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HomeMy WebLinkAbout04 FISCAL YEAR 2024-2025 AUDIT REPORTSDocusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 4 Agenda Item Reviewed: AGENDA REPORT City Manager afs Finance Director ^� MEETING DATE: TO: FROM: SUBJECT: SUMMARY: FEBRUARY 17, 2026 ALDO E. SCHINDER, CITY MANAGER JENNIFER KING, FINANCE DIRECTOR/CITY TREASURER FISCAL YEAR 2024-2025 AUDIT REPORTS The financial statement audit for the 2024-2025 fiscal year has been completed by Davis Farr LLP, an independent Certified Public Accountant firm. The audit received an "unmodified", or clean opinion from the auditors indicating that the City's financial statements for the fiscal year are presented fairly. Davis Farr LLP discussed the results of the audit with the Audit Commission on January 22, 2026. RECOMMENDATION: It is recommended that the City Council receive and file the fiscal year 2024-2025 audit reports. FISCAL IMPACT: The total contractual cost of the annual audit with Davis Farr LLP is $46,240 and has been incorporated in the current year budget. Of this amount, $9,248 is charged to the Water Enterprise Fund, and $36,992 is charged to the General Fund. CORRELATION TO THE STRATEGIC PLAN: The recommendation correlates to the strategic plan by implementing Goal C, sustain long- term financial strength with adequate reserves and enhanced capacity to provide a sustainable level of City services. Specifically, the annual audit confirms that the City has implemented sound financial practices and ensured appropriate accounting of public funds. BACKGROUND AND DISCUSSION: The City's financial statements reflect the results of the budgetary process and strategic decisions made and implemented during the fiscal year. It is important to note that certain funds are consolidated in the audited Annual Comprehensive Financial Report (ACFR). Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 City Council Agenda Report Fiscal Year 2024-2025 Audit Reports February 17, 2026 Page 2of3 For example, the General Fund includes amounts associated with the Land Proceeds Fund, Backbone Fee Fund, and other funds that are not permitted to be reported as separate funds for financial statement reporting purposes. Total General Fund revenues excluding transfers -in and the Navy North Hangar fire incident, amounted to approximately $116 million, which reflects an increase of $23 million (25%) compared to prior year revenues. The increases in General Fund revenues were largely attributed to two one-time development related revenues: $16.8 million in profit participation revenue and $5 million in backbone infrastructure development impact fee. Total General Fund expenditures amounted to approximately $110 million excluding transfers -out and the Navy North Hangar fire incident, an increase of $5.6 million (5%) compared to prior year. This increase was primarily related to labor obligations, increased public service demands, and inflation adjustments. In November 2023, the City entered into a Cooperative Agreement with the Department of Navy for the Navy -owned North Hangar fire incident responses. The Agreement has been amended several times with the last amendment providing up to $105.8 million for fire incident related responses. As of December 31, 2025, the City has invoiced the Navy $104 million for expenses related to emergency and clean-up responses. The Navy has reimbursed the City $84 million with the remaining balance to be reimbursed in the coming year. The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its ACFR for the fiscal year ended June 30, 2024. This was the 38t" consecutive year that the City received this prestigious award, which is the highest form of recognition in the area of governmental accounting and financial reporting. The award is valid for a period of one year only. Staff believes the current ACFR for the fiscal year ended June 30, 2025 continues to meet the award program's requirements and was submitted again to GFOA upon completion of the audit. In addition to the Independent Auditor's Report, the auditors issued a separate letter on matters that are required to be communicated in connection with the audit. This letter, referred to as the "Required Audit Communications", outlines the scope of the audit, significant estimates, and other matters, including corrected material misstatements. The letter indicated that there was one corrected misstatement related to the property classification of a $10 million federal grant used by the Orange County Water District (OCWD) to partially fund the construction of the City's Main Street Per- and Polyfluoroalkyl Substances (PFAS) Treatment Plant. The City of Tustin and OCWD entered into an agreement for the Main Street PFAS Plant in 2020, prior to this federal grant being awarded. Under the 2020 agreement, all work for the Main Street Plant, including any grant funded portions, were to be performed by OCWD. The grant proceeds Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 City Council Agenda Report Fiscal Year 2024-2025 Audit Reports February 17, 2026 Page 3of3 were disbursed to OCWD upon receiving from the State of California. Accounting standards require the grant revenue to be classified as federal grant revenue rather than capital contributions. This corrected misstatement has no impact on the City's ability to receive future grants. Davis Farr LLP discussed the results of the audit with the Audit Commission on January 22, 2026. YJAW4r 64 Jennifer King Finance Director/City Treasurer Attachments: 1. Annual Comprehensive Financial Report (ACFR) 2. Report on Appropriations Limit Calculation 3. Report on Compliance Applicable to the Air Quality Improvement Fund 4. Required Audit Communications w 1 :h ASMj: ANNUAL COMPREHENSIVE FINANCIAL REPORT JUNE 30, 2025 CITY OF TUSTIN, CALIFORNIA Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 The page left blank intentionally Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 CITY OF TUSTIN, CALIFORNIA ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2025 Prepared By: Finance Department Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 The page left blank intentionally Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Annual Comprehensive Financial Report For the Year Ended June 30, 2025 Table of Contents Page Number INTRODUCTORY SECTION: Elected and Administrative Officials i Letter of Transmittal iii Organization Chart xiv GFOA Certificate of Achievement for Excellence in Financial Reporting xv FINANCIAL SECTION: Independent Auditor's Report 1 Management's Discussion and Analysis (Required Supplementary Information - Unaudited) 4 Basic Financial Statements: Government -wide Financial Statements: Statement of Net Position 20 Statement of Activities 21 Fund Financial Statements: Governmental Funds: Balance Sheet 23 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position 24 Statement of Revenues, Expenditures and Changes in Fund Balances 25 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 26 Proprietary Fund: Statement of Net Position 27 Statement of Revenues, Expenses and Changes in Net Position 28 Statement of Cash Flows 29 Fiduciary Funds: Statement of Fiduciary Net Position 31 Statement of Changes in Fiduciary Net Position 32 Notes to Basic Financial Statements 33 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Annual Comprehensive Financial Report For the Year Ended June 30, 2025 Table of Contents Page Number REQUIRED SUPPLEMENTARY INFORMATION: Safety Plan: Schedule of Proportionate Share of the Net Pension Liability 91 Schedule of Contributions 93 Miscellaneous Plan: Schedule of Changes in the Net Pension Liability and Related Ratios 95 Schedule of Contributions 97 Other Post -Employment Benefit Plan (OPEB): Schedule of Changes in the Net OPEB Liability and Related Ratios 99 Schedule of Contributions - OPEB 100 Annual Money -Weighted Rate of Return on Investments 101 Budgetary Comparison Schedules: General Fund 102 Housing Authority Special Revenue Fund 103 Note to Required Supplementary Information 104 SUPPLEMENTARY INFORMATION: Other Governmental Funds: Description of Special Revenue Funds 105 Description of Capital Projects Funds 107 Combining Balance Sheet 108 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 110 Schedules of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual: Gas Tax Special Revenue Fund 112 Community Development Block Grant (CDBG) Fund 113 Asset Forfeiture Special Revenue Fund 114 Air Quality Special Revenue Fund 115 Supplemental Law Enforcement Special Revenue Fund 116 American Rescue Plan Act (ARPA) Special Revenue Fund 117 Special Tax B Special Revenue Fund 118 Road Maintenance and Rehabilitation Special Revenue Fund 119 Voluntary Workforce Housing Incentive Special Revenue Fund 120 Solid Waste Special Revenue Fund 121 Park Acquisition and Development Special Revenue Fund 122 Measure M Special Revenue Fund 123 Cable PEG Special Revenue Fund 124 Landscape Lighting Special Revenue Fund 125 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Annual Comprehensive Financial Report For the Year Ended June 30, 2025 Table of Contents Page Number Custodial Funds: Combining Statement of Fiduciary Net Position — Custodial Funds 126 Combining Statement of Changes in Fiduciary Net Position — Custodial Funds 127 STATISTICAL SECTION (UNAUDITED): Description of Statistical Section Contents 128 Financial Trends: Net Position by Component - Last Ten Fiscal Years 129 Changes in Net Position - Expenses and Program Revenues - Last Ten Fiscal Years 131 Changes in Net Position - General Revenues - Last Ten Fiscal Years 133 Fund Balances of Governmental Funds - Last Ten Fiscal Years 135 Changes in Fund Balances of Governmental Funds - Last Ten Fiscal Years 137 Revenue Capacity: Taxable Sales by Category - Last Ten Calendar Years 139 Tax Revenue by Source - Governmental Activities 141 Direct and Overlapping Sales Tax Rates - Last Ten Fiscal Years 142 Assessed Value and Estimated Actual Values of Taxable Property - Last Ten Fiscal Years 143 Direct and Overlapping Property Tax Rates - Last Ten Fiscal Years 145 Principal Property Taxpayers - Current Year and Nine Years Ago 147 Property Tax Levies and Collections - Last Ten Fiscal Years 148 Debt Capacity: Ratios of Outstanding Debt by Type - Last Ten Fiscal Years 149 Overlapping Debt Schedule 151 Legal Debt Margin Information - Last Ten Fiscal Years 152 Pledged -Revenue Coverage - Last Ten Fiscal Years 154 Demographic and Economic Information: Demographic and Economic Statistics - Last Ten Calendar Years 155 Principal Employers - Current Year and Nine Years Ago 156 Operating Information: Full -Time City Employees by Function - Last Ten Fiscal Years 157 Capital Asset Statistics by Function - Last Ten Fiscal Years 158 Water District Schedules for Revenue Capacity: Water Consumption by Customer Type - Last Ten Fiscal Years 159 Water Rates - Last Ten Fiscal Years 161 Water Customers - Current Year and Nine Years Ago 162 Operating Indicators by Function — last Ten Fiscal Years 163 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 The page left blank intentionally MAIN STREET PFAS TREATMENT FACILITY INTRODUCTORY SECTION wo Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 The page left blank intentionally Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 The page left blank intentionally Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 CITY OF TUSTIN Elected and Administrative Officials As of June 30, 2025 AUSTIN LUMSARD Mayor RYAN GALLAGHER Councilmember JOHN NIELSEN Mayor Pro Tem LEE K. FINK Councilmember AUDIT COMMISSION John Wende, Chair Lillyan Chandler, Chair Pro Tern Daniel Erickson Adrian Henson Michael Zwissler RAY SCHNELL Councilmember Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 CITY MANAGER Aldo E. Schindler ASSISTANT CITY MANAGER Nicole Bernard David E. Kendig City Attorney Brian Moncrief Deputy City Manager, Real Property Justina Willkom Director, Community Development Jennifer King Director, Finance / City Treasurer Erica N. Yasuda City Clerk Sean Thuilliez Chief of Police Derick Yasuda Director, Human Resources Chad Clanton Director, Parks & Recreation Services Michael Grisso Director, Public Works Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 The page left blank intentionally Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 FINANCE DEPARTMENT Remembering what connects us. December 22, 2025 It is our pleasure to submit the Annual Comprehensive Financial Report (ACFR) of the City of Tustin for the fiscal year ended June 30, 2025. These statements have been prepared in conformity with generally accepted accounting principles (GAAP) as promulgated by the Government Accounting Standards Board (GASB). This report consists of management's representations concerning the finances of the City of Tustin. Responsibility for the accuracy and completeness of the data presented, including all disclosures, rests with management. To provide a reasonable basis for making these representations and assurance that the financial statements will be free from material misstatements, management has established a comprehensive internal control framework that is designed both to protect the government's assets from loss, theft, or misuse, and to compile sufficient reliable information for the preparation of the financial statements in conformity with GAAP. As the cost of internal control should not outweigh their benefits, the City's comprehensive framework of internal controls has been designed to provide reasonable, rather than an absolute assurance that the financial statements will be free from material misstatements. The City of Tustin's financial statements for the year ended June 30, 2025, have been audited by Davis Farr LLP, an independent public accounting firm of licensed certified public accountants. The goal of the audit was to provide reasonable assurance that the financial statements of the City of Tustin for the fiscal year ended June 30, 2025, were 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. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion that the City of Tustin's financial statements for the fiscal year ended June 30, 2025, 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. 300 Centennial Way, Tustin, CA 92780 • 714-573-3060 • tustinca.org Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 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 the MD&A and should be read in conjunction with it. The City of Tustin's MD&A can be found immediately following the report of the independent auditors in the financial section of the ACFR. PROFILE OF THE CITY OF TUSTIN The City of Tustin is in the central part of Orange County, about forty miles southeast of Los Angeles and eighty miles north of San Diego, at the intersection of the 5 and 55 Freeways. Tustin covers over eleven square miles adjacent to the cities of Orange, Santa Ana, and Irvine. The State of California Department of Finance has estimated the City's population at 79,326 as of January 1, 2025, a slight decrease of about 0.2% from 2024. Over half of the cities in Orange County showed minor decreases in population, with the County of Orange's total population increasing by 0.2%. The California statewide population grew by 0.3% for a second consecutive year-to-year increase since 2020, which is largely attributable to natural increase (net result of births minus deaths). The City was incorporated underthe General Laws of the State of California in 1927 and is governed by a five -member elected City Council. The CounciVAdministrator form of city government was adopted in 1965 and modified to the Council/City Manager form in 1981. Council members served staggered, four-year terms, with a two -consecutive - term limit. In 2021, the City code was amended to implement by -district elections for four council members and established the Office of the Mayor to be elected at -large starting in November 2022. Effectively December 3, 2024, the City code was also amended to allow all council members including the Mayor to serve three consecutive four-year terms or 12 consecutive years, whichever is less. The City Manager is appointed by the City Council to carry out the policies and directions of the City Council, oversee the day-to-day operations of the City, and appoint department directors. Tustin is a full -service City. The services provided by the City include police, street and park maintenance, water, recreation, traffic and transportation, public improvements, 300 Centennial Way, Tustin, CA 92780 • 714-573-3060 • tustinca.org iv Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 economic development, planning, zoning, and general administrative services. The City contracts with the Orange County Fire Authority for fire suppression and emergency medical services. Also included in the City's overall operations are the Tustin Public Financing Authority, Tustin Financing Authority, and Tustin Housing Authority. The activities of all three entities are included in these financial statements. Additional information for the Tustin Public Financing Authority, Tustin Financing Authority, and Tustin Housing Authority is available in Note 1 of the Notes to Basic Financial Statements. BUDGET DEVELOPMENT AND MONITORING The key element of the City's financial management process is the development and approval of the biennial budget. The two-year budget serves as the foundation for the City's financial planning and control, which allows the Council to prioritize expenditures and focus on programs essential to our community. Additionally, the Council adopts a second -year update to the biennial budget. As part of the budget development, the City Council conducts various public workshops on the proposed budget and adopts the budget at a public meeting. Budget documents are available on the City website at www.tustinca.org. Budgetary control is at the fund level. The City Manager is authorized to transfer appropriations within a fund between various programs and/or departments as long as the transfers do not result in an increase in the fund's approved appropriations. ECONOMIC OUTLOOK As year 2025 coming to a close, national economic indicators continue to show decent economic growth with the real gross domestic product (GDP) increasing at an annual rate of 3.8 percent in the second quarter of 2025. Consumer spending has remained resilient, even among concerns over inflation, cost of living, and high interest rates. The pace of inflation has mostly returned to normal, but the price level continues to stay elevated. The labor market has clearly cooled down compared to 2024 with businesses pausing hiring until greater financial stability emerges. California's unemployment rate inched up to 5.5% in August 2025, above the national rate of 4.3%. In response to 300 Centennial Way, Tustin, CA 92780 • 714-573-3060 • tustinca.org v Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 several downward revisions of the employment data in recent months, the Federal Open Market Committee (FOMC) has lowered the federal funds rate three times in the last six months. These actions aim to stabilize the labor market while balancing inflationary concerns. The U.S. economy is projected to grow at an even pace of two percent in the next two year. The City's biennial budget reflects the objectives of a 10-year Fiscal Sustainability Strategy, which is designed to maintain a strong financial foundation and support sustainable growth. Specific goals include: • Increase the General Fund's recurring revenue by advancing the development of City -owned properties; • Decrease the General Fund's recurring expenses, including analysis to explore new pension paydown strategies; • Maintain a health reserve of 15% to 20% of the General Fund's annual operating expenditures; and • Sustain service levels to meet community needs through thoughtful uses of non- recurring revenues. Year one of the City's biennial budget projects an increase of $2 million in General Fund revenues in fiscal year 2025-2026 as compared to the amendment budget from fiscal year 2024-2025, excluding the Navy North Hangar Fire incident responses. The budgeted revenues include a near -term growth rate of 1% to 2% in sales tax receipts and a steady 3% to 4% increase in property tax revenue. When comparing with fiscal year 2018-2019 pre -pandemic level, total local sales tax revenue has grown by 42%, with categories such as autos and transportation as well as the state and county pools Leading the way. Activities for the City's top three General Fund revenue sources are briefly described below: • Sales tax revenue is the General Fund's largest revenue source. While general consumer spending continues to be stable in the short-term forecast, concerns over inflationary adjustment and uptick in unemployment remain. Sales tax revenue is projected to increase by just over 1% statewide in 2025-2026 and under 3% statewide by 2026-2027. 300 Centennial Way, Tustin, CA 92780 • 714-573-3060 • tustinca.org vi Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 • Property tax revenue is the General Fund's second largest revenue source. This revenue is estimated to increase by 3% to 4% per year due to projected increases in assessed property valuations primarily from the annual 2% CPI adjustment and ownership changes. • Transfers and reimbursements are largely related to specific operating expenditures incurred and paid for by the General Fund. They are eligible to be funded from other restricted or designated funding sources. Some examples of the reimbursements include service tax collected from the Tustin Legacy area to support public services; and staffing costs specifically for Legacy area development. The other budgeted transfer is to maintain the General Fund's reserve at a level set by the City Council. The General Fund expenditures are projected to increase by $9 million over the fiscal year 2024-2025 amended budget. Major factors impacting the General Fund are contractually obligated salary increases; higher annual required contributions toward the City's pension obligations; inflation adjustments in most supply and service contracts, including fire, animal services, and professional services; and funding for the Tustin Temporary Emergency Shelter. Additionally, the General Fund provides funding for capital projects such as the Police Department's locker room remodel and replacement of its body -worn and in -car cameras. These increases are partially funded from the General Fund's reserves. MAJOR ECONOMIC DEVELOPMENTS Tustin Legacy Development at Tustin Legacy, the City's newest community, continues to move forward. Staff is monitoring the costs of providing public services and maintaining facilities including streets, sidewalks, and parks; these items are largely funded by service taxes tied to Community Facilities Districts (CFDs). A significant amount of development has occurred to date, including major regional and local infrastructure, residential neighborhoods, shopping centers, parks, and institutional uses. While there 300 Centennial Way, Tustin, CA 92780 • 714-573-3060 • tustinca.org vii Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 is still a substantial amount of infrastructure to install and remaining land to develop, some major projects are underway or nearing completion, including: • Irvine Company at Tustin Legacy — The proposed project envisions 1,336 new apartment homes within Tustin Legacy, complemented by a 0.66-acre public park, landscaped open spaces, and inviting community amenities that connect seamlessly with nearby developments. Six contemporary "wrap" buildings, four to five stories tall, will feature integrated parking garages screened from view. The plan includes approximately 1,956 access -controlled parking spaces for residents and guests. Homes will offer a mix of one-, two-, and three -bedroom layouts ranging from 592 to 1,513 square feet, including 334 affordable units and four manager residences in Buildings 5 and 6. Designed for walkability and community connection, the project links to Tustin Legacy's nearby retail, dining, and recreational destinations through a series of tree -lined promenades. With its blend of high -quality architecture, lush Landscaping, and public amenities, such as a cafe, paseos, and park space, the development brings Tustin's long-term vision for vibrant, inclusive living to life. This project was approved in February 2025, and plans are currently under review by City Staff. Construction is anticipated to begin in early 2026. • Residences at The District - The proposed project introduces 800 new residential units across two phases within Tustin Legacy. Phase 1 includes 450 for -rent apartments on a 5.63-acre site, featuring a five -story, 426,727-square-foot building with outdoor and rooftop amenities. Approximately 730 parking spaces are planned to serve residents and guests, and 5% of the units will be reserved for very low-income households. This phase requires a Specific Plan Amendment to rezone the site from Commercial to Mixed -Use Urban, along with Design Review and a Development Agreement. Phase 2 will proceed under a separate design review. The project remains in the entitlement review stage and is not yet scheduled for public hearings. 300 Centennial Way, Tustin, CA 92780 • 714-573-3060 • tustinca.org Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 • Clearwater Living at Tustin Legacy - A new proposal envisions two buildings designed to serve Tustin's growing senior community. Building 1 would feature 168 age -restricted active adult units, including 26 designated for low-income residents. Building 2 would include 74 assisted living units and 28 memory care units, totaling 102 residences tailored for seniors requiring various levels of care and support. The project remains in the entitlement review phase and is not yet scheduled for public hearings. This development aims to expand housing choices for older adults - offering independent, assisted, and memory care living options within a thoughtfully designed community setting. • Advantech North America Campus — The Advantech North America Campus will establish a state-of-the-art headquarters within Tustin Legacy's Advanced Technology Education Park (ATEP). The 10-acre site, located at the southeast corner of Red Hill Avenue and Victory Road, includes a six -story office building, a two-story warehouse facility, 381 parking spaces, and over 111,000 square feet of landscaped open space. Approved in October 2023, the project is now under construction and anticipated for completion in mid-2026. Once finished, the campus will bring high-tech innovation, modern design, and new employment opportunities to the Tustin Legacy area. Central Tustin • The Jessup — In January 2023, the City Council approved Intracorp Homes' proposal to develop The Jessup, a modern residential community at 17802 and 17842 Irvine Boulevard. The project replaced two existing two-story office buildings with 40 three-story homes, including 18 duplexes (36 units) and four single-family residences. Each unit features a fully enclosed two -car garage (80 total stalls), complemented by 10 uncovered guest parking spaces. Two of the homes are reserved for very low-income households, expanding Tustin's commitment to housing diversity. Construction is now complete, marking the successful transformation of a former office site into a thoughtfully designed neighborhood within the heart of Tustin. 300 Centennial Way, Tustin, CA 92780 • 714-573-3060 • tustinca.org ix Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 • Cypress Grove - A new proposal seeks to transform the site at 17852 17th Street by demolishing five existing office buildings and constructing 145 for -sale, market -rate condominiums. The project features 62 single-family detached cluster homes and 83 single-family attached townhomes, complemented by upgrades to traffic signals, bike infrastructure, utility connections, and other public improvements. The project was approved by the Planning Commission and recommended to the City Council in November 2025. The City Council held a public hearing in December 2025 and approved the proposal as recommended. • Stafford Glen — Approved by the City Council on November 21, 2023, the KB Homes project at 14042 Newport Avenue introduces a modern blend of live/work and residential condominiums designed to enhance flexibility and community connection. The development features 42 total units across six buildings, 35 residential condominiums and 7 live/work units, with 2 homes reserved for very Low-income families. Each unit includes an enclosed two -car garage and private open space, complemented by 17 guest parking spaces, landscaped common areas, and a public amenity space fronting El Camino Real. Construction is nearing completion, and residents are expected to begin moving in soon. • Compass at Red Hill — In June 2025, The City Council approved a proposal to construct 73 three-story townhomes on a 3.39-acre site, offering a mix of spacious, modern homes ranging from 1,215 to 1,719 square feet. Four of the units will be reserved for very low-income households. As of August 2025, the project team is preparing to begin the plan check process, with grading expected to start soon. Once complete, this new community will bring thoughtfully designed, high -quality housing to Tustin, enhancing the Red Hill Corridor, and expanding residential options for future homeowners. Affordable Housing • Tustin Heritage Project — The Tustin Heritage Project is an 8,700-square-foot, three-story development featuring eight rental units designed for lower -income families. Located at 1852 San Juan Street, the project received City Council 300 Centennial Way, Tustin, CA 92780 • 714-573-3060 • tustinca.org x Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 approval on May 6, 2025, marking a milestone in the City's ongoing efforts to expand affordable housing options. Funded through the City of Tustin's Inclusionary Housing Fee Grant Program, the development was made possible through a strong partnership with local nonprofit Families Forward. The project was recognized for its collaborative success and lasting community impact in providing safe, supportive housing for families in need. Ideally located near schools, grocery stores, and retail centers, the Tustin Heritage Project keeps residents connected to daily essentials. On -site services, including case management, career counseling, and financial literacy courses, further empower families toward stability and long-term growth. CAPITAL PROJECT ACCOMPLISHMENTS AND FUTURE PROJECTS Major capital improvement projects completed during fiscal year 2025 include the following: • Park Facilities o Legacy Dog Park (Bark Barrack) o Centennial Park Renovation • Public Facilities o Community Center Roof Replacement o Police Facility Improvements • Transportation Facilities o Red Hill Avenue Rehabilitation o Annual Roadway and Pavement Maintenance Program • Water Utilities o Main Street PFAS (per -and polyfluoroalkyl substance) Treatment Plant o Beneta Well Improvements The City's capital projects for fiscal year 2025-2026 are budgeted at $57.8 million. The budget reflects capital improvement projects funded by Tustin Legacy Backbone 300 Centennial Way, Tustin, CA 92780 • 714-573-3060 • tustinca.org A Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 Infrastructure Fees and proceeds from sale of land at the Tustin Legacy. Other funding sources for the capital projects include the General Fund, water revenues, Gas Tax, state grant for parks, Measure M2 transportation funds, and State Road Maintenance and Rehabilitation funds (RMRA). Major capital projects for fiscal year 2025-2026 include: • Public Facilities o Civic Center Alternate Power Source Improvements o Columbus Tustin Gym HVAC Replacement o Facility Improvements at the Police Department, Senior Center, and City Hall • Park Facilities o Tustin Legacy Linear Park o Tustin Legacy Park o Heideman School Park o Tustin Sports Park Diamonds and Turf Renovation o Camino Real Park Playground Renovation • Traffic Facilities o Main Street Improvements o Neighborhood D-South Infrastructure Construction — Phase 2 o Neighborhood G Phase 1 o Armstrong Pedestrian Bridge • Transportation Facilities o Annual Roadway Maintenance and Public Infrastructure Maintenance Program o Old Town Improvements o Jamboree Road Rehabilitation AWARDS The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Tustin for its Annual Comprehensive Financial Report (ACFR) for the fiscal year ended June 30, 2024. This was the thirty-eighth (38) consecutive year that Tustin has achieved this prestigious award. To be awarded a Certificate of Achievement, a municipality must 300 Centennial Way, Tustin, CA 92780 • 714-573-3060 • tustinca.org xii Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 publish an easily readable and efficiently organized annual comprehensive financial report. This report must satisfy both generally accepted accounting principles and applicabte legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current annual comprehensive financial report continues to meet the Certificate of Achievement Program's requirements, and we are submitting it to GFOA to determine its eligibility for another certificate. ACKNOWLEDGMENTS The preparation of this report would not have been possible without the efficient and dedicated services of the entire staff of the Finance Department as well as other City departments. Credit must atso be given to the City Council for their exceptional support and commitment to maintaining the highest standards of professionalism in the management of the City's finances, and finally, to the City's auditing firm of Davis Farr LLP for their professional assistance. Respectfully submitted, Aldo E. Schindler City Manager Jennifer King Finance Director/City Treasurer 300 Centennial Way, Tustin, CA 92780 • 714-573-3060 • tustinca.org Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 The page left blank intentionally Citizens of Tusin Police Mayor City Council City Manager Human Resources ff M Coordination Cooperation Private . Special Utilities Districs Finance MM City Attorney Parks & public Works Community Recreation 0 E Development Contract Services City Clerk Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Tustin California For its Annual Comprehensive Financial Report For the Fiscal Year Ended June 30, 2024 Executive Director/CEO xv PEPPERTREE PARK INDEPENDENT AUDITOR'S REPORT I I *07M off I Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 The page left blank intentionally Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 DavisFa r r CERTIFIED PUBLIC ACCOUNTANTS Davis Farr LLP 18201 Von Korman Avenue I Suite 1100 1 Irvine, CA 92612 Main: 949.474.2020 1 Fax: 949.263.5520 Independent Auditor's Report Honorable Mayor and Members of City Council City of Tustin Tustin, California Report on the Audit of the Financial Statements Opinions We have audited the financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City of Tustin, California, as of and for the year June 30, 2025, and the related notes to the financial statements, which collectively comprise the City of Tustin's basic financial statements as listed in the table of contents. In our opinion, the accompanying financial statements present fairly, in all material respects, the respective financial position of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City of Tustin, California, as of June 30, 2025, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City of Tustin, California, and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Emphasis of Matter As described further in Notes 1 and 21 to the financial statements, during the year ended June 30, 2025, the City implemented Governmental Accounting Standards Board (GASB) Statement No. 101, Compensated Absences. As a result, the beginning net position has been restated. Our opinions are not modified with respect to this matter. Responsibilities of Management for the Financial Statements The City of Tustin's management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City of Tustin's ability to continue as a going concern for one year after the date that the financial statements are issued. Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with GAAS, we: • Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City of Tustin's internal control. Accordingly, no such opinion is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. • Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City of Tustin's ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control -related matters that we identified during the audit. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis, budgetary comparison information for the General Fund and each major special revenue fund, Schedule of Proportionate Share of the Net Pension Liability - Safety Plan, Schedule of Contributions - Safety Plan, Schedule of Changes in the Net Pension Liability and Related Ratios - Miscellaneous Plan, Schedule of Contributions - Miscellaneous Plan, Schedule of Changes in the Net OPEB Liability and Related Ratios, Schedule of Contributions - OPEB, and the Annual Money -Weighted Rate of Return on Investments be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with 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 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Tustin's basic financial statements. The combining and individual nonmajor fund financial statements and schedules 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 and schedules, are the responsibility of management and were derived from and relate 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 and schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Information Management is responsible for the other information included in the Annual Comprehensive Financial Report. The other information comprises the introductory section and statistical section but does not include the financial statements and our auditor's report thereon. Our opinions on the financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report December 22, 2025 on our consideration of the City of Tustin's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City of Tustin's internal control over financial reporting and compliance. Irvine, California December 22, 2025 3 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 The page left blank intentionally FLIGHTATTUSTIN MANAGEMENT'S DISCUSSION AND ANALYSIS SAT. DRINK, HFAC. -TV Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 The page left blank intentionally Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 CITY OF TUSTIN Management's Discussion and Analysis (Unaudited) June 30, 2025 As management of the City of Tustin, California (City), we offer readers of the City of Tustin's financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2025. