202_Agenda%20Packet_02.17.2026 — Canyon Lake City Council, February 17, 2026

CITY COUNCIL AGENDA
City of Canyon Lake, California
Tuesday, February 17, 2026
Regular Meeting (Rescheduled) at 5:00 P.M.

City Hall Council Chambers
31516 Railroad Canyon Road
Canyon Lake, CA 92587
CITY COUNCIL MEMBERS:

Mayor Jeremy Smith
Mayor Pro Tem Kasey Castillo
Council Member Joshua Steeber
Council Member Mark Terry
Council Member Dale Welty
Public Comment: Any person wishing to address the City Council on any matter within the jurisdiction of the City, whether or not it appears on this agenda, is asked to complete a speaker card and provide it to the City Clerk prior to the start of public comment. The City Council has adopted a time limit of three (3) minutes per person. Comments on specific agenda items will be heard when the item is called. Please note that if you are addressing the City Council on items N OT on the agenda, the Brown Act does not allow discussion of such items. Therefore, the City Council may only do the following: refer the matter to staff, ask for additional information or request a report back, or give a very limited factual response. Electronic comments may be submitted to [email protected]. Comments submitted electronically will be provided to the City Council and included in the official record but will not be read aloud during the meeting.

CEQA Notice: Unless stated otherwise on the agenda, every item on the agenda is exempt from C EQA Guidelines sections 15060(c), 15061(b)(3), 15273, 15378, 15301, 15323 and/or Public Resources Code section 21065.

Council Agendas: The designated office for inspection of records is the Office of the City Clerk, Canyon Lake City Hall, 31516 Railroad Canyon Road, Canyon Lake, C A 92587. Complete agenda packets are available for public review at City Hall during normal business hours and on the City's website at www.canyonlakeca.gov.

ADA Notice: In compliance with the Americans with Disability Act, if you need special assistance to participate in this meeting or if you need agenda documents provided in an alternate format, please contact the City Clerk's Office at (951) 244- 2955 at least 48 hours prior to the meeting to ensure that reasonable arrangements can be made.

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REGULAR SESSION

CALL TO ORDER

INVOCATION

FLAG SALUTE

ROLL CALL
Castillo, Steeber, Terry, Welty, Smith
PUBLIC COMMENT (3 MINUTES)
Members of the public wishing to address the City Council on any matter within the City's jurisdiction are asked to complete a speaker card and provide it to the City Clerk prior to the start of public comment.

Comments on specific agenda items will be heard when the item is called. Comments on Consent Calendar items will be heard prior to the City Council's consideration of that calendar. Each speaker is allowed (3) minutes to speak.

CONSENT CALENDAR
All items listed on the Consent Calendar are considered to be routine in nature and may be enacted in one motion. Individual items may be removed by a Council Member for separate discussion immediately after the adoption of the balance of the Consent Calendar. All ordinance titles are deemed to be read in their entirety and further reading waived on any ordinance listed on the Consent Calendar.

1. Approve Claims and Demands of the City
Recommendation:

Adopt Resolution No. 2026-09 Approving Claims and Demands of the City.

2. Approval of City Council Meeting Minutes
Recommendation:

Approve the minutes of the January 14, 2026, City Council meeting.

3. Consideration of an Invocation Policy for the City of Canyon Lake Recommendation:

Adopt Resolution No. 2026-10 adopting an Invocation Policy for the City of Canyon Lake.

4. Receive and File - HCD Determination of Substantial Compliance with the City's 6th Cycle Housing Element
Recommendation:

Receive and file the report.

5. Receive and File - Quarterly Investment Report for the Quarter Ended December 31, 2025 Recommendation:

Receive and file the Quarterly Investment Report for the quarter ended December 31, 2025, in compliance with the City's Investment Policy.

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6. Receive and File - Fiscal Year 2024-25 Audited Financial Statements and Related Reports Recommendation:

Receive and file the Fiscal Year 2024-25 Annual Financial Statements and the related reports.

7. Receive and File - 2026 City Events Calendar
Recommendation:

Receive and file the 2026 City Events Calendar.

8. Receive and File - 2025 Canyon Lake Fire Department Annual Report Recommendation:

Receive and file the 2025 Canyon Lake Fire Department Annual Report.

PULLED CONSENT CALENDAR ITEMS
Items removed from the Consent Calendar for separate discussion will be considered at this time.

PUBLIC HEARINGS

9. Consideration of a Resolution Adopting an Advertising Policy and Fee Schedule for the CityOwned Monument Sign at 31790 Railroad Canyon Road Recommendation:
(1) Open the public hearing and take public testimony; and (2) adopt Resolution No. 2026-11 approving the Advertising Policy and establishing the fee schedule for advertising on the Cityowned monument sign.

BUSINESS ITEMS

10. (1) Adopt Urgency Ordinance No. 270 - An Urgency Ordinance of the City Council of the City of Canyon Lake, California, An Amendment to the Canyon Lake Municipal Code, Chapter 4.20:

Commercial Cannabis Businesses, Section 4.20.250, Location and Design of Cannabis Businesses; and (2) Introduction and First Reading of Ordinance No. 271 - An Ordinance of the City Council of the City Of Canyon Lake, California, an Amendment to the Canyon Lake Municipal Code, Chapter 4.20: Commercial Cannabis Businesses, Section 4.20.250, Location And Design of Cannabis Businesses
Recommendation:
(1) Adopt Urgency Ordinance No. 270 - An Urgency Ordinance of the City Council of the City of Canyon Lake, California, an Amendment to the Canyon Lake Municipal Code, Chapter 4.20:

Commercial Cannabis Businesses, Section 4.20.250, Location and Design of Cannabis Businesses; and (2) introduce and read by title only Ordinance No. 271 - An Ordinance of the City Council of the City of Canyon Lake, California, an Amendment to the Canyon Lake Municipal Code, Chapter 4.20: Commercial Cannabis Businesses, Section 4.20.250, Location And Design of Cannabis Businesses.

11. Review of the Fiscal Year 2025-26 Mid-Year Budget and Approval of Proposed Budget Adjustments
Recommendation:

Review the Fiscal Year 2025-26 Mid-Year Budget Report and approve the recommended budget adjustments.

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CLOSED SESSION

CALL TO ORDER

ROLL CALL
Castillo, Steeber, Terry, Welty, Smith
PUBLIC COMMENT (3 MINUTES)
Members of the public wishing to address the City Council on any matter listed on the Closed Session agenda are asked to complete a speaker card and provide it to the City Clerk prior to the start of public comment. Comments are limited to Closed Session items only. Each speaker is allowed (3) minutes to speak.

DISCUSSION ITEMS

1. PUBLIC EMPLOYEE PERFORMANCE EVALUATION - Pursuant to Government Code Section 54957: Title: City Manager

ADJOURNMENT
AFFIDAVIT OF POSTING: I, Sheryl L. Garcia, City Clerk of the City of Canyon Lake, California, do hereby declare that the foregoing agenda was posted as of the date noted below, at least seventy-two (72) hours prior to the meeting per Government Code 54954.2, and as required by Resolution 2019-42.

Sheryl L. Garcia, MMC, CPM
City Clerk
Dated: February 12, 2026
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ITEM NO. 1

CITY COUNCIL STAFF REPORT
TO: Honorable Mayor and Members of the City Council
FROM: Arron Brown, City Manager
BY: Elizabeth Luna, Accounting Specialist
DATE: 02/17/2026
SUBJECT: Approve Claims and Demands of the City
Recommendation:

Adopt Resolution No. 2026-09 Approving Claims and Demands of the City.

Background/Analysis:

All claims and demands are reported and summarized for review and approval by the City Council on a routine basis at each City Council meeting. The attached claims represent the paid claims and demands since the City Council meeting of January 14, 2026 .

Fiscal Impact Yes/No:No
Additional Fiscal Information:

All claims and demands are paid from appropriated funds or authorized resources of the City and have been recorded in accordance with the City's policies.

Attachments:
1 - Resolution
2 - Claims and Demands Jan 2026
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RESOLUTION NO. 2026-09

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CANYON LAKE,

CALIFORNIA, ALLOWING CERTAIN CLAIMS AND DEMANDS AS SET FORTH IN

EXHIBIT A
WHEREAS, the Finance & Planning Committee of the City of Canyon Lake reviewed Exhibit A at their regularly scheduled meeting on February 17, 2026; and WHEREAS, Exhibit A was presented at the regular meeting of the City Council on February 17, 2026, at which all present, were given an opportunity to comment.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CANYON LAKE DOES RESOLVE AS FOLLOWS:

Section 1. The above recitals are true and correct and are incorporated herein by reference.

Section 2. Demands are approved as shown on the Demand\Warrant Register of February 17th, in the amount of $1,326,898.35 as follows:

Payroll Earnings (Direct Deposit) $239,671.01 (For Month of January) Payroll Processing Fees $1,065.40 (For Month of January) Payroll Taxes - Employer & Employee $66,737.71 (For Month of January) Payroll CS $1,192.56 (For Month of January)
On-line Retirement $21,802.38 (For Month of January)
On-line Health $29,428.19 (For Month of January)
Nationwide Deferred Comp. $36,037.21 (For Month of January) General $930,963.89 (For Month of January)
Total
$1,326,898.35
Section 3. The provisions of this Resolution are severable and if any provision, clause, sentence, word or part thereof is held illegal, invalid, unconstitutional, or inapplicable to any person or circumstances, such illegality, invalidity, unconstitutionality, or inapplicability shall not affect or impair any of the remaining provisions, clauses, sentences, sections, words or parts thereof of the Resolution or their applicability to other persons or circumstances.

Section 4. That the City Clerk shall certify to the adoption of this Resolution and that the same shall be in full force and effect.

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Section 5. This Resolution shall take effect immediately upon its adoption.

PASSED, APPROVED AND ADOPTED this 17th day of February 2026, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

Jeremy Smith, Mayor
ATTEST & CERTIFIED:

I, Sheryl Garcia, City Clerk of the City of Canyon Lake, hereby attest to the Mayor’s signature above and certify that the City Council duly adopted this Resolution as recorded in the vote tally stated herein.

Sheryl L. Garcia, MMC, CPM
City Clerk
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ITEM NO. 2

CITY COUNCIL STAFF REPORT
TO: Honorable Mayor and Members of the City Council
FROM: Arron Brown, City Manager
BY: Sheryl Garcia, Administrative Services Director/City Clerk DATE: 02/17/2026
SUBJECT: Approval of City Council Meeting Minutes
Recommendation:

Approve the minutes of the January 14, 2026, City Council meeting.

Background/Analysis:

Minutes of City Council meetings are prepared by the City Clerk to serve as the official record of City Council actions. City Council approval of the minutes ensures the accuracy of the record before they are entered into the City's permanent archives.

Fiscal Impact Yes/No:No
Attachments:
1 - Minutes
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Minutes 1/14/2026

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MINUTES

REGULAR MEETING OF THE

CANYON LAKE CITY COUNCIL
Canyon Lake City Hall
31516 Railroad Canyon Road
Canyon Lake, CA 92587
Wednesday, January 14, 2026
Closed Session – 5:30 p.m.

CALL TO ORDER
Mayor Smith called the meeting to order at 5:30 p.m.

ROLL CALL

Present: Mayor Pro Tem Castillo, Council Member Steeber, Council Member Terry, Council Member Welty and Mayor Smith.

Absent: None.

PUBLIC COMMENTS
There were no public comments

CLOSED SESSION

1. CONFERENCE WITH LEGAL COUNSEL - EXISTING LITIGATION - Pursuant to Government Code Section 54956.9(d)(1): Richard Beck v. City of Canyon Lake, 4th DCA Case No. D083322

2. PUBLIC EMPLOYEE PERFORMANCE EVALUATION - Pursuant to Government Code Section 54957: Title: City Manager
The City Council entered Closed Session at 5:30 p.m.

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Open Session – 6:30 p.m.

CALL TO ORDER
Mayor Smith called the meeting to order at 6:30 p.m.

INVOCATION
The Invocation was led by Council Member Smith.

FLAG SALUTE
Mayor Pro Tem Castillo led the Flag Salute.

ROLL CALL

Present: Mayor Pro Tem Castillo, Council Member Steeber, Council Member Terry, Council Member Welty and Mayor Smith.

Absent: None.

CLOSED SESSION REPORT
City Attorney Graham reported that there was no reportable action.

CEREMONIAL MATTERS
Mayor Smith presented an In Memoriam certificate to the family of Warren Kelsey.

CITY COUNCIL AND COMMITTEE REPORTS / COMMENTS
Council Member Steeber and Mayor Pro Tem Castillo reported on the Community Engagement Committee meeting held with staff. Council Member Steeber also reported on his appointment by the League of California Cities to the Transportation, Communication, and Public Works Policy Committee.

Mayor Pro Tem Castillo wished everyone a happy New Year and expressed enthusiasm for upcoming community initiatives in 2026.

Council Member Welty provided an update on Inland Empire regional matters, summarizing information from the T-Now and SCAG meetings.

Council Member Terry wished everyone a happy New Year, reported attendance at the WRCOG Strategic Planning meeting with Council Member Welty, and encouraged residents to attend Coffee at the Country Club held on the first Wednesday of each month.

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Mayor Smith wished everyone a happy New Year and noted RTA is hiring bus drivers.

PRESENTATIONS
Director Darcy Burke provided an update on behalf of the Elsinore Valley Municipal Water District.

Board Vice President Jeff Bill provided an update provided an update on behalf of the Canyon Lake Property Owner’s Association.

Vice President and Director of Events Rick Tobin provided an update on behalf of the Canyon Lake Chamber of Commerce
Chief LaTendresse provided an update on fire statistics.

Council Member Terry introduced the non-profit spotlight on behalf of His Little Feet Foundation.

PUBLIC COMMENT
Greg Langworthy provided an overview of the election and the role of the Riverside County Integrity Team in overseeing elections.

Renee Griffiths commented on the proposed pay schedule for the new Police Department.

Matt Piercy commented on reckless driving on Schooner Drive and nearby side streets.

CONSENT CALENDAR
Council Member Steeber pulled Item No. 5 for further consideration.

Mayor Smith pulled Item No. 6 for further consideration.

Motion and second by Council Member Terry/Council Member Welty to approve Consent Calendar Items 1-4.

Motion carried 5-0 with Mayor Pro Tem Castillo, Council Member Steeber, Council Member Terry, Council Member Welty, and Mayor Smith voting aye.

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1. Approve Claims and Demands of the City
Action taken: The City Council adopted Resolution No. 2026-01 Approving Claims and Demands of the City.

2. Approve a Resolution Authorizing the City Manager to Execute a Police Dispatch Services Agreement with the City of Hemet
Action taken: The City Council adopted Resolution No. 2026-02 authorizing the City Manager to execute a Police Dispatch Services Agreement with the City of Hemet.

3. Approval of City Council Meeting Minutes
Action taken: The City Council approved the minutes of the December 10, 2025, City Council meeting.

4. Adopt a Resolution Establish a Premium Pay Benefit for Part-time Employees In Lieu of the Public Agency Retirement System (PARS) Benefit Action taken: The City Council adopted Resolution No. 2026-03 authorizing the establishment of a Premium Pay benefit for all part-time employees of 7.5% of base pay.

PULLED CONSENT CALENDAR ITEMS

5. Adopt a Resolution Approving the City's FY 2026/2027 Community Development Block Grant (CDBG) Funding Allocation
Council Member Steeber pulled this item for further discussion.

There were no public comments.

Motion and second by Council Member Welty/Council Member Steeber to adopt Resolution No. 2026-08 authorizing the allocation of Fiscal Year 26/27 Community Development Block Grant (CDBG) funding.

Motion carried 5-0 with Mayor Pro Tem Castillo, Council Member Steeber, Council Member Terry, Council Member Welty, and Mayor Smith voting aye.

6. Approval of a First Amendment to the Amended and Restated City Manager Employment Agreement with Arron Brown
Mayor Smith pulled this item for further discussion.

City Attorney Grahm provided an oral report explaining that the amendment restructures compensation into a guaranteed annual lump-sum contribution paid in January, reduces administrative costs, and has no fiscal impact.

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There were no public comments.

Motion and second by Council Member Terry/Mayor Pro Tem Castillo to: (1) approve the first amendment to the amended and restated City Manager Employment Agreement with Arron Brown; and (2) authorize the Mayor to execute the Amendment on behalf of the City.

Motion carried 4-1 with Mayor Pro Tem Castillo, Council Member Terry, Council Member Welty and Mayor Smith voting aye and Council Member Steeber voting no.

PUBLIC HEARINGS

7. Report on Employee Vacancies and Recruitment Efforts in Compliance with Assembly Bill 2561 and Approve Organizational Changes
Mayor Smith opened the public hearing at 7:54 p.m.

Administrative Services Senior Analyst Hernandez provided a presentation.

There was no public testimony.

Mayor Smith closed the public hearing at 7:58 p.m.

Motion and second by Council Member Terry/Mayor Smith to: (1) receive and file the AB 2561 annual report; and (2) adopt Resolution No. 2026-04 approving job descriptions, Resolution No. 2026-05 adopting Salary and Wage Schedules for Non-Safety Employees and Resolution No. 2026-06 adopting Salary and Wage Schedules for Safety Employees.

Motion carried 5-0 with Mayor Pro Tem Castillo, Council Member Steeber, Council Member Terry, Council Member Welty, and Mayor Smith voting aye.

BUSINESS ITEMS

8. Approve the Establishment of a Facilities Maintenance/Capital Improvement Program (CIP) Contingency Account Within the City Manager's FY 2025/26 Budget City Manager Brown provided a presentation.

Motion and second by Council Member Steeber/Council Member Welty to adopt Resolution No. 2026-07 establishing a Facilities Maintenance/CIP Contingency account in the City Manager's budget and appropriate $135,000 in one-time revenue for expenditures.

Motion carried 5-0 with Mayor Pro Tem Castillo, Council Member Steeber, Council Member Terry, Council Member Welty, and Mayor Smith voting aye.

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9. Designation of Voting Delegates for the Southern California Association of Governments (SCAG) 2026 Regional Conference and General Assembly City Clerk Garcia provided a presentation.

Motion and second by Council Member Steeber/Council Member Terry to designate Council Member Welty as the delegate and Council Member Steeber as the alternate for the SCAG 2026 Regional Conference.

Motion carried 5-0 with Mayor Pro Tem Castillo, Council Member Steeber, Council Member Terry, Council Member Welty, and Mayor Smith voting aye.

10. Consideration of Fees for the Emergency Medical Services Subscription Program for Fiscal Year 2026/2027 and Scheduling of Public Hearing City Manager Brown provided a presentation.

Motion and second by Council Member Steeber/Council Member Terry to maintain the existing EMS Program fees for FY 2026/27 and set a public hearing for June 10, 2026.

Motion carried 5-0 with Mayor Pro Tem Castillo, Council Member Steeber, Council Member Terry, Council Member Welty, and Mayor Smith voting aye.

CITY MANAGER COMMENTS
City Manager Brown thanked Administrative Services Senior Analyst Hernandez for her earlier presentation and expressed confidence in the City’s lean and highly capable workforce.

ANNOUNCEMENTS
Mayor Smith announced that the regular City Council Meeting scheduled for February 11, 2026 was rescheduled to February 17, 2026.

ADJOURNMENT
At 8:11 p.m., Mayor Smith adjourned the meeting in honor of Warren Kelsey.

Respectfully submitted,
__________________________
Sheryl L. Garcia, MMC, CPM
City Clerk
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ITEM NO. 3

CITY COUNCIL STAFF REPORT
TO: Honorable Mayor and Members of the City Council
FROM: Arron Brown, City Manager
BY: Sheryl Garcia, Administrative Services Director/City Clerk DATE: 02/17/2026
SUBJECT: Consideration of an Invocation Policy for the City of Canyon Lake Recommendation:

Adopt Resolution No. 2026-10 adopting an Invocation Policy for the City of Canyon Lake.

Background/Analysis:

Invocations have been a longstanding tradition in legislative bodies across the United States, serving to promote solemnity, reflection, and unity before public meetings. The U.S. Supreme Court has consistently upheld the constitutionality of invocations at public meetings, provided they adhere to principles of inclusivity, non-coercion, and neutrality toward religion. Landmark cases have clarified the permissible scope and implementation of legislative invocations under the First Amendment.

The City of Canyon Lake seeks to adopt a formal policy to guide the inclusion of invocations at City Council meetings and other official gatherings. This policy is designed to respect the diverse beliefs of the community, promote voluntary participation, and ensure legal compliance. Key provisions of the proposed policy include:

Inclusivity and Respect: Invocations will be non-denominational and reflective of the community's diversity, avoiding language that proselytizes, disparages any faith, or advances a specific religion.

Voluntary Participation: Participation in or attendance at the invocation will be entirely voluntary. No individual's participation or absence will influence official actions or decisions.

Eligibility and Scheduling: Staff will compile a list of eligible speakers, including representatives of religious congregations, spiritual organizations, and secular groups within the City. Speakers will be scheduled to ensure fairness and diversity.

Guidelines for Content: The content of the invocation will remain at the discretion of the speaker but must align with the principles of inclusivity and respect outlined in the policy.

Legal Compliance: The policy adheres to federal and state legal standards, including the U.S.

Constitution's First Amendment and relevant case law.

The adoption of this policy underscores the City's commitment to fostering an environment of mutual respect and inclusion while honoring the traditions of solemnizing public meetings. It also ensures that the City's practices remain consistent with constitutional principles and legal precedents.

Fiscal Impact Yes/No:No
Attachments:
1 - Resolution
2 - Policy
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RESOLUTION NO. 2026-10

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CANYON LAKE,

CALIFORNIA, ESTABLISHING AN INVOCATION POLICY FOR CITY MEETINGS WHEREAS, the City Council recognizes the long-standing democratic tradition of opening legislative meetings with invocations intended to solemnize proceedings and invite reflection; and WHEREAS, the City Council desires to ensure that invocations are conducted in a manner consistent with the United States Constitution, including principles of freedom of religion and nonestablishment of religion; and WHEREAS, the City Council seeks to adopt a policy that establishes guidelines for the purpose, scope, speaker eligibility, content, procedures, and legal compliance related to invocations at City meetings.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CANYON LAKE DOES RESOLVE AS FOLLOWS:

Section 1. The above recitals are true and correct and are incorporated herein by reference.

Section 2. The City Council hereby adopts the Invocation Policy attached hereto as Exhibit “A”. The City Manager is authorized to amend the Policy from time to time with changes approved as to form by the City Attorney.

Section 3. In the event of a conflict between the Policy and the City’s Employee Handbook and Personnel Policy Manual, the provisions of the Policy shall apply.

Section 4. The provisions of this Resolution are severable and if any provision, clause, sentence, word or part thereof is held illegal, invalid, unconstitutional, or inapplicable to any person or circumstances, such illegality, invalidity, unconstitutionality, or inapplicability shall not affect or impair any of the remaining provisions, clauses, sentences, sections, words or parts thereof of the Resolution or their applicability to other persons or circumstances.

Section 5. That the City Clerk shall certify to the adoption of this Resolution and that the same shall be in full force and effect.

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Section 6. This Resolution shall take effect immediately upon its adoption.

PASSED, APPROVED AND ADOPTED this 17th day of February 2026, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:
_____________________________
Jeremy Smith, Mayor
ATTEST & CERTIFIED:

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Exhibit “A”
Invocation Policy
(to be attached)
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Invocation Policy
Policy Information
Policy Number: 23
Adoption Date: 2/17/26
Effective Date: 2/17/26
Lead Department: City Manager
Revision/Amendment History
Date Action
(Adopted /
Amended /
Rescinded)
Resolution # /
Approval
Notes
2/17/26 Adopted 2026- –
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City of Canyon Lake
Invocation Policy

1. Intent and Purpose.

The City of Canyon Lake recognizes the long-standing democratic tradition of legislative bodies solemnizing through invocations. This policy ensures that invocations before City of Canyon Lake events are conducted in a manner consistent with constitutional principles of freedom of religion and non-establishment of religion while providing an opportunity for voluntary participation.

2. Policy Statement.

The City Council may open its meetings with an invocation for the purpose of acknowledging traditions, promoting solemnity, and inviting reflection. Invocations shall be inclusive, voluntary, and respectful of the diversity of beliefs represented within the City of Canyon Lake.

3. Scope and Applicability.

This policy applies to all meetings of the City Council and, where applicable, to meetings of any board, committee, or commission of the City of Canyon Lake.

4. Invocation Guidelines.

A. Voluntary Participation. Participation in or attendance for the invocation shall be completely voluntary. No person shall be required to participate, and no official action or decision shall be influenced by an individual’s participation, presence, or absence. No invocational speaker shall receive compensation for his or her service.

B. Non-Denominational and Inclusive. Invocations should not proselytize, disparage any faith, or advance any particular religion. They should strive to be inclusive and respectful of the community’s diversity, including individuals of different faiths and those with no religious affiliation.

C. Speaker Eligibility.

1. City Staff may compile a list of religious leaders, spiritual representatives, and community members that are located within or serve the City of Canyon Lake.

2. Any adult representative of an established religious congregation, spiritual organization, or secular/non-religious group located within the City of Canyon Lake may request to provide an invocation.

3. Individuals shall be scheduled in a manner that provides for fairness and diversity.

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4. City Staff will invite individuals through fair and neutral criteria.

5. City Staff may also request participation from chaplains who serve the City of Canyon Lake Police and/or Fire Department or any nearby military facilities.

6. Any Council Member or City employee may voluntarily provide an invocation.

D. Content of Invocations.

1. The content of the invocation shall be left to the discretion of the speaker, within the boundaries of this policy.

2. The invocation may include a request for reflection, guidance, peace, unity, or solemnity.

3. The City Council shall not review or approve the content of any invocation.

E. No Endorsement. The invocation is not intended to serve as an endorsement or disapproval of any religion, belief, or non-belief by the City of Canyon Lake, its City Council, or staff.

