminish, or impair the lien of any Mortgage made in good faith and for value. This Agreement shall immediately be deemed in default and immediately terminate upon the foreclosure or transfer of any interest in the Site or Project, whether by operation of law or any other

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method of interest change or transfer, unless the City Manager has authorized such change or transfer in advance, in writing. City agrees to not unreasonably withhold its authorization.

ARTICLE 8 DEFAULT

Section 8.1. General Provisions.

(a) Subject only to any extensions of time by mutual consent in writing, or as otherwise provided herein, the failure or delay by any Party to perform in accordance with the terms and provisions of this Agreement shall constitute a default. Any Party alleging a default or breach of this Agreement (“Charging Party”) shall give the other Party (“Charged Party”) not less than ten (10) days written notice, which shall specify the nature of the alleged default and the manner in which the default may be cured. During any such ten (10) calendar day period, the Charged Party shall not be considered in default for purposes of termination of this Agreement or institution of legal proceedings for the breach of this Agreement.

(b) After expiration of the ten (10) calendar day period, if such default has not been cured or is not in the process of being diligently cured in the manner set forth in the notice, or if the breach cannot reasonably be cured within ten (10) days, the Charging Party may, at its option, institute legal proceedings pursuant to this Agreement and give notice of its intent to terminate this Agreement pursuant to Government Code section 65868. In the event City is the Charging Party, City may, in its sole discretion, give notice, as required by law, to the Charged Party of its intent to revoke or rescind any operable Conditional Use Permit related to or concerning the Cannabis Business Project.

(c) Prior to the Charging Party giving notice to the Charged Party of its intent to terminate, or prior to instituting legal proceedings, the matter shall be scheduled for consideration and review by City in the manner set forth in Government Code sections 65865, 65867, and 65868 within thirty (30) days from the expiration of the ten (10) day notice period.

(d) Following consideration of the evidence presented and said review before City, and after providing the Charged Party an additional five (5) calendar day period to cure, the Charging Party may institute legal proceedings against the Charged Party, or may give written notice of termination of this Agreement to the Charged Party.

(e) Evidence of default may arise in the course of a regularly scheduled periodic review of this Agreement, pursuant to Government Code section 65865.1, as set forth in Section 8.2. If any Party determines that another Party is in default following the completion of the normally scheduled periodic review, without reference to the procedures specified in Section 8.1(c), said Party may give written notice of termination

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of this Agreement, specifying in the notice the alleged nature of the default and potential actions to cure said default where appropriate. If the alleged default is not cured in ten (10) days or within such longer period specified in the notice, or the defaulting Party is not diligently pursuing a cure or if the breach cannot reasonably be cured within the period or the defaulting party waives its right to cure such alleged default, this Agreement may be terminated by the non-defaulting Party by giving written notice. An extension of the ten (10) day cure period may be given by mutual consent of the Parties.

(f) In the event Developer is in default under the terms and conditions of this Agreement, no permit application shall be accepted by City, nor will any permit be issued to Developer until the default is cured or the Agreement is terminated.

Section 8.2. Annual Review. City shall, at least every twelve (12) months during the Term of this Agreement, review the extent of good faith, substantial compliance of Developer and City with the terms of this Agreement. Such periodic review by City shall be limited in scope to compliance with the terms of this Agreement pursuant to California Government Code section 65865.1. City shall deposit in the mail or fax to Developer a copy of all staff reports and, to the extent practical, related exhibits concerning this Agreement or the Cannabis Business Project’s performance, at least seven (7) days prior to such periodic review. Developer shall be entitled to appeal a determination of City or the City Manager to the City Council. Any appeal must be filed within ten (10) days of the decision of City or the City Manager, respectively. Developer shall be permitted an opportunity to be heard orally or in writing regarding its performance under this Agreement before City, the City Manager, or the City Council, as applicable. The reasonable cost for City's annual review of this Agreement shall be paid by Developer, not to exceed the actual costs incurred by City in connection with the review.

Section 8.3. Estoppel Certificates.

(a) City shall, with at least twenty (20) days prior written notice, execute, acknowledge, and deliver to Developer, Developer’s lender, potential investors, or assignees an Estoppel Certificate in writing which certifies that this Agreement is in full force and effect, that there are no breaches or defaults under the Agreement, and that the Agreement has not been modified or terminated and is enforceable in accordance with its terms and conditions.

(b) At Developer’s option, City’s failure to deliver such Estoppel Certificate within the stated time period shall be conclusive evidence that the Agreement is in full force and effect, that there are no uncured breaches or defaults in Developer’s performance of the Agreement or violation of any City ordinances, regulations, and policies regulating the use and development of the Dispensary Site, Microbusiness Site, Cannabis Business Project, or the subject to this Agreement.

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Section 8.4. Default by City. In the event City does not accept, review, approve, or issue any permits or approvals in a timely fashion, as defined by this Agreement, or if City otherwise defaults under the terms of this Agreement, City agrees that Developer shall not be obligated to proceed with or complete the Cannabis Business Project and shall constitute grounds for termination or cancellation of this Agreement by Developer.

Section 8.5. Cumulative Remedies of Parties. In addition to any other rights or remedies, City or Developer may institute legal or equitable proceedings to cure, correct, or remedy any default, enforce any covenant, or enjoin any threatened or attempted violation of the provisions of this Agreement, so long as any such action conforms to Section 9.1(c) of this Agreement.

Section 8.6. Forced Delay, Extension of Times of Performance. Delays in performance, by either Party, shall not be deemed a default if such delays or defaults are due to war, terrorism, insurrection, strikes, walkouts, riots, floods, earthquakes, fires, casualties, acts of God, governmental restrictions imposed where mandated by governmental entities other than City, enactment of conflicting state or federal laws or regulations, new or supplementary environmental regulations enacted by the state or federal government, litigation, or other force majeure events. An extension of time for such cause shall be in effect for the period of forced delay or longer, as may be mutually agreed upon.

Section 8.7. Appeals. Developer may appeal any adverse decision or action of City pursuant to A.M.C. Chapter 1.12.

ARTICLE 9 TERMINATION

Section 9.1. Termination Upon Completion of Development. This Agreement shall terminate upon the expiration of the Term, unless it is terminated earlier pursuant to the terms of this Agreement. Upon termination of this Agreement, City shall record a notice of such termination in substantial conformance with the “Notice of Termination” attached hereto as Exhibit F, and this Agreement shall be of no further force or effect except as otherwise set forth in this Agreement.

Section 9.2. Effect of Termination on Developer’s Obligations. Termination of this Agreement shall eliminate any further obligation of Developer to comply with this Agreement, or some portion thereof, if such termination relates to only part of the Site or Project. Termination of this Agreement, in whole or in part, shall not, however, eliminate the rights of Developer to seek any applicable and available remedies or damages based upon acts or omissions occurring before termination.

Section 9.3. Effect of Termination on City’s Obligations. Termination of this Agreement shall eliminate any further obligation of City to comply with this Agreement, or some portion thereof. Termination of this Agreement shall not, however, eliminate the

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rights of City to seek any applicable and available remedies or damages based upon acts or omissions occurring before termination.

Section 9.4. Survival After Termination. The rights and obligations of the Parties set forth in this Section 9.4, Section 2.8, Section 6.3, Section 10.3, Section 10.4, Section 10.5, Section 10.7, and Section 10.10, and any right or obligation of the Parties in this Agreement which, by its express terms or nature and context is intended to survive termination of this Agreement, will survive any such termination.

ARTICLE 10 OTHER GENERAL PROVISIONS

Section 10.1. Assignment and Assumption.

(a) Assignment and Related Background Checks. Developer shall not have the right to sell, assign, or transfer all or any part of its rights, title, and interests in all or a portion of the Site or Project, subject to or a part of this Agreement, to any person, firm, corporation, or entity during the Term of this Agreement without the advance written consent of the City Manager. This assignment prohibition applies to the corporate and business entities of Developer that are a party to this Agreement. Any assignment or transfer prohibited by this Agreement will be considered an immediate breach of this Agreement and City may elect to immediately terminate this Agreement. If the City Manager approves an assignment or transfer of any interest detailed in this Section 10.1, City and Developer shall execute an “Assignment and Assumption Agreement” in the form attached hereto as Exhibit G. Notwithstanding the above, the City Manager shall evaluate in good faith any request for a transfer of rights to a third party under this Agreement, and shall not unreasonably withhold approval of such request. The City Manager's evaluation shall take into consideration the experience of and resources available to the prospective transferee relative to their ability to competently assume the commercial cannabis business operation, and applicable background information of the third party, including but not limited to a background check for criminal activity, a history of legal actions such as filing for bankruptcy, civil lawsuits involving claims of fraud or related actions. Additionally, the City Manager may, at his or her discretion, deny a transfer request for any of the reasons contemplated in California Code of Regulations, tit. 16, sections 5017-5018.

(b) Successor in Interest. Developer shall have the right to name a successor in interest who may assume ownership of the Cannabis Business Project and permits thereunder in the event of the Developer or it's principal's death or incapacity, provided the City Manager has conducted a background check of the named successor in interest, subject to the provisions for assignments to third parties set forth above, and there are no issues related to his or her background that would preclude eligibility to operate the Cannabis Business Project. Developer shall designate its successor in interest in writing and provide notice to the City as set forth below.

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Section 10.2. Covenants Running with the Land. All of the provisions contained in this Agreement shall be binding upon the Parties, and their respective heirs, successors and assigns, representatives, lessees, and all other persons acquiring all or a portion of interest in the Site or Cannabis Business Project, whether by operation of law or in any manner whatsoever. All of the provisions contained in this Agreement shall be enforceable as equitable servitudes and shall constitute covenants running with the land pursuant to California law, including California Civil Code section 1468. Each covenant herein to act or refrain from acting is for the benefit of or a burden upon the Cannabis Business Project, as appropriate, runs with the Site and is binding upon Developer.

Developer may, subject to any zoning restrictions or necessary land use entitlement approvals transfer its rights and obligations under this Agreement to apply to an alternative physical premises provided the premises are suitable and appropriately zoned for the Commercial Cannabis Activities contemplated under this Agreement and the City’s rules and regulations. Developer hereby acknowledges that it shall be required to obtain any necessary City and state permits and approvals, including but not limited to a Major Amendment to this Agreement, and obtain a Conditional Use Permit for any alternative premises in order to conduct business at such an alternative premises.

Section 10.3. Notices. Any notice or communication required hereunder between City and Developer must be in writing and may be given either personally, by facsimile (with original forwarded by regular U.S. Mail), by registered or certified mail (return receipt requested), or by Federal Express, UPS, or other similar couriers providing overnight delivery. If personally delivered, a notice shall be deemed to have been given when delivered to the Party to whom it is addressed. If given by facsimile transmission, a notice or communication shall be deemed to have been given and received upon actual physical receipt of the entire document by the receiving Party’s facsimile machine. Notices transmitted by facsimile after 5:00 p.m. on a normal business day, or on a Saturday, Sunday, or holiday, shall be deemed to have been given and received on the next normal business day. If given by registered or certified mail, such notice or communication shall be deemed to have been given and received on the first to occur of (i) actual receipt by any of the addressees designated below as the Party to whom notices are to be sent; or (ii) five (5) days after a registered or certified letter containing such notice, properly addressed, with postage prepaid, is deposited in the United States mail. If given by Federal Express, or similar courier, a notice or communication shall be deemed to have been given and received on the date delivered, as shown on a receipt issued by the courier. Any Party hereto may at any time by giving ten (10) days written notice to the other Party hereto, designate any other address in substitution of the address to which such notice or communication shall be given. Such notices or communications shall be given to the Parties at their addresses set forth below:

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If to City: City of Atwater 750 Bellevue Road

Atwater, California 95301 Attention: City Manager

and Churchwell White LLP

1414 K Street, 3rd Floor Sacramento, California 95814

Attention: Douglas L. White, Esq.

If to Developer: Central Cal Brothers, Inc. 1531 Ronnie Ct. Merced, California 95341 Attention: Felimon Alvarez and: Law Office of Armando M. Flores 429 13th St. Modesto, California 05354

Section 10.4. Governing Law and Binding Arbitration. The validity, interpretation, and performance of this Agreement shall be controlled by and construed pursuant to the laws of the state of California. Any dispute, claim, or controversy arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation, or validity thereof, including the determination of the scope or applicability of this Agreement to arbitrate, shall be determined by binding arbitration in Sacramento, California, before one arbitrator. The arbitration shall proceed pursuant to the Comprehensive Arbitration Rules and Procedures of the Judicial Arbitration and Mediation Services (“JAMS”). Judgment on the award may be entered in any court having jurisdiction thereof.

Section 10.5. Invalidity of Agreement / Severability. If this Agreement in its entirety is determined by an arbitrator or court of competent jurisdiction to be invalid or unenforceable, this Agreement shall automatically terminate as of the date of final entry of judgment. If any term or provision of this Agreement shall be determined by an arbitrator or court of competent jurisdiction to be invalid and unenforceable, or if any term or provision of this Agreement is rendered invalid or unenforceable according to the terms of any federal or state statute, any provisions that are not invalid or unenforceable shall continue in full force and effect and shall be construed to give effect to the intent of this Agreement. The Parties expressly agree that each Party is strictly prohibited from failing to perform any and all obligations under this Agreement on the basis that this Agreement is invalid, unenforceable, or illegal. By entering into this Agreement, each Party disclaims any right to tender an affirmative defense in any

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arbitration or court of competent jurisdiction, that performance under this Agreement is not required because the Agreement is invalid, unenforceable, or illegal.

Section 10.6. Cumulative Remedies. In addition to any other rights or remedies, City and Developer may institute legal or equitable proceedings to cure, correct, or remedy any default, to specifically enforce any covenant or agreement herein, or to enjoin any threatened or attempted violation of the provisions of this Agreement. The prevailing Party in any such action shall be entitled to reasonable attorneys’ fees and costs. Notwithstanding the foregoing or any other provision of this Agreement, in the event of City default under this Agreement, Developer agrees that Developer may not seek, and shall forever waive any right to, monetary damages against City, but excluding therefrom the right to recover any fees or charges paid by Developer in excess of those permitted hereunder.

Section 10.7. Third Party Legal Challenge. In the event any legal action or special proceeding is commenced by any person or entity challenging this Agreement, or any associated entitlement necessary or directly related to this Agreement, permit, or approval granted by City to Developer for the Cannabis Business Project (collectively, “Project Litigation”), the Parties agree to cooperate with each other as set forth herein. City may elect to tender the defense of any lawsuit filed and related in whole or in part to Project Litigation with legal counsel selected by City. Developer will indemnify, hold City harmless from, and defend City from all costs and expenses incurred in the defense of such lawsuit, including, but not limited to, damages, attorneys’ fees, and expenses of litigation awarded to the prevailing Party or Parties in such litigation. Developer shall pay all litigation fees to City within thirty (30) days of receiving a written request and accounting of such fees and expenses from City. Notwithstanding the aforementioned, City may request, and Developer will provide to City within seven (7) days of any such request, a deposit to cover City’s reasonably anticipated Project Litigation fees and costs.

Section 10.8. Constructive Notice and Acceptance. Every person who, after the Effective Date and recording of this Agreement, owns or acquires any right, title, or interest to any portion of the Site is and shall be conclusively deemed to have consented and agreed to every provision contained herein, whether or not any reference to this Agreement is contained in the instrument by which such person acquired an interest in the Site, and all rights and interests of such person in the Site shall be subject to the terms, requirements, and provisions of this Agreement.

Section 10.9. Statute of Limitations and Laches. City and Developer agree that each Party will undergo a change in position in detrimental reliance upon this Agreement from the time of its execution and subsequently. The Parties agree that section 65009, subdivision (c)(1)(D) of the California Government Code, which provides for a ninety (90) day statute of limitations to challenge the adoption of this Agreement, is applicable to this Agreement. In addition, any person who may challenge the validity of this Agreement is hereby put on notice that, should the legality or validity of this

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Agreement be challenged by any third party in litigation, which is filed and served more than ninety (90) days after the execution of this Agreement, City and Developer shall each assert the affirmative defense of laches with respect to such challenge, in addition to all other available defenses. This Section in no way limits the right of a Party, claiming that the other Party breached the terms of this Agreement, to bring a claim against the other Party within the four (4) year statute of limitations set forth in Section 337 of the California Civil Code.

Section 10.10. Joint and Several Liability. Developer shall be jointly and severally liable for any amount due under this Agreement, and any breach of this Agreement or failure to pay by one Party shall also constitute a breach of this Agreement by the other Party. Developer agrees that City may impose a lien and seek foreclosure on any parcel of the Site due to any default by Developer.

Section 10.11. Change in State Regulations. In no event shall Developer operate the Cannabis Business Project in violation of the Agreement, or State Cannabis Regulations, as may be amended from time to time.

Section 10.12. Standard Terms and Conditions.

(a) Venue. Venue for all legal proceedings shall be the JAMS Resolution Center in Sacramento, California.

(b) Waiver. A waiver by any Party of any breach of any term, covenant, or condition herein contained or a waiver of any right or remedy of such Party available hereunder, at law or in equity, shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant, or condition herein contained or of any continued or subsequent right to the same right or remedy. No Party shall be deemed to have made any such waiver unless it is in writing and signed by the Party so waiving.

(c) Completeness of Instrument. This Agreement, together with its specific references, attachments, and Exhibits, constitutes all of the agreements, understandings, representations, conditions, warranties, and covenants made by and between the Parties hereto. Unless set forth herein, no Party to this Agreement shall be liable for any representations made, express or implied.

(d) Supersedes Prior Agreement. It is the intention of the Parties hereto that this Agreement shall supersede any prior agreements, discussions, commitments, or representations, written, electronic, or oral, between the Parties hereto with respect to the Site or the Cannabis Business Project.

(e) Captions. The captions of this Agreement are for convenience and reference only, and the words contained therein shall in no way be held to explain, modify, amplify, or aid in the interpretation, construction, or meaning of the provisions of this Agreement.

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(f) Number and Gender. In this Agreement, the neuter gender includes the feminine and masculine, and the singular includes the plural, and the word “person” includes corporations, partnerships, firms, or associations, wherever the context requires.

(g) Mandatory and Permissive. “Shall” and “will” and “agrees” are mandatory. “May” or “can” are permissive.

(h) Term Includes Extensions. All references to the Term of this Agreement shall include any extensions of such Term.

(i) Counterparts. This Agreement may be executed simultaneously and in several counterparts, each of which shall be deemed an original, but which together shall constitute one and the same instrument.

(j) Other Documents. The Parties agree that they shall cooperate in good faith to accomplish the objectives of this Agreement and, to that end, agree to execute and deliver such other instruments or documents as may be necessary and convenient to fulfill the purposes and intentions of this Agreement.

(k) Time is of the Essence. Time is of the essence in this Agreement in each covenant, term, and condition herein.

(l) Authority. All Parties to this Agreement warrant and represent that they have the power and authority to enter into this Agreement and the names, titles, and capacities herein stated on behalf of any entities, persons, states, or firms represented or purported to be represented by such entities, persons, states, or firms and that all former requirements necessary or required by state or federal law in order to enter into this Agreement had been fully complied with. Further, by entering into this Agreement, no Party hereto shall have breached the terms or conditions of any other contract or agreement to which such Party is obligated, which such breach would have a material effect hereon.

(m) Document Preparation. This Agreement will not be construed against the Party preparing it but will be construed as if prepared by all Parties.

(n) Advice of Legal Counsel. Each Party acknowledges that it has reviewed this Agreement with its own legal counsel and, based upon the advice of that counsel, freely entered into this Agreement.