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found in the introductory section of this report, and with the City's financial statements. Financial Highlights • As of June 30, 2025, the City's assets and deferred outflows of resources exceeded its liabilities and deferred inflows of resources by $855.3 million (net position). The net position includes $598.8 million invested in capital assets, $57.3 million in restricted net position, and $199.2 million in unrestricted net position. • The City's total net position increased by $32.4 million during the fiscal year ended June 30, 2025. Governmental activities accounted for an increase of $20.2 million, while business -type activity increased by $12.2 million. • In governmental activities, the City recognized two one-time development -related revenues during the fiscal year: a profit -participation payment of $16.8 million and a backbone impact fee of $5 million. • Net position for business -type activity increased primarily due to a one-time $10 million federal grant and a $2.2 million asset contribution from Orange County Water District (OCWD), both of which were related to a per -and polyfluoroalkyl substance (PFAS) treatment plant. • Since November 2023, the City has performed emergency cleanup and related activities under a cooperative agreement with the U.S. Navy following the fire that destroyed the Navy -owned Tustin North Hangar. To date, the City has incurred $104.7 million in related expenditures, including $32.9 million during fiscal year 2024-2025. The City has received $79.4 million in reimbursements from the Navy, of which $42.8 million was received in the current fiscal year. The City anticipates receiving the remaining reimbursements in the upcoming fiscal year. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City's basic financial statements. The City's basic financial statements consist of three components: 1) government -wide financial statements, 2) fund financial statements, and 3) notes to the basic financial statements. This report also contains the required supplementary and other supplementary information in addition to the basic financial statements themselves. 11 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 CITY OF TUSTIN Management's Discussion and Analysis (Unaudited) June 30, 2025 Overview of the Financial Statements (Continued) The government -wide financial statements are designed to provide readers with a broad overview of the City's finance, in a manner similar to a private -sector business. The statement of net position presents information on all of the City's assets and liabilities and deferred inflows/outflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The statement of activities presents information showing how the government's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). Government -wide financial statements distinguish City governmental activities that are principally supported by taxes and intergovernmental revenues from other business -type activities that are intended to recover all or a significant portion of their costs through user fees and charges. Governmental activities of the City and its three blended component units, the Tustin Housing Authority, Tustin Public Financing Authority, and Tustin Financing Authority, cover general government, public safety, community services, and public works functions. Business -type activity of the City is the water utility services. The government -wide financial statements can be found immediately following this discussion and analysis. 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 funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. 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, the 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. E Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 CITY OF TUSTIN Management's Discussion and Analysis (Unaudited) June 30, 2025 Fund Financial Statements (Continued) Because the focus of governmental funds 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 statements. By doing so, readers may better understand the long-term impact of the government's near -term financing decisions. Both the Governmental Funds Balance Sheet and the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains various individual governmental funds organized by their type (special revenue and capital projects funds). Information is presented separately in the Governmental Funds Balance Sheet and in the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances. The General Fund and Housing Authority Special Revenue Fund are considered to be major funds. Data from other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements elsewhere in this report. The City adopts a biennial budget for its General Fund and the Special Revenue Funds. Budgetary comparison schedules have been provided to demonstrate compliance with this budget requirement elsewhere in this report. The governmental funds financial statements can be found immediately following the government - wide financial statements. Proprietary funds. The City of Tustin maintains one type of proprietary (Enterprise) fund. This enterprise fund is used to report the same functions presented as business -type activities in the government -wide financial statements. The City uses an enterprise fund to account for its water utility services. The proprietary fund financial statements can be found immediately following the governmental funds financial statements. Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government -wide financial statements because the resources of those funds are not available to support the City's own programs. The City utilizes a private -purpose trust fund to account for the assets, liabilities, and activities of the Successor Agency. The Successor Agency was created on February 1, 2012 with the dissolution of the Tustin Community Redevelopment Agency. M Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 CITY OF TUSTIN Management's Discussion and Analysis (Unaudited) June 30, 2025 Fund Financial Statements (Continued) The second fiduciary fund is the Other Post -Employment Benefit (OPEB) Trust Fund, which is used to account for the assets in Section 115 trust with the Public Agency Retirement Services (PARS) for pre - funding the City's OPEB obligations. The City Council approved the establishment of the trust in April 2017, and the City has made several deposits to the trust since its inception. The third fiduciary fund is a custodial fund used to accountfor the assets of Community Facilities Districts (CFDs) 04-1, 07-1, 06-1, and 2014-1. In June 2025, bonds originally issued for CFDs 06-1 and 2014-1 were refinanced through the issuance of the Series 2025 bonds. The fiduciary fund financial statements are presented immediately following the proprietary fund financial statements. Notes to the Basic Financial Statements The notes to the basic financial statements 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 immediately following the fiduciary funds financial statements. Other Information In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information, which includes the Budgetary Comparison Schedules for the General Fund and one other major fund, as well as schedules of funding progress for the City's defined benefit pension plans and other post -employment healthcare benefits (OPEB) plan. The required supplementary information can be found immediately following the notes to the basic financial statements. The combining statements referred to earlier in connection with nonmajor governmental funds are presented for all nonmajor Special Revenue Funds and nonmajor Capital Projects Funds. These combining and individual fund statements and schedules can be found immediately following the required supplementary information. Government -wide Financial Analysis The government -wide financial statements provide long-term and short-term information about the City's overallfinancial condition. This analysis addresses the financial statements of the City as a whole. The largest portion of the City's net position (70%) reflects its investment in capital assets (e.g., land, buildings, and improvements other than buildings, equipment, infrastructure, and construction in progress), less any related outstanding debt that was used to acquire those assets. The City uses these 7 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 CITY OF TUSTIN Management's Discussion and Analysis (Unaudited) June 30, 2025 Government -wide Financial Analysis (Continued) capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. The City's total assets increased by $26.9 million, or 2.7%, compared to the prior fiscal year, while total deferred outflows of resources decreased by $9.6 million, or 25.3%. The growth in assets was primarily driven by higher cash balances resulting from two one-time development -related payments, as mentioned in earlier section. In addition, as previously discussed, OCWD completed construction of a PFAS treatment plant on behalf of the City, increasing the Water Enterprise Fund's capital assets by $12.2 million. The City's total liabilities decreased by $11.7 million, or 5.6%, and its total deferred inflows of resources decreased by $3.4 million compared to the prior fiscal year. A portion of the liability reduction is attributable to expending $3.2 million in previously obligated, but unspent American Rescue Plan Act (ARPA) funds. In addition, the City's net pension liability decreased by $5.9 million, accompanied by a related decrease in pension -related deferred inflows of $1.1 million, primarily due to CaIPERS' actual investment returns that exceeded actuarial assumptions. These stronger -than -expected asset gains improved the plan's funded status and reduced the unfunded liability. Minor actuarial adjustments based on updated demographic and economic assumptions also contributed to the decrease. Deferred inflows of resources were further reduced by $2.2 million due to the amortization of lease -related balances established under GASB Statement No. 87. The City's total net position increased by $32.4 million or 3.94%. Major factors that contributed to the net position increase are discussed in the following pages. E Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 CITY OF TUSTIN Management's Discussion and Analysis (Unaudited) June 30, 2025 Government -wide Financial Analysis (Continued) City of Tustin Summary of Net Position As of June 30, 2025 (in millions of dollars) Governmental Business -Type Total Activities Activities Total % Change 2024 2025 2024 2025 2024 2025 2024-25 Assets: Current and other assets $369.4 $381.0 $ 18.1 $ 18.0 $ 387.5 $ 399.0 Capital assets 540.5 544.0 80.7 92.6 621.2 636.6 Total Assets 909.9 925.0 98.8 110.6 1,008.7 1,035.6 2.7% Deferred Outflows of Resources 34.4 25.5 4.7 3.9 39.1 29.4 -24.8% Liabilities: Current liabilities Non -Current liabilities Total Liabilities Deferred Inflows of Resources Net Position: Net investment in capital assets Restricted Unrestricted Total Net Position 52.7 47.4 110.3 105.0 163.0 152.4 4.8 5.5 46.0 44.1 50.8 49.6 57.5 52.9 156.3 149.1 213.8 202.0 -5.5% 11.0 7.6 0.1 0.1 11.1 7.7 -30.6% 535.3 540.2 47.6 58.6 582.9 598.8 54.2 57.3 - - 54.2 57.3 180.8 193.0 5.0 6.2 185.8 199.2 770.3 790.5 52.6 64.8 822.9 S 855.3 3.94% Governmental Activities. The net position of the City's governmental activities increased by $20.2 million or 3% to $790.5 million (after restatement from implementation of GASB 101 Compensated Absences as shown in Note 21). Of the $790.5 million in net position, $540.2 million is invested in capital assets such as land, buildings, equipment, and infrastructure; $57.3 million is restricted to specifically stipulated spending agreements originated by law and contracts with external parties. The remaining $193 million is unrestricted and available to be designated for specific purposes by the City Council to meet the City's ongoing obligations. 0 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 CITY OF TUSTIN Management's Discussion and Analysis (Unaudited) June 30, 2025 Government -wide Financial Analysis (Continued) Program Revenues and Expenses - Governmental Activities Year Ended June 30, 2025 millions 70.0 60.0 50.0 40.1) 30.0 20.0 10.0 GENERAL PUBLIC SAFETY PUBLICWDRKS OOMMUNITY OPERATING CAPITAL GRANTS GCVERNMENT SERVICES GRANTSANd AND 0 CONTRIBUTIONS CONTRIBUTIONS W Expenses 4 Revenue L General Revenges By Source - Governmental Activities Sales tax 38% Investment income 11.4% Unrestricted motor vehicle in -lieu fees 0.1% P roperty tomes 29.4% Transient occupancy taxes 2.3% Franchise tax 1.8% Profit participation Business license taxes 17.196 0.596 othergeneraIrevenues 0.4% 10 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 CITY OF TUSTIN Management's Discussion and Analysis (Unaudited) June 30, 2025 Government -wide Financial Analysis (Continued) City of Tustin Summary of Changes in Net Position For the Year Ended June 30, 2025 (in millions of dollars) Governmental Business -Type Activities Activities Total 2024 2025 2024 2025 2024 2025 Revenues: Program revenues Charges for services $ 14.8 $ 14.6 $ 20.6 $ 23.6 $ 35.4 $ 38.2 Operating grants and contributions 89.9 54.9 - - 89.9 54.9 Capital grants and contributions 2.3 9.0 13.4 12.2 15.7 21.2 General revenues: Taxes 66.9 69.7 - - 66.9 69.7 Earnings(loss) on investments 11.6 11.2 0.8 1.0 12.4 12.2 Motor vehicle in -lieu fees 0.1 0.1 - - 0.1 0.1 Miscellaneous 0.4 0.4 - - 0.4 0.4 Profit participation - 16.8 - - - 16.8 Total Revenues 186.0 176.7 34.8 36.8 220.8 213.5 Expenses: General government 98.4 61.6 - - 98.4 61.6 Public safety 51.5 53.6 - - 51.5 53.6 Public works 34.9 30.7 - - 34.9 30.7 Community services 9.9 10.2 - - 9.9 10.2 Interest on long-term liabilities - 0.1 - - - 0.1 Water - - 22.5 24.6 22.5 24.6 Total Expenses 194.7 156.2 22.5 24.6 217.2 180.8 Change in net position (8.7) 20.5 12.3 12.2 3.6 32.7 Net Position - Beginning 779.0 770.0 40.3 52.6 819.3 822.6 Net Position - Ending S770.3 790.5 52.6 64.8 822.9 855.3 *Restated for GASB 101: Compensated Absences Total % Change 2024-2025 -3.3% -16.8% 0.4% 3.9% Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 CITY OF TUSTIN Management's Discussion and Analysis (Unaudited) June 30, 2025 Government -wide Financial Analysis (Continued) The increase in governmental activities' net position of $20.2 million was primarily attributable to the following factors: • Total cash position increased by $16 million largely due to development revenues as mentioned in previous section. • Decrease in net pension liability: The City's net pension liability decreased by $5.9 million, primarily due to CaIPERS' stronger -than -expected investment performance (9.5% actual return compared to a 6.8% assumed rate) and updated actuarial assumptions reflecting changes in demographic, economic, and geographic factors. • Impact of pension -related deferred inflows and outflows: Changes in actuarial assumptions and employer contributions made after the valuation date affected the calculation of pension - related deferred inflows and deferred outflows of resources. The net effect of these changes resulted in a $7.4 million reduction to net position. • Capital assets and depreciation: Depreciation expense of $15 million was offset by an $18.5 million increase in capital assets, resulting in a net positive impact of $3.5 million to net position. • Reduction in unearned revenue: It decreased by $3.2 million, primarily due to the expenditure of previously obligated American Rescue Plan Act (ARPA) funds during this fiscal year. In fiscal year 2023-24, the net position of governmental activities decreased by $8.7 million, compared to an increase of $20.5 million in fiscal year 2024-25, representing a year -over -year improvement of $29.2 million. A significant portion of this change was attributable to one-time development revenues received during FY 2025, including the profit participation revenue and backbone development impact fee mentioned in previous sections. Additional factors contributing to the year -over -year charge include the following: • Property tax increased by approximately $1 million primarily from annual CPI adjustments and ownership changes resulting in higher assessed values. • Sales tax increased by $2 million due to resilient consumer spending and the effects of inflation on taxable sales. Business -type activities reported an increase in net position of $12.3 million, primarily attributable to a one-time $10 million federal grant and a $2.2 million capital asset contribution from the Orange County Water District (OCWD) related to a per- and polyfluoroalkyl substances (PFAS) treatment plant. 12 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 CITY OF TUSTIN Management's Discussion and Analysis (Unaudited) June 30, 2025 Financial Analysis of the Government's Funds As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance - related legal requirements. The focus of the City's governmental funds is to provide information on near -term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City's financing requirements. As of the end of the current fiscal year, the City's governmental funds reported a total ending fund balance of $292.6 million, an increase of $27 million compared to the prior year. The following factors impacted the net change to fund balance: • One-time development revenue of $16.8 million from a Profit Participating Agreement and a $5 million backbone development impact fee received during the year. • Property tax increased by approximately $1 million, primarily due to annual CPI adjustments, changes in assessed values, and continued strength in the local real estate market, while sales tax increased by approximately $2 million driven by resilient consumer spending and inflationary impact on taxable transactions. • State grant revenue increased by $3.8 million attributable to funding received forthe Centennial Park improvement project. • Investment earnings decreased by $0.4 million due to federal rate actions and market fluctuations in the past year. • During fiscal year 2025, the City incurred $32.9 million in costs related to the U.S. Navy North Hangar fire incident and received $42.8 million in reimbursements from the Navy, resulting in a net increase to fund balance of $9.9 million. In comparison, during fiscal year 2024, the City incurred $71.7 million in related expenditures and recognized $36.6 million in reimbursements, resulting in a net use of fund balance in that year. The City expects to receive the remaining reimbursements from the Navy in the coming fiscal year. • Excluding costs related to the Navy North Hangar fire incident, non -capital expenditure increased by $5.4 million, primarily due to contractually obligated labor cost increases, higher public safety expenditures, and inflationary adjustments across operating contracts and services. 13 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 CITY OF TUSTIN Management's Discussion and Analysis (Unaudited) June 30, 2025 Financial Analysis of the Government's Funds (continued) Approximately $107.5 million or 37% of the City's governmental fund balance constitutes nonspendable fund balance. Of this amount, $102.5 million represents land held for resale. The remaining fund balance includes $57 million in restricted funds, $10.7 million assigned to capital projects, and $117.3 million in unassigned funds. The General Fund is the primary operating fund of the City. At the end of the current fiscal year, the unassigned fund balance of the General Fund was $117.3 million, while total fund balance was $260.2 million. As a measure of the General Fund's liquidity, it may be useful to compare unassigned fund balance to total fund expenditures. The unassigned fund balance covers 81% of the total General Fund expenditure, including transfers out. The Housing Authority Special Revenue Fund is the only other major governmental funds of the City. At the end of the current fiscal year, it reported a restricted fund balance of $0.07 million for increasing or improving low -and -moderate income housing. The Housing Authority Fund holds $8.6 million in affordable housing loans and related accrued interest receivables. 14 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 CITY OF TUSTIN Management's Discussion and Analysis (Unaudited) June 30, 2025 City of Tustin Summary of Changes in Fund Balances - General Fund For the Year Ended June 30, 2025 (in millions of dollars) Total % Change 2024 2025 2024-25 Revenues: Taxes $ 69.5 $ 71.8 Charges for services 5.1 4.7 Intergovernmental 1.3 0.6 Intergovernmental - N. Hangar fire 36.7 42.8 Fines and forfeitures 0.9 1.0 Licenses and permits 2.2 2.4 Investment income 9.7 9.5 Other 4.4 4.3 Profit participation - 16.8 Developer fee - 5.0 Total Revenues 129.8 158.8 22.4% Expenditures: General government 22.7 25.5 General government - N. Hangar fire 71.7 32.9 Public safety 46.8 50.0 Public works 18.4 16.2 Community services 5.6 5.8 Capital outlay 10.3 12.0 Debt service 0.9 0.9 Total Expenses 176.4 143.3 -18.8% Excess of Revenues Over (Under) Expenditures (46.6) 15.5 Other Financing Sources (Uses): Net transfers 5.2 12.2 Lease acquisition 0.1 0.3 Net Change in Fund Balance (41.3) S 28.0 167.8% 15 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 CITY OF TUSTIN Management's Discussion and Analysis (Unaudited) June 30, 2025 Financial Analysis of the Government's Funds (Continued) General Fund total revenues increased by $29 million or 22.4% as noted in the previous table. Significant transactions affecting revenues in the General Fund were as follows: • A portion of the increase was due to the Navy's reimbursements to cover the cost of the Navy - owned North Hangar fire incident, which amounted to $6 million higher than the previous year. • As mentioned previously, a one-time profit participation revenue of $16.8 million and a $5 million backbone development impact fee were recorded during this fiscal year. • Taxes increased by approximately $2.2 million, primarily due to a $2 million increase in sales tax revenues from resilient consumer spending and inflationary impact on taxable transactions. General Fund's total expenditure decreased by $33 million (18.8%) compared to the prior fiscal year, primarily due to significantly lower costs associated with the Navy North Hangar fire -related response. Expenditures for this incident declined from $71.7 million in FY 2024 to $32.9 million in FY 2025, a net reduction of approximately $38.8 million as most emergency related responses have been completed. Excluding the fire response -related activities, operating expenditure increased by approximately $5.6 million, driven primarily by contractually obligated labor costs, higher public service demands, capital outlays, and inflationary adjustments across operating expenses. General Fund Budgetary Highlights The General Fund actual revenues were $16.4 million lower than the amended budgeted revenues, primarily due to the timing of receivables for the Navy North Hangar fire incident cost reimbursements. The amended budgeted expenditures totaled $218.9 million, reflecting a $39.2 million increase from the original budgeted expenditures. This increase in appropriations was largely associated with a $34 million budget adjustment for the Navy North Hangar fire incident, as well as additional capital outlays for improvements in public infrastructure, public facilities, and special equipment. Actual General Fund expenditures were $75.7 million less than the amended budgeted amount of $218.9 million, primarily due to appropriations for uncompleted capital projects that span multiple years. Financial Analysis of the Proprietary Funds The City has one proprietary fund which is the Water Enterprise Fund. Total revenue for the Water Fund exceeded total expenses by $12.3 million due to capital contributions received for the PFAS treatment plant. As a result, the net position increased from $52.6 million as of June 30, 2024 to $64.9 million as of June 30, 2025. Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 CITY OF TUSTIN Management's Discussion and Analysis (Unaudited) June 30, 2025 Financial Analysis of the Proprietary Funds (Continued) Operating revenues increased by $3 million from rate adjustments. Operating costs increased by $2 million from the prior fiscal year primarily due to increases in labor and on -going maintenance costs. Capital Asset and Debt Ad ministration Capital Assets The City's investment in capital assets for its governmental and business -type activities as of June 30, 2025 amounts to $636.6 million, net of accumulated depreciation. The investment in capital assets includes land, buildings and system improvements, machinery and equipment, park facilities, roads, and bridges. Land Right of way Construction in progress Buildings and improvements Machinery and equipment Infrastructure Lease assets Subsciption Based IT Property, plant and equipment Total Capital Assets, Net City of Tustin Summary of Changes in Capital Assets For the Year Ended June 30, 2025 (in millions of dollars) Governmental Business -Type Activities Activities Total 2024 2025 2024 2025 2024 2025 $ 105.3 $ 105.3 $ 1.2 $ 1.2 106.5 $ 106.5 45.9 45.9 - - 45.9 45.9 11.9 13.5 23.2 0.9 35.1 14.4 115.0 119.2 9.1 38.4 124.1 157.6 6.0 7.9 - - 6.0 7.9 254.7 251.0 - - 254.7 251.0 0.3 0.2 - - 0.3 0.2 1.5 1.0 - - 1.5 1.0 - - 47.2 52.1 47.2 52.1 Total % Change 2024-2025 540.E $544.0 80.7 92.6 621.3 636.6 2.5% The net increase of $15.3 million in capital assets consists of additions totaling $32.8 million (net of transfers from construction in progress and asset disposals); depreciation expense of $17.5 million. In fiscal year 2025, the following major construction projects were completed: • Various roadway and public infrastructure maintenance • Beneta Wells • John Lyttle Reservoir improvements 17 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 CITY OF TUSTIN Management's Discussion and Analysis (Unaudited) June 30, 2025 Capital Assets (continued) • Tustin Legacy Dog Park • Centennial Park renovation • Main Street PFAS Treatment Plant The following major capital projects were in progress in fiscal year 2025: Main Street Improvements, Legacy Neighborhood D-South Infrastructure Phase 2, Heideman School Park Improvements, and various road maintenance and traffic signal projects. Additional information on the City's capital assets can be found in Note 8 of the notes to the basic financial statements section of this report. Long-term Debt At the end of the current fiscal year, the City had total outstanding long-term liabilities of $149.1 million. Of this amount, $39.5 million is secured solely by specified revenue sources such as water service charges. City of Tustin Summary of Changes in Long -Term Liabilities For the Year Ended June 30, 2025 (in millions of dollars Governmental Business -Type Total Activities Activities Total % Change 2024 2025 2024 2025 2024 2025 2024-2025 Bonds payable $ - $ - $ 39.5 $ 38.0 $ 39.5 $ 38.0 Claims and judgments 11.0 11.5 - - 11.0 11.5 Postemployment benefits obligation 12.2 12.0 1.6 1.7 13.8 13.7 Compensated absences 5.0 5.8 0.4 0.5 5.4 6.3 Lease payable 0.3 0.3 - - 0.3 0.3 Subscription based payable 1.5 1.0 - - 1.5 1.0 Pension liabilities 80.3 74.4 4.5 3.9 84.8 78.3 Total Outstanding Debt 110.3 105.0 $ 46.0 $ 44.1 156.3 S 149.1 -4.6% Overall, the long-term debt decreased by $7.2 million or 4.6% compared to the prior year's balance, primarily due to a $6.5 million reduction in the City's net pension liability. This reduction resulted from actual investment returns of 9.5%, which exceeded the assumed discount rate of 6.8%, improving the plan's funded status. Other reductions include $1.5 million in bonds payable due to scheduled debt 11:3 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 CITY OF TUSTIN Management's Discussion and Analysis (Unaudited) June 30, 2025 Long-term Debt (Continued) service payments and $0.5 million in lease payable from maturity. These decreases were offset by $0.5 million increase in claims and judgments as well as $0.9 million increase in compensated absences. Additional information on the City's long-term debt can be found in Notes 9, 10, and 11 in the basic financial statements section of this report. Next Year's Budget On June 3, 2025, the City Council adopted year one of the Fiscal Years 2025-2027 Biennial Budget. Budget. The budget for Fiscal Year 2025-2026 allocates resources aligned with the City Council's strategic priorities to deliver effective, high -quality public services across the community. The 2025- 2026 Budget includes a total appropriation of $252.8 million. The General Fund's estimated revenues are $101.3 million, while budgeted appropriations amount to $109.6 million. The resulting operating deficit will be addressed through planned use of reserves. The $109.6 million total appropriation is $9 million higher than the prior year's amended total appropriation, excluding the impact of the Navy North Hangar fire incident. Requests for Information This financial report is designed to provide a general overview of the City's finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Finance Director, City of Tustin, 300 Centennial Way, Tustin, California, 92780. 19 THEANNEXATTUSTIN LEGACY GOVERNMENT -WIDE Fl Tld NANCIAL STATEMENTS Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 The page left blank intentionally Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN STATEMENT OF NET POSITION June 30, 2025 ASSETS: Cash and investments Receivables: Accounts Interest Leases Loans Allowance for uncollectibles Internal balances Prepaid items and deposits Land held for resale Restricted assets: Cash and investments with fiscal agents Cash and investments held by trust Capital assets: Not being depreciated Being depreciated, net TOTAL ASSETS DEFERRED OUTFLOWS OF RESOURCES: Deferred charge on refunding Deferred amounts on OPEB plan Deferred amounts on pension plans TOTAL DEFERRED OUTFLOWS OF RESOURCES LIABILITIES: Accounts payable and accrued liabilities Interest payable Deposits payable Unearned revenue Noncurrent liabilities: Due within one year Due in more than one year Due in more than one year - OPEB liability Due in more than one year - pension liability TOTAL LIABILITIES DEFERRED INFLOWS OF RESOURCES: Deferred amounts on leases Deferred amounts on OPEB plan Deferred amounts on pension plans TOTAL DEFERRED INFLOWS OF RESOURCES NET POSITION: Net investment in capital assets Restricted for: Community services Public safety Public works Unrestricted TOTAL NET POSITION Governmental Business -type Activities Activity Total $ 179,051,586 $ 16,407,117 $ 195,458,703 44,230,630 3,878,712 48,109,342 5,073,769 72,447 5,146,216 5,513,658 - 5,513,658 6,502,853 - 6,502,853 (1,547,251) - (1,547,251) 3,830,700 (3,830,700) - 1,191,025 29,851 1,220,876 102,457,773 - 102,457,773 17,010,272 1,539,751 18,550,023 17,618,008 - 17,618,008 164,700,741 2,045,433 166,746,174 379,323,520 90,520,955 469,844,475 924,957,284 110,663,566 1,035,620,850 - 2,721,883 2,721,883 1,158,193 114,546 1,272,739 24,368,644 1,062,730 25,431,374 25,526,837 3,899,159 29,425,996 33,909,396 4,489,215 38,398,611 3,145 362,592 365,737 10,922,334 612,335 11,534,669 2,559,305 - 2,559,305 6,331,266 1,996,307 8,327,573 12,295,281 36,537,499 48,832,780 11,986,379 1,704,853 13,691,232 74,441,503 3,882,026 78,323,529 152,448,609 49,584,827 202,033,436 4,857,744 - 4,857,744 1,236,534 104,562 1,341,096 1,461,379 - 1,461,379 7,555,657 104,562 7,660,219 540,250,043 58,648,776 598,898,819 9,859,924 - 9,859,924 1,285,257 - 1,285,257 46,136,141 - 46,136,141 192,948,490 6,224,560 199,173,050 $ 790,479,855 $ 64,873,336 $ 855,353,191 20 See accompanying notes to the basic financial statements Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN STATEMENT OF ACTIVITIES For the year ended June 30, 2025 Functions/programs Expenses Governmental activities: General government $ 61,632,092 Public safety 53,577,400 Public works 30,695,759 Community services 10,245,251 Interest on long-term liabilities 54,792 Total governmental activities 156,205,294 Business -type activity: Water 24,600,039 Total $ 180,805,333 Program Revenues Charges Operating Capital for Grants and Grants and Services Contributions Contributions $ 3,558,431 $ 39,350,830 $ - 1,198,966 4,213,700 - 6,915,908 4,989,914 8,784,120 2,952,402 6,301,848 171,546 14,625,707 54,856,292 8,955,666 23,630,435 - 12,224,479 $ 38,256,142 $ 54,856,292 $ 21,180,145 General revenues: Taxes: Property Franchise Transient occupancy Business license Sales Unrestricted intergovernmental revenue Earnings on investments Profit participation Miscellaneous Total general revenues Change in net position NET POSITION AT BEGINNING OF YEAR, as previously reported Restatement -implementation of GASB 101 (Note 21) NET POSITION AT BEGINNING OF YEAR, as restated NET POSITION AT END OF YEAR 21 See accompanying notes to the basic financial statements Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 Net (Expense) Revenue and Changes in Net Position Governmental Business -type Activities Activity Total $ (18,722,831) (48,164,734) (10,005,817) (819,455) (54,792) (77,767,629) $ (18,722,831) (48,164,734) (10,005,817) (819,455) (54,792) (77,767,629) 11,254,875 11,254,875 (77,767,629) 11,254,875 (66,512,754) 27,858,020 - 27,858,020 1,778,257 - 1,778,257 2,239,766 - 2,239,766 470,040 - 470,040 37,378,034 - 37,378,034 126,676 - 126,676 11,205,150 905,738 12,110,888 16,759,337 - 16,759,337 432,693 128,904 561,597 98,247,973 1,034,642 99,282,615 20,480,344 12,289,517 32,769,861 770,301,454 52,599,083 822,900,537 (301,943) (15,264) (317,207) 769,999,511 52,583,819 822,583,330 $ 790,479,855 $ 64,873,336 $ 855,353,191 22 See accompanying notes to the basic financial statements Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 The page left blank intentionally TUSTIN CORPORATEYARD FUND FINANCIAL STATEMENTS Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 The page left blank intentionally Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 ASSETS Cash and investments Restricted cash and investments Restricted cash and investments held by trust Receivables: Accounts Interest Leases Loans Allowance for uncollectibles Prepaid items and deposits Due from other funds Advances to other funds Land held for resale TOTAL ASSETS LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES LIABILITIES Accounts payable and accrued liabilities Deposits payable Due to other funds Interest payable Unearned revenue TOTAL LIABILITIES DEFERRED INFLOW OF RESOURCES Unavailable revenue Lease related TOTAL DEFERRED INFLOW OF RESOURCES FUND BALANCES Nonspendable Restricted Assigned Unassigned TOTAL FUND BALANCES CITY OF TUSTIN BALANCESHEET GOVERNMENTAL FUNDS June 30, 2025 Housing General Authority Fund Other Total Governmental Governmental Funds Funds $ 145,490,303 $ 242,235 $ 33,319,048 $ 179,051,586 17,010,272 - - 17,010,272 17,618,008 - - 17,618,008 40,959,373 - 3,271,257 44,230,630 1,006,534 3,938,074 129,161 5,073,769 1,683,262 - 3,830,396 5,513,658 409,963 6,092,890 - 6,502,853 (478,511) (1,057,347) (11,393) (1,547,251) 1,191,025 - - 1,191,025 144,436 - - 144,436 3,830,700 - - 3,830,700 102,457,773 - - 102,457,773 $ 331,323,138 $ 9,215,852 $ 40,538,469 $ 381,077,459 $ 31,375,117 $ 262,913 $ 2,271,366 $ 33,909,396 10,921,083 1,251 - 10,922,334 - - 144,436 144,436 3,145 - - 3,145 1,726,130 - 833,175 2,559,305 44,025,475 264,164 3,248,977 47,538,616 25,601,082 8,879,893 1,590,272 36,071,247 1,446,195 - 3,411,549 4,857,744 27,047,277 8,879,893 5,001,821 40,928,991 107,534,127 - - 107,534,127 35,406,883 71,795 21,624,078 57,102,756 - - 10,666,178 10,666,178 117,309,376 - (2,585) 117,306,791 260,250,386 71,795 32,287,671 292,609,852 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES $ 331,323,138 $ 9,215,852 $ 40,538,469 $ 381,077,459 23 See accompanying notes to the basic financial statements Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION June 30, 2025 Fund balances of governmental funds $ 292,609,852 Amounts reported for governmental activities in the Statement of Net Position are different because: Capital assets net of depreciation have not been included as financial resources in governmental funds. 544,024,261 Long-term liabilities applicable to the City's governmental activities are not due and payable in the current period and, accordingly, are not reported as fund liabilities. All liabilities (both current and long-term) are reported in the Statement of Net Position: Balance at June 30, 2025 are: Claims and judgments payable (11,497,230) Compensated absences payable (5,835,188) Subscription -based information technology arrangements (990,505) Lease payable (303,624) Total long-term liabilities (18,626,547) Pension related debt applicable to the City's governmental activities are not due and payable in the current period and accordingly are not reported as fund liabilities. Deferred outflows of resources and deferred inflows of resources related to pensions are only reported in the Statement of Net Position as the changes in these amounts affect only the government -wide statements for governmental activities: Deferred outflows of resources 24,368,644 Deferred inflows of resources (1,461,379) Pension liability (74,441,503) (51,534,238) OPEB related debt applicable to the City's governmental activities are not due and payable in the current period and accordingly are not reported as fund liabilities. Deferred outflows of resources and deferred inflows of resources related to OPEB are only reported in the Statement of Net Position as the changes in these amounts affect only the government -wide statements for governmental activities: Deferred outflows of resources 1,158,193 Deferred inflows of resources (1,236,534) Post employment benefit liability (11,986,379) (12,064,720) Other long-term assets are not available to pay for current period expenditures and, therefore, are reported as unavailable revenue in the governmental funds balance sheet. 36,071,247 Net position of governmental activities $ 790,479,855 24 See accompanying notes to the basic financial statements Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For the year ended June 30, 2025 Other Total Housing Authority Governmental Governmental General Fund Funds Funds REVENUES Taxes $ 71,777,165 $ - $ 7,107,657 $ 78,884,822 Licenses and permits 2,416,550 - - 2,416,550 Fines and forfeitures 973,445 - 500 973,945 Investment income 9,464,584 3,060 1,737,505 11,205,149 Intergovernmental revenue 43,420,219 330,525 15,806,823 59,557,567 Developer fees 21,805,040 - - 21,805,040 Charges for services 4,687,316 50,808 265,194 5,003,318 Rental income 3,091,485 - 314,613 3,406,098 Other revenue 1,202,151 16,194 462,417 1,680,762 TOTAL REVENUES 158,837,955 400,587 25,694,709 184,933,251 EXPENDITURES Current: General government 58,431,156 - 7,383 58,438,539 Public safety 49,987,387 - 184,789 50,172,176 Public works 16,182,323 - 3,037,166 19,219,489 Community services 5,815,956 1,481,847 741,014 8,038,817 Capital outlay 11,985,804 - 9,579,793 21,565,597 Debt service: Principal retirement 824,076 - - 824,076 Interest expenditures 54,792 - - 54,792 TOTAL EXPENDITURES 143,281,494 1,481,847 13,550,145 158,313,486 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 15,556,461 (1,081,260) 12,144,564 26,619,765 OTHER FINANCING SOURCES (USES) Transfer in 13,243,136 985,912 101,198 14,330,246 Transfer out (1,087,110) (460,393) (12,782,743) (14,330,246) Issuance of debt 141,159 - - 141,159 Issuance of leases 141,948 - - 141,948 Proceeds from the sale of capital assets - 69,041 - 69,041 TOTAL OTHER FINANCING SOURCES (USES) 12,439,133 594,560 (12,681,545) 352,148 NET CHANGES IN FUND BALANCES 27,995,594 (486,700) (536,981) 26,971,913 FUND BALANCES - BEGINNING OF YEAR 232,254,792 558,495 32,824,652 265,637,939 FUND BALANCES - END OF YEAR $ 260,250,386 $ 71,795 $ 32,287,671 $ 292,609,852 25 See accompanying notes to the basic financial statements Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For the year ended June 30, 2025 Net changes in fund balances - total governmental funds $ 26,971,913 Amounts reported for governmental activities in the Statement of Activities are different because: Governmental funds report capital outlays as expenditures. However, in the Statement of Activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense. This is the amount by which capital expenditures and contributions exceeded depreciation and disposition of capital assets in the current period: Capital outlay $ 19,028,106 Disposition of capital assets (379,094) Depreciation expense (15,147,065) 3,501,947 The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long term -debt and changes in other long-term liabilities affects the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. This amount is the net effect of theses differences in the treatment of long-term liabilities: Issuance of debt - lease (141,948) Issuance of debt - subscription -based information technology arrangements (141,159) Principal payments - lease 192,173 Principal payments - subscription -based information technology arrangements 631,903 Net changes in claims and judgments payable (501,250) Net changes in compensated absences payable (578,657) (538,938) Pension expenditures reported in the governmental funds includes the annual required contributions. hi the Statement of Activities, pension expense includes the change in the net pension liability, and related change in pension amounts for deferred outflows of resources and deferred inflows of resources. (1,608,653) OPEB expenditures reported in the governmental funds includes the actuarially determined contributions. hi the Statement of Activities, pension expense includes the change in the net pension liability, and related change in pension amounts for deferred outflows of resources and deferred inflows of resources. 