5. Procedures.

A. Scheduling Speakers.

1. City Staff shall make reasonable efforts to contact and schedule individuals or groups willing to provide an invocation.

2. City Staff will maintain a record of scheduled and past speakers.

B. Time for Invocation.

1. The invocation shall take place prior to the official start of the City Council meeting.

2. Speakers shall limit their invocation to no more than 2 minutes.

C. Opt-Out Option. Council Members, staff, or attendees may choose whether to participate or step out during the invocation without consequence or stigma.

D. Notification. Prior to each City Council meeting, the meeting agenda shall include notice of the invocation and a statement clarifying the voluntary nature of participation.

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6. Legal Compliance.

This policy shall be implemented in compliance with applicable federal and state law, including but not limited to the U.S. Constitution’s First Amendment and relevant case law.

7. Adoption and Review.

This policy shall be adopted by the City Council and reviewed periodically to ensure continued compliance with legal standards and community needs.

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ITEM NO. 4

CITY COUNCIL STAFF REPORT
TO: Honorable Mayor and Members of the City Council
FROM: Arron Brown, City Manager
BY: Sheryl Garcia, Administrative Services Director/City Clerk DATE: 02/17/2026
SUBJECT: Receive and File - HCD Determination of Substantial Compliance with the City's 6th Cycle Housing Element
Recommendation:

Receive and file the report.

Background/Analysis:

The City adopted its 6th Cycle Housing Element for the 2021--2029 planning period on November 12, 2025, and submitted it to the California Department of Housing and Community Development (HCD) for review. HCD received the adopted Housing Element on December 15, 2025, in accordance with State law.

By letter dated December 15, 2025, HCD notified the City that its adopted 6th Cycle Housing Element has been found to be in substantial compliance with State Housing Element Law (Government Code section 65580 et seq.). This determination confirms that the Housing Element satisfies statutory requirements for the current planning cycle.

As noted in HCD's letter, the City will continue the timely and effective implementation of all Housing Element programs and actions and will monitor and report progress through the required Annual Progress Reports pursuant to Government Code section 65400.

No further action by the City Council is required at this time.

Fiscal Impact Yes/No:No
Attachments:
1 - HCD Letter
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ITEM NO. 5

CITY COUNCIL STAFF REPORT
TO: Honorable Mayor and Members of the City Council
FROM: Arron Brown, City Manager
BY: Terry Shea, Finance Director
DATE: 02/17/2026
SUBJECT: Receive and File - Quarterly Investment Report for the Quarter Ended December 31, 2025 Recommendation:

Receive and file the Quarterly Investment Report for the quarter ended December 31, 2025, in compliance with the City's Investment Policy.

Background/Analysis:

The attached Quarterly Investment Report presents the City's cash and investments for the quarter that ended December 31, 2025. This report is in compliance with the California Government Code Section 53646 regarding the reporting of detailed information on all securities, investments, and monies of the City, as well as the reporting of the market value of the investments held. All the investments contained within the portfolio are in full compliance with the City's Investment Policy and Government Code Section 53601 as to the types of investments allowed. It is recommended that the City Council receive and file the attached Quarterly Investment Report.

The City maintains a portfolio of investments in order to earn interest in cash balances that are not currently required to fund operations. California Government Code Sections 53601 and 53646 establish the types of investments allowed, the governing restrictions on these investments, the third-party custodian arrangement for certain investments, and the reporting practices related to the portfolios of local agencies. In keeping with best practices, the City has implemented an Investment Policy, which was last reviewed by the City Council on September 13, 2023. The policy is in full compliance with the requirements of both of the above-mentioned Code Sections.

The attached Quarterly Investment Report presents the City's cash and investments for the quarter that ended December 31, 2025. The report complies with California Government Code Section 53646 regarding the reporting of detailed information on all securities, investments, and monies of the City, as well as the reporting of the market value of the investments held. All the investments contained within the portfolio are in full compliance with the City's Investment Policy and Government Code Section 53601 as to the types of investments allowed. As stated in the attached report, there is more than adequate liquidity within the portfolio for the City to meet its budgeted expenditures over the next six months.

The City's investment policy has set the primary goals of the portfolio management as Safety and Liquidity followed by Yield. The City's cash flow requirements are evaluated on an ongoing basis, with short-term needs accommodated through the City's pooled investment funds with Local Agency Investment Fund (LAIF) and Citizens Trust Allspring Funds Trust Government Money Market Funds.

LAIF is a pool of public funds managed by the State Treasurer of California, providing 24-hour liquidity while yielding a rate of return approximately equivalent to a one-year treasury bill. With the combined use of a conservative approach to evaluating cash flow needs and LAIF and the Allspring Funds Trust City Council Agenda,

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Government Money Market liquidity, the City will not have to liquidate securities at current market rates that are intended to be held for longer-term investment.

The table below shows the portfolio average yield to maturity for the quarter ending December 31, 2025, compared to the quarter ending December 31, 2024.

Fiscal Impact Yes/No:No
Attachments:
1 - Schedule of Investments
2 - Investment Policy
3 - Citizens Bank Statement
4 - Multi Bank Securities Statement
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Book Value (Fair Value)
Par Price @ Market Purchase Maturity
Institution Value Cost Value Yield Date Date

ACTIVE DEPOSITS
Money Market Accounts:

Citizens Business Bank - Money Market 313,797.00 $ 313,797.00 $ 313,797.00 $ 0.100% N/A N/A Total Money Market $ 313,797.00 $ 313,797.00 $ 313,797.00 Pooled Investment Accounts:

Local Agency Investment Fund $ 11,658.00 $ 11,658.00 $ 11,658.00 4.025% N/A N/A Total Pooled Investment $ 11,658.00 $ 11,658.00 $ 11,658.00 Multi-Bank Securities
Cash Balance $ 7,683.01 $ 7,683.01 $ 7,683.01 0.000% N/A N/A Kemba Financial Credit Union CD 249,000.00 249,000.00 249,202.00 3.700% 10/23/25 10/23/26 Wells Fargo Bank CD 210,000.00 210,000.00 210,088.00 3.650% 10/23/25 10/23/26 Transportation Alliance Bank CD 249,000.00 249,000.00 249,080.00 3.650% 10/23/25 04/23/27 Seven Seventeen Credit Union CD 247,000.00 247,000.00 247,553.00 3.800% 10/24/25 04/26/27 Vibrant Credit Union CD 249,000.00 249,000.00 249,558.00 3.800% 10/27/25 04/26/27 California Credit Union CD 245,000.00 245,000.00 245,510.00 3.800% 10/28/25 04/28/27 Dort Financial Credit Union CD 247,000.00 247,000.00 247,269.00 3.700% 10/28/25 04/28/27 Live Oak Bank CD 249,000.00 249,000.00 249,075.00 3.650% 10/28/25 04/28/27 First Freedom Bank CD 210,000.00 210,000.00 210,088.00 3.650% 10/23/25 10/23/26 Total MBS $ 2,162,683.01 $ 2,162,683.01 $ 2,165,106.01
Citizens Trust:

Allspring Funds TR Government MMKT 2,568,320.72 $ $ 2,568,320.72 $ 2,568,320.72 4.500% N/A N/A Federal Home Loan Bank 150,000.00 150,000.00 149,348.00 0.650% 02/24/21 02/24/26 Federal Home Loan Bank 150,000.00 150,000.00 147,512.00 1.050% 08/26/21 08/26/26 Federal Farm Credit Bank 100,000.00 99,925.00 98,188.00 0.900% 08/26/21 08/26/26 Federal Home Loan Bank 150,000.00 150,000.00 149,352.00 0.780% 02/26/21 02/26/26 Federal Home Loan Bank 100,000.00 100,000.00 99,055.00 1.000% 08/12/21 05/12/26 Apple Inc. 125,000.00 121,254.58 124,600.00 3.350% 02/23/23 02/09/27 Total Citizens Trust $ 3,343,320.72 $ 3,339,500.30 $ 3,336,375.72 ACTIVE DEPOSITS TOTAL $ 5,827,638.31 5,831,458.73 $ 5,826,936.73 $ Effective Interest Rate 3.54% Unrealized Gains (Losses) $ (701.58)

INACTIVE DEPOSITS
Checking Account:

Citizens Business Bank - Checking 1,043,288.43 $ 1,043,288.43 $ 0.000% N/A N/A Citizens Business Bank - Rental 9,170.88 9,171.00 0.000% N/A N/A California Bank & Trust - Checking 8,016.82 8,016.82 0.000% N/A N/A Investment in Real Estate 2,222,501.37 2,222,501.37 0.000% N/A N/A Total $ 3,282,977.62 3,282,977.50 $ 0.000%
INACTIVE DEPOSITS TOTAL $ 3,282,977.62 3,282,977.50 $
GRAND TOTAL CASH $ 9,109,914.35 9,110,615.81 $
________________________________
Terry Shea
12/31/2025
City of Canyon Lake
Schedule of Investments
as of December 31, 2025
Per Government Code requirements, the Investment Report is in compliance with the City of Canyon Lake's Investment Policy, and there are adequate funds available to meet budgeted and actual expenditures for the next six months.

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INVESTMENT POLICY
The City of Canyon Lake has adopted the following policy for the investment of City funds.

I. The Legal Authority
The Authority governing investments for the City of Canyon Lake is set forth in the California Government Code, sections 53601 et. Seq. The City Treasurer is granted authority to make investments on behalf of the City.

Government Code Section 53607 states “.....the authority of the legislative body to invest or to reinvest funds of a local agency, or to sell or exchange securities so purchased, may be delegated by the legislative body to the treasurer of the local agency, who shall thereafter assume full responsibility for such transactions until such time as the delegation of authority is revoked, and shall make a monthly report of such transaction to the legislative body.”
Government Code Section 53649 states “...the treasurer is responsible for the safekeeping of money in his custody and shall enter into any contract with a depository relating to any inactive deposits which in his judgment is to the public advantage.” The City Treasurer will enter into purchases subject to this policy and at the direction of City Council.

In addition, Government Code Section 53607 provides the authority for the legislative body of the local agency to invest the funds of the local agency or to delegate the full responsibility to the treasurer of the local agency.

II. Investment Objectives
A. The purpose of this policy is to provide guidelines for the investment of the City’s funds based upon State law and prudent money management. This policy is designed according to the specific needs of the City of Canyon Lake. The ultimate goal is to enhance the economic status of the City while ensuring the safety of funds.

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C. The investment of the funds of the City of Canyon Lake shall be guided by the goals of safety, liquidity, diversification and return on investments in that order of priority.

Safety: Safety of principal is the foremost objective of the City of Canyon Lake. Each investment transaction shall seek to ensure that capital losses are avoided, whether from securities default, broker-dealer default, or erosion of market value. The City shall seek to preserve principal by mitigating the two types of risk; credit risk and market risk.

Credit Risk - Credit Risk; defined as the risk of loss due to failure of the issuer of a security, shall be mitigated by investing only with issuers whose financial strength and reputation can be verified to be the highest as rated by nationally known rating agencies and by diversifying the investment portfolio so that the failure of any one issuer would not unduly harm the City’s cash flow.

Market Risk - Market risk, the risk of the market value fluctuations due to overall changes in the general level of interest rates, shall be mitigated by (a) structuring the portfolio so that securities mature earlier than or concurrent with the timing of major cash outflows, thus eliminating the need to sell securities prior to their maturity; (b) prohibiting the use of leverage or margin accounts; (c) prohibiting the taking of short positions, that is, selling securities which the City does not own; (d) prohibiting the use of reverse repurchase agreements and repurchase agreements; and (e) prohibiting the use of “inverse floaters”. It is explicitly recognized herein, however, that in a diversified portfolio, occasional measured loses are inevitable, and must be considered within the context of the overall investment return.

Liquidity: The City’s financial portfolio must be structured in a manner which will provide that securities mature at approximately the same time as cash is needed to meet anticipated demands.

Return on Investments: The investment portfolio shall be designed with the overall objective of obtaining a total rate of return throughout economic cycles, commensurate with investment risk constraints and cash flow needs.

III. Deposits/Authorized Investments
A. Deposits
Money must be deposited in State or national banks, State or Federal savings associations, or State or Federal Credit unions within the State. It may be in inactive City Council Agenda,

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The bank or savings and loan must secure the active and inactive deposits with eligible securities having a market value of 110% of the total amount of the deposits. State law also allows as an eligible security, first trust deeds having a value of 150% of the total amount of the deposits. A third class of collateral is letter of credit drawn on the Federal Home Loan Bank (FHLB).

B. Authorized Investments
General Guidelines that the City should follow in managing its investments are as follows:
• No investment will be purchased which matures more than five years from the date of purchase without the prior approval of the City Council. • Maturities of individual investments shall be diversified, attempting to match, where possible, cyclical cash flow requirements.
• The use of callable securities is permitted.

To reduce overall portfolio risk while attempting to attain market value rates of return consistent with the primary objectives of safety and availability of funds, investments shall be diversified cross types of investments, maturities of those investments, and institutions in which those investments are made. Generally, the portfolio is to be invested in Federal Agency securities, with a modest addition of high-grade Medium Term Corporate Notes, Certificates of Deposit (CD’s), U.S. Treasuries and Commercial Paper.

The City specifically prohibits investments in Bonds issued by other local agencies, Reverse Repurchase Agreements and Derivatives (Interest rate floaters, range notes, interest-only strips)
Permitted Investments Per City Policy:

Investments shall be made only in those instruments specifically authorized by California State laws (section 53600-53609), and to no greater an extent than those authorized by those laws.

The City’s specific permitted investment guidelines are listed below. It should be noted that the City’s permitted investments are moderately more restrictive than the State guidelines. Attachment A provides a summary of the State of California Statues Applicable to Municipal Investments and a Glossary.

PERMITTED INSTRUMENTS CITY GUIDELINES
State or County Investment
Pool (LAIF)
LAIF $75,000,000 / 50% of portfolio
maximum
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Deposits
5 Years / No limit
U.S. Treasuries 5 Years / No limit
Government
Sponsored Enterprises
*(US Agencies)
5 Years / No limit
Bankers Acceptances 180 Days / 10% max / 5% per issuer
Commercial Paper 270 Days / 10% max / 10% per issuer
combined
Medium-Term Notes 5 Years / 15% max / 5% per issuer
combined / 10% max by sector
classification
Negotiable Certificates of Deposit 5 Years / 30% max / lesser of 5% or $1 million per issuer
Repurchase Agreements 1 Year / 10% max
Only with Master Repurchase
Agreement / Daily mark to market
valuation
Money Market Mutual Funds 10% max / $500 million assets / 5% per issuer
Reverse Repurchase Agreements Not Allowed
California State Obligations Not Allowed
California Local Obligations Not Allowed
Mutual Funds Not Allowed
Mortgage Pass Through
Securities
Not Allowed
IV. Investment Program Controls
A. Separation of Reconciliation. A separation of responsibilities of reconciling bank statements and conducting investment transactions provides an internal control of checks and balances. Only individuals authorized by the City Manager and City Clerk may conduct investment transactions. Consequently, individuals responsible for reconciling bank statements may not conduct investment transactions.

B. Third Party Safekeeping Agreements. Contractual agreement between the City and third-party custodian public investment agencies (LAIF) is used to secure City invested funds.

C. Quarterly Treasurer’s Report. The City Treasurer shall submit a quarterly investment report to the City Council. This report shall include types of investment, investment ratings, institutions involved, dates of purchases, dates of maturity, amount of deposits or cost of the security, current market value of securities, interest rates, investment fund balances and a statement that there are sufficient funds to meet the City’s cash obligations.

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ATTACHMENT A:

Summary of State of California Statutes Applicable to Municipal Investment

The following investments are authorized by California State Code, Title 5, Division 2, Sections53600 et seq. and 16429.1.

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GLOSSARY
ACTIVE DEPOSITS: Demand or checking accounts, which receive revenues and pay disbursements.

AGENCIES: Federal agency securities.

ASKED: The price at which securities are offered.

BANKERS' ACCEPTANCE (BA): short-term credit arrangements to enable businesses to obtain funds to finance commercial transactions. They are time drafts drawn on a bank by an exporter or importer to obtain funds to pay for specific merchandise. By its acceptance, the bank becomes primarily liable for the payment of the draft at its maturity. An acceptance is a highgrade negotiable instrument.

Acceptances are purchased in various denominations for 30, 60, or 90 days, but no longer than 180 days. The interest is calculated on a 360-day discount basis similar to treasury bills. Local agencies may not invest more than 40% of their surplus money in banker’s acceptance.

BASIS POINT: A basis point equals one one-hundredth of 1% (.01%).

BID: The price offered for securities.

BOOK-ENTRY SECURITIES: All U.S. Treasury and Federal Agencies are maintained on computerized records at the Federal Reserve now known as "wireable" securities.

BROKER: A broker brings buyers and sellers together for a commission paid by the initiator of the transaction or by both sides. In the money market, brokers are active in markets in which
banks buy and sell money and in inter-dealer markets.

CERTIFICATES OF DEPOSIT (CD): Time deposits of a bank or savings and loan.

They are purchased in various denominations with maturities ranging from 30 to 360 days. The interest is calculated on a 360-day, actual day month basis and is payable monthly.

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COLLATERAL: Securities, evidence of deposit or other property which a borrower pledges to secure repayment of a loan. Also refers to securities pledged by a bank to secure deposits of public monies.

COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR): The official annual report for the City of Canyon Lake. It includes five combined statements and basic financial statements for each individual fund and account group prepared in conformity with GAAP. It also includes supporting schedules necessary to demonstrate compliance with finance-related, legal and contractual provisions, extensive introductory material, and a detailed Statistical Section.

COMMERCIAL PAPER: Short-term unsecured promissory note issued by a corporation to raise working capital. These negotiable instruments are purchased at a discount to par value or at par value with interest bearing. Local agencies are permitted by State law to invest in commercial paper of "prime" quality of the highest ranking or of the highest letter and numerical ratings as provided by Moody's Investor's Service, Inc., or Standard and Poor's Corporation. Purchases of eligible commercial paper may not exceed 270 days maturity nor exceed 30% of the local agency's surplus funds.

COUPON: (a) The annual rate of interest that a bond's issuer promises to pay the bondholder on the bond's face value. (b) A certificate attached to a bond evidencing interest due on a payment date.

DEALER: A dealer, as opposed to a broker, acts as a principal in all transactions, buying and selling for his own account.

DELIVERY VERSUS PAYMENT (DVP): There are two methods of delivery of securities: delivery versus payment and delivery versus receipt (also called free).

Delivery versus payment is delivery of securities with an exchange of money for the securities. Delivery versus receipts is delivery of securities with an exchange of a signed receipt for the securities.

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DISCOUNT: The difference between the cost price of a security and its value at maturity when quoted at lower than face value. A security selling below original offering price shortly after sale also is considered to be at a discount.

DISCOUNT SECURITIES: Non-interest-bearing money market instruments that are issued at a discount and redeemed at maturity for full face value (e.g., U.S.

Treasury bills).

DIVERSIFICATION: Dividing investment funds among a variety of securities and issuers offering independent returns.

DERIVATIVE: An asset that derives its value from another asset. For example, a call option on the stock of Coca-Cola is a derivative security that obtains value from the shares of Coca-Cola that can be purchased with the call option. Call options, put options, convertible bonds, futures contracts, and convertible preferred stock are examples of derivatives. A derivative can be either a risky or low-risk investment, depending upon the type of derivative and how it is used.

FEDERAL CREDIT AGENCIES: Guaranteed directly or indirectly by the United States Government. All agency obligations qualify as legal investments and are acceptable as security for public deposits. They usually provide higher yields than regular Treasury issues with all of the same advantages. Examples include Federal Home Loan Bank, Federal Farm Credit Bank, FNMA (Fannie Mae) and Federal Home Loan Mortgage Corp. (Freddie Mac).

FEDERAL FUNDS: Non-interest-bearing deposits held by member banks at the Federal Reserve. Also used to denote "immediately available" funds in the clearing sense. "Fed Funds" also used to refer to these funds.

FEDERAL FUNDS RATE: The rate of interest at which Fed funds are traded. This rate is currently pegged by the Federal Reserve through open-market operations.

FEDERAL OPEN MARKET COMMITTEE (FOMC): Consists of seven members of the Federal Reserve Board and five of the twelve Federal Reserve Bank Presidents.

The President of the New York Federal Reserve Bank is a permanent member while the other Presidents serve on a rotating basis. The Committee periodically meets to set Federal Reserve guidelines regarding purchases and sales of Government Securities in the open market as a means of influencing the volume of bank credit and money.

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INTEREST-BEARING ACTIVE DEPOSITS: Money-market accounts at a financial institution, (e.g., bank, savings and loan, credit union). These accounts are demand accounts (i.e., checking accounts) with restricted transaction activity.

LIQUIDITY: A liquid asset is one that can be converted easily and rapidly into cash without a substantial loss of value. In the money market, a security is said to be liquid if the spread between bid and asked prices is narrow and reasonable size can be done at those quotes.

LAIF (Local Agency Investment Fund): A special fund in the State Treasury which local agencies may use to deposit funds for investment. There is no minimum investment period, and the minimum transaction is $5,000, in multiples of $1,000 above that, with a maximum balance of $75,000,000 for any agency. The City is restricted to a maximum of fifteen transactions per month. It offers high liquidity because deposits can be converted to cash in twenty-four hours and no interest is lost. All interest is distributed to those agencies participating on a proportionate share basis determined by the amounts deposited and the length of time they are deposited. Interest is paid quarterly. The State retains an amount for reasonable costs of making the investments, not to exceed one-quarter of one percent of the earnings. The interest rates are fairly high because of pooling the State's surplus cash with the surplus cash deposited. This creates a multi-billion-dollar money pool and allows diversified investments.

MARKET VALUE: The price at which a security is trading and could presumably be purchased or sold.

MASTER REPURCHASE AGREEMENT: A written contract covering all future transactions between the parties to repurchase--reverse agreements that establishes each party's rights in the transactions. A master agreement will often specify, among other things, the right of the buyer-lender to liquidate the underlying securities in the event of default by the seller-borrower.

MATURITY: The date upon which the principal or stated value of an investment becomes due and payable.

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MONEY MARKET FUNDS: Open-ended mutual fund that invests in highly liquid and safe securities (bills, commercial paper, bankers' acceptances, CD’s, etc.) and pays money market rates of interest. The fund’s net asset value remains a constant $1 a share.

OPEN MARKET OPERATIONS: Purchases and sales of government and certain other securities in the open market by the New York Federal Reserve Bank, as directed by the FOMC, in order to influence the volume of money and credit in the economy. Purchases inject reserves into the bank system and stimulate growth of money and credit; sales have the opposite effect. Open market operations are the Federal Reserve's most important and most flexible monetary policy tool.

PASSBOOK SAVINGS ACCOUNTS: Similar to an inactive deposit except that the period of time is not fixed. The interest rate is much lower than for a certificate of deposit, but the savings account is more flexible. Funds can be deposited and withdrawn according to daily needs.

PORTFOLIO: Collection of securities held by an investor.

PRIMARY DEALER: A group of government securities dealers that submit daily reports of market activity and positions and monthly financial statements to the Federal Reserve Bank of New York and are subject to its informal oversight.

Primary dealers include Securities and Exchange Commission (SEC) registered securities broker-dealers, banks, and a few unregulated firms.

PRIME RATE: The rate at which banks lend to their best or "prime" customers.

Also known as the "reference rate."
PRUDENT PERSON RULE: An investment standard. In some states the law requires that a fiduciary, such as a trustee, may invest money only in a list of securities selected by the state (the so-called legal list). In other states, the trustee may invest in a security if it is one which would be brought by a prudent person of discretion and intelligence who is seeking a reasonable income and preservation of capital.

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QUALIFIED PUBLIC DEPOSITORIES: A financial institution which does not claim exemption from the payment of any sales or compensating use or ad valorem taxes under the laws of this state, which has segregated for the benefit of the commission eligible collateral having a value of not less than its maximum liability and which has been approved by the Public Deposit Protection Commission to hold public deposits.

REPURCHASE AGREEMENTS (RP OR REPO): A repo or reverse-repo is a shortterm investment transaction. Banks buy temporarily idle funds from a customer by selling U.S. Government or other securities with a contractual agreement to repurchase the same securities on a future date. Repurchase agreements are typically for one to ten days in maturity. The customer receives interest from the bank. The interest rate reflects both the prevailing demand for Federal funds and the maturity of the repo. Some banks will execute repurchase agreements for a minimum of $100,000 to $500,000, but most banks have a minimum of $1,000,000.

A reverse-repo is exactly what the name implies.

SAFEKEEPING: A service to customers rendered by banks for a fee whereby securities and valuables of all types and descriptions are held in the bank's vaults for protection.

SECONDARY MARKET: A market made for the purchase and sale of outstanding issues following the initial distribution.

SECURITIES & EXCHANGE COMMISSION: Agency created by Congress to protect investors in securities transactions by administering securities legislation.

SETTLEMENT DATE: The date on which a trade is cleared by delivery of securities against funds. This date may be the same as the trade date or later.

TRADE DATE: The date on which a transaction is initiated or entered into by the buyer and seller.

TREASURY BILLS: Issued weekly with maturity dates up to one year. They are issued and traded on a discount basis with interest figured on 1 360-day basis, actual number of days. They are issued in amounts of $10,000 and up, in multiples of $5,000. They are a highly liquid security.

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TREASURY BOND: Long-term U.S. Treasury securities having initial maturities of more than ten years.

