Agenda packet — Costa Mesa City Council, March 17, 2026 (part 6 of 7)

No. Necessary
Cotxdition
Condition 's Application
Objective
Standards
11 residential No, Id.
activities of the
household are
(:Onducted on a
not-for-profit
basis
Yes, with an
administrative subpoena,
but if and only if the City
can verify that the
housing provider is
either is incorporated as a
nonprofit or operates at a
loss and that each
occupant, regardless of
age, infirmity, or
capacity pays an equal
share of the housing
expense
Catx City Lawfully
Observe and Verify
Facts to Determitxe
Condition
No, unless the City obtains
an administrative
subpoena, permitting the
City to lawfully obtain
records showing that a
housing provider is a
nonprofit or operates at a
loss and detailed financial
records reflecting
household expenses and
contributions by each
occupant.

Does the proposed SHU definition provide with the City's zoning and code enforcers (as well as its citizens) with robust, objective standards that can be reliably applied to readily observable facts reflecting conditions that endure over the lifetime of a household? The answer is obvious no. Worse, if you assume that the proposed definition means what it says, and its conditions were uniformly applied to the wide variety of household that exist in Costa M esa2, very few of those households could qualify as Single Housekeeping Unit. Worse still, under the proposed definition, the City is committed to policing the personal relationship and domestic affairs of its citizens, an undertaking that is as unpopular as it is unconstitutional.

We urge the Planning Commission to reject the resolution recommending the adoption of the proposed SHU definition.

3. The proposed amendments to zoning regulations governing group homes fail to implement the objective of the City's Housing Program 2P, perpetuate discrimination against disabled persons, and promise to violate federal and state fair housing laws.
2 Please refer to the City's demographic profile in the City's Sixth Cycle Housing Element. -11-
1349
Planning Commission
February 9, 2026

Page 12 ends

The City proposes to implement Housing Plan Program 2P ("Group Homes") by not making any substantive changes to its current group home regulations, codified as CMMC Title 13, Chaps. XV and XVI, and CMMC Title 9, Chap. II, Art. 23. See Meeting Packet, Exhibit 3. As a result, the City's group home regulations continue to discriminate against housing for disabled persons, as reflected in Exhibit l hereto.

The only substantive change proposed by the City is to import the definition of "operator" into the definition of group home or sober living home. That amendment is deeply flawed and will not cure the problems with the City's current group home regulations. The operator definition is standardless, circular, and assumes that landlords renting to non-disabled persons do not engage in placement, rule-setting, and behavioral oversight of their tenants-an demonstrably untnie assumption.

We urge the Planning Commission to reject the resolution recommending the adoption of the proposed amendments to the group home regulations because they are insufficient.

4. The proposed amendments to the City's RA regulations fail to implement the requirements of the City's Housing Program 2N, perpetuate discrimination against disabled persons, and promise to continue violating federal and state fair housing laws.

The City proposes to implement Housing Plan Program 2N ("Reasonable Accornrnodation") by making modest changes to the existing regulation that fail to fulfill this Housing Program's intent and continue a policy in violation of federal and state fair housing laws.

To implement Program 2N, the City must amend the curent regulation to address each of the issues raised in DRC's letter to the City dated January 12, 2026, a copy of which is attached as Exhibit 2. In addition, the City must provide a cogent definition of "institutionalization" if it intends to apply that criterion as a basis for denying RA requests.

We urge the Planning Commission to reject the resolution recommending -12-
1350
Plaru'iing Commission
February 9, 2026

Page 13 ends

adoption of the proposed RA regulation because it is insufficient.

Thank you for your consideration.
/s/ Christopher Brancart
cbrancart(,brancart.com
-13-
1351
Zoninq requlations for unlicensedl residential uses in Costa Meso's multi-family zoninq districts CMMC Regulations Governing
Residential Uses in City's Multifamily
Districts
Sober Living Home2 Group Home3 Boardinghouse,
Small < 3 renta/
rooms'
Boardinghouse,
Large < 7 rental
rooms
Multi-family
Dwelling5
Use Definitions
Use defined based on disability status of
residents, CMMC 13-06
Yes, CC 96 Yes, CC 5 NO, CC 3 No, CC 3 No CC 4
I Licensed uses are subject to state-mandated zoning entitlements and restrictions. The Costa Mesa Municipal Code (CMMC) defines these uses as Residential . A residential facility licensed by the state where care, services, or treatment is provided to persons living in a supportive community residential setting. Residential care facilities include, but may not be limited to, the following: intermediate care facilities for the developmentally disabled (Health & Safety Code §§ 1267.8, 1267.9);community care facilities (Health & Safety Code § 1500 et seq.); residential care facilities for the elderly (Health &Safety Code El 1569 et seq.); residential care facilities for the chronically ill (22 C.C.R. E) 87801(a)(5); Health & Safety Code § 1568.02); alcoholism and drug abuse facilities (Health & Safety Code §§ 11834.02-11834.30); pediatric day health and respite care facilities (Health & Safety Code § 1760 et seq.); residential health care facilities, including congregate living health facilities (Health & Safety Code % 1265-1271.1, 1250(i), 1250(e), (h)); family care home, foster home, group home for the mentally disordered or otherwise handicapped persons or dependent and neglected children (Wel. & Inst. Code % 5115-5120)." CMMC 13-06. 2Sober livinq home means a group home for persons who are recovering from a drug and/or alcohol addiction and who are considered handicapped under state or federal law. Sober living homes shall not include the following: (1) residential care facilities; (2) any sober living home that operates as a single housekeeping unit." CMMC 13-06.

3. A facility that is being used as a supportive living environment for persons who are considered handicapped under state or federal law. A group home operated by a single operator or service provider (whether licensed or unlicensed) constitutes a single facility, whether the facility occupies one (1) or more dwelling units. Group homes shall not include the following: (1) residential care facilities; (2) any group home that operates as a single housekeeping unit." CMMC 13-06.
4 "Boardinqhouse. A residence or dwelling, other than a hotel, wherein rooms are rented under two (2) or more separate written or oral rental agreements, leases or subleases or combination thereof, whether or not the owner, agent or rental manager resides within the residence. Boardinghouse, small means two (2) or fewer rooms being rented. Boardinghouse, large means three (3) to six (6) rooms being rented. Boardinghouses renting more than six (6) rooms are prohibited." CMMC 13-06.
5 "Dwellinq, multi-family "Dwelling, multi-family" or "multi-family dwelling" is a building or buildings of permanent character placed on one (1) lot which is designed or used for residential occupancy by two (2) or more families." CMMC 13-06. 6 "CC t' refers to page numbers in the excerpt of the current Costa Mesa Municipal Code [as of 05/09/2021], attached to this Table for reference.

I
1352
CMMC Regulations Governing
Residential Uses in City's Multifamily
Districts
Sober Living Home2 Gmup Home3 Boardinghouse,
Sma// < 3 rental
rooms"
Boardinghouse,
Large < 7 rental
rooms
Multi-family
Dwelling5
Use defined based on nature of the
disability of dwelling's residents, CMMC
13-06
Yes, CC 9 No, CC 5 No, CC 3 No, CC 3 No CC 4
PermittedZoning District
Permitted in Residential Zoning District,
CMMC 13-30, 13-204
No, CC 31 No, CC 31 Yes, CC 31 Yes, if pre-
existing, CC 54;
No, if new, CC 31
Yes, CC 31
Permitted in Multifamily Zoning Districts
(R2-MD, R2-HD, R3), CMMC 13-30
No, CC 31 No, CC 31 Yes, CC 31 Yes, if pre-
existing, CC 54;
No, if new, CC 31
Yes, CC 31
Permitted in Planned Development
Residential Districts (PDR-LD, PDR-MD,
PDR-HD, PRD-NCM, PDC, PDI), CMMC 13-
30, 13-204
No, CC 31 No, CC 31 Yes, CC 31 Yes, if pre-
existing, CC 54;
No, if new, CC 31
Yes, CC 31
Permitted in Institutional & Recreational
(I&R) Zoning District [intended for
"recreation, open space, health, public
services," 13-20(i), CC 17]
Yes, CC 31 Yes, CC 31 No, CC 31 No, CC 31 No, CC 31 Specially or Conditionally Permitted in
Institutional & Recreational (I&R) Zoning
District [intended for "recreation, open
space, health, public services," 13-20(i),
CC 17]
NA, CC 31 NA, CC 31 No, CC 31 No, CC 31 No, CC 31
Nonconforming use Status
Existing uses required to apply for
Special or Conditional Use Permit to
Yes, CC 67, 59 Yes, CC 67, 59 No, CC 54 No, CC 54 NA,CC31 2 1353
CMMC Regulations Governing
Residential Uses in City's Multifamily
Districts
Sober Living Home2 Group Home3 Boardinghouse,
Smo// < 3 rento/
rooms"
Boardinghouse,
Large < 7 rental
rooms
Multi-family
Dwelling5
continue existing use, 13-324, 13-
207.1 versus 13-204 13-30
Separation Requirement
Separation requirement imposed on
existing uses, 13-322, 13-323, 13-324
versus 13-30, 13-204, 13-207.1
Yes: At least 650
feet between
dwelling and any
group home, sober
living home or
state-licensed drug
and alcohol
treatment facility.

CC 66-67
Yes: At least 650
feet between
dwelling and any
group home, sober
living home or state-
licensed drug and
alcohol treatment
facility. CC 66-67
No, CC 54 No, CC 54 NA, 13-30
Separation requirement imposed on new
uses, 13-322, 13-323, 13-324 versus 13-30
fn 7
Yes: At least 650
feet between
dwelling and any
group home, sober
living home, or
state-licensed drug
and alcohol
treatment facility.

CC 66-67
Yes: At least 650
feet between
dwelling and any
group home, sober
living home, or state-
licensed drug and
alcohol treatment
facility. CC 66-67
Yes: Small
boardinghouses
shall locate at
least six
hundred fifty
(650) feet from
any other small
boardinghouse.

CC 49
Yes: Large
boardinghouses
shall be located
at least one
thousand (1,000)
feet away from
any other
boardinghouse.

CC 49
NA, 13-30
Dwelling Operatls Permit Required
Owner or operator of dwelling must
obtain an "Operator's Permit," CMMC 13-
323, 9-372, or meet same conditions for
Yes, CC 67, 69
[CUP]; Yes, CC 66,
61-63 [SUP]
Yes, CC 67, 69 [CUP];
Yes, CC 66, 61-63
[SUP]
No No No
3 1354
CMMC Regulations Governing
Residential Uses in City's Multifamily
Districts
Sober Living Home2 Group Home3 Boardinghouse,
Sma// < 3 rento/
roomsa
Boardinghouse,
Large < 7 renta/
rooms
Multi-family
Dwelling5
Operator's Permit under SUP
requirements, 13-322, 13-311
Owner or operator of dwelling must
obtain an "operator"s permit" as a
condition to qualify for a conditional use
permit, CMMC 13-323, 9-372, or meet
same conditions for Operator"s Permit to
qualify for SUP, 13-322, 13-311
Yes, CC 67, 69
[CUP]; Yes, CC 66,
61-63 [SUP]
Yes, CC 67, 69 [CUP];
Yes, CC 66, 61-63
[SUP]
No No No
PermitApplication Requirements
Permit Application: Required to list
applicant/operator's every general
partner and every owner with controlling
interest in corporation. CMMC 13-311(a)
+ 9-374(a) versus CMMC 13-29(a) + City
Form 09/2019
Yes, CC 61, 69;
[CUP]; Yes, CC 66,
61-63 [SUP]
Yes, CC 61, 69; [CUP];
Yes, CC 66, 61-63
[SUP]
No, CC 22 No, CC 22 No, CC 22
Permit Application: Required to provide
permit history or operation of similar use
at any time anywhere in the United
States. CMMC 13-311(a) + 9-374(a)
versus CMMC 13-29(a) + City Form
09/2019
Yes, CC 61, 69;
[CUP]; Yes, CC 66,
61-63 [SUP]
Yes, CC 61, 69; [CUP];
Yes, CC 66, 61-63
[SUP]
No CC 22 No, CC 22 No, CC 22
Permit Application: Required to provide
copy of rules governing conduct of
residents occupying dwelling. CMMC 13-
311(a) + 9-374(a) versus CMMC 13-29(a)
+ City Form 09/2019
Yes, CC 61, 69;
[CUP]; Yes, CC 66,
61-63 [SUP]
Yes, CC 61, 69; [CUP];
Yes, CC 66, 61-63
[SUP]
No CC 22 No, CC 22 No, CC 22
4 1355
CMMC Regulations Governing
Residential Uses in City's Multifamily
Districts
Sober Living Home2 Group Home3 Boardinghouse,
Sma// < 3 rental
rooms"
Boardinghouse,
Large < 7 rento/
rooms
Multi-family
Dwelling5
Permit Application: Required to identify
the name, address, telephone, CDL of
onsite dwelling manager. CMMC 13-
311(a) + 9-374(a) versus CMMC 13-29(a)
' + City Form 09/2019
Yes, CC 61, 69;
[CUP]; Yes, CC 66,
61-63 [SUP]
Yes, CC 61, 69; [CUP];
Yes, CC 66, 61-63
[SUP]
No, CC 22 No, CC 22 No, CC 22
Permit Application: Required to provide
document reflecting criteria for
acceptance of resident in dwelling.

CMMC 13-311(a) + 9-374(a) versus CMMC
13-29(a) + City Form 09/2019
Yes, CC 61, 69;
[CUP]; Yes, CC 66,
61-63 [SUP]
Yes, CC 61, 69; [CUP];
Yes, CC 66, 61-63
[SUP]
No, CC 22 No, CC 22 No, CC 22
Permit Notice Requirements, July 2017
(17-05) - October20l8 (18-06) time
period
Public notice of hearing on application for
special use permit, CMMC 13-311(b)
versus CMMC 13-29(c) [07/2017-
09/2018]
Notice to be mailed
to the owner of
record and
occupants of all
properties within
five hundred
(500) feet of the
location of the
group home.

Notice to be mailed
to the owner of
record and
occupants of all
properties within
five hundred
(500) feet of the
location of the group
home.

Notices of the
hearing shall be
mailed to all
property
owners within
a five hundred-
foot radius of
the project site
Notices of the
hearing shall be
mailed to all
property owners
within a five
hundred-foot
radius of the
project site
Notices of the
hearing shall
be mailed to
all property
owners within
a five
hundred-foot
radius of the
project site
Occupancy limit on number of
residents per dwelling
5 1356
CMMC Regulations Governing
Residential Uses in City's Multifamily
Districts
Sober Living Home2 Group Home3 Boardinghouse,
Smo// < 3 rental
rooms"
Boardinghouse,
Large < 7 rental
rooms
Multi-family
Dwelling5
Occupancy limitation City Housing
Element
City Housing Element State Housing
Law/UHC
State Housing
Law/UHC
State Housing
Law/UHC
On-Site Manager Requirements
Dwelling must have a 24/7 onsite
manager. CMMC 13-311(a)(4) + CMMC 9-
274(b)(1) versus State Housing Law
Yes, CC 62, 70 Yes, CC 62, 70 NO, State
Housing Law
No, State
Housing Law
No, State
Housing Law
Vehicle Restrictions
Each dwelling resident limited to one
vehicle that must be used as resident's
primary form of transportation, 13-
311(a)(5) + CMMC 9-274(b)(2)
Yes, CC 62, 70 Yes, CC 62, 70 No No No
Resident Parking Restrictions
Each dwelling resident must park her
vehicle on dwelling premises or within
500 feet of dwelling, 13-311(a)(5) +
CMMC 9-274(b)(2) versus CMMC Title 10,
Ch X (Stopping, Standing and Parking)
Yes, CC 62, 70 Yes, CC 62, 70 No No No
riii;p*;xa* rzyai;aiziuvizx*p
GVIIAIIIII ICqullCll%lllJ
Landlord/operator must notify resident's
emergency contact, OCHA QC Links
Referral Line, and Costa Mesa"s Network
for Homeless Solutions before an evicting
resident, CMMC 13-311(a)(10) + 9-
374(b)(6)
Yes, CC 62, 70 Yes, CC 62, 70 No No No
Landlord/operator must provide
transportation to alternative housing to
any resident evicted from dwelling,
CMMC 13-311(a)(11) + 9-374(b)(7)
Yes, CC 62, 70 Yes, CC 62, 70 No No No
6 1357
CMMC Regulations Governing
Residential Uses in City's Multifamily
Districts
Sober Living Home2 Group Home3 Boardinghouse,
Smo// < 3 rento/
rooms"
Boardinghouse,
Large < 7 rental
rooms
Multi-family
Dwelling5
Landlord/operator must maintain eviction
records for one year resident"s eviction
from dwelling, CMMC 13-311(a)(12) + 9-
374(b)(8)
Yes, CC 62, 70 Yes, CC 62, 70 No No No
Regulation of Residents within
Dwelling
Each resident of dwelling must actively
participate in a legitimate self-
improvement program (e.g., 12-step
programl CMMC 13-311(a)(14)(i) + 9-
374(b)(10)(i)
Yes, CC 63, 71 No No No No
Landlord/operator must maintain records
showing that resident is actively
participating in a legitimate self-
improvement program (e.g., 12-step
program), CMMC 13-311(a)(14)(i) + 9-
374(b)(10)(i)
Yes, CC 63, 71 No No No No
Landlord/operator must promulgate a
rule warning that if a resident refuse to
actively participating in a legitimate self-
improvement program (e.g., 12-step
program), then the resident may be
evicted. CMMC 13-311(a)(14)(i) + 9-
374(b)(10)(i)
Yes, CC 63, 71 No No No No
Landlord/Operator must prohibit
residents from use of any non-
prescription drugs. CMMC 13-
311(a%l4)(ii) + 9-374(b)(10)(ii)
Yes, CC 63, 71 No No No No
1358
CMMC Regulations Governing
Residential Uses in City's Muftifamily
Districts
Sober Living Home2 Gmup Home3 Boardinghouse,
Sma// < 3 rental
rooms=
Boardinghouse,
Large < 7 rental
rooms
Multi-family
Dwelling5
Landlord/operator must evict any
resident caught using any non-
prescription drug. CMMC 13-
311(a%l4)(ii) + 9-374(b)(l0%ii)
Yes, CC 63, 71 No No No No
Landlord/operator must promulgate a
good neighbor policy directing residents
"to be considerate of neighbors, including
refraining from engaging in excessively
loud, profane or obnoxious behavior that
would unduly interfere with a neighbor's
use and enjoyment of their dwelling
unit." CMMC 13-311(a)(14)(vi) + 9-
a;a(b)(io)(v)
Yes, CC 63, 71 No No No No
Landlord/operator must promulgate
written protocol for onsite manager to
follow in response to a neighbor's
complaint. CMMC protocol for 13-
311(a)(14)(vi) + 9-374(b)(10)(v)
Yes, CC 63, 71 No No No No
Owner, Landlord, Operator, and
Employee Qualification Requirements
Owner, landlord, or operator of a
dwelling is barred from obtaining a
Special or Condition Use Permit for that
dwelling if she was terminated from a job
for sexual harassment, embezzlement, or
illegally furnishing alcohol within two
years of applying to the City for that
zoning permit. CMMC 13-311(b)(2i 9-
374(e)(2) versus 13-29(g)(2)
Yes, CC 63, 71 Yes, CC 63, 71 No, CC 25 No, CC 25 No, CC 25 8 1359
CMMC Regulations Governing
Residential Uses in City's Multifamily
Districts
Sober Living Home2 Gmup Home3 Boardinghouse,
Smo// < 3 rental
rOOmSa
Boardinghouse,
Large < 7 rental
rooms
Multi-family
Dwelling5
Owner, landlord, or operator of a
dwelling is barred from obtaining a
Special or Condition Use Permit for that
dwelling if she employs any person who
was terminated from a job alcohol for
sexual harassment, embezzlement, or
illegally furnishing alcohol within two
years of applying to the City for that
zoning permit. CMMC 13-311(b)(2i 9-
374(e)(2) VerSuS 13-29(g)(2)
Yes, CC 63, 71 Yes, CC 63, 71 No, CC 25 No, CC 25 No, CC 25 Owner, landlord, or operator of a
dwelling is barred from obtaining a
Special or Condition Use Permit for that
dwelling if she was convicted or pleaded
nolo contendere to any PC 290 sex
offense or PC 667.5 felony within 10 years
of applying to the City for that zoning
permit. CMMC 13-311(b)(2), 9-374(e)(2)
versus 13-29(g)(2)
Yes, CC 63-64, 71-72 Yes, CC 63-64, 71-72 No, CC 25 No, CC 25 No, CC 25 Owner, landlord, or operator of a
dwelling barred from obtaining a Special
or Condition Use Permit for that dwelling
i if she employs any person who was
convicted or pleaded nolo contendere to
any PC 290 sex offense or PC 667.5 felony
within 10 years of applying to the City for
that zoning permit. CMMC 13-311(b)(2),
9-374(e)(2) versus 13-29(g)(2)
Yes, CC 63-64, 71-72 Yes, CC 63-64, 71-72 No, CC 25 No, CC 25 No, CC 25 1360
CMMC Regulations Governing
Residential Uses in City's Multifamily
Districts
Sober Living Home2 Group Home3 Boardinghouse,
Sma// < 3 rento/
rooms"
Boardinghouse,
Large < 7 rental
rooms
Multi-family
Dwelling5
Owner, landlord, or operator of a
dwelling barred from obtaining a Special
or Condition Use Permit for that dwelling
if he was convicted or pleaded nolo
contendere to any PC 290 sex offense or
PC 667.5 felony within 10 years of
applying to the City for that zoning
permit. CMMC 13-311(b)(2), 9-374(e)(2)
versus 13-29(g)(2)
Yes, CC 63-64, 71-72 Yes, CC 63-64, 71-72 No, CC 25 No, CC 25 No, CC 25 Owner, landlord, or operator of a
dwelling barred from obtaining a Special
or Condition Use Permit for that dwelling
if she employs any person who was
convicted or pleaded nolo contrendere to
any PC 451 arson offense or furnishing
any controlled substance within 7 years of
applying to the City for that zoning
permit. CMMC 13-311(b)(21 9-374(e)(2)
versus 13-29(g)(2)
Yes, CC 63-64, 71-72 Yes, CC 63-64, 71-72 No, CC 25 No, CC 25 No, CC 25 Owner, landlord, or operator of a
dwelling barred from obtaining a Special
or Condition Use Permit for that dwelling
if she is in recovery from abuse of drugs
or alcohol and has been abstained for less
than one year before applying to the City
for that zoning permit. CMMC 13-
311(b%6), 9-374(e)(2) versus 13-29(g%2)
Yes, CC 64, 72 No No, CC 25 No, CC 25 No, CC 25
1361
Disability
Rights
California
California's protection & advocacy system
January 12, 2026

VIA EMAIL
Kimberly Hall Barlow
Jones Mayer
3777 N. Harbor Blvd.