(o) Attorney’s Fees and Costs. If any action at law or in equity, including action for declaratory relief, is brought to enforce or interpret provisions of this Agreement, the prevailing Party shall be entitled to reasonable attorney's fees and costs, which may be set by the court in the same action or in a separate action brought for that purpose, in addition to any other relief to which such Party may be entitled.

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(p) Calculation of Time Periods. All time referenced in this Agreement shall be calendar days, unless the last day falls on a legal holiday, Saturday, or Sunday, in which case the last day shall be the next business day.

SIGNATURES ON FOLLOWING PAGE

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IN WITNESS WHEREOF, this Agreement has been entered into by and between Developer and City as of the Effective Date of the Agreement, as defined above.

“CITY” Date: , 2019 CITY OF ATWATER, a California municipal corporation

By: ___________________________


Attest:

By: ___________________________

City Clerk Approved to as Form

By___________________________

Douglas L. White City Attorney

“DEVELOPER”

Date: , 2019 CENTRAL CAL BROTHERS, INC., a California corporation

By: Filemon Alvarez Its: President

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California All-Purpose Acknowledgment

State of California ) ) County of ) On , before me , a Notary

Public, personally appeared who

proved to me on the basis of satisfactory evidence to be the person(s) whose name(s)

is/are subscribed to the within instrument and acknowledged to me that he/she/they

executed the same in his/her/their authorized capacity(ies), and that by his/her/their

signature(s) on the instrument the person(s), or the entity upon behalf of which the

person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California

that the foregoing paragraph is true and correct.

Witness my hand and official seal.

(Signature)

(Seal)

A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

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Exhibit A

Cannabis Site Legal Description

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Exhibit B

Cannabis Dispensary Site Map

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Exhibit C

Site Lease

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Exhibit D

Notice of Non-Performance Penalty

DATE: , 20___ PARTIES: CITY OF ATWATER, a California municipal corporation 750 Bellevue Road

Atwater, California 95301 Central Cal Brothers, Inc., a California corporation

_________________ _________________

THIS NOTICE OF NON-PERFORMANCE PENALTY (“Penalty Notice”) is being executed by the City of Atwater, a California municipal corporation (“City”), with reference to the following.

A. By Instrument No. _____________, which was recorded in the Official Records of Merced County, California, on ________________, 2019, City recorded a development agreement between City and __________________, dated ______________, 2019 (the “Development Agreement”), relating to the development and operation of a cannabis dispensary and microbusiness.

B. Pursuant to Section 4.2 of the Development Agreement, Developer agrees to pay

to City a Public Benefit on the first business day of each month during the term of the Development Agreement.

C. On ________, 20__, the Public Benefit was due to City by Developer. City did

not receive payment.

D. Pursuant to Section 4.5 of the Development Agreement, if Developer fails to make payment when it is due, City may impose a penalty of one percent (1%) of the total of the past due amounts (“Penalty”). As of ____________, 20__, the past due amount equals $_________. The Penalty owed by Developer equals $____________ (“Penalty Amount”).

E. Pursuant to Section 4.5 of the Development Agreement, Developer shall make

payment of the Penalty Amount in a single installment due within fifteen (15) days of delivery of this Penalty Notice (“Penalty Due Date”).

F. Pursuant to Section 4.6 of the Development Agreement, if Developer fails to pay

the Penalty Amount before the Penalty Due Date, then, in addition to the Penalty

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Amount specified in subdivision (D), Developer shall pay City interest on the Penalty Amount, at the rate of eighteen percent (18%) per annum (“Penalty Interest Payment”), computed from the Penalty Due Date specified in subdivision (E). The Penalty Interest Payment is due fifteen (15) days following delivery of the Penalty Due Date. As of ____________, 20__, the Penalty Interest Payment amount equals $_________.

G. Nothing contained herein shall constitute a waiver of City’s future claims for the

Public Benefit, Penalty, or interest on the Penalty. NOW, THEREFORE, City hereby provides Developer the Penalty Notice required by Section 4.5 of the Development Agreement. This Penalty Notice shall be effective upon notice pursuant to Section 10.3 of the Development Agreement.

CITY OF ATWATER, a California municipal corporation

By: City Manager

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Exhibit E

INDEMNITY AGREEMENT FOR LAND USE ENTITLEMENT PROCESSING

THIS INDEMNITY AGREEMENT FOR LAND USE ENTITLEMENT PROCESSING (“Agreement”) is made and entered into on this ___ day of ______ 2019, (“Effective Date”) by and between the City of Atwater, a California municipal corporation, (“City”) and Central Cal Brothers, Inc., a California corporation (collectively, “Applicant”). City and Applicant may be referred to herein individually as a “Party” or collectively as the “Parties”. There are no other parties to this Agreement.

RECITALS

A. In 1996, the people of the state of California approved Proposition 215, the Compassionate Use Act of 1996 (“CUA”). The CUA enables seriously ill Californians to legally possess, use, and cultivate marijuana for medical use under state law. In 2003, the California Legislature adopted Senate Bill 420, entitled the Medical Marijuana Program (“MMP”), which authorizes qualified patients and their primary caregivers to cultivate marijuana for medical purposes without being subject to criminal prosecution under the California Penal Code.

B. On October 9, 2015, Governor Jerry Brown signed three bills into law (Assembly Bill 266, Assembly Bill 243, and Senate Bill 643) which are collectively referred to as the Medical Cannabis Regulation and Safety Act (“MCRSA”). MCRSA establishes a statewide regulatory system for the cultivation, processing, transportation, testing, manufacturing, and distribution of medical marijuana to qualified patients and their primary caregivers.

C. On November 8, 2016, California voters passed Proposition 64, the Adult Use of Marijuana Act (“AUMA”). AUMA legalizes the cultivation, commercial sale, and possession of recreational cannabis for adults age 21 and older.

D. On June 27, 2017, Governor Jerry Brown signed into law the Medicinal and Adult-Use Cannabis Regulation and Safety Act (“MAUCRSA”), which created a single regulatory scheme for both medicinal and adult-use cannabis businesses. MAUCRSA retains the provisions in the MCRSA and AUMA that granted local jurisdictions control over whether businesses engaged in commercial cannabis activity may operate in a particular jurisdiction.

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E. On December 7, 2017, California state cannabis licensing authorities issued emergency regulations that apply to AUMA and MAUCRA and further regulate businesses engaged in commercial cannabis activity.

F. Atwater Municipal Code (“A.M.C.”) Chapter 5.60 authorizes cannabis

businesses to operate within the City under specified restrictions pursuant to a Cannabis Pilot Program.

G. Applicant intends to improve, develop, and use real property to operate a Cannabis business (the “Project”) within the City in strict compliance with MAUCRSA and A.M.C. Chapter 5.60.

H. Applicant has an agreement to lease that certain real property located at 664 Railroad Avenue in the City of Atwater, identified as Merced County Assessor’s Parcel 003-170-009 (the “Project”) Applicant intends to improve approximately twenty four thousand (24,000) square feet of space and operate the Project on the Property.

I. As a condition of approval of the Land Use Entitlements, City has required Applicant to enter into this Agreement.

J. It is in the public interest for City and Applicant to enter into this

Agreement, as Applicant will benefit from City’s processing of the Project. K. Applicant desires to enter into this Agreement to fulfill a condition of

approval of the Project, which is a prerequisite for construction of the Project.

AGREEMENT NOW, THEREFORE, in consideration of the promises, covenants and agreements set forth below, the Parties agree as follows: Section 1. Recitals. The recitals set forth above (“Recitals”) are true and correct and are hereby incorporated into and made part of this Agreement by this reference. In the event of any inconsistency between the Recitals and Sections 1 through 19 of this Agreement, Sections 1 through 19 shall prevail.

Section 2. Applicant’s Indemnification Obligations.

2.1. Indemnification for Land Use Entitlements. To the fullest extent permitted by law, Applicant shall indemnify, and hold harmless City and its agents, elected and appointed officials, officers, employees, and volunteers (collectively, “City’s Agents”) from any and all liability arising out of a claim, action, or proceeding against

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City, or City’s Agents, to attack, set aside, void, or annul, an approval concerning the Land Use Entitlements necessary or directly related to the Project by reason of the action or inaction of City, or City’s Agents. Applicant’s duty to indemnify and hold harmless shall not extend to any claim, action or proceeding arising from the gross negligence or willful misconduct of City, or City’s Agents. Applicant’s obligations under this Agreement to indemnify City shall apply to any claim, lawsuit or challenge against City brought against the Project, specifically including, but not limited to, any legal challenge based on the California Environmental Quality Act, codified in California Public Resources Code section 21000 et seq.; actions or proceedings brought to challenge the validity of environmental documents prepared in conjunction with the approval of the Project or Land Use Entitlements, or the requirements of any other federal, state, or local laws, including, but not limited to, general plan, specific plan, and zoning requirements.

2.2. Tender of Defense. Upon receiving notice of a claim and pursuant to Article 6 of the Land Use Entitlements, Applicant shall assume the defense of the claim, action, or proceeding through the prompt payment of all attorneys’ fees and costs, incurred in good faith and in the exercise of reasonable discretion, of City’s counsel in defending such an action. Regardless of whether Applicant chooses to defend City pursuant to Section 6.4 of the Land Use Entitlements, City shall have the absolute and sole authority to control the litigation and make litigation decisions, including, but not limited to, selecting counsel to defend City and settlement or other disposition of the matter.

2.3. Deposit for Costs. Applicant shall make a refundable deposit to City within thirty (30) days of written notification from City (“Cost Deposit”), to cover the estimated fees and costs associated with City’s defense of any claim, action or proceeding. Applicant shall make any and all additional payments to City to replenish the Cost Deposit within thirty (30) days of written notice from City.

2.4. Failure to Indemnify; Waiver. Failure to indemnify City, when required

by this Agreement, shall constitute a material breach of this Agreement and of the Land Use Entitlements, which shall entitle City to all remedies available under law including, but not limited to, specific performance and damages. Failure to indemnify shall constitute grounds upon which City may rescind its approval of the Land Use Entitlements. Applicant’s failure to indemnify City shall be a waiver by Applicant of any right to proceed with the Project, or any portion thereof, and a waiver of Applicant’s right to file a claim, action or proceeding against City or City’s Agents based on City’s rescission or revocation of the Land Use Entitlements, or City’s failure to defend any claim, action or proceeding based on Applicant’s failure to indemnify City.

2.5. Satisfaction of Judgment. With respect to any claims, demands, acts, causes of action, damages, costs, expenses, settlements, losses or liabilities which Applicant has indemnified City against, Applicant shall pay and satisfy any judgment,

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award, settlement or decree that may be rendered or agreed against City and City’s Agents arising out of any final, non-appealable judicial or administrative action.

2.6. Payment of Costs and Fees. Applicant’s obligations under this Agreement to defend and indemnify City shall include, but not be limited to, payment of all court costs and attorneys' fees, all litigation-related costs, all costs of any judgments or awards against City, or all settlement costs which arise out of City’s processing or approval of the Project.

2.7. Continuing Obligation. Applicant shall be and remain personally obligated to all of the terms of this Agreement, notwithstanding any attempt to assign, delegate or otherwise transfer all or any of the rights or obligations of this Agreement, and notwithstanding a change in or transfer of ownership of the real property upon which the Project is located (or any interest therein). However, Applicant may be released from such obligations if Applicant obtains City’s prior written consent to such transfer, which consent shall not be unreasonably withheld. Section 3. City’s Obligations. City shall notify Applicant of any claim, action or proceeding within ten (10) business days of receiving service of any claim, action or proceeding. If City fails to notify Applicant of any claim, action, or proceeding, Applicant shall not, thereafter, be responsible to defend, indemnify, or hold City harmless. City shall have and retain, in its sole discretion, the right to not participate in the defense of any claim, action, or proceeding. At its sole discretion, City may participate at its own expense in the defense, but such participation shall not relieve Applicant of any obligation imposed by this Agreement. Section 4. Notice. Any notice or communication required hereunder between City and Applicant must be in writing and may be given either personally, by facsimile (with original forwarded by regular U.S. Mail), by registered or certified mail (return receipt requested), or by Federal Express, UPS or other similar couriers providing overnight delivery. If personally delivered, a notice shall be deemed to have been given when delivered to the Party to whom it is addressed. If given by facsimile transmission, a notice or communication shall be deemed to have been given and received upon actual physical receipt of the entire document by the receiving Party’s facsimile machine. Notices transmitted by facsimile after 5:00 p.m. on a normal business day, or on a Saturday, Sunday or holiday, shall be deemed to have been given and received on the next normal business day. If given by registered or certified mail, such notice or communication shall be deemed to have been given and received on the first to occur of (a) actual receipt by any of the addressees designated below as the Party to whom notices are to be sent, or (b) five (5) days after a registered or certified letter containing such notice, properly addressed, with postage prepaid, is deposited in the United States mail. If given by Federal Express or similar courier, a notice or communication shall be deemed to have been given and received on the date delivered as shown on a receipt

{CW074909.2}


issued by the courier. Any Party hereto may at any time, by giving ten (10) days’ written notice to the other Party hereto, designate any other address in substitution of the address to which such notice or communication shall be given. Such notices or communications shall be given to the Parties at their addresses set forth below:

If to City: City of Atwater

750 Bellevue Road Atwater, California 95301 Attention: City Manager and Churchwell White, LLP 1414 K Street, 3rd Floor Sacramento, California 95814 Attention: Douglas L. White, Esq. [email protected] If to Applicant: Central Cal Brothers, Inc. 1531 Ronnie Ct. Merced, California 95341 Attention: Felimon Alvarez and: Law Office of Armando M. Flores

429 13th St. Modesto, California 05354

Section 5. Modification of Agreement. This Agreement may be supplemented, amended, or modified only by a writing signed by City and Applicant.

Section 6. Entire Agreement. This Agreement constitutes the final, complete, and exclusive statement of the terms of the agreement between the Parties pertaining to the action and supersedes all other prior or contemporaneous oral or written understandings and agreements of the Parties. No Party has been induced to enter into this Agreement by, nor is any Party relying on, any representation or warranty except those expressly set forth in this Agreement.

Section 7. Agreement is Voluntary. The Parties acknowledge that they have entered into this Agreement voluntarily, on the basis of their own judgment and without coercion, and not in reliance on any promises, representations, or statements made by the other Party other than those contained in this Agreement. This Agreement incorporates the entire understanding of the Parties and recites the sole consideration of the promises and agreements contained within it. The Parties have read this Agreement and are fully aware of its contents and legal effect.

{CW074909.2}


Section 8. Time of Essence. Time is of the essence for this Agreement, and each section contained within this Agreement is made and declared to be a material, necessary, and essential part of this Agreement. Section 9. Severability of Agreement. If a court or an arbitrator of competent jurisdiction holds any section of this Agreement to be illegal, unenforceable, or invalid for any reason, the validity and enforceability of the remaining sections of this Agreement shall not be affected. Section 10. Authority. All Parties to this Agreement warrant and represent that they have the power and authority to enter into this Agreement, and the names, titles, and capacities herein stated on behalf of any entities, persons, states, or firms represented or purported to be represented by such entities, persons, states, or firms and that all former requirements necessary or required by state or federal law in order to enter into this Agreement had been fully complied with. Further, by entering into this Agreement, neither Party hereto shall have breached the terms or conditions of any other contract or agreement to which such Party is obligated, which such breach would have a material effect hereon. Section 11. Noninterference. No Party will do anything to interfere with or inhibit the ability of the other to comply with their respective obligations under the terms of this Agreement. Section 12. Ambiguities. Each Party has participated fully in the review and revision of this Agreement. Any rule of construction that ambiguities are to be resolved against the drafting Party does not apply in interpreting this Agreement. Section 13. Headings. The headings in this Agreement are included for convenience only, and neither affect the construction or interpretation of any section in this Agreement nor affect any of the rights or obligations of the Parties to this Agreement. Section 14. Necessary Acts and Further Assurances. The Parties shall, at their own cost and expense, execute and deliver such further documents and instruments and shall take such other actions as may be reasonably required or appropriate to evidence or carry out the intent and purposes of this Agreement. The Parties will act in good faith to carry out the intent of this Agreement. Section 15. Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of California. Section 16. Venue. Venue for all legal proceedings shall be in the Superior Court of

{CW074909.2}


California, in and for the County of Merced. Section 17. Attorney’s Fees and Costs. If any action at law or in equity, including action for declaratory relief, is brought to enforce or interpret sections of this Agreement, the prevailing Party shall be entitled to reasonable attorney's fees and costs, which may be set by the court in the same action or in a separate action brought for that purpose, in addition to any other relief to which such Party may be entitled. Section 18. Waiver. No covenant, term, or condition, or the breach thereof, shall be deemed waived, except by written consent of the Party against whom the waiver is claimed, and any waiver of the breach of any covenant, term, or condition shall not be deemed to be a waiver of any preceding or succeeding breach of the same or any other covenant, term, or condition. Section 19. Counterparts. This Agreement may be executed in counterparts and all so executed shall constitute an agreement which shall be binding upon the Parties hereto, notwithstanding that the signatures of all Parties and Parties’ designated representatives do not appear on the same page.

[SIGNATURE PAGE TO FOLLOW]

{CW074909.2}


IN WITNESS THEREOF, the Parties have executed this Agreement on the day, month and year first above written. APPLICANT Central Cal Brothers, Inc., a California corporation By: ______ __ Name: Filemon Alvarez Its: President Date: ______

CITY City of Atwater, a California municipal corporation By:____ Lori Waterman, City Manager Date: APPROVED AS TO FORM: By:_____ Douglas L. White, City Attorney

{CW074909.2}


Exhibit F

Notice of Termination RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO:

City of Atwater 750 Bellevue Road Atwater, CA 95301 Attention: City Clerk

SPACE ABOVE THIS LINE FOR RECORDER’S USE

Recording Fee Exempt per Government Code § 6103

NOTICE OF TERMINATION AND RELEASE OF DEVELOPMENT AGREEMENT

DATE: _________________, 20___ PARTIES: CITY OF ATWATER, a California municipal corporation 750 Bellevue Road

Atwater, California 95301

CENTRAL CAL BROTHERS, INC., a California limited liability company ____________________ ____________________

THIS NOTICE OF TERMINATION AND RELEASE (the “Release”) is being

executed by the City of Atwater, a California municipal corporation (“City”), with reference to the following.

A. By Instrument No. _____________, which was recorded in the Official Records of Merced County, California, on ________________, 2019, City recorded a development agreement between City and Central Cal Brothers, Inc., dated ______________, 2019 (the “Development Agreement”), relating to the development and operation of a cannabis dispensary and microbusiness.

B. Pursuant to Sections 1.7 and 9.1 of the Development Agreement, the term of the Development Agreement expires three (3) years from _______, 2019, on __________, 20__.

{CW074909.2}


C. Pursuant to Section 9.1 of the Development Agreement, once terminated, the Development Agreement has no further force or effect, unless otherwise set forth in the Development Agreement.

NOW, THEREFORE, City hereby terminates, cancels, and otherwise releases Developer and Developer’s heirs, executives, administrators, successors, and assigns from their obligations in the Development Agreement on this ____ day of ________, 20__, and relinquishes any right it may hereafter have to enforce any of the terms and provisions set forth in the Development Agreement, unless otherwise set forth in the Development Agreement. This termination, cancellation and release, shall be effective upon the recordation of this Release in the office of the County Recorder for the County of Merced, State of California.