UNIFORM NET CAPITAL RULE (SEC RULE 15C3-1): Securities and Exchange Commission requirement that member firms as well as nonmember broker-dealers in securities maintain a maximum ratio of indebtedness to liquid capital of 15 to 1; also called net capital rule and net capital ratio. Indebtedness covers all money owed to a firm, including margin loans and commitments to purchase securities, one reason new public issues are spread among members of underwriting syndicates.

Liquid capital includes cash and assets easily converted into cash.

WHEN-ISSUED TRADES: Typically, there is a lag between the time a new bond is announced and sold, and the time when it is actually issued. During this interval, the security trades "when, as, and if issued."
YIELD: The rate of annual income returns on an investment, expressed as a percentage. (a) INCOME YIELD is obtained by dividing the current dollar income by the current market price for the security. (b) NET YIELD or YIELD TO MATURITY is the current income yield minus any premium above par or plus any discount from par in purchase price with the adjustment spread over the period from the date of purchase to the date of maturity of the bond.

YIELD TO MATURITY: The rate of return yielded by a debt security held to maturity when both interest payments and the investor’s capital gain or loss on the security are taken into account.

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ITEM NO. 6

CITY COUNCIL STAFF REPORT
TO: Honorable Mayor and Members of the City Council
FROM: Arron Brown, City Manager
BY: Terry Shea, Finance Director
DATE: 02/17/2026
SUBJECT: Receive and File - Fiscal Year 2024-25 Audited Financial Statements and Related Reports Recommendation:

Receive and file the Fiscal Year 2024-25 Annual Financial Statements and the related reports.

Background/Analysis:

Attached for City Council's review is the City of Canyon Lake's Annual Financial Report (Report) and associated letters prepared by Lance, Soll & Lunghard, LLP (LSL). The Report expresses an "unmodified opinion" for the City acknowledging the City's finances and accounting procedures are in order.

In September, Lance, Soll & Lunghard, LLP (LSL) audited the City's financial records inclusive of reviewing its internal controls and testing procedures. As a result of that effort, along with an unmodified opinion in the Audit Report, LSL issued two letters. As covered in the attached Internal Control Letter, LSL found that the City has no internal control deficiencies or compliance issues.

Based on the Fiscal Year 2024-25 Audited Financial Statements the Fund Balance for the General Fund is $7,249,929, of which $2,023,609 is nonspendable. For Fiscal Year 2024-25 the General Fund added $16,026 to the General Fund Fund Balance. The Fiscal Year 2025-26 General Fund Budgeted expenditures were $8,624,319, which would set the June 30, 2025, Emergency Reserve at $862,435, the Contingency Reserve at $431,217 and based on the Equipment Replacement schedule we are reserving $430,380 for the Equipment Replacement Reserve. This leaves the Surplus Reserve at $3,502,288 which is 40.61% of the upcoming fiscal year's General Fund budgeted expenditures.

Fiscal Impact Yes/No:No
Attachments:
1 - ACFR
2 - Communications Letter
3 - Internal Control Report
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CITY OF CANYON LAKE,

CALIFORNIA

ANNUAL FINANCIAL REPORT
For the Fiscal Year Ended June 30, 2025
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City of Canyon Lake
Annual Financial Report
For the Fiscal Year Ended June 30, 2025
Table of Contents
Page
Independent Auditors’ Report 1 – 3
Management’s Discussion and Analysis 4 – 13
Basic Financial Statements
Government-Wide Financial Statements
Statement of Net Position 14
Statement of Activities 15 – 16
Fund Financial Statements
Governmental Funds
Balance Sheet 17
Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position 18
Statement of Revenues, Expenditures, and Changes in Fund Balances 19
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the
Statement of Activities 20
Proprietary Funds
Statement of Net Position 21
Statement of Revenues, Expenditures, and Changes in Net Position 22
Statement of Cash Flows 23
Fiduciary Funds
Statement of Fiduciary Net Position
Statement of Changes in Fiduciary Net Position
24 25

Notes to the Basic Financial Statements 26 – 56

Required Supplementary Information
Budgetary Comparison Schedule
General Fund 57
Gas Tax Special Revenue Fund 58
Measure A Fund 59
Schedule of Proportionate Share of the Net Pension Liability 60 Schedule of Plan Contributions 61
Schedule of Changes in Total OPEB Liability and Related Ratios Schedule of OPEB Plan Contributions
62 63
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City of Canyon Lake
Annual Financial Report
For the Fiscal Year Ended June 30, 2025
Table of Contents, (Continued)
Page
Supplementary Schedules
Nonmajor Governmental Funds 64
Combining Balance Sheet 65
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 66
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LSLCPAS.COM
INDEPENDENT AUDITORS’ REPORT
To the Honorable Mayor and Members of the City Council
City of Canyon Lake, California
Report on the Audit of the Financial Statements
Opinions
We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Canyon Lake, California, (hereafter, 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 as listed in the table of contents.

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City 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 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 Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City 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
Change in Accounting Principle
As described in Note 1 to the financial statements, in 2025, the City adopted new accounting guidance, GASB Statement No. 101, Compensated Absences. Our opinion is not modified with respect to this matter.

Responsibilities of Management for the Financial Statements 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.

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’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.
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To the Honorable Mayor and Members of the City Council
City of Canyon Lake, California
Auditors’ 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 auditors’ 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 generally accepted auditing standards and Government Auditing Standards 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 generally accepted auditing standards and Government Auditing Standards, we:
x Exercise professional judgment and maintain professional skepticism throughout the audit. x 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. x 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’s internal control. Accordingly, no such opinion is expressed. x 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. x Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’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, and required pension and other post-employment benefits schedules as listed on the table of contents 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 because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. -2-
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To the Honorable Mayor and Members of the City Council
City of Canyon Lake, California
Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The accompanying combining and individual fund financial statements and schedules (supplementary information) are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements.

The 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 supplementary information is fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 18, 2025, on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering City’s internal control over financial reporting and compliance.

Irvine, California
November 18, 2025
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Management’s Discussion and Analysis
As management of the City of Canyon Lake, California (City), we are pleased to offer to the readers of the City’s financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2025.

Financial Highlights
 The assets and deferred outflows of the City exceeded its liabilities and deferred inflows at the end of fiscal year 2025 by $17,705,833. The difference between assets and deferred outflows of resources and liabilities and deferred inflows of resources is referred to as net position.
 The City’s total net position increased by $369,191 during fiscal year 2024-2025.  As of June 30, 2025, the City’s governmental funds reported combined fund balances of $10,731,576, a decrease of $(631,368) from the prior fiscal year, and $3,709,550 of the governmental funds' fund balances are assigned and unassigned.  As of June 30, 2025, the unassigned fund balance for the General Fund was $3,502,288 or 38.5 percent of total General Fund expenditures.
 The City’s total debt for governmental activities decreased by $252,900 as a result of a new lease liability of $29,107 offset by principal payments of $282,007. The unfunded pension liability of $612,430 and the unfunded OPEB liability of $905,457 are included in these financial statements.

Overview of the Financial Statements
This discussion and analysis are intended to serve as an introduction to the City of Canyon Lake’s basic financial statements. The City's basic financial statements are comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves.

Government-wide financial statements: The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner that is similar to a private-sector business.

Government-wide financial statements include a statement of net position and a statement of activities. The statement of net position presents information on all of the City’s assets, deferred outflows of resources and liabilities, and deferred inflows of resources, with the difference between the two reported as net position. Over time, increases or decreases may provide a useful indicator on whether the financial position of the City is improving or deteriorating.

The statement of activities provides information showing how the City’s net position changed during the most recent fiscal year. These changes are reported using the full accrual basis of accounting that is when the economic event occurs, rather than when cash is received or paid.

Under this basis of accounting, revenues and expenses are reported in the statement for some items that will only result in future cash inflows or outflows such as vacation earned but not paid and uncollected taxes.

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Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, public safety, community development, building and planning, animal control, and public works. The business-type activities of the City include rental activities.

The government-wide financial statements can be found on pages 14 - 16 of this report.

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. The 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 government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating the City’s near-term financing requirements.

Because the focus of governmental funds is more narrow 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 City’s nearterm financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.

The City maintains seven individual governmental funds for financial reporting purposes.

Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General Fund, the Gas Tax, and Measure A Special Revenue Funds, and the Capital Projects Fund which are considered to be major funds. Data from the remaining 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 an annual appropriated budget for its General Fund, Special Revenue Funds, and Capital Projects Fund. A budgetary comparison statement has been provided for the General Fund and the Major Special Revenue Funds Gas Tax, and Measure A in order to demonstrate compliance with this budget.

The governmental fund financial statements can be found on pages 17 - 20 of this report.

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Proprietary Funds: The City maintains one type of proprietary fund. Enterprise funds are 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 rental activities of a Cityowned building.

Proprietary funds provide the same kind of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide information for the City’s rental activities, which is considered a major fund of the City.

The basic proprietary fund financial statements can be found on pages 21 - 23 of this report.

Fiduciary funds: Fiduciary funds are used to account for resources held for the benefit of parties outside the City. Fiduciary funds are not included in the government-wide financial statements because the resources of those funds are not available to support the City’s own programs.

The basic fiduciary fund financial statements can be found on pages 24 - 25 of this report.

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 on pages 26 - 56 of this report.

Other information: In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information (RSI), as listed on the Table of Contents and which can be found on pages 57 - 63.

Combining statements for nonmajor governmental funds are presented immediately following the required supplementary information and can be found on pages 65- 66 of this report.

Government-wide financial analysis
As noted earlier, net position may, over time, serve as a useful indicator of the City’s financial position. For the fiscal year ended June 30, 2025, the City’s assets and deferred outflows exceeded its liabilities and deferred inflows by $17,705,833 as summarized below:

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Statement of Net position
The City’s net position only include infrastructure assets such as roads, streets, lighting systems, drainage systems, bridges, etc. that were added in the fiscal years ending June 30, 2004, through 2025. Historically, the City has not recorded these assets. Under GASB 34, the City has elected not to retroactively include the value of major infrastructure assets in the statement of net position.
2025 2024 2025 2024 2025 2024
Assets:

Current and other assets $ 12,085,715 $ 12,371,588 $ 371,434 $ 263,723 $ 12,457,149 $ 12,635,311 Capital assets (net of depreciation/
amortization) 9,194,767 8,189,894 - 9,194,767 - 8,189,894 Total assets 21,280,482 20,561,482 371,434 263,723 21,651,916 20,825,205 Deferred outflows of resources:

Pension related items 345,389 371,944 - - 345,389 371,944 OPEB related 162,783 177,032 - - 162,783 177,032
508,172 548,976 - - 508,172 548,976
Liabilities:

Current and other liabilities 1,718,420 1,322,918 51,316 1,769,736 210 1,323,128 Long-term liabilities 2,337,987 2,484,262 - 2,337,987 - 2,484,262 Total liabilities 4,056,407 3,807,180 51,316 4,107,723 210 3,807,390 Deferred inflows of resources:

Pension related items 2,956 7,040 - - 2,956 7,040
OPEB related 343,576 161,812 - - 343,576 161,812
346,532 168,852 - - 346,532 168,852
Net position:

Net investment in capital assets 8,214,170 6,956,397 - 8,214,170 - 6,956,397 Restricted 3,274,385 2,505,732 - 3,274,385 - 2,505,732
Unrestricted 5,897,160 7,672,297 320,118 263,513 6,217,278 7,935,810 Total net position $ 17,385,715 $ 17,134,426 $ 320,118 $ 263,513 $ 17,705,833 $ 17,397,939 Governmental Activities Business-Type Activities Total
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Excluding the unknown value of infrastructure assets, net investment in capital assets represents 46.39 percent of the City's net position. The City uses capital assets to provide services to citizens; consequently, these assets are not available for future spending. An additional portion of the City’s net position, $3,274,385 or 18.49 percent, represent resources that are subject to restrictions on how they may be used. The remaining balance, (unrestricted net position), is $6,217,278.

Statement of Activities: The statement of activities shows how the City’s net position changed during the fiscal years 2024-25 and 2023-24. Provided below is a summary of changes in net position.

Statement of Changes in Net position
2025 2024 2025 2024 2025 2024
Revenues:

Program Revenues:

Charges for services $ 2,023,222 $ 1,414,534 $ 116,823 $ 84,003 $ 2,140,045 $ 1,498,537 Operating grants and contributions 1,368,910 2,786,543 - 1,368,910 - 2,786,543 Capital grants and contributions 38,250 178,269 - - 38,250 178,269 General revenues 7,031,761 6,928,488 102,642 - 7,134,403 6,928,488 Total revenues 10,462,143 11,307,834 219,465 84,003 10,681,608 11,391,837 Expenses:

General government 3,280,150 2,648,043 - 3,280,150 - 2,648,043 Public safety 5,394,077 4,801,482 - 5,394,077 - 4,801,482 Public works 953,491 1,331,010 - 953,491 - 1,331,010
Community development 481,102 488,456 - 481,102 - 488,456 Rental activities - 135,412 - 57,401 135,412 57,401
Interest on long-term debt 40,737 39,365 27,448 18,419 68,185 57,784 Total expenses 10,149,557 9,308,356 162,860 75,820 10,312,417 9,384,176 Change in net position 312,586 1,999,478 56,605 8,183 369,191 2,007,661 Net position - beginning, restated 17,073,129 15,134,948 263,513 255,330 17,336,642 15,390,278 Net position - ending $ 17,385,715 $ 17,134,426 $ 320,118 $ 263,513 $ 17,705,833 $ 17,397,939 Governmental Activities Business-Type Activities Total
The City’s net position increased overall by $369,191 during the current fiscal year. The reason for the increase is explained in the governmental activity’s discussion below.

Governmental activities: Net position from governmental activities assets increased by $312,586. Key elements of the increase are as follows:
 Measure A Fund revenues over the expenditures of $294,068.  Gas Tax Fund revenues over expenditures of $502,709
 Governmental expenditures reduced by capital asset purchases of $2,106,026, offset by depreciation and amortization expense of $927,692.

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The charts below provide graphic representation of the City’s expenses compared to program revenues by function and its revenue by source.
$-
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
General
government
Public safety Public works Community
development
Interest on longterm debt
Expenses and Program Revenues - Governmental Activities Expenses Program Revenues
19%
13%
0%
38%
13%
4%
9%
4%
Revenues by Source - Governmental Activities
Charges for s ervices Operating grants and contributions Capital grants and contributions Property taxes
Utility users tax Sales taxes
Other taxes Other
The governmental activities expenses and program revenues chart is designed to reflect expenses associated with each City function and the revenues that are directly attributable to each function. It is important to note that general revenues such as property, sales and other taxes are not directly attributable to specific functions and are therefore used to support program activities citywide. Regarding the revenues by source chart, it shows that 38 percent of governmental activities revenues came from property tax revenue.

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Business-type activities: For the City’s business-type activities, the results for the current fiscal year were positive. Overall net position increased by $56,605 to an ending balance of $320,118. The Rental Fund accounts for the activity of two City-owned commercial buildings.

Financial Analysis of City’s Funds
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance related legal requirements.

Governmental Funds: 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. In particular, unreserved fund balance may serve as a useful measure of the City’s net resources available for spending at the end of the fiscal year. Please refer to pages 17 - 20 for more detail on governmental funds.

As of June 30, 2025, the City’s governmental funds reported combined ending fund balances of $10,731,576, a decrease of $(631,368) in comparison with the prior year. Of the $10,731,576 $3,709,550 or 34.57 percent constitutes assigned and unassigned fund balance. The remainder of fund balance is nonspendable, restricted or committed to indicate that it is not available for new spending or constraints are placed on the use of resources, respectively. The increase in governmental fund balance is due to an increase in the fund balance of the General Fund of $16,026, an increase in the Gas Tax Fund of $502,709 an increase in Measure A Fund of $294,608, a decrease in the Capital Projects Fund of $(1,416,047) and a decrease of non-major governmental funds of $(28,124). For the General Fund this is a decrease of $804,079 from the last fiscal year’s increase of $820,105. General Fund revenues of $9,125,876 were up $551,713 over the prior year amount of $8,574,163. The major components of the increase are, Property Taxes increased $123,701 due to higher assessed values, Utility Users Tax increased $411,202, and EMS Subscriptions increased by $467,868 due to an increase in the fee to reflect actual costs. These were offset by decreases in Grant Revenues of $225,806 and Construction and Building Permits of $30,291. General Fund expenditures of $9,106,315 were up $2,106,475 from the prior year amount of $6,999,840. The major components of this are an increase in salaries and benefits across all Departments of $498,201. The Law Enforcement costs for the General Fund increased by $1,164,000 as the City used ARPA Funds for $1,284,692 for public safety costs in Fiscal Year 2023-24. The increase in the Gas Tax Fund is revenues of $664,231 were more than expenditures of $161,522, as the prior year included $910,128 in right-of-way purchases. The increase in the Measure A Fund is revenues of $338,253 were more than the expenditures of $44,185, as the prior year decrease included a capital improvement project of $362,500. The decrease in the Capital Projects Fund is the result of the $1,284,692 transferred in from the General Fund in Fiscal Year 2023-24 to be used for the City Hall remodeling project and the expenditure of $1,307,700 for the City Hall Improvement Project in the current fiscal year.

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General Fund Financial and Budgetary Highlights
The General Fund is the chief operating fund of the City. On June 30, 2025, unassigned fund balance was $3,502,288. As a measure of the General Fund’s financial condition, it may be useful to compare the unassigned fund balance to total expenditures. Unassigned fund balance represents 38.46 percent of General Fund expenditures. For the fiscal year, the General Fund’s fund balance increased $16,026 from the prior year. The differences between the General Fund budget and actual are summarized below:
 General Fund actual revenues were above budget by $306,919 mainly due to higher than anticipated property taxes, EMS subscription fees, and utility user’s tax.  Actual expenditures were $147,391 less than the final budgeted amount of $9,106,315, with police and fire protection services being lower than anticipated.

Capital Assets, Intangible Assets and Debt Administration Capital Assets: City investment in capital assets for its governmental type activities as of June 30, 2025, amounted to $9,194,767 (net of accumulated depreciation/amortization). This investment in capital assets includes land, buildings and improvements, machinery/vehicles, intangible assets (leases and SBITA) and infrastructure assets.

Capital and intangible assets events during the current fiscal year included the following:
 Converting of 31520 Railroad Canyon Road for City Hall purposes for $400,000.  City Hall improvements for $1,239,168.
 Remodeling of Fire Station Kitchen for $38,653.
 Furniture and equipment for $394,151.
 New equipment leases of $29,107.

Additional information on the City’s capital assets can be found on page 40 in the notes to the basic financial statements and a summary is provided below.

City of Canyon Lake
Capital Assets (net of depreciation/amortization)
2025 2024 2025 2024 2025 2024
Land $ 500,399 $ 353,856 $ - $ 500,399 - $ $ 353,856
Building and improvements 3,175,731 1,760,374 - 3,175,731 - 1,760,374 Machinery, equipment and vehicles 1,669,767 1,560,404 - 1,669,767 - 1,560,404 Infrastructure 3,790,541 4,303,251 - 3,790,541 - 4,303,251 Construction in progress 105,001 - - - 105,001 -
Intangible right to use assets:

Equipment 69,581 40,474 - - 69,581 40,474
Buildings - - - - - -
SBITA - 66,534 - - - 66,534
Total $ 9,206,019 $ 8,189,894 $ - $ 9,206,019 - $ $ 8,189,894 Governmental Activities Business-Type Activities Total
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Long-term liabilities: At the end of fiscal year 2025, the City’s total long-term liabilities outstanding was $980,597. This amount was comprised of a $356,841 Loan from the CLPOA for the purchase of the Fire Station, two vehicle leases with PNC Bank of $574,171, other leases for $49,585.

Outstanding long-term liabilities of the City is summarized below, and additional information can be found on pages 41 - 43 in the notes to basic financial statements.

City of Canyon Lake
Outstanding Long-Term Liabilities
2025 2024 2025 2024 2025 2024
PNC Equipment Lease $ 456,621 $ 525,277 -$ $ - $ 456,621 $ 525,277 PNC Equipment Lease 117,550 154,926 - 117,550 - 154,926 CLPOA Loan 356,841 446,826 - 356,841 - 446,826
Other Leases 49,585 38,043 - - 49,585 38,043
SBITA Liability - 68,425 - - - 68,425
Total long-term labilities 980,597 $ $ 1,233,497 $ - $ - $ 980,597 $ 1,233,497 Governmental Activities Business-Type Activities Total
Pension Plan Obligations
The City implemented GASB Statement No. 68 during fiscal year 2014-15 which resulted in an ending net pension liability of $615,663 on June 30, 2024, and $612,430 on June 30, 2025.

Additional information can be found on pages 44 - 50 in the notes to the basic financial statements.

The City implemented GASB Statement No. 75 during fiscal year 2017-18 which resulted in an ending total OPEB liability of $814,628 on June 30, 2024, and $905,457 on June 30, 2025.

Additional information can be found on pages 51 - 53 in the notes to the basic financial statements.

Economic Factors and Next Year’s Budgets and Rates
In preparing the budget for fiscal year 2025-26, management was conservative in its projections for revenues and budgeted increases in public safety costs as dictated by the police contracts and fire services.

The Operating Budget for fiscal year 2025-26 anticipates having a surplus of $50,101 for the General Fund.
 Anticipated General Fund Revenues of $8,674,450, an increase of $253,589 from the previous year due to projected increases in property taxes, EMS Subscription fees, and interest income.
 Proposed General Fund Expenditures of $8,624,349, an increase of $358,001 over the previous year, due to increased costs in personnel for City employees, increased costs in insurance.

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Detailed information about the economic analysis, revenue assumptions, and other budgetary process parameters utilized in the annual budget preparation, can be obtained from the City’s 2025-26 Budget which is available at City Hall.

Requests for Information
This financial report is designed to provide a general overview of the City’s finances for all those with interest in the government’s finances. Questions concerning any of the information provided in this report, or requests for additional information, should be addressed to the City Clerk, City of Canyon Lake, 31516 Railroad Canyon Road, Canyon Lake, California 92587, or call (951) 244-2955.

City Council Agenda,

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City of Canyon Lake
Statement of Net Position
June 30, 2025
The accompanying notes are an integral part of these financial statements - 14 -
Governmental Business-Type
Activities Activities Total
ASSETS
Cash and investments $ 9,357,076 $ - $ 9,357,076
Investments in real estate - 2,222,501 2,222,501
Receivables:

Accounts 203,981 - 203,981
Interest 31,261 - 31,261
Intergovernmental 389,089 - 389,089
Deposits - 61,700 61,700
Prepaid items 191,541 - 191,541
Internal balances 1,912,767 (1,912,767) -
Capital assets, not being depreciated/amortized 500,399 - 500,399 Capital assets, net of accumulated depreciation/
amortization 8,694,368 - 8,694,368
Total assets 21,280,482 371,434 21,651,916

DEFERRED OUTFLOWS OF RESOURCES
Pension related items 345,389 - 345,389
OPEB related items 162,783 - 162,783
508,172 - 508,172

LIABILITIES
Accounts payable 966,731 51,316 1,018,047
Accrued interest payable 4,323 - 4,323
Accrued payroll payable 128,522 - 128,522
Unearned revenues 258,886 - 258,886
Compensated absences, due within one year 139,623 - 139,623 Lease payable, due within one year 16,328 - 16,328
Financing payable, due within one year 108,946 - 108,946 Notes payable, due within one year 95,061 - 95,061
Noncurrent liabilities:

Compensated absences 59,838 - 59,838
Lease payable 33,257 - 33,257
Financing payable 465,225 - 465,225
Notes payable 261,780 - 261,780
Net OPEB liability 905,457 - 905,457
Net pension liability 612,430 - 612,430
Total liabilities 4,056,407 51,316 4,107,723

DEFERRED INFLOWS OF RESOURCES
Pension related items 2,956 - 2,956
OPEB related items 343,576 - 343,576
346,532 - 346,532

NET POSITION
Net investment in capital assets 8,214,170 - 8,214,170
Restricted 3,274,385 - 3,274,385
Unrestricted 5,897,160 320,118 6,217,278
Total net position $ 17,385,715 $ 320,118 $ 17,705,833
City Council Agenda,

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City of Canyon Lake
Statement of Activities
For the Fiscal Year Ended June 30, 2025
The accompanying notes are an integral part of these financial statements - 15 -
Operating Capital
Charges for Grants and Grants and
Expenses Services Contributions Contributions
Governmental activities:

General government 3,280,150 $ - $ 5,848 $ -$
Public safety 5,394,077 1,477,848 343,546 38,250
Public works 953,491 1,019,516 - -
Community development 481,102 545,374 - -
Interest on long-term debt 40,737 - - -
Total governmental activities 10,149,557 2,023,222 1,368,910 38,250 Business-type activities:

Rental 135,412 116,823 - -
Interest on long-term debt 27,448 - - -
Total business-type activities 162,860 116,823 - -
Total Primary Government 10,312,417 $ $ 2,140,045 $ 1,368,910 $ 38,250 General revenues:

Taxes:

Property tax, levied for general purpose
Utility users tax
Transient occupancy tax
Franchise tax
Sales tax
Other taxes
Use of money and property
Other
Transfers
Total general revenues
Change in net position
Net position, beginning of year
Adoption of new GASB
Net position, beginning of year, as restated
Net position, end of year
Program Revenues
City Council Agenda,

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The accompanying notes are an integral part of these financial statements - 16 -
Governmental Business-Type
Activities Activities Total
$ - (3,274,302) $ $ (3,274,302)
(3,534,433) - (3,534,433)
66,025 - 66,025
64,272 - 64,272
(40,737) - (40,737)
(6,719,175) - (6,719,175)
- (18,589) (18,589)
- (27,448) (27,448)
- (46,037) (46,037)
(6,719,175) (46,037) (6,765,212)
3,946,649 - 3,946,649
1,365,858 - 1,365,858
65,681 - 65,681
667,655 - 667,655
405,285 - 405,285
181,260 - 181,260
267,005 - 267,005
165,010 70,000 235,010
(32,642) 32,642 -
7,031,761 102,642 7,134,403
312,586 56,605 369,191
17,134,426 263,513 17,397,939
(61,297) - (61,297)
17,073,129 263,513 17,336,642
$ 17,385,715 $ 320,118 $ 17,705,833
Net (Expense) Revenue
and Changes in Net Position
City Council Agenda,

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City of Canyon Lake
Balance Sheet
Governmental Funds
June 30, 2025
The accompanying notes are an integral part of these financial statements - 17 -
Capital Total
Projects Fund Non-major Total
Gas Tax Measure A Capital Governmental Governmental
General Fund Fund Projects Funds Funds
ASSETS
Cash and investments 5,999,947 $ 1,407,195 $ 1,651,786 $ 209,327 $ 88,821 $ 9,357,076 $ Receivables:

Accounts 203,981 - - - - 203,981
Interest 31,261 - - - - 31,261
Intergovernmental 256,712 80,069 48,758 - 3,550 389,089 Prepaid items 191,541 - - - - 191,541
Due from other funds 80,699 - - - - 80,699
Advances from other funds 1,832,068 - - - 1,832,068 -
Total assets $ 8,596,209 $ 1,487,264 $ 1,700,544 $ 209,327 $ 92,371 $ 12,085,715

LIABILITIES AND FUND BALANCES
Liabilities:

Accounts payable $ 958,872 $ 5,794 -$ $ 2,065 $ - $ 966,731 Accrued payroll payable 128,522 - - - - 128,522
Unearned revenues 258,886 - - - - 258,886
Total liabilities 1,346,280 5,794 - 2,065 1,354,139 -
Fund Balances:

Nonspendable 2,023,609 - - - 2,023,609 -
Restricted - 1,481,470 1,700,544 - 92,371 3,274,385
Committed 1,724,032 - - - 1,724,032 -
Assigned - - - 207,262 - 207,262
Unassigned 3,502,288 - - - 3,502,288 -
Total fund balances 7,249,929 1,481,470 1,700,544 207,262 92,371 10,731,576 Total liabilities and fund balances 8,596,209 $ $ 1,487,264 $ 1,700,544 $ 209,327 $ 92,371 $ 12,085,715 Special Revenue Funds
City Council Agenda,

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City of Canyon Lake
Reconciliation of the Balance Sheet of
Governmental Funds to the Statement of Net Position
June 30, 2025
The accompanying notes are an integral part of these financial statements - 18 -
Fund balances of governmental funds $ 10,731,576
position are different because:
resources and, therefore, are not reported in the funds. 9,194,767 Deferred outflow of resources relate to:

Pension related deferred outflows of resources 345,389
OPEB related deferred outflows of resources 162,783
Accrued interest payable for the current portion of interest due on long-term debt has not been reported in the governmental funds. Therefore, interest payable is not reported as a liability in governmental funds. (4,323) statement of net position.