91,635 Some revenues and reported in the Statement of Activities are not considered to be available to finance current expenditures and therefore are reported as unavailable revenues in the governmental funds: Net change in unavailable revenue (7,937,560) Change in net position of governmental activities $ 20,480,344 26 See accompanying notes to the basic financial statements Docusign Envelope ID: A6BE669C-DB25-44DB-AA21 -F69A9AF2C1 F5 CITY OF TUSTIN STATEMENT OF NET POSITION PROPRIETARY FUND June 30, 2025 Business -type Activity Water ASSETS: Enterprise Fund CURRENT ASSETS: Cash and investments $ 16,407,117 Accounts receivable 3,878,712 Interest receivable 72,447 Prepaid items 29,851 Restricted cash and investments 1,539,751 TOTAL CURRENT ASSETS 21,927,878 NONCURRENT ASSETS: Capital assets: Not being depreciated 2,045,433 Being depreciated, net 90,520,955 TOTAL NONCURRENT ASSETS 92,566,388 TOTAL ASSETS 114,494,266 DEFERRED OUTFLOWS OF RESOURCES: Deferred charge on refunding 2,721,883 Deferred amounts on pension plans 1,062,730 Deferred amounts on OPEB plan 114,546 TOTAL DEFERRED OUTFLOWS OF RESOURCES 3,899,159 LIABILITIES: CURRENT LIABILITIES: Accounts payable and accrued liabilities 4,489,215 Deposits payable 612,335 Interest payable 362,592 Compensated absences payable 408,702 Bonds payable 1,587,605 TOTAL CURRENT LIABILITIES 7,460,449 LONG-TERM LIABILITIES: Compensated absences payable 115,275 Advances from other funds 3,830,700 Bonds payable 36,422,224 Net pension liability 3,882,026 Net OPEB liability 1,704,853 TOTAL LONG-TERM LIABILITIES 45,955,078 TOTAL LIABILITIES 53,415,527 DEFERRED INFLOWS OF RESOURCES: Deferred amounts on OPEB plan 104,562 TOTAL DEFERRED INFLOWS OF RESOURCES 104,562 NET POSITION: Net investment in capital assets 58,648,776 Unrestricted 6,224,560 TOTAL NET POSITION $ 64,873,336 27 See accompanying notes to the basic financial statements Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION PROPRIETARY FUND For the year ended June 30, 2025 OPERATING REVENUES: Charges for services TOTAL OPERATING REVENUES OPERATING EXPENSES: Personnel services Purchased water Maintenance and operation Depreciation TOTAL OPERATING EXPENSES OPERATING INCOME (LOSS) NONOPERATING REVENUES (EXPENSES): Investment income Other income Interest expense and other fiscal charges TOTAL NONOPERATING REVENUES (EXPENSES) CAPITAL CONTRIBUTIONS Contributed capital Contributed capital assets Capital grants TOTAL CAPITAL CONTRIBUTIONS CHANGE IN NET POSITION NET POSITION AT BEGINNING OF YEAR, as previously reported Restatement -implementation of GASB 101 (Note 21) NET POSITION AT BEGINNING OF YEAR, as restated NET POSITION AT END OF YEAR Business -type Activity Water Enterprise Fund 23,630,435 4,918,621 11,542,311 4,266,991 2,386,770 905,738 128,904 (1,485,346) (450,704) 29,052 2,195,427 52,599,083 (15,264) $ 64,873,336 28 See accompanying notes to the basic financial statements Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN STATEMENT OF CASH FLOWS PROPRIETARY FUND For the year ended June 30, 2025 Business -type Activity Water Enterprise Fund CASH FLOWS FROM OPERATING ACTIVITIES: Receipts from customers $ 23,802,999 Payments to suppliers (15,005,793) Payments to employees (4,681,448) NET CASH PROVIDED BY OPERATING ACTIVITIES 4,115,758 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Acquisition of capital assets (1,996,684) Principal paid on bonds (1,475,000) Interest paid on long-term debt (1,495,990) NET CASH USED BY CAPITAL AND RELATED FINANCING ACTIVITIES (4,967,674) CASH FLOWS FROM INVESTING ACTIVITIES: Investment income 873,929 NET CASH PROVIDED BY INVESTING ACTIVITIES 873,929 NET INCREASE IN CASH AND CASH EQUIVALENTS 22,013 CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 17,924,855 CASH AND CASH EQUIVALENTS - END OF YEAR $ 17,946,868 CASH AND CASH EQUIVALENTS: Cash and investments - current assets $ 16,407,117 Cash and investments - restricted assets 1,539,751 TOTAL CASH AND CASH EQUIVALENTS $ 17,946,868 29 See accompanying notes to the basic financial statements Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN STATEMENT OF CASH FLOWS PROPRIETARY FUND (CONTINUED) For the year ended June 30, 2025 Business -type Activity Water Enterprise Fund RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Operating income (loss) $ 515,742 Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation and amortization 2,386,770 Other nonoperating income (expense) 128,904 Change in assets, liabilities and deferrals: (Increase) decrease in accounts receivable 43,660 (Increase) decrease in prepaid items (1,988) (Increase) decrease in deferred outflows of resources 630,825 Increase (decrease) in accounts payable and accrued liabilities 1,020,582 Increase (decrease) in deposits payable (215,085) Increase (decrease) in compensated absences 125,825 Increase (decrease) in net pension liability (569,215) Increase (decrease) in total OPEB liability 74,129 Increase (decrease) in deferred inflows of resources (24,391) NET CASH PROVIDED BY OPERATING ACTIVITIES $ 4,115,758 SCHEDULE OF NON -CASH CAPITAL AND INVESTING ACTIVITIES Unrealized gain on investments $ 113,599 Donated capital assets 2,195,427 Retention on capital projects 169,420 30 See accompanying notes to the basic financial statements Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN STATEMENT OF FIDUCIARY NET POSITION June 30, 2025 Successor Agency to the Tustin Community Redevelopment Other Post - Agency Private Employment Purpose Trust Benefit (OPEB) Custodial Fund Trust Fund Funds ASSETS: Cash and investments $ 3,632,098 $ - $ - Investments: Money markets - 153,965 - Mutual funds - equity - 2,537,924 - Mutual funds - fixed income - 2,559,693 - Restricted cash and investments 3,485 - 6,285,076 Receivables: Accounts - - 77,623 TOTAL ASSETS 3,635,583 5,251,582 6,362,699 DEFERRED OUTFLOWS OF RESOURCES: Deferred charge on refunding 4,805,401 - - LIABILITIES: Interest payable 517,775 - - Long-term liabilities: Due within one year 2,656,077 - - Due in more than one year 41,111,418 - - TOTAL LIABILITIES 44,285,270 - - NET POSITION: Restricted for: Postemployment benefits other than pensions - 5,251,582 - Individuals, organizations and other governments (35,844,286) - 6,362,699 TOTAL NET POSITION $ (35,844,286) $ 5,251,582 $ 6,362,699 31 See accompanying notes to the basic financial statements Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN STATEMENT OF CHANGES IN FIDUCIARY NET POSITION ADDITIONS: Tax revenue Investment income Employer contributions Funding of bond reserve Miscellaneous revenue TOTAL ADDITIONS DEDUCTIONS: Administrative expenses Community services Payment on bonds Interest TOTAL DEDUCTIONS CHANGE IN NET POSITION For the year ended June 30, 2025 Successor Agency to the Tustin Community Redevelopment Other Agency Private Post -Employment Purpose Trust Benefit (OPEB) Custodial Fund Trust Fund Funds $ 3,975,434 $ - $ 7,360,275 11,603 502,845 546,665 - 500,000 - - - 2,895,818 212,093 - - 4,199,130 1,002,845 10, 802,758 - 20,270 180,242 26,448 - - - - 14,384,171 1,603,332 - 4,083,475 1,629,780 20,270 18,647,888 2,569,350 982,575 (7,845,130) NET POSITION - BEGINNING OF YEAR (38,413,636) 4,269,007 14,207,829 NET POSITION - END OF YEAR $ (35,844,286) $ 5,251,582 $ 6,362,699 32 See accompanying notes to the basic financial statements ALLEY GROVE PROMENADE NOTES TO THE FINANCIAL STATEMENTS E Ir %,ce', `. . Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 The page left blank intentionally Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 1 - SUMMARY OF SIGNIFICANTA CCOUNTING POLICIES a. The Financial Reporting Entity The City of Tustin (City) was incorporated in 1927 as a "General Law" City governed by an elected five -member city council. As required by accounting principles generally accepted in the United States of America, these financial statements present the City of Tustin (the primary government) and its component units. The component units discussed below are included in the City's reporting entity because of the significance of their operational or financial relationship with the City. These entities are legally separate from each other. However, the City of Tustin's elected officials have a continuing full or partial accountability for fiscal matters of the other entities. The financial reporting entity consists of. (1) the City, (2) organizations for which the City is financially accountable, and (3) organizations for which the nature and significance of their relationship with the City are such that exclusion would cause the City's financial statements to be misleading or incomplete. An organization is fiscally dependent on the primary government if it is unable to adopt its budget, levy taxes, or set rates or charges, or issue bonded debt without approval by the primary government. In a blended presentation, a component unit's balances and transactions are reported in a manner similar to the balances and transactions of the City. Component units are presented on a blended basis when the component unit's governing body is substantially the same as the City's or the component unit provides services almost entirely to the City and there is a financial benefit/burden relationship. Blended Component Units The Tustin Public Financing Authority(the Authority) is a joint powers authority organized pursuant to the State of California Government Code, Section 6500. The Authority exists under a Joint Exercise of Power Agreement dated May 1, 1995. The members of the City Council constitute the members of the Board of Directors of the Authority. The Authority is authorized to borrow money for the purpose of financing the acquisition of bonds, notes, and other obligations of, or for the purpose of making loans to the City and/or to refinance outstanding obligations of the City or Assessment Districts of the City. The Authority's financial transactions consist of debt service payments that are reported in the Water Enterprise Fund as the Authority has issued debt for the Water Enterprise Fund. The City of Tustin Housing Authority (the Housing Authority) was established by the City Council in 2011 and is responsible for the administration of providing affordable housing in the City. The Housing Authority is governed by a five -member Board of Directors which consists of members of the City Council, which designates management and has full accountability for the Housing Authority's financial affairs. The Housing Authority's financial transactions are reported in the Housing Authority Special Revenue Fund. 33 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 1 - SUMMARY OF SIGNIFICANTACCOUNTING POLICIES (CONTINUED) a. The Financial Reporting Entity (Continued) The Tustin Financing Authority (the Financing Authority) is a joint powers authority organized pursuant to the State of California Government Code, Section 6500. The Financing Authority exists under a Joint Exercise of Power Agreement dated March 1, 2025. The members of the City Council constitute the members of the Board of Directors of the Financing Authority. The Financing Authority is authorized to borrow money for the purpose of financing the acquisition of bonds, notes, and other obligations of, or for the purpose of making loans to the City or the Housing Authority and/or to refinance outstanding obligations of the City or the Housing Authority. All of the City's component units are considered to be blended component units as the City Council serves as the governing board, management of the City has operational responsibility, and the City is considered financially accountable for these component units. Blended component units, although legally separate entities, are in substance, part of the City's operations and so data from these units are reported within the funds of the primary government. These component units do not issue separate component unit financial statements. b. Government -wide and Fund Financial Statements The government -wide financial statements (i.e., the statement of net position and the statement of activities) report information about the reporting government as a whole, except for its fiduciary activities. All fiduciary activities are reported only in the fund financial statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business -type activities, which rely to a significant extent on fees and charges for support. Likewise, the primary government (including its blended component units) is reported separately from discretely presented component units for which the primary government is financially accountable. The City has no discretely presented component units. Certain eliminations have been made as prescribed by Governmental Accounting Standards Board (GASB) Statement No. 34 in regard to interfund activities, payables and receivables. All internal balances in the statement of net position have been eliminated except those representing balances between the governmental activities and the business -type activity, which are presented as internal balances and eliminated in the total primary government column. In the statement of activities, inter -fund services have been eliminated; however, those transactions between governmental and business -type activity have not been eliminated. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not included among program revenues are reported instead as general revenues. 34 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 1 - SUMMARY OF SIGNIFICANTACCOUNTING POLICIES (CONTINUED) b. Government -wide and Fund Financial Statements (Continued) The underlying accounting system of the City is organized and operated on the basis of separate funds, each of which is considered to be a separate accounting entity. The operations of each fund are accounted for with a separate set of self -balancing accounts that comprise its assets, deferred outflows of resources, liabilities, deferred inflows of resources, fund equity, revenues, and expenditures or expenses, as appropriate. Governmental resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. Separate financial statements for the City's governmental, proprietary, and fiduciary funds are presented after the government -wide financial statements. These statements display information about major funds individually and other governmental funds in the aggregate for governmental funds. Fiduciary fund statements, even though excluded from the government -wide financial statements, include financial information for private purpose trust funds, other post -employment benefit trust fund, and custodial funds. c. Measurement Focus, Basis of Accounting and Financial Statement Presentation The government -wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary private purpose trust fund (fiduciary custodial funds use the economic resource measurement focus) financial statements. Under the economic resources measurement focus, all assets, deferred outflows of resources, liabilities, and deferred inflows of resources (whether current or noncurrent) associated with their activity are included on their statements of net position. Operating statements present increases (revenues) and decreases (expenses) in total net position. Under the accrual basis of accounting, revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Proprietary funds result from providing services and producing and delivering goods. Nonexchange transactions, in which the City gives (or receives) value without directly receiving (or giving) equal value in exchange include taxes, grants, entitlements, and donations. Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all the eligibility requirements have been satisfied. Property taxes are recognized as revenue in the year for which they are levied. Operating revenues are those that result from providing services. Operating expenses for proprietary funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. 35 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 1 - SUMMARY OF SIGNIFICANTACCOUNTING POLICIES (CONTINUED) c. Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued) Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under the current financial resources measurement focus, only current assets, current liabilities, and deferred inflows of resources are generally included on their balance sheets. The reported fund balance (net current assets) is considered to be a measure of "available spendable resources". Governmental fund operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in fund balance. Accordingly, they are said to present a summary of sources and uses of "available spendable resources" during a period. Noncurrent portions of long-term receivables due to governmental funds are reported on their balance sheets in spite of their spending measurement focus. Under the modified accrual basis of accounting, revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, except for principal and interest on long-term liabilities, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of long-term liabilities are reported as other financing sources. Property taxes, franchise taxes, licenses, intergovernmental revenue 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 period. All other revenue items are considered to be measurable and available only when cash is received by the government. The City's fiduciary funds consist of a private purpose trust, other post -employment benefit (OPEB) trust, and custodial funds which are reported using the economic resources measurement focus. All governmental activities, business -type activity and fund financial statements of the City follow Governmental Accounting Standards Board (GASB) pronouncements. When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted resources first, then unrestricted resources as they are needed. Fund Classifications The funds designated as major funds are determined by a mathematical calculation. The City reports the following major governmental funds: 36 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 1 - SUMMARY OF SIGNIFICANTACCOUNTING POLICIES (CONTINUED) c. Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued) The General Fund is the primary operating fund of the City and is used to account for all revenues and expenditures that are not required to be accounted for in another fund. The Housing Authori . Fund is used to account for revenues and associated expenditures to be used for the operation of the City's temporary emergency shelter; and for increasing or improving low- and moderate -income housing. The City reports the following major proprietary fund: The Water Enterprise Fund is used to account for the City's water service operations. The City's fund structure also includes the following fund types: Governmental Funds Special Revenue Funds are used to account for the proceeds of specific revenue sources that are restricted by law or administrative action for a specified purpose. Capital Projects Funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities. Fiduciary Funds Private Purpose Trust Fund is used to account for the activities of the Successor Agency to the Tustin Community Redevelopment Agency. Other Post -Employment Benefit Trust Fund is used to account for the activities of the City's trust for the OPEB plan. Custodial Funds are used to account for assets held by the City in a trustee capacity or as an agent for individuals, private organizations and other governments. The custodial funds are used to account for taxes received for special assessment district debt for which the City is not obligated. 37 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 1 - SUMMARY OF SIGNIFICANTACCOUNTING POLICIES (CONTINUED) d. New Accounting Pronouncements Pending Accounting Standards In April 2024, GASB issued Statement No. 103 — Financial Reporting Model Improvements. The objective of this Statement is to improve key components of the financial reporting model to enhance its effectiveness in providing information that is essential for decision making and assessing a government's accountability. This Statement also addresses certain application issues. Management's Discussion and Analysis This Statement continues the requirement that the basic financial statements be preceded by management's discussion and analysis (MD&A), which is presented as required supplementary information (RSI). MD&A provides an objective and easily readable analysis of the government's financial activities based on currently known facts, decisions, or conditions and presents comparisons between the current year and the prior year. This Statement requires that the information presented in MD&A be limited to the related topics discussed in five sections: (1) Overview of the Financial Statements, (2) Financial Summary, (3) Detailed Analyses, (4) Significant Capital Asset and Long -Term Financing Activity, and (5) Currently Known Facts, Decisions, or Conditions. Furthermore, this Statement stresses that the detailed analyses should explain why balances and results of operations changed rather than simply presenting the amounts or percentages by which they changed. This Statement emphasizes that the analysis provided in MD&A should avoid unnecessary duplication by not repeating explanations that may be relevant to multiple sections and that "boilerplate" discussions should be avoided by presenting only the most relevant information, focused on the primary government. In addition, this Statement continues the requirement that information included in MD&A distinguish between that of the primary government and its discretely presented component units. Unusual or Infrequent Items This Statement describes unusual or infrequent items as transactions and other events that are either unusual in nature or infrequent in occurrence. Furthermore, governments are required to display the inflows and outflows related to each unusual or infrequent item separately as the last presented flow(s) of resources prior to the net change in resource flows in the government -wide, governmental fund, and proprietary fund statements of resource flows. Presentation of the Proprietary Fund Statement of Revenues, Expenses, and Changes in Fund Net Position This Statement requires that the proprietary fund statement of revenues, expenses, and changes in fund net position continue to distinguish between operating and nonoperating revenues and expenses. Operating revenues and expenses are defined as revenues and expenses other than nonoperating revenues and expenses. Nonoperating revenues and expenses are defined as (1) subsidies received and provided, (2) contributions to permanent and term endowments, (3) revenues and expenses related to financing, (4) resources from the disposal of capital assets and inventory, and (5) investment income and expenses. 38 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 1 - SUMMARY OF SIGNIFICANTACCOUNTING POLICIES (CONTINUED) d. New Accounting Pronouncements (Continued) Pending Accounting Standards (Continued) In addition to the subtotals currently required in a proprietary fund statement of revenues, expenses, and changes in fund net position, this Statement requires that a subtotal for operating income (loss) and noncapital subsidies be presented before reporting other nonoperating revenues and expenses. Subsidies are defined as (1) resources received from another party or fund (a) for which the proprietary fund does not provide goods and services to the other party or fund and (b) that directly or indirectly keep the proprietary fund's current or future fees and charges lower than they would be otherwise, (2) resources provided to another party or fund (a) for which the other party or fund does not provide goods and services to the proprietary fund and (b) that are recoverable through the proprietary f ind's current or future pricing policies, and (3) all other transfers. Major Component Unit Information This Statement requires governments to present each major component unit separately in the reporting entity's statement of net position and statement of activities if it does not reduce the readability of the statements. If the readability of those statements would be reduced, combining statements of major component units should be presented after the fund financial statements. Budgetary Comparison Information This Statement requires governments to present budgetary comparison information using a single method of communication—RSI. Governments also are required to present (1) variances between original and final budget amounts and (2) variances between final budget and actual amounts. An explanation of significant variances is required to be presented in notes to RSI. In September 2024, GASB issued Statement No. 104 — Disclosure of Certain Capital Assets. The objective of this Statement is to provide users of government financial statements with essential information about certain types of capital assets. This Statement requires certain types of capital assets to be disclosed separately in the capital assets note disclosures required by Statement 34. Lease assets recognized in accordance with Statement No. 87, Leases, and intangible right -to -use assets recognized in accordance with Statement No. 94, Public -Private and Public -Public Partnerships and Availability Payment Arrangements, should be disclosed separately by major class of underlying asset in the capital as- sets note disclosures. Subscription assets recognized in accordance with Statement No. 96, Subscription -Based Information Technology Arrangements, also should be separately disclosed. In addition, this Statement requires intangible assets other than those three types to be disclosed separately by major class. 39 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 1 - SUMMARY OF SIGNIFICANTACCOUNTING POLICIES (CONTINUED) d. New Accounting Pronouncements (Continued) Pending Accounting Standards (Continued) This Statement also requires additional disclosures for capital assets held for sale. A capital asset is a capital asset held for sale if (a) the government has decided to pursue the sale of the capital asset and (b) it is probable that the sale will be finalized within one year of the financial statement date. Governments should consider relevant factors to evaluate the likelihood of the capital asset being sold within the established time frame. This Statement requires that capital assets held for sale be evaluated each reporting period. Governments should disclose (1) the ending balance of capital assets held for sale, with separate disclosure for historical cost and accumulated depreciation by major class of asset, and (2) the carrying amount of debt for which the capital assets held for sale are pledged as collateral for each major class of asset. e. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net Position or Equity Cash, Cash Equivalents and Investments Investments are stated at fair value (the value at which a financial instrument would be exchanged in a current transaction between willing parties other than a forced or liquidation sale), except for certain investments which have a remaining life of less than one year when purchased and investment contracts, which are stated at amortized cost. The City's proprietary fund participates in the pooling of City-wide cash and investments. Amounts held in the City pool are available to the fund on demand and are considered to be cash and cash equivalents for statement of cash flow purposes. Investments not held in the City pool that are short-term investments with original maturities of three months or less from the date of acquisition are considered cash and cash equivalents. Prepaids The City uses the consumption method to record prepaid items. Capital Assets Capital assets (including infrastructure) are recorded at cost where historical records are available and at an estimated original cost where no historical records exist. Contributed capital assets are valued at acquisition value at the date of contribution. Capital asset purchases (other than infrastructure) in excess of $10,000 are capitalized if they have an expected useful life of five years or more. Infrastructure assets with a cost exceeding $150,000 are capitalized. 40 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 1 - SUMMARY OF SIGNIFICANTACCOUNTING POLICIES (CONTINUED) e. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net Position or Equity (Continued) Capital Assets (Continued) Capital assets include additions to public domain (infrastructure), certain improvements including pavement, curb and gutter, sidewalks, traffic control devices, streetlights, sewers, storm drains, bridges, and right-of-way corridors within the City. Capital assets used in operations are depreciated over their estimated useful lives using the straight-line method in the government -wide financial statements and in the fund financial statements of the enterprise fund. Depreciation is charged as an expense against operations and accumulated depreciation is reported on the respective statement of net position. The lives used for depreciation purposes of each capital asset class generally are: Buildings 5 - 40 years Improvements other than buildings 5 - 40 years Property and plant 5 - 40 years Machinery and equipment 4 - 10 years Infrastructure 25 - 75 years Subscription -based IT assets 1 — 7 years Lease assets are defined as assets with an initial, individual cost of more than $10,000 and an estimated useful life of at least one year. Such assets are recorded at the present value of the lease liability. Lease assets are amortized using the straight-line method of each leases' term. Deferred Outflows/Inflows of Resources In addition to assets, the statement of net position and the governmental funds balance sheet 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 assets that applies to future periods and so will not be recognized as an outflow of resources (expense/expenditure) until that time. 41 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) e. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net Position or Equity (Continued) Deferred Outflows/Inflows of Resources (Continued) The City has the following items that qualify for reporting in the deferred outflows of resources category: • Deferred charge on refunding, net of accumulated amortization, reported in the government -wide statement of net position, the proprietary fund and fiduciary funds financial statements. 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. • Deferred outflow related to pensions resulting from employer contributions made after the measurement date of the net pension liability. These amounts are recognized in the subsequent fiscal year. Deferred outflow related to pensions for the changes in proportion and differences between employer contributions and the proportionate share of contributions, differences between expected and actual experience, and from changes of assumptions. These amounts are amortized over a closed period equal to the average of the expected remaining service lives of all employees that are provided with pensions through the plans. • Deferred outflow related to OPEB plan resulting from the differences in projected and actual earnings on investments of the OPEB plan fiduciary net position. These amounts are amortized over five years. Deferred outflow related to changes in assumptions, and differences between expected and actual experience. These amounts are amortized over a closed period equal to the average of the expected remaining service lives of all employees provided with OPEB. 42 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 1 - SUMMARY OF SIGNIFICANTACCOUNTING POLICIES (CONTINUED) e. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net Position or Equity (Continued) Deferred Outflows/Inflows of Resources (Continued) In addition to liabilities, the statement of net position and the governmental funds balance sheet 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 assets that applies to future periods and will not be recognized as an inflow of resources (revenue) until that time. The City has the following items that qualify for reporting in this category: • Deferred inflow from unavailable revenue, which arises only under a modified accrual basis of accounting, is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from grants and rental. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. • Deferred inflow related to pensions for the changes in proportion and differences between employer contributions and the proportionate share of contributions. These amounts are amortized over a closed period equal to the average of the expected remaining service lives of all employees that are provided with pensions through the plans. Deferred inflow related to pension plan resulting from the difference between projected and actual earnings on investments of the pension plan fiduciary net positions. These amounts are amortized over five years. • Deferred inflow related to pensions and OPEB for differences between expected and actual experience. This amount is amortized over a closed period equal to the average of the expected remaining service lives of all employees that are provided with pensions and OPEB through the respective plans. Deferred inflow related to pensions and OPEB plan resulting from changes in assumptions. These amounts are amortized over a closed period equal to the average expected remaining service lives of all employees that are provided with pensions and OPEB through the respective plans. • Deferred inflow related to future lease revenue which is recorded at present value at the point of inception and is recognized over the life of each lease term. Land Held for Resale Land held for resale is carried at the lower of cost or estimated realizable value at fiscal year-end. Estimated realizable value is determined only upon the execution of a disposition and development agreement. Land held for resale is recorded in the General Fund. 43 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 1 - SUMMARY OF SIGNIFICANTACCOUNTING POLICIES (CONTINUED) e. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net Position or Equity (Continued) Property Taxes Under California law, property taxes are assessed and collected by the counties up to 1% of assessed value, plus other increases approved by the voters. The property taxes go into a pool and are then allocated to the cities based on complex formulas. The City accrues as revenues only those taxes which are received within 60 days after year end in the fund financial statements. Property Tax Calendar Property taxes are assessed and collected each fiscal year according to the following property tax calendar: Lien date January 1" Levy period July 1st to June 30th Levy date On or before 4th Monday in September Due date November 1st - I st installment February 1st - 2na installment Collection date December 101h - I" installment April 1 Ott, - 2na installment Interest and penalties are assessed after the collection date. Compensated Absences All vested vacation and compensatory leave time is recognized as an expense and as a liability in the proprietary type fund at the time the liability vests. Governmental fund types recognize the vested vacation and compensatory time as an expenditure in the current year to the extent it is paid during the year or is due and payable at year-end. For governmental activities, compensated absences are primarily liquidated from the general fund. Any additional accrued vacation and compensatory time relating to governmental funds and amounts relating to the proprietary fund type are included as long-term liabilities within the government -wide statement of net position. The liability is calculated using current pay rates and includes employer -paid fringe benefits. During the year ended June 30, 2025, the City adopted new accounting guidance by implementing the provisions of Governmental Accounting Standards Board (GASB) Statement No. 101, Compensated Absences, which seeks to better meet the information needs of financial statement users by updating the recognition and measurement guidance for compensated absences. 44 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 1 - SUMMARY OF SIGNIFICANTACCOUNTING POLICIES (CONTINUED) e. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net Position or Equity (Continued) Leases At the commencement of the lease, the City initially measures the payable at the present value of payments expected to be paid during the lease term. Subsequently, the payable is reduced by the principal portion of payments made. The lease assets are initially measured by the present value of payments expected to be paid during the lease term. Subsequently, the lease assets are amortized over the life of the lease term. Subscription -Based Information Technology (IT) Arrangements The City is a participant in subscription -based IT arrangements as detailed in Footnote 9. The City recognizes a subscription -based IT payable and right to use IT assets in the financial statements. At the commencement of the arrangement, the City initially measures the payable at the present value of payments expected to be paid during the arrangement term. Subsequently, the payable is reduced by the principal portion of payments made. The right to use assets are initially measured at the initial amount of the subscription -based IT payable. Subsequently, the right to use assets are amortized over the life of the arrangement term. 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 City's California Public Employees' Retirement System (Ca1PERS) plans (Plans) and additions to/deductions from the Plans' fiduciary net position have been determined on the same basis as they are reported by Ca1PERS. 