Fullerton, CA 92835
[email protected]

LEGAL ADVOCACY UNIT
'l 831 K Street
Sacramento, CA 95811
Tel: (916) 504-5800
Fax: (916) 504-5801
TTY: (800) 7'l9-5798
Intake Line: (800) 77 €3i-5748
www.disabilityrightsca.org
RE: Costa Mesa's Proposed Revisions to RA Ordinance Dear Ms. Barlow:

Thank you for the opportunity to review and comment on Costa Mesa's proposed revisions to the City's reasonable accommodation ordinance pursuant to the settlement agreement in the Insight v. Costa Mesa case.

In your December 19, 2025 email to us, you said that Costa Mesa was proposing to delete subsection (7) of Section 1 3-200.62(f) of the City's reasonable accommodation ordinance. You explained that the deletion is proposed because "it is operationally difficult for staff or the applicants to make this determination given lack of information and the difficulties in ensuring that any facilities adequately allow individual(s) with said disability(ies) to live in a residential setting. Furthermore, this subsection is unnecessary given the other provisions of the Reasonable Accommodation Ordinance." We support the deletion of subsection (7) from Section 13- 200.62, which requires a finding that "the existing supply of facilities of a similar nature and operation in the community is sufficient to provide individuals with a disability an equal opportunity to live in a residential setting."
IT 2
-24-
1362
January 12, 2026

Page 2 of 7 ends

The deletion of subsection (7) is an important first step in bringing Costa Mesa's reasonable accommodation ordinance into compliance with state and federal fair housing requirements. However, in order to bring the entire reasonable accommodation regulation into compliance, Costa Mesa will need to make additional changes. Given the structure of the current ordinance, it will be difficult to do that by simply editing or rewording the text. Instead, we propose that the City repeal sections of the ordinance in their entirety and replace them with new ones.

To begin with, Section 13-200.62 (f) has problems that cannot be remedied without restructuring. That section is a list of findings "all of which are required for approval" of a reasonable accommodation request. But the list combines factors that the person or entity requesting the accommodation must establish in order to be entitled to an accommodation, i.e., the topics of Findings (1 ) and (2), with factors that are the City's burden to establish if it is going to deny the accommodation, i.e., the topics of Findings (3), (5), and (8). These two types of topics need to be separated to clearly delineate who - the person or entity making the request, or the City - bears the burden of proof.

As written, Findings (3), (5), and (8) require affirmative findings that there is no undue financial or administrative burden, no direct threat, and no fundamental alteration for the approval of a reasonable accommodation request. In other words, they require that the City affirmatively find that those factors are not present. This has the effect of putting the burden on the person or entity making the request to establish the absence of an undue burden or fundamental a(teration. That is contrary to fair housing law, which makes it the City's burden to establish that there is an undue burden, direct threat, or fundamental alteration before denying a reasonable accommodation request. Fair housing law does not permit the City to make the establishment of the absence of those factors a requirement.

Undue burden, direct threat, and fundamental alteration can properly be in the reasonable accommodation ordinance, but the regulation needs to be structured in a way that makes clear that if the person or entity making the request establishes the factors addressed in Findings (1 ) and (2), the City must grant the accommodation unless it finds that granting the -25-
1363
January 12, 2026

Page 3 of 7 ends

accommodation will impose an undue financial or administrative burden, will result in a direct threat, or will result in a fundamental alteration (i.e., the inverse of the current language regarding findings). It does not work to combine them in the same list as the elements that the person or entity making the request has the burden to establish. The two types of findings must be bifurcated.

Moreover, the current structure of the reasonable accommodation ordinance also makes it difficult for the ordinance to adequately reflect the law governing the findings that the City must establish to deny an otherwise valid reasonable accommodation request. For example, where the ordinance authorizes the City to deny a reasonable accommodation request based on a direct threat finding, it must also state that in such a case the City must find that the threat cannot be mitigated by reasonable accommodation. 28 C.F.R. §35.139. A finding that granting a reasonable accommodation would be an undue burden or fundamental alteration must also be made "after considering all resources available for use in the funding and operation or the service, program, or activity, and must be accompanied by a written statement of the reasons for reaching that conclusion." 28. C.F.R. §35.150(a)(3). It will be difficult to add such clarifications in a clear way unless the two types of findings under Section 1 3-200.62(f) are separated and the findings for which the City bears the burden are written in the affirmative.

Section 13-200.62 (f) also includes factors that do not fall within either the burden of the person or entity making the accommodation request or the allowable reasons for the City to deny a request, but instead layer on additional obligations that are not permitted under fair housing law. Finding (4) requires a finding that the "requested accommodation is consistent with surrounding uses in scale and intensity of use." The City cannot apply different occupancy, use, or development standards to shared housing for people with disabilities as compared to other forms of housing, nor can it require a household of people with disabilities to be limited to fewer people than a single housekeeping unit would be allowed to have. To the extent that a requested accommodation would result in housing that was vastly different from permitted housing uses, City staff could evaluate whether granting the request would constitute a fundamental alteration to a City program or would result in an undue burden or direct threat. But simply having the same number of people that a single housekeeping unit would -26-
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January 12, 2026

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be allowed to have, or failing to meet another occupancy or development standard that was not also applied to single housekeeping units, could never fall within one of those permitted reasons for denying an accommodation request. Consistency with other uses should therefore not be listed as a separate required finding.

Likewise, Finding (6) requires in some instances "a finding that the requested accommodation is necessary to make facilities of a similar nature or operation economically viable in light of the particularities of the relevant market and market participants generally." For the same reasons that the City is removing Finding (7), which also focuses on "facilities of a similar nature and operation" rather than on the specific housing that is at issue for a particular reasonable accommodation request, the City should remove Finding (6). It is just as true that it will be "operationally difficult for staff or the applicants to make this determination given lack of information" for Finding (6) as for Finding (7). Moreover, providing a feasibility study or market study about other housing does not fall within the burden of someone making a reasonable accommodation request. Making such a study a condition of approving a disability-related accommodation is therefore a discriminatory housing practice. This should likewise not be listed as a required finding.

The deletion of Finding (7) should also be accompanied by a revision to the language of Finding (2), which states that, "[t]he requested accommodation is necessary to provide one or more individuals with a disability an equal opportunity to use and enjoy a dwelling." To ensure that City staff interpret Finding (2) consistent with fair housing laws, by focusing on the housing at issue in the request rather than "facilities of a similar nature and operation" elsewhere, Finding (2) should be revised to refer to an equal opportunity to use and enjoy "their dwelling," "the dwelling at issue in the accommodation request," or something similar.

In order to bring the reasonable accommodation ordinance into compliance with federal and state fair housing law, the City will also need to revise other portions of the ordinance. As reflected in the settlement agreement, we would welcome the opportunity to work with the City during that portion of its review of the reasonable accommodation ordinance and to provide feedback on any draft revisions of those other sections. -27-
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January 12, 2026

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For those portions of the ordinance as well, it would be most effective for the City to repeal and replace language rather than try to work within the existing structure. For example, Section 1 3-200.62(b) loads burdensome and irrelevant requirements onto people or entities making reasonable accommodation requests. A lay homeowner who needs an accommodation due to disability should be able to comply with application requirements without having to hire an attorney or other expert to help them understand what they need to do. The City should limit the application to information that is necessary for the City to evaluate whether the person or entity making the request has met their burden, such as the location of the dwelling at issue, the existence of the disability, the nature of the accommodation that is being requested, and the connection between the disability and the requested accommodation. The provisions in Section 13- 200.62(b) that require people or entities making reasonable accommodation requests to provide "[a]ny other information that the director reasonably determines is necessary for evaluating the request for reasonable accommodation" ((b)(3)) and "[a]ny other information that the hearing officer reasonably concludes is necessary to determine whether the findings required by subsection (e) of this section can be made" ((b)(7)) are particularly problematic because they are not limited to the information necessary to establish that a person or entity is entitled to a reasonable accommodation.

Section 1 3-200.62(d) provides that appeals of reasonable accommodation requests will be handled through the same procedures as "any other discretionary permit." However, the appeals process pertaining to reasonable accommodation requests needs to be navigable and manageable by lay people with disabilities. This provision should be repealed and replaced with new language that requires a prompt, clear statement of the reasons for any denial, establishes a simple procedure for requesting an appeal, provides a reasonable deadline for making requests for an appeal, and eliminates the need for individuals or entities to pay for the City's review of their reasonable accommodation determination.

Most importantly, the section of the reasonable accommodation ordinance addressing appeals must exempt them from the review procedures that govern general zoning matters in order to respect the privacy of people's disabilities and disability-related needs during any review process.

Hearings regarding reasonable accommodations requests should not be -28-
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January 12, 2026

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made by legislative bodies, and no public notice should be made regarding reasonable accommodation reviews. Public hearings create an opening for members of the public to express animus against people with disabilities, which imposes an improper barrier to people seeking such accommodations. For example, at the hearings regarding Insight's reasonable accommodation request, a member of the public told the Planning Commission that a person who is "mentally disabled does not belong in a neighborhood next door to me or any of us in this room," and someone testified to the City Council that the "mentally ill cannot associate with our children, neighbors." As you know, hearing those types of comments was traumatic for our client Ms. Doe, who spoke about her own experiences with mental illness, and the ways that staying at Insight's housing had helped her, at a hearing on Insight's reasonable accommodation request. Not onfy is the City not obligated to provide the public with a forum to intimidate and humiliate people like Ms. Doe, but the City cannot put people like her through such an ordeal as a condition of having their accommodation request reviewed. Nor can such animus play any part in the City's review of an accommodation request. For similar reasons, the ordinance should also make clear that only the person or entity making the request can appeal a decision regarding a reasonable accommodation, in contrast to the current language which permits virtually anyone - including neighbors with an animus against people with disabilities - to appeal.

Finally, Sections 13-200.62(e) and (g), regarding "considerations," overlap with the required "findings" in Section 1 3-200.62(f) in a way that impedes consistency with fair housing law. Like Section 1 3-200.62(f), these sections fail to make clear which elements are the burden of the person making the reasonable accommodation request to establish and which are the City's burden. Many of them are also improper considerations. For example, the City cannot take into account "whether granting the request would be consistent with the City's General Plan." By definition, any reasonable accommodation request pertaining to zoning will be inconsistent with the zoning scheme. "Requiring public entities to make exceptions to their rules and zoning policies is exactly what the FHAA does." Anderson v. City of Blue Ash, 798 F.3d 338, 363 (6th Cir. 201 5); City of Edmonds v.

Washington State Bldg. Code Council, 18 F.3d 802, 806 (9th Cir. 1994) (FHA imposes an affirmative duty to reasonably accommodate disabled persons). The question is not whether a requested disability -29-
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accommodation is inconsistent with the City's General Plan, but whether granting it would fundamentally alter the General Plan. To take another example, the City cannot take into consideration whether "the accommodation would result in a substantial increase in traffic or insufficient parking" (§ 13-200.62(g)(2)) or "create an institutionalized environment due to the number of and distance between facilities that are similar in nature or operation" (§ 1 3-200.62(g)(4)) unless it is also doing so with respect to single housekeeping units. Again, the City cannot impose more stringent development or occupancy standards on housing occupied by people with disabilities than on single housekeeping units, nor can it use vague or undefined conditions as a basis for denial of a reasonable accommodation request. These are examples, and not an exhaustive list, of the issues with subsections (e) and (g) of Costa Mesa's reasonable accommodation ordinance. We would be happy to provide additional comments or to discuss with you and with City staff in more detail our further thoughts on bringing the ordinance into compliance with state and federal fair housing requirements.

We appreciate your time and attention to our comments and look forward to working with you and the City further on these important access issues for Costa Mesa residents with disabilities. Please let us know if you would like to discuss any of these issues further.

Sincerely,
Autumn M. Elliott
Law Office of Autumn Elliott
Jia Min Cheng
Managing Attorney
Disability Rights California
-30-
1368

HALLIGAN, MICHELLE
From:

Sent:

Cc:

Subject:

Attachments:

TAl, CARRIE
Monday, February 9, 2026 9:38 AM
PARTIDA, ANNA; MCGILL, ANNA; DACEY, MELINDA; HALLIGAN, MICHELLE; Tarquin Preziosi
CJ Segerstrom 8i Sons: February 9 PC Agenda Item PH-1 CJ Segerstrom & Sons Letter to Planning Commission 020726(1 9234784.5).pdf bcc: Plannrng Commission
Chair Harlan and Members ofthe Planning Commission, Please find attached a letter from c...i. Segerstrom & Sons pertaining to the public hearing agenda item on tonight's Planning Commission agenda. C.J. Segerstrom & Sons is requesting thattheir properties be excluded from the rezoning item, in concert with a request to remove their properties from the housing element sites inventory (which will be considered at a future meeting). The reason for these requests relates to how cities must apply overlays given the findings of a recent case law.

Carrie Tai, AICP
Director
City of Costa Mesa l Economic and Development Services Department (714) 754-5270
77 Fair Drive l Costa Mesa l CA 92626
"The City of Costa Mesa serves our residents, businesses and visitors while promoting a safe, inclusive, and vibrant community."
WgJCjW
PLEASE CONSIDER THE ENVIRONMENT BEFORE PRINTING THIS EMAIL. THANK you. d from outside of the organization. Do not click links or open attac'ents unless you recognize the sender aq4 la;'iowtqecontentissafe.R an aciousactivitiestotheInformationTechnolo Departmentg 1 1369
Ill COX CASTLE
Cox, Castle & Nicholson LLP
3121 Michelson Drive, Suite 200 C
Irvine, California 92612-5678
P: 949.260.4600 F: 949.260.4699
Tim Paone
949.260.4655
[email protected]
February 7, 2026
Jeffrey Harlan, Chair
Jon Zich, Vice Chair
Karen Klepack, Commissioner
Johnny Rojas, Commissioner
Angely Andrade Vallarta, Commissioner
David Martinez, Commissioner
Robert Dickson, Commissioner
c/o Carrie Tai
Director of Economic and Development Services
City of Costa Mesa
77 Fair Drive
Costa Mesa, CA 92626
Sent by Email to: [email protected]
Re: C.J. Sezerstrom & Sons Properties in Zoning Ordinance Chair Harlan and Members of the Planning Commission:

This letter serves as the adamant objection by C.J. Segerstrom & Sons ("aS") to the adoption in its current form of the proposed Zoning Code Amendment which is Item Number PH-I on your February 9 meeting agenda. As an overriding theme of this objection, we ask that you keep in mind that the purpose of the statewide RHNA-driven Housing Element update process is to heavily incentivize residential development, not to compel it.

In a letter to the City Council from our office on January 30, 2026, CJS requested that the City take "all actions necessary" to remove from the City's Housing Element the identification of fourteen properties owned by CJS (the "CJS Properties") as "Housing Element sites" with mixed- use overlays. All Planning Commissioners were copied on that letter. Today, we are asking the Planning Commission to recommend to the City Council that the CJS Properties be expressly exempted from the proposed zoning amendment's MUOD requirements.

The basis for this request is straightforward: In 2022, CJS was assured by the City that the mixed- use overlays in the subsequently adopted Housing Element would not jeopardize existing zoning designations on the CJS Properties, leaving CJS the option to pursue residential uses if, when, and to the extent consistent with CJS's business planning. As noted in our letter to the City Council, www.coxcastle.com Los Angeles i Orange County i San Francisco 1370
Chair Harlan and Members of the Planning Commission c/o Carrie Tai
February 7, 2026

Page 2 ends

through no fault of the City, changing circumstances have lessened that assurance. The ongoing proliferation of new housing laws and uncertainty created by court rulings have delivered the reality of "unintended consequences." If adopted as now written, the zoning code amendment before your Commission will effectively reverse the commitment made by the City to CJS in 2022.

HCD's methodology for the preparation of an inventory of properties suitable and available for residential development includes factors related to ownership, existing uses, encumbrances, applicable development agreements, the landowner's intent (or not) to pursue residential development, and much more. In hindsight, the cooperation of CJS in allowing the City to place the CJS Properties in mixed-use overlay districts based upon the good faith assurance that residential development would not be required may have limited the perceived need for a thorough evaluation of these factors. What understandably was not foreseen by the City was that the courts would upset HCD"s statewide practice of accepting Housing Element mixed-use overlays which allowed, but did not require, residential development.

By effectively requiring some residential in the City's MUOD Housing Element sites, the zoning amendment before you appears to be an understandable strategic reaction to a court decision that did not involve the City. This change in course, however, negates the good faith assurance that the City had given aS and, in our view, is not a strategy that should be applied to the CJS Properties. If needed to protect CJS"s critical commercial interests, we will provide appropriate clarification directly to HCD to demonstrate that the CJS Properties are not appropriate Housing Element sites.

There is, however, a better approach. A simple modification of the proposed zoning amendment would resolve our concern with that amendment. A similar provision already is included for another property. Article 11, Section 13-83.58(b)(3) of the proposed zoning amendment (see Exhibit E of the Staff Report) now states:
"Exception. The provisions of this Section shall not apply to residential projects or mixed-use projects having residential units located within the boundaries of the Fairview Development Center Specific Plan."
CJS requests the Commission to include in its recommendation to the City Council that the following language be added to the proposed zoning amendment as Section 13-83.58(b)(4):
"Exception. The provisions of this Section shall not apply to residential, mixed-use, or other projects located within the boundaries of any of the following properties identified in Table B-6 of the Housing Element:
1371
Chair Harlan and Members of the Planning Commission c/o Carrie Tai
February 7, 2026

Page 3 ends

HE Site jVo. CJS Site 10
141 Town Center
205 Town Center
145 South CoastPlaza
146 South CoastPlaza
147 South Coast Plaza
203 US Post Office
204 US Post Office
HE Site No. CJS Site 10
134 HarborAssociates
136 HarborAssociates
137 Home Ranch
138 Home Ranch
198 Home Ranch
1 39 Town Center
140 Town Center
This narrowly tailored exemption would honor the representations made to CJS and, when combined with the requested removal of the CJS properties from the list of Housing Element sites, would avoid adverse consequences to long-standing, actively operated commercia[ properties which greatly benefit the community and the City.

CJS appreciates the Commission's consideration of this request and respectfully urges the Commission to recommend this amendment to the City Council. Please reach out to either me or Justin McCusker if you have any questions.

Thank you.

COX, CASTLE & NICHOLSON LLP
By: Tim Paone
Partner
CC: Costa Mesa City Council
Costa Mesa City Manager Cecilia Gallardo-Daly 1372 Ill COX CASTLE
Cox, Castle & Nicholson LLP
3121 Michelson Drive, Suite 200 C
Irvine, California 92612-5678
P: 949.260.4600 F: 949.260.4699
Tim Paone
949.260.4655
[email protected]
January 30, 2026
Mayor John Stephens
Mayor Pro Tem Manuel Chavez
Council Member Jeff Pettis
Council Member Andrea Marr
Council Member Loren Gameros
Council Member Mike Buley
Council Member Arlis Reynolds
c/o Carrie Tai
Director of Economic and Development Services
City of Costa Mesa
77 Fair Drive
Costa Mesa, CA 92626
Sent by Email to: Carrie.Tai@costamesaca.@ov
Re: CJS Properties in Housinz Element
Mayor Stephens and Members of the City Council:

As you know, c.i. Segerstrom & Sons ("CJS") has deep roots in the City of Costa Mesa. The City and CJS not only have significantly benefited from each other"s continued success, but also have a demonstrated history of cooperation to further that success. It was with that cooperative spirit that CJS agreed to the City's request that fourteen properties owned by CJS (the "CJS Properties") be identified "Housing Element sites" with mixed-use overlays as part of the City's Housing Element update process. CJS's cooperation relied on the City's assurance that these overlays would not jeopardize existing zoning designations, but instead would give CJS the option to pu-rsue reside-ntial-us-es -i-f-and-wh-enconsis-fe-nt-with aS's-b-usi-ness-p-l-anning. Sta-nding alon-e, th-e Housing Element as adopted by the City Council in 2022 reflected that assurance.

Through no fault of the City, however, changing circumstances have lessened that assurance.

Since 2022, new State housing laws have continued to proliferate, with the prospect of more to come. Both the City and the State's Department of Housing and Community Development ("HCD") have had to adapt not only to evolving State housing laws, but also to court decisions interpreting those laws, often with unexpected results. Concurrently, the City has been working to reconcile the various implications of Measure Y, Measure K, the "Neighborhoods Where We www.coxcastle.com Los Angeles i Orange County i San Francisco 1373
Mayor Stephens and Council Members
January 30, 2026

Page 2 ends

All Belong" program, planning for the Fairview Developmental Center, and HCD"s rezoning requirements. As a result, the risk of "unintended consequences" has become significant.

Unlike many landowners, CJS is neither in a hurry to develop its properties nor, at this time, focused upon residential development of the CJS Properties. To the contrary, the common reputational and economic interests of aS and the City are to a significant degree tied to CJS's thoughtfully planned and highly successful commercial development. While these shared interests do not preclude residential development in the future, CJS is not ready to commit the CJS Properties to residential development at this time, whether directly or inadvertently.

As we have communicated since before the holidays, it has become clear that sooner or later CJS will need to request the removal of the CJS Properties from the Housing Element. Therefore, CJS is formally requesting the City to take all actions necessary to remove the CJS Properties from the Housing Element.

HE Site No. CJS Site 10
141 Town Center
205 Town Center
145 South Coast Plaza
146 South Coast PLaza
147 South Coast PLaza
203 US Post Office
204 US Post Office
HE Site No. CJS Site 10
134 Harbor Associates
136 Harbor Associates
137 Home Ranch
138 Home Ranch
198 Home Ranch
139 Town Center
140 Town Center
Please reach out to either me or Justin McCusker if you have any questions or if there are further steps which aS must take to facilitate the near-term removal of the CJS Properties from the City's updated Housing Element.

Thank you.