Balances at June 30, are:

Compensated absences $ (199,461)
Financing payable (574,171)
Lease payable (49,585)
CLPOA loan payable (356,841)
Net OPEB liability (905,457)
Net pension liability (612,430) (2,697,945)
Pension related deferred outflows of resources (2,956)
OPEB related deferred outflows of resources (343,576)
Net position of governmental activities $ 17,385,715
as fund liabilities. Interest on long-term debt is not accrued in Deferred inflows of resources relate to:
governmental funds, but rather is recognized as an expenditure when due. All liabilities, both current and long-term are reported in the due and payable in the current period and accordingly are not reported Long-term liabilities applicable to the City's governmental activities are not Capital assets used in governmental activities are not financial Amounts reported for governmental activities in the statement of net City Council Agenda,

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City of Canyon Lake
Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds
For the Fiscal Year Ended June 30, 2025
The accompanying notes are an integral part of these financial statements - 19 -
(Formerly Capital Total
Major Fund) Projects Fund Non-major Total
Gas Tax Measure A Miscellaneous Capital Governmental Governmental General Fund Fund Grants Fund Projects Funds Funds

REVENUES
Taxes $ 6,547,650 $ - -$ -$ $ 6,547,650 - $
Licenses and permits 1,942,349 - - - - 1,942,349
Fines and forfeitures 11,255 - - - - 11,255
Intergovernmental 213,499 619,158 281,427 - 363,615 1,477,699 Use of money and property 267,005 45,073 56,826 - 2,810 371,714 Other 144,118 - - - - 144,118
Total revenues 9,125,876 664,231 338,253 - 366,425 10,494,785

EXPENDITURES
Current:

General government 3,163,497 - - - 3,164,397 900
Public safety 4,600,123 - - - 372,883 4,973,006
Public works 206,499 161,522 - - 368,021
Community development 481,102 - - - - 481,102
Capital outlay 400,000 - 44,185 1,416,047 20,766 1,880,998 Debt service:

Principal 213,582 - - - - 213,582
Interest and fiscal charges 41,512 - - - - 41,512
Total expenditures 9,106,315 161,522 44,185 1,416,047 394,549 11,122,618 Excess (deficiency) of revenues over (under)
expenditures 19,561 502,709 294,068 (1,416,047) (28,124) (627,833)

OTHER FINANCING SOURCES (USES)
Transfers in 24,358 - - - - 24,358
Transfers out (57,000) - - - - (57,000)
Proceeds from lease issuance 29,107 - - - - 29,107
Total other financing sources (3,535) - - - - (3,535)
Net change in fund balances 16,026 502,709 294,068 (1,416,047) (28,124) (631,368) Fund balances, beginning of year 7,233,903 978,761 1,406,476 15,818 1,623,309 104,677 11,362,944 Change within financial reporting entity - - - (15,818) - 15,818 - Fund balances, beginning of year, as restated 7,233,903 978,761 1,406,476 1,623,309 - 120,495 11,362,944 Fund balances, end of year $ 7,249,929 $ 1,481,470 $ 1,700,544 $ - $ 207,262 $ 92,371 $ 10,731,576 Special Revenue Funds
City Council Agenda,

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City of Canyon Lake
Reconciliation of the Statement of Revenues,
Expenditures, and Changes in Fund Balances of
Governmental Funds to the Statement of Activities
For the Fiscal Year Ended June 30, 2025
The accompanying notes are an integral part of these financial statements - 20 -
Net change in fund balances - total governmental funds $ (631,368) different because:
capitalization threshold. This activity is reconciled as follows:

Cost of assets capitalized 2,106,026
Depreciation and amortization expense (927,692)
Capital assets disposed of (173,461)
Debt proceeds provide current financial resources to governmental funds; however, issuing debt increases long-term liabilities in the statement of net position. In the current period proceeds were received from:

Lease acquisition (29,107)
long-term liability.

Principal payments on PNC leases 106,032
Principal payments on leases 17,565
Principal payments on SBITA liability 68,425
Principal payments on loan 89,985
as expenditures in the governmental funds:

Pension related net of adjustments (19,238)
OPEB related net of adjustments (286,842)
Increase in compensated absences payable (8,514)
Decrease in accrued interest payable on long-term liabilities 775 Change in net position of governmental activities $ 312,586 Governmental funds report capital outlays as expenditures. However, in Amounts reported for governmental activities in the statement of activities Some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation/amortization allocated to the appropriate functional expense when the cost is below Governmental funds report principal payments as expenditures. In the statement of activities, principal payments are applied to the appropriate City Council Agenda,

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City of Canyon Lake
Statement of Net Position -
Proprietary Funds
June 30, 2025
The accompanying notes are an integral part of these financial statements - 21 -
Enterprise Fund
Rental
ASSETS
Current Assets:

Investment in real estate 2,222,501 $
Deposits 61,700
Total current assets 2,284,201
Total assets 2,284,201

LIABILITIES
Current Liabilities:

Accounts payable 51,316
Due to other funds 80,699
Advances to other funds 1,832,068
Total current liabilities 1,964,083
Total liabilities 1,964,083

NET POSTION
Unrestricted 320,118
Total net position 320,118 $
City Council Agenda,

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City of Canyon Lake
Statement of Revenues, Expenses, and Changes in Net Position - Proprietary Funds
For the Fiscal Year Ended June 30, 2025
The accompanying notes are an integral part of these financial statements - 22 -
Enterprise Fund
Rental

OPERATING REVENUES
Rental income $ 116,823
Total operating revenues 116,823

OPERATING EXPENSES
Property management 1,961
Repairs and maintenance 77,124
Utilities 16,933
Property assessments 37,208
Property taxes 1,660
Other operating expenses 526
Total operating expenses 135,412
Operating loss (18,589)

NON-OPERATING REVENUES AND EXPENSES
Interest expense (27,448)
Contributions 70,000
Total non-operating revenue and expenses 42,552
Income (loss) before transfers 23,963

TRANSFERS
Transfers in 57,000
Transfers out (24,358)
Change in net position 56,605
Net Position, Beginning 263,513
Net Position, Ending $ 320,118
City Council Agenda,

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City of Canyon Lake
Statement of Cash Flows
Proprietary Funds
For the Fiscal Year Ended June 30, 2025
The accompanying notes are an integral part of these financial statements - 23 -
Enterprise Fund
Rental

CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 116,823 $
Payments to suppliers for goods and services (84,306)
Net cash provided by operating activities 32,517

CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES
Deposits (61,700)
Net cash used for non-capital financing activities (61,700)

CASH FLOWS FROM CAPITAL FINANCING ACTIVITIES
Transfers in from other funds 57,000
Transfers to other funds (24,358)
Investment in real estate (1,095,262)
Capital debt proceeds 1,413,364
Principal payments (1,413,364)
Contributions 70,000
Due from other funds 2,697
Interfund loan 1,046,554
Interest payments (27,448)
Net cash provided by capital financing activities 29,183 Net increase (decrease) in cash and cash equivalents -
Cash and cash equivalents, beginning -
Cash and cash equivalents, ending $ -

RECONCILIATION OF OPERATING LOSS TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:

Operating loss $ (18,589)
Adjustments to reconcile operating loss to net
cash provided by operating activities:

Increase (decrease) in operating liabilities:

Accounts payable 51,106
Net cash provided by operating activities $ 32,517
City Council Agenda,

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City of Canyon Lake
Statement of Fiduciary Net Position
Fiduciary Funds
June 30, 2025
The accompanying notes are an integral part of these financial statements - 24 -
Custodial
Fund
ASSETS
Cash and investments $ 4,035
Receivables:

Intergovernmental 46,410
Total assets 50,445

LIABILITIES
Accounts payable 50,445

NET POSITION
Restricted for taxing entities and other agencies $ -
City Council Agenda,

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City of Canyon Lake
Statement of Changes in Fiduciary Net Position
Fiduciary Funds
For the Fiscal Year Ended June 30, 2024
The accompanying notes are an integral part of these financial statements - 25 -
Custodial
Fund

ADDITIONS
Refuse fees collected for other agency 2,060,149 $
Fees collected for other government 40,756
Total additions 2,100,905

DEDUCTIONS
Payment to other agencies 2,060,149
Payment of fees collected to other government 40,756
Total deductions 2,100,905
Change in net position -
Net Position, Beginning -
Net Position, Ending $ -
City Council Agenda,

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City of Canyon Lake
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2025
- 26 -
I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Note 1: Organization and Summary of Significant Accounting Policies a. Description of the reporting entity
The City of Canyon Lake was incorporated on December 1, 1990 under the laws of the State of California and enjoys all the rights and privileges pertaining to “General Law” cities. The City operates under a council-manager form of government and currently provides a wide variety of services to its citizens, including public safety, public services, community development, general administrative and other services.

There are no separate legal entities over which the City is financially accountable for. b. Government-wide and fund financial statements
The government-wide financial statements include a statement of net position and a statement of activities. These statements present summaries of governmental and business-type activities for the City accompanied by a total column. Fiduciary activities of the City are not included in these statements. Certain eliminations have been made as prescribed by 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 activities, which are presented as internal balances and eliminated in the total primary government column. 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.

The statement of activities demonstrates the degree to which the direct and indirect 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 properly included among program revenue are reported instead as general revenues.

Separate financial statements are provided for governmental funds, proprietary, and fiduciary funds, even though the latter are excluded from the government-wide financial statements.

Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements.

City Council Agenda,

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City of Canyon Lake
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2025
- 27 -
Note 1: Organization and Summary of Significant Accounting Policies (continued) c. Measurement focus, basis of accounting, and financial statement presentation The government-wide statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements.

Agency funds use the accrual basis of accounting but have no measurement focus. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of the cash flows. Accordingly, all of the City's assets and liabilities, including capital assets, as well as infrastructure assets, and long-term liabilities, are included in the accompanying statement of net position. The statement of activities presents changes in net position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred.

The types of transactions reported as program revenues for the City are reported in three categories: 1) charges for services, 2) operating grants and contributions, and 3) capital grants and contributions.

Governmental fund financial statements are reported using the current financial resources measurement focus and the modified-accrual basis of accounting. Under the modified-accrual basis of accounting, revenues are recognized in these funds when susceptible to accrual (i.e. when they are both measurable and available). "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. For this purpose, the City considers property taxes collected after year-end, as available if they are collected within 60 days of the end of the current fiscal period. Other revenue susceptible to accrual includes sales tax, state gasoline taxes, investment income, and certain other intergovernmental revenues. Expenditures in the governmental funds are generally recognized in the accounting period in which the related fund liability is incurred, if measurable, except for unmatured principal and interest on general long-term debt, as well as compensated absences and claims and judgments, which are recognized when due.
d. Fund classifications
The City reports the following major governmental funds:

The General Fund is the government's primary operating fund. It accounts for all financial resources of the general government not accounted and reported in another fund.

The Gas Tax Fund accounts for the repair and maintenance of streets and traffic signals of the City.

The Measure A Fund is used to account for the construction, reconstruction, alteration, and maintenance of the streets of the City.

The Capital Projects Fund is used to account for City-wide capital improvement projects.

City Council Agenda,

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City of Canyon Lake
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2025
- 28 -
Note 1: Organization and Summary of Significant Accounting Policies (continued) d. Fund classifications (continued)
The City reports the following major proprietary fund:

The Rental Fund accounts for the activities of two City-owned building.

Additionally, the City reports the following fund types:

The Special Revenue Funds are used to account for the proceeds of specific revenue resources that are restricted or committed to expenditures for specific purposes other than debt service and capital projects.

The Fiduciary Fund is used to account for the resources held by the City in a fiduciary capacity.

As a general rule the effect of interfund activity has been eliminated from the government-wide financial statements.

Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes.

When both restricted and unrestricted resources are available for use, it is the City’s policy to use the restricted resources first, and then unrestricted resources, as they are needed. e. Financial statement elements
Deposits and investments
The City’s cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition.

Investments are reported at fair value. The City’s policy is to hold investments until maturity or until market values equal or exceed cost. The State Treasurers Investment Pool operates in accordance with appropriate State laws and regulations. The reported value of the Pool is the same as the fair value of the Pool shares.

Receivables and payables
Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either "due to/from other funds" (i.e., the current portion of interfund loans) or "advances to/from other funds" (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported as "due to/from other funds."
City Council Agenda,

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City of Canyon Lake
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2025
- 29 -
Note 1: Organization and Summary of Significant Accounting Policies (continued) e. Financial statement elements (continued)
Receivables and payables (continued)
Advances between funds, as reported in the fund financial statements, are offset by a fund balance reserve account in the applicable governmental funds to indicate that they are not available for appropriation and are not expendable, available financial resources.

Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances.” Property taxes
The County of Riverside collects property taxes for the City. Tax liens attach annually as of 12:01 A.M. on the first day in January preceding the fiscal year for which the taxes are levied.

The tax levy covers the fiscal period July 1st to June 30th. All secured personal property taxes and one-half of the taxes on real property are due November 1st, the second installment is due February 1st. All taxes are delinquent, if unpaid, on December 10th and April 10th respectively.

Unsecured personal property taxes become due on the first of March each year and are delinquent, if unpaid, on August 31st.

Prepaid costs
Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both the government-wide and fund financial statements using the purchases method.

Capital assets
Capital assets, which include property, plant and equipment, lease and subscription assets and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items) are, reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the government as assets with an initial, individual cost of more than or equal to $1,000 (amount not rounded) and an estimated useful life of at least two years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets, donated works of art and similar items, and capital assets received in a service concession arrangement are reported at acquisition value at the date of acquisition.

The cost of normal maintenance and repairs that do not add to the value of the assets or materially extend the assets lives are not capitalized.

Major outlays for capital assets and improvements are capitalized as projects are constructed.

City Council Agenda,

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City of Canyon Lake
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2025
- 30 -
Note 1: Organization and Summary of Significant Accounting Policies (continued) e. Financial statement elements (continued)
Capital assets (continued)
Property, plant and equipment of the primary government, is depreciated using the straight-line method over the following estimated useful lives.

Assets Years
Buildings 39
Building Improvements 10
Infrastructure 20-50
Vehicles 5-10
Office equipment 5-10
Lease assets - equipment 5-10
Lease assets - buildings 5-10
Subscription assets 5-10
Use of estimates
The financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America and include amounts based on estimates and assumptions by management. Actual results could differ from those amounts.

Compensated absences
The City provides to its employees a comprehensive annual leave program. Leave pay is payable at the time it is taken or upon termination.

The total amount of liability for compensated absences is segregated between short-term and long-term with both portions reflected in the government-wide statements. The short-term portion is determined to be the amount due to employees for future absences which is attributable to services already rendered and which is expected to be paid during the next fiscal year.

Long-term obligations
In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the governmental activities, statement of net position. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight-line method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt.

City Council Agenda,

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City of Canyon Lake
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2025
- 31 -
Note 1: Organization and Summary of Significant Accounting Policies (continued) e. Financial statement elements (continued)
Long-term obligations (continued)
In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as expenditures.

Pension Plan
For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Plan and additions to/deductions from the Plan’s fiduciary net position have been determined on the same basis. For this purpose, benefit payments (including refunds of employee contributions) are recognized when currently due and payable in accordance with the benefit terms. Investments are reported at fair value.

Generally accepted accounting principles requires that the reported results must pertain to liability and asset information within certain defined timeframes. For this report, the following timeframes are used.

Valuation Date June 30, 2023
Measurement Date June 30, 2024
Measurement Period July 1, 2023 to June 30, 2024
Other Postemployment Benefits (OPEB)
For purposes of measuring the total OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the City’s plan (OPEB Plan) and additions to/deductions from the OPEB Plan’s fiduciary net position have been determined on the same basis. For this purpose, benefit payments are reported at fair value.

Generally accepted accounting principles require that the reported results must pertain to liability and asset information within certain defined timeframes. For this report, the following timeframes are used:

Valuation Date June 30, 2024
Measurement Date June 30, 2025
Measurement Period July 1, 2024 to June 30, 2025
City Council Agenda,

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City of Canyon Lake
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2025
- 32 -
Note 1: Organization and Summary of Significant Accounting Policies (continued) e. Financial statement elements (continued)
Deferred outflows/inflows of resources
In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net assets that applies to future periods and so will not be recognized as an outflow of resources (expenses) until then. The City currently has pension and OPEB related deferred outflows of resources.

In addition to liabilities, the statement of net position will sometimes report a separate section for deferred inflows of resources. This separate financial element, deferred inflows of resources, represents an acquisition of net assets that applies to future periods and so will not be recognized as an inflow of resources (revenue) until that time. The City currently has pension and OPEB related deferred inflows of resources.

Fund balance
Beginning with fiscal year 2011, the City implemented GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. This statement provides more clearly defined fund balance categories to make the nature and extent of the constraints placed on a government’s fund balance more transparent. The following classifications describe the relative strength of the spending constraints placed on the purposes for which resources can be used:

Nonspendable – amounts that are not in a spendable form (such as inventory) or are required to be maintained intact.

Restricted – amounts constrained to specific purposes by their providers (such as grantors, bondholders and higher levels of government), through constitutional provisions or by enabling legislation.

Committed – amounts constrained to specific purposes by a government itself, using the highest level of decision-making authority; to be reported as committed, amounts cannot be used for any other purpose unless the government takes the same highest level of action to remove or change the constraint.

Assigned – amounts a government intends to use for a specific purpose; intent can be expressed by the City Council or by an official or body to which the City Council delegates the authority.

Unassigned – amounts that are for any purpose; positive amounts are reported only in a general fund.

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City of Canyon Lake
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2025
- 33 -
Note 1: Organization and Summary of Significant Accounting Policies (continued) e. Financial statement elements (continued)
Fund balance, (continued)
The City Council may establish (and modify or rescind) fund balance commitments by passage of an ordinance or resolution.

When both restricted and unrestricted resources are available for use when an expenditure is incurred, it is the City’s policy to use restricted resources first, then unrestricted resources as they are needed. It is the City’s policy to consider committed amounts as being reduced first, followed by assigned amounts, and then unassigned amounts when expenditures are incurred for purposes for which amounts in any of those unrestricted fund balance classifications could be used.

New accounting pronouncements
Governmental Accounting Standards Board Statement No. 101 For the fiscal year ended June 30, 2025, the City implemented Governmental Accounting Standards Board (GASB) Statement 101, Compensated Absences. This Statement provides guidance on the recognition and measurement guidance for compensated absences. The requirements of this Statement are effective for reporting periods beginning after December 15, 2023.

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City of Canyon Lake
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2025
- 34 -
II. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
Note 2: Budgetary Information
The City prepares its budgets on the basis of estimated actual expenditures and, accordingly, the budget amounts included in the accompanying financial statements are presented on a basis consistent with generally accepted accounting principles.

Each year, the City Manager submits a proposed budget to the City Council during May. The City Council holds budget hearings during May and June. The final budget is adopted by the City Council in June.

No budget expenditures can be disbursed without proper appropriations. Once the budget is adopted, no additional funds can be authorized without the City Council’s approval. The level of budgetary control (the level on which expenditures may not legally exceed appropriations) is at the individual fund level. The City Manager can authorize budget transfers between departments without additional appropriations.

Throughout the year, budgeted expenditures are reviewed and projections are made by the City Manager. Therefore, any necessary changes are submitted for approval to the City Council with a recorded action for any budget adjustments.

Formal budgetary integration is employed as a management control device during the year for all the governmental type funds. Budgets for all the governmental type funds are adopted on a basis consistent with generally accepted accounting principles, except for the Capital Projects Fund which does not have a legally adopted budget. Budgeted amounts are as originally adopted and are further amended by the City Council.

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City of Canyon Lake
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2025
- 35 -
III. DETAILED NOTES ON ALL FUNDS
Note 3: Cash and Investments
Cash and investments as of June 30, 2025 are classified in the accompanying financial statements as follows:

Statement of Net position
Cash and investments 9,357,076 $
Investments in real estate 2,222,501
Statement of Fiduciary Net Position
Cash and investments 4,035
Total cash and investments 11,583,612 $
Cash and investments as of June 20, 2025 consists of the following:

Deposits with financial institutions $ 2,276,146
Cash on hand 300
Investments 9,307,166
Total cash and investments $ 11,583,612
The City follows the practice of pooling cash and investments of all funds except for funds held by a fiscal agent. Interest income earned on pooled cash and investments is allocated quarterly to the various funds based on cash balances. Interest income from cash and investments with a fiscal agent is credited directly to the related fund.

The City reports its investments at fair value in the balance sheet. All investment income, including changes in the fair value of investments, is recognized as revenue in the operating statement.

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City of Canyon Lake
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2025
- 36 -
Note 3: Cash and Investments (continued)
Authorized investments
The table below identifies the investment types that are authorized for the City by the California Government Code (or the City’s investment policy, where more restrictive). The table also identifies certain provisions of the California Government Code (or the City’s investment policy, where more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustees that are governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code or the City’s investment policy.

Authorized Investment Type
Maximum
Maturity
Maximum
Percentage
of Portfolio
Maximum
Investment in
one Issuer
U. S. Treasuries 5 years None None
Money Market Accounts N/A 10% 5%
Certificates of Deposit 5 years None None
Local Agency Investment Fund (LAIF) N/A 50% None
Federal Agency Securities 5 years None None
Bankers Acceptances 180 days 10% 5%
Commercial Paper 270 days 10% 10%
Medium-Term Notes 5 years 15% 5%
Negotiable Certificates of Deposit 5 years 30% 5%
Repurchase Agreements 1 year 10% None
Interest rate risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the City manages its exposure to interest rate risk is by purchasing a combination of shorter 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 to market interest rate fluctuations are presented below.

Total
12 months
or less
13 to 24
months
25 to 60
months
Local Agency Investment Fund 11,407 $ $ 11,407 $ - $ -
Negotiable certificates of deposit 492,040 492,040 - -
U.S. Treasury Bills 2,123,232 2,123,232 - -
Federal agency securities 1,775,399 1,035,132 740,267 - Corporate debt securities 248,609 124,890 123,719 -
Money market 2,433,978 2,433,978 - -
Real estate 2,222,501 2,222,501 - -
Totals $ 9,307,166 $ 8,443,180 $ 863,986 $ -
Investment type
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City of Canyon Lake
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2025
- 37 -
Note 3: Cash and Investments (continued)
Credit risk
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. Information about the minimum rating required by the California Government Code, the City’s investment policy, or debt agreements, and the actual rating as of year-end for each type of investment held by the City can be found below.

