March 3, 2026
Robbie Cordes
SDI Advisory Committee Member
President, California City Landowners Association
21000 Hacienda Blvd.
California City, CA 93505
John Elmes
SDI Advisory Committee Member
21000 Hacienda Blvd.
California City, CA 93505
Re: SDI Forensic Audit
Dear Ms. Cordes and Mr. Elmes,
On or about May 27, 2025, Engel & Engel, LLP (“E&E”) was retained by the SDI Advisory Committee to conduct a forensic audit of the SDI Fund. This statement provides an update regarding the current status of our work.
On August 14, 2025, E&E issued an initial document request to the City of California City (“the City”), identifying approximately 119 categories of documents and information required for our forensic investigation. On or about September 15, 2025, the City produced approximately 650 documents in response to our initial document request.
Following our review of the City’s September 15, 2025 production, E&E identified numerous deficiencies, including missing documents, incomplete or non-responsive productions, and assertions that certain records did not exist despite indications that such records should exist.
Accordingly, on October 21, 2025, E&E issued a follow-up document request to address these deficiencies and to seek additional information necessary for our investigation.
On December 4, 2025, the City provided a supplemental production of approximately 250 documents and written responses. E&E has reviewed the City’s December 4, 2025 production and has identified continuing and additional deficiencies, including the following:
1. Numerous requested documents were not provided, responded to, or otherwise addressed, including documents originally requested in August 2025 that have never been acknowledged or responded to and remain outstanding after three separate document requests by E&E.
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2. A significant number of City responses stated that records do not exist; however, we have determined that such documents do and should exist.
3. Numerous responses included incorrect, incomplete, or otherwise non-responsive document productions.
To address these ongoing deficiencies, on February 6, 2026, E&E issued its third document request to the City seeking the outstanding materials and related information. E&E is currently awaiting the City’s production of documents in response to our February 6, 2026 document request.
In the meantime, E&E’s forensic analysis of the documents currently in our possession remains ongoing.
Through January 31, 2026, E&E has incurred approximately 877 hours and $333,000 in professional fees.
E&E remains committed to conducting a thorough, objective, and independent forensic investigation. We will continue pursuing the outstanding information necessary to complete our work and will provide further updates as appropriate.
Respectfully,
Brandon J. Engel
Engel & Engel, LLP
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SDI Advisory Committee
The primary task of the SDI Advisory Committee is to monitor the investments and expenditures of monies in the SDI Fund and to advise the council on the ordinance.
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SDI Investment Review Committee
Is comprised of the City Manager, Finance Director, and SDI Advisory Committee (hereinafter collectively Investment Review Committee) The goal of this committee is to review the SDI Fund’s investment policy annually on or about July 1st of each year and recommend changes as necessary to meet specific goals outlined within the municipal code. The City Council shall consider any such recommendations made by the Investment Review Committee at a public meeting.
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Why was the SDI Fund Established?
• From 1966-1970, the city entered into 29 contracts with developers to defer construction of subdivision improvements (roads and water).
• At the same time, the CITY entered into subdivision agreements with respect to certain subdivision improvements.
• THE CITY agreed to construct, sometime in the future, certain road and water improvements, and in exchange, the developers agreed to pay the then estimated cost of those improvements.
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(continued)
• Money was collected by THE CITY from various subdivisions and property owners, and that money makes up a pro-rata share of the total fund.
• The fund is meant to serve approximately 22,000 properties across 29 SDI Tracts. This money is held in trust by THE CITY. • THIS MONEY IS NOT THE CITY’S MONEY.
• However, the fund is not whole
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LOANS
• In 1990, $4,100,000 ($4.5 million face value) was borrowed for the 317 project. This note is often referred to as the “land note” or the “317 note”. The money was used to purchase approximately 317 acres of property adjacent to the golf course. Roughly bound on the north by North Loop, on the east by CCB, on the south by South Loop, and on the west by Hacienda. It is considered prime real estate within the city. • In 1993, $4,850,972 was borrowed to construct/expand the sewer treatment plant
• These loans now top $20 million dollars plus (at some point, the city stopped accruing interest on the notes without a legal or factual determination).
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Management of SDI Fund
• Who is the Fund Manager?
• Who is authorized to make investment decisions on behalf of the city? To date, the city cannot or will not identify a fund manager According to the Municipal Code, the Treasurer and the Finance Director shall select the proper mix of investments. Other provisions are outlined in the municipal code regarding the utilization of Investment Intermediaries Sec. 3-2.507.