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. Post -Employment Benefits Other Than Pensions (OPEB) For purposes of measuring the net OPEB liability and deferred outflows/inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the City's OPEB Plan and additions to/deductions from the OPEB Plans' fiduciary net position have been determined on the same basis as they are reported by the Plan. For this purpose, the City's OPEB Plan recognizes benefit payments when due and payable in accordance with the benefit terms. Investments are reported at fair value, except for money market investments that have a maturity at the time of purchase of one year or less, which are reported at cost. 45 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 1 - SUMMARY OF SIGNIFICANTACCOUNTING POLICIES (CONTINUED) f. Use of Estimates The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the statement of net position date, and reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates. NOTE 2 - CASHAND INVESTMENTS Cash and Investments Cash and investments as of June 30, 2025, are classified in the accompanying financial statements as follows: Unrestricted assets: Cash and investments Restricted assets: Cash and investments Cash and investments held by trust Total cash and investments Govenunent- Wide Statement of Net Position Fiduciary Funds Statement of Net Position Total $ 195,458,703 $ 3,632,098 $ 199,090,801 17,049,230 6,285,076 19,118,801 5,255,067 $ 231,626,734 $ 15,172,241 Cash and investments as of June 30, 2025, consist of the following: 23,334,306 24,373,868 $ 246,798,975 Cash on hand $ 9,950 Deposits with financial institutions 5,877,850 Investtnents 240,911,175 Total cash and investments $ 246,798,975 Investments Authorized by the California Government Code and the City's Investment Policy The table below identifies the investment types that are authorized for the City. The table also identifies certain provisions of the City's investment policy that address interest rate risk and concentration of credit risk. This table does not address investments of debt proceeds held by fiscal agents that are governed by the provisions of debt agreements of the City or the funds within the Pension Trust and OPEB Trust that are governed by the agreement between the City and the trustee, rather than the general provisions of the California Government Code or the City's investment policy. 46 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 2 - CASHAND INVESTMENTS (CONTINUED) Investments Authorized by the California Government Code and the City's Investment Policy (Continued) Investment Types Maximum Authorized by the City's Policy Maturity Negotiable certificates of deposit 5 years Commercial paper 270 days Local Agency Investment Pool (LAIF) Orange County Investment Pool (OCIP) Bankers acceptances Medium -term notes Municipal and state securities Federal agency bonds or notes United States (U.S.) Treasury securities Money market mutual funds Agency mortgage pass -through securities Repurchase agreements Supranationals Shares of beneficial interest by a JPA N/A - Not Applicable Investments Authorized by Debt Agreements N/A N/A 180 days 5 years 5 years 5 years 5 years N/A 5 years 1 year 5 years 5 years Maximum Maximum Percentage Investment in of Portfolio One Issuer 30% 30% None None 30% 30% 30% None None 20% 20% 30% 5% None 5% 5% Max permitted by State Treasurer Max permitted by County Treasurer 5% 5% 5% 50% None 10% 10% 5% 5% 50% Investment of debt proceeds held by bond trustees is 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 on the next page 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 and the concentration of credit risk. 47 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 2 - CASHAND INVESTMENTS (CONTINUED) Investments Authorized by Debt Agreements (Continued) Investment Types Authorized by Debt Agreements U.S Treasury Obligations U.S Government Sponsored Agency Securities Banker's Acceptances Commercial Paper Money Market Mutual Funds Investment Contracts Certificates of Deposit Corporate Notes Repurchase Agreements N/A - Not Applicable Disclosures Relating to Interest Rate Risk Maximum Maturity None Maximum Percentage of Portfolio Maximum Investment in One Issuer None None N/A None None 270 days None None 180 days None None N/A None None 30 years None None None None None None None None None None None Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the City manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer -term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations. Information about the sensitivity of the fair values of the City's investments (including investments held by bond trustees) to market interest rate fluctuations is provided by the following table that shows the distribution of the City's investments by maturity: 48 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 2 - CASHAND INVESTMENTS (CONTINUED) Disclosures Relating to Interest Rate Risk (Continued) Investment Type U.S. Treasury Notes U.S. Government Sponsored Agency Securities: Federal Home Loan Mortgage Corp (FHLMC) Federal Home Loan Bank (FHLB) Federal Farm Credit Bank (FFCB) Money Market Fund Local Agency Investment Pool (LAIF) California Asset Management Program (CAMP) Negotiable Certificates of Deposit Medium -term Notes Held by Fiscal Agents: Money Market Mutual Funds Held by Pension Trust: Money Market Mutual Funds Mutual Funds - Equity Mutual Funds - Fixed Income Held by OPEB Trust: Money Market Mutual Funds Mutual Funds - Equity Mutual Funds - Fixed Income Total Disclosures Relating to Credit Risk 12 Months or 12 to 24 25 - 60 less Months Months Total $ 12,328,805 $ - $32,595,831 $ 44,924,636 - 738,158 8,167,006 8,905,164 - 1,513,100 4,849,467 6,362,567 - - 7,431,048 7,431,048 847,648 - - 847,648 12,717,408 - - 12,717,408 92,390,926 - - 92,390,926 958,980 236,851 - 1,195,831 7,933,188 3,829,299 23,706,397 35,468,884 7,797,473 - - 7,797,473 538,330 - - 538,330 8,491,740 - - 8,491,740 8,587,938 - - 8,587,938 153,965 - - 153,965 2,537,924 - - 2,537,924 2,559,693 - - 2,559,693 $ 157,844,018 $ 6,317,408 $76,749,749 $ 240,911,175 Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the minimum rating required by (where applicable) the California Government Code, the City's investment policy, or debt agreements, and the Standard & Poor's actual rating as of year-end for each investment type. 49 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 2 - CASHAND INVESTMENTS (CONTINUED) Disclosures Relating to Credit Risk (Continued) Mininntm Total as of Required Not Investment Type June 30, 2025 Rating AAA AA A Rated U.S. Treasury Notes * $ 44,924,636 N/A $ - $ - $ - $ - U.S. Government Sponsored Agency Securities: FHLMC 8,905,164 N/A - 8,905,164 - - FHLB 6,362,567 N/A - 6,362,567 - - FFCB 7,431,048 N/A - 7,431,048 - - Money Market Fund 847,648 AAA 847,648 - - - LAIF 12,717,408 N/A - - - 12,717,408 CAMP 92,390,926 N/A 92,390,926 - - - Negotiable Certificates of Deposit 1,195,831 N/A - - - 1,195,831 Medium -term Notes 35,468,884 A 3,659,583 15,218,560 16,590,741 - Held by Fiscal Agents: Money Market Mutual Funds 7,797,473 A 7,797,473 - - - Held by Pension Trust: Money Market Mutual Funds 538,330 N/A 538,330 - - - Mutual Funds - Equity 8,491,740 N/A - - - 8,491,740 Mutual Funds - Fixed Income 8,587,938 N/A - - - 8,587,938 Held by OPEB Trust: Money Market Mutual Funds 153,965 N/A 153,965 - - - Mutual Funds - Equity 2,537,924 N/A - - - 2,537,924 Mutual Funds - Fixed Income 2,559,693 N/A - - - 2,559,693 Total $240,911,175 $105,387,925 $ 37,917,339 $ 16,590,741 $ 36,090,534 * Securities are exempt from disclosure. Concentration of Credit Risk There were no investments in any one issuer that represented five percent or more of the total City's investments. Custodial Credit Risk Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, an investor will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker -dealer) to a transaction, an investor will not be able to recover the value of its investment or collateral securities that are in the possession of another parry. The California Government Code and the City's investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits: 50 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 2 - CASHAND INVESTMENTS (CONTINUED) Custodial Credit Risk (Continued) The California Government Code requires that a financial institution secures deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The fair value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. As of June 30, 2025, none of the City's deposits with financial institutions in excess of federal depository insurance limits were held in uncollateralized accounts. Investment in State Investment Pool The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by the California Government Code under the oversight of the Treasurer of the State of California. The fair value of the City's investment in this pool is reported in the accompanying financial statements at amounts based upon the City's pro rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis. The California Local Agency Investment Fund is not insured or collateralized. The Fund is subject to regulatory oversight by the State of California Treasurer, although it is not registered with the SEC. Deposits and withdrawals to and from LAIF are made on the basis of $1 and not at fair value. Accordingly, under the fair value hierarchy, the investment with LAIF is uncategorized. Investment in California Asset Management Program (CAMP) The City is a voluntary participant in the California Asset Management Program (CAMP) that is regulated by the California Government Code. 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 CAMP for the entire CAMP portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by CAMP, which are recorded on an amortized cost basis. 51 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 2 - CASHAND INVESTMENTS (CONTINUED) Investments in Pension and OPEB Trusts The City established a trust account with Public Agency Retirement Services (PARS) to hold assets that are legally restricted for use in administering the City's pension and OPEB plans. The Pension and OPEB Trusts' specific cash and investments are managed by a third -parry portfolio manager under guidelines approved by the City. Those guidelines are as follows: Risk Tolerance Risk Management Investment Objective Strategic Ranges Fair Value Measurements Moderate The portfolio is constructed to control risk through four layers of diversification - asset classes (cash, fixed income, equity), investment styles (large cap, small cap, international, value, growth), managers and securities. Disciplined mutual fund selection and monitoring process helps to drive return potential while reducing portfolio risk. To provide growth of principal and income. It is expected that dividend and interest income will comprise a significant portion of total return, although growth through capital appreciation is equally important. 0% - 20% Cash 40% - 60% Fixed Income 40% - 60% Equity The City categorizes its fair value measurement within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the assets. Level 1 inputs are quoted prices in active markets for identical assets, Level 2 inputs are quoted prices of similar assets in active markets, and Level inputs are significant unobservable inputs. 52 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 2 - CASHAND INVESTMENTS (CONTINUED) Fair Value Measurements (Continued) The City has the following recurring fair value measurements as of June 30, 2025: U.S. Treasury Notes U.S. Government Sponsored Agency Securities: FHLMC FHLB FFCB Money Market Fund Negotiable Certificates of Deposit Medium term Notes Held by Pension Trust: Mutual Funds - Equity Mutual Funds - Fixed Income Held by OPEB Trust: Mutual Funds - Equity Mutual Funds - Fixed Income Total Leveled Investments LAIF* CAMP* Money Market Mutual Funds*: Held by Fiscal Agents Held by Pension Trust Held by OPEB Trust Total Investment Portfolio Quoted Observable Unobservable Prices Inputs Inputs Level Level Level Total $ - $ 44,924,636 $ - $ 44,924,636 - 8,905,164 - 8,905,164 - 6,362,567 - 6,362,567 - 7,431,048 - 7,431,048 - 847,648 - 847,648 - 1,195,831 - 1,195,831 - 35,468,884 - 35,468,884 8,491,740 - - 8,491,740 8,587,938 - - 8,587,938 2,537,924 - - 2,537,924 2,559,693 - - 2,559,693 $ 22,177,295 $105,135,778 $ - 127,313,073 * Not subject to fair value measurement hierarchy. NOTE 3 - LOANS RECEIVABLE 12,717,408 92,390,926 7,797,473 538,330 153,965 $ 240,911,175 Multi -Family Development Loan: A bridge loan was provided to a senior apartment developer to assist in the development of 53 affordable rental units. The total outstanding balance as of June 30, 2025, including accrued interest of $15,110 was $365,110. 53 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 3 - LOANS RECEIVABLE (CONTINUED) Home Improvement Loans: Home improvement loans were provided to low- and moderate -income households (rental and ownership). These deferred loans are due upon sale, refinance, or when the rental units are no longer available as affordable units. Term is 30 years. The total outstanding balance as of June 30, 2025, was $12,840. An allowance of $12,840 has been recorded to reflect the amount of the loans not expected to be collectible. Orange County Rescue Mission: On February 10, 2015, the City entered into an agreement with the Orange County Rescue Mission (OCRM), whereby the City agreed to convey two residential buildings to the OCRM to be used for housing for homeless veterans. In exchange, the OCRM executed a promissory note to the City in the amount of $533,000. The note is payable after 30 years with 3% interest. For every year that the OCRM uses the property for homeless veterans housing, the promissory note and any accrued interest will be forgiven by 1/301h. Should the OCRM successfully utilize the properties for homeless veterans housing for all 30 years in which the note is in effect, as stipulated in the deed of trust, it will owe no money to the City. The total outstanding balance at June 30, 2025, including accrued interest of $57,389, was $412,722. An allowance of $412,722 has been recorded to reflect the amount of the note not expected to be collectible. Boys' and Girls' Club Roof Loan: On January 7, 2019, the City executed a promissory note with the Boys' and Girls' Club of Tustin (the Club) in the amount of $86,000 to assist in roof replacements of the Club's facility. The loan is payable over 15 years at 2% interest per annum with annual installments of principal and interest in the amount of $6,693 commencing on January 11, 2021. The total outstanding balance at June 30, 2025, including accrued interest of $584, was $55,214. Affordable Housing Loans: The City executed promissory notes with approximately 279 affordable home buyers to facilitate the preservation of the City's affordable housing supply. The entire unpaid principal amount and accrued interest is due 45 years from the date of the initial sale of the unit to a member of the home -buying public. No prepayment of the note in whole, or in part, is allowed any time prior to the maturity date. Additionally, 95% of the loan and accrued interest is forgivable, should the owner comply with the Affordable Housing Covenant as of the maturity date. As of June 30, 2025, the total outstanding principal balance was $95,267,658. An allowance of $90,504,275 has been recorded to reflect the amount of the note not expected to be collectible. Family Promise Loan: On February 18, 2020, the Housing Authority entered into an agreement with Family Promise of Orange County, whereby the City agreed to convey real property for the development of transitional housing units for homeless families. In exchange, Family Promise executed a promissory note to the City in the amount of $1,000,000 on May 12, 2022. The note is payable after 30 years with 3% interest. For each year that Family Promise complies with all applicable terms, conditions, and covenants of the agreement, 1/30 of both principal and interest shall be forgiven. The total outstanding balance at June 30, 2025, including accrued interest of $77,841, was $1,044,507. An allowance of $1,044,507 has been recorded to reflect the amount of the note not expected to be collectible. 54 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 4 — INTERFUND RECEIVABLES, TRANSFERS, AND ADVANCES The composition of interfund receivable/payable due to negative cash balance of the CDBG fund as of June 30, 2025: Due From Due to Other Other Funds Funds General Fund $ 144,436 $ - CDBG Fund - 144,436 Total $ 144,436 $ 144,436 The composition of interfund transfers for the year ended June 30, 2025, is as follows: Transfers In General Fund General Fund Other Governmental Funds Housing Authority Fund Transfers Out Other Governmental Funds Housing Authority General Fund General Fund Amount $ 12,782,743 460,393 101,198 985,912 $ 14,330,246 The transfers during the fiscal year ended June 30, 2025, were for the following purposes: Other governmental fund (ARPA Special Revenue Fund) transferred to the General Fund $3,215,567 for costs of rehiring public sector staff and revenue replacement intended to cover public safety salaries. Other governmental fund (Special Tax B Special Revenue Fund) transferred $6,260,887 to the General Fund for eligible public service area expenditures. Other governmental fund (Measure M Special Revenue Fund) transferred $136,289 to the General Fund for eligible transportation project expenditures. Other governmental fund (Other Capital Projects Fund) returned $3,170,000 to the General Fund for a capital project that has secured an alternative funding source. The General Fund transferred to the Housing Authority Special Revenue Fund $985,912 to support the temporary emergency shelter. General Fund transferred to other governmental fund (Landscape Lighting Special Revenue Fund) $101,918 to support landscape and lighting district maintenance expenditures. The composition of interfund advances for the year ended June 30, 2025, is as follows: Advance From General Fund Advance To Water Enterprise Fund Amount $ 3,830,700 55 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 4 — INTERFUND RECEIVABLES, TRANSFERS, AND ADVANCES (CONTINUED) In May 2023, the General Fund advanced a total of $3,830,700 to the Water Enterprise Fund to replenish cash to meet bond covenant requirements. The advance accrues interest at a 3.5% annual interest rate and has a maturity date no later than July 1, 2030. NOTE S - LAND HELD FOR RESALE Land held for resale as of June 30, 2025, consisted of the following: General Fund Pacific Center East* $ 30,380,902 Tustin Legacy 72,076,871 Total Land Held for Resale $ 102,457,773 *Pacific Center East includes several parcels bordered by Del Arno, Valencia, Edinger and Newport Avenue. NOTE 6 - LAND TRANSFER FROM THE UNITED STATES GOVERNMENT On May 13, 2002, the City entered into an agreement with the United States of America (the Government) wherein the Government agreed to convey to the City a portion of the former Marine Corps Air Station Tustin (MCAS Tustin). The transfer is pursuant to the authority provided by Section 2905(b)4 of the Defense Base Closure and Realignment Act of 1990, as amended, and the implementing regulations of the Department of Defense to convey surplus property at a closing installation to the local redevelopment authority at no cost for economic development purposes. The real properties, consisting of approximately 1,153 acres of land located within the bounds of the former MCAS Tustin, were conveyed to the City in multiple parcels, by separate conveyances. Parcel Group I, (consisting of approximately 977 acres), was conveyed to the City on May 14, 2002. A portion of Parcel Group I (consisting of approximately 23 acres) was conveyed to the City during fiscal year 2003 and the remainder was conveyed to the City in fiscal year 2004. Conveyance of Parcel Group II (consisting of a total of 49 acres) was conveyed in September 2006 and May and July 2003. Conveyance of Parcel Group III (consisting of approximately 18 acres) and Parcel Group IV (consisting of approximately 119 acres) were conveyed in September 2006 and April 2008, respectively. As part of the agreement, the City also received certain personal property and utilities on the base. The land parcels were recorded at their estimated fair values at the dates of conveyance. Subsequent to the conveyance of properties from the Government, the Agreement required the City to convey approximately 22 acres to Santa Ana Unified School District (SAUSD), 15 acres to Rancho Santiago Community College District (RSCCD) and 65 acres to South Orange County Community College District (SOCCCD) subject to certain conditions as detailed in the agreement with the Government and the terms and conditions of the settlement and release agreements between the City and SAUSD and the City and the RSCCD. 56 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 6 — LAND TRANSFER FROM THE UNITED STATES GOVERNMENT (CONTINUED) The SAUSD declined the conveyance of the land from the City and instead of receiving the land, the SAUSD was paid $60,000,000 under an agreement dated December 20, 2002. The City conveyed the RSCCD parcel during fiscal year 2003. Conveyance of the SOCCCD parcel happened in fiscal year 2004. On May 21, 2013, the City Council approved a General Plan Amendment, MCAS Tustin Specific Plan Amendment, Development Agreement, and Agreement for Exchange of Real Property with the SOCCCD. The Exchange Agreement delineates the terms and processes associated with the exchange of the ultimate ownership of approximately 89 acres of land within Planning Area 1 of Tustin Legacy. The City of Irvine has identified concerns about that project's traffic impacts in Irvine, and about the traffic analysis of projects in the MCAS Tustin Specific Plan area generally. In July 2013, the City entered into a settlement agreement with the City of Irvine which allowed the City to proceed with the Exchange Agreement. The transfer of the parcels occurred in August 2014 and was considered an even exchange. The City also entered into a separate agreement with the SOCCCD in July 2014 to acquire the Valencia Parcels, approximately five acres of land, for $1,083,220 less a demolition credit of $500,000. In August 2014, the City sold 74 acres of the land to a developer for $56,000,000 resulting in a gain on land held for resale of $40,143,447. In February 2015, the City entered into an Exchange Agreement with the United States of America Department of Army. The Exchange Agreement delineates the terms associated with the exchange of the ultimate ownership of approximately 15 acres of usable land and improvements. The transfer of the property occurred in April 2015 and was determined to be of equivalent value. In fiscal year 2015-16, the City reclassified 279 acres of the land held for resale related to the land transfer from the United States Government to land to be used for government purposes. The reclassification was for land to be given to another governmental agency and to be used for parks and roads. In addition, the Valencia Parcels (about five acres) were reclassified due to a change in the intended use of the property. As a result, land held for resale was reduced by $64,002,073 in the General Fund and is reported as land in the government -wide statement of net position. In July 2016, the City sold 20.96 acres of the land to a developer for $8,300,000 resulting in a gain on land held for resale of $3,808,739. In June 2017, the City sold 17.54 acres of land to a developer for $18,292,602 resulting in a gain on land held for resale of $14,533,528. In June 2018, the City sold 14.48 acres of land to a developer for $34,202,712 resulting in a gain on land held for resale of $31,100,613. 57 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 6 - LAND TRANSFER FROM THE UNITED STATES GOVERNMENT (CONTINUED) In September 2021, the City sold 25.44 acres of land to a developer for $61,500,000 resulting in a gain on land held for resale of $56,048,775. Additionally, in September of 2021 the City of Tustin took title to approximately 7.93 acres of property at the Tustin Legacy, which was former Lease in Furtherance of Conveyance (LIFOC) property. The property consists of Carveout 2 (6.23 acres) and Carveout 9 (1.7 acres). In May 2022, 4.74 acres associated with Carveout 2 was sold to a land developer for $1,784,115. An additional 1.49 acres of Carveout 2 and 0.14 acres of Carveout 9 were reclassified by the City out of land held for resale to appropriately record the assets as rights -of -way. The remaining 1.56 acres from Carveout 9 remains in land held for resale at a value of $587,177. The recorded value of the remaining conveyed parcels as of June 30, 2025, was $72,076,871. The value of the parcels was recorded at estimated value at the time of conveyance. The remaining property not sold will be park space or conveyed to other governmental agencies. NOTE 7 —LEASE RECEIVABLES The City is a lessor in 15 noncancellable leases for use of City land and buildings. The lessees are required to make fixed monthly payments ranging from $500 to $43,680. The City recognized $1,691,718 in lease revenue and $147,754 in interest revenue during the current fiscal year related to these agreements. As of June 30, 2025, the lease receivable is $5,513,658 and deferred inflows of resources is $4,857,744. A schedule of future payments is included below: June 30, Principal 2026 $ 1,663,302 2027 421,545 2028 336,605 2029 354,606 2030 377,969 2031 - 2035 1,472,309 2036 - 2040 830,524 2041 56,798 Totals $ 5,513,658 Interest Total $ 102,200 $ 1,765,502 74,510 496,055 68,110 404,715 61,528 416,134 54,651 432,620 176,409 1,648,718 52,878 883,402 508 57,306 $ 590,794 $ 6,104,452 58 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 8 - CAPITAL ASSETS A summary of changes in the Governmental Activities capital assets for the year ended June 30, 2025, is as follows: Capital assets, not depreciated: Land Right of way Construction in progress Total capital assets, not depreciated Capital assets, being depreciated: Buildings hTrovements other than buildings Machinery and equipment Infrastructure Lease assets - machinery and equipment Lease assets - vehicles Lease assets - buildings Subscription -based IT assets Total capital assets, being depreciated Less accumulated depreciation for: Buildings Improvements other than buildings Machinery and equipment Infrastructure Lease assets - machinery and equipment Lease assets - vehicles Lease assets - buildings Subscription -based IT assets Total accumulated Balance at Balance at June 30, 2024 Additions Deletions June 30, 2025 $ 105,254,634 $ - $ - $ 105,254,634 45,926,681 - - 45,926,681 11,916,254 16,165,356 (14,562,184) 13,519,426 163,097,569 16,165,356 (14,562,184) 164,700,741 90,177,543 7,184,480 (691,372) 96,670,651 76,808,514 1,958,289 - 78,766,803 21,074,862 3,478,015 (368,285) 24,184,592 427,009,608 4,516,314 (2,550,434) 428,975,488 249,440 45,845 (24,250) 271,035 231,992 100,044 (76,885) 255,151 250,601 - - 250,601 2,771,134 141,948 (709,887) 2,203,195 618,573,694 17,424,935 (4,421,113) 631,577,516 (29,488,613) (1,753,985) 436,938 (30,805,660) (22,542,603) (2,914,179) - (25,456,782) (15,119,066) (1,549,236) 368,285 (16,300,017) (172,320,853) (8,082,342) 2,425,774 (177,977,421) (128,374) (54,029) 24,250 (158,153) (172,663) (68,163) 76,884 (163,942) (150,360) (50,120) - (200,480) (1,226,417) (675,011) 709,887 (1,191,541) depreciation (241,148,949) (15,147,065) 4,042,018 (252,253,996) Total capital assets, being depreciated, net 377,424,745 2,277,870 (379,095) 379,323,520 Total governmental activities capital assets, net $ 540,522,314 $18,443,226 $ (14,941,279) $ 544,024,261 59 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 8 - CAPITAL ASSETS (CONTINUED) Depreciation expense was charged to functions/programs of the governmental activities as follows: General Government $ 3,246,827 Public Safety 463,133 Public Works 9,204,779 Community Services 2,232,326 Total $ 15,147,065 A summary of changes in the Business -type Activity capital assets for the year ended June 30, 2025, is as follows: Capital assets, not depreciated: Land Construction in progress Total capital assets, not depreciated Capital assets, being depreciated: Buildings and improvements Property, plant and equipment Total capital assets, being depreciated Less accumulated depreciation for: Buildings and improvements Property, plant and equipment Total accunulated depreciation Total capital assets, being depreciated, net Total business -type activity capital assets, net Balance at Balance at June 30, 2024 Additions Deletions June 30, 2025 $ 1,177,216 $ - $ - $ 1,177,216 23,157,472 14,255,280 (36,544,535) 868,217 24,334,688 14,255,280 (36,544,535) 2,045,433 16,499,406 29,661,949 - 46,161,355 83,919,572 6,867,091 (162,978) 90,623,685 100,418,978 36,529,040 (162,978) 136,785,040 (7,359,381) (361,329) - (7,720,710) (36,680,912) (2,025,441) 162,978 (38,543,375) (44,040,293) (2,386,770) 162,978 (46,264,085) 56,378,685 34,142,270 - 90,520,955 $ 80,713,373 $48,397,550 $(36,544,535) $ 92,566,388 99 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 9 - LONG-TERMLIABILITIES A summary of long-term liability activity for the year ended June 30, 2025, is as follows: Governmental Activities: Claims and judgments Subscription -based IT payable Lease payable Compensated absences* Total governmental activities long-term liabilities Business -type Activity: 2016 Water Refunding Revenue Bonds Bond premium 2020 Taxable Water Refunding Revenue Bonds Direct Placement 2024 2024 Water Revenue Bonds Compensated absences* Total business -type activity Balance July 1, 2024* Additions Deletions $10,995,980 $1,773,133 $ (1,271,883) 1,480,460 141,948 (631,903) 354,638 141,159 (192,173) 5,256,531 5,518,698 (4,940,041) Balance Due Within June 30, 2025 One Year $11,497,230 $ 1,269,335 990,505 350,963 303,624 159,521 5 R11; 1 RR A 551 AA7 $18,087,609 $7,574,938 $(7,036,000) $18,626,547 $ 6,331,266 $20,610,000 $ - $ (925,000) $19,685,000 907,434 - (52,605) 854,829 13,895,000 - (445,000) 13,450,000 4,125,000 - (105,000) 4,020,000 398,152 525,477 (399,652) 523,977 $ 950,000 52,605 450,000 135,000 11M 7m long-term liabilities $39,935,586 $ 525,477 $(1,927,257) $38,533,806 $ 1,996,307 *Beginning balances of compensated absences have been restated to reflect the implementation of GASB 101. Governmental Activities Subscription -Based Information Technology (IT)Arrangements Pgyable The City has entered into 14 subscription -based IT arrangements for various software applications and is required to make annual principal and interest payments ranging from $3,276 to $172,746 over the arrangement terms. The payable at June 30, 2025, was $990,505. The future principal and interest lease payments as of June 30, 2025, were as follows: June 3 0, 2026 2027 2028 2029 2030 Principal Interest Total $ 350,963 $ 24,400 $ 375,363 280,997 15,115 296,112 154,650 7,897 162,547 115,307 4,447 119,754 88,588 1,227 89,815 Totals $ 990,505 $ 53,086 $ 1,043,591 61 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 9 - LONG-TERMLIABILITIES (CONTINUED) Governmental Activities (Continued) Lease Pqyable The City has entered into 12 leases as a lessee for facilities, vehicles and equipment and is required to make annual principal and interest payments ranging from $1,198 to $54,035 over the lease terms. The lease liability at June 30, 2025, was $303,624. The future principal and interest lease payments as of June 30, 2025, were as follows: June 30, Principal 2026 $ 159,521 2027 2028 2029 Business -type Activity 123,831 10,588 9,684 Totals $ 303,624 2016 Refunding Water Revenue Bonds Interest Total $ 9,898 2,470 438 171 $ 12,977 169,419 126,301 11,026 9,855 $ 316,601 On September 28, 2016, the City issued $21,515,000, 2016 Water Refunding Revenue Bonds. The Bonds were issued to provide funds to defease the 2011 Water Revenue Bonds and pay the costs of issuing the bonds. The 2016 Water Refunding Revenue Bonds proceeds were invested in an escrow fund with a trustee to pay interest on the 2011 Water Revenue Bonds until April 1, 2021 and to redeem all 2011 Bonds in full on April 1, 2021. The Bonds are payable in annual installments ranging from $905,000 to $1,540,000 until maturity on April 1, 2041. Interest is payable semiannually on April 1 and October 1, with rates ranging from 2.0% to 4.0% per annum. The defeasance resulted in a difference between the reacquisition price and the net carrying amount of the old debt of $3,273,764. The difference reported in the accompanying statements as a deferred outflow of resources, is being charged to interest expense through 2041. The remaining balance at June 30, 2025, is $2,127,947. 62 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 9 - LONG-TERMLIABILITIES (CONTINUED) Business -type Activity (Continued) 2016 Water Refunding Revenue Bonds (Continued) The City has pledged net revenues received from the operation of the Water Enterprise to repay the outstanding debt service. The net revenues are the amount of the gross revenues received less the amount of maintenance and operation costs, which include management, personnel, services, equipment, repair and other necessary costs of maintaining and operating the Water Enterprise. The City has covenanted to fix, prescribe, revise and collect rates, fees and charges for the services and facility furnished by the Water Enterprise during each fiscal year which are sufficient to yield net revenues, at least equal to 120% of the annual debt service on the bonds. At June 30, 2025, total interest and principal remaining on the bonds is $25,456,162. During the fiscal year, the total interest expense incurred was $669,200, principal payments were $925,000, and net revenues were $3,737,633. The annual debt service requirements to amortize the bonds are as follows: June 30, 2026 2027 2028 2029 2030 2031 - 2035 2036 - 2040 2041 Subtotals Add: Premium Totals Principal Interest $ 950,000 $ 645,450 975,000 615,450 1,015,000 576,450 1,035,000 551,075 1,065,000 522,613 6,025,000 1,936,462 7,080,000 877,462 1,540,000 46,200 19,685,000 5,771,162 854,829 - $ 20,539,829 $ 5,771,162 2020 Taxable Water Refunding Revenue Bonds Total $ 1,595,450 1,590,450 1,591,450 1,586,075 1,587,613 7,961,462 7,957,462 1,586,200 25,456,162 854,829 $ 26,310,991 On February 11, 2020, the City issued $14,910,000, Taxable Water Refunding Revenue Bonds, Series 2020. The Bonds were issued to provide funds to defease the 2013 Water Revenue Bonds and pay the costs of issuing the bonds. The 2020 Bonds proceeds were invested in an escrow fund with a trustee to pay interest and principal on the 2013 Bonds until April 1, 2022 and to redeem all 2013 Bonds in full on April 1, 2022. The City refunded the 2013 Bonds to reduce its total debt services payments over 23 years by $3,101,131 and to obtain an economic gain (difference between the present values of the old and new debt) of $2,160,323. The Bonds are payable in annual installments ranging from $609,834 to $2,429,165 until maturity on April 1, 2043. Interest is payable semiannually on April 1 and October 1, with rates ranging from 1.567% to 3.107% per annum. 63 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 9 - LONG-TERMLIABILITIES (CONTINUED) Business -type Activity (Continued) 2020 Taxable Water Refunding Revenue Bonds (Continued) The defeasance resulted in a difference between the reacquisition price and the net carrying amount of the old debt of $773,237. The difference reported in the accompanying statements as a deferred outflow of resources, is being charged to interest expense through 2043. The remaining balance at June 30, 2025, is $593,936. The City has pledged net revenues received from the operation of Water Enterprise to repay the outstanding debt service. The net revenues are the amount of the gross revenues received less the amount of maintenance and operation costs, which include management, personnel, services, equipment, repair and other necessary costs of maintaining and operating the Water Enterprise. The City has covenanted to fix, prescribe, revise and collect rates, fees and charges for the services and facility furnished by the Water Enterprise during each fiscal year which are sufficient to yield net revenues, at least equal to 120% of the annual debt service on the bonds. At June 30, 2025, total interest and principal remaining on the bonds is $18,289,655. During the fiscal year, the total interest expense incurred was $389,721, principal payments were $445,000, and net revenues were $3,737,633. The annual debt service requirements to amortize the bonds are as follows: June 30, 2026 2027 2028 2029 2030 2031-2035 2036-2040 2041-2043 Totals 2024 Water Revenue Bonds Principal Interest $ 450,000 $ 381,760 465,000 373,169 475,000 363,827 490,000 353,904 500,000 343,178 2,670,000 1,522,047 3,080,000 1,119,142 5,320,000 382,628 $ 13,450,000 $ 4,839,655 Total $ 831,760 838,169 838,827 843,904 843,178 4,192,047 4,199,142 5,702,628 $ 18,289,655 On February 6, 2024, the Tustin Public Financing Authority ("Financing Authority") and the City of Tustin ("City") authorized the issuance of direct placement debt with Capital One Public Financing, LLC. The City received $4,125,000 of proceeds with a 4.82% fixed interest rated over the 20-year life of the bonds. The bonds are being issued for the purpose of providing funds to finance the acquisition and construction of certain improvements and facilities to the City's municipal water enterprise. 64 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 9 - LONG-TERMLIABILITIES (CONTINUED) Business -type Activity (Continued) 2024 Water Revenue Bonds (Continued) The City's outstanding bonds are secured by a pledge, charge and lien upon revenue which consist primarily of installment payments to be made by the City to the Financing Authority pursuant to an Installment Sale Agreement, dated as of February 1, 2024, by and between the City and the Financing Authority. The City's obligations under the Installment Sale Agreement will be subordinate to the City's obligations with respect to the payment of debt service on its City of Tustin 2016 Water Refunding Revenue Bonds and its City of Tustin Taxable Water Refunding Revenue Bonds, Series 2020. The outstanding debt contains (1) a provision that in an event of default, the holder of any outstanding Parity Obligations is entitled to accelerate such Indebtedness, Bank may declare all sums of interest and principal and any other amounts owing under the Note or under any other Loan Document immediately due and payable, without notice of default, presentment or demand for payment, protest or notice of nonpayment or dishonor or any other notices or demands. Otherwise, an Event of Default hereunder shall not result in an acceleration of Borrower's obligations hereunder or under the Note and (2) a provision that the City may prepay all, but not less than all of the aggregate unpaid amounts after giving the Original Purchaser 30 days' prior written notice and at a price of 101% of the principal amount so paid. At June 30, 2025, total interest and principal remaining on the bonds is $6,229,247. During the fiscal year, the total interest expense incurred was $224,783, principal payments were $105,000, and net revenues were $3,737,633. The annual debt service requirements to amortize the bonds are as follows: June 30, 2026 2027 2028 2029 2030 2031-2035 2036-2040 2041-2044 Totals Principal Interest $ 135,000 $ 193,764 140,000 187,257 145,000 180,509 155,000 173,520 160,000 166,049 935,000 705,648 1,180,000 457,900 1,170,000 144,600 $ 4,020,000 $ 2,209,247 Total $ 328,764 327,257 325,509 328,520 326,049 1,640,648 1,637,900 1,314,600 $ 6,229,247 65 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 10 - PENSION PLANS a. 