Total
Minimum
legal rating
Ratings as of
year end
Local Agency Investment Fund 11,407 $ N/A Not rated
Negotiable certificates of deposit 492,040 N/A Not rated U.S. Treasury Bills 2,123,232
Federal agency securities 1,775,399 AA-a2 Aa1
Corporate debt securities 248,609 A Aaa,A2
Money market 2,433,978 N/A Not rated
Real estate 2,222,501 N/A Not rated
Totals 9,307,166 $
Investment type
Concentration of credit risk
The investment policy of the City contains no limitations on the amount that can be invested in any one issuer beyond the amount stipulated by the California Government Code. Investments in any one issuer (other than Mutual Funds and External Investment Pools) that represent 5% or more of the City’s investments are as follows:

Issuer Investment Type
Reported
Amounts
Federal Home Loan Bank Federal agency securities $ 1,180,753 U.S. Treasury U.S. Treasury Bills 2,123,232
City Council Agenda,

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City of Canyon Lake
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2025
- 38 -
Note 3: Cash and Investments (continued)
Custodial credit risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government 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., brokerdealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. 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: The California Government Code requires that a financial institution secure 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 market 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 deposits by pledging first deed mortgage notes having a value of 150% of the secured public deposits. As of June 30, 2025, the City had deposits of $2,333,265 with financial institutions in excess of federal depository insurance limits that were held in collateralized accounts.

Investments 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. LAIF is not registered with the Securities and Exchange Commission and is not rated. Deposits and withdrawals are made on the basis of $1 and not fair value. Accordingly, the City’s investment in this pool is measured on uncategorized inputs not defined as level 1, 2 or 3.

LAIF has reported to its participating agencies that, as of June 30, 2025, the carrying amount (at amortized cost) of the Pool was $178,938,897,012 and the estimated fair value of the pool was $179,918,091,940. The City’s proportionate share of the Pool’s market value (as determined by LAIF) as of June 30, 2025, was $11,407. Included in LAIF’s investment portfolio are collateralized mortgage obligations, mortgage-backed securities, other asset-backed securities, loans to certain state funds, and floating rate securities issued by federal agencies, governmentsponsored enterprises, and corporations.

Fair Value Measurement
The City categorizes its fair value measurements 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 asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs.

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City of Canyon Lake
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2025
- 39 -
Note 3: Cash and Investments (continued)
The City has the following recurring fair value measurements as of June 30, 2025:

Investments by Fair Value Level Total Level 1 Level 2 Level 3 Negotiable certificates of deposit 492,040 $ - $ 492,040 $ - $ U.S. Treasury Bills 2,123,232 - 2,123,232 -
Federal agency securities 1,775,399 - 1,775,399 -
Corporate debt securities 248,609 - 248,609 -
Money Market 2,433,978 - 2,433,978 -
- 7,073,258 $ 7,073,258 $ - $
Uncategorized:

Local Agency Investment Fund 11,407
Real estate 2,222,501
Totals 9,307,166 $
Fair Value Measurement Using
Note 4: Interfund Receivables, Payables and Transfers
The composition of interfund balances on June 30, 2025, is as follows:

Due to/from Other Funds:

Receivable Fund Payable Fund Amount
General Fund Rental Fund $ 80,699
The above amount owed to the General Fund is for negative cash balance on June 30, 2025, of $80,699. The negative cash amount will be repaid to the General Fund in Fiscal Year 2025-26.

Advances to/from Other Funds:

Receivable Fund Payable Fund Amount
General Fund Rental Fund $ 1,832,068
The above amount owed to the General Fund is for advances to the Rental Fund for the purchase of two buildings and is being repaid monthly, final payments are due April 14, 2055 on one advance and March 14, 2045 on the second advance.

Interfund Transfers:

Fund Receiving Transfers Fund Making Transfers Amount
Rental Fund General Fund $ 57,000
General Fund Rental Fund 24,358
$ 81,358
The transfer to the Rental Fund is for the capital improvements and the transfer to the General Fund is related to the City converting the use of a building to City offices.

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City of Canyon Lake
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2025
- 40 -
Note 5: Capital Assets
Capital asset activity for the year ended June 30, 2025 was as follows:

Beginning Ending
Balance Additions Deletions Balance
Governmental activities:

Capital assets, not being depreciated/
amortized:

Land $ 353,856 $ 146,543 $ - $ 500,399
Construction in progress 105,001 - 105,001 -
Total capital assets, not
being depreciated/amortized 458,857 146,543 105,001 500,399 Capital assets, being depreciated/
amortized:

Buildings 2,264,260 1,536,225 - 3,800,485
Machinery & equipment 981,119 394,151 - 1,375,270
Vehicles 1,586,684 - - 1,586,684
Infrastructure 10,728,255 - - 10,728,255
Lease equipment 40,474 29,107 - 69,581
Subscriptions 87,396 - 87,396 -
Total capital assets, being
depreciated/amortized 15,688,188 1,959,483 87,396 17,560,275 Less accumulated depreciation/
amortization for:

Buildings (503,886) (120,868) - (624,754)
Machinery & equipment (477,134) (123,229) - (600,363)
Vehicles (530,265) (161,559) - (691,824)
Infrastructure (6,425,004) (512,710) - (6,937,714)
Lease equipment (1,926) (9,326) - (11,252)
Subscriptions (18,936) - 18,936 -
Total accumulated depreciation/
amortization (7,957,151) (927,692) 18,936 (8,865,907)
Total capital assets, being
depreciated/amortized, net 7,731,037 1,031,791 68,460 8,694,368 Governmental activities capital
assets, net $ 8,189,894 $ 1,178,334 $ 173,461 $ 9,194,767 Depreciation/amortization expense was charged to functions of the primary government as follows:

Governmental activities:

General government $ 105,313
Public safety 297,265
Public works 525,114
Total depreciation/amortization expense - governmental activities 927,692 $ City Council Agenda,

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City of Canyon Lake
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2025
- 41 -
Note 6: Compensated Absences
Liabilities for compensated absences are typically liquidated by the General Fund.

Beginning
Balance Net Change
Ending
Balance
Due Within
One Year
Compensated Absences 190,947 $ 8,514 $ 199,461 $ 139,623 $ Note 7: Long-Term Liabilities
Long-term liability activity for the year ended June 30, 2025 was as follows:

Governmental Activities:

Beginning
Balance Additions Reductions
Ending
Balance
Due Within
One Year
Long-term debt
Direct borrowings:

PNC Equipment Finance 525,277 $ - $ 68,656 $ 456,621 $ 70,681 $ PNC Equipment Finance 154,926 - 37,376 117,550 38,265
CLPOA Loan 446,826 - 89,985 356,841 95,061
Toshiba Copier Lease - 3 38,043 - 7,116 30,927 7,354
Security Equipment Lease - 29,107 10,449 18,658 8,974
SBITA Liabilities 68,425 - 68,425 - -
Governmental activities
long-term debt 1,233,497 $ $ 29,107 $ 282,007 $ 980,597 $ 220,335 Equipment Financing – PNC No. 98994503-1
On March 26, 2021, the City entered into a ten-year financing agreement with PNC Equipment Finance LLC for the financing of a 2021 Pierce Enforcer Pumper fire truck. The initial balance of the Agreement was $719,662 with interest at 2.95%. With annual principal and interest payments of $84,151 from March 26, 2022, to March 26, 2031. The balance on June 30, 2025, is $456,621.

Equipment Financing – PNC No. 98994503-2
On March 26, 2021, the City entered into a seven-year lease agreement with PNC Equipment Finance LLC for the financing of a 2021 Firematic 500 GPM Type 6 Fire Apparatus fire truck.

The initial balance of the Agreement was $261,920 with interest at 2.38%. With annual principal and interest payments of $41,063 from March 26, 2022, to March 26, 2028. The balance on June 30, 2025, is $117,550.

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City of Canyon Lake
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2025
- 42 -
Note 7: Long-Term Liabilities (continued)
The annual debt service requirements for the equipment financing payable outstanding on June 30, 2025, are as follows:

Year Ending
June 30, Principal Interest Principal Interest Total
2026 70,681 $ 13,470 $ 38,265 $ 2,798$ $ 125,214
2027 72,766 11,385 39,176 1,887 125,214
2028 74,913 9,238 40,109 954 125,214
2029 77,122 7,029 - - 84,151
2030 79,398 4,753 - - 84,151
2031 81,741 7,164 - - 88,905
$ 456,621 $ 53,039 $ 117,550 5,639$ $ 632,849
Lease No. 98994503-1 Lease No. 98994503-2
Toshiba Copier Lease
On April 8, 2024, the City entered into a 63-month lease as Lessee for the use of Toshiba printer. An initial lease liability was recorded in the amount of $40,474. As of June 30, 2025, the value of the lease liability is $30,927. The City is required to make monthly fixed payments of $689 commencing April 8, 2024 and ending June 8, 2029. The lease has an interest rate of

0.28%. The Equipment estimated useful life was 63 months as of the contract commencement.

The value of the right to use asset as of June 30, 2025, of $40,474 with accumulated amortization of $9,635 is included with Equipment - Leased Printers on the Capital Assets Disclosure (Note 5).

The annual debt service requirements for the leases payable outstanding on June 30, 2025, are as follows:

Year Ending
June 30, Principal Interest Total
2026 7,354 $ $ 910 $ 8,264
2027 7,600 664 8,264
2028 7,855 409 8,264
2029 8,118 146 8,264
$ 30,927 $ 2,129 $ 33,056
Security Equipment Lease
On April 1, 2025, the City entered into a 36-month lease as Lessee for the use of security equipment. An initial lease liability was recorded in the amount of $29,107. As of June 30, 2025, the value of the lease liability is $18,658. The City is required to make annual fixed payments of $10,449 commencing May 1, 2025 and ending May 1, 2027. The lease has an interest rate of

7.91%. The Equipment estimated useful life was 36 months as of the contract commencement.

The value of the right to use asset as of June 30, 2025, of $29,107 with accumulated amortization of $1,617 is included Lease Equipment Disclosure (Note 5).

City Council Agenda,

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City of Canyon Lake
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2025
- 43 -
Note 7: Long-Term Liabilities (continued)
The annual debt service requirements for the leases payable outstanding on June 30, 2025, are as follows:

Year Ending
June 30, Principal Interest Total
2026 8,974 $ 1,476 $ 10,450 $
2027 9,684 766 10,450
$ 2,242 18,658 $ 20,900 $
CLPOA Loan
In July 2023, the City entered into an agreement with the Canyon Lake Property Owners Association (CLPOA) for the purchase of real estate located at 28730 Vacation Drive, Canyon Lake, CA 92587 for $1,390,000 to be used as a fire station. The City paid $900,000 down and incurred a loan of $490,000. The Loan bears interest at 5.50% per annum. The City is required to make 60 monthly payments including principal and interest of $9,360 commencing January 1, 2024, through December 2029.

The annual debt service requirements for the loan payable outstanding on June 30, 2025, are as follows:

Year Ending
June 30, Principal Interest Total
2026 95,061 $ 17,254 $ 112,315 $
2027 100,423 11,892 112,315
2028 106,089 6,226 112,315
2029 55,268 889 56,157
$ 36,261 356,841 $ 393,102 $
Business-Type Activities:

Long-term debt
Beginning
Balance Additions Reductions
Ending
Balance
Due Within
One Year
Direct borrowings:

Note Payable - CBB - $ 1,413,364 $ 1,413,364 $ - $ -$
In March of 2020, the entered into a Promissory Note with Citizens Business Bank for a variable rate Revolving Line of Credit in the amount of $2,000,000. The Line was renewed on January 29, 2025 and matures on March 11, 2026. The loan bears an interest rate based on an index which is the Citizens Business Bank Prime Rate Index. The current rate is 7.5%. During the current fiscal year the City borrowed $1,413,364 for the purchase of commercial real estate and subsequently repaid the loan during the fiscal year. The principal balance as of June 30, 2025, is $0 as the loan was repaid in full.

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City of Canyon Lake
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2025
- 44 -
Note 8: Retirement Plan
A. General Information about the Pension Plan
Plan Description
All qualified permanent and probationary employees are eligible to participate in the Public Agency Cost-Sharing Multiple-Employer Defined Benefit Pension Plan (Plan or PERF C) administered by the California Public Employees’ Retirement System (CalPERS.) The Plan consists of a miscellaneous pool and a safety pool (also referred to as “risk pools”), which are comprised of individual employer miscellaneous and safety rate plans, respectively. Plan assets may be used to pay benefits for any employer rate plan of the safety and miscellaneous pools.

Accordingly, rate plans within the safety or miscellaneous pools are not separate plans under generally accepted accounting principles. Individual employers may sponsor more than one rate plan in the miscellaneous or safety risk pools. The City sponsors two miscellaneous plans.

Benefit provisions under the Plan are established by State statute and City resolution. CalPERS issues publicly available reports that include a full description of the pension plan regarding benefit provisions, assumptions and membership information that can be found on the CalPERS’ website, at www.calpers.ca.gov.

Benefits Provided
CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full-time employment. Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for non-duty disability benefits after 5 years of service. The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost-of-living adjustments for each plan are applied as specified by the Public Employees’ Retirement Law.

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City of Canyon Lake
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2025
- 45 -
Note 8: Retirement Plan (continued)
A. General Information about the Pension Plan (continued) The Plan operates under the provisions of the California Public Employees’ Retirement Law (PERL), the California Public Employees’ Pension Reform Act of 2013 (PEPRA), and the regulations, procedures and policies adopted by the CalPERS Board of Administration. The Plan’s authority to establish and amend the benefit terms are set by the PERL and PEPRA, and may be amended by the California state legislature and in some cases require approval by the CalPERS Board.

The Plan’s provisions and benefits in effect on June 30, 2025, are summarized as follows:

Hire date
Prior to
January 1, 2013
On or after
January 1, 2013
Benefit formula 2 % @ 55 2% @ 62
Benefit vesting schedule 5 years service 5 years service Benefit payments monthly for life monthly for life
Retirement age 50 - 67+ 52 - 67+
Monthly benefits, as a % of eligible compensation 1.426% to 2.418% 1.000% to 2.500% Required employee contribution rates 7.000% 7.750%
Required employer contribution rates 11.880% 7.870%
Miscellaneous
Contributions
Section 20814(c) of the California Public Employees’ Retirement Law (PERL) 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 CalPERS’ 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 employer is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. Employer 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 contribution requirements are classified as plan member contributions. Employer contributions to the Plan for the fiscal year ended June 30, 2025 were $157,110.

B. Net Pension Liability
The City’s net pension liability for the Plan is measured as the total pension liability, less the pension plan’s fiduciary net position. The net pension liability of the Plan 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 as follows.

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City of Canyon Lake
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2025
- 46 -
Note 8: Retirement Plan (continued)
B. Net Pension Liability (continued)
Actuarial Methods and Assumptions Used to Determine Total Pension Liability The collective total pension liability for the June 30, 2024 measurement period was determined by an actuarial valuation as of June 30, 2023, with update procedures used to roll forward the total pension liability to June 30, 2024. The collective total pension liability was based on the following assumptions:

Miscellaneous
Valuation Date June 30, 2023
Measurement Date June 30, 2024
Actuarial Cost Method
Asset Valuation Method Fair Value of Assets
Actuarial Assumptions:

Discount Rate
Inflation 2.30%
Salary Increases Varies by Entry Age and Service
Mortality Rate Table (1)
Post Retirement Benefit
Increase
(1) The mortality table used was developed based on CalPERS-specific data. The rates incorporate Generational Mortality to capture ongoing mortality improvement using 80% of Scale MP-2020 published by the Society of Actuaries. For more details, please refer to the 2021 experience study report from November 2021 that can be found on the CalPERS website.

Entry Age Actuarial Cost Method

6.90%
Contract COLA up to 2.30% until Purchasing Power Protection Allowance floor on purchasing power applies, 2.30% thereafter Derived using CalPERS' membership data for all funds
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, CalPERS 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.

City Council Agenda,

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City of Canyon Lake
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2025
- 47 -
Note 8: Retirement Plan (continued)
B. Net Pension Liability (continued)
Long-term Expected Rate of Return (continued)
The expected real rates of return by asset class are as follows:

Assumed Asset
Asset Class1 Allocation Real Return1,2
Global equity - cap-weighted 30.0% 4.54%
Global equity - non-cap-weighted 12.0% 3.84%
Private equity 13.0% 7.28%
Treasury 5.0% 0.27%
Mortgage-backed securities 5.0% 0.50%
Investment grade corporates 10.0% 1.56%
High yield 5.0% 2.27%
Emerging market debt 5.0% 2.48%
Private debt 5.0% 3.57%
Real assets 15.0% 3.21%
Leverage -5.0% -0.59%
Total 100%
2 Figures are based on the 2021-22 Asset Liability Management study. 1 An expected inflation of 2.30% used for this period.

Discount Rate
The discount rate used to measure the total pension liability for PERF C 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.

Subsequent Events
There were no subsequent events that would materially affect the results presented in this disclosure.

City Council Agenda,

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City of Canyon Lake
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2025
- 48 -
Note 8: Retirement Plan (continued)
B. Net Pension Liability (continued)
Pension Plan Fiduciary Net Position
Information about the pension plan’s assets, deferred outflows of resources, liabilities, deferred inflows of resources, and fiduciary net position are presented in CalPERS’ audited financial statements, which are publicly available reports that can be obtained at CalPERS’ website, at www.calpers.ca.gov. The plan’s fiduciary net position and additions to/deductions from the plan’s fiduciary net position have been determined on the same basis used by the pension plan, which is the economic resources measurement focus and the accrual basis of accounting.

Benefits and refunds are recognized when due and payable in accordance with the terms of the plan. Investments are reported at fair value.

C. Proportionate Share of Net Pension Liability
The following table shows the Plan’s proportionate share of the net pension liability over the measurement period.

Plan Total Pension
Liability
(a)
Plan Fiduciary Net
Position
(b)
Plan Net Pension
Liability
(c ) = (a) - (b)
Balance at: 6/30/2023 (MD) $ 2,432,723 $ 1,817,060 $ 615,663 Balance at: 6/30/2024 (MD) 2,713,578 2,101,148 612,430
Net Changes during 2023-24 $ 280,855 $ 284,088 $ (3,233) Increase (Decrease)
Valuation Date (VD), Measurement Date (MD).

The City’s proportion of the net pension liability was determined by CalPERS using the output from the Actuarial Valuation System and the fiduciary net position, as provided in the CalPERS Public Agency Cost-Sharing Allocation Methodology Report, which is a publicly available report that can be obtained at CalPERS’ website, at www.calpers.ca.gov.

The City’s proportionate share of the net pension liability for the Miscellaneous Plan as of the June 30, 2023, and 2024 measurement dates was as follows:

Miscellaneous
Proportionate Share - June 30, 2023 0.01231%
Proportionate Share - June 30, 2024 0.01266%
Change - Increase (Decrease) 0.00035%
City Council Agenda,

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City of Canyon Lake
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2025
- 49 -
Note 8: Retirement Plan (continued)
C. Proportionate Share of Net Pension Liability (continued) Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate
The following presents the City’s proportionate share of the net pension liability of the Plan as of the measurement date, calculated using the discount rate of 6.9 percent, as well as what the net pension liability would be if it were calculated using a discount rate that is 1 percentage-point lower (5.9 percent) or 1 percentage-point higher (7.9 percent) than the current rate:

Discount Rate - 1%
(5.90%)
Current Discount
Rate (6.90%)
Discount Rate + 1%
(7.90%)
Miscellaneous Plan's Net
Pension Liability $ 978,601 $ 612,430 $ 311,017
Amortization of Deferred Outflows and Deferred Inflows of Resources Gains and losses related to changes in total pension liability and fiduciary net position are recognized in pension expense systematically over time.

The first amortized amounts are recognized in pension expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to pensions and are to be recognized in future pension expense.

The amortization period differs depending on the source of the gain or loss:

Net difference between
projected and actual earnings
on pension plan investments
5-year straight-line amortization
All other amounts Straight-line amortization over the expected average remaining service lives (EARSL) of all members that
are provided with benefits (active, inactive and retired) as of the beginning of the measurement period
City Council Agenda,

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City of Canyon Lake
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2025
- 50 -
Note 8: Retirement Plan (continued)
D. Pension Expense and Deferred Outflows and Deferred Inflows of Resources Related to Pensions
As of the start of the measurement period (July 1, 2023), the City’s net pension liability was $615,663. For the measurement period ending June 30, 2024 (the measurement date), the City incurred a pension expense/(income) of $176,350.

As of June 30, 2025, the City has deferred outflows and deferred inflows of resources related to pensions as follows:

Deferred Outflows
of Resources
Deferred Inflows of
Resources
Differences Between Expected and
Actual Experience 52,950 $ (2,066) $
Changes of Assumptions 15,741 -
Net Difference Between Projected and
Actual Earnings on Pension Plan
Investments 35,257 -
Change in Employer's Proportion 13,375 (890)
Difference in Actual vs. Projected Contributions 70,956 - Pension Contributions Subsequent to
Measurement Date 157,110 -
Total $ 345,389 $ (2,956)
These amounts above are net of outflows and inflows recognized in the 2023-24 measurement period expense. Contributions subsequent to the measurement date of $157,110 reported with deferred outflows of resources will be recognized as a reduction of the net pension liability in the upcoming fiscal year.

Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in future pension expense as follows:

Fiscal Year Ended
June 30:

Deferred
Outflows/(Inflows)
of Resources
2026 73,369 $
2027 109,629
2028 14,407
2029 (12,082)
Thereafter -
$ 185,323
D. Payable to the Pension Plan
At June 30, 2025, the City reported a payable of $4,634 for the outstanding amount of contributions to the pension plan required for the year then ended.

City Council Agenda,

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City of Canyon Lake
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2025
- 51 -
Note 9: Other Postemployment Benefits (OPEB)
The City has established a Retiree Healthcare Plan (HC Plan) and participates in an agent multiple employer plan defined benefit retiree healthcare plan. The Plan provides postemployment medical insurance to eligible retirees through the California Public Employees Retirement System. State statutes within the Public Employees' Retirement Law establish menus of benefit provisions as well as other requirements and may be amended by CalPERS.

The District selected an optional benefit provision specifically for health benefits in compliance with the Public Employees Medical and Hospital Care Act (PEMHCA). A separate financial report is not prepared for the HC Plan.

Employees Covered
As of the June 30, 2025 actuarial valuation, the following current and former employees were covered by the benefit terms under the HC Plan:

Active employees 30
Inactive employees or beneficiaries currently receiving benefits 1 Total 31
Contributions
The contribution requirements of the Plan are established by the City Council. On February 19, 2014, the City Council adopted Resolution No. 2014-7 to reduce the amount of employer’s contribution to the minimum amount under PEMHCA, based upon a formula established by the Public Employees Retirement System, and Resolution No. 2014-8 to confirm the contribution will be for employees with a minimum of 20 years of services to the City. For the fiscal year ended June 30, 2025, the City’s required minimum payments amounted to $4,809 in payment for premiums.

Total OPEB Liability
The City’s total OPEB liability was measured as of June 30, 2025 and the total OPEB liability used to calculate the total OPEB liability was determined by an actuarial valuation dated June 30, 2024, based on the following actuarial methods and assumptions:

Actuarial Assumptions: June 30, 2025
Discount Rate 5.20%
Inflation 2.50%
Healthcare Trend 4.00%
Salary Increases 2.75%
Mortality Rate 2021 CalPERS Mortality for Miscellaneous and School Employees 2021 CalPERS Mortality for Safety Employees
Pre-Retirement Turnover Healthcare Trend Rate 2021 CalPERS 2.0% at 62 Rates for Miscellaneous Employees, 2021 CalPERS 2.7% at 57 Rates for Fire Employees
City Council Agenda,

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City of Canyon Lake
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2025
- 52 -
Note 9: Other Postemployment Benefits (OPEB) (continued) Discount Rate
The discount rate used to measure the total OPEB liability was 5.20% percent. The projection of cash flows used to determine the discount rate assumed that City contributions will be made at rates equal to the actuarially determined contribution rates.

Changes in the Net OPEB Liability
The changes in the total OPEB liability for the HC Plan are as follows:

Total OPEB
Liability
Plan Fiduciary
Net Position
(B)
Net OPEB
Liability/(Asset)
(c)= (a) - (b)
Balance at June 30, 2024
(Measurement Date June 30, 2024) $ 865,749 $ 51,121 $ 814,628 Changes recognized for the measurement period:

Service Cost 267,629 - 267,629
Interest 39,402 2,421 36,981
Changes of assumptions (208,527) - (208,527)
Change in benefit terms - - -
Experience (gains)/losses - - -
Contributions - employer - 4,101 (4,101)
Investment gains/(losses) - 1,464 (1,464)
Benefit payments (4,101) (4,101) -
Administrative expenses - (311) 311
Net Changes 94,403 3,574 90,829
Balance at June 30, 2025
(Measurement Date June 30, 2025) $ 960,152 $ 54,695 $ 905,457 Sensitivity of the Net OPEB Liability to Changes in the Discount Rate The following presents the Net OPEB liability of the City if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate, for measurement period ended June 30, 2025:

Current
1% Decrease Discount Rate 1% Increase

4.20% 5.20% 5.20%
Net OPEB Liability 1,068,411 $ $ 905,457 $ 778,445
City Council Agenda,

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City of Canyon Lake
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2025
- 53 -
Note 9: Other Postemployment Benefits (OPEB) (continued) Sensitivity of the Net OPEB Liability to Changes in the Health Care Cost Trend Rates The following presents the Net OPEB liability of the City if it were calculated using health care cost trend rates that are one percentage point lower or one percentage point higher than the current rate, for measurement period ended June 30, 2025:

Current Healthcare
1% Decrease Cost Trend Rates 1% Increase
Net OPEB Liability 715,784 $ 905,457 $ 1,138,962 $
Change of Assumptions
The discount rate increased from 3.95% to 5.20% in the current year.