COX, CASTLE & NICHOLSON LLP
By: Tim Paone
Partner
CC: Costa Mesa City Manager Cecilia Gallardo-Daly
Costa Mesa Planning Commissioners
1374

www.coxcastle.com Los Angeles | Orange County | San Francisco Cox, Castle & Nicholson LLP
3121 Michelson Drive, Suite 200 C
I r v i n e, C a l i f o r n i a 9 2 6 1 2 - 5 6 7 8 P: 949.260.4600 F: 949.260.4699
Tim Paone
949.260.4655
[email protected]
January 30, 2026
Mayor John Stephens
Mayor Pro Tem Manuel Chavez
Council Member Jeff Pettis
Council Member Andrea Marr
Council Member Loren Gameros
Council Member Mike Buley
Council Member Arlis Reynolds

c/o Carrie Tai
Director of Economic and Development Services
City of Costa Mesa
77 Fair Drive
Costa Mesa, CA 92626

Sent by Email to: [email protected]
Re: CJS Properties in Housing Element

Mayor Stephens and Members of the City Council:

As you know, C.J. Segerstrom & Sons (“CJS”) has deep roots in the City of Costa Mesa. The City and CJS not only have significantly benefited from each other’s continued success, but also have a demonstrated history of cooperation to further that success. It was with that cooperative spirit that CJS agreed to the City’s request that fourteen properties owned by CJS (the “CJS Properties”) be identified “Housing Element sites” with mixed-use overlays as part of the City’s Housing Element update process. CJS’s cooperation relied on the City’s assurance that these overlays would not jeopardize existing zoning designations, but instead would give CJS the option to pursue residential uses if and when consistent with CJS’s business planning. Standing alone, the Housing Element as adopted by the City Council in 2022 reflected that assurance.

Through no fault of the City, however, changing circumstances have lessened that assurance.

Since 2022, new State housing laws have continued to proliferate, with the prospect of more to come. Both the City and the State’s Department of Housing and Community Development (“HCD”) have had to adapt not only to evolving State housing laws, but also to court decisions interpreting those laws, often with unexpected results. Concurrently, the City has been working to reconcile the various implications of Measure Y, Measure K, the “Neighborhoods Where We 1375
Mayor Stephens and Council Members
January 30, 2026

Page 2 ends

All Belong” program, planning for the Fairview Developmental Center, and HCD’s rezoning requirements. As a result, the risk of “unintended consequences” has become significant.

Unlike many landowners, CJS is neither in a hurry to develop its properties nor, at this time, focused upon residential development of the CJS Properties. To the contrary, the common reputational and economic interests of CJS and the City are to a significant degree tied to CJS’s thoughtfully planned and highly successful commercial development. While these shared interests do not preclude residential development in the future, CJS is not ready to commit the CJS Properties to residential development at this time, whether directly or inadvertently.

Please reach out to either me or Justin McCusker if you have any questions or if there are further steps which CJS must take to facilitate the near-term removal of the CJS Properties from the City’s updated Housing Element.

Thank you.

COX, CASTLE & NICHOLSON LLP

By: Tim Paone
Partner

cc: Costa Mesa City Manager Cecilia Gallardo-Daly
Costa Mesa Planning Commissioners
HE Site No. CJS Site ID
134 Harbor Associates
136 Harbor Associates
137 Home Ranch
138 Home Ranch
198 Home Ranch
139 Town Center
140 Town Center
HE Site No. CJS Site ID
141 Town Center
205 Town Center
145 South Coast Plaza
146 South Coast Plaza
147 South Coast Plaza
203 US Post Office
204 US Post Office
1376

BRANCART & BRANCART

ATTORNEYS AT LAW
Christopher Brancart P. O. BOX 686 Telephone (650) 879-0141 Elizabeth Brancart PESCADERO, CA 94060 Facsimile (650) 879-1103 www.brancart.com
Street Address
8205 Pescadero Road
Loma Mar, California 94021
February 9, 2026
Via Email and Facsimile
Michelle Halligan, Sr Planner
Anna McGill, Adv Planning Mgr
Carrie Tai, Director
City of Costa Mesa
77 Fair Drive
Costa Mesa, CA 92626
Fax: (714) 754-4856
[email protected]
[email protected]
[email protected]
Jeffrey Harlan, Chair
Planning Commission
City of Costa Mesa
77 Fair Drive
Costa Mesa, CA 92626
Fax: (714) 754-5028
[email protected]
[email protected]
[email protected]
Re: Planning Commission Agenda Item PH-1
Meeting: February 9, 2026
Objections, Issues, and Concerns
Dear Gentlepersons:

I write on behalf of The Ohio House and its residents, along with present and former Group Home owners, operators, and residents to address several issues regarding Agenda Item PH-1 to be heard, considered and acted upon by the Planning Commission at a public hearing on Monday, February 9, 2026. Item PH- 1 asks the Planning Commission to approve a resolution recommending the adoption by the City Council of several code amendment purporting to implement specific housing programs set forth in the City’s Sixth Cycle (2021-2029) Housing Element.
-1-
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Planning Commission
February 9, 2026

Page 2 ends

1. Issues Addressed in This Letter
This letter focuses exclusively on code amendments purporting to implement Housing Programs regarding the regulation of housing for persons with disability; specifically:

1. Program 2O (Definition of Single Housekeeping Unit): That the City will “review and revise the definition of ‘single housekeeping unit’ within the zoning code to provide greater flexibility in consideration of accommodating a variety of household situations for related and unrelated individuals living together.”

2. Program 2P (Group Homes): That the City will “review and adopt revisions to its zoning code applicable to group homes to affirmatively further fair housing and comply with fair housing laws per the [following] objective: Review and revise the City’s zoning code and application procedures applicable to group homes to promote objectivity and greater approval certainty similar to other residential uses.”

3. Program 2N (Reasonable Accommodation): That the City will “review and adopt revisions to its Reasonable Accommodation process to be consistent with State and federal fair housing requirements.”
To implement these programs, the City proposes to amended the following provisions of the City’s zoning code (Title 13), set forth in Exhibit 3 in the Planning Commission Agenda Report:

4. Exhibit A: Chapter 1, Article 2, Definitions

5. Exhibit D: Chapter IV, Citywide Land Use Matrix

6. Exhibit H: Chapter IX, Article 15, Reasonable Accommodations

7. Exhibit K: Chapter XV, Group Homes; and,

8. Exhibit L: Chapter XVI, Group Homes in the R2-MD, R2-HD and R3 Residential Zones and the PDR-LD, PDR-MD, PDR-HD, PDR-NCM, -2-
1378
Planning Commission
February 9, 2026

Page 3 ends

PDC, and PDI (Planned Development Zones)
and the related Title 9's Group Home Operator’s Permit, set forth in Exhibit 5.

These code amendments fail to meet the requirements in Housing Programs 2N, 2O, and 2P, but also, if enacted as presently proposed, each amendment violates three federal laws – the Fair Housing Act, ADA, and Rehabilitation Act – and several state statutes, including the California Government Code §§ 12955, 65008, 8899.50, and 11135 as well as the California Constitution.

2. The Proposed Amendment of the Definition of Single
Housekeeping Unit fails to implement the requirements of the City’s Housing Program 2O and promise to violate federal and state fair housing laws.

The definition of Single Housekeeping Unit (SHU) is the pivotal zoning provisions that governs housing opportunities throughout Costa M esa’s residential districts. Among all Residential Uses listed in the City’s Land Use M atrix, CMMC TABLE 13-30, a Single Housekeeping Unit is the only use permitted of right in every residential districts. Thus, if the City chooses to classify an residential occupancy as a SHU, then that household may occupy any dwelling in Costa Mesa pursuant to the zoning code. If the City refuses to classify a residential occupancy as a SHU, then that household is prohibited from the City’s residential districts unless specially or conditionally permitted by the City or compelled by state statute.

The City proposes to implement Housing Plan Program 2O (“Definition of Single Housekeeping Unit”) by amending the current definition of Single Housekeeping Unit as follows:
-3-
1379
Planning Commission
February 9, 2026

Page 4 ends

We urge the Planning Commission to reject the resolution recommending the adoption of the proposed amended definition of Single Housekeeping Unit (SHU) because it fails to implement Housing Program 2O, invites unlawful and arbitrary enforcement, and violates state and federal fair housing statutes. a. The Proposed SHU Definition Perpetuates The City
Discrimination against Persons with Disabilities
The City last amended its SHU definition in 2014 as part of Ordinance 14- 13, the City’s sweeping revision of its zoning code to compel the closure of existing group homes in R1 (SFR) districts – and to prohibit any new group homes there – unless the household qualified for issuance of a specially use permit. (This same framework was enacted by the City in 2015 to group homes in the City’s MFR districts, as discussed below.) A fundamental, necessary condition of the City’s discriminatory zoning restrictions enacted under Ordinance 14-13 was the simultaneous adoption of the current SHU definition. Given its inclusion in Ordinance 14-13, it should come as no surprise that the City repeatedly has admitted that the purpose of the current SHU definition was to exclude group homes from the definition and privilege afforded households classified as SHUs. -4-
1380
Planning Commission
February 9, 2026

Page 5 ends

To achieve this result, the City includes a facially discriminatory presumption, a list of subjective, standardless criteria (carried forward in the proposed amendment), and several of observable indicia “that a household is not operating as a single housekeeping unit,” including more than one rental agreement, private, separate entrances, separate food storage and refrigerators.

The proposed amendment deletes the facially discriminatory presumption but also deletes the only objective, observable standards (locks, entrance, refrigerators) in the pivotal provisions. While those observable indicia were enacted for a discriminatory purpose, they at least had the virtue of being an objective standard that could be applied to readily observable conditions (lock, entrance, refrigerators). Once observable conditions are stripped from the definition, the proposed amendment devolves into a series of necessary conditions lacking objective standard and impossible to apply without invading a household’s constitutionally protected privacy.

The upshot is chilling: If applied as written, there are few if any households that could qualify as SHUs. Worse still, the proposed definition commits the City to police personal relationship among every dwelling’s occupants and to monitor the domestic affair of every household in Costa M esa. b. The Text and Terms of the Proposed Single Housekeeping Unit Definition Offends Common Sense, Valid Zoning Principles, and Fair Housing Laws
The proposed SHU amendment lacks valid, measurable, discernable, objective standards to determine whether a household qualifies as a SHU.

Moreover, even if it provided valid standards, its application depends on the City’s observations and determination of the nature and quality of personal relationships amongst household members and their domestic affair within the privacy of their dwellings. In sum, the proposed SHU definition is useless in application, invalid on its face, and unconstitutional in effect. 1
1 There are several ways to assess the efficacy of a zoning definition. We can disaggregate its terms into necessary and sufficient conditions. We can evaluate whether its intention (what it connotes) aligns with its extension (what it denotes). But under any test, the ultimate question is whether the text provides objective standards that can be consistently applied to observable facts reflecting conditions that endure over time. Thus, most zoning regulation concern the physical -5-
1381
Planning Commission
February 9, 2026

Page 6 ends

As drafted, the proposed definition consists of a series of necessary conditions regarding personal relationships that each occupant must satisfy and several domestic affairs that each occupant must perform. Each of these conditions is necessary. In other words, if the City decides that any one occupant fails to met any one of the following conditions, then the household is disqualified as a Single Housekeeping Unit:

Single housekeeping unit. The occupants of a dwelling unit have [1] established ties and [2] familiarity with each other, including joint [3] use of and [4] responsibility for common areas, which includes [5] interaction with each other, [6] shared meals, [7] household activities, and [8] expenses and responsibilities; where [9] residency is mutually agreed by all residents, is [10] not transitory in nature and the residential activities of the household are conducted on a [11] not-for-profit basis.

A close examination of these necessary conditions demonstrates why the proposed definition is not only profoundly flawed for purported purpose (implementing Program 2O), but also wholly dependent on the City violating the California Constitution, fair housing law, and sound zoning principles. as built environment or readily observable externalities. The proposed amended SHU definition meets none of these criteria under any framework.
-6-
1382
Planning Commission
February 9, 2026

Page 7 ends

No. Necessary
Condition
Condition’s
Objective
Standards
Application Can City Lawfully
Observe and Verify
Facts to Determine
Condition
01 Established
Ties between
each occupant
with each other
occupant.

No, lacks
objective
criteria
measuring
quality or
quantity
a. Necessary condition
must exist throughout the
every persons occupancy
at any point in time.
b. To determine whether
household’s “established
ties” are sufficient, each
one-to-one relationship
amongst occupants must
be evaluated by the City;
thus, in a six member
household, there are 15
unique relationships to
be evaluated. C(n,r)[i.e.,
“n chose 2"].

Yes, for some households,
but only by proxy, limiting
Establish Ties to
relationships defined by
law (e.g., consanguinity),
and thereby discriminating
against non-traditional
families.

No, this conditions lack
any objective criteria;
moreover, this condition
involves personal
relationships that are
inherently difficult to
observe and assess since
relationships transpire
within sphere of
constitutionally protected
privacy
02 Familiarity
between each
occupant with
each other
occupant.

No, id. Id. No, this conditions lack
any objective criteria;
moreover, this condition
involves personal
relationships that are
inherently difficult to
observe and assess since
relationships transpire
within sphere of
constitutionally protected
privacy
-7-
1383
Planning Commission
February 9, 2026

Page 8 ends

No. Necessary
Condition
Condition’s
Objective
Standards
Application Can City Lawfully
Observe and Verify
Facts to Determine
Condition
03 Joint use of . . .
common areas
Yes, in part,
because -
unlike other
conditions -
common areas
are observable.

No, since use
lacks objective
criteria
measuring
quality or
quantity
Id. No. This condition lack an
objective standard;
moreover, it occurs within
the privacy of dwelling.
04 Joint . . .
responsibility
for common
areas
No, lacks
objective
criteria
measuring
quality or
quantity
Id. No. This condition lack an
objective standard;
moreover, it occurs within
the privacy of dwelling.
05 Interaction
with each other
No, id. Id. No, this conditions lack
any objective criteria;
moreover, this condition
involves personal
relationships that are
inherently difficult to
observe and assess since
relationships transpire
within sphere of
constitutionally protected
privacy
-8-
1384
Planning Commission
February 9, 2026

Page 9 ends

No. Necessary
Condition
Condition’s
Objective
Standards
Application Can City Lawfully
Observe and Verify
Facts to Determine
Condition
06 Shared meals No, id. Id., but measured by
participate rate of each
occupant. (i.e., Assume
five occupant and five
"household activities,"
the City must examine
each occupants
participation rate in a
total of 25 activities.

Cartesian Product (mxn)
No. The scope, frequency,
and participation rate
transpires within the
privacy of dwelling
07 Shared . . .
household
activities
No, id. Id.,

No. This condition lacks
an objective, reliable
standard. Moreover,
participation of domestic
activities transpires within
the privacy of dwelling.
08 Shared . . .
expenses
No, Id. Yes, with an
administrative subpoena.

No, unless the City obtains
an administrative subpoena
to obtain detailed
statements of household
expenses and contributions
by each member of the
household
-9-
1385
Planning Commission
February 9, 2026

Page 10 ends

No. Necessary
Condition
Condition’s
Objective
Standards
Application Can City Lawfully
Observe and Verify
Facts to Determine
Condition
09 Residency is
mutually
agreed by all
residents
No, Id., unless
condition is
intended to
empowers any
occupant at the
time to bar any
prospective
occupant or
oust any
existing
occupant from
a household,
regardless of
that occupant's
age or
maturity,
consensus of
the other
occupants, or
the basis for
the preclusion
or ouster.

Id. Possibility, but if and only
if the City obtains
confirmation from each
occupant who occupied a
dwelling during its
purported status as a SHU.
10 not transitory
in nature
No., Id. No, without a duration of
occupancy specified, this
necessary condition
cannot applied.

No, unless the City obtains
an administrative
subpoena, permitting the
City to lawfully review
records or compel
statements that establish
the date each occupant
joined a household. This
information, however, is
meaningless without a
temporal criterion.
-10-
1386
Planning Commission
February 9, 2026

Page 11 ends

No. Necessary
Condition
Condition’s
Objective
Standards
Application Can City Lawfully
Observe and Verify
Facts to Determine
Condition
11 residential
activities of the
household are
conducted on a
not-for-profit
basis
No, Id. Yes, with an
administrative subpoena,
but if and only if the City
can verify that the
housing provider is
either is incorporated as a
nonprofit or operates at a
loss and that each
occupant, regardless of
age, infirmity, or
capacity pays an equal
share of the housing
expense
No, unless the City obtains
an administrative
subpoena, permitting the
City to lawfully obtain
records showing that a
housing provider is a
nonprofit or operates at a
loss and detailed financial
records reflecting
household expenses and
contributions by each
occupant.

Does the proposed SHU definition provide with the City’s zoning and code enforcers (as well as its citizens) with robust, objective standards that can be reliably applied to readily observable facts reflecting conditions that endure over the lifetime of a household? The answer is obvious no. W orse, if you assume that the proposed definition means what it says, and its conditions were uniformly applied to the wide variety of household that exist in Costa M esa2, very few of those households could qualify as Single Housekeeping Unit. W orse still, under the proposed definition, the City is committed to policing the personal relationship and domestic affairs of its citizens, an undertaking that is as unpopular as it is unconstitutional.

We urge the Planning Commission to reject the resolution recommending the adoption of the proposed SHU definition.

3. The proposed amendments to zoning regulations governing group homes fail to implement the objective of the City’s Housing Program 2P, perpetuate discrimination against disabled persons, and promise to violate federal and state fair housing laws.
2 Please refer to the City’s demographic profile in the City’s Sixth Cycle Housing Element. -11-
1387
Planning Commission
February 9, 2026

Page 12 ends

The City proposes to implement Housing Plan Program 2P (“Group Homes”) by not making any substantive changes to its current group home regulations, codified as CMMC Title 13, Chaps. XV and XVI, and CMMC Title 9, Chap. II, Art. 23. See Meeting Packet, Exhibit 3. As a result, the City’s group home regulations continue to discriminate against housing for disabled persons, as reflected in Exhibit 1 hereto.

The only substantive change proposed by the City is to import the definition of “operator” into the definition of group home or sober living home. That amendment is deeply flawed and will not cure the problems with the City’s current group home regulations. The operator definition is standardless, circular, and assumes that landlords renting to non-disabled persons do not engage in placement, rule-setting, and behavioral oversight of their tenants— an demonstrably untrue assumption.

We urge the Planning Commission to reject the resolution recommending the adoption of the proposed amendments to the group home regulations because they are insufficient.

4. The proposed amendments to the City’s RA regulations fail to implement the requirements of the City’s Housing Program 2N, perpetuate discrimination against disabled persons, and promise to continue violating federal and state fair housing laws.

The City proposes to implement Housing Plan Program 2N (“Reasonable Accommodation”) by making modest changes to the existing regulation that fail to fulfill this Housing Program’s intent and continue a policy in violation of federal and state fair housing laws.

To implement Program 2N, the City must amend the current regulation to address each of the issues raised in DRC’s letter to the City dated January 12, 2026, a copy of which is attached as Exhibit 2. In addition, the City must provide a cogent definition of “institutionalization” if it intends to apply that criterion as a basis for denying RA requests.

We urge the Planning Commission to reject the resolution recommending -12-
1388
Planning Commission
February 9, 2026

Page 13 ends

adoption of the proposed RA regulation because it is insufficient.

Thank you for your consideration.
/s/ Christopher Brancart
[email protected]
-13-
1389
1 Zoning regulations for unlicensed1 residential uses in Costa Mesa’s multi-family zoning districts

CMMC Regulations Governing
Residential Uses in City’s Multifamily
Districts
Sober Living Home2 Group Home3 Boardinghouse,
Small < 3 rental
rooms
4 Boardinghouse,
Large < 7 rental
rooms
Multi-family
Dwelling5
Use Definitions

Use defined based on disability status of
residents, CMMC 13-06
Yes, CC 96 Yes, CC 5 No, CC 3 No, CC 3 No CC 4

1 Licensed uses are subject to state-mandated zoning entitlements and restrictions. The Costa Mesa Municipal Code (CMMC) defines these uses as Residential care facilities. A residential facility licensed by the state where care, services, or treatment is provided to persons living in a supportive community residential setting. Residential care facilities include, but may not be limited to, the following: intermediate care facilities for the developmentally disabled (Health & Safety Code §§ 1267.8, 1267.9);community care facilities (Health & Safety Code § 1500 et seq.); residential care facilities for the elderly (Health &Safety Code § 1569 et seq.); residential care facilitie s for the chronically ill (22 C.C.R. § 87801(a)(5); Health & Safety Code § 1568.02); alcoholism and drug abuse facilities (He alth & Safety Code §§ 11834.02— 11834.30); pediatric day health and respite care facilities (Health & Safety Code § 1760 et seq.); r esidential health care facilities, including congregate living health facilities (Health & Safety Code §§ 1265— 1271.1, 1250(i), 1250(e), (h)); family care home, foster home, group home for the mentally disordered or otherwise handicapped persons or dependent and neglected children (Wel. & Inst. Code §§ 5115—5120).” CMMC 13-06. 2Sober living home means a group home for persons who are recovering from a drug and/or alcohol addiction and who are considered handicapped under state or federal law. Sober living homes shall not include the following: (1) residential care facilities; (2) any sober living home that operates as a single housekeeping unit.” CMMC 13-06.
3Group home. A facility that is being used as a supportive living environment for persons who are considered handicapped under state or fede ral law. A group home operated by a single operator or service provider (whether licensed or unlicensed) constitutes a single facility, whether the facility occupies one (1) or more dwelling units. Group homes shall not include the following: (1) residential care facilities; (2) any group home that operates as a single housekeeping unit.” CMMC 13-06.
4 “Boardinghouse. A residence or dwelling, other than a hotel, wherein rooms are rented under two (2) or more separate written or oral rental a greements, leases or subleases or combination thereof, whether or not the owner, agent or rental manager resides within the residen ce. Boardinghouse, small means two (2) or fewer rooms being rented. Boardinghouse, large means three (3) to six (6) rooms being rented. Boardinghouses renting m ore than six (6) rooms are prohibited.” CMMC 13-06.
5 “Dwelling, multi-family “Dwelling, multi-family” or “multi- family dwelling” is a building or buildings of permanent character placed on one (1) lot which is designed or used for residential occupancy by two (2) or more families.” CMMC 13-06. 6 “CC #” refers to page numbers in the excerpt of the current Costa Mesa Municipal Code [as of 05/09/2021], attached to this Table for reference. -14-
1390
2 CMMC Regulations Governing
Residential Uses in City’s Multifamily
Districts
Sober Living Home2 Group Home3 Boardinghouse,
Small < 3 rental
rooms
4 Boardinghouse,
Large < 7 rental
rooms
Multi-family
Dwelling5
Use defined based on nature of the
disability of dwelling’s residents, CMMC
13-06
Yes, CC 9 No, CC 5 No, CC 3 No, CC 3 No CC 4
Permitted Zoning District

Permitted in Residential Zoning District,
CMMC 13-30, 13-204
No, CC 31 No, CC 31 Yes, CC 31 Yes, if pre-
existing, CC 54;

No, if new, CC 31
Yes, CC 31
Permitted in Multifamily Zoning Districts
(R2-MD, R2-HD, R3), CMMC 13-30
No, CC 31 No, CC 31 Yes, CC 31 Yes, if pre-
existing, CC 54;

No, if new, CC 31
Yes, CC 31
Permitted in Planned Development
Residential Districts (PDR-LD, PDR-MD,
PDR-HD, PRD-NCM, PDC, PDI), CMMC 13-
30, 13-204
No, CC 31 No, CC 31 Yes, CC 31 Yes, if pre-
existing, CC 54;

No, if new, CC 31
Yes, CC 31
Permitted in Institutional & Recreational
(I&R) Zoning District [intended for
“recreation, open space, health, public
services,” 13-20(i), CC 17]
Yes, CC 31 Yes, CC 31 No, CC 31 No, CC 31 No, CC 31
Specially or Conditionally Permitted in
Institutional & Recreational (I&R) Zoning
District [intended for “recreation, open
space, health, public services,” 13-20(i),
CC 17]
NA, CC 31 NA, CC 31 No, CC 31 No, CC 31 No, CC 31
Nonconforming Use Status

Existing uses required to apply for
Special or Conditional Use Permit to
Yes, CC 67, 59 Yes, CC 67, 59 No, CC 54 No, CC 54 NA, CC 31 -15-
1391
3 CMMC Regulations Governing
Residential Uses in City’s Multifamily
Districts
Sober Living Home2 Group Home3 Boardinghouse,
Small < 3 rental
rooms
4 Boardinghouse,
Large < 7 rental
rooms
Multi-family
Dwelling5
continue existing use, 13-324, 13-
207.1 versus 13-204, 13-30
Separation Requirement

Separation requirement imposed on
existing uses, 13-322, 13-323, 13-324
versus 13-30, 13-204, 13-207.1
Yes: At least 650
feet between
dwelling and any
group home, sober
living home or
state-licensed drug
and alcohol
treatment facility.