By: City Manager

{CW074909.2}


Exhibit G

Assignment and Assumption Agreement

RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO:


SPACE ABOVE THIS LINE FOR RECORDER’S USE Recording Fee Exempt per Government Code § 6103

THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (Agreement”) is entered into this _____ day of ______________________, 20___, by and between ______________, a California limited liability company (“Assignors”), and __________________________________ (“Assignee”).

RECITALS

A. On ___________, 20__, Assignor and the City of Atwater (the “City”) entered into that certain agreement entitled “Development Agreement by and between the City of Atwater, a California municipal corporation, and Central Cal Brothers, Inc., a California corporation,” relating to the improvement, development, and use of real property to operate a cannabis business (the “Development Agreement”), originally recorded upon Merced County Assessor’s Parcel Number __________ (the “Property”).

B. Section 10.1 of the Development Agreement prohibits the sale, assignment, or transfer by Assignor of any portion of Assignor’s interests, rights, or titles described in that section of the Development Agreement (“Assignable Rights”) to a third party without prior written approval by the City Manager of the City.

C. Assignor intends to assign, and Assignee intends to assume, the Assignable Rights under the Development Agreement.

D. In accordance with the terms of the Development Agreement, Assignor has provided to the City Manager a written request for consent to assignment. The City Manager has received the information he or she deems appropriate and consulted with the City Attorney for the purpose of determining that Assignee is a qualified applicant for purposes of the foregoing terms of the Development Agreement. This Agreement is intended to meet the requirements Section 10.1 of the Development Agreement for an Assignment and Assumption Agreement and is executed with the consent of the City Manager as contemplated in the Development Agreement.

{CW074909.2}


NOW, THEREFORE, Assignor and Assignee hereby agree as follows: 1. The foregoing Recitals are true and incorporated herein by this reference

as though set forth in full. 2. Assignor hereby assigns to Assignee all of the Assignable Rights of

Assignor under the Development Agreement. 3. Assignee hereby assumes all of the burdens and obligations of Assignor

under the Development Agreement and agrees to observe and fully perform all of the duties and obligations of Assignor under the Development Agreement, and to be subject to all the terms and conditions thereof, with respect to the Property and Assignable Rights. It is the express intention of Assignor and Assignee that, upon the execution of this Agreement, Assignee shall become substituted for Assignor as the “Developer” under the Development Agreement.

4. This Agreement shall take effect and be binding only upon the City

Manager’s consent to and approval of the Agreement. 5. Assignee represents and warrants that it has reviewed and is familiar with

the terms and conditions of the Development Agreement. Assignee acknowledges that the Assignable Rights are as set forth in Section 10.1 of the Development Agreement, and the duties of Assignor thereunder and the duties of Assignee hereunder, as between Assignee and City, shall be without reference to any underlying agreements or understandings that may exist between Assignee, Assignor, or any other party with respect to the subject matter hereof, and that City is not party to such other agreements.

6. All of the covenants, terms, and conditions set forth herein shall be binding

upon and shall inure to the benefit of the parties hereto and their respective heirs, successors, and assigns.

{CW074909.2}


IN WITNESS HEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

AGREED TO AND ACCEPTED: CITY OF ATWATER, a California municipal corporation City Manager

ASSIGNOR/ DEVELOPER: Central Cal Brothers, Inc., a California corporation ________________________________ Filemon Alvarez Its: President

ASSIGNEE

, a California By: Its:

CITY COUNCIL



AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ATWATER ADOPTING A DEVELOPMENT AGREEMENT BY AND BETWEEN THE CITY OF ATWATER AND CENTRAL CAL BROTHERS, INC.

WHEREAS, on October 9, 2015, Governor Jerry Brown signed three bills into law (Assembly Bill 266, Assembly Bill 243, and Senate Bill 643), which are collectively referred to as the Medical Cannabis Regulation and Safety Act (“MCRSA”). MCRSA established the first statewide regulatory system for medical cannabis businesses; and WHEREAS, in 2016, the voters of California approved Proposition 64 entitled the “Control, Regulate and Tax Adult Use of Marijuana” (“AUMA”). AUMA legalized the adult-use and possession of cannabis by persons 21 years of age and older and the personal cultivation of up to six cannabis plants within a private residence; and WHEREAS, on June 27, 2017, Governor Jerry Brown signed into law the Medicinal and Adult-use Cannabis Regulation and Safety Act (“MAUCRSA”), which created a single regulatory scheme for both medicinal and adult-use cannabis businesses. MAUCRSA retains the provisions in the MCRSA and AUMA that granted local jurisdictions control over whether businesses engaged in commercial cannabis activity may operate in a particular jurisdiction; and WHEREAS, on October 23, 2017, the Atwater City Council (the “City Council”) adopted

Ordinance No. CS 982 to enact cannabis regulations for cannabis businesses pursuant to AUMA and MAUCRSA; and

WHEREAS, On May 14, 2018, the City Council adopted Ordinance CS 996 amending the City of Atwater’s (“City”) cannabis business regulations and establishing a Cannabis Business Pilot Program (the “Pilot Program”); and

WHEREAS, the City Council finds that establishing a structure to regulate all cannabis businesses contemplated by state law is in the best interest of the health, welfare, and safety of the public; and


WHEREAS, Government Code section 65864 et seq. (the "Development Agreement Statute") permits the City to contract with private interests for their mutual benefits in a manner not otherwise available to the contracting parties and such agreements assure property developers that they may proceed with their projects with the assurance that approvals granted by the City will not change during the period of development, and the City is equally assured that public benefit interests will be protected and properly administrated at the time development projects are proposed; and WHEREAS, Central Cal Brothers, Inc., proposes to enter into a Development Agreement to operate a commercial cannabis retail business, as defined under Atwater Municipal Code Section 5.60, in strict accordance with applicable state and local law, at 664 Railroad Avenue, Atwater, California, County of Merced Assessor’s Parcel Number 003-160-026-000 (the “Project”), consistent with the General Plan, as amended; and WHEREAS, on April 17, 2019, the Community Development and Resource Commission (“CDRC”) held a duly noticed public hearing to consider the Project and Development Agreement; and WHEREAS, pursuant to the California Environmental Quality Act (“CEQA”), the CDRC adopted Resolution No. 091-19 on April 3, 2019, which certified that the Project was categorically exempt pursuant to Section 15301 of the CEQA Guidelines, existing facilities, and recommended approval of the Development Agreement by the City Council, incorporated herein by reference; and WHEREAS, on _______, 2019, and ________, 2019, the City Council held duly noticed public hearings to consider the Project and Development Agreement; and WHEREAS, the City Council, based on its independent review and analysis of City staff’s recommendations, oral and written testimony, and the record as a whole, finds, after due study, deliberation, and public hearing and based on its independent judgment, that the following circumstances exist:

1. The Project is consistent with the goals, policies, and standards of the City’s General Plan and all other applicable standards and ordinances of the City.

2. In accordance with the Development Agreement Statute, the City Council finds

that the Development Agreement:

(a) Will not be detrimental to the health, safety, and general welfare of persons residing in the immediate area nor detrimental to the general welfare of the residents of the City as a whole;

(b) Will not adversely affect the orderly development of property or the

preservation of property values; (c) Is consistent with the provisions of Government Code sections 65864

through 65869.5; and


(d) Contains a legal description of the property. WHEREAS, that the City Council finds that the Development Agreement conforms to the Development Agreement Statute. THEREFORE, BE IT RESOLVED, that the City Council approves the Ordinance adopting the Development Agreement to which the Central Cal Brothers, Inc. Development Agreement is incorporated by reference. THEREFORE, THE CITY COUNCIL OF THE CITY OF ATWATER DOES ORDAIN AS FOLLOWS: Section 1. The Project is in compliance with the General Plan, Zoning District, and the Atwater Municipal Code as amended, including Section 5.60 “Cannabis Business Pilot Program” as it has been adopted by the City Council on May 14, 2018. Section 2. The City Manager hereby certifies that the developer/applicant has deposited with the City all associated fees and executed all necessary applications, at this time, associated with the processing of the Development Agreement. Section 3. The City Council approves a Development Agreement by and between Central Cal Brothers, Inc., and the City for the development of the Project and instructs the City Manager to execute the Development Agreement subject to final, technical revisions as required and approved by the City Attorney. Section 4. The City shall review the Development Agreement for compliance with its terms and conditions not less than once every twelve (12) months from the effective date of the Development Agreement. Section 5. Notice of the public hearing on the proposed Development Agreement was published in the Merced Sun Star, a newspaper of general circulation, printed and published in the City; and notices of the public hearing on the proposed Development Agreement were mailed to all interested parties and property owners within 300 feet of the property, according to the most recent assessor’s roll. Section 6. Environmental impacts for the Project have been reviewed and assessed by the City pursuant to CEQA (Public Resources Code section 21000 et seq.; California Code of Regulations title 14, section 15000 et seq.). The Project is categorically exempt from CEQA pursuant to Section 15301 of Title 14 of the California Code of Regulations applicable to existing facilities. Section 7. If any section, subsection, sentence, clause, phrase, or word of this Ordinance is for any reason held by a court of competent jurisdiction to be unconstitutional or invalid for any reason, such decision shall not affect the validity of the remaining portions of the Ordinance. The City Council hereby declares that it would have passed this Ordinance and each section, subsection, sentence, clause, phrase, and word thereof, irrespective of the fact that any one or more section(s), subsection(s), sentence(s), clause(s), phrase(s), or word(s) be declared invalid.


Section 8. Upon the passage of this Ordinance, the City Manager is authorized to execute the Development Agreement on behalf of the City. Within ten (10) days of the execution, but no earlier than thirty (30) days after passage of this Ordinance, the City Clerk shall cause the Development Agreement to be recorded in the Office of the County Recorder, as provided for by Government Code section 65868.5. The Development Agreement shall not take effect for thirty (30) days following passage and adoption of this Ordinance. Introduced by Council Member _____ seconded by Council Member _____ on the ______ day of _______, 2019. Passed on the ________ day of ________, 2019, by the following vote: INTRODUCED: ________, 2019 ADOPTED: ________, 2019 AYES: NOES: ABSENT: APPROVED: __________________________ PAUL CREIGHTON, MAYOR ATTEST:

_______________________________ CITY CLERK Attachments: Attachment A Central Cal Brothers, Inc. (with associated exhibits)


MEETING DATE: May 13, 2019 TO: Mayor and City Council FROM: Douglas L White, City Attorney PREPARED BY: Douglas L White, City Attorney SUBJECT: Waiving first reading and introducing Ordinance No. CS 1010

approving a Development Agreement by and between the City of Atwater and MJI, LLC.

RECOMMENDED COUNCIL ACTION: It is recommended that City Council: 1. Open the Public Hearing and take any testimony given regarding Ordinance No.

CS 1010; and

2. Waive first reading and introduce Ordinance No. CS 1010, approving a Development Agreement by and between the City of Atwater (“City”) and MJI, LLC (“MJI”).

I. BACKGROUND: In November of 2016, the voters of California approved Proposition 64, entitled the “Control, Regulate and Tax Adult Use of Marijuana” (“AUMA”). AUMA legalized the adult-use, possession, and retail sale of cannabis by persons 21 years of age and older. On June 27, 2017, Governor Jerry Brown signed into law the Medicinal and Adult-Use Cannabis Regulation and Safety Act (“MAUCRSA”) which, combined with AUMA, creates a single regulatory scheme for both medicinal and adult-use cannabis businesses. MAUCRSA retains the provisions in AUMA that granted local jurisdictions control over whether businesses engaged in commercial cannabis activity may operate in their jurisdiction.

CITY COUNCIL


Agenda Report – MJI Development Agreement Page 2

On October 23, 2017, the Atwater City Council (the “City Council”) adopted Ordinance No. CS 982 enacting cannabis regulations for cannabis businesses pursuant to AUMA and MAUCRSA. On May 14, 2018, the City Council adopted Ordinance CS 996 amending the City’s cannabis business regulations and establishing a Cannabis Business Pilot Program (the “Pilot Program”). The Pilot Program allows for the regulation of cannabis businesses through a development agreement and a conditional use permit process. II. ANALYSIS: Following the adoption of the Pilot Program, the City issued and circulated a request for proposals (“RFP”). The purpose of the RFP was to form the basis for a selection process of qualified cannabis operators for participation in the Pilot Program. The RFP contemplated proposals for those license types allowed under the Cannabis Business Ordinance. Those businesses include cannabis dispensaries, manufacturing businesses, distribution, cultivation and testing facilities. The Development Agreement described below is a result of the RFP and subsequent negotiations between City staff and the developer. MJI

The City seeks to enter into a Development Agreement with MJI. MJI has leased real property located at 460 Airpark Road, Atwater, California, County of Merced Assessor’s Parcel Number 056-400-029 (the “Property”), on which MJI intends to operate a specialty indoor cultivation commercial cannabis business (the “Project”). The Property is zoned Light Industrial. MJI has obtained the Property owner’s consent to operate the cannabis business on the Property. The major elements of the development agreement are summarized below:

• The term of the agreement is three (3) years.

• MJI is required to begin operations no later than six (6) months after the development agreement and conditional use permit are in effect.

• The Project will provide MJI with substantial private benefits that will place burdens upon the City infrastructure, services, and neighborhoods. MJI will to offset these impacts through a monthly payment classified as a “Public Benefit” amount. The Public Benefit is designed and intended to offset or mitigate any potential impacts of the Project on the community.

• MJI will pay to the City a Public Benefit of no less than $5,000 per month, or 5% of its gross receipts from its operations for the first year; $7,500 per month, or 5% of its gross receipts from its operations for the second year; and $10,000 or 5% of its gross receipts from its operations for the third year. The first Public Benefit payment will be due following the first month MJI begins operations; however, MJI will pay the Public Benefit Amount to the City on a quarterly basis. MJI’s Public Benefit Amount is predicated on a very limited and small-scale cultivation operation (4,000 sq. feet).

Agenda Report – MJI Development Agreement Page 3

• The Project will be subject to security protocols, including security cameras and an alarm system, odor control requirements, insurance requirements, and a waste management plan as required under the Atwater Municipal Code.

III. FISCAL IMPACTS: If the City Council adopts the Ordinance, the City will have an agreement in place to offset any impacts the proposed cannabis business would have upon City services, infrastructure, and neighborhoods. Since the Public Benefit imposed upon the cannabis business scales upward with increased revenue and associated impacts, the Development Agreement ensures that any costs to the City associated with the cannabis business are adequately addressed. IV. LEGAL REVIEW: The City Attorney has prepared the Development Agreement. V. PUBLIC PARTICIPATION: The Public Hearing for consideration of this agenda item was duly noticed and advertised. VI. ENVIRONMENTAL REVIEW: This project is categorically exempt under the California Environmental Quality Act Guidelines section 15301, existing facilities. VII. STEPS FOLLOWING APPROVAL: Upon second reading at a subsequent regular meeting and adoption of the proposed Ordinance, this Ordinance shall become effective thirty (30) days from and after its final passage and adoption. MJI is also required to obtain a conditional use permit before operating in the City. Review and action regarding the conditional use permit will be conducted as part of a public hearing before the Community Development and Resource Commission at a later date. Submitted by: ____________________________________________ Douglas L. White, City Attorney Approved by: ______________________________________________ Lori Waterman, City Manager Attachments:

1. Development Agreement 2. Ordinance No. CS 1010

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DEVELOPMENT AGREEMENT CITY OF ATWATER & MJI, LLC

Page 1 of 29

RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: City of Atwater 750 Bellevue Road Atwater, CA 95301 Attention: City Clerk

SPACE ABOVE THIS LINE FOR RECORDER'S USE

Recording Fee Exempt per Government Code §6103

DEVELOPMENT AGREEMENT

THIS DEVELOPMENT AGREEMENT (“Agreement”) is made and entered into

this _____ day of _________________, 2019, by and between the CITY OF ATWATER, a C a l i f o r n i a municipal corporation (“City”), and MJI, LLC a California limited liability company (“Developer”). City and Developer may be referred to herein individually as a “Party” or collectively as the “Parties.” There are no other parties to this Agreement.

RECITALS A. On October 9, 2015, Governor Jerry Brown signed three bills into law (Assembly

Bill 266, Assembly Bill 243, and Senate Bill 643) which are collectively referred to as the Medical Cannabis Regulation and Safety Act (“MCRSA”). MCRSA establishes a statewide regulatory system for the cultivation, processing, transportation, testing, manufacturing, and distribution of medical marijuana to qualified patients and their primary caregivers.

B. On November 8, 2016, California voters enacted Proposition 64, the Control, Regulate and Tax Adult Use of Marijuana Act, also known as the Adult Use of Marijuana Act (“AUMA”), which establishes a comprehensive system to legalize, control, and regulate the cultivation, processing, manufacture, distribution, testing, and sale of nonmedical cannabis, including cannabis products, for use by adults 21 years and older and to tax the growth and retail sale of cannabis for nonmedical use.

C. On June 27, 2017, Governor Jerry Brown signed into law the Medicinal and Adult-Use Cannabis Regulation and Safety Act (“MAUCRSA”), which creates a single regulatory scheme for both medicinal and adult-use cannabis businesses. MAUCRSA retains the provisions in MCRSA and AUMA that granted local jurisdictions control over whether businesses engaged in Commercial Cannabis Activity, as defined in Section 1.4 of this Agreement, may operate in a particular jurisdiction.

{CW074914.4}


Page 2 of 29

D. On May 14, 2018, the Atwater City Council (“City Council”) adopted Ordinance No. CS 996, adding Atwater Municipal Code (“A.M.C.”) Chapter 5.60 to establish a Cannabis Business Pilot Program to regulate all cannabis businesses within the City.

E. Developer proposes to improve, develop, and use real property to operate a cannabis business consisting of cultivation, as defined below, in strict accordance with California Cannabis Laws, as defined in Section 1.4 of this Agreement and the A.M.C., as each may be amended from time to time.

F. To strengthen the public planning process, encourage private participation in comprehensive planning, and reduce the economic risk of development, the California Legislature adopted Government Code section 65864 et seq. (the “Development Agreement Statute”), which authorizes City and an individual with an interest in real property to enter into a development agreement that establishes certain development rights in real property that is subject to a development agreement application.

G. Developer submitted an application to the City Community Development Department for consideration of a development agreement for a cannabis business.

H. Developer has an agreement to lease that certain real property located at 460 Airpark Road, Atwater, California, in the County of Merced, Assessor’s Parcel Number 056-400-029, of which Developer intends to improve approximately four thousand (4,000) square feet of space (the “Site”) to operate the Cannabis Business Project, more particularly described in the legal description attached hereto as Exhibit A (“Legal Description“) and the Cannabis Business Project Site map attached hereto as Exhibit B.

I. Developer has leased the Site for the purpose of carrying out the Cannabis Business Project. A copy of the lease is attached hereto as Exhibit C, within satisfaction of the requirement of A.M.C. Chapter __. The legal owner of the Site is aware of, and agrees to, the Cannabis Business Project operating at the Site.

J. On April 3, 2019, the City Community Development and Resources Commission (“CDRC”), in a duly noticed and conducted public hearing, considered Developer’s application for this Agreement. At that public hearing, the CDRC recommended the City Council adopt Ordinance No. 2019-1010, which would allow Developer to operate the Cannabis Business Project at the Site.

K. On ___________, 20___, pursuant to Government Code section 65867.5 and following a duly noticed and conducted public hearing, the City Council reviewed, considered, adopted, and entered into this Agreement pursuant to Ordinance No. 2019-1010.