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 Miscellaneous (all other) Plans. The Miscellaneous Plan is an agent multiple -employer defined benefit pension plan, and the Safety Plan is a cost -sharing multiple employer defined benefit pension plan. Both of these Plans are administered by the California Public Employees' Retirement System (CalPERS), which acts as a common investment and administrative agent for its participating member employers. Benefit provisions under the Plans are established by State statute and 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 retirement benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees or their beneficiaries. Benefits are based on three factors: service credit (up to one year of service per fiscal year), benefit factor (based on plan and age at retirement), and final compensation (highest pensionable compensation for a consecutive 12- or 36-month period, depending on plan). Members with five years of total service are eligible to retire at age 50 to 62 with statutorily reduced benefits. Members of all but one plan available to employees are eligible to retire upon reaching age 50 and attaining five years of service credit. PEPRA Miscellaneous members (membership date on or after January 1, 2013) are eligible to retire upon reaching age 52 and attaining five years of service. All members are eligible for non -duty disability retirement benefits after five years of service. Safety members are eligible for industrial disability retirement benefits, regardless of age or years of service, if they are determined to be industrially disabled within the meaning of the retirement law. The survivors of members are eligible for the Basic Death Benefit, the 1957 Survivor Benefit, and/or the 1959 Survivor Benefit. The survivors of Safety members who die prior to retirement are also eligible for the Pre -Retirement Option 2W Death Benefit and, if the member is actively employed and dies in the course of duty, the Special Death Benefit. Each plan provides retirees with a cost -of -living adjustment of up to 2% per year. 0 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 10 - PENSION PLANS (CONTINUED) a. General Information about the Pension Plans (Continued) Benefits Provided (Continued) The information below includes the aggregate total pension plan related items: Miscellaneous Safety Net pension liability $ (29,861,741) $ (48,461,788) Deferred outflows of resources - pension 8,174,843 17,256,531 Deferred inflows of resources - pension - (1,461,379) Pension expense 6,323,541 10,383,916 Total $ (78,323,529) 25,431,374 (1,461,379) 16,707,457 The Plans' provisions and benefits in effect at the measurement date ended June 30, 2024, are summarized as follows: Hire date Benefit formula Benefit vesting schedule Benefit payments Retirement age Monthly benefits, as a % of eligible compensation Required employee contribution rates Required employer contribution rates Normal cost rate Payment of unfunded liability Prior to January 1.2012 2%@55 5 years of service monthly for life 50+ 2.00% 10.00% Miscellaneous January 1, 2012 to December 31.2012 2%@60 5 years of service monthly for life 50+ 2.00% 10.00% 10.09% $2,967,624 On or After January 1.2013 2%@62 5 years of service monthly for life 52+ 2.00% 7.25% 67 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 10 - PENSION PLANS (CONTINUED) a. General Information about the Pension Plans (Continued) Benefits Provided (Continued) The Plans' provisions and benefits in effect at the measurement date ended June 30, 2024, are summarized as follows: Hire date Benefit formula Benefit vesting schedule Benefit payments Retirement age Monthly benefits, as a % of eligible compensation Required employee contribution rates Required employer contribution rates: Normal cost rate Payment of unfunded liability Employees Covered Prior to January 1, 2012 3%@50 5 years of service monthly for life 50+ 3.00% 12.00% 27.32% $ 3,995,362 January 1, 2012 to December 31, 2012 2%@50 5 years of service monthly for life 50+ 2.00% 12.00% 20.09% $ 11,876 On or After January 1, 2013 2.7%@57 5 years of service monthly for life 50+ 2.70% 13.75% 13.76% $ 44,087 At the valuation date ended June 30, 2023, the following employees were covered by the benefit terms for the Miscellaneous Plan: Inactive employees or beneficiaries currently receiving benefits Inactive employees entitled to but not yet receiving benefits Active employees Total Contributions Miscellaneous 328 324 221 873 Section 20814(c) of the California Public Employees' Retirement Law requires that the employer contribution rates for all public employers are determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through Ca1PERS' annual actuarial valuation process. 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. City contribution rates may change if plan contracts are amended. Payments made by the employer to satisfy contribution requirements that are identified by the pension plan terms as plan member contributions requirements are classified as plan member contributions. Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 10 - PENSION PLANS (CONTINUED) a. General Information about the Pension Plans (Continued) Contributions (Continued) The liability for governmental activities is primarily liquidated from the General Fund and the liability for business -type activities is liquidated from the Water Enterprise Fund. b. Net Pension Liability The City's net pension liability for each Plan is measured as the total pension liability, less the pension plan's fiduciary net position. The net pension liability of each of the Plans is measured as of June 30, 2024, using an annual actuarial valuation as of June 30, 2023, rolled forward to June 30, 2024, using standard update procedures. A summary of principal assumptions and methods used to determine the net pension liability is shown below. Actuarial Assumptions The total pension liabilities in the June 30, 2024, actuarial valuations were determined using the following actuarial assumptions: Miscellaneous Safety Valuation Date June 30, 2023 June 30, 2023 Measurement Date June 30, 2024 June 30, 2024 Actuarial Cost Method Entry -Age Actuarial Entry -Age Actuarial Cost Method Cost Method Actuarial Assumptions: Discount Rate 6.90% 6.90% Inflation 2.30% 2.30% Projected Salary Increase (1) (1) Mortality Rate Table (2) (2) Post Retirement Benefit Increase (3) (3) (1) Varies by entry age and service. (2) The mortality table used was developed based on Ca1PERS-specific data. The probabilities of mortality are based on the 2021 CaIPERS Experience Study and Review of Actuarial Assumptions. Mortality rates incorporate full generational mortality improvement using 80% of Scale MP-2020 published by the Society of Actuaries. For more details on this table, please refer to the 2021 experience study report from November 2021 that can be found on the Ca1PERS website. (3) The lesser of contract COLA or 2.30% until Purchasing Power Protection Allowance floor on purchasing power applies, 2.30% thereafter. Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 10 - PENSION PLANS (CONTINUED) b. Net Pension Liability (Continued) Long-term Expected Rate of Return The long-term expected rate of return on pension plan investments was determined using a building -block method in which expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. In determining the long-term expected rate of return, Ca1PERS took into account both short-term and long-term market return expectations. Using historical returns of all of the funds' asset classes, expected compound (geometric) returns were calculated over the next 20 years using a building- block approach. The expected rate of return was then adjusted to account for assumed administrative expenses of 10 Basis points. The expected real rates of return by asset class are as follows: Assumed Asset Real Asset Class Allocation Return1,2 Global Equity - Cap -weighted 30.00% 4.54% Global Equity - Non -Cap -weighted 12.00% 3.84% Private Equity 13.00% 7.28% Treasury 5.00% 0.27% Mortgage -backed Securities 5.00% 0.50% Investment Grade Corporates 10.00% 1.56% High Yield 5.00% 2.27% Emerging Market Debt 5.00% 2.48% Private Debt 5.00% 3.57% Real Assets 15.00% 3.21 % Leverage -5.00% -0.59% - An expected inflation of 2.30% used for this period. - Figures are based on the 2021 Asset Liability Management study. 70 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 10 - PENSION PLANS (CONTINUED) b. Net Pension Liability (Continued) Discount Rate The discount rate used to measure the total pension liability was 6.90%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on those assumptions, the Plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total pension liability. c. Changes in the Net Pension Liability The changes in the net pension liability for the Miscellaneous Plan are as follows: Balance at June 30, 2023 (Valuation Date) Changes in the Year: Service cost Interest on the total pension liability Differences between actual and expected experience Contribution - employer Contribution - employee Net investment income Administrative expenses Benefit payments, including refunds of employee contributions Net Changes Balance at June 30, 2024 (Measurement Date) Increase (Decrease) Total Plan Net Pension Pension Fiduciary Liability Liability Net Position (Asset) $156,690,885 $122,450,572 $ 34,240,313 3,211,327 10,687,100 212,768 5,507,245 1,442,171 - 11,639,989 - (99,638) (7,247,624) (7,247,624) 6,863,571 11,242,143 3,211,327 10,687,100 212,768 (5,507,245) (1,442,171) (11,639,989) 99,638 (4.378.572) $ 163,554,456 $ 133,692,715 $ 29,861,741 71 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 10 - PENSION PLANS (CONTINUED) c. Changes in the Net Pension Liability (Continued) As of June 30, 2025, the City reported $48,461,788 of liabilities for its proportionate share of the net pension liability for the Safety Plan. The City's net pension liability for the Safety Plan is measured as the proportionate share of the net pension liability. The net pension liability of the Safety Plan is measured as of June 30, 2024, and the total pension liability for the Safety Plan used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2023, rolled forward to June 30, 2024, using standard update procedures. The City's proportionate share of the net pension liability was based on a projection of the City's long-term share of contributions to the pension plans relative to the projected contributions of all participating employers, actuarially determined. The City's proportionate share of the net pension liability for the Safety Plan as of measurement dates ended June 30, 2023, and 2024 was as follows: Safety Proportion - June 30, 2023 0.67588% Proportion - June 30, 2024 Change - Increase (Decrease) 0.66470% -0.01118% Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the net pension liability of the City for each Plan, calculated using the discount rate for each Plan of 6.90%, as well as what the City's net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower or 1-percentage point higher than the current rate: 1 % Decrease Net Pension Liability Current Discount Rate Net Pension Liability 1 % Increase Net Pension Liability Miscellaneous Safety 5.90% 5.90% $ 52,051,283 6.90% $ 29,861,741 7.90% $ 11,628,663 $ 76,084,953 6.90% $ 48,461,788 7.90% $ 25,869,922 72 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 10 - PENSION PLANS (CONTINUED) c. Changes in the Net Pension Liability (Continued) Pension Plan Fiduciary Net Position Detailed information about each pension plan's fiduciary net position is available in the separately issued Ca1PERS financial reports. d. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions For the year ended June 30, 2025, the City recognized pension expense of $6,323,541 and $10,383,916 for the Miscellaneous and Safety Plans, respectively. At June 30, 2025, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Pension contributions subsequent to measurement date Differences between actual and expected experience Net differences between projected and actual earnings on plan investments Total Pension contributions subsequent to measurement date Differences between actual and expected experience Change in assumptions Change in employer's proportion and differences between the employer's contributions and the employer's proportionate share of contributions Net differences between employer's contributions and proportionate share of contributions Net differences between projected and actual earnings on plan investments Total Miscellaneous Deferred Outflows of Resources Deferred Inflows of Resources $ 5,904,638 340,293 1,929,912 $ 8,174,843 Safety Deferred Deferred Outflows Inflows of Resources of Resources $ 7,715,563 $ - 3,954,913 (128,591) 1,193,999 - 551,091 1,498,543 (817,202) (515,586) 2,342,422 - $ 17,256,531 $ (1,461,379) 73 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 10 - PENSION PLANS (CONTINUED) d. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions (Continued) Deferred outflows of resources $5,904,638 and $7,715,563 reported in the Miscellaneous and Safety Plans, respectively, are related to contributions subsequent to the measurement date and will be recognized as a reduction of the net pension liability in the fiscal year ending June 30, 2026. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows: Fiscal Year Ending June 30, Miscellaneous Safety 2026 $ 171,706 $ 3,169,266 2027 3,220,902 5,639,833 2028 (480,238) 71,959 2029 (642,162) (801,471) 2030 - - Thereafter - - NOTE 11- POST -EMPLOYMENT HEALTH CARE BENEFITS a. General Information about the OPEB Plan Plan Description The City administers a single -employer defined benefit other post -employment benefit (OPEB) plan that provides eligible retirees with a subsidy towards retiree medical insurance premiums. An employee hired by the City prior to July 1, 2011, is eligible for this benefit if they retire from the City on or after age 50 (unless disabled), with five years of service and are eligible for a Ca1PERS pension and enroll in a Ca1PERS medical insurance plan immediately after retirement. An employee hired by the City on or after July 1, 2011, is eligible for this benefit if they retire from the City on or after age 50 (unless disabled), with ten years of service and are eligible for a Ca1PERS pension and enroll in a CalPERS medical insurance plan immediately after retirement. Eligible employees who suffer a disability may satisfy the continuous service requirement using a combination of service with the City and service with any public agency with a reciprocal retirement system. Benefits vary by hire date, employment status and employment classification. In the event of a retiree's death, benefits may continue to surviving beneficiaries in certain circumstances. 74 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 11 - POST -EMPLOYMENT HEALTH CARE BENEFITS (CONTINUED) a. General Information about the OPEB Plan (Continued) Plan Description (Continued) A portion of the City's OPEB liability is in the form of an implied rate subsidy. Retirees and active employees are insured together as a group, thus creating a lower rate for retirees than if they were insured separately. Although the retirees are solely responsible for the cost of their health insurance benefits through this plan, the retirees receive the benefit of a lower rate. The difference between these amounts is the implied rate subsidy, which is considered an OPEB liability. In 2018, the City established a trust with Public Agency Retirement Services (PARS) to hold assets that are legally restricted for the City's OPEB plan under Section 115 of the Internal Revenue Code. The City makes discretionary contributions to the OPEB Trust. Contributions to the OPEB Trust and earnings on those contributions are irrevocable. The City also determines the timing of the distribution of trust assets and whether those assets will be paid directly to the insurance provider or to reimburse the City for plan benefits and expenses paid by the City. The OPEB Trust is reported as a fiduciary fund since it would be misleading to exclude the OPEB Trust Fund from the City's financial statements. PARS issues a publicly available financial report for the fiduciary net position of the OPEB Trust, which is available upon request. The plan itself does not issue a separate financial report. Employees Covered At June 30, 2023, valuation date, the benefit terms covered the following employees: Inactive employees or beneficiaries currently receiving benefits 136 Active employees 314 Total 450 Accounting for the Plan The OPEB trust is prepared using the accrual basis of accounting. Employer contributions to the plan are recognized when due and the employer has made a formal commitment to provide the contributions. Benefits are recognized when due and payable in accordance with the terms of each plan. Method Used to Value Investments Investments are reported at fair value, which is determined by the mean of the most recent bid and asked prices as obtained from dealers that make markets in such securities. Securities for which market quotations are not readily available are valued at their fair value as determined by the custodian with the assistance of a valuation service. 75 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 11 - POST -EMPLOYMENT HEALTH CARE BENEFITS (CONTINUED) a. General Information about the OPEB Plan (Continued) Contributions The contribution requirements of plan members and the City are established and may be amended by City Council. Currently, contributions are not required from plan members. Administrative costs of the OPEB plan are financed through investment earnings. The annual contribution is based on the actuarially determined contributions. For measurement period ending June 30, 2025, the City contributed $500,000 to the PARS OPEB trust, made payments of $590,493 to insurance providers and retirees, and the estimated implied subsidy was $341,600, resulting in total contributions of $1,432,093. The liability for governmental activities is primarily liquidated from the General Fund and the liability for the business -type activity is liquidated from the Water Enterprise Fund. b. Net OPEB Liability The City's net OPEB liability was measured as of June 30, 2025, and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation as of June 30, 2023, rolled forward to June 30, 2025, using standard update procedures. A summary of the principal assumptions and methods used to determine the total OPEB liability is shown on the next page. Actuarial Assumptions The net OPEB liability in the June 30, 2023, actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified: 76 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 11 - POST -EMPLOYMENT HEALTH CARE BENEFITS (CONTINUED) b. Net OPEB Liability (Continued) Actuarial Assumptions (Continued) Valuation Date Measurement Date Actuarial Cost Method Actuarial Assumptions: Discount Rate Expected long term investment rate of return Inflation Salary Increase Healthcare Cost Trend Rates Pre -Retirement Mortality: Miscellaneous Safety Post -Retirement Mortality: Miscellaneous Safety June 30, 2023 June 30, 2025 Entry -Age Normal Level Percentage of Salary 6.00% 6.00% net of OPEB plan investment expense 2.50% 2.75%. 5.50 percent for 2024, 5.25 percent for 2025-2029, 5.00 percent for 2030-2039, 4.75 percent for 2040-2049, 4.50 percent for 2050-2069, and 4.00 percent for 2070 and later years; Medicare ages: 4.50 percent for 2024-2029 and 4.00 percent for 2030 and later years. Preretirement Mortality Rates for Public Agency Miscellaneous from CAPERS Experience Study (2000-2019) Preretirement Mortality Rates for Public Agency Police and Fire from CAPERS Experience Study (2000-2019) Post -retirement Mortality Rates for Public Agency Miscellaneous from CalPERS Experience Study (2000-2019) Post -retirement Mortality Rates for Public Agency Police and Fire from CaIPERS Experience Study (2000-2019) Actuarial assumptions used in the June 30, 2023, valuation were based on a review of plan experience during the period June 30, 2021, to June 30, 2023. 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 investment expense and inflation) are developed for each major asset class. The calculated investment rate of return was set equal to the expected ten-year compound (geometric) real return plus inflation (rounded to the nearest 25 basis points, where appropriate). The table on the next page provides the long-term expected real rates of return by asset class (based on published capital market assumptions). 77 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 11 - POST -EMPLOYMENT HEALTH CARE BENEFITS (CONTINUED) b. Net OPEB Liability (Continued) Actuarial Assumptions (Continued) Assumed Long -Term Asset Expected Real Asset Class Aflocation Rate of Return PARS OPEB Trust Broad U.S Equity U.S Fixed Total Discount Rate 60.00% 4.40% 40.00% 1.80% 100.00% GASB 75 requires a discount rate that reflects the following: a. The long-term expected rate of return on OPEB plan investment — to the extent that the OPEB plan's fiduciary net position (if any) is projected to be enough to make projected benefit payments and assets are expected to be invested using a strategy to achieve that return. b. A yield or index rate for 20-year, tax-exempt general obligation municipal bonds with an average rating of AA/Aa or higher — to the extent that the conditions in (a) are not met. To determine a resulting single (blended) rate, the amount of the plan's projected fiduciary net position (if any) and the amount of projected benefit payments is compared in each period of projected benefit payments. The discount rate used to measure the City's Total OPEB liability is based on these requirements and the following information: To determine a resulting single (blended) rate, the amount of the plan's projected fiduciary net position (if any) and the amount of projected benefit payments is compared in each period of projected benefit payments. The discount rate used to measure the City's Total OPEB liability is based on these requirements and the following information: Reporting Date Measurement Date Long -Term Expected Return of Plan Investments Municipal Bond Index Bond Rate Discount Rate June 30, 2024 June 30, 2023 6.00% Fidelity GO AA 20 Years 3.86% 6.00% June 30, 2024 June 30, 2024 6.00% Fidelity GO AA 20 Years 3.97% 6.00% June 30, 2025 June 30, 2025 6.00% Bond Buyer 20-Bond GO 5.20% 6.00% 78 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 11 - POST -EMPLOYMENT HEALTH CARE BENEFITS (CONTINUED) c. Changes in the net OPEB liability The changes in the net OPEB liability are as follows: Balance at June 30, 2024 (Measurement Date) Changes in the Year: Service cost Interest on the total OPEB liability Differences between actual and expected experience Changes in assumptions Contribution - employer Net investment income Benefit payments Administrative expenses Net Changes Balance at June 30, 2025 (Measurement Date) Change of Assumptions Increase (Decrease) Total Plan Net OPEB Fiduciary OPEB Liability Net Position Liability $ 18,119,154 $ 4,269,006 $ 13,850,148 656,754 - 656,754 1,098,999 - 1,098,999 - 1,432,093 (1,432,093) - 502,846 (502,846) (932,093) (932,093) - - (20,270) 20,270 823,660 982,576 (158,916) $ 18,942,814 $ 5,251,582 $ 13,691,232 From measurement date June 30, 2024, to measurement date June 30, 2025, there were no changes in assumptions. Sensitivity of the Net OPEB Liability to Changes in the Discount Rate The following presents the net OPEB liability of the City, as well as what the City's net OPEB liability would be if it were calculated using a discount rate that is 1-percentage point lower or 1-percentage point higher than the current discount rate: 1 % Decrease Discount Rate 1 % Increase (5.00%) (6.00%) (7.00%) Net OPEB Liability $ 15,475,938 $ 13,691,232 $ 11,934,110 79 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 11 - POST -EMPLOYMENT HEALTH CARE BENEFITS (CONTINUED) c. Changes in the net OPEB liability (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, as well as what the City's net OPEB liability would be if it were calculated using healthcare cost trend rates that are 1-percentage point lower or 1-percentage point higher than the current healthcare cost trend rates: Current Healthcare 1 % Decrease Cost Trend Rates 1 % Increase Net OPEB Liability $ 11,819,118 $ 13,691,232 $ 16,121,141 d. OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB For the year ended June 30, 2025, the City recognized OPEB expense of $1,407,305. At June 30, 2025, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Differences between actual and expected experience Change in assumptions Differences between projected and actual earnings on investments Total Deferred Deferred Outflows Inflows of Resources of Resources $ 303,983 $ (883,014) 968,756 (278,788) - (179,294) $ 1,272,739 $ (1,341,096) Amounts reported as deferred inflows of resources related to OPEB will be recognized as OPEB expense as follows: Fiscal Year Ending June 30, Amount 2026 $ (54,382) 2027 (161,549) 2028 (136,078) 2029 (87,957) 2030 90,845 Thereafter 280,764 :E Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 12 - IRS SECTION 457 DEFERRED COMPENSATION PLAN In accordance with federal law, all part-time employees must be enrolled in Social Security or another "qualified" retirement plan. Since the City does not participate in Social Security, part-time employees are enrolled in the City's IRS Section 457 deferred compensation plan. Nationwide Retirement Solutions, Inc. acts as the third -party administrative services provider for the defined contribution plan. Employees are required to contribute 5.5% of their salary to the deferred compensation plan every pay period. The City contributes an additional 2% of salary, for a total contribution of 7.5%. The City Council established the plan by resolution in fiscal year 2011-2012 and has the authority to amend contribution requirements. Contributions to the participant's account must equal at least 7.5% of the participant's compensation, or such other minimum amount as required for the plan to be considered a retirement system under applicable government code and legal requirements. Total contributions to the plan during fiscal year 2025 were $111,588. NOTE 13 - SELF-INSURANCE PROGRAMIRISK POOL The City uses a combination of insured and self -insured programs to finance its property and casualty risk. The City is self -insured for worker's compensation, automotive, and general liability risks. Excess liability coverage for the City's self-insurance retention of $350,000 per occurrence is provided through a risk sharing pool, the California Insurance Pool Authority (CIPA). The CIPA provides excess liability coverage above $3,000,000 per occurrence and $20,000,000 annual aggregate. The City's self-insurance retention limit is $300,000 per occurrence for worker's compensation claims. Worker's compensation claims which exceed the self-insurance retention are insured by CIPA up to $2,000,000. Property, pollution, cyber and employment practices liability risk are financed through insurance contracts and have various limits and deductibles. The City is a member of CIPA in order to jointly purchase insurance coverage and to share costs for professional risk management, claim administration, and group purchasing of insurance products with ten other Orange County cities. Members may be assessed the difference between the funds available and the $20,000,000 annual aggregate in proportion to their annual premium. CIPA uses independent actuaries and underwriters to determine premiums and help set insurance limits and deductible levels. The pool is managed by an independent general manager and contracted legal advisers. Two internal subcommittees are made up of City members to provide direction on underwriting and claims activities. The Governing Board of CIPA is comprised of one member from each participating City and is responsible for the selection of the independent general manager, legal counsel, and electing subcommittee members. The financial statements of the CIPA are available at the administrative office located at 366 San Miguel Drive, Newport Beach, California. The government retains a risk of loss, due to the fact that actual losses may exceed estimated claims or coverage amounts. Settled claims have not exceeded any of the City's coverage amounts in any of the last three fiscal years, and there were no reductions in the City's coverage during the year ended June 30, 2025. At June 30, 2025, estimated claims payable of $11,497,230, which includes a provision for incurred but not reported claims and loss adjustment expenses, are reported as a long-term liability. 81 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 13 - SELF-INSURANCE PROGRAMIRISK POOL (CONTINUED) Changes in the balances of claims liabilities for the years ended June 30, 2025, and 2024, including a provision for incurred but not reported claims and loss adjustment expenses, were as follows: Beginning Ending June 30, Balance Additions Deletions Balance 2024 $ 9,329,099 $ 2,935,084 $ (1,268,203) $ 10,995,980 2025 10,995,980 1,773,133 (1,271,883) 11,497,230 NOTE 14 - SPECIAL ASSESSMENT DISTRICTS' BONDS Special assessment districts exist in various parts of the City to provide improvements to properties located in those districts. Properties are assessed for the cost of improvements; these assessments are payable over the term of the debt issued to finance the improvements and must be sufficient to repay this debt. The bonds listed below were issued pursuant to the Refunding Act of 1984 for the 1915 Improvement Act Bonds and the Improvement Bond Act of 1915. They are the liabilities of the property owners and secured by liens against the assessed property. The City Treasurer acts as an agent for the collection of principal and interest payments by the property owners and remittance of such monies to bondholders. Neither the faith and credit nor the general taxing power of the City have been pledged to the payment of the bonds. Therefore, none of the following special assessment bonds have been included in the accompanying financial statements. Amount District Bonds of Issue Community Facilities District 04-1, 2013 $ 9,350,000 Community Facilities District 07-1, 2015A 13,155,000 Community Facilities District 06-1, 2014- 1 Refunding 55,650,000 Outstanding June 30, 2025 $ 5,490,000 11,455,000 55,650,000 $ 78,155,000 $ 72,595,000 In May 2013, the City issued $9,350,000 of Special Tax Refunding Bonds, Series 2013, to refund in full and defease the City of Tustin Community Facilities District No. 04-1 Special Tax Bonds, Series 2004. The 2004 series was originally issued to facilitate the new infrastructure construction on the former MCAS being converted into various public, housing, commercial and educational uses. The proceeds of the bonds will be used to pay the cost and expense of acquisition and construction of certain public facilities necessary for the development of the Tustin Legacy District, fund the reserve account, pay capitalized interest on bonds through September 1, 2032, and pay costs of issuing the Series 2013 Bonds. Serial current interest bonds will mature from September 1, 2014, to September 1, 2032. Term current interest bonds will mature on September 1, 2034, with mandatory sinking payments from September 1, 2033, through September 1, 2034. Interest maturity rates of the current interest bonds range from 2.00% at September 1, 2014, to 5.00% at September 1, 2024. At June 82 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 14 - SPECIAL ASSESSMENT DISTRICTS' BONDS (CONTINUED) 30, 2025, the outstanding amount of the Special Tax Refunding Bonds, Series 2013 was $5,490,000. In December 2015, the City issued $13,155,000 Community Facilities District No. 07-1 Special Tax Refunding Bonds, Series 2015A (CFD 07-1 2015A Refunding Bonds). The CFD 07-1 2015A Refunding Bonds were issued to refund in full and defease the CFD 07-1 Series 2007 Bonds. Serial bonds will mature from September 1, 2021, to September 1, 2025, with interest rates ranging from 2.5% to 3.125%. Term current interest bonds will mature on September 1, 2030, and September 1, 2037, with mandatory sinking payments from September 1, 2030, through September 1, 2037, with interest rates of 5.00%. The City's refunding of the CFD 07-1 Series 2007 Bonds resulted in a decrease of its total debt service payments by $2,152,849 and an economic gain (difference between the present values of the old and new debt) of $1,423,246. At June 30, 2025, the outstanding amount of the CFD 07-1 2015A Refunding Bonds was $11,455,000. In June 2025, the City issued $55,650,000 Community Facilities District No. 2014-01 and 06-01 Special Tax Refunding Bonds (CFD 2014-01 and 06-1 Refunding Bonds). The CFD 2014-01 and 06-1 Refunding Bonds were issued to refund in full and defease the CFD No. 2014-01 and CFD No. 06-1 Bonds. Serial current bonds will mature from September 1, 2026, to September 1, 2045, with an interest rate of 5.0%. The City's refunding of the CFD No. 2014-01 and CFD No. 06-1 Bonds resulted in a decrease of its total debt service payments by $3,733,750 and an economic gain (difference between the present values of the old and new debt) of $3,462,426. At June 30, 2025, the outstanding amount of the Community Facilities District 2014-01 and 06-1 Refunding Bonds was $55,650,000. NOTE 15 - GOVERNMENTAL FUND BALANCE CLASSIFICATIONS The fund balances reported on the fund statements consist of the following categories: Nonspendable - This classification includes amounts that cannot be spent because they are either (a) not in spendable form or (b) legally or contractually required to be maintained intact. Restricted - This classification includes amounts that can be spent only for specific purposes stipulated by constitution, external resource providers or through enabling legislation. Committed - This classification includes amounts that can be used only for the specific purposes determined by a formal action of the City's highest level of decision -making authority. The City Council is the highest level of decision -making authority for the City that can, by adoption of an ordinance prior to the end of the fiscal year, commit fund balance. Once adopted, the limitation imposed by the ordinance remains in place until a similar action is taken (the adoption of another ordinance) to remove or revise the limitation. Assigne - This classification includes amounts that are intended to be used for specific purposes as indicated by City Council or by persons to whom City Council has delegated the authority to assign amounts for specific purposes. The City Council has not delegated such authority. Unassigned - This classification includes the residual balance for the City's general fund including all 83 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 15 - GOVERNMENTAL FUND BALANCE CLASSIFICATIONS (CONTINUED) spendable amounts not contained in other classifications. Negative fund balance in governmental funds, after determining the fund balance classifications described above, is also reported as unassigned fund balance. The General Fund is the only fund that reports a positive unassigned fund balance amount. When an expenditure is incurred for purposes for which both restricted and unrestricted fund balances are available, the City's policy is to apply restricted fund balance first. When an expenditure is incurred for purposes for which committed, assigned or unassigned fund balances are available, the City's policy is to apply committed fund balance first, then assigned fund balance, and finally unassigned fund balance. Nonspendable: Prepaid items Land held for resale Loan receivable Advances to other funds Restricted for: Capital projects (1) Public safety program Community services Housing projects Solid waste program Pension Assigned to: Capital projects (2) Unassigned Total fund balances General Housing Fund Authority Other Governmental Funds Total Governmental Funds $ 1,191,025 $ - $ - $ 1,191,025 102,457,773 - - 102,457,773 54,629 - - 54,629 3,830,700 - - 3,830,700 16,972,518 - 15,432,469 32,404,987 287,923 - 1,031,583 1,319,506 528,434 - 330,291 858,725 - 71,795 2,317,922 2,389,717 - - 2,511,813 2,511,813 17,618,008 - - 17,618,008 - - 10,666,178 10,666,178 117,309,376 - (2,586) 117,306,790 $ 260,250,386 $ 71,795 $ 32,287,670 $ 292,609,851 (1) Restricted for capital projects: • General Fund $16,972,518 - legally restricted for backbone infrastructure at the Tustin Legacy development. • Other Governmental Funds: o Gas Tax Special Revenue Fund $1,677,079 - comprised of state gas taxes restricted for allowable street -related purposes. 84 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 15 - GOVERNMENTAL FUND BALANCE CLASSIFICATIONS (CONTINUED) o Cable PEG Fees Fund $1,009,665 — comprised of state and federal cable franchise fees restricted for capital expenditures that support the City's public access broadcasting and related communications. o Air Quality Special Revenue Fund $235,024 - restricted for projects to reduce pollution. o Road Maintenance and Rehabilitation Special Revenue Fund $7,512,515 - restricted for maintenance and rehabilitation of streets. o Measure M Special Revenue Fund $4,748,406 — allocations from Orange County voter - approved transportation sales tax, restricted for allowable street -related purposes. o Assessment District Construction 95-1 Capital Projects Fund $249,779 - restricted for uses specified in the bond indenture. (2) Assigned to capital projects: • Other Capital Projects Fund $9,035,449 — for specific projects indicated in the adopted budget. • Park Acquisition and Development Special Revenue Fund $1,630,729 — comprised of park fees for improvement of City parks. NOTE 16 - JOINT POWERS A UTHORITY Orange County Fire Authority In January 1995, the City of Tustin entered into a joint powers agreement with the Cities of Buena Park, Cypress, Dana Point, Irvine, Laguna Hills, Laguna Niguel, Lake Forest, La Palma, Los Alamitos, Mission Viejo, Placentia, San Clemente, San Juan Capistrano, Seal Beach, Stanton, Villa Park, and Yorba Linda and the County of Orange (County) to create the Orange County Fire Authority (Fire Authority). The purpose of the Fire Authority is to provide for mutual fire protection, prevention, and suppression services and related and incidental services including, but not limited to, emergency medical and transport services, as well as providing facilities and personnel for such services. In 2021, the City of Placentia left the Fire Authority. The effective date of formation was March 1, 1995. The Fire Authority's governing board consists of one representative from each City and two from the County. The operations of the Fire Authority are funded with structural fire fees collected by the County through the property tax roll for the unincorporated area and on behalf of all member cities except for the Cities of Stanton, Tustin, San Clemente, Buena Park, and Seal Beach. The County pays all structural fees it collects to the Fire Authority. The cities of Stanton, Tustin, San Clemente, Buena Park, and Seal Beach are considered "cash contract cities" and, accordingly, make cash contributions based on the Fire Authority's annual budget. The financial statements of the Orange County Fire Authority are available at 1 Fire Authority Road, Irvine, California. 