CC 49
Yes: Large
boardinghouses
shall be located
at least one
thousand (1,000)
feet away from
any other
boardinghouse.

CC 49
NA, 13-30
Dwelling Operator’s Permit Required

Owner or operator of dwelling must
obtain an “Operator’s Permit,” CMMC 13-
323, 9-372, or meet same conditions for
Yes, CC 67, 69
[CUP]; Yes, CC 66,
61-63 [SUP]
Yes, CC 67, 69 [CUP];
Yes, CC 66, 61-63
[SUP]
No No No
-16-
1392
4 CMMC Regulations Governing
Residential Uses in City’s Multifamily
Districts
Sober Living Home2 Group Home3 Boardinghouse,
Small < 3 rental
rooms
4 Boardinghouse,
Large < 7 rental
rooms
Multi-family
Dwelling5
Operator’s Permit under SUP
requirements, 13-322, 13-311
Owner or operator of dwelling must
obtain an “operator’s permit” as a
condition to qualify for a conditional use
permit, CMMC 13-323, 9-372, or meet
same conditions for Operator’s Permit to
qualify for SUP, 13-322, 13-311
Yes, CC 67, 69
[CUP]; Yes, CC 66,
61-63 [SUP]
Yes, CC 67, 69 [CUP];
Yes, CC 66, 61-63
[SUP]
No No No
Permit Application Requirements

Permit Application: Required to list
applicant/operator’s every general
partner and every owner with controlling
interest in corporation. CMMC 13-311(a)
+ 9-374(a) versus CMMC 13-29(a) + City
Form 09/2019
Yes, CC 61, 69;
[CUP]; Yes, CC 66,
61-63 [SUP]
Yes, CC 61, 69; [CUP];
Yes, CC 66, 61-63
[SUP]
No, CC 22 No, CC 22 No, CC 22
Permit Application: Required to provide
permit history or operation of similar use
at any time anywhere in the United
States. CMMC 13-311(a) + 9-374(a)
versus CMMC 13-29(a) + City Form
09/2019
Yes, CC 61, 69;
[CUP]; Yes, CC 66,
61-63 [SUP]
Yes, CC 61, 69; [CUP];
Yes, CC 66, 61-63
[SUP]
No, CC 22 No, CC 22 No, CC 22
Permit Application: Required to provide
copy of rules governing conduct of
residents occupying dwelling. CMMC 13-
311(a) + 9-374(a) versus CMMC 13-29(a)
+ City Form 09/2019
Yes, CC 61, 69;
[CUP]; Yes, CC 66,
61-63 [SUP]
Yes, CC 61, 69; [CUP];
Yes, CC 66, 61-63
[SUP]
No, CC 22 No, CC 22 No, CC 22
-17-
1393
5 CMMC Regulations Governing
Residential Uses in City’s Multifamily
Districts
Sober Living Home2 Group Home3 Boardinghouse,
Small < 3 rental
rooms
4 Boardinghouse,
Large < 7 rental
rooms
Multi-family
Dwelling5
Permit Application: Required to identify
the name, address, telephone, CDL of
onsite dwelling manager. CMMC 13-
311(a) + 9-374(a) versus CMMC 13-29(a)
+ City Form 09/2019
Yes, CC 61, 69;
[CUP]; Yes, CC 66,
61-63 [SUP]
Yes, CC 61, 69; [CUP];
Yes, CC 66, 61-63
[SUP]
No, CC 22 No, CC 22 No, CC 22
Permit Application: Required to provide
document reflecting criteria for
acceptance of resident in dwelling.

Public notice of hearing on application for
special use permit, CMMC 13-311(b)
versus CMMC 13-29(c) [07/2017-
09/2018]
Notice to be mailed
to the owner of
record and
occupants of all
properties within
five hundred
(500) feet of the
location of the
group home.

Notice to be mailed
to the owner of
record and
occupants of all
properties within
five hundred
(500) feet of the
location of the group
home.

-18-
1394
6 CMMC Regulations Governing
Residential Uses in City’s Multifamily
Districts
Sober Living Home2 Group Home3 Boardinghouse,
Small < 3 rental
rooms
4 Boardinghouse,
Large < 7 rental
rooms
Multi-family
Dwelling5
Occupancy limitation City Housing
Element
City Housing Element State Housing
Law/UHC
State Housing
Law/UHC
State Housing
Law/UHC
On-Site Manager Requirements

Dwelling must have a 24/7 onsite
manager. CMMC 13-311(a)(4) + CMMC 9-
274(b)(1) versus State Housing Law
Yes, CC 62, 70 Yes, CC 62, 70 No, State
Housing Law
No, State
Housing Law
No, State
Housing Law
Vehicle Restrictions

Each dwelling resident limited to one
vehicle that must be used as resident’s
primary form of transportation, 13-
311(a)(5) + CMMC 9-274(b)(2)
Yes, CC 62, 70 Yes, CC 62, 70 No No No
Resident Parking Restrictions

Each dwelling resident must park her
vehicle on dwelling premises or within
500 feet of dwelling, 13-311(a)(5) +
CMMC 9-274(b)(2) versus CMMC Title 10,
Ch X (Stopping, Standing and Parking)
Yes, CC 62, 70 Yes, CC 62, 70 No No No
Eviction requirements

Landlord/operator must notify resident’s
emergency contact, OCHA OC Links
Referral Line, and Costa Mesa’s Network
for Homeless Solutions before an evicting
resident, CMMC 13-311(a)(10) + 9-
374(b)(6)
Yes, CC 62, 70 Yes, CC 62, 70 No No No
Landlord/operator must provide
transportation to alternative housing to
any resident evicted from dwelling,
CMMC 13-311(a)(11) + 9-374(b)(7)
Yes, CC 62, 70 Yes, CC 62, 70 No No No
-19-
1395
7 CMMC Regulations Governing
Residential Uses in City’s Multifamily
Districts
Sober Living Home2 Group Home3 Boardinghouse,
Small < 3 rental
rooms
4 Boardinghouse,
Large < 7 rental
rooms
Multi-family
Dwelling5
Landlord/operator must maintain eviction
records for one year resident’s eviction
from dwelling, CMMC 13-311(a)(12) + 9-
374(b)(8)
Yes, CC 62, 70 Yes, CC 62, 70 No No No
Regulation of Residents within
Dwelling

Each resident of dwelling must actively
participate in a legitimate self-
improvement program (e.g., 12-step
program), CMMC 13-311(a)(14)(i) + 9-
374(b)(10)(i)
Yes, CC 63, 71 No No No No
Landlord/operator must maintain records
showing that resident is actively
participating in a legitimate self-
improvement program (e.g., 12-step
program), CMMC 13-311(a)(14)(i) + 9-
374(b)(10)(i)
Yes, CC 63, 71 No No No No
Landlord/operator must promulgate a
rule warning that if a resident refuse to
actively participating in a legitimate self-
improvement program (e.g., 12-step
program), then the resident may be
evicted. CMMC 13-311(a)(14)(i) + 9-
374(b)(10)(i)
Yes, CC 63, 71 No No No No
Landlord/Operator must prohibit
residents from use of any non-
prescription drugs. CMMC 13-
311(a)(14)(ii) + 9-374(b)(10)(ii)
Yes, CC 63, 71 No No No No
-20-
1396
8 CMMC Regulations Governing
Residential Uses in City’s Multifamily
Districts
Sober Living Home2 Group Home3 Boardinghouse,
Small < 3 rental
rooms
4 Boardinghouse,
Large < 7 rental
rooms
Multi-family
Dwelling5
Landlord/operator must evict any
resident caught using any non-
prescription drug. CMMC 13-
311(a)(14)(ii) + 9-374(b)(10)(ii)
Yes, CC 63, 71 No No No No
Landlord/operator must promulgate a
good neighbor policy directing residents
“to be considerate of neighbors, including
refraining from engaging in excessively
loud, profane or obnoxious behavior that
would unduly interfere with a neighbor’s
use and enjoyment of their dwelling
unit.” CMMC 13-311(a)(14)(vi) + 9-
374(b)(10)(v)
Yes, CC 63, 71 No No No No
Landlord/operator must promulgate
written protocol for onsite manager to
follow in response to a neighbor’s
complaint. CMMC protocol for 13-
311(a)(14)(vi) + 9-374(b)(10)(v)
Yes, CC 63, 71 No No No No
Owner, Landlord, Operator, and
Employee Qualification Requirements

Owner, landlord, or operator of a
dwelling is barred from obtaining a
Special or Condition Use Permit for that
dwelling if she was terminated from a job
for sexual harassment, embezzlement, or
illegally furnishing alcohol within two
years of applying to the City for that
zoning permit. CMMC 13-311(b)(2), 9-
374(e)(2) versus 13-29(g)(2)
Yes, CC 63, 71 Yes, CC 63, 71 No, CC 25 No, CC 25 No, CC 25 -21-
1397
9 CMMC Regulations Governing
Residential Uses in City’s Multifamily
Districts
Sober Living Home2 Group Home3 Boardinghouse,
Small < 3 rental
rooms
4 Boardinghouse,
Large < 7 rental
rooms
Multi-family
Dwelling5
Owner, landlord, or operator of a
dwelling is barred from obtaining a
Special or Condition Use Permit for that
dwelling if she employs any person who
was terminated from a job alcohol for
sexual harassment, embezzlement, or
illegally furnishing alcohol within two
years of applying to the City for that
zoning permit. CMMC 13-311(b)(2), 9-
374(e)(2) versus 13-29(g)(2)
Yes, CC 63, 71 Yes, CC 63, 71 No, CC 25 No, CC 25 No, CC 25 Owner, landlord, or operator of a
dwelling is barred from obtaining a
Special or Condition Use Permit for that
dwelling if she was convicted or pleaded
nolo contendere to any PC 290 sex
offense or PC 667.5 felony within 10 years
of applying to the City for that zoning
permit. CMMC 13-311(b)(2), 9-374(e)(2)
versus 13-29(g)(2)
Yes, CC 63-64, 71-72 Yes, CC 63-64, 71-72 No, CC 25 No, CC 25 No, CC 25 Owner, landlord, or operator of a
dwelling barred from obtaining a Special
or Condition Use Permit for that dwelling
if she employs any person who was
convicted or pleaded nolo contendere to
any PC 290 sex offense or PC 667.5 felony
within 10 years of applying to the City for
that zoning permit. CMMC 13-311(b)(2),
9-374(e)(2) versus 13-29(g)(2)
Yes, CC 63-64, 71-72 Yes, CC 63-64, 71-72 No, CC 25 No, CC 25 No, CC 25 -22-
1398
10 CMMC Regulations Governing
Residential Uses in City’s Multifamily
Districts
Sober Living Home2 Group Home3 Boardinghouse,
Small < 3 rental
rooms
4 Boardinghouse,
Large < 7 rental
rooms
Multi-family
Dwelling5
Owner, landlord, or operator of a
dwelling barred from obtaining a Special
or Condition Use Permit for that dwelling
if he was convicted or pleaded nolo
contendere to any PC 290 sex offense or
PC 667.5 felony within 10 years of
applying to the City for that zoning
permit. CMMC 13-311(b)(2), 9-374(e)(2)
versus 13-29(g)(2)
Yes, CC 63-64, 71-72 Yes, CC 63-64, 71-72 No, CC 25 No, CC 25 No, CC 25 Owner, landlord, or operator of a
dwelling barred from obtaining a Special
or Condition Use Permit for that dwelling
if she employs any person who was
convicted or pleaded nolo contrendere to
any PC 451 arson offense or furnishing
any controlled substance within 7 years of
applying to the City for that zoning
permit. CMMC 13-311(b)(2), 9-374(e)(2)
versus 13-29(g)(2)
Yes, CC 63-64, 71-72 Yes, CC 63-64, 71-72 No, CC 25 No, CC 25 No, CC 25 Owner, landlord, or operator of a
dwelling barred from obtaining a Special
or Condition Use Permit for that dwelling
if she is in recovery from abuse of drugs
or alcohol and has been abstained for less
than one year before applying to the City
for that zoning permit. CMMC 13-
311(b)(6), 9-374(e)(2) versus 13-29(g)(2)
Yes, CC 64, 72 No No, CC 25 No, CC 25 No, CC 25

-23-
1399

LEGAL ADVOCACY UNIT
1831 K Street
Sacramento, CA 95811
Tel: (916) 504-5800
Fax: (916) 504-5801
TTY: (800) 719-5798
Intake Line: (800) 776-5746
www.disabilityrightsca.org
January 12, 2026

VIA EMAIL

Kimberly Hall Barlow
Jones Mayer
3777 N. Harbor Blvd.

Fullerton, CA 92835
[email protected]

RE: Costa Mesa’s Proposed Revisions to RA Ordinance

Dear Ms. Barlow:

Thank you for the opportunity to review and comment on Costa Mesa’s proposed revisions to the City’s reasonable accommodation ordinance pursuant to the settlement agreement in the Insight v. Costa Mesa case.

In your December 19, 2025 email to us, you said that Costa Mesa was proposing to delete subsection (7) of Section 13-200.62(f) of the City’s reasonable accommodation ordinance. You explained that the deletion is proposed because “it is operationally difficult for staff or the applicants to make this determination given lack of information and the difficulties in ensuring that any facilities adequately allow individual(s) with said disability(ies) to live in a residential setting. Furthermore, this subsection is unnecessary given the other provisions of the Reasonable Accommodation Ordinance.” We support the deletion of subsection (7) from Section 13- 200.62, which requires a finding that “the existing supply of facilities of a similar nature and operation in the community is sufficient to provide individuals with a disability an equal opportunity to live in a residential setting.”
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The deletion of subsection (7) is an important first step in bringing Costa Mesa’s reasonable accommodation ordinance into compliance with state and federal fair housing requirements. However, in order to bring the entire reasonable accommodation regulation into compliance, Costa Mesa will need to make additional changes. Given the structure of the current ordinance, it will be difficult to do that by simply editing or rewording the text. Instead, we propose that the City repeal sections of the ordinance in their entirety and replace them with new ones.

To begin with, Section 13-200.62 (f) has problems that cannot be remedied without restructuring. That section is a list of findings “all of which are required for approval” of a reasonable accommodation request. But the list combines factors that the person or entity requesting the accommodation must establish in order to be entitled to an accommodation, i.e., the topics of Findings (1) and (2), with factors that are the City’s burden to establish if it is going to deny the accommodation, i.e., the topics of Findings (3), (5), and (8). These two types of topics need to be separated to clearly delineate who – the person or entity making the request, or the City – bears the burden of proof.

As written, Findings (3), (5), and (8) require affirmative findings that there is no undue financial or administrative burden, no direct threat, and no fundamental alteration for the approval of a reasonable accommodation request. In other words, they require that the City affirmatively find that those factors are not present. This has the effect of putting the burden on the person or entity making the request to establish the absence of an undue burden or fundamental alteration. That is contrary to fair housing law, which makes it the City’s burden to establish that there is an undue burden, direct threat, or fundamental alteration before denying a reasonable accommodation request. Fair housing law does not permit the City to make the establishment of the absence of those factors a requirement.

Undue burden, direct threat, and fundamental alteration can properly be in the reasonable accommodation ordinance, but the regulation needs to be structured in a way that makes clear that if the person or entity making the request establishes the factors addressed in Findings (1) and (2), the City must grant the accommodation unless it finds that granting the -25-
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Moreover, the current structure of the reasonable accommodation ordinance also makes it difficult for the ordinance to adequately reflect the law governing the findings that the City must establish to deny an otherwise valid reasonable accommodation request. For example, where the ordinance authorizes the City to deny a reasonable accommodation request based on a direct threat finding, it must also state that in such a case the City must find that the threat cannot be mitigated by reasonable accommodation. 28 C.F.R. §35.139. A finding that granting a reasonable accommodation would be an undue burden or fundamental alteration must also be made “after considering all resources available for use in the funding and operation of the service, program, or activity, and must be accompanied by a written statement of the reasons for reaching that conclusion.” 28. C.F.R. §35.150(a)(3). It will be difficult to add such clarifications in a clear way unless the two types of findings under Section 13-200.62(f) are separated and the findings for which the City bears the burden are written in the affirmative.

Section 13-200.62 (f) also includes factors that do not fall within either the burden of the person or entity making the accommodation request or the allowable reasons for the City to deny a request, but instead layer on additional obligations that are not permitted under fair housing law. Finding (4) requires a finding that the “requested accommodation is consistent with surrounding uses in scale and intensity of use.” The City cannot apply different occupancy, use, or development standards to shared housing for people with disabilities as compared to other forms of housing, nor can it require a household of people with disabilities to be limited to fewer people than a single housekeeping unit would be allowed to have. To the extent that a requested accommodation would result in housing that was vastly different from permitted housing uses, City staff could evaluate whether granting the request would constitute a fundamental alteration to a City program or would result in an undue burden or direct threat. But simply having the same number of people that a single housekeeping unit would -26-
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Likewise, Finding (6) requires in some instances “a finding that the requested accommodation is necessary to make facilities of a similar nature or operation economically viable in light of the particularities of the relevant market and market participants generally.” For the same reasons that the City is removing Finding (7), which also focuses on “facilities of a similar nature and operation” rather than on the specific housing that is at issue for a particular reasonable accommodation request, the City should remove Finding (6). It is just as true that it will be “operationally difficult for staff or the applicants to make this determination given lack of information” for Finding (6) as for Finding (7). Moreover, providing a feasibility study or market study about other housing does not fall within the burden of someone making a reasonable accommodation request. Making such a study a condition of approving a disability-related accommodation is therefore a discriminatory housing practice. This should likewise not be listed as a required finding.

The deletion of Finding (7) should also be accompanied by a revision to the language of Finding (2), which states that, “[t]he requested accommodation is necessary to provide one or more individuals with a disability an equal opportunity to use and enjoy a dwelling.” To ensure that City staff interpret Finding (2) consistent with fair housing laws, by focusing on the housing at issue in the request rather than “facilities of a similar nature and operation” elsewhere, Finding (2) should be revised to refer to an equal opportunity to use and enjoy “their dwelling,” “the dwelling at issue in the accommodation request,” or something similar.

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For those portions of the ordinance as well, it would be most effective for the City to repeal and replace language rather than try to work within the existing structure. For example, Section 13-200.62(b) loads burdensome and irrelevant requirements onto people or entities making reasonable accommodation requests. A lay homeowner who needs an accommodation due to disability should be able to comply with application requirements without having to hire an attorney or other expert to help them understand what they need to do. The City should limit the application to information that is necessary for the City to evaluate whether the person or entity making the request has met their burden, such as the location of the dwelling at issue, the existence of the disability, the nature of the accommodation that is being requested, and the connection between the disability and the requested accommodation. The provisions in Section 13- 200.62(b) that require people or entities making reasonable accommodation requests to provide “[a]ny other information that the director reasonably determines is necessary for evaluating the request for reasonable accommodation” ((b)(3)) and “[a]ny other information that the hearing officer reasonably concludes is necessary to determine whether the findings required by subsection (e) of this section can be made” ((b)(7)) are particularly problematic because they are not limited to the information necessary to establish that a person or entity is entitled to a reasonable accommodation.

Section 13-200.62(d) provides that appeals of reasonable accommodation requests will be handled through the same procedures as “any other discretionary permit.” However, the appeals process pertaining to reasonable accommodation requests needs to be navigable and manageable by lay people with disabilities. This provision should be repealed and replaced with new language that requires a prompt, clear statement of the reasons for any denial, establishes a simple procedure for requesting an appeal, provides a reasonable deadline for making requests for an appeal, and eliminates the need for individuals or entities to pay for the City’s review of their reasonable accommodation determination.

Most importantly, the section of the reasonable accommodation ordinance addressing appeals must exempt them from the review procedures that govern general zoning matters in order to respect the privacy of people’s disabilities and disability-related needs during any review process.