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Page 3 of 29

L. This Agreement is entered into pursuant to the Development Agreement Statute.

M. City and Developer desire to enter into this Agreement to (i) facilitate the orderly development of the Site; (ii) create a physical environment that is consistent with and complements the City’s goals and visions; (iii) protect natural resources from adverse impacts; (iv) improve, upgrade, and create additional community facilities and infrastructure, enhance services, and assist in implementing the goals of the General Plan; and (vi) reduce the economic risk of development of the Site to both City and Developer.

N. The Parties intend, through this Agreement, to allow Developer to develop and operate the Cannabis Business Project in accordance with the terms of this Agreement.

O. The City Council has determined that this Agreement is consistent with City’s General Plan and has conducted all necessary proceedings in accordance with the A.M.C. for the approval of this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, the Parties do hereby agree as follows:

AGREEMENT

ARTICLE 1

GENERAL PROVISIONS

Section 1.1. Findings. City hereby finds and determines that entering into this Agreement furthers the public health, safety, and general welfare and is consistent with City’s General Plan, including all text and maps in the General Plan.

Section 1.2. Recitals. The Recitals above are true and correct and are hereby incorporated into and made a part of this Agreement. In the event of any inconsistency between the Recitals and the provisions of Articles 1 through 10 of this Agreement, the provisions of Articles 1 through 10 shall prevail.

Section 1.3. Exhibits. The following “Exhibits” are attached hereto and incorporated into this Agreement:

{CW074914.4}


Page 4 of 29

Designation

Description

Exhibit A Cannabis Site Legal Description Exhibit B Cannabis Dispensary Site Map Exhibit C Site Lease Exhibit D Notice of Non-Performance

Penalty Exhibit E Indemnification Agreement Exhibit F Notice of Termination Exhibit G Assignment and Assumption

Agreement

Section 1.4. Definitions. In this Agreement, unless the context otherwise requires, the terms below have the following meaning:

(a) “Additional Insureds” has the meaning set forth in Section 6.1.

(b) “Additional Licenses” has the meaning set forth in Section 2.4.

(c) “Adult-use Cannabis” means a product containing cannabis, including, but not limited to, concentrates and extractions, intended for use by adults 21 years of age and older in California, pursuant to the California Cannabis Laws.

(d) “Agreement” means this Development Agreement, inclusive of all Exhibits attached hereto.

(e) “Application” has the meaning set forth in Recital G.

(f) “Assignment and Assumption Agreement” has the meaning set forth in Section 10.1.

(g) “AUMA” means the Adult Use of Marijuana Act (Proposition 64) approved by California voters on November 8, 2016.

(h) “Authorized License” has the meaning set forth in Section 2.3.

(i) “Bureau” means the Bureau of Cannabis Control within the Department of Consumer Affairs, formerly named the Bureau of Marijuana Control, the Bureau of Medical Cannabis Regulation, and the Bureau of Medical Marijuana Regulation.

(j) “California Building Standards Codes” means the California Building Code, as amended from time to time, in Part 2, Volumes 1 and 2, as part of Title 24 of the California Code of Regulations, as may be adopted by the A.M.C.

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(k) “California Cannabis Laws” includes AUMA, MAUCRSA, CUA (as defined below), the Medical Marijuana Program Act of 2004, codified as Health and Safety Code sections 11362.7 through 11.62.83, and any other applicable laws that may be enacted or approved.

(l) “Cannabis” means all parts of the plant Cannabis sativa Linnaeus, Cannabis indica, or Cannabis ruderalis, whether growing or not; the seeds thereof; the resin, whether crude or purified, extracted from any part of the plant; and every compound, manufacture, salt, derivative, mixture, or preparation of the plant, its seeds, or resin. “Cannabis” also means the separated resin, whether crude or purified, obtained from cannabis. “Cannabis” does not include the mature stalks of the plant, fiber produced from the stalks, oil or cake made from the seeds of the plant, any other compound, manufacture, salt, derivative, mixture, or preparation of the mature stalks (except the resin extracted therefrom), fiber, oil, or cake, or the sterilized seed of the plant which is incapable of germination. For the purpose of this division, “cannabis” does not mean “industrial hemp” as defined by Section 11018.5 of the Health and Safety Code. Cannabis and the term “marijuana” may be used interchangeably.

(m) “Cannabis Business Pilot Program” means the cannabis business program established and authorized by A.M.C. Chapter 5.60.

(n) “Cannabis Business Project” means the cannabis business consisting of cultivation operated by Developer on the Site pursuant to the Authorized License.

(o) “Cannabis Manufacturing Business” means a business engaged in commercial cannabis activity pursuant to a state approved Type 6 or 7 licenses, Type A and M licenses.

(p) “Cannabis product” means cannabis that has undergone a process whereby the plant material has been transformed into a concentrate, including, but not limited to, concentrated cannabis, or an edible or topical product containing cannabis or concentrated cannabis and other ingredients.

(q) “CEQA” means the California Environmental Quality Act, as set forth in Division 13 (Commencing with Section 21000) of the California Public Resources Code, and the CEQA Guidelines, as set forth in Title 14 (Commencing with Section 15000) of the California Code of Regulations.

(r) “City” means the City of Atwater, a municipal corporation having general police powers.

(s) “City Council” means the City of Atwater City Council, as defined in A.M.C. Section 1.04.020.

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(t) “City Manager” means the City Manager of the City of Atwater, or his or her designee, as described in A.M.C. Section 2-4.

(u) “Charged Party” has the meaning set forth in Section 8.1.

(v) “Charging Party” has the meaning set forth in Section 8.1.

(w) “Commercial Cannabis Activity” includes cultivation, possession, manufacture, processing, storing, laboratory testing, labeling, transporting, distribution, delivery, or sale of cannabis or a cannabis product that requires a state license pursuant to MAUCRSA.

(x) “Community Development and Resources Commission” means the City of Atwater Community Development and Resources Commission, as established by A.M.C. Section 2.30.010.

(y) “Conditional Use Permit” means a conditional use permit issued by City pursuant to A.M.C. Section 36-23.24.

(z) “CUA” means the Compassionate Use Act (Proposition 215) approved by California voters on November 5, 1996.

(aa) “Developer” means MJI, LLC, a California limited liability company. Developer also has the meaning set forth in Section 6.1.

(bb) “Development Agreement Statute” has the meaning set forth in Recital E.

(cc) “Exhibits” has the meaning set forth in Section 1.3.

(dd) "Gross Receipts from Operations" means total revenue actually received or receivable from operation of the Cannabis Business Project, including: all sales; the total amount of compensation actually received or receivable for the performance of any act or service, of whatever nature it may be, for which a charge is made or credit allowed whether or not such act or service is done as part of or in connection with the sale of materials, goods, wares, or merchandise; and gains realized from trading in stocks or bonds, interest discounts, rents, royalties, fees, commissions, dividends, or other remunerations, however designated. Included in "gross receipts" shall be all receipts, cash, credits, and property of any kind or nature, without any deduction therefrom on account of the cost of the property sold, the cost of materials used, labor or service costs, interest paid or payable, or losses or other expenses whatsoever, except that the following shall be excluded therefrom:

1. Cash discounts allowed and taken on sales;

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2. Credit allowed on property accepted as part of the purchase price and which property may later be sold, at which time the sales price shall be included as "gross receipts";

3. Any tax required by law to be included in or added to the purchase price and collected from the consumer or purchaser;

4. Such part of the sale price of property returned by purchasers upon rescission of a contract of sale as is refunded either in cash or by credit; and

5. Receipts of refundable deposits, except that such deposits when forfeited and taken into income of the business shall not be excluded.

The intent of this definition is to ensure that in calculating the payment required under Section 4.2, all sales of cannabis products through the Cannabis Business Project are captured. This definition shall therefore be given the broadest possible interpretation consistent with this intent.

(ee) “Indemnification Agreement” has the meaning set forth in Section 6.3.

(ff) “Major Amendment” means an amendment that shall have a material effect on the terms of this Agreement. A Major Amendment also has the meaning set forth in Section 2.4. Major Amendments shall require approval by the City Council.

(gg) “Marijuana” has the same meaning as cannabis and those terms may be used interchangeably.

(hh) “MAUCRSA” means the Medicinal and Adult-Use Cannabis Regulation and Safety Act, codified as Business and Professions Code section 26000 et seq., as may be amended from time to time.

(ii) “MCRSA” has the meaning set forth in Recital A.

(jj) “Ministerial Fee” or “Ministerial Fees” has the meanings set forth in Section 4.1.

(kk) “Minor Amendment” means a clerical amendment to this Agreement that shall not materially affect the terms of this Agreement and any amendment described as minor herein. A Minor Amendment also has the meaning set forth in Section 1.7.

(ll) “Mortgage” has the meaning set forth in Article 7.

(mm) “Non-Performance Penalty” has the meaning set forth in Section 4.3.

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(nn) “Notice of Non-Performance Penalty” has the meaning set forth in Section 4.3.

(oo) “Notice of Termination” has the meaning set forth in Section 9.1.

(pp) “Processing Costs” has the meaning set forth in Section 1.11.

(qq) “Project Litigation” has the meaning set forth in Section 10.7.

(rr) “Public Benefit” has the meaning set forth in Section 4.2.

(ss) “Public Benefit Amount” has the meaning set forth in Section 4.2.

(tt) “State Licensing Authority” means the state agency responsible for the issuance, renewal, or reinstatement of a state cannabis license, or the state agency authorized to take disciplinary action against a business licensed under the California Cannabis Laws.

(uu) “State Cannabis Regulations” means the regulations promulgated by the State Licensing Authority pursuant to the California Cannabis Laws (3 CCR § 8000 et seq., 17 CCR § 40100 et seq., 42 CCR 35000 et seq., or their respective successors).

(vv) “State Taxing Authority” has the meaning set forth in Section 4.2.

(ww) “Subsequent City Approvals” has the meaning set forth in Section 3.1.

(xx) “Term” has the meaning set forth in Section 1.7.

(yy) “Type 1A license” or “Specialty Indoor” means a state license issued by the Department of Agriculture, pursuant to the California Cannabis Laws, for indoor cultivation using exclusively artificial lighting of between 501 and 5,000 square feet of total canopy size on one premises.

(zz) “Type 2A license” or “Small Indoor” means a state license issued by the Department of Agriculture pursuant to the California Cannabis Laws for indoor cultivation using exclusively artificial lighting between 5,001 and 10,000 square feet, inclusive, of total canopy size on one premises.

(aaa) “Type 3A license” or “Indoor” means a state license issued by the Department of Agriculture, pursuant to the California Cannabis Laws, for indoor cultivation using exclusively artificial lighting between 10,001 and 22,000 square feet, inclusive, of total canopy size on one premises.

(bbb) “Type 4 license” or “Nursery” means a state license issued by the Department of Agriculture, pursuant to the California Cannabis Laws, for the cultivation of cannabis solely as a nursery.

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(ccc) “Type 6 license” or “Manufacturer 1” means a state license issued by the

Department of Public Health, pursuant to the California Cannabis Laws, for manufacturing sites that produce cannabis products using nonvolatile solvents.

(ddd) “Type 7 license” or “Manufacturer 2” means a state license issued by the Department of Public Health, pursuant to the California Cannabis Laws, for manufacturing sites that produce cannabis products using volatile solvents.

(eee) “Type 10 license” or “Retailer” means a state license issued by the Bureau

of Cannabis Control, pursuant to the California Cannabis Laws, for the retail sale of cannabis and cannabis products.

(fff) “Type 11 license” or “Distributor” means a state license issued by the Bureau of Cannabis Control, pursuant to the California Cannabis Laws, for the distribution of cannabis and cannabis products from manufacturer to dispensary.

(ggg) “Type 12 license” or “Microbusiness” means a state license issued by a State Licensing Authority, pursuant to the California Cannabis Laws, relating to cannabis cultivation, manufacturing, and distribution.

Section 1.5. Project is a Private Undertaking. The Parties agree that the Cannabis Business Project is a private development and that City has no interest therein, except as authorized in the exercise of its governmental functions. City shall not for any purpose be considered an agent of Developer or the Cannabis Business Project.

Section 1.6. Effective Date of Agreement. This Agreement shall become effective upon the date that the ordinance approving this Agreement becomes effective (the “Effective Date”).

Section 1.7. Term. The “Term” of this Agreement is three (3) years from the Effective Date, unless terminated or extended earlier, as set forth in this Agreement.

(a) Government Tolling or Termination. City may provide written notice to Developer to cease all Commercial Cannabis Activity, upon which Developer shall immediately comply, if City is required, directed, or believes, in its sole and absolute discretion, it must temporarily halt or terminate Commercial Cannabis Activity within the City to comply with federal or state law. If City temporarily halts this Agreement to comply with federal or state law, this Agreement shall be tolled for no longer than one (1) calendar year (the “Tolling Period”). Developer shall not accrue or be liable to City for any Ministerial Fees or Public Benefit Amount during the Tolling Period. Developer shall resume paying any applicable fees after the Tolling Period ends. City and Developer shall discuss in good faith the termination of this Agreement, if the Tolling Period exceeds one (1) calendar year, to comply with federal or state law.

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(b) Developer Tolling or Termination. Developer may not temporarily halt or terminate this Agreement for any purpose without causing a default of this Agreement, except as otherwise allowed by this Agreement or by mutual agreement of the Parties.

Section 1.8. Priority of Enactment. In the event of a conflict between the various land use documents referenced in this Agreement, the Parties agree that the following sequence of approvals establishes the relative priority of the approvals, each approval superior to the approvals listed thereafter: (a) General Plan; (b) Agreement; (c) Conditional Use Permit; (d) Indemnification Agreement; and (e) Subsequent City Approvals.

Section 1.9. Amendment of Agreement. This Agreement shall be amended only by mutual consent of the Parties. All amendments shall be in writing. The City Council hereby expressly authorizes the City Manager to approve a Minor Amendment to this Agreement upon notification of the City Council. A Major Amendment to this Agreement shall be approved by the City Council. The City Manager shall, on behalf of City, have sole discretion for City to determine if an amendment is a Minor Amendment or a Major Amendment. Nothing in this Agreement shall be construed as requiring a noticed public hearing, unless required by law.

Section 1.10. Recordation of Development Agreement. The City Clerk shall cause a copy of this Agreement to be recorded against the title of the Site within ten (10) business days of the Effective Date.

Section 1.11. Funding Agreement for Processing Costs. Developer has deposited Twenty-Five Thousand Dollars ($25,000) with City to pay for all actual fees and expenses incurred by City that are related to the preparation and processing of this Agreement, including recording fees, publishing fees, staff time, and consultant and attorneys’ fees and costs (collectively, “Processing Costs”). The Processing Costs are refundable solely to the extent of non-expended Processing Costs. Developer shall be entitled to a refund of available Processing Costs only after City determines all financial obligations associated with the Cannabis Business Project have been received and paid by City.

(a) Apportionment of Processing Costs. If the amount deposited for purposes of Processing Costs is insufficient to cover all Processing Costs, Developer shall deposit with City such additional funds necessary to pay for all Processing Costs within thirty (30) days. The failure to timely pay any such additional amounts requested by City shall be considered a material default of this Agreement and City may terminate this Agreement.

(b) Accounting. Developer may request, and City shall issue within a reasonable time not to exceed thirty (30) days, an accounting and written acknowledgement of Processing Costs paid to City.

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ARTICLE 2 DEVELOPMENT OF PROPERTY

Section 2.1. Vested Right of Developer. During the Term, in developing the Site consistent with the Cannabis Business Project described herein, Developer is assured that the development rights, obligation terms, and conditions specified in this Agreement, including, without limitation, the terms, conditions, and limitations set forth in the Exhibits, are fully vested in Developer and may not be modified or terminated by City except as set forth in this Agreement or with Developer’s written consent.

Section 2.2. Vested Right to Develop. In accordance with Section 2.1, Developer shall have the vested right to develop and use the Cannabis Business Project consistent with this Agreement, the Conditional Use Permit, and Subsequent City Approvals.

Section 2.3. Permitted Uses and Development Standards. Developer shall be authorized to develop, construct, and use the Site for Commercial Cannabis Activity consistent with the following license type (the “Authorized License”):

Type 1A Specialty Indoor Cultivation Pursuant to this Agreement, Developer shall be permitted to use the Site consistent with the Authorized License for the Term of this Agreement and during the time Developer is applying for the Authorized License with the applicable State Licensing Authority. Developer shall begin operations of the Cannabis Business Project under the Authorized License within six (6) months of the issuance of a Conditional Use Permit or adoption of the operative ordinance approving this Agreement, whichever is later, unless Developer is prevented from doing so due to any event or circumstance set forth in Section 8.6 of this Agreement. Notwithstanding the foregoing, Developer is required to apply for and obtain the Authorized License from the State of California. If the State Licensing Authority does not grant the Authorized License to Developer, Developer shall immediately cease Commercial Cannabis Activity and any other operations on the respective Site. Developer shall also, within thirty (30) days of receiving notice from the State Licensing Authority, notify City of the State Licensing Authority’s denial or rejection of the Authorized License. In this situation, this Agreement shall terminate immediately. The Parties intend for this Agreement and the Conditional Use Permit to serve as the definitive and controlling documents for all subsequent actions, discretionary or ministerial, relating to development of the Site and the Cannabis Business Project.

Section 2.4. Major Amendment to Permitted Uses. Developer may request to add to the Authorized License additional license types once that license is applied for or obtained from the appropriate State Licensing Authority (the “Additional Licenses”). Such request shall be a Major Amendment to this Agreement.

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Section 2.5. Conditional Use Permit. Prior to commencing operation of any Commercial Cannabis Activity on the Site, Developer shall obtain a Conditional Use Permit and any applicable Subsequent City Approvals for each location. Developer shall be required to comply with all provisions of the A.M.C. and any City rules and administrative guidelines associated with implementation of the Cannabis Business Pilot Program. Nothing in this Agreement shall be construed as limiting the ability of City to amend the A.M.C. or issue rules or administrative guidelines associated with implementation of the Cannabis Business Pilot Program or Developer’s obligation to strictly comply with the same.

Section 2.6. Subsequent Entitlements, Approvals, and Permits. Successful implementation of the Cannabis Business Project shall require Developer to obtain additional approvals and permits from City and other local and state agencies. City shall comply with CEQA in the administration of all Subsequent City Approvals. In acting upon any Subsequent City Approvals, City’s exercise of discretion and permit authority shall conform to this Agreement. Notwithstanding the foregoing, in the course of taking action on the Subsequent City Approvals, City will exercise discretion in adopting mitigation measures as part of the Conditional Use Permit. The exercise of this discretion is not prohibited or limited in any way by this Agreement. Nothing in this Agreement shall preclude the evaluation of impacts or consideration of mitigation measures or alternatives, as required by CEQA.

(a) Contemplated City Rules and Guidelines. City anticipates issuing additional rules and administrative guidelines associated with implementation of the Cannabis Business Pilot Program. City may establish requirements that are identical to or place a higher standard of care as existing provisions of the California Cannabis Laws, State Cannabis Regulations, or any amendments thereto. City reserves the right to adopt additional categories of rules or guidelines that are not listed in this Section as part of the Cannabis Business Pilot Program. Developer shall comply with any and all administrative guidelines adopted by City that govern or pertain to the Cannabis Business Project.