85 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 16 - JOINT POWERS A UTHORITY (CONTINUED) Orange County Housing Finance Trust In May 2019, the City of Tustin entered into a joint powers agreement with cities throughout the county and the County of Orange (County) to create the Orange County Housing Finance Trust (OCHFT). The purpose of the OCHFT is to fund the planning and construction of housing of all types and tenures for the homeless population and persons and families of extremely low, very low, and low income as defined in the Section 50093 of the Health and Safety Code, including but not limited to, permanent supportive housing, and to receive public and private financing and funds. The OCHFT's governing board consists of nine members: two members of the Board of Supervisors of the County, two countywide elected officials, one city council member for each city member with the greatest population in the North, Central, and South Region Service Planning Area, as depicted in the agreement, and two city council members selected from member cities that are not already represented. The County is responsible for OCHFT's administrative costs for one year following the creation of OCHFT. After the initial year, the member cities will make annual contributions towards the budgeted administrative costs in accordance with a cost allocation formula approved by the governing board. The particular programs and program budget, funded, sponsored or operated by OCHFT, as well as the level of and mechanisms for, the involvement of OCHFT and each member city, in such programs and program budget, will be determined and approved by the governing board. A member city's individual contribution, involvement and role in any particular program or budgeted program costs will be mutually agreed to between the member city and OCHFT. The financial statements of the Orange County Housing Finance Trust are available at 333 W. Santa Ana Blvd, Santa Ana, California. NOTE 17 - SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT AGENCYDISCLOSURES The assets and liabilities of the former redevelopment agency were transferred to the Successor Agency to the Tustin Community Redevelopment Agency on February 1, 2012, as a result of the dissolution of the former redevelopment agency. The City is acting in a fiduciary capacity for the assets and liabilities. Disclosures related to these transactions are as follows: 0 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 17 - SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT A GENCYDISCL OSURES (CONTINUED) Long -Term Liabilities A summary of long-term liabilities activity for the year ended June 30, 2025, is as follows: Balance June 30, 2024 Tax allocation bonds $41,830,000 Unamortized premium 4,503,572 Additions Deletions $ - $ (2,305,000) - (261,077) Balance Due Within June 30, 2025 One Year $39,525,000 $2,395,000 4,242,495 261,077 Total long-term liabilities $46,333,572 $ - $ (2,566,077) $43,767,495 $2,656,077 2016 Tax Allocation Refunding Bonds onds On September 29, 2016, the Successor Agency to the Tustin Community Redevelopment Agency issued $55,940,000 Refunding Tax Allocation Bonds, Series 2016 (2016 Bonds) for the purpose of refunding in advance the 2010 Housing Bonds and the MCAS 2010 Redevelopment Bonds and pay for a surety bond insurance policy and costs of issuance of the bonds. The 2016 Bonds proceeds were invested in escrow funds (2010 Housing Escrow Fund and 2010 Redevelopment Escrow Fund) with a trustee which together will pay interest and principal on the 2010 Housing Bonds up to and including September 1, 2021 and to redeem the then outstanding 2010 Housing Bonds in full on September 1, 2021; and pay interest and principal on the MCAS 2010 Redevelopment Bonds up to and including September 1, 2018 and to redeem the then outstanding MCAS 2010 Redevelopment Bonds in full on September 1, 2018. As of June 30, 2025, the amount of defeased 2010 Housing Bonds outstanding was $4,805,401. The defeased MCAS 2010 Redevelopment Bonds were paid in full on September 1, 2018. The 2016 Bonds are payable in annual installments ranging from $2,025,000 to $2,925,000 commencing on September 1, 2017. Interest is payable semiannually on March 1 and September 1, with rates ranging from 2.0% to 5.0% per annum. The bonds maturing on or after September 1, 2027, are subject to optional redemption prior to maturity, as a whole or in part, from any available source of funds, at a redemption price equal to the principal amount thereof, together with accrued interest to the date fixed for redemption, without premium. The defeasance resulted in a difference between the reacquisition price and the net carrying amount of the old debt of $7,392,925. The difference reported in the accompanying statements as a deferred outflow of resources, is being charged to interest expense through 2040. The remaining balance at June 30, 2025, is $4,805,401. At June 30, 2025, the 2016 Tax Allocation Refunding Bonds outstanding balance was $39,525,000. The annual debt service requirements to amortize the tax allocation bonds are as follows: 87 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 Year Ending June 30, 2026 2027 2028 2029 2030 2031 - 2035 2036 - 2040 2041 Principal $ 2,395,000 2,515,000 2,640,000 2,360,000 2,030,000 11,525,000 13,790,000 2,270,000 Interest $ 1,493,450 1,370,700 1,241,825 1,116,825 1,007,075 3,684,813 1,413,425 34,050 Total $ 3,888,450 3,885,700 3,881,825 3,476,825 3,037,075 15,209,813 15,203,425 2,304,050 Totals $ 39,525,000 $ 11,362,163 $ 50,887,163 NOTE 18 - SCHOOL FACILITIES IMPLEMENTATION COMMITMENT In August 2015, the City entered into a School Facilities Implementation, Funding and Mitigation Agreement (I/M Agreement) as amended with the Tustin Unified School District (TUSD), as well as a joint community facilities agreement with TUSD and Standard Pacific that provides a framework for development of grades 6-12 schools on the 40-acre designated site, along with the opening of Heritage Elementary School as a magnet elementary site in the fall of 2016. The estimated cost to complete the project is $75,117,850. In order to facilitate the implementation plan, the City will advance funds to the project development with three different approaches. First, the City advanced $4 million in October 2015. Second, the City will deposit an additional $15 million in the project development account which occurred on August 1, 2016. Third, the City will have the option to advance additional funds for the entire project or just certain projects. The City also issued 2014-1 Community Facilities District Special Tax Bonds, Series 2015A, totaling $27,665,000. In October 2017, the City conveyed approximately 40 acres of the former Marine Corps Air Station Tustin (MCAS Tustin) to the Tustin Unified School District for the establishment of the grades 6-12 schools facility project in accordance with the site conveyance agreement. The total obligation under the I/M Agreement with TUSD is the lesser of the actual cost to construct TUSD facilities or $85,000,000. In January 2019, the City advanced $14,958,598 to TUSD to provide the remaining funds necessary to fund both: (a) the Legacy Magnet Academy classroom building for grades 6-9 along with associated parking and athletic fields, and (b) the Administration Building portion of the Legacy Magnet Academy 6-12 School Project. These expenses are expected to be offset by a credit the City will receive from TUSD in the amount of $11,849,685 which credit will be redeemable by the City against any future prepayment by the City of the special tax obligations within CFD 15-2. As of June 30, 2025, the City's total contributions to TUSD under the I/M agreement was $65,226,635. The balance remaining under the I/M Agreement is $19,773,365. :: Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 19 - COMMITMENTS AND CONTINGENCIES Legal Claims There are certain legal actions pending against the City which have arisen in the normal course of operations. In the opinion of management and the City Attorney, the ultimate resolution of such actions is not expected to have a significant impact, if any, on the financial statements or operations of the City. Capital Projects Various capital projects were in progress at June 30, 2025, with an estimated cost to complete of approximately $75,724,520 across all fund types. Families Forward Affordable Housing In November 2023, the City entered into an Affordable Housing Grant Agreement with Families Forward to construct six to eight affordable rental units using $2,000,000 from Voluntary Workforce Housing Incentive Special Revenue Fund. This affordable housing project aims to provide housing for extremely low to low-income families with at least one minor child that are homeless or at risk of homelessness. Under the grant agreement, Families Forward is required to contribute $500,000 of its own funding toward the project and secure a $2.5 million grant from CalOptima. The agreement also specifies that the City will not disburse grant funding until the affordable housing project has been fully entitled and all necessary building permits have been issued. The City has approved the project and appropriated $2,100,000 from the Voluntary Workforce Housing Incentive Special Revenue Fund to cover the grant and associated administrative costs. Entitlement process is underway. NOTE 20 — NAVYNORTHHANGAR FIRE On November 7, 2023, a fire erupted at the former Marine Corps Air Station Tustin North Hangar, a 17-story, 300,000-square-feet wooden structure designated as a historical landmark. The fire eventually destroyed the North Hangar. The debris and other matters from the fire spread to the surrounding communities. The U.S. Navy (Navy), who owns the North Hangar and the approximately 78 acres surrounding the North Hangar, entered into a Cooperative Agreement with the City that allows the City to take all appropriate emergency measures necessary to address public health and environmental concerns related to this fire incident. Since then, the Cooperative Agreement has been amended several times to reflect the Navy's commitment to provide up to $105.8 million in funding for the costs of the emergency response and subsequent clean-up work in the nearby communities. The clean-up work is still on -going. For the year ended June 30, 2025, the City recognized $32,936,827 in emergency and clean-up expenses related to the fire incident. The City also recognized $42,797,641 in reimbursement revenue from the Navy including $34,894,486 of revenue that was deferred at June 30, 2024, and collected in fiscal year 2025. The remaining costs are expected to be reimbursed in the coming year. 0 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Notes to Basic Financial Statements June 30, 2025 NOTE 21— RESTATEMENT The City implemented GASB 101: Compensated Absences during the fiscal year. This adjustment recognized vacation and sick leave (and applicable payroll taxes) that has not been used but is more likely than not to be used or settled in the future. Net position, beginning of year, as previously reported Implementation of GASB 101 Net position, beginning of year, as restated NOTE 22 — SUBSEQUENT EVENTS Land Purchase and Sale Agreement Water Business -Type Governmental Fund Activities Activities $ 52,599,083 $ 52,599,083 $ 770,301,454 (15,264) (15,264) (301,943) $ 52,583,819 $ 52,583,819 $ 769,999,511 On September 16, 2025, the City and Mariners Church entered into a purchase and sale agreement for approximately 3.324 acres of City -owned property located at Tustin Legacy. The agreement sets the purchase price at $4 million with closing at the earliest of 30 days after satisfaction of closing conditions or the entitlement deadline on September 30, 2026. Sale of Land Tustin Legacy On December 12, 2025, the City closed escrow on the sale of 19.4 acres of land at Tustin Legacy to a developer for $42.1 million. .o SUNSETMARKETIN OLDTOWNTUSTIN REQUIRED SUPPLEMENTAL INFORMATION F �S'i1 V- Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 The page left blank intentionally Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 The page left blank intentionally Docusign Envelope ID: A6BE669C-DB25-44DB-AA21 -F69A9AF2C1 F5 CITY OF TUSTIN SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY SAFETY PLAN Last Ten Fiscal Years Fiscal year ended Measurement period Plan's proportion of the net pension liability Plan's proportionate share of the net pension liability Plan's covered payroll Plan's proportionate share of the net pension liability as a percentage of covered payroll Plan's proportionate share of the fiduciary net position as a percentage of the Plan's total pension liability Plan's proportionate share of aggregate employer contributions Notes to Schedule: Benefit Changes: June 30, 2025 June 30, 2024 June 30, 2023 June 30, 2022 June 30, 2021 June 30, 2024 June 30, 2023 June 30, 2022 June 30, 2021 June 30, 2020 0.66470% 0.67588% 0.68936% 0.66329% 0.64745% $ 48,461,788 $ 50,521,884 $ 47,370,171 $ 23,278,195 $ 40,839,584 $ 14,000,339 $ 13,375,405 $ 12,664,376 $ 11,498,163 $ 10,848,695 346.15% 377.72% 374.04% 202.45% 376.45% 76.66% 74.87% 75.53% 76.61% 73.12% $ 5,678,814 $ 5,604,256 $ 8,968,451 $ 7,653,147 $ 6,191,362 There were no changes to benefit terms that applied to all members of the Public Agency Pool. However, individual employers in the Plan may have provided a benefit improvement to their employees such as Golden Handshakes, service purchases, and other prior service costs. Additionally, the figures above do not include any liability impact that occurred after the June 30, 2023 valuation date, unless the liability impact is deemed to be material to the Public Agency Pool. Changes in Assumptions: There were no assumption changes in 2024. Effective with the June 30, 2021 valuation date (June 30, 2022 measurement date), the accounting discount rate was reduced from 7.15% to 6.90%. In determining the long-term expected rate of return, Ca1PERS took into account long-term market return expectations as well as the expected pension fund cash flows. In addition, demographic assumptions and the price inflation assumption were changed in accordance with the 2021 Ca1PERS Experience Study and Review of Actuarial Assumptions. The accounting discount rate was 7.15% for measurement dates June 30, 2017 through June 30, 2021, and 7.65% for measurement dates June 30, 2015 through June 30, 2016. 91 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY SAFETY PLAN Last Ten Fiscal Years Fiscal year ended June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 Measurement period June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 Plan's proportion of the net pension liability 0.61609% 0.62908% 0.60938% 0.60679% 0.58972% Plan's proportionate share of the net pension liability $ 38,459,938 $ 36,911,786 $ 36,411,988 $ 31,427,228 $ 24,298,906 Plan's covered payroll $ 9,896,349 $ 9,967,145 $ 10,443,467 $ 10,013,168 $ 9,495,434 Plan's proportionate share of the net pension liability as a percentage of covered payroll 388.63% 370.33% 348.66% 313.86% 255.90% Plan's proportionate share of the fiduciary net position as a percentage of the Plan's total pension liability 73.37% 75.26% 73.31% 74.06% 78.40% Plan's proportionate share of aggregate employer contributions $ 5,000,688 $ 4,600,007 $ 3,520,089 $ 3,193,318 $ 3,182,851 92 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21 -F69A9AF2C1 F5 CITY OF TUSTIN Fiscal year ended Contractually required contribution (actuarially determined) Contributions in relation to the actuarially determined contributions Contribution deficiency (excess) Covered payroll Contributions as a percentage of covered payroll Notes to Schedule: SCHEDULE OF CONTRIBUTIONS SAFETY PLAN Last Ten Fiscal Years June 30, 2025 June 30, 2024 June 30, 2023 June 30, 2022 June 30, 2021 $ 6,715,563 $ 5,989,388 $ 5,729,176 $ 5,243,210 $ 4,592,442 (7,715,563) (6,989,388) (6,729,176) (6,243,210) (4,592,442) $ (1,OOQ000) $ (1,000,000) $ (1,000,000) $ (1,000,000) $ - $ 15,270,231 $ 14,000,339 $ 13,375,405 $ 12,664,376 $ 11,498,163 50.53% 49.92% 50.31% 49.30% 39.94% Valuation Date 6/30/2022 6/30/2021 6/30/2020 6/30/2019 6/30/2018 Methods and Assumptions Used to Determine Contribution Rates: Actuarial cost method Entry age Entry age Entry age Entry age Entry age Amortization method (1) (1) (1) (1) (1) Asset valuation method Fair Value Fair Value Fair Value Fair Value Fair Value Inflation 2.300% 2.300% 2.300% 2.500% 2.500% Salary increases (2) (2) (2) (2) (2) Discount rate 6.90% (3) 6.90% (3) 7.00% (3) 7.00% (3) 7.00% (3) Retirement age (4) (4) (4) (4) (4) Mortality (6) (5) (5) (5) (5) (1) Varies by date established and source. May be level dollar or level percent of pay and may include direct rate smoothing. (2) Varies by category, entry age, and duration of service. (3) Net of pension plan investment expense, including inflation (4) The probabilities of retirement are based on the 2017 Ca1PERS Experience Study for the period from 1997 to 2015. (5) The probabilities of mortality are based on the 2017 Ca1PERS Experience Study for the period from 1997 to 2015. Mortality rates include 15 years of projected mortality improvement using 90% of Scale MP-2016 published by the Society of Actuaries. (6) The probabilities of mortality are based on the 2021 Ca1PERS Experience Study and Review of Actuarial Assumptions. Mortality rates incorporate full generational mortality improvement using 80% of Scale MP-2020 published by the Society of Actuaries. 93 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21 -F69A9AF2C1 F5 CITY OF TUSTIN SCHEDULE OF CONTRIBUTIONS SAFETY PLAN Last Ten Fiscal Years Fiscal year ended Contractually required contribution (actuarially determined) Contributions in relation to the actuarially determined contributions Contribution deficiency (excess) Covered payroll Contributions as a percentage of covered payroll June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 $ 4,132,787 $ 3,641,308 $ 3,204,833 $ 3,002,977 $ 2,708,192 (5,782,787) (5,291,308) (3,204,833) (3,002,977) (2,708,192) $ (1,650,000) $ (1,650,000) $ - $ - $ - $ 10,848,695 $ 9,896,349 $ 9,967,145 $ 10,443,467 $ 10,013,668 53.30% 53.47% 32.15% 28.75% 27.04% Notes to Schedule: Valuation Date 6/30/2017 6/30/2016 6/30/2015 6/30/2014 6/30/2013 Methods and Assumptions Used to Determine Contribution Rates: Actuarial cost method Entry age Entry age Entry age Entry age Entry age Amortization method (1) (1) (1) (1) (1) Asset valuation method Fair Value Fair Value Fair Value Fair Value Fair Value Inflation 2.625% 2.75% 2.75% 2.75% 2.75% Salary increases (2) (2) (2) (2) (2) Investment rate of return 7.25% (3) 7.375% (3) 7.50% (3) 7.50% (3) 7.50% (3) Retirement age (4) (4) (4) (4) (4) Mortality (5) (5) (5) (5) (5) 94 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21 -F69A9AF2C1 F5 CITY OF TUSTIN SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS MISCELLANEOUS PLAN Fiscal year ended Measurement period Total Pension Liability: Service cost Interest on total pension liability Differences between expected and actual experience Changes in assumptions Changes in benefit terms Benefit payments, including refunds of employee contributions Net Change in Total Pension Liability Total Pension Liability - Beginning of Year Total Pension Liability - End of Year (a) Plan Fiduciary Net Position Last Ten Fiscal Years June 30, 2025 June 30, 2024 June 30, 2023 June 30, 2022 June 30, 2021 June 30, 2024 June 30, 2023 June 30, 2022 June 30, 2021 June 30, 2020 $ 3,211,327 $ 3,103,217 $ 3,049,919 $ 2,693,820 $ 2,581,396 10,687,100 10,246,763 9,777,454 9,379,056 8,860,960 212,768 647,330 134,069 1,568,479 (417,769) - - 4,647,187 - - 199,701 - - (7,247,624) (7,222,606) (6,576,321) (6,434,816) (5,207,052) 6,863,571 6,974,405 11,032,308 7,206,539 5,817,535 156,690,885 149,716,480 138,684,172 131,477,633 125,660,098 $ 163,554,456 $ 156,690,885 $ 149,716,480 $ 138,684,172 $ 131,477,633 Contributions - employer $ 5,507,245 $ 5,229,452 $ 4,877,030 $ 3,581,172 $ 4,837,028 Contributions - employee 1,442,171 1,267,450 1,239,440 1,196,644 1,190,426 Net investment income 11,639,989 7,165,286 (9,500,196) 23,665,065 5,011,357 Benefit payments (7,247,624) (7,222,606) (6,576,321) (6,434,816) (5,207,052) Net plan to plan resource movement - - - Other miscellaneous expense - - - Administrative expense (99,638) (85,372) (78,575) (104,120) (138,915) Net Change in Plan Fiduciary Net Position 11,242,143 6,354,210 (10,038,622) 21,903,945 5,692,844 Plan Fiduciary Net Position - Beginning of Yea 122,450,572 116,096,362 126,134,984 104,231,039 98,538,195 Plan Fiduciary Net Position - End of Year (b) $ 133,692,715 $ 122,450,572 $ 116,096,362 $ 126,134,984 $ 104,231,039 Net Pension Liability - Ending (a)-(b) $ 29,861,741 $ 34,240,313 $ 33,620,118 $ 12,549,188 $ 27,246,594 Plan fiduciary net position as a percentage of the total pension liability 81.74% 78.15% 77.54% 90.95% 79.28% Covered payroll $ 19,265,627 $ 18,865,908 $ 18,260,967 $ 17,513,680 $ 16,946,205 Net pension liability as percentage of covered payroll 155.00% 181.49% 184.11% 71.65% 160.78% Benefit Changes: The figures above generally include any liability impact that may have resulted from voluntary benefit changes that occurred on or before the Measurement Date. However, offers of Two Years Additional Service Credit (a.k.a. Golden Handshakes) that occurred after the Valuation Date are not included in the figures above, unless the liability impact is deemed to be material by the plan actuary. Changes in Assumptions: There were no assumption changes in 2024. Effective with the June 30, 2021 valuation date (June 30, 2022 measurement date), the accounting discount rate was reduced from 7.15% to 6.90%. In determining the long-term expected rate of return, Ca1PERS took into account long-term market return expectations as well as the expected pension fund cash flows. In addition, demographic assumptions and the price inflation assumption were changed in accordance with the 2021 Ca1PERS Experience Study and Review of Actuarial Assumptions. The accounting discount rate was 7.15% for measurement dates June 30, 2017 through June 30, 2021, and 7.65% for measurement dates June 30, 2015 through June 30, 2016. 95 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS MISCELLANEOUS PLAN Last Ten Fiscal Years Fiscal year ended June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 Measurement period June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 Total Pension Liability: Service cost $ 2,456,587 $ 2,402,594 $ 2,211,312 $ 1,840,275 $ 1,779,008 Interest on total pension liability 8,458,273 8,052,611 7,614,130 7,306,376 6,982,672 Differences between expected and actual experience (222,610) (426,547) (737,480) (531,595) 452,122 Changes in assumptions - 1,050,413 6,589,964 (1,770,351) Changes in benefit terms - - Benefit payments, including refunds of employee contributions (4,648,016) (4,523,921) (4,300,829) (4,102,189) (3,956,389) Net Change in Total Pension Liability 6,044,234 6,555,150 11,377,097 4,512,867 3,487,062 Total Pension Liability - Beginning of Year 119,615,864 113,060,714 101,683,617 97,170,750 93,683,688 Total Pension Liability - End of Year (a) $ 125,660,098 $ 119,615,864 $ 113,060,714 $ 101,683,617 $ 97,170,750 Plan Fiduciary Net Position: Contributions - employer $ 4,373,702 $ 2,249,216 $ 1,881,701 $ 1,850,072 $ 1,503,081 Contributions - employee 1,097,180 1,043,932 1,037,304 998,937 905,331 Net investment income 6,030,153 7,268,642 8,829,526 372,172 1,753,374 Benefit payments (4,648,016) (4,523,921) (4,300,829) (4,102,189) (3,956,389) Net plan to plan resource movement - (213) (114) Other miscellaneous expense 213 (254,792) - Administrative expense (65,475) (134,170) (116,299) (48,573) (89,714) Net Change in Plan Fiduciary Net Position 6,787,757 5,648,694 7,331,403 (929,581) 115,569 Plan Fiduciary Net Position - Beginning of Yea 91,750,438 86,101,744 78,770,341 79,699,922 79,584,353 Plan Fiduciary Net Position - End of Year (b) $ 98,538,195 $ 91,750,438 $ 86,101,744 $ 78,770,341 $ 79,699,922 Net Pension Liability - Ending (a)-(b) $ 27,121,903 $ 27,865,426 $ 26,958,970 $ 22,913,276 $ 17,470,828 Plan fiduciary net position as a percentage of the total pension liability Covered payroll Net pension liability as percentage of covered payroll 78.42% 76.70% 76.16% 77.47% 82.02% $ 16,542,504 $ 15,403,283 $ 14,684,868 $ 13,828,003 $ 12,847,036 163.95% 180.91% 183.58% 165.70% 135.99% a Docusign Envelope ID: A6BE669C-DB25-44DB-AA21 -F69A9AF2C1 F5 CITY OF TUSTIN Fiscal year ended Contractually required contribution (actuarially determined) Contributions in relation to the actuarially determined contributions Contribution deficiency (excess) Covered payroll Contributions as a percentage of covered payroll Notes to Schedule: Valuation Date SCHEDULE OF CONTRIBUTIONS MISCELLANEOUS PLAN Last Ten Fiscal Years June 30, 2025 June 30, 2024 June 30, 2023 June 30, 2022 June 30, 2021 $ 4,959,638 $ 5,430,658 $ 4,333,352 $ 3,877,030 $ 3,581,172 (5,904,638) (6,375,658) (5,278,352) (4,877,030) (3,581,172) $ (945,000) $ (945,000) $ (945,000) $ (1,000,000) $ - $ 21,360,011 $ 19,265,627 $ 18,865,908 $ 18,260,967 $ 17,513,680 27.64% 33.09% 6/30/2022 6/30/2021 Methods and Assumptions Used to Determine Contribution Rates: Actuarial cost method Entry age Entry age Amortization method (1) (1) Asset valuation method Fair Value Fair Value 27.98% 21.22% 20.45% 6/30/2020 6/30/2019 6/30/2018 Entry age Entry age Entry age (1) (1) (1) Fair Value Fair Value Fair Value Inflation 2.300% 2.300% 2.300% 2.500% 2.500% Salary increases (2) (2) (2) (2) (2) Investment rate of return 6.80% (3) 6.80% (3) 7.00% (3) 7.00% (3) 7.00% (3) Retirement age (4) (4) (4) (4) (4) Mortality (6) (5) (5) (5) (5) (1) Level percentage of payroll, closed (2) Depending on age, service, and type of employment (3) Net of pension plan investment expense, including inflation (4) The probabilities of retirement are based on the 2017 Ca1PERS Experience Study for the period from 1997 to 2015. (5) The probabilities of mortality are based on the 2017 Ca1PERS Experience Study for the period from 1997 to 2015. Mortality rates include 15 years of projected mortality improvement using 90% of Scale MP-2016 published by the Society of Actuaries. (6) The probabilities of mortality are based on the 2021 Ca1PERS Experience Study and Review of Actuarial Assumptions. Mortality rates incorporate full generational mortality improvement using 80% of Scale MP-2020 published by the Society of Actuaries. 97 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21 -F69A9AF2C1 F5 CITY OF TUSTIN SCHEDULE OF CONTRIBUTIONS MISCELLANEOUS PLAN Last Ten Fiscal Years Fiscal year ended Contractually required contribution (actuarially determined) Contributions in relation to the actuarially determined contributions Contribution deficiency (excess) Covered payroll Contributions as a percentage of covered payroll June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 $ 3,187,028 $ 2,723,702 $ 2,249,217 $ 1,881,701 $ 1,850,100 (4,837,028) (4,373,702) (2,249,217) (1,881,701) (1,850,100) $ (1,650,000) _L (1,65Q000) $ - $ - $ $ 16,946,205 $ 16,542,504 $ 15,403,283 $ 14,684,868 $ 13,828,003 28.54% 26.44% 14.60% 12.81% 13.38% Notes to Schedule: Valuation Date 6/30/2017 6/30/2016 6/30/2015 6/30/2014 6/30/2013 Methods and Assumptions Used to Determine Contribution Rates: Actuarial cost method Entry age Entry age Entry age Entry age Entry age Amortization method (1) (1) (1) (1) (1) Asset valuation method Fair Value Fair Value Fair Value Fair Value Fair Value Inflation 2.625% 2.75% 2.75% 2.75% 2.75% Salary increases (2) (2) (2) (2) (2) Investment rate of return 7.25% (3) 7.375% (3) 7.50% (3) 7.50% (3) 7.50% (3) Retirement age (4) (4) (4) (4) (4) Mortality (5) (5) (5) (5) (5) M Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Fiscal year ended Measurement date Total OPEB Liability: Service cost Interest on total OPEB liability Differences between expected and actual experienc Changes of assumptions Benefit payments Net Change in Total OPEB Liability Total OPEB Liability - Beginning of Year Total OPEB Liability - End of Year (a) Plan Fiduciary Net Position: Contributions - employer Net investment income Benefit payments Administrative expense Net Change in Plan Fiduciary Net Position Plan Fiduciary Net Position - Beginning of Year Plan Fiduciary Net Position - End of Year (b) Net OPEB Liability - Ending (a)-(b) Plan fiduciary net position as a percentage of the total OPEB liability Covered - employee payroll Net OPEB liability as percentage of covered - employee payroll Notes to Schedule: Benefit Changes: There were no changes in benefits. Changes in Assumptions: From fiscal year June 30, 2018 to June 30, 2019: SCHEDULE OF CHANGES IN THE NET OPEB LIABILITY AND RELATED RATIOS Last Ten Fiscal Years* June 30,2025 June 30,2024 June 30,2023 June 30,2022 June 30,2021 June 30,2020 June 30,2019 June 30,2018 June30,2025 June 30,2024 June 30,2023 June 30,2022 June30,2021 June 30,2020 June 30,2019 June 30,2018 $ 656,754 $ 639,177 $ 546,336 $ 531,714 $ 482,722 $ 437,360 $ 735,504 $ 714,949 1,098,999 1,051,197 1,012,346 970,235 894,576 824,887 890,622 862,866 - (163,610) - (10,715) 627,373 (1,778,679) - - - 702,814 - 639,802 - (416,384) (398,848) - (932,093) (890,995) (845,810) (839,870) (849,652) (791,153) (777,685) (686,172) 823,660 1,338,583 712,872 1,291,166 1,155,019 (1,723,969) 449,593 891,643 18,119,154 16,780,571 16,067,699 14,776,533 13,621,514 15,345,483 14, 895,890 14,004,247 18,942,814 18,119,154 16,780,571 16,067,699 14,776,533 13,621,514 15,345,483 14,895,890 1,432,093 1,390,995 1,345,810 1,339,870 849,652 1,291,153 1,277,685 1,686,172 502,846 352,275 212,945 (335,000) 431,637 97,677 77,171 3,283 (932,093) (890,995) (845,810) (839,870) (849,652) (791,153) (777,685) (686,172) (20,270) (17,386) (14,960) (14,404) (13,016) (11,216) 982,576 834,889 697,985 150,596 418,621 586,461 577,171 1,003,283 4,269,006 3,434,117 2,736,132 2,585,536 2,166,915 1,580,454 1,003,283 5,251,582 4,269,006 3,434,117 2,736,132 2,585,536 2,166,915 1,580,454 1,003,283 $ 13,691,232 $ 13,850,148 $ 13,346,454 $ 13,331,567 $ 12,190,997 $ 11,454,599 $ 13,765,029 $ 13,892,607 27.72% 23.56% 20.46% 17.03% 17.50% 15.91% 10.30% 6.74% $ 48,744,377 $ 45,427,638 $ 44,626,782 $ 39,276,574 $ 31,930,486 $ 34,926,881 $ 23,559,635 $ 24,156,049 28.09% 30.49% 29.91% 33.94% 38.18% 32.80% 58.43% 57.51% The discount rate increased from 6.00% to 6.25%. The inflation rate decreased from 2.75% to 2.50%. Salary increase changed from 2.875% to 2.75%. June 30, 2018 contained healthcare cost trend rates of 7.00% trending down to 3.84% over 58 years while June 30, 2019 contained healthcare cost trend rates from 6.50% trending down to 3.84% over 57 years. From fiscal year June 30, 2019 to June 30, 2020: The inflation rate increased from 2.50% to 2.75%. Healthcare cost trend rates changed to 3.50% trending down to 4.00% for 2070 and later years. From fiscal year June 30, 2020 to June 30, 202 L There were no changes in assumptions. From fiscal year June 30, 2021 to June 30, 2022: Healthcare cost trend rates changed to 4.00% for 2023, 5.20% for 2024-2069 and 4.00% for 2070 and later years. From fiscal year June 30, 2023 to June 30, 2024: Healthcare cost trend rates changed to 5.50% for 2024, 5.25% for 2025 to 2029, 5.00% for 2030 to 2039, 4.75% for 2040 to 2049, 4.50% for 2050 to 2069, and 4.00% for 2070 and later years. * Fiscal year 2018 was the first year of implementation; therefore, only eight years are shown. Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 Fiscal year ended Actuarially determined contribution Contributions in relation to the actuarially determined contributions Contribution deficiency (excess) Covered - employee payroll Contributions as a percentage of covered -employee payroll Notes to Schedule CITY OF TUSTIN SCHEDULE OF CONTRIBUTIONS - OPEB Last Ten Fiscal Years* June 30, 2025 June 30, 2024 June 30, 2023 June 30, 2022 June 30, 2021 June 30, 2020 June 30, 2019 June 30, 2018 $ 1,950,738 $ 1,898,528 $ 1,641,241 $ 1,597,315 $ 1,354,712 $ 1,318,454 $ 1,780,746 $ 1,729,589 (1,432,093) (1,390,995) (1,345,810) (1,339,870) (849,652) (1,291,153) (1,277,685) (1,686,172) $ 518,645 $ 507,533 $ 295,431 $ 257,445 $ 505,060 $ 27,301 $ 503,061 $ 43,417 $ 48,744,377 $ 45,427,638 $ 44,626,782 $ 39,276,574 $ 31,930,486 $ 34,926,881 $ 23,559,635 $ 24,156,049 2.94% 3.06% 3.02% 3.41% 2.16% 4.04% 5.42% 6.98% Valuation Date 6/30/2023 6/30/2023 6/30/2021 6/30/2021 6/30/2019 6/30/2019 6/30/2017 6/30/2017 Methods and Assumptions Used to Determine Contribution Rates: Actuarial cost method Entry age Entry age Entry age Entry age Entry age Entry age Entry age Entry age Amortization method (1) (1) (1) (1) (1) (1) (1) (1) Inflation 2.50% 2.50% 2.75% 2.75% 2.75% 2.50% 2.50% 2.50% Salary increases 2.75% 2.75% 2.75% 2.75% 2.75% 2.75% 2.75% 2.75% Healthcare trend rates (5) (5) (4) (3) (3) (2) (2) (2) Rate of return on assets 6.00 % 6.00 % 6.25 % 6.25 % 6.25 % 6.25 % 6.25 % 6.25 % Mortalitv rate Ca1PERS Rates Ca1PERS Rates Ca1PERS Rates Ca1PERS Rates CAPERS Rates Ca1PERS Rates Ca1PERS Rates Ca1PERS Rates Retirement rates Ca1PERS Rates Ca1PERS Rates Ca1PERS Rates Ca1PERS Rates CAPERS Rates Ca1PERS Rates Ca1PERS Rates Ca1PERS Rates (1) Level percentage of payroll, closed (2) 7.00%, trending down to 3.84 % (3) 3.50 % until 2023, 5.20 % for 2024 to 2069 and 4.00 % for 2070 and later years (4) 4.00 % until 2023, 5.20 % for 2024 to 2069 and 4.00 % for 2070 and later years (5) 5.50 % until 2024, 5.25% for 2025 to 2029, 5.00% for 2030 to 2039, 4.75% for 2040 to 2049, 4.50 % for 2050 to 2069, and 4.00 % for 2070 and later years * Fiscal year 2018 was the first year of implementation; therefore, only eight years are shown 100 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21 -F69A9AF2C1 F5 CITY OF TUSTIN Retiree Health Plan Fiscal Year Ended 6/30/2018 6/30/2019 6/30/2020 6/30/2021 6/30/2022 6/30/2023 6/30/2024 6/30/2025 OTHER POST -EMPLOYMENT BENEFIT PLAN ANNUAL MONEY -WEIGHTED RATE OF RETURN ON INVESTMENTS Last Ten Fiscal Years* Annual Money -Weighted Rate of Return, Net of Investment Expense (1) N/A* 6.16% 5.35% 19.62% -11.23% 6.99% 9.92% 11.50% (1) Ten years of historical information is required by the Governmental Accounting Standards Board Statement No. 74. Fiscal year ended June 30, 2018 was the first year of implementation; therefore, only eight years are presented. * Initial deposit to the OPEB trust was made on June 26, 2018. 101 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21 -F69A9AF2C1 F5 CITY OF TUSTIN BUDGETARY COMPARISON SCHEDULE GENERAL FUND For the year ended June 30, 2025 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Taxes $ 70,188,002 $ 69,562,460 $ 71,777,165 $ 2,214,705 Licenses and permits 1,821,785 2,610,286 2,416,550 (193,736) Fines and forfeitures 916,000 829,450 973,445 143,995 Investment income 2,474,075 2,300,000 9,464,584 7,164,584 Intergovernmental revenue 1,797,232 457,285 622,578 165,293 Intergovernmental revenue - Hanger fire - 69,166,047 42,797,641 (26,368,406) Charges for services 4,365,908 4,539,232 4,687,316 148,084 Developer fees - 22,180,830 21,805,040 (375,790) Rental income 2,929,162 3,122,553 3,091,485 (31,068) Other revenue 406,100 491,750 1,202,151 710,401 TOTAL REVENUES 84,898,264 175,259,893 158,837,955 (16,421,938) EXPENDITURES: Current: General government 29,032,242 29,547,366 25,494,329 4,053,037 General government - Hanger Fire - 34,087,482 32,936,827 1,150,655 Public safety 50,245,300 50,879,875 49,987,387 892,488 Public works 16,934,485 17,778,270 16,182,323 1,595,947 Community services 5,683,250 5,958,046 5,815,956 142,090 Capital outlay 77,707,631 80,621,386 11,985,804 68,635,582 Debt service: Principal retirement 81,200 81,200 824,076 (742,876) Interest expense 3,500 3,500 54,792 (51,292) TOTAL EXPENDITURES 179,687,608 218,957,125 143,281,494 75,675,631 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (94,789,344) (43,697,232) 15,556,461 59,253,693 OTHER FINANCING SOURCES (USES): Transfer in 12,955,414 13,806,404 13,243,136 (563,268) Transfer out (1,169,895) (1,812,143) (1,087,110) 725,033 Issuance of debt - - 141,159 141,159 Issuance of leases - - 141,948 141,948 TOTAL OTHER FINANCING SOURCES (USES) 11,785,519 11,994,261 12,439,133 444,872 NET CHANGE IN FUND BALANCE (83,003,825) (31,702,971) 27,995,594 59,698,565 FUND BALANCE - BEGINNING OF YEAR 232,254,792 232,254,792 232,254,792 - FUND BALANCE - END OF YEAR $ 149,250,967 $ 200,551,821 $ 260,250,386 $ 59,698,565 See accompanying notes to the required supplementary information 102 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN BUDGETARY COMPARISON SCHEDULE HOUSING AUTHORITY SPECIAL REVENUE FUND REVENUES: Investment income Intergovernmental revenue Charges for services Other revenue TOTAL REVENUES EXPENDITURES: Current: Community services TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfer in Transfer out Proceeds from the sale of capital assets For the year ended June 30, 2025 Budgeted Amounts Original Final Variance with Final Budget Positive (Negative) $ - $ - $ 3,060 $ 3,060 330,525 330,525 330,525 - - - 50,808 50,808 466,651 466,651 16,194 (450,457) 797,176 797,176 400,587 (396,589) Actual 1,707,640 1,707,640 1,481,847 225,793 1,707,640 1,707,640 1,481,847 225,793 (910,464) (910,464) (1,081,260) (170,796) 1,352,186 (466,651) 1,352,186 (460,393) NET CHANGE IN FUND BALANCE (24,929) (18,671) 985,912 (366,274) (460,393) - 69,041 (69,041) (486,700) (606,111) FUND BALANCE - BEGINNING OF YEAR 558,495 558,495 558,495 - FUND BALANCE - END OF YEAR $ 533,566 $ 539,824 $ 71,795 $ (606,111) See accompanying notes to the required supplementary information 103 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Note to Required Supplementary Information June 30, 2025 NOTE 1 - BUDGETS AND B UD GE TA R YA CCO UNTING The City follows these procedures in establishing the budgets. (1) The annual budget is adopted by the City Council after the holding of a public hearing and provides for the general operation of the City. The operating budget includes proposed expenditures and the means of funding them. (2) The City Council approves total budgeted appropriations and any amendments to appropriations throughout the year. The adopted budget and subsequent amendments cover City expenditures in all governmental funds. The City Manager is authorized to transfer budgeted amounts between departments. Actual expenditures may not exceed budgeted appropriations at the fund level. Budget figures used in the accompanying required supplementary information are the original and final adjusted amounts. (3) Formal budgetary integration is employed as a management control device during the year. Commitments for materials and services, such as purchase orders and contracts, are recorded as encumbrances to assist in controlling expenditures. Unspent capital projects appropriations are an automatic supplemental appropriation for the next year. All other operating appropriations lapse unless they are re -appropriated through the formal budget process. (4) Annual budgets are adopted and amended for the General and Special Revenue Funds, on a basis substantially consistent with accounting principles generally accepted in the United States of America. Accordingly, actual revenues and expenditures can be compared with related budgeted amounts without any significant reconciling items. No budgetary comparisons are presented for the City's Proprietary Funds as the City is not legally required to adopt budgets for these fund types. Budgetary comparisons of Capital Projects Funds are primarily "long-term" budgets, which emphasize capital outlay plans extending over one year. Because of the long-term nature of these budgets, "annual" budget comparisons are not considered meaningful and accordingly, no budgetary information is provided. 