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made by legislative bodies, and no public notice should be made regarding reasonable accommodation reviews. Public hearings create an opening for members of the public to express animus against people with disabilities, which imposes an improper barrier to people seeking such accommodations. For example, at the hearings regarding Insight’s reasonable accommodation request, a member of the public told the Planning Commission that a person who is “mentally disabled does not belong in a neighborhood next door to me or any of us in this room,” and someone testified to the City Council that the “mentally ill cannot associate with our children, neighbors.” As you know, hearing those types of comments was traumatic for our client Ms. Doe, who spoke about her own experiences with mental illness, and the ways that staying at Insight’s housing had helped her, at a hearing on Insight’s reasonable accommodation request. Not only is the City not obligated to provide the public with a forum to intimidate and humiliate people like Ms. Doe, but the City cannot put people like her through such an ordeal as a condition of having their accommodation request reviewed. Nor can such animus play any part in the City’s review of an accommodation request. For similar reasons, the ordinance should also make clear that only the person or entity making the request can appeal a decision regarding a reasonable accommodation, in contrast to the current language which permits virtually anyone – including neighbors with an animus against people with disabilities – to appeal.

Finally, Sections 13-200.62(e) and (g), regarding “considerations,” overlap with the required “findings” in Section 13-200.62(f) in a way that impedes consistency with fair housing law. Like Section 13-200.62(f), these sections fail to make clear which elements are the burden of the person making the reasonable accommodation request to establish and which are the City’s burden. Many of them are also improper considerations. For example, the City cannot take into account “whether granting the request would be consistent with the City's General Plan.” By definition, any reasonable accommodation request pertaining to zoning will be inconsistent with the zoning scheme. “Requiring public entities to make exceptions to their rules and zoning policies is exactly what the FHAA does.” Anderson v. City of Blue Ash, 798 F.3d 338, 363 (6th Cir. 2015); City of Edmonds v.

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accommodation is inconsistent with the City’s General Plan, but whether granting it would fundamentally alter the General Plan. To take another example, the City cannot take into consideration whether “the accommodation would result in a substantial increase in traffic or insufficient parking” (§ 13-200.62(g)(2)) or “create an institutionalized environment due to the number of and distance between facilities that are similar in nature or operation” (§ 13-200.62(g)(4)) unless it is also doing so with respect to single housekeeping units. Again, the City cannot impose more stringent development or occupancy standards on housing occupied by people with disabilities than on single housekeeping units, nor can it use vague or undefined conditions as a basis for denial of a reasonable accommodation request. These are examples, and not an exhaustive list, of the issues with subsections (e) and (g) of Costa Mesa’s reasonable accommodation ordinance. We would be happy to provide additional comments or to discuss with you and with City staff in more detail our further thoughts on bringing the ordinance into compliance with state and federal fair housing requirements.

Sincerely,

Autumn M. Elliott
Law Office of Autumn Elliott

Jia Min Cheng
Managing Attorney
Disability Rights California

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CITY OF COSTA MESA
Agenda Report
77 Fair Drive
Costa Mesa, CA 92626
File #: 26-168 Meeting Date: 3/17/2026
TITLE:

REQUEST FOR CITY COUNCIL DIRECTION REGARDING THE POTENTIAL IMPLEMENTATION

OF A CITYWIDE RENTAL REGISTRY PROGRAM AND ESTABLISHMENT OF A NETWORK FOR RENTERS’ SOLUTIONS
DEPARTMENT: CITY MANAGER’S OFFICE
PRESENTED BY: NATE ROBBINS, NEIGHBORHOOD IMPROVEMENT MANAGER CONTACT INFORMATION: NATE ROBBINS, 714-754-5274
RECOMMENDATION:

Seeking City Council direction regarding the potential implementation of a Citywide rental registry program and establishing a Network for Renters’ Solutions.

BACKGROUND:

On September 9, 2025, the City Council directed staff to develop a proposal for the implementation of a Citywide rental registry modeled after the City of Santa Ana’srental registry program without a rental rate cap. Staff conducted extensive research and obtained program-level information from two California municipalities that have successfully implemented rental registries, namely the cities of Santa Ana and Concord.

Additionally, staff was directed to develop a plan for establishing a Network for Renters’Solutions modeled after the City’sNetwork for Homeless Solutions (NHS) that will focus on improving outreach and communication to the renter/landlord population and help identify and propose solutions for key renter/landlord challenges.

ANALYSIS:

City Council expressed its interest in the collection of renter/landlord and rental market data, as this information is not readily accessible.

Rental Registry Program
A rental registry is a mechanism by which a local government can collect information regarding rental properties within its jurisdiction. Registries are typically operated through online portals where property owners are required to register multi-family rental housing units covered by the Tenant Protection Act of 2019. Single-family homes, condominiums, townhouses, and (in most cases) owner -occupied housing units are exempt from registering. While the specific information gathered varies by jurisdiction, the data typically consists of:

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· Property address
· Property owner contact information
· Unit count
· Unit types (i.e., 1-bedroom, 2-bedroom, etc.)
· Rental rates
Further, property owners are required to submit certain documents within a specified timeframe, including eviction notices, rent increase notices, as well as vacancy and lease-up notices.

Lastly, rental registries may be used to uphold property standards via housing unit inspections performed by Code Enforcement officers and/or Building Inspectors.

Rental Registry Program Fees
Rental Registry programs are subsidized by collecting fees from property owners who register their units. Fees vary widely and are intended to make the program self-sustaining. Appropriate fees are typically calculated by dividing the total projected cost of the program by the number of rental housing units within the jurisdiction. For example, if the total annual cost to operate a rental registry is $1,500,000 and there are 25,000 rental units, the annual registration fee would be approximately $60 per unit. Additional revenue is collected via Civil Citations issued to property owners who fail to register their rental units. Civil Citation fines start at $150 for the first violation and increase to $300 and $500 for second and third violations, respectively, of the same Ordinance with a 12-month period.

Benefits of a Rental Registry Program
Rental Registries allow local governments to monitor rental units and ensure that property owners comply with laws on evictions, rent increases, and property standards. The information collected provides empirical data regarding eviction trends, rental rates, rental housing conditions, and occupancy/vacancy rates. In turn, this data can be used to direct resource allocation to mitigate potentially negative impacts, improve housing stability by ensuring rent increases comply with state and local rent cap regulations, ensure owners are complying with local property standards, and provide the public with a database of vacant units available for rent.

Limitations of a Rental Registry Program
Implementation of a Rental Registry may impact property owners, including increased administrative burdens, city oversight of building conditions, increased costs, delay in legal proceedings (i.e., evictions), privacy concerns, reduced rental housing supply, and removal and/or frequent turnover of rental housing.

Additionally, the municipality will incur one-time and ongoing costs to implement and maintain operations of the program. There may also be legal challenges prior to launch, and during administration of the program (i.e., appeals requiring a hearing).

Several California cities and counties have enacted rental registry programs, requiring rental data

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Several California cities and counties have enacted rental registry programs, requiring rental data reporting. Major cities with active rental registries include Los Angeles, San Francisco, San Jose, Oakland, Berkley, Concord, Culver City, and East Palo Alto. In Orange County, Santa Ana is the only city to implement a comprehensive rental registry program.

City of Santa Ana’s Rental Registry Program
In October 2022, the Santa Ana City Council adopted an ordinance that implemented a rental registry and rent stabilization program. However, this decision was so heavily contested that the Santa Ana City Council elected to delay implementation and, instead, allowed their residents to vote on the matter via a ballot measure known as Measure CC. Measure CC was placed on the November 2024 ballot and subsequently approved by 55% of the voters.

Key Provisions of Measure CC:
· Rental Registry - Establishes an online rental registry for all rental housing units covered by the Ordinance, including mobile homes.
o Requires property owners to pay an annual registration fee of $100 per covered unit. o Requires property owners to submit eviction notices and rent increase notices for review by city staff.
o Requires the creation of the Santa Ana Rental Housing Board to:
§ administer and enforce their ordinance, including petitions, applications, and appeals submitted by landlords or tenants regarding rent increases, habitability, or "fair return" requests (i.e., rent increases above the standard cap). § create and implement official policies and procedures to ensure the city's rent control and eviction laws are properly followed.
§ review the adequacy of city staffing, including hearing officers and housing counselors, to ensure the Rent Stabilization Division functions efficiently. · Housing Unit Inspections - Allows tenants of covered units to submit petitions to have their units inspected when they believe substandard living conditions exist. Santa Ana does not perform proactive inspections.

Santa Ana has allocated, and continues to allocate, significant resources to implement and administer Measure CC.
· Organizational - Santa Ana created a new division and oversight board to administer the ordinance.
o The Rent Stabilization Division was created to perform the day-to-day responsibilities and enforcement required by the ordinance.
o The Santa Ana Rental Housing Board was created to develop policies, review documents, and provide oversight to the Rent Stabilization Division.

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· Staffing - Nine (9) total staff are needed to administer the ordinance to its full extent, including:
o Rent Stabilization Division Manager
o Management Analyst
o Housing Programs Analyst (x2)
o Senior Office Assistant (x2)
o Code Enforcement Officer (x2)
o Community Development Analyst
· Contracted Services - In addition to the in-house staff mentioned above, Santa Ana has contracts with two (2) separate vendors to provide mediation services and conduct administrative hearings.
· Software - Development and ongoing support of software to provide an online portal for property owners to register units and submit required documentation, as well as in-house data management and reporting.
· Office Space - The Rent Stabilization Division leases office space off-site due to capacity constraints at city hall.
· Vehicles - The Rent Stabilization Division purchased two (2) vehicles for staff use.

In total, the Rent Stabilization Division’s annual budget is approximately $2,300,000 and the projected annual revenue from registration fees and fines is estimated at $2,400,000. However, it’s important to note that Santa Ana reported significantly less revenue during the first two (2) years of the program than anticipated because of a self-imposed grace period for community outreach and education.

City of Concord’s Rental Registry Program
In July 2021, the Concord City Council adopted an ordinance that implemented a residential rent registry program. This program was initially designed to gather baseline data on rents, tenancy changes, and evictions to inform future housing policy. The program required property owners to register multi-family rental properties containing four (4) or more units and was designed to collect data. There were no registration fees nor additional requirements imposed on property owners.

In April 2024 and again in April 2025, the Concord City Council voted to significantly expand the program. Key provisions include:
· Rental Registry - Establishes an online rental registry for all rental housing units covered by the Ordinance, including mobile homes.
o Requires property owners to pay an annual registration fee of $33 - $78 per covered unit.
o Requires property owners to submit eviction notices and rent increase notices for

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o Requires property owners to submit eviction notices and rent increase notices for review by city staff.
· Housing Unit Inspections - Rental properties containing four (4) or more units are subject to inspections to ensure the housing meets health and safety standards. Concord has roughly 8,700 rental units that are subject to inspection.
o All covered rental properties undergo proactive, ongoing inspections occurring once every two (2) years.
o Tenants occupying covered rental units may submit a complaint form to request inspections for mold, utilities, infestations, etc.
o Allows owners of well-maintained properties to file a “self-certification”of compliance with the ordinance.

Concord has allocated, and continues to allocate, significant resources to administer their rental registry and rent stabilization program.
· Staffing - Ten (10) total staff are needed to administer the program, including:
o Housing Manager
o Housing Program Analyst (x2)
o Administrative Secretary
o Code Enforcement Officers (x6)
§ Note: These code officers are not included in the program’s budget as their payroll costs are absorbed by a different department.
· Contracted Services - In addition to the staff mentioned above, Concord contracts a hearing officer to resolve appeals made by property owners.
· Software - Concord took a simpler approach to their software than Santa Ana in that they purchased an “off-the-shelf”option without much customization, which reduced their overall costs.

In total, Concord’sannual budget to administer their rental registry program is $1,181,000 and their projected annual revenue from registration fees and fines is $1,172,000. However, as mentioned, this cost does not include the six (6) code enforcement officers tasked with performing bi-annual inspections of their roughly 8,700 multi-family rental units. Estimated cost for these officers is an additional $780,000 annually for a total annual cost of $1,961,000. Much like Santa Ana, Concord’s initial revenue was significantly less than anticipated due to the need for community outreach and education before imposing penalties for non-compliance.

Costa Mesa’s Proposed Rental Registry Program
As seen in the examples above, a rental registry program can take many different forms and contain various components. The following is an example of a rental registry program the City may choose to implement. This program would allow the City to collect data regarding the 16,700 multi-family rental

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implement. This program would allow the City to collect data regarding the 16,700 multi-family rental housing units in Costa Mesa and does not include components related to monitoring rental rate increases and proactive/reactive housing unit inspections.

In summary, the City would procure a software company to develop a rental registry portal where property owners would be required to register all rental units located within city limits. In the initial phase of the program, there will be extensive public outreach and education to include a website, portal instructions, mailers, and flyers. Lastly, legal services will be required for administrative regulations, ensuring compliance, and assist in drafting the program’sfee structure. The City would support the program with current staff from the City Manager’s Department (i.e., Neighborhood Improvement, Constituent Services, Community Relations, etc.).

The total annual expenditures for the rental registry program are estimated at $321,335, with one- time start-up costs of approximately $213,350. This would include rental registry software that would be able to interact with the citywide enterprise resource planning software that is in development. A proposed $19 per unit registration fee would off-set the annual costs, however start-up costs or one- time expenses will be funded by the General Fund. The City can expect lower revenue realization due to outreach, education, and grace periods before enforcement, potentially requiring temporary General Fund support to cover operating and start
‑
up costs. Estimated costs and revenues
associated with the program are shown in Attachment 1.

Proposed Network for Renters’ Solutions
Recent data estimates that 60% of the 41,000 housing units in Costa Mesa are renter-occupied.

Should the Council choose to implement a rental registry, the staff assigned to administer the program will comprise the Network for Renters’Solutions (NRS). Additional members will include community stakeholders, apartment association representatives, and rental property owners. The focus of the NRS will be to:
· Perform community outreach and education regarding tenant/ landlord rights and responsibilities.
· Improve outreach and communication between renters and landlords. · Identify and propose solutions for key challenges renters/landlords face.

Should the Council choose to forgo implementing a rental registry program, the City can still establish a NRS comprised of current staff, community stakeholders, property owners, and apartment association representatives. Since adoption of the Urgency Ordinance in November 2023, the City has provided education and mediation to hundreds of landlords/ tenants regarding rental housing law.

These services will continue regardless of the Council’sdecision regarding implementation of a rental registry and NRS.

ALTERNATIVES:

The City Council may choose to modify or reject the proposed rental registry program. Additionally, the City Council may choose to modify/reject the proposed plan for the establishment of a Network for Renters’ Solutions.

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FISCAL REVIEW:

The City can expect reduced revenue collection during the initial years of a rental registry program due to the need for early outreach, education, and grace periods prior to enforcement. As a result, temporary General Fund support may be necessary to cover both operating and one ‑
time start
‑
up
costs until full compliance is achieved. Staff estimates that approximately 50% of registration revenue will be collected in Year 1, increasing to 75% in Year 2, with the program becoming fully revenue ‑
supported in Year 3 as compliance improves. Based on these assumptions, the General Fund would need to contribute approximately $374,017 in the first year.

While long-term cost recovery is achievable, the City should anticipate additional risk factors that may affect annual expenditures. These include potential legal challenges, increases in appeals, rising contracted
‑
service costs such as software licensing and maintenance, and increased staffing needs as the program grows. Santa Ana’sexperience demonstrates that significant start ‑
up resources and
strong governance structures are critical to successfully administering a robust rental registry program of this scale.

LEGAL REVIEW:

The City Attorney’s Office approves this report as to form.

CITY COUNCIL GOALS AND PRIORITIES:

Diversify, stabilize and increase housing to reflect community needs.

CONCLUSION:

Staff recommends the City Council provide direction regarding the implementation of a Citywide rental registry and establishment of a Network for Renters’ Solutions.

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City of Costa Mesa
Rental Registry Estimated Financial Summary
3/9/2026

DESCRIPTION ANNUAL

COST ONE-TIME
Software
New Software Module $200,000
Software Annual License $200,000
Outreach & Public Education $1,335 $13,350
Legal Services $120,000
TOTAL $321,335 $213,350
Quantity Rate
Unit Registration Fees 16,700 $19
Description
$19
16,700
$160,668
$374,017
$213,350
Registration Fee Rate
Number of Units
1st Year Estimated Revenue
1st Year General Fund Contribution
(Start-Up Costs & Reduction in Revenue)
Revenue
Expenses
Annual Operating
Start-Up Cost
Amount
$321,335
$321,335

RENTAL REGISTRY - ESTIMATED COST

RENTAL REGISTRY - ESTIMATED REGISTRATION FEE
Annually
$321,335

RENTAL REGISTRY - FINANCIAL SUMMARY
Attachment 1
1414

CITY OF COSTA MESA
Agenda Report
77 Fair Drive
Costa Mesa, CA 92626
File #: 25-623 Meeting Date: 3/17/2026
TITLE:

CITY OF COSTA MESA, COSTA MESA FINANCE AUTHORITY, AND COSTA MESA HOUSING

AUTHORITY AUDITED FINANCIAL STATEMENTS, AND HOUSING SUCCESSOR ANNUAL REPORT FOR THE PERIOD ENDING JUNE 30, 2025
DEPARTMENT: FINANCE DEPARTMENT
PRESENTED BY: ANNA ACOSTA, FINANCE MANAGER
CONTACT INFORMATION: ANNA ACOSTA, FINANCE MANAGER, (714) 754-3985 RECOMMENDATION:

1. Staff recommends the City Council receive and file the following reports for the fiscal year ended June 30, 2025:
a. Annual Comprehensive Financial Report (ACFR) (Attachment 1). b. Air Quality Improvement Fund Compliance Report (Attachment 2). c. Audit Communication Letter (Attachment 3).
d. Independent Accountant's Report on Agreed-Upon Procedures Applied to Appropriation Limit Worksheets (Attachment 4).

2. Staff recommends the City Council and Costa Mesa Financing Authority receive and file the Costa Mesa Financing Authority audited financial statements for the fiscal year ended June 30, 2025 (Attachment 5).

3. Staff recommends the City Council and Housing Authority receive and file the following reports for the fiscal year ended June 30, 2025:
a. Independent Financial Audit of the Costa Mesa Housing Authority, including the Low and Moderate-Income Housing Asset Fund (Attachment 6); and
b. The Fiscal Year 2024-25 Housing Successor Annual Report prepared under the California Health and Safety Code section 34176.1 as the housing successor and section 34328 as a housing authority (Attachment 7).

BACKGROUND:

Federal Single Audit guidelines require a recipient of federal funds to have an independent annual financial audit and compliance audit of the federal programs. As such, the City has retained an independent public accounting firm of licensed certified public accountants, CliftonLarsonAllen (CLA),

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LLP, to complete an audit of the City’s financial records.

The goal of the financial statement audit is to provide users with reasonable assurance from an independent source that the information presented in the financial statements is reliable and free of material misstatements. All the financial reports received unmodified opinions from CliftonLarsonAllen LLP signifying that, without exception, the financial statements present in all material respects the financial position of the City.

ANNUAL COMPREHENSIVE FINANCIAL REPORT (ACFR)
The ACFR is an audited summary report of the financial transactions of the City for Fiscal Year 2024- 25 ending on June 30, 2025. The report is presented to the City Council and designed to provide summary financial information.

The financial statements were prepared in conformity with generally accepted accounting principles (GAAP) as set by the Governmental Accounting Standards Board (GASB). The specific financial documents on which the auditor expresses an opinion include (1) the financial statements, and (2) notes to the basic financial statements, which include required supplementary information. These documents, along with the auditor’sopinion letter and management’sdiscussion and analysis, form the core of the ACFR. The additional documents within the ACFR include: the letter of transmittal from the City Manager and Finance Director, the combining and individual fund statements, and a supplemental statistical section presenting detailed information to assist the reader in assessing the economic condition of the City.

The City’s audit was performed in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in the Government Auditing Standards, issued by the Comptroller General of the United States. Such audits utilize sampling of data, inquiries of staff and management, testing of procedures and transactions, confirmation with outside parties, checking of certain internal files and documents, review of meeting minutes, specialized audit checklists, and other accounting techniques. The auditors considered the City’sinternal controls in determining what procedures to use and the size of samples to be selected and reviewed. In their report, the auditors indicated the financial statements were free of material misstatements and all significant transactions were recognized in the proper period.

AIR QUALITY IMPROVEMENT FUND COMPLIANCE REPORT
Assembly Bill 2766 (AB 2766) authorized the South Coast Air Quality Management District (SCAQMD) to impose an annual vehicle registration fee and to distribute a portion of the revenue to all local jurisdictions within the South Coast Air Basin. These revenues are to be used solely to reduce air pollution from motor vehicles by implementing new programs and studies necessary for the implementation of the California Clean Air Act. The City’sAir Quality Improvement Fund accounts for the use of these funds received from CSAQMD. The Air Quality Improvement Fund Compliance Report received an unmodified (clean) audit opinion.

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AUDIT COMMUNICATION LETTER
Audit clarity standards (AU-C) Section 260 requires defined and documented communication between the auditors and the City Council or Audit Committee. This letter provides an opportunity for the auditors to report on any difficulties or major concerns discovered during the audit and explain their role. They provide commentary on management's responsibilities for accounting policies, and they state that no significant difficulties were encountered in performing the audit, and no disagreements occurred with management.

INDEPENDENT ACCOUNTANT’S REPORT ON AGREED UPON PROCEDURES APPLIED TO

APPROPRIATION LIMIT WORKSHEETS
Section 1.5 of Article XIIIB of the California Constitution requires that the City follow the procedures agreed upon by the State of California and the League of California Cities (as presented in the League publication entitled “ArticleXIIIB Appropriations Limitation Uniform Guidelines”)to determine the annual appropriations limit (known as the Gann Limit), which sets forth the maximum amount of special tax revenues an agency is allowed to spend. The auditors perform an “Agreed-Upon Procedure” whereby they recalculate the Gann Limit. They determined that the city has correctly calculated the Gann Limit.

COSTA MESA HOUSING AUTHORITY FINANCIAL STATEMENTS
On January 17, 2012, under the California Housing Authorities Law (HAL), Health and Safety Code (HSC) section 34200, et seq., the City Council established the Costa Mesa Housing Authority (Housing Authority). Also on that date, the City Council selected the Housing Authority to be the housing successor and, as of February 1, 2012, to assume the housing assets, duties, functions, and obligations of the former Costa Mesa Redevelopment Agency (Former Agency). These actions occurred as a result of the dissolution of the Former Agency under Assembly Bill x1 26, the California Supreme Court’s decision in California Redevelopment Association v. Matosantos, Assembly Bill 1484, and other subsequent dissolution legislation (together, “DissolutionLaw”),which laws regulate the administration of successor agencies and housing successors due to the dissolution of all California redevelopment agencies. Further, under section 34328 of the HAL, the Housing Authority also prepares and presents an annual report on its activities for the preceding year.