Section 2.7. Initiatives and Referenda. If any City ordinance, rule or regulation, or addition to the A.M.C. is enacted or imposed by a citizen-sponsored initiative or referendum after the Effective Date that would conflict with this Agreement, an associated Conditional Use Permit, Subsequent City Approvals, or reduce the development rights or assurances provided to Developer in this Agreement, such A.M.C. changes shall not be applied to the Site or the Cannabis Business Project; provided, however, the Parties acknowledge that City’s approval of this Agreement is a legislative action subject to referendum. City shall cooperate with Developer and shall undertake such reasonable actions as may be appropriate to ensure this Agreement remains in full force and effect and is implemented in accordance with its terms to the fullest extent permitted by state or federal law.

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Section 2.8. Regulation by Other Government Entities. Developer acknowledges that City does not have authority or jurisdiction over any other government entities’ ability to grant governmental approvals or permits or to impose a moratorium or other limitations that may negatively affect the Cannabis Business Project or the ability of City to issue a permit to Developer or comply with the terms of this Agreement. Any moratorium imposed by another government entity, including the State Licensing Authority, on City shall not cause City to be in breach of this Agreement.

Section 2.9. Developer’s Right to Rebuild. Developer may renovate portions of the Site any time within the Term of this Agreement consistent with the A.M.C. Any such renovation or rebuild shall be subject to all design, building code, and other requirements imposed on the Cannabis Business Project by this Agreement.

Section 2.10. Changes in California Building Standards Codes. Notwithstanding any provision of this Agreement to the contrary, development of the Cannabis Business Project shall be subject to changes occurring from time to time to the California Building Standards Codes.

Section 2.11. Changes Mandated by Federal or State Law. The Site and the Cannabis Business Project shall be subject to subsequently enacted state or federal laws or regulations that may preempt the A.M.C., or mandate the adoption or amendment of local regulations, or are in conflict with this Agreement or local rules or guidelines associated with the Cannabis Business Pilot Program. As provided in Section 65869.5 of the Development Agreement Statute, in the event state or federal laws or regulations enacted after the Effective Date prevent or preclude compliance with one or more provisions of this Agreement, such provisions shall be modified or suspended as may be necessary to comply with such state or federal laws or regulations. Upon discovery of a subsequently enacted federal or state law meeting the requirements of this Section, City or Developer shall provide the other Party with written notice of the state or federal law or regulation and a written statement of the conflicts thereby raised with the provisions of the A.M.C. or this Agreement. Promptly thereafter, City and Developer shall meet and confer in good faith in a reasonable attempt to modify this Agreement, as necessary, to comply with such federal or state law or regulation, provided City shall not be obligated to agree to any modification materially increasing its obligations or materially adversely affecting its rights and benefits hereunder. In such discussions, City and Developer will attempt to preserve the terms of this Agreement and the rights of Developer derived from this Agreement to the maximum feasible extent while resolving the conflict. If City, in its judgment, determines it necessary to modify this Agreement to address such conflict, City shall have the right and responsibility to do so and shall not have any liability to Developer for doing so or be considered in breach or default of this Agreement. City also agrees to process, in accordance with the provisions of this Agreement, Developer’s proposed changes to, or election to terminate, the Cannabis Business Project that are necessary to comply with such federal or state law and that such proposed changes shall be conclusively deemed to

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be consistent with this Agreement without further need for any amendment to this Agreement.

Section 2.12. Health and Safety Emergencies. In the event that any future public health and safety emergencies arise with respect to the Cannabis Business Project contemplated by this Agreement, City agrees that it shall attempt, if reasonably possible as determined by City in its discretion, to address such emergency in a way that does not have a material adverse impact on the Cannabis Business Project. If City determines, in its discretion, that it is not reasonably possible to so address such health and safety emergency in a way that does not have a material adverse impact on the Cannabis Business Project, City may select an option which, in its discretion, minimizes, so far as reasonably possible, the impact on development and use of the Cannabis Business Project in accordance with this Agreement, while still addressing such health and safety emergency in a manner acceptable to City.

ARTICLE 3 ENTITLEMENT AND PERMIT PROCESSING, INSPECTIONS

Section 3.1. Subsequent City Approvals. City shall permit the development, construction, and conditionally permitted use contemplated in this Agreement. City agrees to timely grant, pursuant to the terms of this Agreement, the A.M.C. and any Subsequent City Approvals reasonably necessary to complete the goals, objectives, policies, standards, and plans described in this Agreement. The Subsequent City Approvals shall include any applications, permits, and approvals required to complete the improvements necessary to develop the Site, in general accordance with this Agreement (“Subsequent City Approvals”). Nothing herein shall require City to provide Developer with Subsequent City Approvals prior to, or without complying with, all of the requirements in this Agreement, the A.M.C., and any applicable state law.

Section 3.2. Timely Processing. City shall use its reasonable best efforts to process and approve, within a reasonable time, any Subsequent City Approvals or environmental review requested by Developer during the Term of this Agreement.

Section 3.3. Cooperation Between City and Developer. Consistent with the terms set forth herein, City agrees to cooperate with Developer, on a timely basis, in securing all permits or licenses that may be required by City or any other government entity with permitting or licensing jurisdiction over the Cannabis Business Project.

Section 3.4. Further Consistent Discretionary Actions. The exercise of City's authority and independent judgment is recognized under this Agreement, and nothing in this Agreement shall be interpreted as limiting City’s discretion or obligation to hold legally required public hearings. Except as otherwise set forth herein, such discretion and action taken by City shall, however, be consistent with the terms of this Agreement and not prevent, hinder, or compromise development or use of the Site as contemplated by the Parties in this Agreement.

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ARTICLE 4 PUBLIC BENEFIT, PROCESSING, AND OVERSIGHT

Section 4.1. Processing Fees and Charges. Developer shall pay to City those processing, inspection, plan checking, and monitoring fees and charges required by City which are in force and effect at the time those fees and charges are incurred (including any post-Effective Date increases in such fees and charges) for processing applications and requests for building permits, inspections, other permits, approvals and actions, and monitoring compliance with any permits issued or approvals granted or the performance of any conditions (each a “Ministerial Fee” and collectively, the “Ministerial Fees”).

Section 4.2. Public Benefit.

(a) The Parties acknowledge and agree that this Agreement, and the Cannabis Business Project, confers substantial private benefits upon Developer that will place burdens upon City infrastructure, services, and neighborhoods. Accordingly, the Parties intend to provide consideration to City to offset these impacts that commensurate with the private benefits conferred on Developer (the “Public Benefit”). In consideration of the foregoing, Developer shall remit to City as follows (the “Cannabis Business Public Benefit”):

Effective Date No Public Benefit Due.

First (1st) Business Day following the 1st Month in which Developer commences Commercial Cannabis Activity.


1st Business Day of the Thirteenth (13th) Month in which Developer commences Commercial Cannabis Activity.


1st Business Day of the Twenty-fifth (25th) Month in which Developer commences Commercial Cannabis Activity.


(b) Collectively, these tier amounts shall be known as the “Public Benefit

Amount”. The Public Benefit Amount shall be calculated on a monthly basis as set forth above; however, Developer shall pay the Public Benefit Amount to City on a quarterly basis following the commencement of Commercial Cannabis Activity.

(c) Developer shall file an applicable statement that complies with the California State Board of Equalization, California Department of Tax and Fee Administration, or either’s successor agency (the “State Taxing Authority”) for sales tax purposes showing the true and correct amount of Gross Receipts from Operations of

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the Cannabis Business Project during the applicable time period. Developer shall provide a copy of such statement to City upon request by City.

Section 4.3. Reporting. Developer shall provide City with copies of any reports provided to a State Licensing Authority within forty-five (45) days of that submission.

Any failure or refusal of Developer to provide any statement or report to City, the State Taxing Authority, or any other State Licensing Authority, as required within the time required, or to pay such sums due hereunder when the same are due and payable in accordance with the provisions of this Agreement, may constitute full and sufficient grounds for the revocation or suspension of the Conditional Use Permit.

Section 4.4. Records. Developer shall keep records of all Commercial Cannabis Activity in accordance with Chapter 16 (commencing with Section 26160) of Division 10 of the Business and Professions Code and the applicable State Cannabis Regulations. All records required by this Section shall be maintained and made available for City’s examination and duplication (physical or electronic) at the Site or at an alternate facility as approved in writing by the City Manager, or his or her designee.

Section 4.5. Penalty. Developer acknowledges that to ensure proper compliance with the terms of this Agreement and any applicable laws, City must engage in costly compliance review, inspections, and, if necessary, enforcement actions to protect the health, safety, and welfare of its residents. Penalty and interest provisions are necessary to assist City in compliance review and enforcement actions. If Developer fails to make any payment when due, as required by this Agreement, including the Public Benefit Amount, City may impose a “Non-Performance Penalty.” A Non-Performance Penalty of one percent (1%) shall be applied to all past due payments. City shall deliver to Developer a “Notice of Non-Performance Penalty,” attached hereto as Exhibit D. Payment of the Non-Performance Penalty shall be in a single installment due on or before a date fifteen (15) days following delivery of the Notice of Non-Performance Penalty.

Section 4.6. Interest on Unpaid Non-Performance Penalty. If Developer fails to pay the Non-Performance Penalty after City has delivered the Notice of Non-Performance Penalty, then, in addition to the principal amount of the Non-performance Penalty, Developer shall pay the City interest at the rate of eighteen percent (18%) per annum, computed on the principal amount of the Non-Performance Penalty, from a date fifteen (15) days following delivery of the Notice of Non-performance Penalty.

Section 4.7. Protections from City Tax. Notwithstanding Section 4.2, for the Term of this Agreement, Developer shall be exempt from any City tax, including a business license tax, on commercial cannabis businesses. Notwithstanding the foregoing, Developer and the Cannabis Business Project shall be subject to any and all taxes, assessments, or similar charges or fees of general applicability enacted by the federal

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government, state government, or County of Merced, including any tax applicable to an area greater than the City limits to which City may be a party (i.e., county tax sharing agreement).

ARTICLE 5 PUBLIC FACILITIES, SERVICES, AND UTILITIES

City shall use the Public Benefit Amount to pay for the impact on and maintenance or improvement of City neighborhoods and the existing level of service of City infrastructure and services to accommodate for the Cannabis Business Project.

ARTICLE 6 INSURANCE AND INDEMNITY

Section 6.1. Insurance. Developer shall require all persons doing work on the Cannabis Business Project, including its contractors and subcontractors (collectively, “Developer” for purposes of this Article 6 only), to obtain and maintain insurance of the types and in the amounts described in this Article with carriers reasonably satisfactory to City.

(a) General Liability Insurance. Developer shall maintain commercial general liability insurance or equivalent form with a limit of not less than Two Million Dollars ($2,000,000) (or as otherwise approved, in writing, by City) per claim and Two Million Dollars ($2,000,000) each occurrence. Such insurance shall also:

(i) Name City, its elected and appointed councils, boards, commissions, officers, agents, employees, and representatives as “Additional Insureds” by endorsement with respect to performance of this Agreement. The coverage shall contain no special limitations on the scope of its protection afforded to the above-listed additional insured.



(b) Automotive Liability Insurance. Developer shall maintain business automobile liability insurance or equivalent form with a limit of not less than One Million Dollars ($1,000,000) for each accident. Such insurance shall include coverage for owned, hired, and non-owned automobiles. Such insurance shall also:

(i) Name City, its elected and appointed councils, boards, commissions, officers, agents, employees, and representatives as Additional Insureds by endorsement with respect to performance of this Agreement. The coverage shall

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contain no special limitations on the scope of its protection afforded to the above-listed Additional Insureds.



(c) Workers’ Compensation Insurance. Developer shall take out and maintain, during the Term of this Agreement, workers’ compensation insurance for all of Developer’s employees employed at or on the Cannabis Business Project, and in the case any of the work is subcontracted, Developer shall require any general contractor or subcontractor similarly to provide workers’ compensation insurance for such contractor’s or subcontractor’s employees, unless such employees are covered by the protection afforded by Developer. In case any class of employee engaged in work on the Cannabis Business Project is not protected under any workers’ compensation law, Developer shall provide and shall cause each contractor and subcontractor to provide adequate insurance for the protection of employees not otherwise protected. Developer hereby indemnifies City for any damage resulting from failure of Developer, its agents, employees, contractors, or subcontractors to take out or maintain such insurance. Workers’ compensation insurance with statutory limits, and employer’s liability insurance with limits of not less than One Million Dollars ($1,000,000) for each accident, shall be maintained by Developer.

Section 6.2. Other Insurance Requirements. Developer shall do all of the following:

(a) Prior to taking any actions under this Agreement, furnish City with properly executed certificates of insurance that clearly evidence all insurance required in this Article, including evidence that such insurance will not be canceled, allowed to expire, or materially reduced in coverage without thirty (30) days prior written notice to City.

(b) Provide to City, upon request and within seven (7) days of said request, certified copies of endorsements and policies and properly executed certificates of insurance evidencing the insurance required herein.

(c) Replace or require the replacement of certificates, policies, and endorsements for any insurance required herein expiring prior to the termination of this Agreement.

(d) Maintain all insurance required herein from the Effective Date of this Agreement to the earlier of the expiration of the Term or the mutual written termination of this Agreement.

(e) Place all insurance required herein with insurers licensed to do business in California with a current Best’s Key Rating Guide reasonably acceptable to City.

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Section 6.3. Indemnity. To the fullest extent permitted by law, Developer shall defend, indemnify, and hold harmless City, and its agents, elected and appointed officials, officers, employees, consultants, and volunteers (collectively, “City’s Agents”) from any and all liability arising out of a claim, action, or proceeding against City, or City’s Agents, to attack, set aside, void, or annul an approval concerning the Cannabis Business Project, this Agreement, any applicable Conditional Use Permit, or Subsequent City Approvals related to the Cannabis Business Project. Developers shall execute the indemnification agreement (“Indemnification Agreement”) attached hereto as Exhibit E.

Section 6.4. Failure to Indemnify; Waiver. Failure by Developer to indemnify City, when required by this Agreement and the Indemnification Agreement, shall constitute a material breach of this Agreement and of any applicable Conditional Use Permit and Subsequent City Approvals, which shall entitle City to all remedies available under law, including, but not limited to, specific performance and damages. Failure to indemnify shall constitute grounds upon which City may rescind its approval of any applicable Conditional Use Permit. Developer’s failure to indemnify City shall be a waiver by Developer of any right to proceed with the Cannabis Business Project, or any portion thereof, and a waiver of Developer’s right to file a claim, action, or proceeding against City, or City’s Agents, based on City’s rescission or revocation of any Conditional Use Permit, Subsequent City Approvals, or City’s failure to defend any claim, action, or proceeding based on Developer’s failure to indemnify City.

Section 6.5. Waiver of Damages. Notwithstanding anything in this Agreement to the contrary, the Parties acknowledge that City would not have entered into this Agreement had it been exposed to liability for damages from Developer and, therefore, Developer hereby waives all claims for damages against City for breach of this Agreement. Developer further acknowledges that under the Development Agreement Statute, land use approvals (including development agreements) must be approved by the City Council and that, under law, the City Council's discretion to vote in any particular way may not be constrained by contract. Developer, therefore, waives all claims for damages against City in the event that this Agreement or any Project approval is: (1) not approved by the City Council; or (2) is approved by the City Council but with new changes, amendments, conditions, or deletions to which Developer is opposed. Developer further acknowledges that, as an instrument which must be approved by ordinance, a development agreement is subject to referendum and that, under law, the City Council's discretion to avoid a referendum by rescinding its approval of the underlying ordinance may not be constrained by contract, and Developer waives all claims for damages against City in this regard.

ARTICLE 7 MORTGAGEE PROTECTION

This Agreement, once executed and recorded, shall be superior and senior to any lien placed upon the Site or any portion thereof following recording of this

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Agreement, including the lien of any deed of trust or mortgage (“Mortgage”). Notwithstanding the foregoing, no breach hereof shall defeat, render invalid, diminish, or impair the lien of any Mortgage made in good faith and for value. This Agreement shall immediately be deemed in default and immediately terminate upon the foreclosure or transfer of any interest in the Site or Project, whether by operation of law or any other method of interest change or transfer, unless the City Manager has authorized such change or transfer in advance, in writing. City agrees to not unreasonably withhold its authorization.

ARTICLE 8 DEFAULT

Section 8.1. General Provisions.

(a) Subject only to any extensions of time by mutual consent in writing, or as otherwise provided herein, the failure or delay by any Party to perform in accordance with the terms and provisions of this Agreement shall constitute a default. Any Party alleging a default or breach of this Agreement (“Charging Party”) shall give the other Party (“Charged Party”) not less than ten (10) days written notice, which shall specify the nature of the alleged default and the manner in which the default may be cured. During any such ten (10) calendar day period, the Charged Party shall not be considered in default for purposes of termination of this Agreement or institution of legal proceedings for the breach of this Agreement.

(b) After expiration of the ten (10) calendar day period, if such default has not been cured or is not in the process of being diligently cured in the manner set forth in the notice, or if the breach cannot reasonably be cured within ten (10) days, the Charging Party may, at its option, institute legal proceedings pursuant to this Agreement and give notice of its intent to terminate this Agreement pursuant to Government Code section 65868. In the event City is the Charging Party, City may, in its sole discretion, give notice, as required by law, to the Charged Party of its intent to revoke or rescind any operable Conditional Use Permit related to or concerning the Cannabis Business Project.

(c) Prior to the Charging Party giving notice to the Charged Party of its intent to terminate, or prior to instituting legal proceedings, the matter shall be scheduled for consideration and review by City in the manner set forth in Government Code sections 65865, 65867, and 65868 within thirty (30) days from the expiration of the ten (10) day notice period.

(d) Following consideration of the evidence presented and said review before City, and after providing the Charged Party an additional five (5) calendar day period to cure, the Charging Party may institute legal proceedings against the Charged Party or may give written notice of termination of this Agreement to the Charged Party.

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(e) Evidence of default may arise in the course of a regularly scheduled periodic review of this Agreement, pursuant to Government Code section 65865.1, as set forth in Section 8.2 of this Agreement. If any Party determines that another Party is in default following the completion of the normally scheduled periodic review, without reference to the procedures specified in Section 8.1(c) of this Agreement, said Party may give written notice of termination of this Agreement, specifying in the notice the alleged nature of the default and potential actions to cure said default where appropriate. If the alleged default is not cured in ten (10) days or within such longer period specified in the notice, or the defaulting Party is not diligently pursuing a cure or if the breach cannot reasonably be cured within the period or the defaulting Party waives its right to cure such alleged default, this Agreement may be terminated by the non-defaulting Party by giving written notice. An extension of the ten (10) day cure period may be given by mutual consent of the Parties.

(f) In the event Developer is in default under the terms and conditions of this Agreement, no permit application shall be accepted by City, nor will any permit be issued to Developer until the default is cured or the Agreement is terminated.

Section 8.2. Annual Review. City shall, at least every twelve (12) months during the Term of this Agreement, review the extent of good faith, substantial compliance of Developer and City with the terms of this Agreement. Such periodic review by City shall be limited in scope to compliance with the terms of this Agreement pursuant to California Government Code section 65865.1. City shall deposit in the mail or fax to Developer a copy of all staff reports and, to the extent practical, related exhibits concerning this Agreement or the Cannabis Business Project’s performance, at least seven (7) days prior to such periodic review. Developer shall be entitled to appeal a determination of City or the City Manager to the City Council. Any appeal must be filed within ten (10) days of the decision of City or the City Manager, respectively. Developer shall be permitted an opportunity to be heard orally or in writing regarding its performance under this Agreement before City, the City Manager, or the City Council, as applicable. The reasonable cost for City's annual review of this Agreement shall be paid by Developer, not to exceed the actual costs incurred by City in connection with the review.