104 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 The page left blank intentionally TUSTIN LEGACY PARK SUPPLEMENTARY SCHEDULES l 1 6 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 The page left blank intentionally Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Other Governmental Funds June 30, 2025 SPECIAL REVENUE FUNDS The Special Revenue Funds are used to account for the proceeds of specific revenue sources that are restricted by law or administrative action for a specific purpose. Gas Tax — This fund accounts for revenues and expenditures apportioned under the Street and Highways Code of the State of California. Expenditures may be made for any street -related purpose allowable under the Code. Community Development Block Grant — This fund is used to account for funds received from U.S. Department of Housing and Urban Development to meet low-income housing and community development needs. Asset Forfeiture — This fund is used to account for monies received from the Federal government that are used for special law enforcement purchases. Air Quality — This fund is used to account for funds received from the South Coast Air Quality Management District to be used for reducing pollution. Supplemental Law Enforcement — This law was established under Government Code Section 30061 enacted by A133229, Chapter 134, of the 1996 Statues and is an appropriation from the State Budget for the "Citizen Option for Public Safety Program". This fund can only be used for police front line municipal activities that provide police services to the City in prevention of drug abuse, crime prevention and community awareness programs. American Rescue Plan Act (ARPA)_— This fund is used to account for monies received from the U.S. Treasury for COVID-19 related expenses. Special Tax B — This fund is used to account for Special Tax B service tax levied on taxable property in the Tustin Legacy to pay for public services and administrative expenses. Road Maintenance and Rehabilitation — This fund is used to account for revenues and expenditures apportioned under the Road Repair and Accountability Act of 2017 (SB1) for road maintenance and rehabilitation. Voluntary Workforce Housing Incentive — This fund is used to account for in -lieu fees collected and the associated expenditures that support development of City affordable housing programs and projects under the City of Tustin Ordinance 1491. Solid Waste — This fund is used to account for solid waste program revenues and expenditures. Park Acquisition and Development — This fund is used to account for fees received from developers and park activities as well as federal and state grants to develop the City's park system. Measure M — This fund is used to account for monies received from the Orange County Transportation Authority for street projects and transportation activities. 105 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Other Governmental Funds June 30, 2025 Cable PEG Fees — This fund is used to account for monies received from cable franchise PEG revenues for capital equipment and improvements supporting public, educational, and governmental access programming. Landscape Lighting — This fund is used to account for monies received from assessment revenues that are restricted for landscaping and street -lighting within the district. 106 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Other Governmental Funds June 30, 2025 CAPITAL PROJECTS FUNDS The Capital Projects Funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities. Construction 95-1 — This fund accounts for infrastructure improvements to the Assessment District 95- 1 Area. Other Capital Projects — This fund is used to account for capital projects which are not funded by a specific source. CFD Construction — This fund is used to account for construction and improvements to the Tustin Legacy area. 107 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN COMBINING BALANCE SHEET OTHER GOVERNMENTAL FUNDS June 30, 2025 Special Revenue Funds Road Supplemental American Maintenance Asset Air Law Rescue Plan Act Special and Gas Tax CDBG Forfeiture Quality Enforcement (ARPA) Tax B Rehabilitation ASSETS Cash and investments $1,707,745 $ - $ 356,068 $ 234,017 $ 612,393 $ 697,542 $ 1,750 $ 7,126,158 Receivables: Accounts 207,032 265,338 - 27,444 - - 65,191 386,357 Interest 7,532 - 1,551 1,007 2,666 9,161 - - Leases - - - - - Allowance for uncollectibles (11,393) TOTAL ASSETS $1,910,916 $ 265,338 $ 357,619 $ 262,468 $ 615,059 $ 706,703 $ 66,941 $ 7,512,515 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES LIABILITIES: Accounts payable and accrued liabilities $ 233,837 $ 123,487 $ $ $ 6,285 $ $ 1,751 $ Due to other funds - 144,436 - - Unearned revenue - - - 706,703 - TOTAL LIABILITIES 233,837 267,923 6,285 706,703 1,751 DEFERRED INFLOWS OF RESOURCES: Unavailable revenue 27,444 Lease related - TOTAL DEFERRED INFLOW OF RESOURCES: 27,444 - FUND BALANCES: Restricted 1,677,079 357,619 235,024 608,774 Assigned - - - - Unassigned - (2,585) - - - TOTAL FUND BALANCES 1,677,079 (2,585) 357,619 235,024 608,774 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES 65,190 7,512,515 65,190 7,512,515 AND FUND BALANCES $1,910,916 $ 265,338 $ 357,619 $ 262,468 $ 615,059 $ 706,703 $ 66,941 $ 7,512,515 108 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 Special Revenue Funds (Continued) Capital Projects Funds Voluntary Park Total Workforce Acquisition Other Other Housing Solid and Cable Landscape Construction Capital CFD Governmental Incentive Waste Development Measure M PEG Fees Lighting 95-1 Projects Construction Funds $2,307,858 $2,677,021 $ 1,424,952 $4,515,254 $ 984,356 $ 466,008 $ 249,779 $ 9,954,797 $ 3,350 $ 33,319,048 - 250 1,886,840 406,973 21,025 4,807 - - - 3,271,257 10,064 11,657 18,663 19,662 4,284 - 42,914 129,161 - - 3,830,396 - - - 3,830,396 - - - - - - - - - (11,393) $2,317,922 $2,688,928 $ 7,160,851 $4,9 11,889 $1,009,665 $ 470,815 $ 249,779 $ 9,997,711 $ 3,350 $ 40,538,469 $ $ 50,643 $ 555,745 $ 193,482 $ $ 140,524 $ $ 962,262 $ 3,350 $ 2,271,366 - - - - - - 144,436 126,472 - - - - - 833,175 177,115 555,745 193,482 140,524 962,262 3,350 3,248,977 1,562,828 1,590,272 3,411,549 3,411,549 4,974,377 - - - - 5,001,821 2,317,922 2,511,813 - 4,748,407 1,009,665 330,291 249,779 - 21,624,078 - - 1,630,729 - - - - 9,035,449 10,666,178 - - - - - - - - (2,585) 2,317,922 2,511,813 1,630,729 4,748,407 1,009,665 330,291 249,779 9,035,449 32,287,671 $2,317,922 $2,688,928 $ 7,160,851 $4,9 11,889 $1,009,665 $ 470,815 $ 249,779 $ 9,997,711 $ 3,350 $ 40,538,469 109 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - OTHER GOVERNMENTAL FUNDS For the year ended June 30, 2025 Special Revenue Funds Road Voluntary Supplemental American Maintenance Workforce Asset Air Law Rescue Plan Act Special and Housing Gas Tax CDBG Forfeiture Quality Enforcement (ARPA) Tax B Rehabilitation Incentive REVENUES: Taxes $ $ $ $ $ $ $ 6,297,588 $ $ Fines and forfeitures - Investment income 86,383 16,348 8,713 29,207 103,827 278,204 118,428 Intergovernmental revenue 2,274,471 582,712 36,783 104,415 239,239 3,111,740 2,192,461 - Charges for services - - - - - - - Rental income Other revenue - - - - - - - TOTAL REVENUES 2,360,854 582,712 53,131 113,128 268,446 3,215,567 6,297,588 2,470,665 118,428 EXPENDITURES: Current: General government - - - - - - 7,000 - - Public safety - 184,789 - - Public works 1,825,020 - - 16,959 - Community services - 582,712 - - - 101,829 Capital outlay 692,525 - 34,428 4,269 61,225 - TOTAL EXPENDITURES 2,517,545 582,712 34,428 189,058 - 7,000 78,184 101,829 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (156,691) - 18,703 113,128 79,388 3,215,567 6,290,588 2,392,481 16,599 OTHER FINANCING SOURCES (USES): Transfers in - - - - - - - Transfers out (3,215,567) (6,260,887) TOTAL OTHER FINANCING (USES) (3,215,567) (6,260,887) - - NET CHANGE IN FUND BALANCES (156,691) 18,703 113,128 79,388 29,701 2,392,481 16,599 FUND BALANCES - BEGINNING OF YEAR 1,833,770 (2,585) 338,916 121,896 529,386 35,489 5,120,034 2,301,323 FUND BALANCES - END OF YEAR $ 1, 777,079 $ (2,585) $ 357 619 $ 235 024 $ 008,774 $ $ 65,190 $ 7 512 515 $ 2, 117,922 110 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 Special Revenue Funds (Continued) Capital Projects Funds Park Total Acquisition Other Other Solid and Cable Lighting Construction Capital CFD Governmental Waste Development Measure M PEG Fees Landscape 95-1 Projects Construction Funds $ - $ $ $ $ 810,069 $ $ $ $ 7,107,657 500 - 500 114,786 198,127 191,247 45,941 11,938 533,973 383 1,737,505 127,002 4,854,710 2,282,051 - - 1,239 - 15,806,823 248,918 16,276 - - 265,194 - 314,613 - - 314,613 372,927 - 1,347 88,143 - - 462,417 864,133 5,383,726 2,474,645 134,084 822,007 535,212 383 25,694,709 383 7,383 - - - 184,789 402,762 - 792,425 3,037,166 - 56,473 - 741,014 - 5,725,520 577,430 27,735 - 2,456,661 - 9,579,793 402,762 5,781,993 577,430 27,735 792,425 2,456,661 383 13,550,145 461,371 (398,267) 1,897,215 106,349 29,582 (1,921,449) - 12,144,564 - - - 101,198 101,198 (136,289) - (3,170,000) (12,782,743) (136,289) - 101,198 (3,170,000) (12,681,545) 461,371 (398,267) 1,760,926 106,349 130,780 (5,091,449) (536,981) 2,050,442 2,028,996 2,987,481 903,316 199,511 249,779 14,126,898 32,824,652 $ 2, 111,813 $ 1, 330,729 $ 4, 448,407 $ 1, 009,665 $ 330,291 $ 2 99,779 $ 9, 335,449 $ $ 32,2 77,671 111 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL GAS TAX SPECIAL REVENUE FUND For the year ended June 30, 2025 REVENUES: Investment income Intergovernmental revenue TOTAL REVENUES EXPENDITURES: Current: Public works Capital outlay TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ 60,000 $ 60,000 $ 86,383 $ 26,383 2,222,406 2,222,406 2,274,471 52,065 2,282,406 2,282,406 2,360,854 78,448 1,856,498 1,895,498 1,825,020 70,478 2,414,000 3,605,090 692,525 2,912,565 4,270,498 5,500,588 2,517,545 2,983,043 (1,988,092) (3,218,182) (156,691) 3,061,491 (1,988,092) (3,218,182) (156,691) 3,061,491 1,833,770 1,833,770 1,833,770 - $ (154,322) $ (1,384,412) $ 1,677,079 $ 3,061,491 112 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) FUND For the year ended June 30, 2025 REVENUES: Intergovernmental revenue TOTAL REVENUES EXPENDITURES: Current: Community services Capital outlay TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ 904,235 $ 904,235 $ 582,713 $ (321,522) 904,235 904,235 582,713 (321,522) 493,235 493,235 582,713 (89,478) 411,000 411,000 - 411,000 904,235 904,235 582,713 321,522 (2,585) (2,585) (2,585) $ (2,585) $ (2,585) $ (2,585) $ 113 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL ASSET FORFEITURE SPECIAL REVENUE FUND For the year ended June 30, 2025 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Investment income $ 3,000 $ 3,000 $ 16,348 $ 13,348 Intergovernmental revenue - - 36,783 36,783 TOTAL REVENUES 3,000 3,000 53,131 50,131 EXPENDITURES: Capital outlay - 34,500 34,428 72 TOTAL EXPENDITURES - 34,500 34,428 72 EXCESS OF REVENUES OVER EXPENDITURES 3,000 (31,500) 18,703 50,203 NET CHANGE IN FUND BALANCE 3,000 (31,500) 18,703 50,203 FUND BALANCE - BEGINNING OF YEAR 338,916 338,916 338,916 - FUND BALANCE - END OF YEAR $ 341,916 $ 307,416 $ 357,619 $ 50,203 114 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL AIR QUALITY SPECIAL REVENUE FUND For the year ended June 30, 2025 REVENUES: Investment income Intergovernmental revenue TOTAL REVENUES EXPENDITURES: Capital outlay TOTAL EXPENDITURES NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ 1,500 $ 1,500 $ 8,713 $ 7,213 95,900 95,900 104,415 8,515 97,400 97,400 113,128 15,728 97,400 97,400 113,128 15,728 121,896 121,896 121,896 - $ 219,296 $ 219,296 $ 235,024 $ 15,728 115 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL SUPPLEMENTAL LAW ENFORCEMENT SPECIAL REVENUE FUND For the year ended June 30, 2025 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Investment income $ 5,000 $ 5,000 $ 29,207 $ 24,207 Intergovernmental revenue 176,000 125,000 239,239 114,239 TOTAL REVENUES 181,000 130,000 268,446 138,446 EXPENDITURES: Current: Public safety 237,102 230,416 184,789 45,627 Capital outlay - - 4,269 (4,269) TOTAL EXPENDITURES 237,102 230,416 189,058 41,358 EXCESS OF REVENUES OVER EXPENDITURES (56,102) (100,416) 79,388 179,804 NET CHANGE IN FUND BALANCE (56,102) (100,416) 79,388 179,804 FUND BALANCE - BEGINNING OF YEAR 529,386 529,386 529,386 - FUND BALANCE - END OF YEAR $ 473,284 $ 428,970 $ 608,774 $ 179,804 116 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN BUDGETARY COMPARISON SCHEDULE ARPA SPECIAL REVENUE FUND For the year ended June 30, 2025 Variance with Final Budget Budgeted Amounts Positive REVENUES: Original Final Actual (Negative) Investment income $ 15,000 $ 15,000 $ 103,827 $ 88,827 Intergovernmental revenue - - 3,111,740 3,111,740 TOTAL REVENUES 15,000 15,000 3,215,567 3,200,567 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 15,000 15,000 3,215,567 3,200,567 OTHER FINANCING SOURCES (USES): Transfer out (3,215,567) (3,215,567) (3,215,567) - TOTAL OTHER FINANCING SOURCES (USES) (3,215,567) (3,215,567) (3,215,567) - NET CHANGE IN FUND BALANCE (3,200,567) (3,200,567) - 3,200,567 FUND BALANCE - BEGINNING OF YEAR - - - - FUND BALANCE - END OF YEAR $ (3,200,567) $ (3,200,567) $ - $ 3,200,567 117 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL SPECIAL TAX B SPECIAL REVENUE FUND REVENUES: Intergovernmental revenue TOTAL REVENUES EXPENDITURES: Current: General government TOTAL EXPENDITURES EXCESS OF REVENUES OVER EXPENDITURES OTHER FINANCING SOURCES (USES): For the year ended June 30, 2025 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ 6,303,025 $ 6,303,025 $ 6,297,588 $ (5,437) 6,303,025 6,303,025 6,297,588 (5,437) 10,000 10,000 7,000 3,000 10,000 10,000 7,000 3,000 6,293,025 6,293,025 6,290,588 (2,437) Transfer out (6,293,025) (6,293,025) (6,260,887) 32,138 NET CHANGE IN FUND BALANCE - - 29,701 29,701 FUND BALANCE - BEGINNING OF YEAR 35,489 35,489 35,489 - FUND BALANCE - END OF YEAR $ 35,489 $ 35,489 $ 65,190 $ 29,701 118 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL ROAD MAINTENANCE AND REHABILITATION SPECIAL REVENUE FUND For the year ended June 30, 2025 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Investment income $ 100,000 $ 100,000 $ 278,204 $ 178,204 Intergovernmental revenue 2,057,600 2,057,600 2,192,461 134,861 TOTAL REVENUES 2,157,600 2,157,600 2,470,665 313,065 EXPENDITURES: Current: Public works 34,252 34,252 16,959 17,293 Capital outlay 4,770,000 4,770,000 61,225 4,708,775 TOTAL EXPENDITURES 4,804,252 4,804,252 78,184 4,726,068 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (2,646,652) (2,646,652) 2,392,481 5,039,133 NET CHANGE IN FUND BALANCE (2,646,652) (2,646,652) 2,392,481 5,039,133 FUND BALANCE - BEGINNING OF YEAR 5,120,034 5,120,034 5,120,034 - FUND BALANCE - END OF YEAR $ 2,473,382 $ 2,473,382 $ 7,512,515 $ 5,039,133 119 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL VOLUNTARY WORKFORCE HOUSING INCENTIVE SPECIAL REVENUE FUND For the year ended June 30, 2025 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Investment income $ - $ - $ 118,428 $ 118,428 TOTAL REVENUES - - 118,428 118,428 EXPENDITURES: Current: Community services - 2,100,000 101,829 1,998,171 TOTAL EXPENDITURES - 2,100,000 101,829 1,998,171 EXCESS OF REVENUES OVER EXPENDITURES - (2,100,000) 16,599 2,116,599 NET CHANGE IN FUND BALANCE - (2,100,000) 16,599 2,116,599 FUND BALANCE - BEGINNING OF YEAR 2,301,323 2,301,323 2,301,323 - FUND BALANCE - END OF YEAR $ 2,301,323 $ 201,323 $ 2,317,922 $ 2,116,599 120 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL SOLID WASTE SPECIAL REVENUE FUND For the year ended June 30, 2025 REVENUES: Fines and forfeitures Investment income Intergovernmental revenue Charges for services Other revenue TOTAL REVENUES EXPENDITURES: Current: Public works TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR Budgeted Amounts Original Final 20,000 20,000 150,000 150,000 220,000 220,000 Actual $ 500 114,786 127,002 248,918 372.927 390,000 390,000 864,133 521,661 521,246 402,762 521,661 521,246 402,762 Variance with Final Budget Positive (Negative) $ 500 94,786 (22,998) 28,918 372,927 474.133 118.484 118.484 (131,661) (131,246) 461,371 592,617 (131,661) (131,246) 461,371 592,617 2,050,442 2,050,442 2,050,442 - $ 1,918,781 $ 1,919,196 $ 2,511,813 $ 592,617 121 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL PARK ACQUISITION AND DEVELOPMENT SPECIAL REVENUE FUND For the year ended June 30, 2025 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Investment income $ 20,000 $ 20,000 $ 198,127 $ 178,127 Intergovernmental revenue 6,050,000 6,050,000 4,854,710 (1,195,290) Charges for services 25,000 25,000 16,276 (8,724) Rental income 360,000 360,000 314,613 (45,387) TOTAL REVENUES 6,455,000 6,455,000 5,383,726 (1,071,274) EXPENDITURES: Current: Community services - - 56,473 (56,473) Capital outlay 7,284,980 8,309,448 5,725,520 2,583,928 TOTAL EXPENDITURES 7,284,980 8,309,448 5,781,993 2,527,455 EXCESS OF REVENUES OVER EXPENDITURES (829,980) (1,854,448) (398,267) 1,456,181 NET CHANGE IN FUND BALANCE (829,980) (1,854,448) (398,267) 1,456,181 FUND BALANCE - BEGINNING OF YEAR 2,028,996 2,028,996 2,028,996 - FUND BALANCE - END OF YEAR $ 1,199,016 $ 174,548 $ 1,630,729 $ 1,456,181 122 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL MEASURE M SPECIAL REVENUE FUND REVENUES: Taxes Investment income Intergovernmental revenue Other revenue TOTAL REVENUES EXPENDITURES: Capital outlay TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): For the year ended June 30, 2025 Budgeted Amounts Original 50,000 2,230,000 2,280,000 Final Variance with Final Budget Positive (Negative) 50,000 191,247 141,247 2,230,000 2,282,051 52,051 - 1,347 1,347 2,280,000 2,474,645 194,645 Actual 1,109,029 3,728,391 577,430 3,150,961 1,109,029 3,728,391 577,430 3,150,961 1,170,971 (1,448,391) 1,897,215 3,345,606 Transfer out (80,000) (80,000) (136,289) (56,289) NET CHANGE IN FUND BALANCE 1,090,971 (1,528,391) 1,760,926 3,289,317 FUND BALANCE - BEGINNING OF YEAR 2,987,481 2,987,481 2,987,481 - FUND BALANCE - END OF YEAR $ 4,078,452 $ 1,459,090 $ 4,748,407 $ 3,289,317 123 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL REVENUES: Investment income Other revenue TOTAL REVENUES EXPENDITURES: Capital outlay TOTAL EXPENDITURES CABLE PEG FEE SPECIAL REVENUE FUND For the year ended June 30, 2025 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ 10,000 $ 10,000 $ 45,941 $ 35,941 110,000 110,000 88,143 (21,857) 120,000 120,000 134,084 14,084 150,000 150,000 27,735 122,265 150,000 150,000 27,735 122,265 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (30,000) (30,000) 106,349 136,349 NET CHANGE IN FUND BALANCE (30,000) (30,000) 106,349 136,349 FUND BALANCE - BEGINNING OF YEAR 903,316 903,316 903,316 - FUND BALANCE - END OF YEAR $ 873,316 $ 873,316 $ 1,009,665 $ 136,349 124 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL LANDSCAPE LIGHTING SPECIAL REVENUE FUND REVENUES: Taxes Investment income TOTAL REVENUES EXPENDITURES: Current: Public works TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES For the year ended June 30, 2025 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ 813,262 $ 813,262 $ 810,069 $ (3,193) - - 11,938 11,938 813,262 813,262 822,007 8,745 898,600 923,600 792,425 131,175 898,600 923,600 792,425 131,175 (85,338) (110,338) 29,582 139,920 OTHER FINANCING SOURCES (USES): Transfer in 87,538 87,538 101,198 13,660 NET CHANGE IN FUND BALANCE 2,200 (22,800) 130,780 153,580 FUND BALANCE - BEGINNING OF YEAR 199,511 199,511 199,511 - FUND BALANCE - END OF YEAR $ 201,711 $ 176,711 $ 330,291 $ 153,580 125 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN COMBINING STATEMENT OF FIDUCIARY NET POSITION CUSTODIAL FUNDS June 30, 2025 Community Community Community Community Community Facilities Facilities Facilities Facilities Facilities District District District District District 06-1 and 2014- 1 Refunding 04-01 06-01 07-01 2014-1 2025 Total ASSETS Restricted cash and investments $ 1,256,019 $ $ 2,133,239 $ - $ 2,895,818 $ 6,285,076 Accounts receivable 6,903 23,529 - 47,191 - 77,623 TOTAL ASSETS 1,262,922 23,529 2,133,239 47,191 2,895,818 6,362,699 NET POSITION Restricted for: Bondholders $ 1,262,922 $ 23,529 $ 2,133,239 $ 47,191 $ 2,895,818 $ 6,362,699 126 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET POSITION CUSTODIAL FUNDS For the year ended June 30, 2025 Community Community Community Community Community Facilities Facilities Facilities Facilities Facilities District District District District District 06-1 and 2014- 1 Refunding 04-01 06-01 07-01 2014-1 2025 Total ADDITIONS Tax revenue $ 696,121 $ 3,839,984 $ 1,120,260 $ 1,703,910 $ $ 7,360,275 Investment income 39,997 270,531 78,373 157,764 546,665 Funding on bond reserve - - - - 2,895,818 2,895,818 TOTAL ADDITIONS 736,118 4,110,515 1,198,633 1,861,674 2,895,818 10,802,758 DEDUCTIONS Administrative expenses 17,916 88,005 43,495 30,826 - 180,242 Payments on bonds 420,000 9,047,265 495,000 4,421,906 14,384,171 Interest 250,906 2,028,031 570,238 1,234,300 4,083,475 TOTAL DEDUCTIONS 688,822 11,163,301 1,108,733 5,687,032 - 18,647,888 NET INCREASE (DECREASE) IN FIDUCIARY NET POSITION 47,296 (7,052,786) 89,900 (3,825,358) 2,895,818 (7,845,130) NET POSITION AT BEGINNING OF YEAR 1,215,626 7,076,315 2,043,339 3,872,549 - 14,207,829 NET POSITION AT END OF YEAR $ 1,262,922 $ 23,529 $ 2,133,239 $ 47,191 $ 2,895,818 $ 6,362,699 127 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 The page left blank intentionally PIONEER ROAD PARK STATISTICAL SECTION Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 The page left blank intentionally Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN Description of Statistical Contents June 30, 2025 This part of the City of Tustin's Annual Comprehensive Financial Report presents detail information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City's overall financial health. Contents: Pages Financial Trends — These schedules contain trend information to help the reader understand how the City's financial performance and well-being have changed over time. 129 Revenue Capacity — These schedules contain information to help the reader assess the City's most significant local revenue sources. 139 Debt Capacity — These schedules present information to help the reader assess the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in the future. 149 Demographic and Economic Information — These schedules offer demographic and economic indicators to help the reader understand the environment within which the City's financial activities take place. 155 Operating Information — These schedules contain service and infrastructure data to help the reader understand how the information in the City's financial report relates to the services the City provides and the activities it performs. 157 Sources: Unless otherwise noted, the information in these schedules is derived from the Annual Comprehensive Financial Reports for the relevant year. 128 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN NET POSITION BY COMPONENT Last Ten Fiscal Years (accrual basis of accounting) Fiscal Year 2016 2017 2018 2019 Governmental activities: Net investment in capital assets $ 483,229,135 $ 490,574,647 $ 499,190,473 $ 520,166,300 Restricted 95,241,025 102,027,853 87,395,188 67,892,989 Unrestricted 107,224,779 144,442,931 151,119,177 108,567,573 Total governmental activities net position $ 685,694,939 $ 737,045,431 $ 737,704,838 $ 696,626,862 Business -type activities: Net investment in capital assets $ 25,443,651 $ 23,252,432 $ 22,753,763 $ 20,650,435 Restricted - - - - Unrestricted 12,227,557 15,129,697 16,505,744 19,489,664 Total business -type activities net position $ 37,671,208 $ 38,382,129 $ 39,259,507 $ 40,140,099 Primary government: Net investment in capital assets $ 508,672,786 $ 513,827,079 $ 521,944,236 $ 540,816,735 Restricted 95,241,025 102,027,853 87,395,188 67,892,989 Unrestricted 119,452,336 159,572,628 167,624,921 128,057,237 Total primary government net position $ 723,366,147 $ 775,427,560 $ 776,964,345 $ 736,766,961 * Fiscal year 2020 net position was restated. 129 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 Fiscal Year 2020* 2021 2022 2023 2024 2025 $ 549,473,651 $ 565,395,034 $ 540,256,185 $ 533,745,376 $ 535,362,349 $ 540,250,043 59,304,350 39,407,529 48,269,367 53,735,373 54,143,735 57,281,322 114,195,576 106,773,829 177,884,930 188,209,049 180,795,370 192,948,490 $ 722,973,577 $ 711,576,392 $ 766,410,482 $ 775,689,798 $ 770,301,454 $ 790,479,855 $ 24,145,887 $ 25,941,133 $ 29,184,048 $ 34,501,119 $ 47,613,869 $ 58,648,776 15,070,837 12,918,451 9,775,999 5,818,220 4,985,214 6,224,560 $ 39,216,724 $ 38,859,584 $ 38,960,047 $ 40,319,339 $ 52,599,083 $ 64,873,336 $ 573,619,538 $ 591,336,167 $ 569,440,233 $ 568,246,495 $ 582,976,218 $ 598,898,819 59,304,350 39,407,529 48,269,367 53,735,373 54,143,735 57,281,322 129,266,413 119,692,280 187,660,929 194,027,269 185,780, 584 199,173,050 $ 762,190,301 $ 750,435,976 $ 805,370,529 $ 816,009,137 $ 822,900,537 $ 855,353,191 130 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN CHANGES IN NET POSITION EXPENSES AND PROGRAM REVENUES Last Ten Fiscal Years (accrual basis of accounting) Fiscal Year 2016 2017 2018 2019 Expenses: Governmental activities: General government $ 20,023,280 $ 24,504,764 $ 23,949,544 $ 27,097,686 Public safety 27,779,830 34,611,078 33,713,796 36,215,060 Public works 47,326,664 24,822,480 37,599,662 45,849,976 Community services 7,869,124 19,524,660 10,795,733 20,304,550 Interest on Long-term debt - 5,802 12,043 9,297 Total governmental activities expenses 102,998,898 103,468,784 106,070,778 129,476,569 Business -type activities: Water 15,586,463 16,654,429 17,680,886 17,763,633 Total business -type activities expenses 15,586,463 16,654,429 17,680,886 17,763,633 Program revenues: Governmental activities: Charges for services: General government 2,072,540 1,979,211 1,630,903 1,920,214 Public safety 1,195,350 1,255,299 1,283,672 1,285,584 Public works 3,538,906 1,861,045 2,167,726 3,300,906 Community services 953,149 1,101,294 1,434,988 2,426,578 Operating grants and contributions 2,722,978 2,742,140 3,863,547 4,952,271 Capital grants and contributions 48,711,583 26,535,693 7,641,510 3,942,834 Total governmental activities program revenues 59,194,506 35,474,682 18,022,346 17,828,387 Business -type activities: Charges for services: Water 16,511,795 17,100,836 18,229,013 17,329,090 Operating grants and contributions - - - - CapitaL grants and contributions - - - - TotaL business -type activities program revenues 16,511,795 17,100,836 18,229,013 17,329,090 Net revenues (expenses): Governmental activities $ (43,804,392) $ (67,994,102) $ (88,048,432) $ (111,648,182) Business -type activities 925,332 446,407 548,127 (434,543) Total net revenues (expenses) $ (42,879,060) $ (67,547,695) $ (87,500,305) $ (112,082,725) 131 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 Fiscal Year 2020 2021 2022 2023 2024 2025 $ 29,282,004 $ 27,172,397 $ 19,435,937 $ 23,229,440 $ 98,403,543 $ 61,632,092 39,064,730 42,307,312 37,274,550 43,411,070 51,506,630 53,577,400 40,430,009 25,720,382 34,752,971 34,453,960 34,924,407 30,695,759 5,682,249 7,898,475 11,705,919 11,011,517 9,918,277 10,245,251 6,444 3,476 25,311 25,402 32,133 54,792 114,465,436 103,102,042 103,194,688 112,131,389 194,784,990 156, 205, 294 17,767,158 19,283,136 21,303,398 22,544,478 22,540,741 24,600,039 17,767,158 19,283,136 21,303,398 22,544,478 22,540,741 24,600,039 2,157,735 2,011,470 3,072,210 3,344,041 3,836,719 3,558,431 1,205,519 1,298,587 1,222,841 1,400,441 1,237,042 1,198,966 3,123,961 2,586,033 5,825,437 7,436,265 6,692,885 6,915,908 1,892,126 1,232,539 2,654,817 3,445,025 3,034,343 2,952,402 4,911,642 8,618,631 12,264,401 12,781,132 89,886,641 54,856,292 4,565,393 4,422,891 12,852,760 3,133,846 2,302,997 8,955,666 17,364,694 18,891,433 19,633,007 19,466,690 20,596,504 23,630,435 - - 48,914 - - - 1,575,140 4,090,446 13,376,076 12,224,479 $ (96,609,060) $ (82,931,891) $ (65,302,222) $ (80,590,639) $ (87,794,363) $ (77,767,629) (402,464) (391,703) (46,337) 1,012,658 11,431,839 11,254,875 $ (97,011,524) $ (83,323,594) $ (65,348,559) $ (79,577,981) $ (76,362,524) $ (66,512,754) 132 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN CHANGES IN NET POSITION GENERAL REVENUES Last Ten Fiscal Years (accrual basis of accounting) Fiscal Year 2016 2017 2018 2019 General revenues and other changes in net position: Governmental activities: Taxes: Property taxes $ 16,451,763 $ 24,437,717 $ 25,636,673 $ 26,275,789 Transient occupancy taxes 1,554,754 1,609,318 1,575,830 1,825,957 Business License taxes 406,891 420,684 431,457 466,828 Franchise taxes 1,839,963 1,931,185 1,781,175 1,762,642 Sales tax 24,513,610 25,133,146 24,925,934 26,634,458 Motor vehicle in Lieu, unrestricted 6,778,329 37,056 43,359 39,526 Investment income (Loss) 2,430,087 611,964 1,109,193 7,167,093 Other general revenues 2,671,845 4,594,651 4,838,383 6,002,632 Gain on sale of land held for resale - 24,241,261 33,636,759 395,281 Profit participation - 31,327,612 - - Transfers - - - - Extraordinary and special items 2,546,442 5,000,000 - - Total governmental activities 59,193,684 119,344,594 93,978,763 70,570,206 Business -type activities: Investment income (Loss) 480,050 108,669 150,371 1,084,525 Miscellaneous 149,374 155,845 178,880 230,610 Transfers - - - - Total business -type activities 629,424 264,514 329,251 1,315,135 Total primary government $ 59,823,108 $ 119,609,108 $ 94,308,014 $ 71,885,341 Changes in net position: Governmental activities $ 15,389,292 $ 51,350,492 $ 5,930,331 $ (41,077,976) Business -type activities 1,554,756 710,921 877,378 880,592 Total primary government $ 16,944,048 $ 52,061,413 $ 6,807,709 $ (40,197,384) 133 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 Fiscal Year 2020 2021 2022 2023 2024 2025 $ 27,358,525 $ 29,142,850 $ 28,324,241 $ 30,283,746 $ 26,805,569 $ 27,858,020 1,593,532 1,218,924 1,857,502 2,151,007 2,392,315 2,239,766 438,632 416,266 435,626 470,064 460,416 470,040 1,792,263 1,862,200 1,850,139 2,011,849 1,864,197 1,778,257 25,487,518 30,753,042 34,391,644 35,889,406 35,403,145 37,378,034 64,400 58,955 92,431 82,411 99,310 126,676 4,445,124 1,676,386 (3,500,691) 6,081,889 11,629,540 11,205,150 4,556,040 1,308,076 190,141 1,126,304 368,622 432,693 1,014,511 85,240 56,048,775 - - - - 5,012,767 337,972 11,622,220 - 16,759,337 - - 108,532 - - - 66,750,545 71,534,706 120,136,312 89,718,896 79,023,114 98,247,973 869,426 5,629 (173,093) 326,716 819,851 905,738 23,193 28,934 428,425 19,918 28,054 128,904 - - (108,532) - - - 892,619 34,563 146,800 346,634 847,905 1,034,642 $ 67,643,164 $ 71,569,269 $ 120,283,112 $ 90,065,530 $ 79,871,019 $ 99,282,615 $ (29,858,515) $ (11,397,185) $ 54,834,090 $ 9,128,257 $ (8,771,249) $ 20,480,344 490,155 (357,140) 100,463 1,359,292 12,279,744 12,289,517 $ (29,368,360) $ (11,754,325) $ 54,934,553 $ 10,487,549 $ 3,508,495 $ 32,769,861 134 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN FUND BALANCES OF GOVERNMENTAL FUNDS Last Ten Fiscal Years (modified accrual basis of accounting) Fiscal Year 2016 2017 2018 2019 General fund: Nonspendable $ 88,579,214 1 $ 84,344,748 $ 82,868,217 $ 82,902,130 Restricted 18,657,461 34,901,943 41,269,878 31,250,893 Unassigned 79,667,061 102,517,562 116,332,458 88,768,803 Total general fund $ 186,903,736 $ 221,764,253 $ 240,470,553 $ 202,921,826 All other governmental funds: Nonspendable $ 1,922 $ 1,922 $ - $ 1,922 Restricted 54,438,343 51,069,708 46,322,996 37,215,903 Assigned 26,871,816 20,408,936 17,719,394 5,762,048 Unassigned - - - - Total all other governmental funds $ 81,312,081 $ 71,480,566 $ 64,042,390 $ 42,979,873 135 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 Fiscal Year 2020* 2021 2022 2023 2024 2025 $ 107,921,521 $ 108,201,957 $ 103,464,420 $ 107,508,711 $ 107,523,830 $ 107,534,127 16,438,469 15,684,164 24,668,684 27,466,991 27,317,982 35,406,883 74,972,202 78,811,634 136,230,562 2 139,772,869 98,515,807 117,309,376 $ 199,332,192 $ 202,697,755 $ 264,363,666 $ 274,748,571 $ 233,357,619 $ 260,250,386 $ - $ 3,305 $ 5,731 $ 7,301 $ 36,233 $ - 37,107,137 27,060,075 21,976,212 19,752,931 16,090,778 21,695,873 1,432,974 4,918,161 4,807,905 12,277,742 16,155,894 10,666,178 (628,792) - - (97,462) (2,585) (2,585) $ 37,911,319 $ 31,981,541 $ 26,789,848 $ 31,940,512 $ 32,280,320 $ 32,359,466 1 Decrease of $33.9 million due to the reclassification of $34 million of land held for resale to land reported as capital assets which is not reflected in the governmental funds statements. 2 Increase of $56 million due to the gain on sale of land in the former Marine Corp Air Station referred to as the Legacy. * Fiscal year 2020 fund balance was restated. 136 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS Last Ten Fiscal Years (modified accrual basis of accounting) Fiscal Year 2016 2017 2018 2019 Revenues: Taxes $ 23,525,899 $ 24,825,401 $ 25,770,970 $ 26,385,383 Licenses and permits 1,334,311 853,990 905,086 1,212,696 Fines and forfeitures 982,123 953,665 996,912 909,355 Investment income (loss) 2,422,072 608,888 1,120,276 7,172,443 Intergovernmental revenues 42,838,003 35,382,444 42,121,841 39,613,110 Charges for services 2,357,268 1,999,860 2,177,345 2,761,688 Rental income 1,308,852 1,542,281 1,674,068 2,055,135 Developer contributions 26,357,490 16,804,964 1,341,143 - Profit participation - 23,495,709 7,179,553 212,651 Gain on sale of land held for resale 24,241,261 33,636,759 395,281 Contribution from Successor Agency - - - - Other revenues 4,714,101 5,849,937 8,848,778 7,590,956 Total revenues 105,840,119 136,558,400 125,772,731 88,308,698 Expenditures: Current: General government 20,372,454 24,052,915 21,259,806 25,539,637 Public safety 27,897,182 30,733,524 32,335,404 33,200,885 Public works 7,182,380 7,591,876 7,795,849 9,105,493 Community services 7,308,498 18,727,257 9,747,562 19,603,654 Capital outlay 22,498,621 26,657,177 40,082,440 59,389,068 Debt service: Principal retirement 4,101,171 4,129,203 3,271,503 71,908 Interest and fiscal charges - 5,802 12,043 9,297 Total expenditures 89,360,306 111,897,754 114,504,607 146,919,942 Excess (deficiency) of revenues over (under) expenditures 16,479,813 24,660,646 11,268,124 (58,611,244) Other financing sources (uses): Transfers in 5,453,988 4,242,209 8,908,605 7,281,771 Transfers out (5,453,988) (4,242,209) (8,908,605) (7,281,771) Sale of property - - Leases issued 368,356 - Total other financing sources (uses) - 368,356 - Extraordinary gain (loss) 976,042 - - Special item (34,026,499) - - Net change in fund balances $ (16,570,644) $ 25,029,002 $ 11,268,124 $ (58,611,244) Debt service as a percentage of noncapital expenditures 6.03% 5.28% 3.46% 0.06% 1 Sales tax revenues were classified as intergovernmental revenues prior to June 30, 2021. Effective June 30, 2021, sales tax revenues have been classified as taxes in the financial statements. 137 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 Fiscal Year 2020 2021 2022 2023 2024 2025 1,280,180 1,227,707 2,179,335 3,007,410 2,246,204 2,416,550 841,747 929,637 1,011,519 1,160,608 930,778 973,945 4,455,060 1,676,386 (3,500,691) 6,081,889 11,629,547 11,205,149 38,156,567 16,875,101 1 19,174,643 21,609,227 55,807,711 59,557,567 2,688,921 2,017,100 4,293,614 5,101,300 5,489,050 5,003,318 2,133,706 1,905,553 3,259,121 3,323,645 3,661,473 3,406,098 - - - - - 21,805,040 - 5,012,767 - 11,622,220 - - 1,014,511 85,240 56,048,775 - - - 4,918,426 5,678,057 12,238,083 2,197,505 1,510,665 1,680,762 82,676,130 94,152,031 158,782,430 121,941,242 150,768,914 184,933,251 27,145,126 25,336,809 18,626,105 19,838,017 94,394,427 58,438,539 36,427,058 37,592,859 41,515,077 44,351,748 47,029,712 50,172,176 8,231,789 8,784,309 17,365,084 19,183,766 20,464,848 19,219,489 4,955,971 4,711,435 9,799,151 8,781,817 7,335,018 8,038,817 42,277,454 20,209,628 14,954,652 13,586,395 21,809,818 21,565,597 74,763 77,730 131,364 638,528 829,157 824,076 6,444 3,476 25,311 25,402 32,133 54,792 119,118,605 96,716,246 102,416,744 106,405,673 191,895,113 158,313,486 (36,442,475) (2,564,215) 56,365,686 15,535,569 (41,126,199) 26,619,765 4,745,170 11,814,494 12,495,004 15,528,398 15,343,366 14,330,246 (4,745,170) (11,814,494) (12,386,472) (15,528,398) (15,343,366) (14,330,246) - - - 69,041 - - 75,055 283,107 - 108,532 75,055 352,148 $ (36,442,475) $ (2,564,215) $ 56,474,218 $ 15,535,569 $ (41,051,144) $ 26,971,913 0.09% 0.10% 0.16% 0.71% 0.50% 0.63% 138 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 Apparel Stores Food Stores Dining Establishments Building Materials Auto Dealers and Supplies Service Stations Other Retail Stores All Other Outlets Total CITY OF TUSTIN TAXABLE SALES BY CATEGORY Last Ten Calendar Years (in thousands) 2015 2016 2017 2018 $ 98,255 $ 96,034 $ 94,393 $ 102,633 56,633 55,204 56,228 60,007 231,840 250,950 262,594 281,896 94,443 99,684 120,898 124,999 604,030 625,145 665,699 638,835 117,494 100,654 113,544 129,034 665,163 657,641 688,694 704,877 $ 2,307,814 $ 2,385,211 $ 2,498,062 $ 2,560,314 Sources: State Board of Equalization, California Department of Taxes and Fees Administration, State Controller's Office, The HdL Companies Note: Due to confidentiality issues, the names of the ten largest revenue payers are not available. The categories presented are intended to provide alternative information regarding the sources of the City's revenues. 139 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 2019 2020 2021 2022 2023 2024 $ 102,324 $ 67,564 $ 103,841 $ 104,754 $ 130,871 $ 145,177 61,492 65,914 64,692 67,606 70,526 75,573 291,336 220,127 293,883 334,479 363,064 370,540 132,804 139,117 151,590 160,425 149,950 158,451 651,974 679,888 899,226 976,971 911,003 878,864 131,387 87,224 130,136 162,347 136,748 184,709 732,924 688,436 818,174 903,288 948,165 932,535 $ 2,672,477 $ 2,643,681 $ 3,221,936 $ 3,530,539 $ 3,587,775 $ 3,628,450 140 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 Fiscal Year Ended June 30 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 CITY OF TUSTIN TAX REVENUES BY SOURCE, GOVERNMENTAL ACTIVITIES Last Ten Fiscal Years (accrual basis of accounting) Transient Sales Property * Occupancy $ 24,513,610 $ 16,451,763 $ 1,554,754 $ 25,133,146 24,437,717 1,609,318 24,925,934 25,636,673 1,575,830 26,634,458 26,275,789 1,825,957 25,487,518 27,358,525 1,593,532 30,753,042 29,142,850 1,218,924 34,391,644 28,324,241 1,857,502 35,889,406 30,283,746 2,151,007 35,403,145 26,805,569 2,392,315 37,378,034 27,858,020 2,239,766 Business Franchise License Total 1,839,963 $ 406,891 $ 44,766,981 1,931,185 420,684 53,532,050 1,781,175 431,457 54,351,069 1,762,642 466,828 56,965,674 1,792,263 438,632 56,670,470 1,862,200 416,266 63,393,282 1,850,139 435,626 66,859,152 2,011,849 470,064 70,806,072 1,864,197 460,416 66,925,642 1,778,257 470,040 69,724,117 Source: ACFR Required Supplemental Information * Prior to FY 2023, property tax include Community Facilities District Special Service Assessment Tax B. 141 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 CITY OF TUSTIN DIRECT AND OVERLAPPING SALES TAX RATES Last Ten Fiscal Years Fiscal City Orange State of Total Year Ended Local County California Sales Tax June 30 Rate Rate Rate Rate 2016 1.00 0.50 6.50 8.00 2017 1.25 0.50 6.00 7.75 2018 1.25 0.50 6.00 7.75 2019 1.25 0.50 6.00 7.75 2020 1.25 0.50 6.00 7.75 2021 1.25 0.50 6.00 7.75 2022 1.25 0.50 6.00 7.75 2023 1.25 0.50 6.00 7.75 2024 1.25 0.50 6.00 7.75 2025 1.25 0.50 6.00 7.75 Source: State of California Board of Equalization 142 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY (IN THOUSANDS) Last Ten Fiscal Years Fiscal Year Ended June 30 Secured City Unsecured Taxable Assessed Value 2016 $ 7,924,736 $ 293,492 $ 8,218,228 2017 8,254,232 312,525 8,566,757 2018 8,684,095 311,475 8,995,570 2019 9,092,631 313,242 9,405,874 2020 9,494,882 324,715 9,819,597 2021 9,958,441 326,678 10,285,119 2022 10,296,800 312,672 10,609,472 2023 10,921,736 408,806 11,330,542 2024 11,625,131 532,993 12,158,124 2025 12,128,773 533,536 12,662,309 Notes: Exemptions are netted directly against individual categories. In 1978 the voters of the State of California passed Proposition 13 which limited property taxes to a total maximum rate of 1% based upon the assessed value of the property being taxed. Each year, the assessed value of property may be increased by an "inflation factor" (limited to a maximum increase of 2%). With few exceptions, property is only reassessed at the time that it is sold to a new owner. At that point, the new assessed value is reassessed at the purchase price of the property sold. The assessed valuation data shown above represents the only data currently available with respect to the actual market value of taxable property and is subject to the limitations described above. 