Amortization of Deferred Inflows and Outflows of Resources As of the fiscal year ended June 30, 2025 the City reported deferred outflows of resources related to OPEB from the following sources:

Deferred Deferred
Outflows Inflows
of Resources of Resources
Changes of assumptions $ 114,026 $ (305,423)
Differences between expected
and actual experience 48,757 (36,244)
Differences between projected and
actual return on assets - (1,909)
Total $ 162,783 $ (343,576)
The deferred items will be amortized and recognized in pension expense as follows:

Fiscal Year Ended
June 30:

Deferred
Outflows/(Inflows)
of Resources
2026 (13,978) $
2027 (13,978)
2028 (13,975)
2029 (13,730)
2030 (13,438)
Thereafter: (111,694)
$ (180,793)
City Council Agenda,

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City of Canyon Lake
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2025
- 54 -
Note 10: Risk Management
The City is a member of the Public Entity Risk Management Authority (PERMA), a joint powers authority formed under Section 990 of the California Government Code for the purpose of jointly funding programs of insurance coverage for its members. PERMA is comprised of thirty-one participating member agencies: twenty-one cities, four transit agencies and six special districts.

The City participates in the liability, employment practices liability, property, auto physical damage, crime and cyber liability insurance programs of PERMA. The City joined PERMA on July 1, 2011.

The liability program provides coverage up to $50 million per occurrence for personal injury, bodily injury, property damage and public officials' errors and omissions. The City has selected a $10,000 self-insured retention for this coverage and participates in risk sharing pools for losses up to $1 million, followed by PERMA's membership in the Public Risk Innovation, Solutions, and Management (PRISM) for $49 million of excess liability coverage.

The employment practices liability program provides up to $50 million coverage for employment related lawsuits, such as wrongful termination and discrimination. The City self-insures up to $25,000 per occurrence and participates in the Employment Risk Management Authority (ERMA) for losses up to $1 million. Coverage above $1 million and up to $50 million is available through PERMA’s membership in PRISM for liability coverage.

The property insurance program is group purchased under a master property insurance policy with accumulated values from all participants effecting lower rates and broader coverage for members. The program covers real property, business personal property, inland marine coverage for special mobile equipment and business interruption. Commercial property coverage is written on a replacement cost basis and all risk, eliminating the traditional commercial "named peril" policy.

The auto physical damage insurance program is also group purchased under a master insurance policy with accumulated values from all participants effecting lower rates for members. Auto physical damage coverage is written on an agreed amount basis.

The crime insurance program provides public employee dishonesty, forgery or alteration, and computer fraud coverage under a master insurance policy.

The cyber liability program provides coverage for information security & privacy liability, privacy notification costs, regulatory defense & penalties, website media content liability, cyber extortion, first party data protection & business interruption losses.

The City is insured with PERMA for workers’ compensation claims. There is no deductible requirement for this coverage.

The amount of the settlements has not exceeded the above coverage for the past three fiscal years.

City Council Agenda,

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City of Canyon Lake
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2025
- 55 -
Note 11: Commitments and Contingencies
The City has received federal and state grants for specific purposes that are subject to review and audit by the grantor agencies. Such audits could lead to requests for reimbursement to the grantor agency for expenditures disallowed under terms of the grant. City management believes such disallowances, if any, would not have a material effect on the City’s financial position.

Note 12: Fund Balance
The City has established certain fund balance designations to report the amounts in the following funds, which represent available spendable resources which are restricted, committed or assigned for a specific purpose:

Capital Non-Major
General Gas Tax Measure A Projects Governmental
Fund Fund Fund Fund Funds Total
Fund Balances:

Nonspendable:

Prepaid items 191,541 $ - $ -$ -$ $ - $ 191,541
Advances from other funds 1,832,068 - - - 1,832,068 -
Restricted for:

Public works 1,481,470 - 1,700,544 - 87,036 3,269,050
Public safety - - - - 5,335 5,335
Committed to:

Emergency reserve 862,435 - - - - 862,435
Contingency reserve 431,217 - - - - 431,217
Equipment replacement 430,380 - - - - 430,380
Assigned to:

Capital projects - - - 207,262 - 207,262
Unassigned: 3,502,288 - - - 3,502,288 -
$ 7,249,929 $ 1,481,470 $ 1,700,544 $ 207,262 $ 92,371 $ 10,731,576 Major Funds
Note 13: Jointly Governed Organization
The City, in conjunction with 4 other governmental entities, created the Southwest Communities Financing Authority (Authority) on November 30, 2004. The Authority was formed to issue bonds for the construction of an animal shelter to be used by the member agencies. The Authority’s board is comprised of one member from each participating entity. The City has the following fiscal obligations: debt repayment of bonds issued, administrative costs and operation of the animal shelter. The debt service payments and the animal shelter operating costs will be prorated to each member based on the percentage of the animals housed at the facility, on an annual basis. The administrative costs will be borne equally by all members. The City incurred costs of $133,873 for the fiscal year ended June 30, 2025, which included $17,984 in debt service costs on the bonds issued. To obtain the financial statements for the Authority please contact the Authority at 33751 Mission Trail, Wildomar, CA 92595.

City Council Agenda,

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City of Canyon Lake
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2025
- 56 -
Note 14: Changes to or Within the Financial Reporting Entity Change in Major Fund Presentation (Column A)
The Miscellaneous Grants Fund was reported as a Major Fund for Fiscal Year 2023-24, however in Fiscal Year 2024-25 the Fund did not meet the quantitative threshold for a major fund.

Adoption of a new Accounting Principle (Column B)
The City adopted new accounting guidance, GASB Statement No. 101, Compensated Absences. The adoption resulted in an increase of Compensated Absences payable of $61,297 as of June 30, 2024 and resulted in the restatement of beginning net position in the governmental activities.

June 30, 2024 Change to or Adoption of
As Previously Within the Financial New Accounting June 30, 2024 Reported Reporting Entity (A) Principal (B) As Restated Government-Wide
Governmental Activities 17,134,426 $ - $ $ (61,297) $ 17,073,129 Business-Type Activities 263,513 - - 263,513
Total Primary Government $ 17,397,939 $ - $ (61,297) $ 17,336,642 Governmental Funds
Major Funds:

General Fund $ 7,233,903 - - $ 7,233,903
Gas Tax Fund 978,761 - - 978,761
Measure A Fund 1,406,476 - - 1,406,476
Miscellaneous Grants Fund 15,818 (15,818) - -
Capital Projects Fund 1,623,309 - - 1,623,309
Nonmajor Funds 104,677 15,818 - 120,495
Total Governmental Funds $ 11,362,944 $ - $ - $ 11,362,944 Proprietary Fund
Rental Fund $ 263,513 $ - $ - $ 263,513
Fiduciary Funds
Custodial Fund $ - $ - $ - $ -
City Council Agenda,

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REQUIRED SUPPLEMENTARY INFORMATION
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City of Canyon Lake
Required Supplementary Information
Budgetary Comparison Schedule
General Fund
For the Fiscal Year Ended June 30, 2025
- 57 -
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)

REVENUES
Taxes 6,069,861 $ 6,219,486 $ 6,547,650 $ 328,164 $
Licenses and permits 2,060,000 2,050,000 1,942,349 (107,651) Fines and forfeitures 15,000 15,000 11,255 (3,745)
Intergovernmental 44,000 242,718 213,499 (29,219)
Use of money and property 200,000 204,753 267,005 62,252 Other 32,000 87,000 144,118 57,118
Total revenues 8,420,861 8,818,957 9,125,876 306,919

EXPENDITURES
Current:

General government 2,498,933 3,032,973 3,163,497 (130,524) Public safety 4,572,087 4,742,935 4,600,123 142,812
Public works 173,500 234,600 206,499 28,101
Community development 766,734 588,104 481,102 107,002
Capital outlay - 400,000 400,000 -
Debt service:

Principal 213,582 213,582 213,582 -
Interest and fiscal charges 41,512 41,512 41,512 -
Total expenditures 8,266,348 9,253,706 9,106,315 147,391 Excess (deficiency) of revenues
over (under) expenditures 154,513 (434,749) 19,561 454,310

OTHER FINANCING SOURCES
Transfers in - - 24,358 24,358
Transfers out - (60,000) (57,000) 3,000
Proceeds from lease issuance - 29,107 29,107
Total other financing sources - (60,000) (3,535) 56,465 Net change in fund balance 154,513 (494,749) 16,026 510,775 Fund balance, beginning of year 7,233,903 7,233,903 7,233,903 - Fund balance, end of year $ 7,388,416 $ 6,739,154 $ 7,249,929 $ 510,775 Budgeted Amounts
City Council Agenda,

Page 134 ends

City of Canyon Lake
Required Supplementary Information
Budgetary Comparison Schedule
Gas Tax Special Revenue
For the Fiscal Year Ended June 30, 2025
- 58 -
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)

REVENUES
Intergovernmental $ 594,820 $ 594,820 $ 619,158 $ 24,338 Use of money and property 4,200 4,200 45,073 40,873
Total revenues 599,020 599,020 664,231 65,211

EXPENDITURES
Current:

Public works 234,705 234,705 161,522 73,183
Capital outlay 120,000 120,000 - 120,000
Total expenditures 354,705 354,705 161,522 193,183
Net change in fund balance 244,315 244,315 502,709 258,394 Fund balance, beginning of year 978,761 978,761 978,761 - Fund balance, end of year $ 1,223,076 $ 1,223,076 $ 1,481,470 $ 258,394 Budgeted Amounts
City Council Agenda,

Page 135 ends

City of Canyon Lake
Required Supplementary Information
Budgetary Comparison Schedule
Measure A Fund
For the Fiscal Year Ended June 30, 2025
- 59 -
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)

REVENUES
Intergovernmental 285,000 $ 285,000 $ 281,427 $ (3,573) $ Use of money and property 4,500 4,500 56,826 52,326
Total revenues 289,500 289,500 338,253 48,753

EXPENDITURES
Current:

Capital outlay 76,150 76,150 44,185 31,965
Total expenditures 76,150 76,150 44,185 31,965
Net change in fund balance 213,350 213,350 294,068 80,718 Fund balance, beginning of year 1,406,476 1,406,476 1,406,476 - Fund balance, end of year $ 1,619,826 $ 1,619,826 $ 1,700,544 $ 80,718 Budgeted Amounts
City Council Agenda,

Page 136 ends

City of Canyon Lake
Required Supplementary Information
Schedule of the Local Government’s Proportionate Share of the Plan’s Net Pension Liability and Related Ratios as of the Measurement Date Last 10 Years
For the Fiscal Year Ended June 30, 2025
- 60 -
Measurement Date
Employer's Proportion
of the Collective Net
Pension Liability1
Employer's
Proportionate Share of
the Collective Net
Pension Liability
Employer's Covered
Payroll
Employer's
Proportionate Share of
the Collective Net
Pension Liability as a
percentage of the
Employer's Covered
Payroll
Pension Plan's
Fiduciary Net Position
as a percentage of the
Total Pension Liability
6/30/2015 0.00332% 228,126 $ $ 241,941 94.29% 82.84%
6/30/2016 0.00369% 319,581 257,514 124.10% 77.98%
6/30/2017 0.00384% 380,550 408,132 93.24% 77.26%
6/30/2018 0.00389% 375,028 367,763 101.98% 78.15%
6/30/2019 0.00408% 417,619 399,181 104.62% 76.64%
6/30/2020 0.00421% 458,117 514,343 89.07% 75.42%
6/30/2021 0.00468% 252,921 668,955 37.81% 87.32%
6/30/2022 0.01173% 548,927 839,744 65.37% 74.89%
6/30/2023 0.01231% 615,663 1,065,824 57.76% 74.69%
6/30/2024 0.01266% 612,430 1,272,099 48.14% 77.43%
1 Proportion of the net pension liability represents the plan's proportion of PERF C, which includes both the Miscellaneous and Safety Risk Pools excluding the 1959 Survivors Risk Pool.

City Council Agenda,

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City of Canyon Lake
Required Supplementary Information
Schedule of Plan Contributions
Last 10 Years
For the Fiscal Year Ended June 30, 2025
- 61 -
Fiscal Year
Actuarially
Determined
Contribution
Contributions in
Relation to the
Actuarially
Determined
Contribution
Contribution
Deficiency (Excess)
Employer's Covered
Payroll
Contributions as a
Percentage of
Covered Payroll
2015-16 28,593 $ (28,593) $ - $ 257,514 $ 11.10%
2016-17 36,602 (36,602) - 408,132 8.97%
2017-18 38,386 (38,386) - 367,763 10.44%
2018-19 49,184 (49,184) - 399,181 12.32%
2019-20 66,387 (66,387) - 514,343 12.91%
2020-21 82,957 (82,957) - 668,955 12.40%
2021-22 101,915 (101,915) - 839,744 12.14%
2022-23 125,961 (125,961) - 1,065,824 11.82%
2023-24 139,716 (139,716) - 1,272,099 10.98%
2024-25 157,110 (157,110) - 1,424,093 11.03%
Notes to Schedule:

Change in Benefit Terms: There were no changes to benefit terms that applied to all members of the Public Agency Pool. Additionally, the figures above do not include any liability impact that may have resulted from Golden Handshakes that occurred after the June 30, 2021 valuation date, unless the liability impact is deemed to be material to the Public Agency Pool.

City Council Agenda,

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City of Canyon Lake
Required Supplementary Information
Schedule of Changes in the Net OPEB Liability and Related Ratios as of the Measurement Date
Last 10 Years*
For the Fiscal Year Ended June 30, 2025
- 62 -
Measurement Period 2018 2019 2020 2021 2022 2023 2024 2025 Total OPEB Liability
Service Cost $ 21,629 22,224$ 24,506$ 84,100$ 87,584$ $ 201,263 200,124 $ $ 267,629 Interest on the Total OPEB Liability 4,592 5,011 6,109 7,445 9,241 18,954 26,986 39,402 Actual and expected experience difference - - - - - - - - Changes in assumptions - 162,794 7,672 (115,651) 4,165 (11,912) (19,356) (208,527) Experience (gains)/losses - - (54,994) - 42,480 - 20,199 - Changes in benefit terms - - - 27,522 - - - -
Benefit payments (4,412) (4,588) (4,733) (3,972) (4,139) (3,536) (4,094) (4,101) Net change in Total OPEB Liability 21,809 30,319 133,682 91,738 47,037 203,630 224,998 94,403 Total OPEB Liability - beginning 112,536 134,345 164,664 298,346 390,084 437,121 640,751 865,749 Total OPEB Liability - ending $ 164,664 134,345 $ 298,346 $ 390,084$ 437,121$ 640,751 $ 865,749 $ $ 960,152 Plan Fiduciary Net Position
Contribution - employer $ - $ - $ - $ - $ - $ 54,094 - $ $ 4,101 Investment gains/(losses) - - - - - - 1,232 3,885
Benefit payments - - - - - - (4,094) (4,101)
Administrative expense - - - - - - (111) (311)
Net change in Plan Fiduciary Net Position - - - - - 51,121 - 3,574 Plan Fiduciary Net Position - beginning - - - - - - 51,121 - Plan Fiduciary Net Position - ending (b) $ - $ - $ - $ - $ - $ - $ 51,121 $ 54,695 Total OPEB Liability - ending $ 164,664 134,345 $ 298,346 $ 390,084$ 437,121$ 640,751 $ 814,628 $ $ 905,457 Plan fiduciary net position as a percentage
of the total OPEB liability 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 5.90% 5.70% Covered payroll $ 371,707 300,891 $ 483,844 $ 607,262$ 633,633$ 992,399 $ $ 1,245,627 1,170,253 $ Total OPEB liability as a percentage of
covered employee payroll 44.65% 44.30% 61.66% 64.24% 68.99% 64.57% 69.61% 72.69% Notes to schedule:

Contributions are not based on a measure of pay for the OPEB plan, therefore covered employee payroll is used.

The following assumptions were changed from the prior valuation:
* Fiscal Year 2017-18 was the first year of implementation, additional years information will be added as it becomes available.

Discount rate increased to 5.20% from 3.95% by using the BondBuyer 20 Index.

City Council Agenda,

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City of Canyon Lake
Required Supplementary Information
Schedule of OPEB Plan Contributions
For the Fiscal Year Ended June 30, 2025
- 63 -
Fiscal Year Ended June 30 2024 2025
Contractually or Statutorily Determined Contributions (C/S DC) $ 54,094 $ 4,740 Contributions in relation to the C/S DC (54,094) (4,101) Contribution deficiency/(excess) $ - $ 639
Covered payroll $ 1,170,253 $ 1,245,627
Contribution as a percentage of covered payroll 4.62% 0.33% Notes to schedule:

None
Methods and assumptions used to determine contributions:

N/A
* Fiscal Year 2017-18 was the first year of implementation.

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- 64 -

NONMAJOR GOVERNMENTAL FUNDS
Special Revenue Funds
Miscellaneous Grants Fund – This fund is used to account for specific revenue resources that are restricted or committed to expenditure for specific purposes other than capital projects.

AQMD – This fund is used to account for the receipt of AB 2766 funds to implement programs that reduce air pollution from motor vehicles. Local Governments receive forty percent of the motor vehicle registration fee surcharge of $4 per vehicle collected by the Department of Motor Vehicles.

Law Enforcement Grants – This fund is used to account for the Supplemental Law Enforcement Grant funds used for front line law enforcement services, and for the California Law Enforcement Equipment Program for the purchase of equipment to assist law enforcement to prevent and reduce crime.

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City of Canyon Lake
Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2025
- 65 -
Total
Law Non-major
Miscellaneous Enforcement Governmental
Grants Fund AQMD Grants Funds
ASSETS
Cash and investments - $ $ 83,486 $ 5,335 $ 88,821
Receivables:

Intergovernmental - 3,550 - 3,550
Total assets $ - $ 87,036 $ 5,335 $ 92,371

FUND BALANCES
Fund Balances:

Restricted for:

Public works $ - $ 87,036 $ - $ 87,036
Public safety - - 5,335 5,335
Total fund balances $ - $ 87,036 $ 5,335 $ 92,371
Special Revenue Funds
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City of Canyon Lake
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds
For the Fiscal Year Ended June 30, 2025
- 66 -
Total
(Formerly Major) Law Non-major
Miscellaneous Enforcement Governmental
Grants Fund AQMD Grants Funds

REVENUES
Intergovernmental 154,731 $ 14,221 $ 194,663 $ $ 363,615 Use of money and property - 2,810 - 2,810
Total revenues 154,731 17,031 194,663 366,425

EXPENDITURES
Current:

General government 900 - - 900
Public safety 148,883 - 224,000 372,883
Capital Outlay 20,766 - - 20,766
Total expenditures 170,549 - 224,000 394,549
Net change in fund balances (15,818) 17,031 (29,337) (28,124) Fund balances, beginning of year, as
previously reported - 70,005 34,672 104,677
Change within financial reporting entity 15,818 - - 15,818 Fund Balances, beginning of year, restated 15,818 70,005 34,672 120,495 Fund balances, end of year $ - $ 87,036 $ 5,335 $ 92,371 Special Revenue Funds
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LSLCPAS.COM
November 18, 2025
To the Honorable Mayor and Members of City Council
City of Canyon Lake, California
We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of City of Canyon Lake, California (hereafter, the City) for the year ended June 30, 2025. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards, generally accepted auditing standards and Government Auditing Standards, as well as certain information related to the planned scope and timing of our audit.

We have communicated such information in our letter to you dated August 18, 2025. Professional standards also require that we communicate to you the following information related to our audit.

Significant Audit Matters
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City are described in Note 1 to the financial statements. As described in Note 1 to the financial statements, the City changed accounting policies related to compensated absences by adopting Statement of Governmental Accounting Standards (GASB Statement) No. 101, Compensated Absences, in fiscal year 2025.

Accordingly, the cumulative effect of the accounting change as of the beginning of the year is reported in the Statement of Activities. We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period.

Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s 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 significantly from those expected. The most sensitive estimates affecting the City’s financial statements were:

Management’s estimates of the net pension liability and net other post-employment benefits liability are based on actuarial valuations. We evaluated the methods, assumptions, and data used to develop the net pension liability and net other post-employment benefits liability in determining that it is reasonable in relation to the financial statements taken as a whole.

The financial statement disclosures are neutral, consistent, and clear.

Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing our audit.

Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. We are pleased to report that no misstatements were identified during the course of our audit.

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To the Honorable Mayor and Members of the City Council
City of Canyon Lake, California
Disagreements with Management
For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditors’ report. We are pleased to report that no such disagreements arose during the course of our audit.

Management Representations
We have requested certain representations from management that are included in the management representation letter dated November 18, 2025.

Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to the City’s financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants.

Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the City’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention.

Other Matters
We applied certain limited procedures to management’s discussion and analysis, the budgetary comparison schedules for the General Fund and major special revenue funds, and the required pension and other post-employment benefits schedules, which are required supplementary information (RSI) that supplement the basic financial statements. Our procedures consisted of inquiries of management regarding 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 did not audit the RSI and do not express an opinion or provide any assurance on the RSI.

We were engaged to report on the combining and individual fund statements and schedules which accompany the financial statements but are not RSI. With respect to this supplementary information, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves.

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To the Honorable Mayor and Members of the City Council
City of Canyon Lake, California
Future GASB Pronouncements
The following Government Accounting Standards Board (GASB) pronouncements will be effective for the following fiscal years’ audits and should be reviewed for proper implementation by management:

Fiscal Year 2025-2026
GASB Statement No. 103, Financial Reporting Model Improvements.

GASB Statement No. 104, Disclosure of Certain Capital Assets.

Future Projects
Comprehensive Project, Revenue and Expense Recognition.

Major Project, Going Concern Uncertainties and Severe Financial Stress.

Major Project, Infrastructure Assets.

Practice Issue, Subsequent Events.

Restriction on Use
This information is intended solely for the information and use of City Council and management of the City and is not intended to be, and should not be, used by anyone other than these specified parties.

Very truly yours,
Irvine, California
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LSLCPAS.COM
INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON

COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN

ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
To the Honorable Mayor and Members of the City Council
City of Canyon Lake, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Canyon Lake, California (hereafter, 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 November 18, 2025.

Report on Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City’s internal control over financial reporting (internal control) 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 or significant deficiencies may exist that were not identified.

Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements.

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.

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To the Honorable Mayor and Members of the City Council
City of Canyon Lake, California
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 in considering the City’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Irvine, California
November 18, 2025
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ITEM NO. 7

Receive and file the 2026 City Events Calendar.

Background/Analysis:

The City of Canyon Lake prepares an annual City Events Calendar to provide the City Council, staff, and the community with an overview of events that are planned, organized, and administered by the City throughout the calendar year. The calendar serves as an internal planning and coordination tool to support scheduling, staffing, resource allocation, and public communication efforts.

The 2026 City Events Calendar reflects the City's continued commitment to community engagement and civic connection through a variety of City-led programs and events. These events are designed to encourage resident participation, promote community pride, and provide opportunities for residents to connect directly with City leadership and staff.

Event dates, locations, and program details may be adjusted as necessary based on operational needs, staffing availability, weather conditions, or City Council direction. Presenting the 2026 City-Hosted Events Calendar as a receive-and-file item allows the City Council to review anticipated City-led events for the upcoming year and remain informed of planned community programming while maintaining flexibility in event planning and implementation.

Fiscal Impact Yes/No:No
Additional Fiscal Information:

There is no fiscal impact associated with receiving and filing the 2026 City Events Calendar. Costs associated with individual City events have been addressed in the current City Events budget.

Attachments:
1 - 2026 City Events Calendar
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2026 Calendar of City Events

1. Fire Station Open House
Saturday, May 2, 2026 | 10:00 a.m. – 1:00 p.m.

2. Citywide Clean-Up
Saturday, May 16, 2026 | 8:00 a.m. – 2:00 p.m.

3. National Night Out
Tuesday, August 4, 2026 | Time TBD

4. 9/11 Remembrance Ceremony
Friday, September 11, 2026 | 8:30 a.m. – 9:30 a.m.

5. Battle of the Cities Golf Tournament
Friday, October 2, 2026 | 7:30 a.m. – 1:00 p.m.

6. State of the City Address
Thursday, October 8, 2026 | 5:00 p.m. – 7:00 p.m.

7. Pumpkin Bash
Thursday, October 22, 2026 | 4:00 p.m. – 9:00 p.m.

8. Veterans Day Patriotic Market
Wednesday, November 11, 2026 | 1:00 p.m. – 4:00 p.m.

9. Annual Turkey Drive
Thursday, November 19, 2026 | 2:00 p.m. – 4:00 p.m.

10. Donuts with Santa
Saturday, December 19, 2026 | 10:00 a.m. – 12:00 p.m.

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ITEM NO. 8

CITY COUNCIL STAFF REPORT
TO: Honorable Mayor and Members of the City Council
FROM: Arron Brown, City Manager
BY: Jeff LaTendresse, Fire Chief
DATE: 02/17/2026
SUBJECT: Receive and File - 2025 Canyon Lake Fire Department Annual Report Recommendation:

Receive and file the 2025 Canyon Lake Fire Department Annual Report.

Background/Analysis:

The Canyon Lake Fire Department prepares an annual report to document fire department statistics and major achievements. Attached is the Annual Report for 2025.

This report will be available for public view at City Hall and available on the City's Fire Department webpage.

Fiscal Impact Yes/No:No
Additional Fiscal Information:

There is no fiscal impact.

Attachments:
1 - 2025 Canyon Lake Fire Department Annual Report
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Canyon Lake
Fire
Department
2025
Annual Report
City Council Agenda,

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Council Member
Jeremy Smith
2025 City Council
Mayor Mayor Pro Tem
Council Member
Mark Terry
Dale Welty
Kasey Castillo
Council Member
Josh Steeber
City Manager City Clerk
Arron Brown Sheryl Garcia
2025 City Staff
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A Message From
Your Fire Chief
On behalf of the men and women of the
Canyon Lake Fire Department, I am
proud to present our Annual Report for
2025. This report reflects not only the
statistics for the year, but the
dedication, professionalism, and
commitment to service that define the
Canyon Lake Fire Department each and
every day. This report highlights our
activities as we completed four years of
service to the City of Canyon Lake.