Under section 34176, added by AB x1 26 and amended by AB 1484, the State Department of Finance (DOF) issued a decision letter in January 2013 that confirmed the Housing Authority holds all affordable housing assets of the Former Agency as listed in a Housing Asset Transfer schedule prepared by the Housing Authority and submitted to the DOF prior to August 1, 2012.

Since dissolution, all housing assets are held and administered by the Housing Authority in the Low to Moderate Income Housing Asset Fund (LMIHAF) under the Dissolution Law, as per sections 34176 and 34176.1. Under section 34176.1(f), the Housing Successor is required to conduct an independent financial audit of LMIHAF and prepare an annual report for each fiscal year and provide such reports to the governing body.

From its inception, the Housing Authority’s primary function had been to serve as the Housing

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File #: 25-623 Meeting Date: 3/17/2026
From its inception, the Housing Authority’s primary function had been to serve as the Housing Successor to the former Agency. Beginning in Fiscal Year (FY) 2018-19, the Housing Authority expanded services beyond the scope of LMIHAF by consolidating the City’s existing Homeless Outreach Program and establishing a new Bridge Shelter operation for individuals experiencing homelessness.

ANALYSIS:

Based on the results of their audit, CLA, LLP provided the City with an unmodified opinion on the financial statements, which indicates that the City’s financial statements are free of material misstatements and are in accordance with GAAP. This is the best and highest audit opinion the city could receive.

GENERAL FUND FINANCIAL RESULTS
FY 2024-25 General Fund revenues (before transfers) totaled $191 million, an increase of $7.0 million over the prior fiscal year. Summary is as follows:
§ Tax revenue increased by $5.8 million or 3.8 percent. Notable contributors to this increase were sales tax by $1.8 million due to price increases on consumer products. Property tax increased by $2.9 million as a result of a steady housing market and an increase in the City’s single-family homes median sales price. Cannabis and Business tax revenues increased by $1.2 million due to higher annual receipts of new Measure Q Cannabis businesses. § Charges for services increased by $1.0 million or 10 percent. This includes a rise in paramedic fees by $0.5 million, increase of permit fees by $0.3 million, as well as vehicle storage fees and self-haul fees by $0.2 million.
§ Transient occupancy tax decreased by $0.2 million or 1.9 percent due to a slight reduction in travel and tourism.

General Fund expenditures (before transfers) totaled $180.5 million, approximately $2.8 million below the budget. General Fund transfers out totaled $10.9 million and included $3.9 million to the Capital Improvements Funds for capital improvement projects, $2.8 million to the Finance Authority Debt Service Fund for bond service payments, $1.3 million to the Housing Authority for subsidy of homeless program costs, and $2.9 million to the Internal Service Funds pursuant to Costa Mesa Municipal Code section 2-209.4 1.5% transfer to information the City’s Information Technology needs.

GENERAL FUND - FUND BALANCE
The General Fund’s fund balance (i.e., Reserve) increased by $0.5 million. General Fund expenditures of $180.5 million, plus Transfers Out of $10.9 million, totaled $191.4 million, which was an increase of $7.1 million compared to last fiscal year. This was offset by $190.9 million in General Fund revenue, reflects an increase of $6.1 million compared to last fiscal year.

As of June 30, 2025, the City has a total of $61.0 million in General Fund balances (reserves) as follows: 1) A total of $25.1 million committed for declared disasters, self-insurance, and economic uncertainty; 2) A total of $14.4 million assigned for compensated absences, the Police Retirement 1% Supplemental Plan, workers compensation claims, a facilities reserve, strategic plan projects, prepaid items, and inventory; 3) An allocation of $2.1 million for the Section 115 Trust for post-retirement

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File #: 25-623 Meeting Date: 3/17/2026
items, and inventory; 3) An allocation of $2.1 million for the Section 115 Trust for post-retirement benefits; and, 4) $19.3 million in unassigned fund balance for a total of $61.0 million. This amount is $6.0 million above the City Council’s adopted reserve policy of $55.0 million.

STATEMENT OF NET POSITION
Change in Net Position
On June 30, 2025, the Statement of Net Position, which is in essence the city’soverall balance sheet and reflects the City’stotal assets and liabilities on an All-Funds basis, reflects a decrease of $1.4 million due to the change in the GASB 101 compensated absences reporting requirements.

Pensions and Retiree Medical Liabilities
The City’snet pension liability decreased by $11.4 million to $335.8 million primarily due to CalPERS’ rate of return earnings of 11.6%, an increase by 4.8% of the rate of return target of 6.8%. Three of the City’s four pension plans are administered by CalPERS. The Police 1% Supplemental Plan is administered by the city and is paid on a pay-as-you-go basis.

In addition, FY 2024-25 is the eighth year the City is required to record the Other Post Employment Benefits (OPEB) net liability for retiree health care on its financial statements, similar to the pension liability above. The City’snet OPEB liability decreased by $0.9 million to $46.4 million due to an increase of mortality changes in the retired population. This plan is administered by the city and is paid to retirees on a pay-as-you-go basis.

COSTA MESA FINANCING AUTHORITY FINANCIAL STATEMENTS
The Costa Mesa Financing Authority received an unmodified opinion from the auditors, CLA, LLP.

This is the highest and cleanest attestation report given by independent auditors. The reports that deal with compliance information also received unmodified opinions and no findings were noted.

In Fiscal Year 2024-25, the Financing Authority continued to support debt service payments for the 2017 Lease Revenue Bonds, which were originally issued in October 2017 to fund the Donald Dungan Library, Norma Hertzog Neighborhood Community Center, and Lions Park projects; and to advance the refund of the 2007 Certificates of Participation. On June 30, 2025, the 2017 bonds outstanding principal was $17.3 million.

COSTA MESA HOUSING AUTHORITY FINANCIAL STATEMENTS
An audit of the Housing Authority’s financial activities, consisting of the LMIHAF activities and homeless assistance programs, was completed as part of the City’soverall financial audit by an independent certified public accounting firm, CLA, LLP. The Housing Authority received an unmodified opinion. This is the highest attestation report given by independent auditors. The reports that deal with compliance information also received unmodified opinions with no findings. The audit results are incorporated as part of the City’sAnnual Comprehensive Financial Report (ACFR). The section in the City’s audit/ACFR relating to the LMIHAF Audit is entitled: Costa Mesa Housing Authority (A Component unit of the City of Costa Mesa) Financial Statements Year ended June 30,

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File #: 25-623 Meeting Date: 3/17/2026
2025 (Attachment 6).

In FY 2024-25, the Housing Authority received approximately $4.3 million in revenues and incurred $5.8 million in expenditures. Revenues and transfers of $4.37 million include City of Newport Beach contribution of $1.34 million; $1.10 of Housing Authority revenues that includes loan repayments and grants; $1.7 million subsidy to the Housing Authority for homeless program costs and rental assistance program; $660.000 ARPA funding for Mercy House Rental Assistance Program, for households facing Just Cause Evictions and for Homeless Outreach. On June 30, 2025, the Housing Authority’savailable fund balance was $6.9 million, which is restricted and allocated primarily for previously approved City Council priorities and projects.

ALTERNATIVES:

Not applicable. The reports are for receive and file purposes.

FISCAL REVIEW:

There is no fiscal impact associated with receiving and filing the audited financial statements and reports.

LEGAL REVIEW:

The City Attorney’s Office has approved this report and approves it as to form.

CITY COUNCIL GOALS AND PRIORITIES:

This item supports the following City Council Goal:
· Achieve Long-Term Fiscal Sustainability
· Strengthen the Public’s Safety and Improve the Quality of Life · Diversify, Stabilize and Increase Housing to Reflect Community Needs · Maintain and Enhance the City’s Facilities, Technology and Equipment CONCLUSION:

3. Staff recommends the City Council and Housing Authority receive and file the following report for

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File #: 25-623 Meeting Date: 3/17/2026

3. Staff recommends the City Council and Housing Authority receive and file the following report for the fiscal year ended June 30, 2025:
a. Independent Financial Audit of the Costa Mesa Housing Authority, including the Low and Moderate-Income Housing Asset Fund (Attachment 6).
b. The Fiscal Year 2024-25 Housing Successor Annual Report prepared under the California Health and Safety Code section 34176.1 as the housing successor and section 34328 as a housing authority (Attachment 7).

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City of Costa Mesa
Annual Comprehensive Financial Report
Fiscal Year Ended
JUNE 30, 2025
Attachment 1
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CITY OF COSTA MESA, CALIF
ORNIA

ANNUAL COMPREHENSIVE FINANCIAL REPORT
YEAR ENDED JUNE 30, 2025
PREPARED BY:

FINANCE DEPARTMENT
www.costamesaca.gov
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TABLE OF CONTENTS

INTRODUCTORY SECTION: Page

Letter of Transmittal i List of Principal Officials vii Organizational Chart viii GFOA Certificate of Achievement for Excellence in Financial Reporting ix

FINANCIAL SECTION:

Independent Auditor’s Report 1

Management’s Discussion and Analysis (Required Supplementary Information) 5

Basic Financial Statements:

Government-wide Financial Statements:

Statement of Net Position 16
Statement of Activities 17

Fund Financial Statements:

Governmental Funds:

Balance Sheet 20
Reconciliation of the Balance Sheet to the Statement of Net Position 23
Statement of Revenues, Expenditures and Changes in Fund Balances 24
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities 27

Proprietary Funds:

Statement of Net Position 28
Statement of Revenues, Expenses, and Changes in Net Position 29 Statement of Cash Flows 30

Fiduciary Funds:

Statement of Fiduciary Net Position 31
Statement of Changes in Fiduciary Net Position 32

Notes to the Basic Financial Statements 33

Required Supplementary Information:

Miscellaneous Plan:

Schedule of Changes in the Net Pension Liability and Related Ratios 79 Schedule of Contributions 81
Police Safety Plan:

Schedule of Changes in the Net Pension Liability and Related Ratios 82 1425

TABLE OF CONTENTS (CONTINUED)

Page

Schedule of Contributions 84

Fire Safety Plan:

Schedule of Proportionate Share of the Net Pension Liability 85 Schedule of Contributions 86
Police 1% Supplemental Retirement Plan:

Schedule of Changes in the Net Pension Liability and Related Ratios 87 Other Post-Employment Benefit Plan:

Schedule of Changes in OPEB Liability and Related Ratios 88 Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual:

General Fund 90
Government Grants Fund 92
Gas Tax Fund 93
American Rescue Plan Act Fund 94

Notes to Required Supplementary Information 95

Supplementary Schedules:

Nonmajor Governmental Funds:

Combining Balance Sheet 101
Combining Statement of Revenues, Expenditures, and
Changes in Fund Balances 106

Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual:

Nonmajor Special Revenue Funds:

HOME Program Fund 111
Air Quality Improvement Fund 112
Community Development Fund 113
Supplemental Law Enforcement Services Fund 114
Rental Rehabilitation Fund 115
Narcotics Forfeiture Fund 116
Office of Traffic Safety Fund 117
Housing Authority Fund 118
Behavioral Health Fund 119
Senior Transportation Fund 120

Major and Nonmajor Capital Projects Funds:

Capital Improvements Fund 121
Measure M2 Fund 122
Parking Districts Fund 123
Golf Course Improvements Fund 124
Park Development Fund 125
Drainage Fees Fund 126
Traffic Impact Fees Fund 127
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TABLE OF CONTENTS (CONTINUED)

Page
Jack Hammett Sports Complex Fund 128
Lions Park Capital Improvements Fund 129

Internal Service Funds:

Combining Statement of Net Position 131
Combining Statement of Revenues, Expenses, and Changes in Net Position 132
Combining Statement of Cash Flows 133

STATISTICAL SECTION (unaudited) Tables Page

Net Position by Component – Last Ten Fiscal Years 1 136

Changes in Net Position – Last Ten Fiscal Years 2 137

Fund Balances of Governmental Funds – Last Ten Fiscal Years 3 138

Changes in Fund Balance of Governmental Funds – Last Ten Fiscal Years 4 139

Tax Revenues by Source, Governmental Funds – Last Ten Fiscal Years 5 140

Taxable Sales by Category – Last Ten Calendar Years 6 141

Principal Sales Tax Remitters by Category – Current and Nine Years Ago 7 142

Direct and Overlapping Sales Tax Rates – Last Ten Fiscal Years 8 143

Property Tax Levies and Collections – Last Ten Fiscal Years 9 144

Assessed Value and Estimated Actual Value of Taxable Property - Last Ten Fiscal Years 10 145

Direct and Overlapping Property Tax Rates – Last Ten Fiscal Years 11 146

Principal Property Taxpayers – Current and Nine Years Ago 12 147

Ratio of General Bonded Debt Outstanding and Legal Debt Margin - Last Ten Fiscal Years 13 148

Ratios of Outstanding Debt by Type - Last Ten Fiscal Years 14 149

Direct and Overlapping Governmental Activities Debt 15 150 1427

TABLE OF CONTENTS (continued)
Page

Demographic and Economic Statistics – Last Ten Calendar Years 16 151

Principal Employers – Current and Nine Years Ago 17 152

Operating Indicators by Function/Program – Last Ten Fiscal Years 18 153

Full-time Equivalent City Government Employees by Function/Program - Last Ten Fiscal Years 19 154

Capital Asset Statistics by Function/Program – Last Ten Fiscal Years 20 155 1428

INTRODUCTORY SECTION

ANNUAL COMPREHENSIVE

FINANCIAL REPORT

INTRODUCTORY SECTION
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CITY OF COSTA MESA
77 FA IR DR IVE, P.O. BOX 1200, COSTA MESA, CA 92628-1200

FROM THE OF FICE OF THE FINANCE DIRECTOR-CITY TREASURER December 18, 2025
To the Honorable Mayor, Members of City Council, and Citizens of the City of Costa Mesa:

The Annual Comprehensive Financial Report (ACFR) of the City of Costa Mesa (the City) for the fiscal year ended June 30, 2025, is hereby submitted. These statements have been prepared in conformity with generally accepted accounting principles (GAAP) and audited in accordance with generally accepted auditing standards by an independent public accounting firm of licensed certified public accountants.

This report consists of management's representations concerning finances of the City.

Management is responsible for the accuracy of the data, along with the completeness and fairness of presentation, including all disclosures. To provide a reasonable basis for making these representations, management has established a comprehensive internal control framework that is designed both to protect the government's assets from loss, theft, or misuse and to compile sufficient reliable information for preparation of financial statements in conformity with GAAP. The City's comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement because the cost of internal controls should not outweigh their benefits.

Management asserts that to the best of its knowledge and belief, the enclosed data is accurate in all material respects. It is reported in a manner designed to fairly present the financial position and results of operations of various funds and component units of the City. All disclosures necessary to enable the reader to gain an understanding of the City's financial activities have been included.

The City's financial statements for the fiscal year ended June 30, 2025, have been audited by CliftonlarsonAllen LLP, an independent public accounting firm of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City for the fiscal year ended June 30, 2025, are free of material misstatement. The independent audit involved examining on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion that the City's financial statements for the fiscal year ended June 30, 2025, are fairly presented in conformity with GAAP. The independent auditor's report is presented as the first component in the financial section of this report.

The independent audit of the financial statements of the City was part of a broader, federally mandated "Single Audit" designed to meet the special needs of federal granter agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited government's internal controls. There is a special emphasis on internal controls and legal requirements involving the administration of federal awards. These reports are available in the City's separately issued Single Audit Report.
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DEBT ADMINISTRATION
The City accounts for general debt service under the following funds in the financial statements: the Public Financing Authority (PFA) Debt Service Fund and the Financing Authority (FA) Debt Service Fund. Sources of revenues for retirement of outstanding bonded indebtedness include general property and sales taxes.

In October 2017, the FA issued the 2017 Lease Revenue Bonds that refinanced the PFA Series 2007 Certificates of Participation (COP) and provided partial funding for the Lion's Park, Donald Dungan Library and Norma Hertzog Neighborhood Community Center projects.

Standard & Poor's (S&P) rated the 2017 bonds AA+ upon initial issuance. On November 3, 2020, Standard & Poor's reaffirmed the 2017 bonds' AA+ long-term rating with a stable outlook. According to the final report, S&P "reviewed governance risks and consider them better than the sector standard because of the City's very strong management profile with strong financial policies and practices, and successful economic development efforts." The City continuously reviews existing debt for refunding possibilities to lower total debt service requirements. The City has also adopted a comprehensive set of debt policies covering all aspects of debt issuance in order to consolidate information for debt obligations and maintain or improve its excellent credit standing.

FINANCIAL REPORTING AWARDS
The Government Finance Officers Association (GFOA) has awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its Annual Comprehensive Financial Report for the fiscal year ended June 30, 2024. This was the 27th consecutive year that the City has received this prestigious award. In order to be awarded a Certificate of Achievement for Excellence in Financial Reporting, the City must publish an easily readable and efficiently organized Annual Comprehensive Financial Report. This report must also satisfy both GAAP and applicable legal requirements.

A Certificate of Achievement is valid for a period of one year. We believe that our June 30, 2025, Annual Comprehensive Financial Report continues to meet the Certificate of Achievement program requirements, and it will be submitted to the GFOA to determine its eligibility for another award.

ACKNOWLEDGMENTS
Special recognition is extended to the entire Finance Department for their ongoing dedication and support to all City departments and residents on a daily basis. Special appreciation is also extended specifically to the Accounting Division staff who contributed to and participated in the coordination and preparation of this Annual Comprehensive Financial Report. In addition, our deepest appreciation is also extended to the Central Services Division staff for their assistance in the printing of this document. Further, thanks are also extended to our independent auditors, CLA (CliftonLarsonAllen), for their continued oversight, expertise, and advice.

Respectfully submitted,
CECILIA GALLARDO=ciAL
City Manager
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CAROL MOLINA
Finance Director
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City of Costa Mesa
List of Principal Officials
Mayor
John Stephens
City Council
Manuel Chavez
Mike Buley
Loren Gameros
Andrea Marr
Jeff Pettis
Arlis Reynolds
City Manager---------------------------------------------Cecilia Gallardo-Daly City Attorney (Contract) ------------------------------------ Kimberly Barlow Assistant City Manager ---------------------------------------- -- Alma Reyes Development Services Director ------------------------------------- Carrie Tai Finance Director -------------------------------------------------- Carol Molina Information Technology Director ----------------------------------- Steve Ely Parks and Community Services Director ----------------------- Brian Gruner Public Works Director -------------------------------------- Raja Sethuraman Fire Chief --------------------------------------------------------- Dan Stefano Police Chief ---------------------------------------------------- Joyce Lapointe 1436
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Organization Chart
June 30, 2025
viii
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Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Costa Mesa
California
For its Annual Comprehensive
Financial Report
For the Fiscal Year Ended
June 30, 2024
Executive Director/CEO
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INDEPENDENTAUDITOR’S REPORT

ANNUAL COMPREHENSIVE

FINANCIAL REPORT
INDEPENDENT AUDITOR’S REPORT
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CLA (CliftonLarsonAllen LLP) is an independent network member of CLA Global. See CLAglobal.com/disclaimer.

CliftonLarsonAllen LLP
CLAconnect.com
(1)

INDEPEND
ENT AUDITORS’ REPORT
Honorable Mayor and
Members of the City Council
City of Costa Mesa
Costa Mesa, California
Report on the Audit of the Financial Statements
Opinions
We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the City of Costa Mesa (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 of Costa Mesa’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, each major fund, and the aggregate remaining fund information of the City of Costa Mesa, as of June 30, 2025, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards appli cable 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 discussed in Note 18 to the financial statements, the City adopted the provisions of Governmental Accounting Standards Board (GASB) Statement No. 101, Compensated Absences, as of July 1, 2024.

Accordingly, the beginning net position for the governmental activities has been restated to reflect this change in accounting principle. Our opinions are not modified with respect to this matter.

Responsibilities of Management for the Financial Statements Management is responsible for the preparation and f air 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 c ontrol relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
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(2)
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.

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 GAAS 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 GAAS and Government Auditing Standards, we:

 Exercise professional judgment and maintain professional skepticism throughout the audit.

 Identify and assess the risks of material misstat ement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

 Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, no such opinion is expressed.

 Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.

 Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’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.

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Required Supplementary Information
Accounting principles generally accepted in the United States of America require that that the management’s discussion and analysis, schedules of changes in net pension liability and related ratios of the pension plans, schedule of proportionate share of the net pension liability, schedules of pension plan contributions, schedule of changes in net OPEB liability and related ra tios, and the budgetary comparison schedules for the general and major spec ial revenue funds, 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 GAAS, 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.

Supplementary Information
Our audit for the year ended June 30, 2025 was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The combining and individual fund financial statements and schedules for the year ended June 30, 2025 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 for the year ended June 30, 2025 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 GAAS. In our opinion, the combining and individual fund financial statements and schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole for the year ended June 30, 2025.

The financial statements of the City’s governmental activities, each major fund, and the aggregate remaining fund information as of June 30, 2024 were audited by other auditors whose report dated January 16, 2025, expressed unmodified opinions on those financial statements. Their report, as of the same date, on the combining and individual fund financial statements and schedules stated that, in their opinion, such information was fairly stated in all material respects in relation to the basic financial statements for the year ended June 30, 2024, as a whole.

Other Information
Management is responsible for the other information included in the annual report. The other information comprises the introductory and statistical sections but does not include the basic financial statements and our auditors’ report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon. 1443
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In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report.

Report on Summarized Comparative Information
The financial statements of the City of Costa Mesa’s governmental activities, each major fund, and the aggregate remaining fund information as of June 30, 2024 were audited by other auditors whose report dated January 16, 2025, expressed unmodified opinions on those financial statements. In our opinion, the summarized comparative information presented herein as of and for the year ended June 30, 2024, is consistent, in all material respects, with the audited financial statements from which it has been derived.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 18, 2025, on our consideration of the City of Costa Mesa’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 of Costa Mesa’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 the City of Costa Mesa’s internal control over financial reporting and compliance.

CliftonLarsonAllen LLP
Irvine, California
December 18, 2025
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MANAGEMENT’S DISCUSSIONAND ANALYSIS

ANNUAL COMPREHENSIVE

FINANCIAL REPORT
MANAGEMENT’S DISCUSSION AND ANAL YSIS
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MANAGEMENT’

S DISCUSSION AND ANALYSIS
As management of the City of Costa Mesa (City), we offer readers of the City’s financial statements this narrative overview and analysis of the financial acti vities for the fiscal year ended June 30, 2025. We encourage all readers to consider information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages i–vii of this report.