***It should be noted that several key individuals within the city lack surety bonding
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In September of 2024, the committee had requested that the fund be moved to a public fiduciary based primarily on:
• The lack of required quarterly reporting and lags in updating the city’s financials (US Bank Investments), & variances in the treasurer’s and finance departments’ reporting numbers
• The fact that the fund made no money in nearly four years • Outstanding loan obligations totaling $20 plus million not being addressed
• $1.3 million missing from SDI Street Reserves, and
• Unexplained trade activity, no MOU with any third-party intermediary, bonds that were being sold prior to maturity, and the city’s failure to identify a fund manager.
That request went unanswered by the previous Mayor, the previous Acting City Manager, and the City Attorney.
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FINANCE MANAGER MONTHLY SDI BALANCE SHEET TREASURER'S REPORT (INCLUDED IN MONTHLY AGENDA)
DATE MARKET VALUE
ADJUSTMENT
SDI-US BANK INVESTMENTS
72-01046 SDI-US BANK INVESTMENTS
12/31/2024 $ (8,866,153.40) $ 91,414,155.20 $ 88,308,939.00 12/31/2023 $ (8,866,153.40) $ 91,414,155.20 $ 85,458,265.00 12/31/2022 $ (1,839,135.25) $ 89,639,660.77 $ 81,855,636.00 12/31/2021 $ (3,817,311.36) $ 92,650,610.06 $ 88,465,215.00 12/31/2020 $ 89,193,113.00
Between June 2019 and December 2020, the fund made nearly $2 million, according to the Treasurer’s Report 208
Thus, the request for the Forensic Audit
December of 2024
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Key Discussion Topics
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COUNCIL AGENDA ITEM
March 10, 2026
TO: Mayor and City Council
FROM: Sean Grayson, Interim City Manager
Anu Doravari, City Planner
SUBJECT: Consideration of City-Initiated Zone Text Amendment (ZTA) to Allow “Farmers Markets” as a Land Use Within the C-2 (Community Commercial) Zoning District or Amendment of
the Temporary Uses Article of the Zoning Code to Allow
Expanded Use of Farmers Markets by Temporary Use Permit BACKGROUND/ DISCUSSION:
On November 17, 2025, the City Council considered a proposal for the City to initiate a Zone Text Amendment (ZTA) to allow “Farmers Market” as a land use within the C-2 (Community Commercial) zoning district. The intent was to allow for the existing farmers market within the community and future potential farmers markets to be able to operate in conformance with the City’s municipal code. The City Council’s direction from the previous meeting was to bring the item back for consideration with information on the cost to the City once the City’s financial situation had been established. The anticipated cost of ZTA is estimated to be $3000, inclusive of legal fees, contract fees for the City Planner, public hearing notices for the Planning Commission and the City Council, and related staff work. This is similar in cost to other community benefit ordinance changes initiated by the City, including the skate park ordinance update.
The proposed ZTA would:
• Define “Farmers Market” as a specific land use within the Zoning Code; • Establish operational standards addressing site layout, hours of operation, signage, waste management, and public safety; and
• Provide flexibility for both temporary and recurring markets while maintaining neighborhood compatibility and regulatory oversight.
In the alternative, the Temporary Uses article of the Zoning Code could be amended to allow for the expanded use of farmers markets via temporary use permit as currently allowed.
Staff would work with the existing farmers market team and other temporary use permit applicants to refine the best approach to address the needs of the applicants and the needs of the City. If directed, staff will coordinate with the City Attorney’s Office to ensure the proposed regulations are consistent with the California Retail Food Code, applicable CEQA requirements and other applicable state and county regulations.
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If council provides direction to staff to initiate, the following steps will be taken:
• Staff will bring the draft ZTA to the Planning Commission in April 2026 for a public hearing and recommendation.
• Following the Planning Commission’s recommendation, the ZTA will be scheduled for City Council consideration and adoption in early May 2026. • Until the ZTA is adopted, any farmers market operations will remain subject to existing Temporary Use Permit regulations.
FISCAL IMPACT:
There is no fiscal impact with this action. The cost of implementing a ZTA, if directed, would come funded through the exiting Planning budget for fiscal year 2025/26.
RECOMMENDATION:
Staff recommends that the City Council provide formal direction to prepare a Zoning Text Amendment (ZTA) to allow and regulate “Farmers Market” in the manner best suited for applicants and the City.
ATTACHMENTS:
None.