1 Effective February 1, 2012, the Redevelopment Agency was dissolved. The Successor Agency took over the assets and liabilities of the former Redevelopment Agency. See Note 18 for more information. 2 This rate represents the weighted average of all individual direct rates applied by the City of Tustin. 143 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 Successor Agency 1 Taxable Total Assessed Direct Tax Secured Unsecured Value Rate 2 $ 2,643,865 $ 141,934 $ 2,785,799 0.116% 2,872,602 138,433 3,011,035 0.116% 3,260,212 143,833 3,404,045 0.116% 3,498,105 138,599 3,811,347 0.116% 3,671,553 167,199 3,996,268 0.116% 3,900,575 186,969 4,087,544 0.116% 4,077,588 125,960 4,203,548 0.116% 4,290,538 145,081 4,435,619 0.117% 4,627,872 172,806 4,800,678 0.117% 4,992,668 188,505 5,181,173 0.117% 144 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN DIRECT AND OVERLAPPING PROPERTY TAX RATES Last Ten Fiscal Years (rate per $100 of taxable value) Direct Rate: City of Tustin Tustin Unified School District South Orange County Community College District County of Orange Orange County Flood Control District Orange County Library District Orange County Department of Education Various Special Districts Total Direct Rate Overlapping Rates: Tustin Unified School District Bonds Metropolitan Water District Bonds Rancho Santiago Community College District Bonds Orange Unified School District Bonds Irvine Ranch Water District Bonds Santa Ana Unified School District Bonds Irvine Unified School District Bonds Total Overlapping Rates Total Direct and Overlapping Rates Source: HdL, Coren & Cone Fiscal Year 2016 2017 2018 2019 $ 0.1272 $ 0.1272 $ 0.1272 $ 0.1272 0.4397 0.4397 0.4397 0.4397 0.0886 0.0886 0.0886 0.0886 0.0617 0.0617 0.0617 0.0617 0.0198 0.0198 0.0198 0.0198 0.0167 0.0167 0.0167 0.0167 0.0161 0.0161 0.0161 0.0161 0.2302 0.2302 0.2302 0.2302 1.0000 1.0000 1.0000 1.0000 0.0775 0.0700 0.0687 0.0669 0.0035 0.0035 0.0035 0.0035 0.0504 0.0495 0.0509 0.0454 - - - 0.0269 0.0960 0.1270 0.1270 0.1270 0.0660 0.0638 0.0633 0.0556 - - 0.0271 0.0280 0.2934 0.3138 0.3405 0.3532 $ 1.2934 $ 1.3138 $ 1.3405 $ 1.3532 145 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 Fiscal Year 2020 2021 2022 2023 2024 2025 $ 0.1272 $ 0.1272 $ 0.1272 $ 0.1272 $ 0.1272 $ 0.1272 0.4397 0.4397 0.4397 0.4397 0.4397 0.4397 0.0886 0.0886 0.0886 0.0886 0.0886 0.0886 0.0617 0.0617 0.0617 0.0617 0.0617 0.0617 0.0198 0.0198 0.0198 0.0198 0.0198 0.0198 0.0167 0.0167 0.0167 0.0167 0.0167 0.0167 0.0161 0.0161 0.0161 0.0161 0.0161 0.0161 0.2302 0.2302 0.2302 0.2302 0.2302 0.2302 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 0.0638 0.0710 0.0652 0.0665 0.0586 0.0576 0.0035 0.0035 0.0035 0.0035 0.0035 0.0070 0.0518 0.0452 0.0429 0.0469 0.0456 0.0451 0.0229 0.0166 0.0166 0.0256 0.0253 0.0244 0.1270 0.1270 0.1270 0.1270 0.1270 0.1270 0.0730 0.0813 0.0686 0.0698 0.0589 0.0608 0.0253 0.0280 0.0231 0.0258 0.0239 0.0269 0.3673 0.3727 0.3469 0.3651 0.3428 0.3488 $ 1.3673 $ 1.3727 $ 1.3469 $ 1.3651 $ 1.3428 $ 1.3487 146 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 Taxpayer Vestar Kimco Tustin LP Raintree Tustin LLC CSHV Myford Tustin LLC Flight Phase I Owner LLC Legacy Villas LLC Schools First Federal Credit Union DPIF3 California 35 Valencia Avenue LLC Tustin Market Place Rivian Automotive LLC Costco Wholesale Corporation Irvine Company LLC Avalon II California Value I PK II Larwin Square SC LP Irvine Apartment Communities Borchard Redhill SKB-Tustin LLC Ricoh Development Cadigan Communities CP II Park Place LLC Source: HdL, Coren & Cone CITY OF TUSTIN PRINCIPAL PROPERTY TAX PAYERS Current Year and Nine Years Ago 2025 Taxable Assessed Value $ 197,911,563 162,049,179 155,974,811 144,900,661 141,890,065 139,894,934 103,511,192 93,734,049 84,088,683 76,625,442 2016 Percent of Total City Taxable Taxable Assessed Assessed Value Value 1.11% $ 168,166,642 0.91% 0.87% 0.81% 0.79% 100,997,664 0.78% 0.58% 0.52% 0.47% 0.43% 48,093,830 233,313,029 103,839,054 49,508,974 51,860,610 50,867,718 48,064,313 50,320,770 Percent of Total City Taxable Assessed Value 1.53% 0.92% 0.44% 2.12% 0.95% 0.45% 0.47% 0.46% 0.44% 0.46% $ 1,300,580,579 7.27% $ 905,032,604 8.24% 147 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 Fiscal Taxes Levied Year Ended forthe June 30 Fiscal Year CITY OF TUSTIN PROPERTY TAX LEVIES AND COLLECTIONS Last Ten Fiscal Years Collected within the Fiscal Year of Levy Collections in Percent Subsequent Amount of Levy Years Total Collections to Date Percent Amount of Levy 2016 $ 10,847,984 $ 10,541,516 97.17% $ 233,935 $ 10,775,451 99.33% 2017 11,278,643 10,996,314 97.50% 207,332 11,203,646 99.34% 2018 11,844,150 11,615,833 98.07% 174,112 11,789,945 99.54% 2019 12,335,873 12,072,342 97.86% 183,788 12,256,130 99.35% 2020 12,732,756 12,500,616 98.18% 182,977 12,683,593 99.61% 2021 13,346,141 13,122,458 98.32% 180,669 13,303,126 99.68% 2022 13,867,033 13,518,415 97.49% 279,787 13,798,202 99.50% 2023 15,050,249 14,717,998 97.79% 277,170 14,995,169 99.63% 2024 15,859,881 15,521,841 97.87% 251,597 15,773,438 99.45% 2025 16,483,153 16,118,149 97.79% 306,508 16,424,657 99.65% Notes: The amounts presented for fiscal years 2009 through 2012 include City property taxes and former Redevelopment Effective February 1, 2012, the former Redevelopment Agency was dissolved. See Notes 18 for more information Source: County of Orange Auditor Controller's Office Millions Property Tax Levies and Collections $18.00 $16.00 $14.00 $12.00 $10.00 $8.00 $6.00 $4.00 $2.00 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Taxes Levied Amount Collected 148 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN RATIOS OF OUTSTANDING DEBT BY TYPE Last Ten Fiscal Years Fiscal Governmental Activities Year Total Ended Notes Lease Lease Subscription Governmental June 30 Payable 1 Payable z Payable 3 Payable ° Activities 2016 $ 12,303,512 $ - $ $ $ 12,303,512 2017 3,202,341 340,324 - - 3,542,665 2018 - 271,162 - - 271,162 2019 - 199,255 - 199,255 2020 - 124,492 - 124,492 2021 - 46,761 - 46,761 2022 - - 564,529 - 564,529 2023 - - 467,949 2,121,251 2,589,200 2024 - - 354,638 1,480,460 1,835,098 2025 - - 303,624 990,505 1,294,129 Notes: Details regarding the City's outstanding debt can be found in the notes to the financial statements. 1 In December of 2008 the City executed a note payable to the Tustin Redevelopment Agency in the amount of $18,881,750 to increase its deposit of probable compensation per court order pending litigation. As of February 1, 2012, this note became payable to the Successor Agency to the Tustin Community Redevelopment Agency. See Note 17 for more information. z In February 2017 the City entered into a lease to finance equipment with a present value of $368,356. 3 In fiscal year 2021-2022, the City implemented GASB 87 Lease Payable as a lessee for facilities, vehicles and equipment. See Note 9 for more information. ° In fiscal year 2022-2023, the City implemented GASB 96 Subscription Payable as a payor for various software applications. See Note 9 for more information. Source: LT Debt -City & Water Revenue Bonds + Bond Premium 149 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 Water Revenue Bonds 5 Water Revenue Bonds 6 Water Revenue Bonds 7 Business -type Activity Water Water Revenue Revenue Bonds a Bonds 9 Advance to Water 10 Water Revenue Bonds" Total Business -type Activity Total Primary Government Percentage of Personal Income Debt Per Capita $ 21,013,711 $ 6,571,858 $ 14,062,474 $ - $ - $ - $ - $ 41,648,043 $ 53,951,555 2.21% 656 - 5,720,101 14,013,530 22,790,666 42,524,297 46,066,962 1.82% 559 4,843,344 13,959,586 22,738,061 41,540,991 41,812,153 1.63% 508 3,931,858 13,905,642 22,685,456 - 40,522,956 40,722,211 1.46% 500 2,989,831 - 22,632,852 14,910,000 40,532,683 40,657,175 1.37% 506 2,023,074 22,580,247 14,745,000 39,348,321 39,395,082 1.27% 492 1,021,317 22,527,643 14,540,000 38,088,960 38,653,489 1.18% 486 - 22,475,037 14,335,000 3,830,700 - 40,640,737 43,229,937 1.23% 543 21,517,432 13,895,000 3,830,700 4,125,000 43,368,132 45,203,230 1.19% 573 20,539,828 13,450,000 3,830,700 4,125,000 41,945,528 43,239,657 1.08% 545 6 In May 2011 the City issued $20,760,000 Water Revenue Bonds, 2011 Series A to finance water capital improvement projects. 6 In March 2012 the City issued $8.91 million of Refunding Water Bonds to defease the outstanding 2003 Water Revenue Bonds. 7 In October 2013 the City issued $14.045 million of Water Revenue Bonds to finance water capital improvement projects. a In September 2016 the City issued $21.515 million of Refunding Water Bonds to defease the outstanding 2011 Water Revenue Bonds. 9 In February 2020 the City issued $14.91 million of Refunding Water Bonds to defease the outstanding 2013 Water Revenue Bonds. i0 On June 1, 2023, the General Fund purchased a seven year Promissory Note issued by the Water Enterprise Fund to provide cash flows. u On February 2024, the City issued $4.125 million of Water Revenue Bond to fund capital improvements for the City's Water System 150 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN OVERLAPPING DEBT SCHEDULE June 30, 2025 2024-25 Assessed Valuation: $ 17,844,701,158 Redevelopment Incremental Valuation (5,001,486,034) Adjusted Assessed Value $ 12,843,215,124 City's Share of Total Debt Debt at OVERLAPPING TAX AND ASSESSMENT DEBT: 6/30/2025 % Applicable' 6/30/2025 Metropolitan Water District $ 17,155,000 0.438% $ 75,139 Rancho Santiago Community College District 132,145,756 0.169 223,326 Rancho Santiago Community College District School Facilities Improvement District No.1 138,730,000 0.294 407,866 Irvine Unified School District School Facilities Improvement District No. 1 207,575,000 2.718 5,641,889 Orange Unified School District 275,590,000 0.028 77,165 Santa Ana Unified School District 401,142,561 0.362 1,452,136 Tustin Unified School District 87,000,000 42.7 37,149,000 Tustin Unified School District School Facilities Improvement District No. 2002-1 32,340,000 47.695 15,424,563 Tustin Unified School District School Facilities Improvement District No. 2008-1 69,670,000 46.325 32,274,628 Tustin Unified School District School Facilities Improvement District No. 2012-1 42,090,000 46.587 19,608,468 Tustin Unified School District Community Facilities District No. 06-1 12,115,000 100 12,115,000 City of Tustin Community Facilities Districts 72,595,000 100 72,595,000 Irvine Ranch Water District Improvement Districts 404,124,803 4.699 - 89.488 47,555,618 TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT 244,599,798 DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT: Orange County General Fund Obligations $ 429,065,000 2.201% $ 9,443,721 Orange County Board of Education General Fund Obligations 9,120,000 2.201 200,731 Orange Unified School District Certificates of Participation 8,175,000 0.028 2,289 Orange Unified School District Benefit Obligations 53,905,000 0.028 15,093 Santa Ana Unified School District General Fund Obligations 38,301,736 0.362 138,652 City of Tustin Lease Payable 303,624 100 303,624 City of Tustin Subscription Payable 990,505 100 990,505 TOTAL DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT 11,094,615 OVERLAPPING TAX INCREMENT DEBT (Successor Agencies) $ 76,355,000 0.001-100.% 39,525'000 z TOTAL OVERLAPPING DEBT TOTAL DIRECT DEBT COMBINED TOTAL DEBT 293,925,284 s 1,294,129 $ 295,219,413 ' The percentage of overlapping debt applicable to the city is estimated using taxable assessed property value. Applicable percentages were estimated by determining the portion of the overlapping district's assessed value that is within the boundaries of the city divided by the district's total taxable assessed value. z Effective February 1, 2012, the former Redevelopment Agency was dissolved. The Successor Agency took over assets and liability of the former Redevelopment agency. See Note 18 for more information 3 Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non -bonded leases Ratios to 2024-2025 Assessed Valuations: Total Overlapping Tax and Assessment Debt 1.37% Total Direct Debt 0.01% Combined Total Debt 1.65% Ratios to Redevelopment Successor Agencies Incremental Valuation (S5,001,486,034 Total Overlapping Tax Increment Debt 0.79% Source: California Municipal Statistics, Inc. via HdL 151 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 The page left blank intentionally Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 Assessed valuation Conversion percentage Adjusted assessed valuation Debt limit percentage Debt limit Total net debt applicable to limitation Legal debt margin Total debt applicable to the limit as a percentage of debt limit CITY OF TUSTIN LEGAL DEBT MARGIN INFORMATION Last Ten Fiscal Years Fiscal Year 2016 2017 2018 2019 2020 $ 8,218,228,000 $ 8,566,757,000 $ 8,995,570,000 $ 9,405,874,000 $ 9,819,597,000 25% 25% 25% 25% 25% 2,054,557,000 2,141,689,250 2,248,892,500 2,351,468,500 2,454,899,250 15% 15% 15% 15% 15% 308,183,550 321,253,388 337,333,875 352,720,275 368,234,888 $ 308,183,550 $ 321,253,388 $ 337,333,875 $ 352,720,275 $ 368,234,888 0.0% 0.0% 0.0% 0.0% 0.0% The Government Code of the State of California provides for a legal debt limit of 15% of gross assessed valuation. However, this provision was enacted when assessed valuation was based on 25% of market value. Effective with the 1981-82 fiscal year, each parcel is now assessed at 100% of market value (as of the most recent change in ownership for that parcel). The computations shown above reflect a conversion of assessed valuation data for each fiscal year from the current full valuation perspective to the 25% level that was in effect at the time that the legal debt margin was enacted by the State of California for local governments located within the state. Sources: County Tax Assessor's Office City Finance Department 152 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 Fiscal Year 2021 2022 2023 2024 2025 $ 10,285,119,000 $ 10,609,472,000 $ 11,330,542,000 $ 12,158,124,000 $ 12,662,309,000 25% 25% 25% 25% 25% 2,571,279,750 2,652,368,000 2,832,635,500 3,039,531,000 3,165,577,250 15% 15% 15% 15% 15% 385,691,963 397,855,200 424,895,325 455,929,650 474,836,588 $ 385,691,963 $ 397,855,200 $ 424,895,325 $ 455,929,650 $ 474,836,588 0.0% 0.0% 0.0% 0.0% 0.0% 153 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN PLEDGED -REVENUE COVERAGE Last Ten Fiscal Years Fiscal Year Less Net Water Revenue Bonds Ended Water Proceeds from Operating Available Debt Service June 30 Revenue Advance' Expenses Revenue Principal Interest Coverage 2016 $ 17,141,219 $ $ 12,013,376 $ 5,127,843 $ 790,000 $ 1,951,170 1.87 2017 17,365,350 13,032,698 4,332,652 815,000 1,229,673 2.12 2018 18,558,264 14,315,827 4,242,437 845,000 1,535,895 1.78 2019 18,644,225 14,284,473 4,359,752 880,000 1,503,095 1.83 2020 18,257,313 14,022,416 4,234,897 860,000 1,474,120 1.81 2021 19,083,377 15,889,077 3,194,300 1,050,000 1,251,630 1.39 2022 21,740,382 18,481,674 3,258,708 1,125,000 1,166,362 1.42 2023 18,550,021 3,830,700 18,072,628 4,308,093 1,165,000 1,126,308 1.88 2024 21,743,329 - 18,394,803 3,348,526 1,345,000 1,084,540 1.38 2025 24,421,059 20,683,426 3,737,633 1,370,000 1,058,920 1.54 1 On June 1, 2023, the General Fund purchased a seven year Promissory Note issued by the Water Enterprise Fund to provide cash flows Notes: Details regarding the City's outstanding debt can be found in the notes to the basic financial statements. Operating expenses do not include interest or depreciation and amortization expenses. Source: Proprietary Fund (ACFR) & Debt Service Schedules 154 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 CITY OF TUSTIN DEMOGRAPHIC AND ECONOMIC STATISTICS Last Ten Calendar Years Personal Per Capita Calendar City of Tustin Income Personal Unemployment Year Population (in Thousands) Income Rate 2015 82,717 $ 2,441,169 $ 29,512 4.20% 2016 82,372 2,506,380 30,427 3.70% 2017 82,344 2,570,460 31,216 3.50% 2018 81,369 2,785,795 34,237 2.80% 2019 80,382 2,963,734 36,870 2.60% 2020 80,009 3,112,332 38,899 8.30% 2021 79,535 3,271,521 41,133 5.90% 2022 79,558 3,510,034 44,119 3.00% 2023 78,844 3,788,661 48,052 3.40% 2024 79,326 4,008,871 50,536 4.00% Source: HdL Coren & Cone, LLC City of Tustin Population 100,000 80,000 60,000 40,000 20,000 Per Capita Personal Income $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 Personal Income (in Thousands) $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 ti ti ti ti ti ti ti ti ti ti Unemployment Rate 10.00% 8.00% 6.00% 4.00% \ 2.00% 0.00% oti�' oti° oti o 'P oti� oti� olti ti ti tioti ti ti ti ti ti ti ti 155 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN PRINCIPAL EMPLOYERS Current Year and Nine Years Ago 2025 2016 Percent of Percent of Number of Total Number of Total Employer Employees Employment Employees Employment Tustin Unified School District 2,481 6.25% 2,248 5.13% Pacific Bell 1,100 2.77% Schools First Federal Credit Union 1,079 2.72% Costco Wholesale Corporation 741 1.87% 350 0.80% Rivian 490 1.23% Foothill Regional Medical Center 465 1.17% City of Tustin 446 1.12% 392 0.89% New American Funding 412 1.04% Avid BioSciences 387 0.97% Lendistry 285 0.72% Virgin Galactic 261 0.66% Kaiser Foundation Hospitals - 0.00% 593 1.35% Youngs Market Company LLC - 0.00% 548 1.25% Logomark Inc - 0.00% 315 0.72% Toshiba America Medical Systems - 0.00% 300 0.68% Ricoh Electronics Inc - 0.00% 256 0.58% Vita Best Nutrition Inc - 0.00% 250 0.57% Balboa Water Group - 0.00% 250 0.57% Sources: State of California Employment Development Department City of Tustin US Census Bureau 156 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 Function General Government Community Development Public Works Police Parks and Recreation Water Total FULL-TIME CITY EMPLOYEES BY FUNCTION Last Ten Fiscal Years Fiscal Year 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 38 35 39 42 42 45 42 46 43 43 19 19 19 20 20 23 24 24 20 27 45 48 47 49 50 53 60 61 64 64 141 137 142 140 143 150 147 163 157 160 14 17 17 17 16 17 19 17 27 32 19 18 18 19 17 21 16 20 25 21 276 274 282 287 288 309 308 331 336 347 The City contracts with the OC Fire Authority for fire services. Source: City of Tustin Human Resources Department 157 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN CAPITAL ASSET STATISTICS BY FUNCTION Last Ten Fiscal Years Fiscal Year Function 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Public Safety Police Stations 1 1 1 1 1 1 1 1 1 1 Fire Stations 1 2 2 2 2 2 2 2 2 2 2 Public Works Street (miles) 130.1 130.7 131.3 131.3 132.6 132.6 132.6 134.4 134.4 144.0 Street Lights 3,680 3,700 3,700 3,740 3,797 3,789 3,789 3,874 3,874 3,874 Traffic Signals 125 126 128 128 128 131 131 135 135 137 Storm Drain (miles) 51.8 52.9 53.9 53.9 53.9 54.8 54.8 56.5 56.5 68.0 Street Trees 15,706 15,542 15,574 15,042 14,606 14,546 14,546 14,566 14,183 14,286 Parks and Recreation Parks 14 14 14 14 16 16 16 18 19 19 Parks (acres) 116.0 116.0 116.0 116.0 173.5 173.5 173.5 173.6 175.6 175.6 Community Centers 3 3 3 3 3 4 4 4 4 4 Senior Centers 1 1 1 1 1 1 1 1 1 1 Water Metered Services 14,099 14,109 14,104 14,241 14,328 14,325 14,392 14,405 14,413 14,480 Average daily consumptic 9,975 10,601 11,770 11,098 11,098 12,494 11,755 10,389 10,131 11,315 Reservoirs 6 6 6 6 6 6 7 7 7 7 Wells 13 14 14 14 14 14 14 14 14 14 Water Main (miles) 178 178 178 178 178 178 178 183 183 183 Fire Hydrants 1,911 1,911 1,911 1,911 1,911 1,911 1,911 1,911 1,911 1,911 1 The City contracts with the OC Fire Authority for fire services, and they have full use of City owned stations. Source: City of Tustin Finance Department 158 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 The page left blank intentionally Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 CITY OF TUSTIN WATER CONSUMPTION BY CUSTOMER TYPE Last Ten Fiscal Years Type of Customer Residential Apartment/Multiple Units Commercial Fire Services Irrigation Government Restaurants Hospitals Non -Profit Industrial HoteIJMotels ALL Others Measured in hundred cubic feet. *2021 data was restated. Source: City of Tustin Finance Department 5,000,000 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0 2016 Fiscal Year 2016 2017 2018 2019 1,934,761 2,119,716 2,398,744 2,199,236 1,003,808 987,688 1,039,878 1,029,284 259,459 271,649 274,943 267,541 646 504 589 564 96,082 105,750 146,941 131,579 134,446 162,843 195,695 177,321 45,069 44,947 45,086 45,905 11,166 11,276 10,536 13,102 22,989 26,751 34,539 32,021 40,407 45,071 45,062 44,693 23,387 25,185 28,908 32,594 3,641,050 3,872,101 4,296,129 4,050,713 Water Consumption By Customer 2017 2018 2019 2020 Residential � Apartment/Multiple Units Commercial Fire Services Irrigation Government 159 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 Fiscal Year 2020 2021* 2022 2023 2024 2025 2,264,//2 2,498,332 2,4U/,3U1 2,U/9,3U3 1,993,145 2,288,366 1,026,696 1,093,537 1,045,809 988,524 999,361 1,023,327 255,245 247,832 252,125 229,890 239,886 241,246 475 595 767 479 832 953 127,429 151,390 147,165 112,562 113,504 142,669 158,344 195,034 214,756 174,594 153,130 192,536 37,786 30,574 36,088 37,173 40,695 40,779 10,158 10,256 9,687 15,232 11,458 16,569 28,491 28,792 30,534 26,749 23,722 31,747 37,520 43,009 45,838 32,634 26,028 35,085 32,754 33,598 31,621 26,531 23,819 24,821 70,777 66,722 68,762 68,168 72,070 92,029 4,050,713 4,399,671 4,290,453 3,791,839 3,697,650 4,130,126 2021 2022 2023 2024 2025 0 Restaurants 0 Hospitals ■ Non -Profit ■ Industrial ■ Hotel/Motels � All Others 160 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN WATER RATES Last Ten Fiscal Years Consumption Charges Bi-Monthly Up to From From From From From All Fiscal Fixed 10 11 to 20 21 to 30 31 to 40 41 to 50 51 to 60 Over 61 Year Charge HCF HCF HCF HCF HCF HCF HCF 2016 $ 46.85 $ 0.84 $ 1.48 $ 1.94 $ 2.41 $ 3.05 $ 3.53 $ 4.05 2017 46.85 0.84 1.48 1.94 2.41 3.05 3.53 4.05 2018 46.85 0.84 1.48 1.94 2.41 3.05 3.53 4.05 2019 46.85 0.84 1.48 1.94 2.41 3.05 3.53 4.05 2020 46.85 0.84 1.48 1.94 2.41 3.05 3.53 4.05 2020 2 39.76 2.79 2.79 2.79 2.79 2.79 2.79 2.79 2021 41.75 2.93 2.93 2.93 2.93 2.93 2.93 2.93 2022 43.84 11.44 3.08 3.08 3.08 3.08 3.08 3.08 2023 46.03 12.02 3.24 3.24 3.24 3.24 3.24 3.24 2024 49.73 3.57 3.57 3.57 3.57 3.57 3.57 3.57 2025 54.21 3.90 3.90 3.90 3.90 3.90 3.90 3.90 Emergency Drought Stage 2 - Consumption Charges Bi-Monthly Up to From From From From From All Fiscal Fixed 8 9 to 16 17 to 24 25 to 32 33 to 40 41 to 48 Over 49 Year Charge HCF HCF HCF HCF HCF HCF HCF 2016 1 46.85 0.84 1.48 1.94 2.41 3.05 3.53 4.05 2017 46.85 0.84 1.48 1.94 2.41 3.05 3.53 4.05 2018 46.85 0.84 1.48 1.94 2.41 3.05 3.53 4.05 2019 46.85 0.84 1.48 1.94 2.41 3.05 3.53 4.05 2020 3 46.85 0.84 1.48 1.94 2.41 3.05 3.53 4.05 Notes: HCF = Hundred Cubic Feet (1 HCF = 748 gallons) 1 A revised seven (7) tiered rate structure was approved on August 5, 2014 to address a stage 2 emergency drought water demand reduction mandate. A seven (7) tiered rate structure was implemented on July 1, 2010. Additionally, a new fixed charge (Capital Fee) was implemented with the new rate structure, which has been included in the Bi-Monthly Fixed Charge. The rate shown is for a standard residential customer. The bi-monthly fixed rate shown is based on the standard residential customer meter (5/8"). The City uses the American Water Works Association equivalent meter capacity ratios from the AWWA Manual M6 to calculate fixed charges for meters ranging from 1 to 6 inches. z The City Council adopted Resolution No. 20-04 to replace the tiered rate structure with a rate structure that consists a fixed component based on the size of water meter and a variable component based on usage. The new rate structure went into effect on February 1, 2020. 3 No longer in effect. Source: City of Tustin Finance Department 161 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 CITY OF TUSTIN Water Customers Current Fiscal Year and Ten Years Ago 2025 2015 Percent of Percent of Water Total Water Water Total Water Water Customer Charges Revenues Charges Revenues Tustin Unified School District $ 943,213 3.99% $ 708,074 3.74% Tustin Village Mhp Assoc LP 386,217 1.63% Tustin Acres Comm Assoc 377,149 1.60% 49,974 0.26% Raintree Tustin LLC 257,097 1.09% City of Tustin 225,530 0.95% 164,480 0.87% Tustin Parc 128,841 0.55% Water Stone Gardens Investments LP 104,867 0.44% Westchester Park LP 92,651 0.39% 36,694 0.19% Briarwood Investment Co. Ltd 93,755 0.40% Saddleback Mobilodge 86,351 0.37% Raintree-Evergreen LLC 92,052 0.39% Tustin Park Villas 88,621 0.38% Schroeder Prop Mgmt 86,624 0.37% 53,205 0.28% New Villa Valencia MHP 75,443 0.32% Tustin Village Com. Assn 81,695 0.35% Tustin Plaza Center LP 80,993 0.34% 59,833 0.32% Contesta Immobilien GMBH & Co 95,874 0.41% Regency West 76,967 0.33% Arnel Management (Walnut East) 71,364 0.30% 15701 TV Way Partnership 92,528 0.39% 34,080 0.18% Sycamore Gardens HOA 94,585 0.40% Alta Newport Hospitals Inc 55,096 0.23% Vio Tustin Investment LP 73,301 0.31 % Tree Haven Owners Assoc. 85,392 0.36% 34,875 0.18% Stonebrook Lmtd. 62,380 0.26% AT&T Services, Inc. 83,470 0.44% Ricoh Electronics 80,191 0.42% CalTrans - District 12 70,667 0.37% SKB-Tustin LLC 51,237 0.27% Tustin Place Homeowners Association 35,756 0.19% HSA LP 34,852 0.18% Sierra Corporate Management 33,912 0.18% 71286 JMJ LLC 33,124 0.17% Residence Inn Tustin 32,925 0.17% Briarwood Investment Co. Ltd 31,556 0.17% Total Water Sales $ 3,908,586 16.54% $ 1,628,905 8.58% Source: City of Tustin Finance Dept Total Water Revenues: 23,630,435 24/25 annual report 162 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 CITY OF TUSTIN OPERATING INDICATORS BY FUNCTION Last Ten Fiscal Years Public Safety Moving Citations Parking Violations Arrests Calls for Service Public Works Number of Building Permits Issued Number of Building Inspections Completed Transportation Permits Annual Single Encroachment Permits Utility Permits Curb Miles Swept Community Services Rentals Classes General Government New Hires Retiree/separations 2016 2017 2018 2019 6,982 5,590 4,762 4,355 13,855 14,514 16,836 17,017 2,494 2,343 2,302 2,463 36,618 35,172 36,571 38,326 2,334 2,430 2,078 2,425 11,947 11,768 9,816 11,348 66 56 46 77 82 208 137 127 147 107 155 136 59 62 71 65 22,087 20,589 20,270 22,162 1,253 1,494 1,483 1,326 1,389 1,213 1,160 854 47 67 48 62 38 47 63 56 (1) Prior to 2019, Community Services Classes include Classes that were canceled but offered. Fiscal year 2019 on reflects the classes that were held. * Reduced rentals and classes due to COVID-19 pandemic restrictions. Public Safety 80,000 70,000 - 60,000 50,000 40,000 30,000 20,000 10,000 0 ti�y6 tidy^ ti�y� tiS9 ■ Moving Citations ■ Parking Violations Arrests ■ Calls for Service Public Works - Permits 3,500 3,000 2,500 2,000 - �- 1,500 - - 1,000 - - 500 - n - tici�� ■ Number of Building Permits Issued ■ Transportation Permits (Annual) ■Transportation Permits (Single) ■ Encroachment Permits ■ Utility Permits 163 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1 F5 Fiscal Year 2020 2021 2022 2023 2024 2025 2,811 3,079 3,312 2,788 3,161 3,266 12,609 16,256 17,898 16,094 13,797 15,014 2,448 2,774 2,810 2,605 2,159 2,469 38,288 37,616 39,168 47,564 45,070 41,442 1,915 1,560 2,265 2,330 1,675 2,277 15,884 9,907 10,073 14,962 13,224 12,106 74 73 81 73 96 93 104 64 84 62 88 85 161 117 147 209 267 170 57 65 55 43 96 67 20,766 20,766 20,766 19,276 20,317 22,404 550 * 187 * 1,102 1,176 1,597 1,909 805 362 * 758 735 873 914 46 24 26 35 34 18 37 24 30 34 41 31 Community Services 2,500 2,000 1,500 1,000 Soo 0 ■ Rentals ■ Classes General Government 80 70 60 50 40 30 20 10 0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 -New Hires -Retiree/separations 164 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 DavisFarr CERTIFIED PUBLIC ACCOUNTANTS Davis Farr LLP 18201 Von Karman Avenue I Suite 1100 1 Irvine, CA 92612 Main: 949.474.2020 1 Fax: 949.263.5520 INDEPENDENT ACCOUNTANT'S REPORT The Honorable Mayor and City Council City of Tustin, California We have performed the procedures enumerated below on the City of Tustin, California (City) appropriations limit worksheets for compliance with the requirements of Section 1.5 of Article XIIIB of the California Constitution for the year ended June 30, 2025. The City is responsible for compliance with Section 1.5 of Article XIIIB of the California Constitution. The City has agreed to and acknowledged that these procedures are appropriate to meet the intended purpose of evaluating compliance with the requirements of Section 1.5 of Article XIIIB of the California Constitution and the League of California Cities publication entitled Article XIIIB Appropriations Limitation Uniform Guidelines for the year ended June 30, 2025. This report may not be suitable for any other purpose. The procedures performed may not address all the items of interest to a user of this report and may not meet the needs of all users of this report and, as such, users are responsible for determining whether the procedures performed are appropriate for their purposes. The procedures and the associated findings are as follows: 1. We obtained the worksheets referred to above and compared the limit and annual adjustment factors included in those worksheets to the limit and annual adjustment factors that were adopted by resolution of the City Council. We also compared the population and inflation options included in the aforementioned worksheets to those that were selected by a recorded vote. Results: No exceptions were noted as a result of our procedures. 2. We recalculated the mathematical computations reflected in the City's worksheets. Results: No exceptions were noted as a result of our procedures. 3. We compared the current year information used to determine the current year limit and agreed it to worksheets prepared by the City and to information provided by the State Department of Finance. Results: No exceptions were noted as a result of our procedures. 4. We compared the amount of the prior year appropriations limit presented in the worksheets to the amount adopted by the City Council for the prior year. Results: No exceptions were noted as a result of our procedures. Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 The Honorable Mayor and City Council City of Tustin, California Page Two We were engaged by the City to perform this agreed -upon procedures engagement and conducted our engagement in accordance with standards established by the American Institute of Certified Public Accountants. We were not engaged to and did not conduct an examination or review, the objective of which would be the expression of an opinion or conclusion, respectively on the worksheets referred to above. Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. No procedures have been performed with respect to the determination of the appropriation limit for the base year, as defined by the League publication entitled Article XIIIB Appropriations Limitation Uniform Guidelines. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements related to our agreed -upon procedures engagement. This report is intended solely for the information and use of the Management of the City of Tustin, California and is not intended to be, and should not be, used by anyone other than the specified party. Irvine, California December 22, 2025 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 0 1 DavisFarr CERTIFIED PUBLIC ACCOUNTANTS Davis Farr LLP 18201 Von Korman Avenue I Suite 1100 1 Irvine, CA 92612 Main:949.474.2020 1 Fax:949.263.5520 Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Air Ouality Improvement Special Revenue Fund Performed in Accordance with Government Auditing Standards Honorable Mayor and Members of City Council City of Tustin Tustin, 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 City of Tustin, California (the City) including the Air Quality Improvement Special Revenue Fund (the Fund) of the City, as of and for the year ended June 30, 2025, and the related notes to the financial statements, which collectively comprise the City's basic financial statements and have issued our report thereon dated December 22, 2025. Internal Control over Financial Reporting In planning and performing our audit of the Fund's financial statements, we considered the City's internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters. As part of obtaining reasonable assurance about whether the City's Fund financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. Such provisions include Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 those provisions of laws and regulations identified in Assembly Bill 2766 Chapter 1705 [Health and Safety Code Sections 44220 through 44247] (the Guide). 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 City's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards and the Guide in considering the City's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. L4P Irvine, California December 22, 2025 Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 DavisFarr CERTIFIED PUBLIC ACCOUNTANTS Honorable Mayor and Members of City Council City of Tustin Tustin, California Davis Farr LLP 18201 Von Karman Avenue I Suite 1100 1 Irvine, CA 92612 Main: 949.474.2020 1 Fax: 949.263.5520 We have audited the financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City of Tustin (the "City") as of and for the year ended June 30, 2025, and have issued our report thereon dated December 22, 2025. 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 April 16, 2025, our responsibility, as described by professional standards, is to form and express opinions about whether the financial statements that have been prepared by management with your oversight are presented fairly, in all material respects, in accordance with accounting principles generally accepted in the United States of America. 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, have complied with all relevant ethical requirements regarding independence under the American Institute of Certified Public Accountants ("AICPA") independence standards, contained in the Code of Professional Conduct. We identified independence threats related to the preparation of the financial statements. We have applied certain safeguards to reduce them to an acceptable level, including using Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 an independent party within the firm to perform a quality control review of the financial statements, and obtaining confirmation from the City's management that their review of the financial statements included comparing the financial statement footnotes to the underlying accounting records. Significant Risks Identified We are required by the auditing standards to evaluate significant risks. We have identified the following areas for additional audit emphasis: The City's land management activities. As a result, we evaluated the accuracy and completeness of the City's land held for resale records, reviewed the recent developer agreements for financial impact, and evaluated whether related transactions have been recorded properly in the City's accounting records. Implementation of Governmental Accounting Standards Board (GASB) No. 101 - Compensated Absences due to the complexity of the standard and being the first year of implementation. Federal government grant compliance for Department of Justice grants and the Environmental Protection Agency grant. As a result, we plan to test the City's federal expenditures of Department of Justice grants and Environmental Protection Agency grant for compliance with federal guidelines when performing our single audit procedures. We also evaluated grant revenue for proper revenue recognition in the financial statements. 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. There have been no initial selection of accounting policies. The City changed the accounting policies related to compensated absences by adopting Statement of Governmental Accounting Standards (GASB Statement) No. 101, Compensated Absences, and risk disclosures related to government vulnerabilities due to concentrations and constraints by adopting Statement of Governmental Accounting Standards (GASB Statement) No. 102, Certain Risk Disclosures, in the fiscal year ended June 30, 2025. 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. Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 The most sensitive accounting estimates affecting the financial statements include the following: • Judgements involving the calculation of the pension liability Judgements involving the calculation of the other post -employment benefit (OPEB) liability • Judgements involving estimates of claims payable liabilities related to general liability and workers' compensation claims. Management's estimate of the pension liability, OPEB liability, and claims payable liability are based on actuarial valuation reports. We evaluated the key factors and assumptions used to develop the pension liability, OPEB liability, and claims payable liability and determined that it is reasonable in relation to the basic financial statements taken as a whole and in relation to the applicable opinion units. 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 the net pension liability and related amounts and the net OPEB liability and related amounts. 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 also 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. There were no uncorrected mistatements as a result of our audit procedures. Uncorrected misstatements or matters underlying those uncorrected misstatements could potentially cause future -period financial statements to be materially misstated, even though the uncorrected misstatements are immaterial to the financial statements currently under audit. 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. There was one material corrected misstatement related to a federal award for the PFAS Treatment Facility. 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, Docusign Envelope ID: A6BE669C-DB25-44DB-AA21-F69A9AF2C1F5 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 the attached letter dated December 22, 2025. 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 Matters, 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, significant events or transactions that occurred during the year, operating and regulatory conditions affecting the entity, 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 City's auditors. Other Information Included in the Annual Comprehensive Financial Report Pursuant to professional standards, our responsibility as auditors for other information, whether financial or nonfinancial, included in City's annual comprehensive financial report, does not extend beyond the information identified in the audit report, and we are not required to perform any procedures to corroborate such other information. However, in accordance with such standards, we have read the information and considered whether such information, or the manner of its representation, was materially inconsistent with its presentation in the financial statements. Our responsibility also includes communicating to you any information which we believe is a material misstatement of fact. Nothing came to our attention that caused us to believe that such information, or its manner of presentation, is materially inconsistent with the information, or manner of its presentation, appearing in the financial statements. This report is intended solely for the information and use of the City Council, and management of the City of Tustin and is not intended to be and should not be used by anyone other than these specified parties. �� � "P Irvine, California December 22, 2025