Section 8.3. Estoppel Certificates.

(a) City shall, with at least twenty (20) days prior written notice, execute, acknowledge, and deliver to Developer, Developer’s lender, potential investors, or assignees an Estoppel Certificate in writing which certifies that this Agreement is in full force and effect, that there are no breaches or defaults under the Agreement and that the Agreement has not been modified or terminated and is enforceable in accordance with its terms and conditions.

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(b) At Developer’s option, City’s failure to deliver such Estoppel Certificate within the stated time period shall be conclusive evidence that the Agreement is in full force and effect, that there are no uncured breaches or defaults in Developer’s performance of the Agreement or violation of any City ordinances, regulations, and policies regulating the use and development of the Dispensary Site, Microbusiness Site, Cannabis Business Project, or the subject to this Agreement.

Section 8.4. Default by City. In the event City does not accept, review, approve, or issue any permits or approvals in a timely fashion, as defined by this Agreement, or if City otherwise defaults under the terms of this Agreement, City agrees that Developer shall not be obligated to proceed with or complete the Cannabis Business Project and shall constitute grounds for termination or cancellation of this Agreement by Developer.

Section 8.5. Cumulative Remedies of Parties. In addition to any other rights or remedies, City or Developer may institute legal or equitable proceedings to cure, correct, or remedy any default, enforce any covenant, or enjoin any threatened or attempted violation of the provisions of this Agreement, so long as any such action conforms to Section 9.1(c) of this Agreement.

Section 8.6. Forced Delay, Extension of Times of Performance. Delays in performance, by either Party, shall not be deemed a default if such delays or defaults are due to war, terrorism, insurrection, strikes, walkouts, riots, floods, earthquakes, fires, casualties, acts of God, governmental restrictions imposed where mandated by governmental entities other than City, enactment of conflicting state or federal laws or regulations, new or supplementary environmental regulations enacted by the state or federal government, litigation, or other force majeure events. An extension of time for such cause shall be in effect for the period of forced delay or longer, as may be mutually agreed upon.

Section 8.7. Appeals. Developer may appeal any adverse decision or action of City pursuant to A.M.C. Chapter 1.12.

ARTICLE 9 TERMINATION

Section 9.1. Termination Upon Completion of Development. This Agreement shall terminate upon the expiration of the Term, unless it is terminated earlier pursuant to the terms of this Agreement. Upon termination of this Agreement, City shall record a notice of such termination in substantial conformance with the “Notice of Termination” attached hereto as Exhibit F, and this Agreement shall be of no further force or effect except as otherwise set forth in this Agreement.

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Section 9.2. Effect of Termination on Developer’s Obligations. Termination of this Agreement shall eliminate any further obligation of Developer to comply with this Agreement, or some portion thereof, if such termination relates to only part of the Site or Cannabis Business Project. Termination of this Agreement, in whole or in part, shall not, however, eliminate the rights of Developer to seek any applicable and available remedies or damages based upon acts or omissions occurring before termination.

Section 9.3. Effect of Termination on City’s Obligations. Termination of this Agreement shall eliminate any further obligation of City to comply with this Agreement, or some portion thereof. Termination of this Agreement shall not, however, eliminate the rights of City to seek any applicable and available remedies or damages based upon acts or omissions occurring before termination.

Section 9.4. Survival After Termination. The rights and obligations of the Parties set forth in this Section 9.4, Section 2.8, Section 6.3, Section 10.3, Section 10.4, Section 10.5, Section 10.7, and Section 10.10, and any right or obligation of the Parties in this Agreement which, by its express terms or nature and context is intended to survive termination of this Agreement, will survive any such termination.

ARTICLE 10 OTHER GENERAL PROVISIONS

Section 10.1. Assignment and Assumption.

(a) Assignment and Related Background Checks. Developer shall not have the right to sell, assign, or transfer all or any part of its rights, title, and interests in all or a portion of the Site or Cannabis Business Project, subject to or a part of this Agreement, to any person, firm, corporation, or entity during the Term of this Agreement without the advance written consent of the City Manager. This assignment prohibition applies to the corporate and business entities of Developer that are a party to this Agreement. Any assignment or transfer prohibited by this Agreement will be considered an immediate breach of this Agreement and City may elect to immediately terminate this Agreement. If the City Manager approves an assignment or transfer of any interest detailed in this Section 10.1, City and Developer shall execute an “Assignment and Assumption Agreement” in the form attached hereto as Exhibit G. Notwithstanding the above, the City Manager shall evaluate in good faith any request for a transfer of rights to a third party under this Agreement and shall not unreasonably withhold approval of such request. The City Manager's evaluation shall take into consideration the experience of and resources available to the prospective transferee relative to their ability to competently assume the commercial cannabis business operation, and applicable background information of the third party, including but not limited to a background check for criminal activity, a history of legal actions such as filing for bankruptcy, civil lawsuits involving claims of fraud or related actions. Additionally, the City Manager may, at his or her discretion, deny a transfer request for any of the reasons contemplated in California Code of Regulations, tit. 16, sections 5017-5018.

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(b) Successor in Interest. Developer shall have the right to name a successor in interest who may assume ownership of the Cannabis Business Project and permits thereunder in the event of the Developer or it's principal's death or incapacity, provided the City Manager has conducted a background check of the named successor in interest, subject to the provisions for assignments to third parties set forth above, and there are no issues related to his or her background that would preclude eligibility to operate the Cannabis Business Project. Developer shall designate its successor in interest in writing and provide notice to the City as set forth below.

Section 10.2. Covenants Running with the Land. All of the provisions contained in this Agreement shall be binding upon the Parties and their respective heirs, successors and assigns, representatives, lessees, and all other persons acquiring all or a portion of interest in the Site or Cannabis Business Project, whether by operation of law or in any manner whatsoever. All of the provisions contained in this Agreement shall be enforceable as equitable servitudes and shall constitute covenants running with the land pursuant to California law, including California Civil Code section 1468. Each covenant herein to act or refrain from acting is for the benefit of or a burden upon the Cannabis Business Project, as appropriate, runs with the Site and is binding upon Developer.

Developer may, subject to any zoning restrictions or necessary land use entitlement approvals, transfer its rights and obligations under this Agreement to apply to an alternative physical premises provided the premises are suitable and appropriately zoned for the Commercial Cannabis Activities contemplated under this Agreement and the City’s rules and regulations. Developer hereby acknowledges that it shall be required to obtain any necessary City and state permits and approvals including, but not limited to, a Major Amendment to this Agreement and obtain a Conditional Use Permit for any alternative premises in order to conduct business at such an alternative premises.

Section 10.3. Notices. Any notice or communication required hereunder between City and Developer must be in writing and may be given either personally, by facsimile (with original forwarded by regular U.S. Mail), by registered or certified mail (return receipt requested), or by Federal Express, UPS, or other similar couriers providing overnight delivery. If personally delivered, a notice shall be deemed to have been given when delivered to the Party to whom it is addressed. If given by facsimile transmission, a notice or communication shall be deemed to have been given and received upon actual physical receipt of the entire document by the receiving Party’s facsimile machine. Notices transmitted by facsimile after 5:00 p.m. on a normal business day, or on a Saturday, Sunday, or holiday, shall be deemed to have been given and received on the next normal business day. If given by registered or certified mail, such notice or communication shall be deemed to have been given and received on the first to occur of (i) actual receipt by any of the addressees designated below as the Party to whom notices are to be sent; or (ii) five (5) days after a registered or certified letter containing such notice, properly addressed, with postage prepaid, is deposited in the United States mail. If given by Federal Express, or similar courier, a notice or communication shall be

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deemed to have been given and received on the date delivered, as shown on a receipt issued by the courier. Any Party hereto may at any time by giving ten (10) days written notice to the other Party hereto, designate any other address in substitution of the address to which such notice or communication shall be given. Such notices or communications shall be given to the Parties at their addresses set forth below:

If to City: City of Atwater 750 Bellevue Road

Atwater, California 95301 Attention: City Manager

and Churchwell White LLP

1414 K Street, 3rd Floor Sacramento, California 95814

Attention: Douglas L. White, Esq.

If to Developer: ____________________ ____________________ ____________________ ____________________ and: ____________________ ____________________ ____________________

Section 10.4. Governing Law and Binding Arbitration. The validity, interpretation, and performance of this Agreement shall be controlled by and construed pursuant to the laws of the state of California. Any dispute, claim, or controversy arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation, or validity thereof, including the determination of the scope or applicability of this Agreement to arbitrate, shall be determined by binding arbitration in Sacramento, California, before one arbitrator. The arbitration shall proceed pursuant to the Comprehensive Arbitration Rules and Procedures of the Judicial Arbitration and Mediation Services (“JAMS”). Judgment on the award may be entered in any court having jurisdiction thereof.

Section 10.5. Invalidity of Agreement / Severability. If this Agreement in its entirety is determined by an arbitrator or court of competent jurisdiction to be invalid or unenforceable, this Agreement shall automatically terminate as of the date of final entry of judgment. If any term or provision of this Agreement shall be determined by an arbitrator or court of competent jurisdiction to be invalid and unenforceable, or if any term or provision of this Agreement is rendered invalid or unenforceable according to the terms of any federal or state statute, any provisions that are not invalid or

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unenforceable shall continue in full force and effect and shall be construed to give effect to the intent of this Agreement. The Parties expressly agree that each Party is strictly prohibited from failing to perform any and all obligations under this Agreement on the basis that this Agreement is invalid, unenforceable, or illegal. By entering into this Agreement, each Party disclaims any right to tender an affirmative defense in any arbitration or court of competent jurisdiction, that performance under this Agreement is not required because the Agreement is invalid, unenforceable, or illegal.

Section 10.6. Cumulative Remedies. In addition to any other rights or remedies, City and Developer may institute legal or equitable proceedings to cure, correct, or remedy any default, to specifically enforce any covenant or agreement herein, or to enjoin any threatened or attempted violation of the provisions of this Agreement. The prevailing Party in any such action shall be entitled to reasonable attorneys’ fees and costs. Notwithstanding the foregoing or any other provision of this Agreement, in the event of City’s default under this Agreement, Developer agrees that it may not seek, and shall forever waive any right to, monetary damages against City, but excluding therefrom the right to recover any fees or charges paid by Developer in excess of those permitted hereunder.

Section 10.7. Third Party Legal Challenge. In the event any legal action or special proceeding is commenced by any person or entity challenging this Agreement, or any associated entitlement necessary or directly related to this Agreement, permit, or approval granted by City to Developer for the Cannabis Business Project (collectively, “Project Litigation”), the Parties agree to cooperate with each other as set forth herein. City may elect to tender the defense of any lawsuit filed and related in whole or in part to Project Litigation with legal counsel selected by City. Developer will indemnify, hold City harmless from, and defend City from all costs and expenses incurred in the defense of such lawsuit, including, but not limited to, damages, attorneys’ fees, and expenses of litigation awarded to the prevailing Party or Parties in such litigation. Developer shall pay all litigation fees to City within thirty (30) days of receiving a written request and accounting of such fees and expenses from City. Notwithstanding the aforementioned, City may request, and Developer will provide to City within seven (7) days of any such request, a deposit to cover City’s reasonably anticipated Project Litigation fees and costs.

Section 10.8. Constructive Notice and Acceptance. Every person who, after the Effective Date and recording of this Agreement, owns or acquires any right, title, or interest to any portion of the Site is and shall be conclusively deemed to have consented and agreed to every provision contained herein, whether or not any reference to this Agreement is contained in the instrument by which such person acquired an interest in the Site, and all rights and interests of such person in the Site shall be subject to the terms, requirements, and provisions of this Agreement.

Section 10.9. Statute of Limitations and Laches. City and Developer agree that each Party will undergo a change in position in detrimental reliance upon this

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Agreement from the time of its execution and subsequently. The Parties agree that Section 65009, subdivision (c)(1)(D) of the California Government Code, which provides for a ninety (90) day statute of limitations to challenge the adoption of this Agreement, is applicable to this Agreement. In addition, any person who may challenge the validity of this Agreement is hereby put on notice that, should the legality or validity of this Agreement be challenged by any third party in litigation, which is filed and served more than ninety (90) days after the execution of this Agreement, City and Developer shall each assert the affirmative defense of laches with respect to such challenge, in addition to all other available defenses. This Section in no way limits the right of a Party, claiming that the other Party breached the terms of this Agreement, to bring a claim against the other Party within the four (4) year statute of limitations set forth in Section 337 of the California Civil Code.

Section 10.10. Joint and Several Liability. Developer shall be jointly and severally liable for any amount due under this Agreement, and any breach of this Agreement or failure to pay by one Party shall also constitute a breach of this Agreement by the other Party. Developer agrees that City may impose a lien and seek foreclosure on any parcel of the Site due to any default by Developer.

Section 10.11. Change in State Regulations. In no event shall Developer operate the Cannabis Business Project in violation of the Agreement, or State Cannabis Regulations, as may be amended from time to time.

Section 10.12. Standard Terms and Conditions.

(a) Venue. Venue for all legal proceedings shall be the JAMS Resolution Center in Sacramento, California.

(b) Waiver. A waiver by any Party of any breach of any term, covenant, or condition herein contained, or a waiver of any right or remedy of such Party available hereunder, at law or in equity, shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant, or condition herein contained or of any continued or subsequent right to the same right or remedy. No Party shall be deemed to have made any such waiver unless it is in writing and signed by the Party so waiving.

(c) Completeness of Instrument. This Agreement, together with its specific references, attachments, and Exhibits, constitutes all of the agreements, understandings, representations, conditions, warranties, and covenants made by and between the Parties hereto. Unless set forth herein, no Party to this Agreement shall be liable for any representations made, express or implied.

(d) Supersedes Prior Agreement. It is the intention of the Parties hereto that this Agreement shall supersede any prior agreements, discussions, commitments, or representations, written, electronic, or oral, between the Parties hereto with respect to the Site or the Cannabis Business Project.

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(e) Captions. The captions of this Agreement are for convenience and reference only and the words contained therein shall in no way be held to explain, modify, amplify, or aid in the interpretation, construction, or meaning of the provisions of this Agreement.

(f) Number and Gender. In this Agreement, the neuter gender includes the feminine and masculine, and the singular includes the plural, and the word “person” includes corporations, partnerships, firms, or associations, wherever the context requires.

(g) Mandatory and Permissive. “Shall” and “will” and “agrees” are mandatory. “May” or “can” are permissive.

(h) Term Includes Extensions. All references to the Term of this Agreement shall include any extensions of such Term.

(i) Counterparts. This Agreement may be executed simultaneously, and in several counterparts, each of which shall be deemed an original but which together shall constitute one and the same instrument.

(j) Other Documents. The Parties agree that they shall cooperate in good faith to accomplish the objectives of this Agreement and, to that end, agree to execute and deliver such other instruments or documents as may be necessary and convenient to fulfill the purposes and intentions of this Agreement.

(k) Time is of the Essence. Time is of the essence in this Agreement in each covenant, term, and condition herein.

(l) Authority. All Parties to this Agreement warrant and represent that they have the power and authority to enter into this Agreement and the names, titles, and capacities herein stated on behalf of any entities, persons, states, or firms represented or purported to be represented by such entities, persons, states, or firms and that all former requirements necessary or required by state or federal law in order to enter into this Agreement had been fully complied with. Further, by entering into this Agreement, no Party hereto shall have breached the terms or conditions of any other contract or agreement to which such Party is obligated, which such breach would have a material effect hereon.

(m) Document Preparation. This Agreement will not be construed against the Party preparing it but will be construed as if prepared by all Parties.

(n) Advice of Legal Counsel. Each Party acknowledges that it has reviewed this Agreement with its own legal counsel and, based upon the advice of that counsel, freely entered into this Agreement.

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(o) Attorney’s Fees and Costs. If any action at law or in equity, including action for declaratory relief, is brought to enforce or interpret provisions of this Agreement, the prevailing Party shall be entitled to reasonable attorney's fees and costs, which may be set by the court in the same action or in a separate action brought for that purpose, in addition to any other relief to which such Party may be entitled.

(p) Calculation of Time Periods. All time referenced in this Agreement shall be calendar days, unless the last day falls on a legal holiday, Saturday, or Sunday, in which case the last day shall be the next business day.

SIGNATURES ON FOLLOWING PAGE

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IN WITNESS WHEREOF, this Agreement has been entered into by and between Developer and City as of the Effective Date of the Agreement, as defined above.

“CITY” Date: , 2019 CITY OF ATWATER, a California municipal corporation

By: ___________________________


Attest:

By: ___________________________

City Clerk Approved to as Form

By___________________________

Douglas L. White City Attorney

“DEVELOPER”

Date: , 2019 MJI, LLC, a California limited liability company

By: Its:

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California All-Purpose Acknowledgment

State of California ) ) County of ) On , before me , a Notary

Public, personally appeared who

proved to me on the basis of satisfactory evidence to be the person(s) whose name(s)

is/are subscribed to the within instrument and acknowledged to me that he/she/they

executed the same in his/her/their authorized capacity(ies), and that by his/her/their

signature(s) on the instrument the person(s), or the entity upon behalf of which the

person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California

that the foregoing paragraph is true and correct.

Witness my hand and official seal.

(Signature)

(Seal)

A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

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Exhibit A

Cannabis Site Legal Description

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Exhibit B

Cannabis Dispensary Site Map

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Exhibit C

Site Lease

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Exhibit D

Notice of Non-Performance Penalty

DATE: , 20___ PARTIES: CITY OF ATWATER, a California municipal corporation 750 Bellevue Road

Atwater, California 95301 MJI, LLC, a California limited liability company

________________ ________________

THIS NOTICE OF NON-PERFORMANCE PENALTY (“Penalty Notice”) is being executed by the City of Atwater, a California municipal corporation (“City”), with reference to the following.

A. By Instrument No. _____________, which was recorded in the Official Records of Merced County, California, on ________________, 2019, City recorded a development agreement between City and MJI, LLC, dated ______________, 2019 (the “Development Agreement”), relating to the development and operation of a cannabis dispensary and microbusiness.

B. Pursuant to Section 4.2 of the Development Agreement, Developer agrees to pay

to City a Public Benefit on the first business day of each month during the term of the Development Agreement.

C. On ________, 20__, the Public Benefit was due to City by Developer. City did

not receive payment.

D. Pursuant to Section 4.5 of the Development Agreement, if Developer fails to make payment when it is due, City may impose a penalty of one percent (1%) of the total of the past due amounts (“Penalty”). As of ____________, 20__, the past due amount equals $_________. The Penalty owed by Developer equals $____________ (“Penalty Amount”).

E. Pursuant to Section 4.5 of the Development Agreement, Developer shall make

payment of the Penalty Amount in a single installment due within fifteen (15) days of delivery of this Penalty Notice (“Penalty Due Date”).

F. Pursuant to Section 4.6 of the Development Agreement, if Developer fails to pay

the Penalty Amount before the Penalty Due Date, then, in addition to the Penalty

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Amount specified in subdivision (D), Developer shall pay City interest on the Penalty Amount, at the rate of eighteen percent (18%) per annum (“Penalty Interest Payment”), computed from the Penalty Due Date specified in subdivision (E). The Penalty Interest Payment is due fifteen (15) days following delivery of the Penalty Due Date. As of ____________, 20__, the Penalty Interest Payment amount equals $_________.