FINANCIAL HIGHLIGHTS
 Assets and deferred outflows of resources of the City’s primary government exceeded its liabilities and deferred inflows of resources at the close of Fiscal Year 2025 by $111.8 million ( net position).

Of this amount, $209.5 million (unrestricted net position deficit) primarily resulted from the unfunded liabilities for pension plans and other postemp loyment benefits (OPEB) that impacted other government agencies, along with the implementation of Government Accounting Standards Board (GASB) 101. GASB 101 established standards for measuring and recognizing liabilities for certain types of compensated absences.
 In the government-wide financial statements, total net position decreased by $1.4 million from the prior fiscal year total of $113.2 million due to the change in the GASB 101 compensated absences reporting requirements.
 In the fund financial statements, the governmental funds reported a combined ending fund balance of $153.6 million, an increase of $3.8 million in comparison with the prior year total of $149.8 million.  At the end of Fiscal Year 2025, the General Fund’s unassigned fund balance was $19.3 million or

10.7 percent of General Fund expenditures of $180.5 million. Unassigned fund balance may be used to meet the government’s ongoing obligations.
 At June 30, 2025, the City reported $335.8 million in pension liabilities a nd $46.4 million in OPEB liabilities.

OVERVIEW OF TH

E FINANCIAL STATEMENTS
This discussion and analysis are intended to serve as an introduction to the basic financial statements which are comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the basic financial statements. This report also contains other required 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 similar to a private-sector business.

The statement of net position presents information on all assets, deferred outflows of resources, liabilities, and deferred inflows of resources, with the difference between assets/deferred outflows of resources and liabilities/deferred inflows of resources reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating.

The statement of activities presents information to show how the government’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying
event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues 1446
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and expenses are reported in this statement for some items that will result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave).

Both 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). Governmental activities include general government, protection of persons and property, community programs, public services, and interest on long-term debt. The City has no business-type activities or discretely presented component units.

The basic government-wide financial statements can be found on pages 16-17 of this report.

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

Governmental Funds
Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements.

Considering the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental funds balance sheet and statement of revenues, expenditures, and changes in fund balances provide reconciliations to facilitate this comparison between governmental funds and governmental activities.

The City maintains 32 individual governmental funds. Information is presented separately in the governmental funds balance sheet and statement of revenues, expenditures, and changes in fund balances for the General, Government Grant, Capital Improvements, American Rescue Plan Act, and Gas Tax funds, all of which are considered to be major funds. Data from the other 27 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 operating and capital budget for its General, Special Revenue, and Capital Projects funds. Budgetary comparison statements have been provided for these fund types to demonstrate compliance with the budget.

The basic governmental fund financial statements can be found on pages 20-27 of this report. 1447
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Proprietary Funds
The City maintains one t
ype of proprietary fund, internal service funds. Internal service funds are an accounting device used to accumulate and allocate costs internally among various City functions. The City uses internal service funds to account for equipment replacement, self-insurance (workers’ compensation, general liability, unemployment), and information technology replacement functions.

There are no business-type functions because they have been included within governmental activities in the government-wide financial statements.

Proprietary funds provide the same type of information as government-wide financial statements, only in more detail. Proprietary fund financial statements provide separate information for the Equipment Replacement, Self-Insurance, and Information Technology Replacement funds, all of which are considered to be nonmajor funds. The internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for each nonmajor internal service fund is provided in the form of combining statements in the supplementary schedules section of this report.

The basic proprietary fund financial statements can be found on pages 28-30 of this report.

Fiduciary Funds
Fiduciary funds are used to account for Foundation resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because resources of these funds are not available to support the City’s own programs and services. The accounting method used for fiduciary funds is much like that used for proprietary funds. The basic fiduciary fund financial statements can be found on pages 31-32 of this report.

Notes to the Basic Financial Statements
The notes provide additional information that is essential to a full understanding of data provided in the government-wide and fund financial statements. The not es to the basic financial statements can be found on pages 33-78 of this report.

Other Info
rmation
In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City. Required supplementary information can be found on pages 79-85 of this report.

The combining statements referred to earlier in connection with nonmajor governmental funds and internal service funds are presented immediately following the required supplementary information section. Combined and individual fund statements and schedules can be found on pages 101-133 of this report.

GOVERNMENT-WIDE

FINANCIAL ANALYSIS
City assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $111.8 million at June 30, 2025, a decrease of $1.4 million from 2024 due to the change in the GASB 101 compensated absences reporting requirements.
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As in previous years, the City’s net position co ntinued to reflect the impact from implementations of GASB Statements No. 68, 71 and 73 for pension and GA SB 75 for OPEB, all of which account for the City’s defined benefit liabilities. The City’s total defined benefit liability is estimated at $383.6 million on the Statement of Net Position, a decrease of $10.6 million as compared to the prior year.

Another significant portion of the City’s total net position reflects its investment in capital assets (e.g., land, buildings, machinery, and equipment), less related outstanding debt used to acquire assets that are still in service. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City’s investment in its capital assets is reported net of related debt, it should be noted that resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.

At the end of Fiscal Year 2024-25, the City continued to report positive balances in two out of three categories of net posit
ion for the government, as well as for its separate governmental activities. The unrestricted net position ended the fiscal year with a balance of $209.5 million is primarily due to the unfunded pension obligations and new changes in the GASB 101 reporting requirements. These requirements recalculate compensated absences from a one-year to a three-year average. If absent, the City’s net position would have increased by $1.3 million.

As a result of the new calculation of Fiscal Year 2024-25, the City’s total net position decreased by $1.4 million.
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Governmental Activities
During the current year, the net position for governmental activities decreased by $1.4 million from the prior fiscal year’s ending balance of $113.2 million. Total revenues of $227.3 million were higher than expenses and net transfers of $219.8 million. Key factors in the City’s net position included:
 Charges for services increased by $3.0 million or 12.9 percent due to the increase in traffi c impact fees, building permits, paramedic fees, and plan check fees.  Property tax revenues increased by $3.1 million or 5.5 percent. The increase is due primarily due to a steady housing market, increase in the City’s single-family homes median sales price, and an increase in overall property assessed valuations.  Operating contributions and grants increased by $2.3 million or 10.0 percent primarily due to a grant received for the Fire Station #4 Training Tower funding, Jack Hammett Sports Complex, and LED lights for TeWinkle and Bark Park.
 Sales and use taxes increased by $1.8 million or 2.4 percent, which is the City’s largest revenue source. The sales and use tax increase is due to improved consumer spending in general consumer goods and positive performance across various sectors during the remaining months of the fiscal year.
 Investment income increased by $1.5 million due to a higher yield on interest income.

FINANCIAL ANALYSIS OF TH
E GOVERNMENT’S FUNDS
As was noted earlier, the City uses fund accounting to ensure and demonstrate compliance with professional standards promulgated by oversight agencies and due to 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 financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year.

As of the end of Fiscal Year 2024-25, the City’s governmental funds reported combined ending fund balance of $153.6 million, an increase of $3.8 million or 2.5 percent in comparison with the prior fiscal year fund balance of $149.8 million. Of this total amount:
 $0.9 million represents nonspendable fund balance which includes amounts that cannot be used because they are either not spendable in form or legally or contractually required to remain intact.
 $50.4 million represents restricted fund balance which includes amounts that can be spent only for specific purposes stipulated by external sources or through enabling legislation.  $25.1 million represents committed fund balance which includes amounts that can be used only for specific purposes determined by a formal action of the City Council. It includes legislation (City Council action) that can only be overturned by a subsequent council action requiring a voting consensus.
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 $57.9 millio
n represents assigned fund balance which includes amounts that are designated or expressed by the City Council for certain purposes but do not require formal actions like resolutions or ordinances. City Council, via resolution, delegated the authority to establish, modify, or rescind a fund balance assignment to the Finance Director.  The remaining $19.3 million constitutes unassigned fund balance.

The General Fund is the primary operating fund of the City. At the end of Fiscal Year 2024-25, the General Fund’s fund balance increased by $0.6 million. While the total fund balance amounted to $61.0 million, the unassigned fund balance was $19.3 million. Key factors attributable to the increase in net position include:
 Tax revenue increased by $5.8 million or 3.8 percent. Notable contributors to this increase were sales tax by $1.8 million due to price increases on consumer products. Property tax increased by $2.9 million as a result of a steady housing market, increase in the City’s single-family homes median sales price, an increase in overall property assessed valuations from new developments, and improvements to properties. Cannabis and Business tax revenues increased by $1.2 million due to higher annual receipts of new Measure Q Cannabis businesses.  Charges for services increased by $1.0 million or 10 percent. This includes a rise in pa ramedic fees by $0.5 million, increase of permit fees by $0.3 million, as well as vehicle storage fees and self-haul fees by $0.2 million.
 Transient occupancy tax decreased by $0.2 million or 1.9 percent due to a slight reduction in travel and tourism.

Major Funds Other Than the General Fund
The Capital Improvements Fund had $33.5 million in fund balance which represents a net decrease of $1.9 million or 5.4 percent from the prior fiscal year. The decrease in fund balance is mainly attributed to the increase in capital expenditures from $4.3 million to $8.0 million. The Citywide Street Maintenance and Fire Station #4 Training Tower incurred the highest expenditures, $1.6 million and $1.5 million, respectively.

The Government Grants Fund is comprised of reimbursements of Federal and State grants. It had a fund balance of $0.6 million at the end of the fiscal year which represents a net increase of $2.1 million or 137.7 percent from the prior fiscal year. The increase in fund balance is due to grant expenditures reimbursements in the current year.

The Gas Tax Fund had a fund balance of $24.8 million, which represents a net increase of $2.9 million or 13.5 percent increase from the prior fiscal year. Gas Tax revenues were $7.6 million compared to $4.7 million in expenditures in Fiscal Year 2024-25. The revenue is primarily earmarked for street related projects.

The American Rescue Plan Act (ARPA) Fund had $502,739 in fund balance in Fiscal Year 2024-25, and had a fund balance of $425,256 in the prior fiscal year. The increase is due to interest earnings received during the year.
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Proprietary Funds
The City’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. The City also utilizes Internal Service Funds.

The unrestricted net position of the Internal Service Funds at the Fiscal Year 2024-25 was $19.6 million.

Total net position increased by $77,718 or 0.2 percent from the prior fiscal year. The increase in net position is mainly attributed to a decrease in payables and an increase in assets for equipment and fleet purchases.

GENERAL FUND BUDGET

ARY HIGHLIGHTS
During fiscal year 2024-25 the actual revenues were $169,212 or 0.1 percent higher than the final amended budget. Sales tax revenue increased by $1.8 million and property tax revenue increased by $2.9 million compared to the prior fiscal year. Additionally, charges for services revenue received increased by $1.0 million compared to the prior fiscal year. Actual expenditures were $2.8 million or 1.5 percent lower than the final adjusted budget.

CAPITAL ASSETS AND DE

BT ADMINISTRATION
Capital Assets
The City’s investment in capital assets for its governmental activities (the City has no business-type activities or discretely presented component units) as of June 30, 2025, amounted to $293.0 million.

The investment in capital assets includes: land, building improvements and structures, landscaping and sprinklers, machinery and equipment, intangible assets, park system and facilities, and road and storm drain infrastructure. The City’s investment in capital assets for the current fiscal year increased by $6.3 million. Major infrastructure asset additions during the fiscal year were: Adams Avenue and Pinecreek Drive Intersection, LED Light Retrofit Project for Tennis Center and Bark Park, various building maintenance projects, various street rehabilitation projects, and other ongoing capital projects. Other assets capitalized included vehicle replacements and a variety of equipment purchases. During the fiscal year, capital assets not being depreciated decreased by $12.8 million and capital assets being depreciated or amortized increased by $36.1 million. The increase is due to several completed infrastructure parks and roads projects.
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Construction in progress as of June 30, 2025, totaled $14.6 million, $12.8 million lower than the previous fiscal year. Generally, as the notice of completion (NOC) is filed on each project, the costs associated with each project will be deleted from the construction in progress capital asset category and added to the appropriate capital asset category in the year the NOC is filed. Construction in progress includes some of the following projects with significant commitment balances:

Additional information on capital assets can be found in Note 7 on pages 54-55 of this report. 1454
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Long-Term Debt
At year-end, the City had one outstanding bond issue: the Financing Authority 2017 Lease Revenue Bonds with an outstanding balance of $19.9 million. Additionally, the City had $33.0 million in other outstanding liabilities related to leases, loans, claims, and employee benefits.

Long-term liabilities had a net decrease of $0.07 million, primarily due to the City’s outstanding leases.

Additional information on the City’s long-term debt can be found in Notes 8 through 9 on pages 60-64 of this report.

ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES
During fiscal year 2024-25, the City continue d to remain economically resilient, boasting new businesses, diverse industries, and strong financ ial management. Positive indicators like reduced unemployment and higher property values marked continued local economic growth, while continuing to remain fiscally cautious for financial stability. Looking ahead for fiscal year 2025-26, the City anticipates a slowdown in economic growth and continues to exercise strong fiscal management to ensure stability. Supported by a diverse economic base, robust reserves, and commitment to quality service delivery, Costa Mesa is well prepared to proactively manage anticipated economic challenges.

REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview of the City’s finances for all who have an interest in the government’s funding streams and overall fiscal conditions. This report and other financial related informati on can be found on the City’s website www.costamesaca.gov. Questions concerning any informat ion provided in this report or requests for additional financial information should contact:
 By mail: Finance Department, City of Costa Mesa, P.O. Box 1200, Costa Mesa, California, 92628-1200
 By e-mail: [email protected]
 By phone: (714) 754-5243
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GOVERNMENT-WIDEFINANCIAL STATEMENTS

ANNUAL COMPREHENSIVE

FINANCIAL REPORT

GOVERNMENT-WIDE FINANCIAL STATEMENTS
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GOVERNMENT-WIDE FINANCIAL STATEMENTS
The Statement of Net Position and the Statement of Activities report information about the City as a whole and its activities. These statements include all assets, deferred outflows of resources, liabilities, deferred inflows of resources, and net position using the accrual basis of accounting, which is similar to accounting used by most private-sector companies. All current year revenues and expenses are taken into account regardless of when cash is received or paid.

Statement of Net Position
The Statement of Net Position pres
ents information on all of the City’s assets, deferred outflows of resources, liabilities, and deferred inflows of resources, with the difference between assets/deferred outflows and liabilities/deferred inflows reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating.

Statement of Activities
The Statement of Acti
vities presents information to show how the City’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). 1457

CITY OF COSTA MESA, CALIFORNIA

STATEMENT OF NET POSITION
JUNE 30, 2025
(WITH SUMMARIZED FINANCIAL INFORMATION AS OF JUNE 30, 2024) See accompanying Notes to Basic Financial Statements.
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2025 2024
ASSETS
Cash and Cash Equivalents 184,451,972$ 193,341,227$ Cash and Investments with Fiscal Agent 30,711 381,491 Due from Other Governments 23,913,960 21,177,148
Accounts Receivable, Net 2,240,792 4,455,911
Interest Receivable 1,241,716 1,183,240
Loans Receivable, Net 4,839,435 2,795,774
Rent Receivable 465,156 395,963
Leases Receivable 3,170,693 3,484,578
Inventories 475,603 336,156
Prepaid Items 3,689,802 4,806,196
Capital Assets:

Capital Assets not Being Depreciated 79,001,208 91,833,291 Capital Assets, Net of Depreciation and Amortization 213,977,676 194,820,199 Total Assets 517,498,724 519,011,174

DEFERRED OUTFLOWS OF RESOURCES
Deferred Amounts Related to Pensions 76,137,150 96,499,873 Deferred Amounts Related to OPEB 8,846,806 9,390,219
Total Deferred Outflows of Resources 84,983,956 105,890,092

LIABILITIES
Accounts Payable 9,166,846 12,026,252
Accrued Liabilities 5,824,297 4,906,459
Accrued Interest Payable 182,700 203,480
Retentions Payable 861,476 375,986
Deposits Payable 5,887,068 4,701,309
Unearned Revenue 4,103,587 12,503,260
Long-Term Liabilities:

Portion Due Within One Year 9,574,377 8,127,992
OPEB Liability Due Within One Year 2,900,880 1,889,161 Police Retirement 1% Supplemental Liability Due
Within One Year 180,680 188,828
Portion Due Beyond One Year 43,656,601 41,697,752
OPEB Liability 43,525,290 43, 562,915
Police Retirement 1% Supplemental Liability Due 1,205,296 1,383,478 Net Pension Liability 335,790,094 347,226,468
Total Liabilities 462,859,192 478,793,340

DEFERRED INFLOWS OF RESOURCES
Deferred Amounts Related to Leases 2,933,190 3,295,536 Deferred Amounts Related to Pensions 5,623,027 7,858,571 Deferred Amounts Related to OPEB 19,294,991 21,748,934 Total Deferred Inflows of Resources 27,851,208 32,903,041

NET POSITION
Net Investment in Capital Assets 265,820,274 257,950,628 Restricted for:

Pension 2,092,360 -
Protection of Persons and Property 1,863,547 1,568,489 Community Programs 10,206,991 12,663,845
Public Services 37,019,168 9,246,161
Debt Service 1,001 -
Unrestricted (205,231,061) (168,224,238)
Total Net Position 111,772,280$ 113,204,885$
Governmental Activities
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CITY OF COSTA MESA, CALIFORNIA

STATEMENT OF ACTIVITIES
YEAR ENDED JUNE 30, 2025
(WITH SUMMARIZED FINANCIAL INFORMATION FOR THE YEAR ENDED JUNE 30, 2024) See accompanying Notes to Basic Financial Statements.
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Operating Capital
Charges for Grants and Grants and
Functions/Programs Expenses Services Contributions Contributions 2025 2024 Governmental Activities:

General Government 57,099,994 $ - $ 329,200$ -$ (56,770,794)$ (46,030,042)$ Protection of Persons and Property 116,454,036 10,670,393 14,103,162 - (91,680,481) (92,436,403) Community Programs 20,681,772 6,735,983 4,635,096 - (9,310,693) (17,197,227) Public Services 30,882,547 8,564,419 6,948,633 4,477,056 (10,892,439) (4,369,573) Interest on Long-Term Debt 807,311 - - - (807,311) (1,033,694) Total Governmental Activities 225,925,660$ 25,970,795$ 26,016,091$ 4,477,056$ (169,461,718) (161,066,939) General Revenues
Taxes:

Property Taxes 59,494,432 56,411,786
Sales and Use Taxes 78,244,492 76,400,160
Transient Occupancy Tax 9,962,421 10,150,696
Franchise Taxes 6,637,150 6,542,802
Business/Cannabis Tax 5,060,510 3,902,514
Other Intergovernmental - Unrestricted 349,375 138,951
Investment Income (Loss) 8,709,004 7,200,904
Gain on sale of capital assets 68,995 -
Miscellaneous 2,288,046 2,579,220
Total General Revenues 170,814,425 163,327,033
CHANGE IN NET POSITION 1,352,707 2,260,094
Net Position - Beginning of Year, As Previously Reported 113,204,885 110,944,791 Restatement (2,785,312) -
Net Position - Beginning of Year, As Restated 110,419,573 110,944,791 NET POSITION - END OF YEAR 111,772,280$ 113,204,885$
Program Revenues Net Revenue
(Expenses) and
Changes in Net Position
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FUND FINANCIALSTATEMENTS

ANNUAL COMPREHENSIVE

FINANCIAL REPORT

FUND FINANCIAL STATEMENTS
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GOVERNMENTAL FUNDS
Major Governmental Funds

GENERAL FUND

The General Fund must be classified as a major fund in the accompanying fund financial statements and is used to account for all general revenues of the City not specifically levied or collected for some special purpose, and for expenditures related to the rendering of general services by the City. The General Fund is used to account for all resources not required to be accounted for in another fund.

SPECIAL REVENUE FUNDS
Government Grants
Established to account for receipt and disbursement of grant monies provided by federal, state, and county governmental agencies for various programs.

Gas Tax Fund
Established to account for the receipt and disbursement of funds required to be used for construction and maintenance of the City’s road network system. Financing is provided by the City’s share of State gasoline taxes, including allocations from the Highway Users Tax Account (HUTA) and the Road Maintenance and Rehabilitation Account (RMRA).

American Rescue Plan Act (ARPA)
Established to account for the receipt and disbursement of grant monies under the American Rescue Plan Act.

CAPITAL PROJECTS FUNDS
Measure M2 Fund
Established to account for the receipt and expenditure of the 2006 voter-approved one-half percent sales tax for local transportation improvements. Measure M2 is a 30-year extension of the earlier Measure M program.

Capital Improvements Fund
Established to account for the construction of capital facilities financed by the City’s General Fund and various governmental grants.