Throughout 2025, our Firefighters responded to emergencies with courage and compassion, often under challenging and
unpredictable conditions. Whether answering calls for fire suppression, emergency medical services, fire prevention activities, or community outreach, our personnel remained steadfast in their mission to protect life, property, and the community we serve.

None of this would be possible without the support of our elected officials, city leadership, automatic and mutual aid partners, and residents and business members of Canyon Lake. Your trust and support allow us to carry out our mission with pride. I am especially grateful to the families of our firefighters, whose patience and sacrifice make this service possible.

As we look ahead to 2026, the Canyon Lake Fire Department remains committed to continuous improvement, fiscal
responsibility, and service excellence. We will continue to adapt, train, and serve our community with P.R.I.D.E. and meet the growing needs of the City of Canyon Lake.

Thank you for your continued support. It is an honor
to serve as your Fire Chief. Jeff LaTendresse
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Our Mission
The Mission of the Canyon Lake Fire Department
is to sustain and enhance quality of life for the community by protecting the lives, environment, and property of those who live, work, visit, and invest in our City, with efficient and cost-effective emergency response, fire prevention, and public education, while being active participants in the community we serve.

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1 2
3 4
5 OUR VISION
The Canyon Lake Fire Department will continually
strive to achieve new and innovative ways of
providing all-risk emergency services while being a
positive partner with the community we serve. We
aim to accomplish this by each member of the Fire
Department living up to our five core values, and
doing so with P.R.I.D.E.

Core Values
"P.R.I.D.E."
Professionalism: We shall always maintain our
professional image; on emergency incidents, in the
community, and at the fire station.

Respect: We believe in the rights and dignity of
every person.

Integrity: We recognize that trustworthiness is the
most important aspect granted by our community
and it is the foundation of our service.

Dependability: We will be there for the community,
and not just during emergency incidents; we will
engage with the public and endeavor to be active
and reliable members of the Canyon Lake Family.

Excellence: We will deliver quality services to the
City of Canyon Lake while keeping in mind the
regional support we mutually share with our
neighboring communities.

Our Vision
The Canyon Lake Fire Department will continually
strive to achieve new and innovative ways of
providing all-risk emergency services while being a
positive partner with the community we serve. We
aim to accomplish this by each member of the Fire
Department living up to our five core values, and
doing so with P.R.I.D.E.

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The Canyon Lake Team
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MEET YOUR

CANYON LAKE
FIREFIGHTERS!
2025
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Years in Review
2025 2024 2023
0 200 400 600 800 1000
Rescue/EMS
Fire Responses
Other Incidents
Service Calls
1,120 Emergency
Responses
825
731
782
43 43
39 125
200
232
118
87 96
2024 Total: 1,112
2023 Total: 1,089
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GETTING THERE IS
THE FIRST PART!
0:55
Average
Turnout
Time
5:17
Average
Travel
Time
8:30
90% Fractile
Response
Time
6:06
Average
Response
Time
1:31
90% Fractile
Turnout
Time
7:25
90% Fractile
Travel
Time
0:54
Average
Turnout
Time
5:12
Average
Travel
Time
8:34
90% Fractile
Response
Time
5:57
Average
Response
Time
1:35
90% Fractile
Turnout
Time
7:34
90% Fractile
Travel
Time
2025 2024 2023 0:48
Average
Turnout
Time
5:17
Average
Travel
Time
05:59
Average
Response
Time
1:24
90% Fractile
Turnout
Time
7:30
90% Fractile
Travel
Time
8:35
90% Fractile
Response
Time
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Push Harder Than
Yesterday, If You Want A
Different Tomorrow!
Canyon Lake Firefighters completed over
2,424 hours of training.

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MEET THE FIRE
FLEET!
2025
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Automatic and
Mutual Aid
Canyon Lake Firefighters responded to 117
incidents outside the City. Riverside County/
Cal Fire, Murrieta, and Corona responded to
73 incidents inside the City.

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Canyon Lake
Firefighters Association Donated donuts to National Day of Prayer Certificate of Appreciation
Canyon Lake Firefighters Association Golf Cart Show
Donated to the Canyon Lake Jr. Women’s Club Annual Charity Golf Tournament Association booth for Fiesta Days
“2025 was a year of progress and purpose
for the Canyon Lake Firefighters
Association. Guided by our mission and
supported by the City and community, we
strengthened our foundation and remain
dedicated to serving Canyon Lake with
excellence in the years ahead”
Canyon Lake Firefighters Association
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RESERVE

FIREFIGHTER PROGRAM
The Canyon Lake Fire Department is funded for up to 15
Reserve Firefighters. All Reserves must have graduated
from a State Certified Fire Academy, have an EMT
License, and work at least two 24 hours shifts per month and attend monthly training.

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Conducted a three-day CERT Training Program.

Implemented the use of Table Command for Chief Officers.

Trained two Department Fire Investigators.

Participated in EVMWD’s Water Leadership Program.

Provided a Fire Engine for the March ARB Air Show.

Participated in County-Wide Wildland Fire training.

Completed a complete remodel of the Fire Station kitchen.

Participated in Strike Team Responses.

Hurst Fire - Los Angeles County.

Eaton Fire - Los Angeles County.

Implemented “Alert Canyon Lake” for emergency
notification of residents during a disaster.

Hired two new Captains, two Engineers, two Firefighters, eight Reserve Firefighters, and an Office Assistant.

All personnel completed live fire training in Corona.

Looking Back
on 2025
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FIREFIGHTER AND

RESERVE OF THE YEAR
Fire Engineer/
Paramedic
Jonathan “Jon”
Sasse
Reserve
Firefighter
Michael
Longobardo
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WE ARE A PART OF THE COMMUNITY WE SERVE
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JOIN CANYON
LAKE CERT!
HOW TO JOIN.

WHAT IS CERT?
The Community Emergency Response Team (CERT)
program educates people about disaster preparedness for hazards that may impact their area.

CERT Meetings are held every 3rd Thursday of each month at City Hall at 6:00 p.m. To join the email subscription list for monthly meeting reminders and future trainings visit the Canyon Lake Fire Department website.

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Stay Connected
With Us!
Annual Report
Canyon Lake Fire Department
2025
951-335-9414
28730 Vacation Drive
Canyon Lake, CA 92587
https://www.instagram.com
/canyonlakefire/
https://www.facebook.com/
CanyonLakeFire
https://www.canyonlakeca.
gov/clfd/
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ITEM NO. 9

CITY COUNCIL STAFF REPORT
TO: Honorable Mayor and Members of the City Council
FROM: Arron Brown, City Manager
BY: Madalyne Gonzales, Community Engagement Coordinator DATE: 02/17/2026
SUBJECT: Consideration of a Resolution Adopting an Advertising Policy and Fee Schedule for the City-Owned Monument Sign at 31790 Railroad Canyon Road
Recommendation:
(1) Open the public hearing and take public testimony; and (2) adopt Resolution No. 2026-11 approving the Advertising Policy and establishing the fee schedule for advertising on the City-owned monument sign.

Background/Analysis:

In December 2025, the monument sign located in the Canyon Lake Towne Center was donated to the City of Canyon Lake, transferring ownership of the sign to the City. More recently, as part of formalizing City records and operations, the monument sign was assigned the address 31790 Railroad Canyon Road, and the City assumed full operational responsibility for its use and administration.

Prior to the City's acquisition, advertising fees for the 2025-2026 period were established and administered by the former owner, West Coast Outdoor Messaging, Inc. The proposed fee schedule reflects the same fee structure previously charged during that period and is being formally adopted by the City to ensure continuity, transparency, and City oversight.

The monument sign includes two distinct advertising components: (1) digital advertising content displayed on a rotating basis, and (2) permanent panel signage occupied by long-term tenants.

Permanent panel signage is reserved exclusively for tenants located within the Canyon Lake Towne Center, consistent with the long-term nature and fixed placement of those panels. Digital advertising on the monument sign is open to any business, organization, or entity that meets the eligibility criteria and content standards established in the adopted Advertising Policy, regardless of physical location, subject to availability and administrative approval.

Following the City's assumption of ownership and operational control, staff identified an opportunity to formalize the advertising program by adopting an Advertising Policy and establishing an advertising fee schedule to guide the use, administration, and long-term sustainability of the sign. A key objective of this effort is to ensure the sign remains current, well-maintained, and refreshed, while continuing to provide value to local businesses and serving as a well-presented community asset.

The proposed Advertising Policy is designed to provide consistency and transparency by outlining eligibility requirements, content standards, display parameters, and administrative procedures governing the use of the City-owned monument sign. Adoption of the policy ensures the program is managed fairly and consistently while protecting City assets and aligning advertising content with community standards.

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In conjunction with the proposed policy, Resolution No. 2026-11 establishes the official Advertising Fee Schedule, including pricing and tier structures for digital marquee advertising and an annual fee for permanent panel signage.

The resolution further establishes that the adopted fees apply through the remainder of calendar year 2026, with a single, non-recurring fee adjustment of ten percent (10%) to all such fees effective January 1, 2027, in order to support cost recovery and the ongoing operation of the program.

Together, adoption of the Advertising Policy and fee schedule will modernize the advertising program, simplify administration, and create a scalable framework that supports the long-term sustainability and refresh of the City-owned monument sign.

Fiscal Impact Yes/No:No
Additional Fiscal Information:

Approval of Resolution No. 2026-11 establishes the Advertising Fee Schedule for the City-owned monument sign. The fees are intended to cover costs for program administration, maintenance, operations, and future upgrades.

Revenue from digital advertising and permanent panel signage will go into the Enterprise Fund to support the ongoing operation and management of the monument sign.

This fee schedule provides a cost-recovery framework, does not authorize new spending, and is not expected to have an immediate fiscal impact. Any related budget adjustments will be addressed through the City's mid-year budget.

Attachments:
1 - Resolution
2- Policy
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RESOLUTION NO. 2026-11

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CANYON LAKE,

CALIFORNIA, ADOPTING A MONUMENT SIGN ADVERTISING POLICY AND

ESTABLISHING AN ADVERTISING FEE SCHEDULE FOR THE CITY-OWNED MONUMENT SIGN LOCATED AT 31790 RAILROAD CANYON ROAD
WHEREAS, in December 2025, a monument sign located in the Canyon Lake Towne Center was donated to the City of Canyon Lake, thereby becoming a City-owned asset; and WHEREAS, prior to the City’s acquisition of the monument sign, advertising fees for the 2025–2026 period were established and administered by the former owner, West Coast Outdoor Messaging, Inc.; and
WHEREAS, the advertising fees adopted herein reflect the same fee structure previously charged during the 2025–2026 period under prior private ownership and are being formally adopted by the City to ensure continuity, transparency, and City oversight; and WHEREAS, the City-owned monument sign includes both digital advertising display capabilities and permanent panel signage occupied by long-term tenants; and WHEREAS, the City Council desires to ensure that advertising on the City-owned monument sign is administered in a manner that is fair, transparent, fiscally responsible, and consistent with community standards; and
WHEREAS, the City has developed a Monument Sign Advertising Policy to establish eligibility criteria, content standards, display parameters, term lengths, and administrative procedures governing advertising on the monument sign; and
WHEREAS, the City desires to adopt a clear and consistent fee schedule for advertising on the monument sign that supports cost recovery for administration, maintenance, operations, and future upgrades; and
WHEREAS, the City Manager is authorized to revise and update the Monument Sign Advertising Policy and administratively adjust advertising fees as necessary to respond to operational costs, market conditions, maintenance needs, and program sustainability; and WHEREAS, the City Council desires to establish advertising fees applicable through the remainder of calendar year 2026, with a single, non-recurring fee adjustment of ten percent (10%) to all such fees taking effect on January 1, 2027, in order to support cost recovery and the ongoing operation of the City-owned monument sign advertising program; and WHEREAS, the proposed advertising program is structured to provide tiered digital advertising options based on overall visibility and time on the sign, rather than fixed guaranteed rotations, while also maintaining a separate annual fee for permanent panel signage; and City Council Agenda,

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WHEREAS, the City Council finds the proposed Monument Sign Advertising Policy and Advertising Fee Schedule to be fair, reasonable, and necessary to ensure consistent administration, protect City assets, and support the long-term sustainability of the monument sign.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CANYON LAKE DOES RESOLVE AS FOLLOWS:

Section 1. The above recitals are true and correct and are incorporated herein by reference.

Section 2. The City Council hereby adopts the Monument Sign Advertising Policy governing the use of the City-owned monument sign located at 31790 Railroad Canyon Road, establishing uniform standards for eligibility, content review, display parameters, agreement terms, and administrative oversight, attached as Exhibit A hereto.

Section 3. The following fees are hereby adopted as the official City of Canyon Lake Advertising Fee Schedule for digital advertising on the City-owned monument sign, effective immediately upon adoption of this Resolution:

Digital Advertising Tier Description Estimated Display Frequency* Monthly Fee Annual Fee Basic Standard rotation Approximately 8–10 plays per
hour $85 $1,020
Standard Enhanced rotation Approximately 11–14 plays per hour $115 $1,380
Premium High visibility rotation Approximately 16–20 plays per hour $160 $1,920
Premium + Highest visibility
rotation
Approximately 20–24 plays per
hour $229 $2,748
Section 4. The following fee is hereby adopted as the official annual maintenance fee for permanent panel signage located on the City-owned monument sign:

Fee Type Amount
Standard Permanent Panel – Annual Maintenance Fee $575
Large Permanent Panel – Annual Maintenance Fee $2,875
*The Large Permanent Panel fee reflects the proportional size and capacity of the panel area relative to standard permanent panels.

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In addition to the annual maintenance fee, any new permanent panel installation shall be subject to a one-time startup cost equal to the actual cost incurred by the City for fabrication, production, and installation of the panel, including materials and labor. Such cost shall be paid in full prior to installation.

Section 5. Revenue generated from digital marquee advertising fees and permanent panel signage fees shall be deposited into the appropriate Enterprise Fund and used to support the operation, maintenance, administration, and future improvements of the City-owned monument sign.

Section 6. The City Manager, or designee, shall have the authority to administer and interpret the Monument Sign Advertising Policy and Fee Schedule, execute advertising agreements, manage display scheduling, and impose reasonable conditions necessary to protect City property and ensure consistent program operation.

Section 7. The provisions of this Resolution are severable and if any provision, clause, sentence, word or part thereof is held illegal, invalid, unconstitutional, or inapplicable to any person or circumstances, such illegality, invalidity, unconstitutionality, or inapplicability shall not affect or impair any of the remaining provisions, clauses, sentences, sections, words or parts thereof of the Resolution or their applicability to other persons or circumstances.

Section 8. That the City Clerk shall certify to the adoption of this Resolution and that the same shall be in full force and effect.

Section 9. This Resolution shall take effect immediately upon its adoption.

PASSED, APPROVED AND ADOPTED this 17th day of February 2026, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

Jeremy Smith, Mayor
ATTEST & CERTIFIED:

Sheryl L. Garcia, MMC, CPM
City Clerk
City Council Agenda,

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Exhibit “A”
Monument Sign
Advertising Policy
(to be attached)
City Council Agenda,

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1 Monument Sign Advertising Policy
Policy Information
Policy Number: 23
Adoption Date: 2/17/2026
Effective Date: 2/17/2026
Lead Department: Community Development
Revision/Amendment History
Date Action
(Adopted /
Amended /
Rescinded)
Resolution # /
Approval
Notes
2/17/2026 Adopted R-2026-11 –
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2 City of Canyon Lake
Monument Sign Advertising Policy
Intent and Purpose
The City of Canyon Lake ("City") owns and operates a monument sign, including digital advertising display components, as part of the City's economic development program to encourage local business activity, provide public information, enhance public safety, and other governmental purposes.

This Policy is intended to set forth that advertising displayed on the City-owned monument sign is a means by which the City communicates messages selected and conveyed by the City itself. The City does not intend to create, and does not create, a public forum, designated public forum, or limited public forum for private expressive activity. All content displayed on the Digital Marquee constitutes government speech within the meaning of applicable federal and state law.

This policy may be amended by the City Manager at any time to reflect changes in technology, applicable law, organizational needs, or operational considerations.

Definitions
a. City Manager shall mean the City Manager of the City of Canyon Lake or the City Manager's designee.
b. Designee shall mean an individual authorized by the City Manager to carry out duties under this policy.
c. Monument Sign shall mean the City-owned monument sign located at the Canyon Lake Towne Center, including any digital display, marquee, or other advertising components owned and operated by the City of Canyon Lake.
d. Government Speech shall mean expression that is selected, approved, controlled, and conveyed by the City in furtherance of City objectives, and that reflects messages the City has adopted as its own.
e. Message shall mean any text, graphic, image, or multimedia content, including paid advertising content, displayed on any portion of the monument sign.

Advertising Components
The monument sign includes two distinct advertising components:

1. Digital Advertising Displays, which display advertising content on a rotating basis; and City Council Agenda,

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3 2. Permanent Panel Signage, which consists of fixed, non-digital panels occupied by longterm tenants.

Permanent panel signage is reserved exclusively for tenants located within the Canyon Lake Towne Center, consistent with the long-term nature, fixed placement, and limited capacity of those panels.

Digital advertising on the monument sign may be made available to businesses, organizations, or entities that meet the eligibility criteria and content standards established in this Policy, regardless of physical location, subject to availability, administrative approval, and City operational needs.

City Control
The City retains exclusive authority over all content displayed on the Monument Sign. The City Manager or designee shall have sole discretion to:
 Select messages for display;
 Retain full editorial control over all message content, including the authority to approve, require revisions to, or decline any proposed message;
 Approve or modify message timing, duration, sequencing, and frequency;  Remove or replace any message at any time.

The City Manager may delegate authority under this policy to specific City staff positions in writing. Any such delegation shall:
 Specify the scope of delegated authority;
 Be maintained on file with the City Clerk;
 Be revocable at will by the City Manager; and
 Not create independent authority beyond the terms of this Policy.

No person or entity has a right of access to the Monument Sign. No approval or display of a message shall be construed to create a contractual right, vested right, entitlement, or expectation of continued or future display.

Content Standards and Restrictions
In determining the messages it will convey on the Monument Sign, the City will not display content that, in the judgment of the City Manager or designee:
 Is false, misleading, or deceptive;
 Promotes unlawful activity or violates applicable law;  Contains obscenity;
 Depicts violence or sexual content;
 Contains profanity or lewd material inappropriate for a general audience;  Promotes or opposes a political candidate, ballot measure, or legislation; City Council Agenda,

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4  Contains sectarian religious content that would create a reasonable perception of City endorsement of a particular faith tradition, except where such content is part of a neutral recognition of cultural or community observances (e.g., “Merry Christmas” “Happy Holidays,” etc.);
 Does not advance the City's economic development priorities, including but not limited to, promotion of retail businesses with physical locations in Canyon Lake, City-permitted events, community programs, tourism promotion, and civic activities;  Creates a risk to public safety, including content that may cause driver distraction, incite imminent lawless action, or interfere with emergency response operations; or  Interferes with City operations.

These standards reflect the City's determination of the messages it chooses to convey and do not obligate the City to display any particular message or category of content.

Editorial Control
The City maintains exclusive editorial control and is not obligated to display any submitted content.

Public Safety and City Preemption
The City reserves the right at all times to preempt, interrupt, replace, or remove any message displayed on the Monument Sign in order to display public safety announcements, emergency notifications, disaster response information, or other time-sensitive City communications. Such messages shall take precedence over all other content.

No Forum Created/No Endorsement
Nothing in this Policy shall be construed to create a forum for private speech or expressive activity.

The Monument Sign is not open for public expression.

The display of information about local businesses, organizations, or events constitutes the City's own communication regarding matters of community interest and economic development. Such display reflects the City's determination that the information serves a valid governmental purpose and does not constitute a commercial endorsement, recommendation, or warranty of quality.

Severability and Interpretation
If any provision of this Policy is found invalid, the remaining provisions shall remain in full force and effect. This Policy shall be interpreted to maximize the City's authority to control content while maintaining compliance with applicable law. In the event of conflict, public safety considerations shall take precedence.

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STANDARD

PERMANENT PANEL

STANDARD

PERMANENT PANEL

STANDARD

PERMANENT PANEL

STANDARD

PERMANENT PANEL

STANDARD

PERMANENT PANEL

STANDARD

PERMANENT PANEL
LARGE

PERMANENT PANEL
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ITEM NO. 10

CITY COUNCIL STAFF REPORT
TO: Honorable Mayor and Members of the City Council
FROM: Arron Brown, City Manager
BY: Jim Morrissey, City Planner
DATE: 02/17/2026
SUBJECT: (1) Adopt Urgency Ordinance No. 270 - An Urgency Ordinance of the City Council of the City of Canyon Lake, California, An Amendment to the Canyon Lake Municipal Code, Chapter 4.20: Commercial Cannabis Businesses, Section 4.20.250, Location and Design of Cannabis Businesses; and (2) Introduction and First Reading of Ordinance No. 271 - An Ordinance of the City Council of the City Of Canyon Lake, California, an Amendment to the Canyon Lake Municipal Code, Chapter 4.20: Commercial Cannabis Businesses, Section

4.20.250, Location And Design of Cannabis Businesses
Recommendation:
(1) Adopt Urgency Ordinance No. 270 - An Urgency Ordinance of the City Council of the City of Canyon Lake, California, an Amendment to the Canyon Lake Municipal Code, Chapter 4.20: Commercial Cannabis Businesses, Section 4.20.250, Location and Design of Cannabis Businesses; and (2) introduce and read by title only Ordinance No. 271 - An Ordinance of the City Council of the City of Canyon Lake, California, an Amendment to the Canyon Lake Municipal Code, Chapter 4.20:

Commercial Cannabis Businesses, Section 4.20.250, Location And Design of Cannabis Businesses.

Background/Analysis:

Background
On October 6, 2021, the City Council adopted Ordinance No. 215 regulating Commercial Cannabis Businesses. The Ordinance was subsequently amended several times (Ordinances Nos. 246 and 269) in response to a number of items, including the number of businesses to be permitted, their security measures, operating procedures, and the processing of subsequent approvals.

The original ordinance specified cannabis businesses would be conducted within the City's C-1 General Commercial Zone. At one time the C-1 Zone included all three of the City's commercial areas. In June 2022, the City rezoned the Towne Center to Mixed Use to reflect the General Plan Land Use designation of Mixed Use and implement the Towne Center Specific Plan.

Discussion
The intent of the Cannabis Ordinance is to permit cannabis uses in the City's commercially zoned districts. The Mixed Use Zone allows all uses permitted within the C-1 Zone. However, the Cannabis Ordinance specifically restricts cannabis businesses to only the C-1 Zone. To reflect the City's original intent to permit cannabis uses within all commercial areas of the City and properly reflect the applicable zoning categories that now exist, the Cannabis Ordinance is proposed to be amended to add the Mixed Use Zone as provided below (underlined represents additions, strikethrough deletions):

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Sec. 4.20.250. Location and Design of Cannabis Businesses.

Cannabis businesses permitted to engage in Retail subject to the following zoning and locational requirements:
(a) Retail must be in the C-1 General Commercial Zone or Mixed Use Zones and must meet all of the requirements for development in these zones. The cannabis business must also meet all of the following distance requirements:

Fiscal Impact Yes/No:No
Attachments:
1 - Urgency Ordinance
2 - Ordinance (Non-Urgency)
City Council Agenda,

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URGENCY ORDINANCE NO. 270

AN URGENCY ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CANYON

LAKE, CALIFORNIA, AN AMENDMENT TO THE CANYON LAKE MUNICIPAL CODE, CHAPTER 4.20: COMMERCIAL CANNABIS BUSINESSES, SECTION 4.20.250,

LOCATION AND DESIGN OF CANNABIS BUSINESSES
WHEREAS, the City of Canyon Lake has adopted Ordinance No. 215 and subsequent Ordinance amendments Nos. 246 and 269 to regulate cannabis businesses with the City; and WHEREAS, the City has undertaken actions to update these regulations to reflect changing circumstances and reflect current desires that include efforts to modernize and streamline the approval processes; and
WHEREAS, the City’s original actions referenced permitting cannabis uses within all of the commercially zoned areas of the City, which were zoned C-1, General Commercial; and WHEREAS, the City has rezoned an area known as the Canyon Lake Towne Center from C-1 General Commercial to Mixed Use to provide consistency with the General Plan and permit the adoption of the Towne Center Specific Plan, which is intended to permit both commercial and residential uses and implement the City’s adopted Housing Element; and WHEREAS, the intent of the adopted Specific Plan was to maintain the types of uses currently permitted within the Towne Center Mixed Use Zone, the Mixed Use Zone was amended to explicitly reference all uses permitted within the C-1 General Commercial Zone; and WHEREAS, the City desires to maintain the original intent of Ordinance No. 215 that required cannabis uses in commercial areas, including the Towne Center, notwithstanding subsequent zoning changes; and
WHEREAS, this ordinance is adopted pursuant to Government Code section 36937(b) as an urgency ordinance necessary for the immediate preservation of the public peace, health, and safety.

THE CITY COUNCIL OF THE CITY OF CANYON LAKE, CALIFORNIA, DOES ORDAIN AS FOLLOWS:

Section 1. Incorporation. The above recitals are all true and correct and are incorporated herein by this reference.

Section 2. Environmental Determination and Findings. The proposed amendment is exempt from the California Environmental Quality Act (CEQA) pursuant to Section 15061(b)(3) of the CEQA Guidelines, because it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment.