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COUNCIL AGENDA ITEM
March 10, 2026
TO: Honorable Mayor and City Council
FROM: Sean Grayson, City Manager
Inge Elmes, OHV Manager
SUBJECT: Adopt A Resolution of the City Council of the City of California City Authorizing the Application for the Purchase or Lease of Public Lands From the Bureau of Land Management Under the Recreation and Public Purposes Act
Background/Discussion
Recognizing a strong public need for recreational areas, in 1954 Congress enacted the Recreation and Public Purposes Act (R&PP), administered by the Bureau of Land Management (BLM). This act authorizes the sale or lease of public land for recreational or public purposes to state and local government at no cost.
On April 28, 2021, the City of California City submitted a letter of interest to acquire, either through the sale or lease of APN #262-010-01, under the R&PP Act. This property is situated directly adjacent to Borax Bill Park Campground. The purpose of this request is to expand Borax Bill Park Campground and to provide additional recreational services to the public.
The lease period for governmental entities is 25 years. Land Patents (deeds) issued under the R&PP Act convey a restricted title since they contain certain provisions or clauses which if not complied with, may result in reversion to the United States. Leases may be additionally canceled for nonuse or any use other than that for which the lease was granted from BLM.
On February 28, 2024, the city received correspondence listing the requirement for additional documents to review for this request. A preliminary application was submitted on that same day as requested.
During the past two years, boundary maps and property maps have been generated as well as preliminary drafting of site plan elements.
If approved, the next step would be to provide a development and management plan along with preliminary site plans and executed resolution to BLM for review.
Grant funding will be requested for planning, environmental documents, and development of this project.
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Fiscal Impact
There is no cost for the sale and/or lease of the property under the Recreation and Public Purposes Act.
Recommendation
Staff recommends that the City Council adopt Resolution No. 26-3221.
Attachments
Resolution No. 26-3221
Map – APN #262-10-01
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RESOLUTION NO. 26-3221
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CALIFORNIA CITY AUTHORIZING
THE APPLICATION FOR AND PURCHASE OR LEASE OF PUBLIC LANDS FROM THE
BUREAU OF LAND MANAGEMENT UNDER THE RECREATION AND PUBLIC PURPOSES ACT.
WHEREAS, the Recreation and Public Purposes Act (68 Statute 173; 43 U.S.C. § 869 et seq.) authorizes the sale and/or lease of public land for recreational or public purposes to qualified entities.
WHEREAS, the City of California City is a qualified entity under the Recreation and Public Purposes Act, and any local agency may purchase for recreation purposes up to 6,400 acres annually.
WHEREAS, APN #262-010-01 is a 259.06 acre parcel adjacent to Borax Bill Park Campground and currently owned by the Bureau of Land Management (the “Property”), which qualifies for the sale and/or lease, at no cost to the City of California City, under the Recreation and Public Purposes Act.
WHEREAS, the purpose of leasing and/or purchasing the Property is for the expansion of Borax Bill Park Campground and OHV recreation.
WHEREAS, the City has legal authority and the capability to develop, maintain, and manage the lands for the stated purpose.
WHEREAS, the City has the financial capability and necessary staff to develop, operate, and maintain the facility on the subject property.
WHEREAS, the City’s proposed use is in the public interest, is in conformance with this jurisdiction’s adopted general plan, is compatible with local land use plans, and will provide recreational services to the public.
NOW, THEREFORE, BE IT RESOLVED THAT: the City of California City hereby:
1. Approves the filing of the application to purchase/lease the Property from the BLM; and
2. Authorizes the City Manager or designee to execute the application; and
3. Certifies that the City understands the legal obligations to BLM; and
4. Certifies that the City agrees to abide by the requirements of the Recreation and Public Purposes Act and applicable regulations and to use the land solely for approved public purposes; and
5. Appoints the City’s Off Highway Vehicle Manager to draft development and management plans to include proposed purposes, anticipated expenditures, maps, site plans, timetable for development, and proposed maintenance responsibilities and procedures.
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PASSED, APPROVED, AND ADOPTED on this 10th day of March 2026 by the following roll call vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
Marquette E. Hawkins, Mayor
ATTEST:
John Maier, City Clerk
STATE OF CALIFORNIA }
COUNTY OF KERN } SS
CITY OF CALIFORNIA CITY }
I, John Maier, City Clerk of the City of California City, do hereby certify that the foregoing Resolution was duly and regularly adopted by the City Council of the City of California City on the _________ day of ________________ 2026, by the following vote:
John Maier, City Clerk
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