G. Nothing contained herein shall constitute a waiver of City’s future claims for the

Public Benefit, Penalty, or interest on the Penalty. NOW, THEREFORE, City hereby provides Developer the Penalty Notice required by Section 4.5 of the Development Agreement. This Penalty Notice shall be effective upon notice pursuant to Section 10.3 of the Development Agreement.


By: City Manager

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Exhibit E

INDEMNITY AGREEMENT FOR LAND USE ENTITLEMENT PROCESSING

THIS INDEMNITY AGREEMENT FOR LAND USE ENTITLEMENT PROCESSING (“Agreement”) is made and entered into on this ___ day of ___________, 2019, (“Effective Date”) by and between the City of Atwater, a California municipal corporation (“City”), and MJI, LLC, a California limited liability company (collectively, “Applicant”). City and Applicant may be referred to herein individually as a “Party” or collectively as the “Parties”. There are no other parties to this Agreement.

RECITALS

A. In 1996, the people of the state of California approved Proposition 215, the Compassionate Use Act of 1996 (“CUA”). The CUA enables seriously ill Californians to legally possess, use, and cultivate marijuana for medical use under state law. In 2003, the California Legislature adopted Senate Bill 420, entitled the Medical Marijuana Program (“MMP”), which authorizes qualified patients and their primary caregivers to cultivate marijuana for medical purposes without being subject to criminal prosecution under the California Penal Code.

B. On October 9, 2015, Governor Jerry Brown signed three bills into law (Assembly Bill 266, Assembly Bill 243, and Senate Bill 643) which are collectively referred to as the Medical Cannabis Regulation and Safety Act (“MCRSA”). MCRSA establishes a statewide regulatory system for the cultivation, processing, transportation, testing, manufacturing, and distribution of medical marijuana to qualified patients and their primary caregivers.

C. On November 8, 2016, California voters passed Proposition 64, the Adult Use of Marijuana Act (“AUMA”). AUMA legalizes the cultivation, commercial sale, and possession of recreational cannabis for adults age 21 and older.

D. On June 27, 2017, Governor Jerry Brown signed into law the Medicinal and Adult-Use Cannabis Regulation and Safety Act (“MAUCRSA”), which created a single regulatory scheme for both medicinal and adult-use cannabis businesses. MAUCRSA retains the provisions in the MCRSA and AUMA that granted local jurisdictions control over whether businesses engaged in commercial cannabis activity may operate in a particular jurisdiction.

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E. On December 7, 2017, California state cannabis licensing authorities issued emergency regulations that apply to AUMA and MAUCRA and further regulate businesses engaged in commercial cannabis activity.

F. Atwater Municipal Code (“A.M.C.”) Chapter 5.60 authorizes cannabis

businesses to operate within the City under specified restrictions pursuant to a Cannabis Pilot Program.

G. Applicant intends to improve, develop, and use real property to operate a Cannabis business (the “Project”) within the City in strict compliance with MAUCRSA and A.M.C. Chapter 5.60.

H. Applicant has an agreement to lease that certain real property located at 460 Airpark Road, Atwater, California, in the County of Merced, Assessor’s Parcel Number 056-400-029 (the “Project”) Applicant intends to improve approximately fourth thousand (4,000) square feet of space and operate the Project on the Property.

I. As a condition of approval of the Land Use Entitlements, City has required Applicant to enter into this Agreement.

J. It is in the public interest for City and Applicant to enter into this

Agreement, as Applicant will benefit from City’s processing of the Project. K. Applicant desires to enter into this Agreement to fulfill a condition of

approval of the Project, which is a prerequisite for construction of the Project.

AGREEMENT NOW, THEREFORE, in consideration of the promises, covenants and agreements set forth below, the Parties agree as follows: Section 1. Recitals. The recitals set forth above (“Recitals”) are true and correct and are hereby incorporated into and made part of this Agreement by this reference. In the event of any inconsistency between the Recitals and Sections 1 through 19 of this Agreement, Sections 1 through 19 shall prevail.

Section 2. Applicant’s Indemnification Obligations.

2.1. Indemnification for Land Use Entitlements. To the fullest extent permitted by law, Applicant shall indemnify and hold harmless City and its agents, elected and appointed officials, officers, employees, and volunteers (collectively, “City’s Agents”) from any and all liability arising out of a claim, action, or proceeding against

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City, or City’s Agents, to attack, set aside, void, or annul, an approval concerning the Land Use Entitlements necessary or directly related to the Project by reason of the action or inaction of City, or City’s Agents. Applicant’s duty to indemnify and hold harmless shall not extend to any claim, action or proceeding arising from the gross negligence or willful misconduct of City, or City’s Agents. Applicant’s obligations under this Agreement to indemnify City shall apply to any claim, lawsuit, or challenge against City brought against the Project, specifically including, but not limited to, any legal challenge based on the California Environmental Quality Act, codified in California Public Resources Code section 21000 et seq., actions or proceedings brought to challenge the validity of environmental documents prepared in conjunction with the approval of the Project or Land Use Entitlements, or the requirements of any other federal, state, or local laws, including, but not limited to, general plan, specific plan, and zoning requirements.

2.2. Tender of Defense. Upon receiving notice of a claim and pursuant to Article 6 of the Land Use Entitlements, Applicant shall assume the defense of the claim, action, or proceeding through the prompt payment of all attorneys’ fees and costs, incurred in good faith and in the exercise of reasonable discretion, of City’s counsel in defending such an action. Regardless of whether Applicant chooses to defend City pursuant to Section 6.4 of the Land Use Entitlements, City shall have the absolute and sole authority to control the litigation and make litigation decisions, including, but not limited to, selecting counsel to defend City and settlement or other disposition of the matter.

2.3. Deposit for Costs. Applicant shall make a refundable deposit to City within thirty (30) days of written notification from City (“Cost Deposit”) to cover the estimated fees and costs associated with City’s defense of any claim, action or proceeding. Applicant shall make any and all additional payments to City to replenish the Cost Deposit within thirty (30) days of written notice from City.

2.4. Failure to Indemnify; Waiver. Failure to indemnify City, when required

by this Agreement, shall constitute a material breach of this Agreement and of the Land Use Entitlements, which shall entitle City to all remedies available under law including, but not limited to, specific performance and damages. Failure to indemnify shall constitute grounds upon which City may rescind its approval of the Land Use Entitlements. Applicant’s failure to indemnify City shall be a waiver by Applicant of any right to proceed with the Project, or any portion thereof, and a waiver of Applicant’s right to file a claim, action or proceeding against City or City’s Agents based on City’s rescission or revocation of the Land Use Entitlements, or City’s failure to defend any claim, action or proceeding based on Applicant’s failure to indemnify City.

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2.5. Satisfaction of Judgment. With respect to any claims, demands, acts, causes of action, damages, costs, expenses, settlements, losses or liabilities which Applicant has indemnified City against, Applicant shall pay and satisfy any judgment, award, settlement or decree that may be rendered or agreed against City and City’s Agents arising out of any final, non-appealable judicial or administrative action.

2.6. Payment of Costs and Fees. Applicant’s obligations under this Agreement to defend and indemnify City shall include, but not be limited to, payment of all court costs and attorneys' fees, all litigation-related costs, all costs of any judgments or awards against City, or all settlement costs which arise out of City’s processing or approval of the Project.

2.7. Continuing Obligation. Applicant shall be and remain personally obligated to all of the terms of this Agreement, notwithstanding any attempt to assign, delegate or otherwise transfer all or any of the rights or obligations of this Agreement and notwithstanding a change in or transfer of ownership of the real property upon which the Project is located (or any interest therein). However, Applicant may be released from such obligations if Applicant obtains City’s prior written consent to such transfer, which consent shall not be unreasonably withheld. Section 3. City’s Obligations. City shall notify Applicant of any claim, action or proceeding within ten (10) business days of receiving service of any claim, action or proceeding. If City fails to notify Applicant of any claim, action, or proceeding, Applicant shall not, thereafter, be responsible to defend, indemnify, or hold City harmless. City shall have and retain, in its sole discretion, the right to not participate in the defense of any claim, action, or proceeding. At its sole discretion, City may participate at its own expense in the defense, but such participation shall not relieve Applicant of any obligation imposed by this Agreement. Section 4. Notice. Any notice or communication required hereunder between City and Applicant must be in writing and may be given either personally, by facsimile (with original forwarded by regular U.S. Mail), by registered or certified mail (return receipt requested), or by Federal Express, UPS or other similar couriers providing overnight delivery. If personally delivered, a notice shall be deemed to have been given when delivered to the Party to whom it is addressed. If given by facsimile transmission, a notice or communication shall be deemed to have been given and received upon actual physical receipt of the entire document by the receiving Party’s facsimile machine. Notices transmitted by facsimile after 5:00 p.m. on a normal business day, or on a Saturday, Sunday or holiday, shall be deemed to have been given and received on the next normal business day. If given by registered or certified mail, such notice or communication shall be deemed to have been given and received on the first to occur of (a) actual receipt by any of the addressees designated below as the Party to whom notices are to be sent, or (b) five (5) days after a registered or certified letter containing such notice, properly addressed, with postage prepaid, is deposited in the United States

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mail. If given by Federal Express or similar courier, a notice or communication shall be deemed to have been given and received on the date delivered as shown on a receipt issued by the courier. Any Party hereto may at any time, by giving ten (10) days’ written notice to the other Party hereto, designate any other address in substitution of the address to which such notice or communication shall be given. Such notices or communications shall be given to the Parties at their addresses set forth below:

If to City: City of Atwater

750 Bellevue Road Atwater, California 95301 Attention: City Manager and Churchwell White, LLP 1414 K Street, 3rd Floor Sacramento, California 95814 Attention: Douglas L. White, Esq. [email protected] If to Applicant: ____________________ ____________________ ____________________ and ____________________ ____________________ ____________________ Section 5. Modification of Agreement. This Agreement may be supplemented, amended, or modified only by a writing signed by City and Applicant.

Section 6. Entire Agreement. This Agreement constitutes the final, complete, and exclusive statement of the terms of the agreement between the Parties pertaining to the action and supersedes all other prior or contemporaneous oral or written understandings and agreements of the Parties. No Party has been induced to enter into this Agreement by, nor is any Party relying on, any representation or warranty except those expressly set forth in this Agreement.

Section 7. Agreement is Voluntary. The Parties acknowledge that they have entered into this Agreement voluntarily, on the basis of their own judgment and without coercion, and not in reliance on any promises, representations, or statements made by the other Party other than those contained in this Agreement. This Agreement incorporates the entire understanding of the Parties and recites the sole consideration

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of the promises and agreements contained within it. The Parties have read this Agreement and are fully aware of its contents and legal effect. Section 8. Time of Essence. Time is of the essence for this Agreement, and each section contained within this Agreement is made and declared to be a material, necessary, and essential part of this Agreement. Section 9. Severability of Agreement. If a court or an arbitrator of competent jurisdiction holds any section of this Agreement to be illegal, unenforceable, or invalid for any reason, the validity and enforceability of the remaining sections of this Agreement shall not be affected. Section 10. Authority. All Parties to this Agreement warrant and represent that they have the power and authority to enter into this Agreement, and the names, titles, and capacities herein stated on behalf of any entities, persons, states, or firms represented or purported to be represented by such entities, persons, states, or firms and that all former requirements necessary or required by state or federal law in order to enter into this Agreement had been fully complied with. Further, by entering into this Agreement, neither Party hereto shall have breached the terms or conditions of any other contract or agreement to which such Party is obligated, which such breach would have a material effect hereon. Section 11. Noninterference. No Party will do anything to interfere with or inhibit the ability of the other to comply with their respective obligations under the terms of this Agreement. Section 12. Ambiguities. Each Party has participated fully in the review and revision of this Agreement. Any rule of construction that ambiguities are to be resolved against the drafting Party does not apply in interpreting this Agreement. Section 13. Headings. The headings in this Agreement are included for convenience only, and neither affect the construction or interpretation of any section in this Agreement nor affect any of the rights or obligations of the Parties to this Agreement. Section 14. Necessary Acts and Further Assurances. The Parties shall, at their own cost and expense, execute and deliver such further documents and instruments and shall take such other actions as may be reasonably required or appropriate to evidence or carry out the intent and purposes of this Agreement. The Parties will act in good faith to carry out the intent of this Agreement. Section 15. Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of California.

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Section 16. Venue. Venue for all legal proceedings shall be in the Superior Court of California, in and for the County of Merced. Section 17. Attorney’s Fees and Costs. If any action at law or in equity, including action for declaratory relief, is brought to enforce or interpret sections of this Agreement, the prevailing Party shall be entitled to reasonable attorney's fees and costs, which may be set by the court in the same action or in a separate action brought for that purpose, in addition to any other relief to which such Party may be entitled. Section 18. Waiver. No covenant, term, or condition, or the breach thereof, shall be deemed waived, except by written consent of the Party against whom the waiver is claimed, and any waiver of the breach of any covenant, term, or condition shall not be deemed to be a waiver of any preceding or succeeding breach of the same or any other covenant, term, or condition. Section 19. Counterparts. This Agreement may be executed in counterparts and all so executed shall constitute an agreement which shall be binding upon the Parties hereto, notwithstanding that the signatures of all Parties and Parties’ designated representatives do not appear on the same page.

[SIGNATURE PAGE TO FOLLOW]

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IN WITNESS THEREOF, the Parties have executed this Agreement on the day, month and year first above written. APPLICANT MJI, LLC a California limited liability company By: Name: Its: Date:

CITY City of Atwater, a California municipal corporation By Lori Waterman, City Manager Date: APPROVED AS TO FORM: By Douglas L. White, City Attorney

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Exhibit F

Notice of Termination RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO:


SPACE ABOVE THIS LINE FOR RECORDER’S USE

Recording Fee Exempt per Government Code § 6103

NOTICE OF TERMINATION AND RELEASE OF DEVELOPMENT AGREEMENT

DATE: _________________, 20___ PARTIES: CITY OF ATWATER, a California municipal corporation 750 Bellevue Road

Atwater, California 95301

MJI, LLC, a California limited liability company ____________________ ____________________

THIS NOTICE OF TERMINATION AND RELEASE (the “Release”) is being

executed by the City of Atwater, a California municipal corporation (“City”), with reference to the following.

A. By Instrument No. _____________, which was recorded in the Official Records of Merced County, California, on ________________, 2019, City recorded a development agreement between City and MJI, LLC, dated ______________, 2019 (the “Development Agreement”), relating to the development and operation of a cannabis dispensary and microbusiness.

B. Pursuant to Sections 1.7 and 9.1 of the Development Agreement, the term of the Development Agreement expires three (3) years from _______, 2019, on __________, 20__.

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C. Pursuant to Section 9.1 of the Development Agreement, once terminated, the Development Agreement has no further force or effect, unless otherwise set forth in the Development Agreement.

NOW, THEREFORE, City hereby terminates, cancels, and otherwise releases Developer and Developer’s heirs, executives, administrators, successors, and assigns from their obligations in the Development Agreement on this ____ day of ________, 20__, and relinquishes any right it may hereafter have to enforce any of the terms and provisions set forth in the Development Agreement, unless otherwise set forth in the Development Agreement. This termination, cancellation and release, shall be effective upon the recordation of this Release in the office of the County Recorder for the County of Merced, State of California.


By: City Manager

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Exhibit G

Assignment and Assumption Agreement

RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO:


SPACE ABOVE THIS LINE FOR RECORDER’S USE Recording Fee Exempt per Government Code § 6103

THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (Agreement”) is entered into this _____ day of ___________, 20___, by and between ______________, a California ________________________ (“Assignors”), and _____________________ (“Assignee”).

RECITALS

A. On ___________, 20__, Assignor and the City of Atwater (the “City”) entered into that certain agreement entitled “Development Agreement by and between the City of Atwater, a California municipal corporation, and MJI, LLC, a California limited liability company,” relating to the improvement, development, and use of real property to operate a cannabis business (the “Development Agreement”), originally recorded upon Merced County Assessor’s Parcel Number __________ (the “Property”).

B. Section 10.1 of the Development Agreement prohibits the sale, assignment, or transfer by Assignor of any portion of Assignor’s interests, rights, or titles described in that section of the Development Agreement (“Assignable Rights”) to a third party without prior written approval by the City Manager of the City.

C. Assignor intends to assign, and Assignee intends to assume, the Assignable Rights under the Development Agreement.

D. In accordance with the terms of the Development Agreement, Assignor has provided to the City Manager a written request for consent to assignment. The City Manager has received the information he or she deems appropriate and consulted with the City Attorney for the purpose of determining that Assignee is a qualified applicant for purposes of the foregoing terms of the Development Agreement. This Agreement is intended to meet the requirements of Section 10.1 of the Development Agreement for an Assignment and Assumption Agreement and is executed with the consent of the City Manager as contemplated in the Development Agreement.

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NOW, THEREFORE, Assignor and Assignee hereby agree as follows: 1. The foregoing Recitals are true and incorporated herein by this reference

as though set forth in full. 2. Assignor hereby assigns to Assignee all of the Assignable Rights of

Assignor under the Development Agreement. 3. Assignee hereby assumes all of the burdens and obligations of Assignor

under the Development Agreement and agrees to observe and fully perform all of the duties and obligations of Assignor under the Development Agreement and to be subject to all the terms and conditions thereof, with respect to the Property and Assignable Rights. It is the express intention of Assignor and Assignee that, upon the execution of this Agreement, Assignee shall become substituted for Assignor as the “Developer” under the Development Agreement.

4. This Agreement shall take effect and be binding only upon the City

Manager’s consent to and approval of the Agreement. 5. Assignee represents and warrants that it has reviewed and is familiar with

the terms and conditions of the Development Agreement. Assignee acknowledges that the Assignable Rights are as set forth in Section 10.1 of the Development Agreement, and the duties of Assignor thereunder and the duties of Assignee hereunder, as between Assignee and City, shall be without reference to any underlying agreements or understandings that may exist between Assignee, Assignor, or any other party with respect to the subject matter hereof, and that City is not party to such other agreements.

6. All of the covenants, terms, and conditions set forth herein shall be binding

upon and shall inure to the benefit of the parties hereto and their respective heirs, successors, and assigns.

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IN WITNESS HEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

AGREED TO AND ACCEPTED: CITY OF ATWATER, a California municipal corporation City Manager

ASSIGNOR/ DEVELOPER: MJI, LLC, a California limited liability company ________________________________ Its: _____

ASSIGNEE

, a California By: Its:

CITY COUNCIL



AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ATWATER ADOPTING A DEVELOPMENT AGREEMENT BY AND BETWEEN THE CITY OF ATWATER AND MJI, LLC.