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Section 3. Municipal Code Amendments. Section 4.20.250. Location and Design of Cannabis Businesses, is hereby amended as provided below (underlined represents additions, strikethrough deletions):
(a) Retail must be in the C-1 General Commercial Zone or Mixed Use Zones and must meet all of the requirements for development in these zones.

Section 4. Concluding Facts and Reasons. Based on the substantial evidence presented to the City Council during the public hearing on the Ordinance, and the specific findings set forth in the Recitals, and Sections 1 and 2, above, the City Council hereby concludes that the proposed Amendment to the City of Canyon Lake Municipal Code is consistent with the goals, policies, plans, and exhibits of the General Plan. Staff has thoroughly reviewed the proposed Municipal Code Amendment and the conditions under which it will be implemented and has determined the proposed Municipal Code provisions to be consistent with the applicable goals, policies, plans, and exhibits of the General Plan. Additionally the City Council finds that the proposed Amendment to the City of Canyon Lake Municipal Code would not be detrimental to the public interest, health, safety, convenience, or general welfare of the City.

Section 5. Clerical Errors. The City Council directs the City Clerk to correct any clerical errors found in this Ordinance including, but not limited to, typographical errors, irregular numbering and incorrect section references.

Section 6. Severability. Should any section, subsection, clause, or provision of this Ordinance for any reason be held to be invalid or unconstitutional, such invalidity or unconstitutionality shall not affect the validity or constitutionality of the remaining portions of this Ordinance; it being hereby expressly declared that this Ordinance, and each section, subsection, sentence, clause, and phrase hereof would have been prepared, proposed, approved, and ratified irrespective of the fact that any one or more sections, subsections, sentences, clauses, or phrases be declared invalid, unenforceable, or unconstitutional.

Section 7. Effective Date (Urgency). This Ordinance shall become effective immediately upon adoption by four-fifths of the City Council as this ordinance relates to the immediate preservation of the public peace, health, or safety for the reasons set forth above.

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Section 8. Publication. The Mayor shall sign this Ordinance and the City Clerk shall certify as to the adoption and shall cause the ordinance or a summary thereof to be published in accordance with state law.

PASSED, APPROVED AND ADOPTED this 17th day of February 2026, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:
_____________________________
Jeremy Smith, Mayor
ATTEST & CERTIFIED:

I, Sheryl Garcia, City Clerk of the City of Canyon Lake, hereby attest to the Mayor’s signature above and certify that the City Council duly adopted this Ordinance as recorded in the vote tally stated herein.
_________________________
Sheryl L. Garcia, MMC, CPM
City Clerk
APPROVED AS TO FORM:
_________________________
Steven Graham Pacifico, City Attorney
City Council Agenda,

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ORDINANCE NO. 271

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CANYON LAKE,

CALIFORNIA, AN AMENDMENT TO THE CANYON LAKE MUNICIPAL CODE, CHAPTER 4.20: COMMERCIAL CANNABIS BUSINESSES, SECTION 4.20.250,

THE CITY COUNCIL OF THE CITY OF CANYON LAKE, CALIFORNIA, DOES ORDAIN AS FOLLOWS:

Section 1. Incorporation. The above recitals are all true and correct and are incorporated herein by this reference.

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Section 7. Effective Date. In accordance with California Government Code section 36937, this Ordinance shall take effect and be in force thirty (30) days from passage and adoption.

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PASSED, APPROVED AND ADOPTED this ____ day of __________ 2026, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:
_____________________________
Jeremy Smith, Mayor
ATTEST & CERTIFIED:

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ITEM NO. 11

CITY COUNCIL STAFF REPORT
TO: Honorable Mayor and Members of the City Council
FROM: Arron Brown, City Manager
BY: Terry Shea, Finance Director
DATE: 02/17/2026
SUBJECT: Review of the Fiscal Year 2025-26 Mid-Year Budget and Approval of Proposed Budget Adjustments
Recommendation:

Review the Fiscal Year 2025-26 Mid-Year Budget Report and approve the recommended budget adjustments.

Background/Analysis:

In May 2025, the City Council adopted Resolution 2025-26, approving the Fiscal Year 2025-26 Budget and Appropriations Limit. The adopted General Fund budget included $8,674,450 in revenues and $8,624,349 in expenditures for a budgeted Revenues over Expenditures of $50,101. Through January, the City Council has approved additional appropriations of $1,384,250, for various items including Police Department Start-up and building remodel costs of $1,200,000, establishing a Facilities Maintenance/Capital Improvement Program Contingency account for $135,000, which is offset by funds received from a penalty for a failed bid, and $37,500 for an employee settlement. In addition, the City Council approved additional revenues for $1,512,000 in Proceeds from Long-term Debt for the purchase of property and $11,750 for sponsorships received for various City Events. The results of the changes as described above increased the proposed Revenues over Expenditures to $189,601.

Actual revenues through December 2025 with projections for the remainder of the fiscal year are higher than anticipated by $174,925. The largest projected increase is in Miscellaneous Income $85,000 as the result of a penalty received for a failed bid, Insurance claim payments $24,300 and sponsorships received for City Events $7,000. The proposed adjustment for revenues is as follows:
10-000-4791 Insurance Reimbursements $24,300
10-000-4790 Miscellaneous Income $85,000
10-421-4801 City Events $7,000
Total General Fund $116,300
Actual expenditures through December 2025 with projections for the remainder of the fiscal year are in line with the original budget, with projected savings in most Departments and Divisions. However, certain line items are over, and some items need to be added to the budget. For the increases, decreases and proposed budget adjustments see Attachment 2 hereto.

Fiscal Year 2026-2027 Budget Adoption Timeline
As Staff continue to monitor the City's financial position, preparations for the Fiscal Year 2026-2027 City Council Agenda,

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budget are underway. The schedule below outlines key dates in the budget adoption process:

March 5, Budget Kickoff Meeting. Internal staff meeting to initiate the budget process.

March 16, Draft Budget Presented to City Manager. Finance Director to present the draft budget to the City Manager.

April 8, Preliminary Budget Presentation. Staff presentation of the draft budget to City Council.

May 13, Budget Adoption. Final approval of the budget incorporating any changes directed by City Council at the April 8, 2025, City Council meeting.

Fiscal Impact Yes/No:Yes
Additional Fiscal Information:

If the proposed Budget Adjustments are approved, the planned budgeted Revenues over Expenditures for the General Fund for Fiscal Year 2025-26 increases from $189,601 to $219,730.

Attachments:
1 - Revenues and Expenditures
2 - Adjustments for Discussion
3 - Proposed Adjustments
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Year-to-Date % Total of % Total of
Actual Projected Projected Amended Budget Used Budget Used 31-Dec-25 January to June FY 2025/26 Budget Mid-Year Yearend Variance

REVENUES
PROPERTY TAXES $ 952,834 $ 3,331,012 $ 4,283,846 $ 4,262,250 22.36 100.51 $ 21,596 SALES TAXES 129,976 276,940 406,916 406,400 31.98 100.13 516 UTILITY USERS 318,520 662,000 980,520 952,500 33.44 102.94 28,020TRANSIENT LODGING TAX 13,993 51,000 64,993 72,000 19.44 90.27 (7,007)BUSINESS LICENSE FEES 34,026 33,850 67,876 69,000 49.31 98.37 (1,124)COURT, VEHICLE, PARKING 2,746 2,400 5,146 15,000 18.30 34.30 (9,854) FRANCHISE FEES 128,394 560,200 688,594 696,200 18.44 98.91 (7,606) INTEREST INCOME 118,834 97,703 216,537 200,000 59.42 108.27 16,537 PERMITS AND FEES 303,728 328,213 631,941 618,100 49.14 102.24 13,841EMS SUBSCRIPTION FEE 9,995 1,288,861 1,298,856 1,300,000 0.77 99.91 (1,145) MOTOR VEHICLE FEE 16,909 - 16,909 18,000 93.94 93.94 (1,091)GRANTS 7,840 4,400 12,240 8,000 98.00 153.00 4,240 MISCELLANEOUS 166,527 20,224 186,751 68,750 242.22 271.64 118,001 PROCEEDS FROM LONG-TERM DEBT 1,512,000 - 1,512,000 1,512,000 100.00 100.00 - TOTAL REVENUES $ 3,716,322 $ 6,656,803 $ 10,373,125 $ 10,198,200 36.44 101.72 $ 174,925 Year-to-Date % Total of % Total of
Actual Projected Projected Amended Budget Used Budget Used 31-Dec-25 January to June FY 2025/26 Budget Mid-Year Yearend Variance

EXPENDITURES

CITY COUNCIL
SALARIES AND BENEFITS $ 32,511 $ 32,700 $ 65,211 $ 66,012 49.25 98.79 $ 801OPERATIONS AND MATERIALS 18,300 37,140 55,440 63,600 28.77 87.17 8,160 50,811 69,840 120,651 129,612 39.20 93.09 8,961

CITY ATTORNEY
CONTRACT SERVICES 58,221 95,889 154,110 159,224 36.57 96.79 5,114 58,221 95,889 154,110 159,224 36.57 96.79 5,114

CITY OF CANYON LAKE

MID-YEAR REVIEW - REVENUES AND EXPENDITURES
10 - GENERAL FUND
FISCAL YEAR 2025-26

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Year-to-Date % Total of % Total of
Actual Projected Projected Amended Budget Used Budget Used 31-Dec-25 January to June FY 2025/26 Budget Mid-Year Yearend Variance

CITY MANAGER
SALARIES AND BENEFITS $ 220,317 $ 203,130 $ 423,446 $ 462,205 47.67 91.61 $ 38,759 OPERATIONS AND MATERIALS 57,505 13,300 70,805 71,450 80.48 99.10 645 CAPITAL OUTLAY - 85,475 85,475 135,000 - 63.31 49,525
277,822 301,905 579,726 668,655 41.55 86.70 88,929

COMMUNITY DEVELOPMENT
SALARIES AND BENEFITS 135,583 48,030 183,613 340,217 39.85 53.97 156,604 OPERATIONS AND MATERIALS 234,938 59,390 294,328 288,332 81.48 102.08 (5,996) 370,521 107,420 477,940 628,549 58.95 76.04 150,609

CITY CLERK
SALARIES AND BENEFITS 111,463 101,941 213,404 204,893 54.40 104.15 (8,511) OPERATIONS AND MATERIALS 31,191 57,686 88,877 102,050 30.56 87.09 13,173 142,654 159,627 302,281 306,943 46.48 98.48 4,662

FINANCE
SALARIES AND BENEFITS 125,797 127,052 252,850 255,781 49.18 98.85 2,931CONTRACT SERVICES 69,969 77,951 147,920 126,650 55.25 116.79 (21,270) OPERATIONS AND MATERIALS 92,904 8,249 101,153 105,195 88.32 96.16 4,042 288,670 213,252 501,923 487,626 59.20 102.93 (14,297)

PLANNING
CONTRACT SERVICES 31,010 22,700 53,710 162,800 19.05 32.99 109,090 31,010 22,700 53,710 162,800 19.05 32.99 109,090

BUILDING & SAFETY
SALARIES AND BENEFITS 127,180 123,820 251,000 254,723 49.93 98.54 3,723CONTRACT SERVICES 28,177 88,000 116,177 150,000 18.78 77.45 33,823 OPERATIONS AND MATERIALS 4,817 2,154 6,971 11,500 41.89 60.62 4,529 160,174 213,974 374,148 416,223 38.48 89.89 42,075

LAW ENFORCEMENT
CONTRACT SERVICES 347,642 1,698,000 2,045,642 2,052,390 16.94 99.67 6,748OPERATIONS AND MATERIALS 13,807 42,500 56,307 59,500 23.21 94.63 3,193 CAPITAL OUTLAY 5,000 - 5,000 5,000 100.00 100.00 -
366,449 1,740,500 2,106,949 2,116,890 17.31 99.53 9,941

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Year-to-Date % Total of % Total of
Actual Projected Projected Amended Budget Used Budget Used 31-Dec-25 January to June FY 2025/26 Budget Mid-Year Yearend Variance

CITY POLICE DEPARTMENT
SALARIES AND BENEFITS $ 46,126 $ 106,537 $ 152,663 $ - #DIV/0! #DIV/0! $ (152,663) POLICE DEPARTMENT STARTUP COST 398,404 84,931 483,335 547,137 15.52 88.34 63,802 BUILDING IMPROVEMENTS PD 716,665 - 716,665 652,863 109.77 109.77 (63,802) 847,722 504,941 1,352,663 1,200,000 70.64 112.72 (152,663)

CITY FIRE DEPARTMENT
SALARIES AND BENEFITS 826,199 782,869 1,609,068 1,724,502 47.91 93.31 115,434 DEBT SERVICE - 125,215 125,215 125,215 - 100.00 -
OPERATIONS AND MATERIALS 70,195 174,660 244,855 269,596 26.04 90.82 24,741 CONTRACT SERVICES 8,610 162,107 170,717 187,456 4.59 91.07 16,739 905,004 1,244,851 2,149,855 2,306,769 39.23 93.20 156,914

EMERGENCY PREPAREDNESS
OPERATIONS AND MATERIALS 2,369 39,224 41,593 45,000 5.26 92.43 3,407 2,369 39,224 41,593 45,000 5.26 92.43 3,407

ANIMAL CONTROL
CONTRACT SERVICES 64,854 47,323 112,177 126,350 51.33 88.78 14,173 64,854 47,323 112,177 126,350 51.33 88.78 14,173

PUBLIC WORKS ADMINISTRATION
CONTRACT SERVICES 1,891 14,000 15,891 30,000 6.30 52.97 14,109 1,891 14,000 15,891 30,000 6.30 52.97 14,109
NPDES
OPERATIONS AND MATERIALS 87,305 60,216 147,521 159,200 54.84 92.66 11,679 87,305 60,216 147,521 159,200 54.84 92.66 11,679

CODE ENFORCEMENT
SALARIES AND BENEFITS 185,899 187,009 372,908 379,396 49.00 98.29 6,488 OPERATIONS AND MATERIALS 3,878 13,860 17,738 22,500 17.23 78.83 4,762 189,777 200,869 390,646 401,896 47.22 97.20 11,250

BUILDING & FACILITY
OPERATIONS AND MATERIALS 435,691 79,635 515,326 524,546 83.06 98.24 9,220 DEBT SERVICE 56,157 56,157 112,315 112,316 50.00 100.00 1 CAPITAL IMPROVEMENTS 1,455 24,150 25,605 26,000 5.60 98.48 395 493,304 159,942 653,246 662,862 74.42 98.55 9,616

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Year-to-Date % Total of % Total of
Actual Projected Projected Amended Budget Used Budget Used 31-Dec-25 January to June FY 2025/26 Budget Mid-Year Yearend Variance TRANSFERS TO OTHER FUNDS $ - $ - $ - $ - #DIV/0! #DIV/0! $ - TOTAL EXPENDITURES $ 4,338,557 $ 5,196,474 $ 9,535,031 $ 10,008,599 43.35 95.27 473,568 EXCESS (DEFICIT) REVENUES OVER EXP. (622,235) $ $ 1,460,329 $ 838,094 $ 189,601

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Attachment 2
Account No. Account Description Description Amount
Revenues
10-000-4790 Miscellaneous Income Failed contractor bid $ 85,000 10-000-4791 Insurance Reimbursement Insurance reimbursements for City damages 24,300 10-000-4801 City Events Increase for Sponsorships received 7,000 Expenditures
10-310-6245 Tuition Reimbursement Adjust balance in account to $2,500 $ 500 10-311-6010 Salaries & Wages Vacant position (100,000)
10-311-6080 Benefits Vacant position (30,000)
10-311-6610 Professional/Specialized Serv. Additional IT support and increased costs 10,250 10-311-6831 City Events For Donuts with Santa, not included in the Budget 1,200 10-311-6831 City Events Increase for State of City for sponsorships received 15,350 10-311-6831 City Events Increase for Community Cleanup Day 1,700 10-311-6831 City Events Increase for actual costs of CLEAR Lifeguard Program 906 10-330-6210 Office Expense & Supplies Increase for bank fees 1,550 10-330-6530 Software Adding EFT Module to software 750
10-330-6610 Professional/Specialized Serv. Increase for additional support and training 22,000 10-350-6616 Regular Planning Services Contract Planner retiring & change in service method (15,000) 10-350-6619 General Plan Services Budgeted amount will be included in the FY 2026-27 Budget (90,000) 10-416-6030 Salaries-PD Management Salary for new Chief of Police 114,000 10-416-6091 Benefits-PD Mgmt Benefits for new Chief of Police 4,000 10-416-6093 Benefits-PD Health Ins Mgmt Health Insurance for new Chief of Police 19,500 10-416-6095 Benefits-PD PARS Mgmt Retirement for new Chief of Police 15,300 10-416-XXX Explorer Program Establish an Explorer Program 2,800 10-416-6976 Police Department Startup Costs Decrease for Change Order to construction (63,802) 10-416-8014 Building Improvements Increase for construction Change Order 63,802 10-421-6020 Salaries FD Mgmt Move budgeted amounts to new Part-Time account (10,350) 10-421-6023 Salaries FD FF Move budgeted amounts to new Part-Time account (14,885) 10-421-6024 Salaries FD Part-Time Increase in Part-Time salaries and budigeted amounts from above 32,235 10-421-6710 Training & Education AED & CPR Training 1,365 10-430-6610 Professional/Specialized Serv. Adjust Budget to actual (3,000) 10-430-6900 Interest Expense Adjust Budget to actual (9,000) 10-550-6840 Liability Property Ins and Ded Adjust Budget to actual (5,000) 10-550-9000 Transfers Out to Rental Fund Transfer to Rental Fund for digital sign improvements 100,000 10-550-9000 Transfers Out to Capital Projects Improv. 20,000 Revenues
40-421-5091 Transfers In From General Fund Transfer in for engineering plans for improvements $ 20,000 Expenditures
40-421-8017 Fire & Life Saving Equipment Engineering plans for Fire/Police Gym at Fire Station $ 8,000 40-421-8017 Fire & Life Saving Equipment Engineering plans for Fuel Tanks and Generator at Fire Station 12,000 City of Canyon lake
Proposed Budget Adjustments for Discussion
General Fund
Capital Projects Fund (Fund 40)
City Council Agenda,

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Account No. Account Description Description Amount
City of Canyon lake
Proposed Budget Adjustments for Discussion
Revenues
60-585-5091 Transfers In From General Fund Transfer in from General Fund for digital sign improvements $ 100,000 60-585-4698 Rental Income Advertising rent for digital sign 44,000 Expenditures
60-585-6320 Utilities Electrical expense for Digital Sign $ 4,800 60-585-6325 Repairs & Maintenance Repairs and equipment for digital sign 80,000 Revenues
27-311-4590 Calrecycle Grant OWR4 For new Calrecycle grant for the Community Deveolpment Dept. $ 75,000 Expenditures
27-311-6455 Calrecycle Grant Exp For new Calrecycle grant for the Community Deveolpment Dept. $ 75,000 Miscellaneous Grants Fund
Rental Fund
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Amended Adjusted
Mid-Year Budget Mid-Year Budget
Account# Account Name Reason for Adjustment Adj. FY 2025/26 Adjustment FY 2025/26 10-000-4790 Miscellaneous Income Increase of revenues for penalty for failed bid $ 85,000 $ 85,000 $ 85,000 10-000-4791 Insurance Reimbursements Increase for actual insurance reimbursements $ 24,300 $ - $ 24,300 $ 24,300 10-000-4801 City Events Increase for Sponsorship revenue for City Events $ 7,000 $ - $ 7,000 $ 7,000 Increase in Revenues . $ 116,300Original General Fund Budget (as amended) - Revenues $ 10,198,200Adjusted General Fund Budget - Revenues $ 10,314,500 City Manager
10-310-6245 Tuition Reimbursement Increase balance to $2,500 $ 500 2,000$ $ 500 $ 2,500 Community Development
10-311-6010 Salaries & Wages Vacant position $ (100,000) 271,255$ $ (100,000) $ 171,255 10-311-6080 Benefits Vacant position $ (30,000) 68,962$ $ (30,000) $ 38,96210-311-6610 Professional/Specialized Serv. Additional IT support and increased monthly costs $ 10,250 63,650$ $ 10,250 $ 73,900 10-311-6831 City Events For Donuts with Santa, not included in the Budget $ 1,200 160,850$ $ 19,156 $ 180,006 10-311-6831 City Events Increase for State of City for sponsorships received $ 15,350 10-311-6831 City Events Increase for Community Cleanup Day $ 1,700 10-311-6831 City Events Increase for actual costs of CLEAR Lifeguard Program $ 906 Finance 10-330-6210 Office Expense & Supplies Increase for bank fees $ 1,550 740$ $ 1,550 $ 2,290 10-330-6530 Software Adding EFT Module to software $ 750 7,640$ $ 750 $ 8,39010-330-6610 Professional/Specialized Serv. Increase for additional support and training $ 22,000 126,650$ $ 22,000 $ 148,650 Planning
10-350-6616 Regular Planning Services Contract Planner retiring & change in service method $ (15,000) 72,800$ $ (15,000) $ 57,80010-350-6619 General Plan Services Budgeted amount will be included in the FY 2026-27 Budget $ (90,000) 90,000$ $ (90,000) -$

GENERAL FUND EXPENDITURES

CITY OF CANYON LAKE

MID-YEAR PROPOSED BUDGET ADJUSTMENTS
FISCAL YEAR 2025-26 BUDGET ADJUSTMENTS

GENERAL FUND REVENUES

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City Council Agenda,

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Amended Adjusted
Mid-Year Budget Mid-Year Budget
Account# Account Name Reason for Adjustment Adj. FY 2025/26 Adjustment FY 2025/26 City Police Department
10-416-6030 Salaries-PD Management Hiring of Police Chief $ 114,000 -$ $ 114,000 $ 114,000 10-416-6091 Benefits-PD Mgmt. Hiring of Police Chief benefits $ 4,000 -$ $ 4,000 $ 4,00010-416-6093 Benefits-PD Health Ins Mgmt. Hiring of Police Chief health insurance $ 19,500 -$ $ 19,500 $ 19,500 10-416-6095 Benefits-PD PARS Mgmt. Hiring of Police Chief retirement payments $ 15,300 -$ $ 15,300 $ 15,300 10-416-XXX Explorer Program Establish and Explorer Program $ 2,800 -$ $ 2,800 $ 2,800 10-416-6976 Police Department Startup Costs Reduce for Change Order to construction $ (63,802) 547,137$ $ (63,802) $ 483,335 10-416-8014 Building Improvements Increase for construction Change Order $ 63,802 652,863$ $ 63,802 $ 716,665 City Fire Department
10-421-6020 Salaries FD Mgmt. Move budgeted amounts to new Part-Time account $ (10,350) 320,804$ $ (10,350) $ 310,454 10-421-6023 Salaries FD FF Move budgeted amounts to new Part-Time account $ (14,885) 822,383$ $ (14,885) $ 807,498 10-421-6027 Salaries FD Part-Time Increase for Part-Time salaries and wages and transfers $ 32,235 -$ $ 32,235 $ 32,235 10-421-6710 Training & Education AED & CPR Training $ 1,365 33,000$ $ 1,365 $ 34,365 Animal Control
10-430-6610 Professional/Specialized Serv. Adjust Budget to actual $ (3,000) 103,050$ $ (3,000) $ 100,050 10-430-6900 Interest Expense Adjust Budget to actual $ (9,000) 23,300$ $ (9,000) $ 14,300 Building & Facilities Maint
10-550-6840 Liability Property Ins and Ded Adjust Budget to actual $ (5,000) 379,230$ $ (5,000) $ 374,230 10-550-9000 Transfers Out Transfer to Rental Fund for digital sign improvements $ 100,000 -$ $ 120,000 $ 120,000 10-550-9000 Transfers Out Transfer to Capital Projects Fund for engineering plans $ 20,000 Total Budget Adjustments - Expenditures 86,171$ $ 86,171 Amended General Fund Budget - Expenditures $ 10,008,599Adjusted General Fund Budget - Expenditures $ 10,094,770 Amended General Fund Budget - Surplus $ 189,601Adjusted General Fund Budget - Surplus $ 219,730 60-585-5091 Transfers In From General Fund Transfer in from General Fund for digital sign improvements 100,000$ -$ $ 100,000 $ 100,000 60-585-4698 Rental Income Advertising rent for digital sign 44,000$ -$ $ 44,000 $ 44,000 60-585-6320 Utilities Electrical costs for Digital Sign 4,800$ -$ $ 4,800 $ 4,800 60-585-6325 Repairs & Maintenance Repairs and equipment for digital sign 80,000$ -$ $ 80,000 $ 80,000

RENTAL FUND REVENUES AND EXPENSES

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Amended Adjusted
Mid-Year Budget Mid-Year Budget
Account# Account Name Reason for Adjustment Adj. FY 2025/26 Adjustment FY 2025/26 40-421-5091 Transfers In From General Fund Transfer in for engineering plans for improvements 20,000$ -$ $ 20,000 $ 20,000 40-421-8017 Fire & Life Saving Equipment Engineering plans for Fire/Police Gym at Fire Station 8,000$ -$ $ 20,000 $ 20,000 40-421-8017 Fire & Life Saving Equipment Engineering plans for Fuel Tanks and Generator at Fire Station 12,000$ 27-311-4590 Calrecycle Grant OWR4 For new Calrecycle grant for the Community Development Dept. 75,000$ -$ $ 75,000 $ 75,000 27-311-6457 Calrecycle Grant Exp For new Calrecycle grant for the Community Deveolpment Dept. 75,000$ -$ $ 75,000 $ 75,000

CAPITAL PROJECTS FUND REVENUES AND EXPENDITURES

MISCELLANEOUS GRANTS FUND REVENUES AND EXPENDITURES

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City Council Agenda,

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Canyon Lake City CouncilFebruary 17, 2026

Canyon Lake City Council
February 17, 2026