WHEREAS, on October 9, 2015, Governor Jerry Brown signed three bills into law (Assembly Bill 266, Assembly Bill 243, and Senate Bill 643), which are collectively referred to as the Medical Cannabis Regulation and Safety Act (“MCRSA”). MCRSA established the first statewide regulatory system for medical cannabis businesses; and WHEREAS, in 2016, the voters of California approved Proposition 64 entitled the “Control, Regulate and Tax Adult Use of Marijuana” (“AUMA”). AUMA legalized the adult-use and possession of cannabis by persons 21 years of age and older and the personal cultivation of up to six cannabis plants within a private residence; and WHEREAS, on June 27, 2017, Governor Jerry Brown signed into law the Medicinal and Adult-use Cannabis Regulation and Safety Act (“MAUCRSA”), which created a single regulatory scheme for both medicinal and adult-use cannabis businesses. MAUCRSA retains the provisions in the MCRSA and AUMA that granted local jurisdictions control over whether businesses engaged in commercial cannabis activity may operate in a particular jurisdiction; and WHEREAS, on October 23, 2017, the Atwater City Council (the “City Council”) adopted Ordinance No. CS 982 to enact cannabis regulations for cannabis businesses pursuant to AUMA and MAUCRSA; and

WHEREAS, On May 14, 2018, the City Council adopted Ordinance CS 996 amending the City of Atwater’s (“City”) cannabis business regulations and establishing a Cannabis Business Pilot Program (the “Pilot Program”); and

WHEREAS, the City Council finds that establishing a structure to regulate all cannabis businesses contemplated by state law is in the best interest of the health, welfare, and safety of the public; and


WHEREAS, Government Code section 65864 et seq. (the "Development Agreement Statute") permits the City to contract with private interests for their mutual benefits in a manner not otherwise available to the contracting parties and such agreements assure property developers that they may proceed with their projects with the assurance that approvals granted by the City will not change during the period of development, and the City is equally assured that public benefit interests will be protected and properly administrated at the time development projects are proposed; and WHEREAS, MJI, LLC, a California limited liability company, proposes to enter into a Development Agreement for development of a specialty indoor cultivation commercial cannabis business, as defined under Atwater Municipal Code Section 5.60, in strict accordance with applicable state and local law, at 460 Airpark Road, Atwater, California, County of Merced Assessor’s Parcel Number 056-400-029 (the “Project”), consistent with the General Plan, as amended; and WHEREAS, on April 17, 2019, the Community Development and Resource Commission (“CDRC”) held a duly noticed public hearing to consider the Project and Development Agreement; and WHEREAS, pursuant to the California Environmental Quality Act (“CEQA”), the CDRC adopted Resolution No. 093-19 on April 17, 2019, which certified that the Project was categorically exempt pursuant to Section 15301 of the CEQA Guidelines, existing facilities, and recommended approval of the Development Agreement by the City Council, incorporated herein by reference; and WHEREAS, on _______, 2019, and ________, 2019, the City Council held duly noticed public hearings to consider the Project and Development Agreement; and WHEREAS, the City Council, based on its independent review and analysis of City staff’s recommendations, oral and written testimony, and the record as a whole, finds, after due study, deliberation, and public hearing and based on its independent judgment, that the following circumstances exist:

1. The Project is consistent with the goals, policies, and standards of the City’s General Plan and all other applicable standards and ordinances of the City.

2. In accordance with the Development Agreement Statute, the City Council finds

that the Development Agreement:

(a) Will not be detrimental to the health, safety, and general welfare of persons residing in the immediate area nor detrimental to the general welfare of the residents of the City as a whole;

(b) Will not adversely affect the orderly development of property or the

preservation of property values; (c) Is consistent with the provisions of Government Code sections 65864

through 65869.5; and


(d) Contains a legal description of the property.

WHEREAS, that the City Council finds that the Development Agreement conforms to the Development Agreement Statute. THEREFORE, BE IT RESOLVED, that the City Council approves the Ordinance adopting the Development Agreement to which the MJI, LLC Development Agreement is incorporated by reference. THEREFORE, THE CITY COUNCIL OF THE CITY OF ATWATER DOES ORDAIN AS FOLLOWS: Section 1. The Project is in compliance with the General Plan, Zoning District, and the Atwater Municipal Code as amended, including Section 5.60 “Cannabis Business Pilot Program” as it has been adopted by the City Council on May 14, 2018. Section 2. The City Manager hereby certifies that the developer/applicant has deposited with the City all associated fees and executed all necessary applications, at this time, associated with the processing of the Development Agreement. Section 3. The City Council approves a Development Agreement by and between MJI, LLC, and the City for the development of the Project and instructs the City Manager to execute the Development Agreement subject to final, technical revisions as required and approved by the City Attorney. Section 4. The City shall review the Development Agreement for compliance with its terms and conditions not less than once every twelve (12) months from the effective date of the Development Agreement. Section 5. Notice of the public hearing on the proposed Development Agreement was published in the Merced Sun Star, a newspaper of general circulation, printed and published in the City; and notices of the public hearing on the proposed Development Agreement were mailed to all interested parties and property owners within 300 feet of the property, according to the most recent assessor’s roll. Section 6. Environmental impacts for the Project have been reviewed and assessed by the City pursuant to CEQA (Public Resources Code section 21000 et seq.; California Code of Regulations title 14, section 15000 et seq.). The Project is categorically exempt from CEQA pursuant to Section 15301 of Title 14 of the California Code of Regulations applicable to existing facilities. Section 7. If any section, subsection, sentence, clause, phrase, or word of this Ordinance is for any reason held by a court of competent jurisdiction to be unconstitutional or invalid for any reason, such decision shall not affect the validity of the remaining portions of the Ordinance. The City Council hereby declares that it would have passed this Ordinance and each section, subsection, sentence, clause, phrase, and word thereof, irrespective of the


fact that any one or more section(s), subsection(s), sentence(s), clause(s), phrase(s), or word(s) be declared invalid. Section 8. Upon the passage of this Ordinance, the City Manager is authorized to execute the Development Agreement on behalf of the City. Within ten (10) days of the execution, but no earlier than thirty (30) days after passage of this Ordinance, the City Clerk shall cause the Development Agreement to be recorded in the Office of the County Recorder, as provided for by Government Code section 65868.5. The Development Agreement shall not take effect for thirty (30) days following passage and adoption of this Ordinance. Introduced by Council Member _____ seconded by Council Member _____ on the ______ day of _______, 2019. Passed on the ________ day of ________, 2019, by the following vote: INTRODUCED: ________, 2019 ADOPTED: ________, 2019 AYES: NOES: ABSENT: APPROVED: __________________________ PAUL CREIGHTON, MAYOR ATTEST:

_______________________________ CITY CLERK Attachments: Attachment A MJI, LLC Development Agreement (with associated exhibits)

Fire Department

2018

Annual Report (May 6th 2019)

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FIRE DEPARTMENT in cooperation

with

Table of Contents

Information .......................................................................................................................4

MISSION STATEMENT ........................................................................................ 4

OBJECTIVES ....................................................................................................... 5

POLICY ................................................................................................................ 6

Organizational Chart ............................................................................................... 7

Reserve Firefighter Program ................................................................................... 8

Emergency Activity Report……………………………………………………………….9

Station 41, 699 Broadway Ave………………………………………………………..…9

Station 42, 2008 Ave 2………………………………………………………………..…10

Vehicle and Equipment Update…………………………………………………………11

Fire Prevention Bureau…………………………………………………………………..12 Misc Department Projects……………………………………………………………………..15

Training…………………………………………………………………………………….16

Measure H Funding….……………………………………………………………………18

4

Information

MISSION STATEMENT

The primary mission of the Atwater Fire Department is to provide a range of programs aimed at protecting the lives and property of the people in Atwater from the adverse effects of fires, medical emergencies, exposure to hazardous materials, or other dangerous conditions as an All Risk emergency response agency. These programs include comprehensive fire protection planning, fire suppression, emergency medical response, rescue, hazardous materials response and mitigation, fire prevention & education, fire law and code enforcement. The Atwater Fire Department provides first responder level Emergency Medical Services, including rescue and extrication, as well as control and mitigation of hazardous materials emergency incidents. Atwater Fire Department provides mutual and automatic aid to cooperating local agencies and participates in the statewide fire and rescue mutual aid system.

GOAL STATEMENT

The goal of the Atwater Fire Department is to provide integrated, cooperative, and cost-effective fire protection and emergency services to the public; to provide automatic and mutual aid agreements to adjoining fire departments, fire districts; and other cooperators to continue to improve operational efficiency and fiscal accountability; to increase professionalism; and to support the mission, goals, and objectives of the City of Atwater.

5

Information

OBJECTIVES 1. Provide strategic planning and analysis to identify the

most cost effective organizational and operational structure for the department.

2. Provide quality training aimed at enhancing the proficiency and safety of all career and reserve firefighters.

3. Improve the safety, reliability, and efficiency of the fire apparatus fleet by following higher standards of preventive maintenance, improving operator training, and conducting frequent safety and administrative inspections. Replace obsolete fire apparatus and administrative vehicles as necessary.

4. Increase funding and operational support to make critical facility repairs and improvements.

5. Work with City Administration to develop a plan to increase staffing on fire apparatus and future fire station locations.

6

POLICY

The following policy statements provide direction and guidance for the future of the Atwater Fire Department. 1. Provide efficient levels of fire protection services to the citizens

of Atwater. Encourage the continuance of the existing contractual arrangement between the City of Atwater and the California Department of Forestry and Fire Protection for cooperative fire protection services.

2. Continue to bring forward recommendations for the Department’s facilities, personnel, and technology as required to meet the changing conditions and increased demands for services.

3. Maintain and manage fire impact fees in order to provide a supplemental source of funding for capital equipment. This will allow the Atwater Fire Department to expand fire protection service into areas of significant new growth as the need arises and keep equipment up-to-date to meet the ever changing All Risk emergency response environment.

4. Seek opportunities, where feasible, to conduct joint operations, share responsibilities, or construct joint facilities with municipalities in order to avoid duplication of effort or cost in the provision of basic fire protection services. Pursue meaningful automatic and mutual aid agreements with other adjoining fire entities.

6. Continue to update the Atwater Fire Department’s Master Plan

with guidance from the Atwater City Council and members of City staff.

7. Pursue grant funding through Local, State and Federal agencies

to obtain needed support for various programs. The most serious issue facing the Atwater Fire Department is the lack of a Vehicle Replacement Plan and Staffing Levels that meet NFPA Guidelines.

7

Organizational Chart

Fire Chief Division Chief

9 Reserve Firefighters

(City Employees)

Battalion 14

Battalion Chief

Station 41

Station 42

Battalion 24

Battalion Chief

8

OBJECTIVE:

• This program was created to provide work experience and on-the-job training opportunities for individuals pursuing a career in fire service.

• This program has been developed to provide structured personal growth and professional development to the participant.

GUIDELINES:

• It is not the intent of the City to displace regular employees, or for the Reserve Firefighter (also referred to herein as a “Reserve”) to perform work without the guidance of paid professional staff.

• Reserve Firefighters shall not be considered to fulfill minimum staffing levels. • The intent of the program is to provide Reserves the opportunity to gain on-the-

job experience, and to familiarize themselves with the normal day-to-day operations of a Fire Department. The Reserves will work under the direct observation and supervision of regular staff.

• The training and experience is intended to be basic, allowing participants in the program to use the experience they gain in similar situations.

Atwater City Firefighter Reserve Program

Station New Hires Separations

Total Reserves

Total Hours

Totals 8 2 8 2,823

9

Emergency Activity Reports

Station 41 699 Broadway

Staffing: Two People Equipment: One Type 2 Fire Engines

One Type 2 Reserve Fire Engines One Cascade Air Supply Trailer

One Utility Vehicle Alarm Sounding 50 2.05%

Cover Assignment 0 0.00% Debris 39 1.60%

Medical Aid 1786 73.08% EMS Code Blue 11 0.45%

False Alarm 57 2.33% Fire Menace Standby 24 0.98%

Fire Other 2 0.08% Haz Mat 3 0.12%

Plane/Helicopter Crash 0 0.00% Public Assist 168 6.87% Structure Fire 36 1.47%

Vegetation Fire 33 1.35% Vehicle Accident 119 4.87%

Vehicle Accident With Pin-In 5 0.20%

Vehicle Fire 18 0.74% Emergency Stand By 1 0.04%

Total Calls YTD 2444 100.00%

Reserve Responses 231 9.45%

10

Emergency Activity Reports

Station 42

3405 Hardstand Ave. Atwater Staffing: Two People

Equipment: One Ladder Truck One Type 2 Reserve Fire Engine,

One Utility Truck

Alarm Sounding 29 1.92% Cover Assignment 0 0.00% Debris 8 0.53% Medical Aid 845 55.81% EMS Code Blue 18 1.19% False Alarm 59 3.90% Fire Menace Standby 9 0.59% Fire Other 0 0.00% Haz Mat 1 0.07% Plane/Helicopter Crash 0 0.00% Public Assist 113 7.46% Structure Fire 26 1.72% Vegetation Fire 13 0.86% Vehicle Accident 55 3.63% Vehicle Accident With Pin-In 6 0.40% Vehicle Fire 9 0.59% Emergency Stand By 2 0.13% Total Calls YTD 1514 100.00% Reserve Responses 195 12.88%

11

2018 Vehicle and Equipment Update

Year/Lic No: Assignment: Type: Make: Description: Replacement Recommendation:

Mileage:

2017-1505770 Battalion 14 Command Chevrolet 4X4 Pickup 150,000 17,080 2017-1505771 Battalion 24 Command Chevrolet 4X4 Pickup 150,000 20,000 2009-1317998 Engine 41 Engine Ferrara 2X4 1500 GPM 2029 70,345 1999-1048952 Reserve Engine 241 Engine High Tec/Spar 2X4 1500 GPM 2019 104,8952 2014-1338858 Truck 42 Ladder Truck Rosenbauer 2X6 2000 GPM 2034 36,875 1990-085537 Reserve Engine 42 Engine High Tec/Spar 2X4 1500 GPM 2010 125,661 1990-330292 Utility 42 Support Chevrolet 2X4 Pickup 200,000 101,253 2005-1223031 Utility 41 Support Ford 4X4 Pickup 200,000 145,889

The National Fire Protection Agency under the 1901 guideline for first-line and reserve fire apparatus recommends that apparatus more than 15 years old be rotated in a reserve status. NFPA recommends that apparatus older than 20 years be replaced.

12

Fire Prevention Bureau Summary: 2018 was an eventful year of changes for the bureau both positive and challenging. The staff had to work diligently to maintain the professional services our community relies on for all the fire prevention activities of Atwater. We continue to strive toward enhancing our current technological tools, seek more efficient programs and processes to move forward. The continued relationship and teamwork with each other, along with our other departments we continue to work closely with, are growing stronger. The bureau continues to build on permit tracking methods so that other departments could collaborate more effectively and efficiently. This also led to us tracking our finances more effectively so that projects no-longer go unpaid after work hours are invested. Plan Review: The Fire Marshall is tasked with the responsibility of closely monitoring and reviewing all commercial and residential construction projects for fire and life safety. We take pride in working with the citizens with emphasis on customer service and to ensure the safety of Atwater’s citizens and do our best to make sure the intent of the fire code is being met in every situation which presents itself. In 2018 the bureau reviewed more than 72 commercial, residential and construction plans. Each of these plan reviews requires an average minimum of two hours to review and two inspections by our personnel to ensure proper installation, testing and compliance.

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Operational Permits: In addition to commercial construction projects, the bureau reviews and inspects existing businesses for compliance with applicable codes and standards. These inspections are essential for the safety of not only the owners and employees of these businesses but also for all the citizens and emergency service personnel who reside and respond within and around Atwater. These inspections include Schools, assemblies, high piled storage, high hazard storage, apartments, hotels, and fuel dispensing locations among others. Inspections by experienced personnel also uncovered multiple violations of not only fire codes but also building codes, environmental health regulations, county ordinances and federal standards at various locations which is information we share with our appropriate departments and partners. The dedicated efforts of the Fire Marshall and many other City, County, State and Federal agencies, helped bring these situations into proper compliance. We are also responsible for issuing and inspecting all the fireworks permits for booths and festive displays.

Inspection Type FIRE OP INSPECTION 1208

• Fireworks Display* 2 • Fireworks Stand* 14 • Fuel Dispensing Station* 1 • Carnival Displays* 4

Total 1227 *Additional details and information and details can be obtained from the Fire Marshal.

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Fire Hazard Abatement: Fire hazards are abundant in Atwater due to the agro-centric nature of the local economy. Grass lands, grazing lands, grain fields and other crop production produce thousands of tons of dry fuels which burn readily in dry summer months. This, coupled with high winds and multiple highways, puts Atwater at higher risk for vegetation and debris fires. Unfortunately, many of these fires have been known to spread into nearby structures and other outbuildings, costing citizens both time and money. The Fire Marshall leads the charge against these types of fires by implementing an aggressive fire hazard abatement program each spring and continues to urge fire safety throughout the year. Our Fire Marshall trains and assists the fire department’s engine company officers to complete hundreds of inspections each year. This process is on-going and ever changing as weather, conditions, development, and new mandates are implemented. It is through this unit that notices get sent to property owners regarding possible fire hazards on their property. Complaints are received and followed up by numerous City departments in a spirit of cooperation and team work. At the end of the process, most of the cases get excellent results because of education, cooperation, great customer service and follow through.

Fire Hazard Abatement Inspection Infractions 215

• Tall Standing Dead Grass 206 • Debris Against Structure 3 • Ladder Fuel Separation 4 • Debris or Vegetation Blocking Access Way* 2

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Miscellaneous Department Projects

Fire and Life Safety Education hours ................................. 42 Fire Safety Demonstration hours .......................................... 9 Fireworks Booth Inspections .............................................. 14 Public Safety Meetings ...................................................... 10 City Council Meetings......................................................... 51 School Inspections ............................................................. 31 Training Hours................................................................ 1221 Training Hours................................................................ 1855 Total Hours ....................................................................3233

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Training Reserve Firefighter Training:

Within the first month after employment, the Reserve Firefighter must complete the following courses and certification that will be provided by Atwater City Fire Department paid personnel:

• First Responder Medical with CPR and AED certification. • CSTI Hazmat First Responder Operations (FRO) certification • Confined Space Awareness certification. • Equal Employment Opportunity Course (EEO)

Certificates of completion of the above must be provided to the Human Resources Department. The Reserve Firefighter must also complete the Atwater City Fire Department Fire Year Reserve Firefighter Task Book within (1) year of employment. CAL FIRE Career Professional Training:

• Supervision 2 • CAL FIRE Firefighter Academy • Incident Management 2 • Aircraft Rescue Firefighting Part.139 Training Burn • CAL FIRE Company Officer Academy • Rosenbauer T-Rex Truck Operations • MMU Truck Operations • Demob Unit Leader • Resource Unit Leader • CSFM Regional Instructor Orientation • CSFM Truck Operator • CSFM Ethics and Leadership

• A total of 3 CAL FIRE / Atwater Fire Department Fire, Fire Apparatus

Engineers successfully met and completed their 3-year Joint Apprentice Committee training requirement

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Training Courses

Atwater Fire Training hosted 13 courses including State Fire Marshal, California Specialized Training Institute and National Wildfire Coordinating Group training courses throughout 2018. Hosting these courses in Atwater allows for firefighters from Atwater Fire Department and neighboring agencies to learn new skills and meet Joint Apprentice Committee training requirements resulting in improved levels of service and a significant cost savings to the Department. The courses included the following:

• CSTI Hazmat FRO (16 Hr) • CSFM Auto Extrication (24 Hr) • CSFM Firefighter Safety and Survival (16 Hr) • CSFM Confined Space Awareness (8hrs) • CSFM Fire Control 1 • CSFM Fire Control 2 • CSFM Truck Operations • MMU Truck Operations • Atwater City Firefighter Reserve Academy • ICS 100 • ICS 200 • CAL FIRE CPR and AED

o Total Students: 203

o Total Hours: 272

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Atwater City Measure H Fund

93%

7%

Measure H Revenue FY 16-17

$1,914,158.00

PoliceMeasure H$1,781,242.00

Fire MeasureH$132,916.00

95%

5%

Measure H Revenue FY 17-18

$1,807,326.00

PoliceMeasure H$1,719,410.00

FireMeasure H$87,916.00

71%

29%

Measure H Revenue FY 18-19 $1,935,456.00

Police Measure H$1,377,540.00

Fire Measure H $557,916.00