Nonmajor Governmental Funds
Nonmajor g overnmental funds constitute all o
ther governmental funds which include 14 Special
Revenue Funds, 10 Capital Projects Funds, and 1 Debt Service Fund. 1462

CITY OF COSTA MESA, CALIFORNIA

BALANCE SHEET

GOVERNMENTAL FUNDS
JUNE 30, 2025
(WITH SUMMARIZED FINANCIAL INFORMATION AS OF JUNE 30, 2024) See accompanying Notes to Basic Financial Statements.
(20)
American
Government Rescue
General Grants Gas Tax Plan Act
ASSETS
Cash and Investments 52,436,755$ 4,674,653$ 24,178,189$ 690,776$ Cash and Investments with Fiscal Agents - - - - Due from Other Governments 19,884,347 719,447 810,927 - Accounts Receivable, Net 1,833,781 - - - Interest Receivable 431,840 9,879 158,106 4,781 Loans Receivable, Net 730 - - -
Leases Receivable 1,896,961 - - -
Rent Receivable 432,851 - - -
Due from Other Funds 181,028 - - - Inventories 73,601 - - -
Prepaid Items 809,471 - - -
Total Assets 77,981,365$ 5,403,979$ 25,147,222$ 695,557$

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES

LIABILITIES
Accounts Payable 3,257,749$ 316,318$ 208,974$ 142,436$ Accrued Liabilities 5,543,579 15,984 35,871 - Retentions Payable - 170,764 76,491 -
Deposits Payable 5,499,974 - - -
Due to Other Funds - - - -
Unearned Revenue - 4,040,040 - 50,382
Total Liabilities 14,301,302 4,543,106 321,336 192,818

DEFERRED INFLOWS OF RESOURCES
Lease Related 1,700,925 - - -
Unavailable Revenue 1,017,334 281,074 56,361 - Total Deferred Inflows of Resources 2,718,259 281,074 56,361 -

FUND BALANCES
Nonspendable:

Prepaid Items 809,471 - - -
Inventories 73,601 - - -
Restricted:

Pension and OPEB 2,092,360 - - -
Protection of Persons and Property - - - 502,739 Community Programs - - - -
Public Services - 579,799 24,769,525 -
Debt Service - - - -
Committed 25,125,000 - - -
Assigned 13,554,327 - - -
Unassigned 19,307,045 - - -
Total Fund Balances 60,961,804 579,799 24,769,525 502,739 Total Liabilities, Deferred Inflows of
Resources, and Fund Balances 77,981,365$ 5,403,979$ 25,147,222$ 695,557$ Special Revenue
1463

CITY OF COSTA MESA, CALIFORNIA

BALANCE SHEET

GOVERNMENTAL FUNDS (CONTINUED)
JUNE 30, 2025
(WITH SUMMARIZED FINANCIAL INFORMATION AS OF JUNE 30, 2024) See accompanying Notes to Basic Financial Statements.
(21)
Nonmajor
Measure Capital Governmental
M2 Improvements Funds 2025 2024
7,286,084$ 34,430,582 $ 23,521,960 $ 147,218,999 $ 154,610,165 $ - - 30,711 30,711 381,491
1,531,002 182,427 785,810 23,913,960 21,177,148 - - 394,251 2,228,032 4,455,911 17,391 208,796 183,507 1,014,300 1,129,220 - - 4,838,705 4,839,435 2,795,774 - - 1,273,732 3,170,693 3,484,578 - - 32,305 465,156 395,963
- - - 181,028 65,076
- - 28 73,629 69,920
- - - 809,471 560,290
8,834,477$ 34,821,805$ 31,061,009$ 183,945,414$ 189,125,536$ 2,404,183$ 956,969$ 1,510,234$ 8,796,863$ 9,942,792$ - 101 103,352 5,698,887 4,783,548
288,305 258,924 66,992 861,476 375,986
- - 387,094 5,887,068 4,701,309 - - 181,028 181,028 65,076
- - 13,165 4,103,587 12,503,260
2,692,488 1,215,994 2,261,865 25,528,909 32,371,971 - - 1,232,265 2,933,190 3,295,536 422,399 138,083 3,415 1,918,666 3,705,967 422,399 138,083 1,235,680 4,851,856 7,001,503 - - - 809,471 560,290
- - 28 73,629 69,892
- - - 2,092,360 3,367,408
- - 1,360,808 1,863,547 1,697,480 - - 10,203,576 10,203,576 10,475,793
5,719,590 - 5,190,420 36,259,334 30,915,892
- - 1,001 1,001 17,449
- - - 25,125,000 25,125,000
- 33,467,728 10,848,900 57,870,955 61,410,302
- - (41,269) 19,265,776 16,112,556
5,719,590 33,467,728 27,563,464 153,564,649 149,752,062 8,834,477$ 34 ,821,805$ 31,061,009$ 183,945,414$ 189,125,536$ Totals
Capital Projects
1464
1465

CITY OF COSTA MESA

RECONCILIATION OF THE BALANCE SHEET

TO THE STATEMENT OF NET POSITION

GOVERNMENTAL FUNDS
JUNE 30, 2025
See Notes to Basic Financial Statements.
(23)
Total Fund Balance - Governmental Funds 153,564,649$
Amounts reported for governmental activities in the statement of net position are different because:

When capital assets (property, plant, and equipment) for governmental activities are purchased or constructed, the cost of those assets are reported as expenditures in the governmental funds. However, the statement of net position includes those capital assets among the assets of the City as a whole.

Cost of Capital Assets 699,527,331
Accumulated Depreciation/Amortization (423,057,765)
Long-term liabilities applicable to the City's governmental activities are not due and payable in the current period and, accordingly, are not reported as fund liabilities. All liabilities (both current and long term) are reported in the statement of net position.

Bonds Payable (17,345,000)
Premium on Bonds (2,548,978)
Loans Payable (51,302)
Leases Payable (505,726)
Subscription Payable (694,991)
Employee Benefits Leave Payable (10,579,029)
Accrued liabilities in the statement of net position differ from the amount reported in governmental funds due to accrued interest on outstanding debt payable. (182,700) Internal service funds are used by management to charge the costs of certain activities to individual City funds. The assets and liabilities of the internal service funds are included in governmental activities in the statement of net position because they primarily service governmental activities of the City. 35,263,427 Certain unavailable revenues that do not provide current financial resources are reported as deferred inflows of resources in the funds. 1,918,666 Amounts regarding the pension plans and OPEB are as follows:

Deferred Outflows of Resources Related to Pensions 76,137,150 Deferred Outflows of Resources Related to OPEB 8,846,806 Deferred Inflows of Resources Related to Pensions (5,623,027) Deferred Inflows of Resources Related to OPEB (19,294,991) CalPERS Pension Liability (335,790,094)
OPEB Liability (46,426,170)
Police 1% Supplemental Retirement Liability (1,385,976) Net Position of Governmental Activities 111,772,280$
1466

CITY OF COSTA MESA, CALIFORNIA

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES

GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30, 2025
(WITH SUMMARIZED FINANCIAL INFORMATION FOR THE YEAR ENDED JUNE 30, 2024) See Notes to Basic Financial Statements.
(24)
American
Government Rescue
General Grants Gas Tax Plan Act

REVENUES
Taxes 159,222,229$ -$ -$ -$
Licenses and Permits 6,809,704 - - -
Charges for Services 11,235,537 - - -
Fines and Forfeitures 1,455,764 - - - Intergovernmental 3,602,022 7,840,461 6,236,356 4,894,160 Investment Income (Loss) 2,671,680 87,654 1,142,498 77,484 Rental Income 4,811,425 - - - Miscellaneous 1,092,678 - 218,959 -
Total Revenues 190,901,039 7,928,115 7,597,813 4,971,644

EXPENDITURES
Current:

General Government 44,123,621 2,483,286 - - Protection of Persons and Property 109,314,995 1,004,012 - 1,968,657 Community Programs 16,651,172.00 503,154 - -
Public Services 9,689,267.00 1,819,846 4,659,007 - Debt Service:

Principal 594,726 - - -
Interest and Fiscal Charges 116,351 - - - Total Expenditures 180,490,132 5,810,298 4,659,007 1,968,657

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 10,410,907 2,117,817 2,938,806 3,002,987

OTHER FINANCING SOURCES (USES)
Subscriptions Proceeds 1,036,210 - - - Transfers In - - - -
Transfers Out (10,848,214) - - (2,925,504) Total Other Financing Sources (Uses) (9,812,004) - - (2,925,504) NET CHANGE IN FUND BALANCES 598,903 2,117,817 2,938,806 77,483 Fund Balances - Beginning of Year
As Previously Presented 60,362,901 (1,538,018) 21,830,719 425,256 Change within financial reporting entity
(nonmajor to major fund) - - - - Fund Balances - Beginning of Year
As Restated 60,362,901 (1,538,018) 21,830,719 425,256 FUND BALANCES - END OF YEAR 60,961,804$ 579,799$ 24,769,525$ 502,739$ Special Revenue
1467

CITY OF COSTA MESA, CALIFORNIA

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES

GOVERNMENTAL FUNDS (CONTINUED)
YEAR ENDED JUNE 30, 2025
(WITH SUMMARIZED FINANCIAL INFORMATION FOR THE YEAR ENDED JUNE 30, 2024) See Notes to Basic Financial Statements.
(25)
Nonmajor
Measure Capital Governmental
M2 Improvements Funds 2025 2024
-$ -$ 27,912$ 159,250,141$ 153,486,531$
- - - 6,809,704 5,982,422
- - 987,203 12,222,740 10,568,751 - - 18,655 1,474,419 1,422,437 3,860,654 566,334 6,073,639 33,073,626 26,518,073 374,600 1,570,269 1,131,922 7,056,107 5,731,450 - - 658,403 5,469,828 5,396,192 - 22,401 579,498 1,913,536 1,650,312
4,235,254 2,159,004 9,477,232 227,270,101 210,756,168 - 37,180 6,139,896 52,783,983 43,466,720
- 215,911 679,793 113,183,368 104,825,629
- 103,963 2,026,267 19,284,556 25,158,889
6,283,124 7,671,607 2,755,714 32,878,565 20,328,775 - - 2,015,000 2,609,726 2,486,391 - - 781,175 897,526 941,676
6,283,124 8,028,661 14,397,845 221,637,724 197,208,080 (2,047,870) (5,869,657) (4,920 ,613) 5,632,377 13,548,088 - - - 1,036,210 -
- 3,949,994 7,171,441 11,121,435 15,195,375 - - (203,717) (13,977,435) (18,892,041) - 3,949,994 6,967,724 (1,819,790) (3,696,666)
(2,047,870) (1,919,663) 2,047,111 3,812,587 9,851,422 - 35,387,391 33,283,813 149,752,062 139,900,640 7,767,460 - (7,767,460) - -
7,767,460 35,387,391 25,516,353 149,752,062 139,900,640 5,719,590$ 33,467,728$ 27,563,464$ 153,564,649$ 149,752,062$ Totals
Capital Projects
1468
1469

CITY OF COSTA MESA, CALIFORNIA

RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES,

AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES

GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30, 2025
See Notes to Ba
sic Financial Statements.
(27)
Net Change in Fund Balance - Governmental Funds 3,812,587$ Amounts reported for governmental activities in the Statement of Activities are different because:

When capital assets for governmental activities are purchased or constructed, the resources expended for those assets are reported as expenditures in governmental funds.

However, in the Statement of Activities, the cost of those assets is allocated over their estimated lives and reported as depreciation expense. As a result, fund balance decreases by the amount of financial resources used, whereas net position decreases by the amount of depreciation expense charged for the year.

Capital Outlay 21,430,756
Depreciation Expense (16,543,381)
Some expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. Repayment of debt service is reported as an expenditure in governmental funds and, thus, has the effect of reducin
g fund balances because current financial resources
have been used. For the City as a whole, however, the principal payments reduce the liabilities in the statement of net position and do not result in an expense in the Statement of Activities.

Net Changes in Employee Benefits Leave Payable (1,811,696) Subscr
iptions Proceeds (1,036,210)
Princ
ipal Payments - Bonds 2,015,000
Principal Payments - Loans Payable 15,391
Principal Payments - Lease Payable 234,541
Principal Payments - Subscription Payable 344,794
Amortization of Bond Premium 147,767
Pension and OPEB expense reported in the governmental funds include the actual contributions. In the Statement of Activities, pension and OPEB expenses include the change in net position and OPEB liabilities and the related changes in pension and OPEB amounts for deferred outflows of resources and deferred inflows of resources.

Net Change in Pension Liability (6,504,475)
Ne
t Change in OPEB Liability 936,436
Recording of the current year change of accrued interest on outstanding debt payable. 20,780
Internal service funds are used by management to charge the costs of certain activities to individual City funds. The adjustments for internal service funds "close" those funds by charging additional amounts to participating governmental activities to completely cover the internal service funds' costs for the year,. 77,718 Certain unavailable revenues that do not provide current financial resources are reported as deferred inflows of resources in the funds. (1,787,301) Change in
Net Position of Governmental Activities 1,352,707$
1470

CITY OF COSTA MESA, CALIFORNIA

STATEMENT OF NET POSITION

PROPRIETARY FUNDS
JUNE 30, 2025
(WITH SUMMARIZED FINANCIAL INFORMATION AS OF JUNE 30, 2024) See Notes to Basic Financial Statements.
(28)
2025 2024
ASSETS

CURRENT ASSETS
Cash and Investments 37,232,973$ 38,731,062$
Accounts Receivable 12,760 -
Interest Receivable 227,416 54,020
Prepaid Items 2,880,331 4,245,906
Inventories 401,974 266,236
Total Current Assets 40,755,454 43,297,224

CAPITAL ASSETS
Intangible Assets 1,932,537 -
Motorized Equipment 24,570,988 22,875,746
Other Equipment 8,832,890 5,928,501
Accumulated Depreciation (18,827,097) (13,732,948)
Capital Assets, Net 16,509,318 15,071,299
Total Assets 57,264,772 58,368,523

LIABILITIES

CURRENT LIABILITIES
Accounts Payable 369,983 2,083,460
Accrued Liabilities 125,410 122,911
Notes Payable 891,411 864,738
Claims Payable 1,293,969 862,543
Total Current Liabilities 2,680,773 3,933,652

LONG-TERM LIABILITIES
Notes Payable 4,259,726 5,151,138
Claims Payable 15,060,846 14,098,024
Total Long-Term Liabilities 19,320,572 19,249,162
Total Liabilities 22,001,345 23,182,814

NET POSITION
Net Investment in Capital Assets 11,358,181 9,055,423 Unrestricted 23,905,246 26,130,286
Total Net Position 35,263,427$ 35,185,709$
Governmental Activities -
Internal Service Funds
1471

CITY OF COSTA MESA, CALIFORNIA

STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION

PROPRIETARY FUNDS
YEAR ENDED JUNE 30, 2025
(WITH SUMMARIZED FINANCIAL INFORMATION FOR THE YEAR ENDED JUNE 30, 2024)

See Notes to Basic Financial Statements.
(29)

2025 2024

OPERATING REVENUES
Charges for Services 11,236,062$ 10,938,708$

OPERATING EXPENSES
Allocated Administrative Costs 5,231,815 4,288,668 Depreciation 1,632,720 1,532,452
Fuel and Repair Parts 974,182 1,423,961
Claims and Premiums 7,892,862 6,768,057
Total Operating Expenses 15,731,579 14,151,483 OPERATING LOSS (4,495,517) (3,212,775)

NONOPERATING REVENUES (EXPENSES)
Investment Income (Loss) 1,652,894 1,469,458 Other Nonoperating Revenue 73,678 10,000 Interest Expense (78,332) (55,041)
Gain/(Loss) on Disposal of Equipment 68,995 145,438 Total Nonoperating Revenues (Expenses) 1,717,235 1,569,855 LOSS BEFORE TRANSFERS (2,778,282) (1,642,920)

TRANSFERS
Transfers In 2,856,000 3,716,386
CHANGE IN NET POSITION 77,718 2,053,746 Net Position - Beginning of Year 35,185,709 33,131,963 NET POSITION - END OF YEAR 35,263,427$ 35,185,709$ Governmental Activities -
Internal Service Funds

1472

CITY OF COSTA MESA, CALIFORNIA

STATEMENT OF CASH FLOWS

PROPRIETARY FUNDS
JUNE 30, 2025
(WITH SUMMARIZED FINANCIAL INFORMATION FOR THE YEAR ENDED JUNE 30, 2024) See Notes to Basic Financial Statements.
(30)
2025 2024

CASH FLOWS FROM OPERATING ACTIVITIES
Cash Received from Customers and User Departments 11,223,302$ 10,938,708$ Cash Payments to Suppliers for Goods and Services (11,023,030) (7,197,189) Cash Payments to Employees for Services (2,162,722) - Cash Received from Other Sources 73,678 (2,926,462) Net Cash Provided (Used) by Operating Activities (1,888,772) 815,057

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Cash Received from Other Funds 2,856,000 3,716,386

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Principal Paid on Capital Debt (864,739) (563,165) Interest Paid on Capital Debt (78,332) (55,041) Proceeds from Sale of Capital Assets 127,830 178,217 Acquisition of Capital Assets (3,129,574) (6,896,181) Net Cash Used by Capital and Related Financing Activities (3,944,815) (5,049,721)

CASH FLOWS FROM INVESTING ACTIVITIES
Investment Income (Loss) 1,479,498 1,459,030
Net Cash Provided by Investing Activities 1,479,498 1,459,030 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1,498,089) 921,032 Cash and Cash Equivalents - Beginning of Year 38,731,062 37,810,030 CASH AND CASH EQUIVALENTS - END OF YEAR 37,232,973$ 38,731,062$

RECONCILIATION OF OPERATING INCOME (LOSS) TO NET

CASH PROVIDED (USED) BY OPERATING ACTIVITIES
Operating Income (Loss) (4,495,517)$ (3,212,775)$ Adjustments to Reconcile Operating Income (Loss) to
Net Cash Provided (Used) by Operating Activities:

Depreciation 1,632,720 1,532,452
Other Revenues 73,678 -
(Increase) Decrease in Accounts Receivable (12,760) - (Increase) Decrease in Inventories 1,365,575 (117,033) (Increase) Decrease in Prepaid Items (135,738) 242,026 Increase (Decrease) in Accounts Payable (1,713,477) 1,247,568 Increase (Decrease) in Accrued Liabilities 2,499 (10,349) Increase (Decrease) in Claims Payable 1,394,248 1,133,168 Net Cash Provided (Used) by Operating Activities (1,888,772)$ 815,057$ Governmental Activities -
Int
ernal Service Funds
There were no noncash investing, capital and financing activities during fiscal year ended June 30, 2025. 1473

CITY OF COSTA MESA, CALIFORNIA

STATEMENT OF FIDUCIARY NET POSITION

FIDUCIARY FUNDS
JUNE 30, 2025
See Notes to Ba
sic Financial Statements.
(31)
Custodial
Fund
ASSETS
Cash and Cash Equivalents 253,253$
Accounts Receivable 46
Total Assets 253,299

LIABILITIES
Accounts Payable 12,275
Deposits Payable 34,160
Total Liabilities 46,435

FIDUCIARY NET POSITION
Restricted for:

Individuals, Organizations, and Other
Governments 206,864
Total Fiduciary Net Position 206,864$
1474

CITY OF COSTA MESA, CALIFORNIA

STATEMENT OF CHANGES IN FIDUCIARY NET POSITION

FIDUCIARY FUNDS
YEAR ENDED JUNE 30, 2025
See Notes to Basic Financial Statements.
(32)
Custodial
Fund
ADDITIONS:

Donations 5,988$
Investment Income 695
Total Additions 6,683
DEDUCTIONS:

Remittance to Others 376,115
Total Deductions 376,115
CHANGE IN FIDUCIARY NET POSITION (369,432)
Total Fiduciary Net Position - Beginning of Year 576,296 TOTAL FIDUCIARY NET POSITION - END OF YEAR 206,864$
1475

NOTES TO THEFINANCIAL STATEMENTS

ANNUAL COMPREHENSIVE

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
1476

CITY OF COSTA MESA, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025
(33)
NOTE 1

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies of the City of Costa Mesa, California (City):

A. Description of the Reporting Entity
The City of Costa Mesa was incorporated on June 29, 1953 as a general law city under the Government Code of the State of California. The City operates under a Coun cil- Manager form of government. Amon g services provided by the City are the following:
public works, parks and recreation, planning, community development, fire, and law enforcement services.

As required by generally accepted accounting principles, these financial statem ents present the City and its component units, entitie s for which the City is considered to be financially a ccountable. The City is considered to be financially accountable for an organization if the City appoints a voting majority of that organization’s governing b ody and the City is either able to impose its will on that organization, or there is a potential for that organization to provide specific financia l benefits to or impose specific fina ncial burdens on the City. The City is also considered to be financially accountable if an organization is fiscally dependent upon the City (i.e., it is unable to adopt its budget, levy taxes, set rates or charges, or issue bonded debt without approval fr om the City). In certain case s, other organizations are included as component units if the nature and significance of their relationship with the City are such that their exclusion would cause the City’s financial statements to be misleading or incomplete.

All of the City’s component units are considered to be blended component units.

Blended component units, although legally separate entities, are, in substance, part of the City’s operations and so data from these units are appropriately presented as f unds of the primary government. The following or ganizations are considered to be component units of the City:

Costa Mesa Housing Authority
The Costa Mesa Housing Authority (Housing Authority) was created pursuant to the State of California Health and Safety Code, Section 34176(a). The Housing Authority promotes affordable housing for low and moderate income households within the City, administers the homeless outrea ch program and operates the bridge shelte r for homeless individuals.

The Housing Authority is a separate entity primarily funded by housing loan repayments and transfers from the City.

City Council members, in separate session, serve as the governing board of the Housing Authority, and all accounting and administrative functions are performed by the City.

Financial activity of the Housing Authority has been reported as if it were part of the City in the Housing Authority Special Revenue Fund. Separate financial statements of the Housing Authority can be obtained at City Hall.
1477

CITY OF COSTA MESA, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025
(34)
NOTE 1

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
A. Description of the Reporting Entity (Continued)
Costa Mesa Financing Authority
The Costa Mesa Financing Authority (Financing Authority) was created by a joint powers agreement between the City of Costa Mesa (the City) and the Costa Mesa Housing Authority (the Housing Authority), dated August 1, 2017. It was created pursuant to Article 1 of Chapter 5 of Division 7 of Title of the Government Code of the State of California (the JPA Act). Transactions of the Financing Authority are repo rted in the Debt Service Fund. Separate financial statements of the Financing Authority can be ob tained at City Hall.

B. Basis of Accounting and Measurement Focus
The basic financial statements of the City are composed of the following:
 Government-wide financial statements
 Fund financial statements
 Notes to the basic financial statements
Government-Wide Financial Statements
Government-wide financial statements display information about the reporting government as a whole, except for its fiduciary activities. These statements include separate columns for the governmental and business-type activities of the primary government (including its blended component units), as well as its discretely presented component units. The City has no business-type activities or discretely presented component units. Eliminations have been made in the Statement of Activities so that certain allocated expenses are recorded only once (by the function to which they were allocated). However, general government expenses have not been allocated as indirect expenses to the various functions of the City.

Government-wide financial statements are presented using the economic resources measurement focus and the accrual basis of accounting . Under the economic resources measurement focus, all (both current and long-term) economic resources and obligations of the reporting government are reported in the government-wide financial statements. Basis of accounting refers to when revenues and expenses are recognized in the accounts and reported in the financial statements.

Under the accrual basis of accounting , revenues, expenses, gains, losses, assets, deferred outflows of resources, liabilities, and deferred inflows of resources resulting from exchange and exchange-like transactions are recognized when the exchange takes place. Revenues, expenses, gains, losses, assets, deferred outflows of resources, liabilities, and deferred inflows of resources resulting from nonexchange transactions are recognized in accordance with the requirements of GASB Statement No. 33. 1478

CITY OF COSTA MESA, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025
(35)
NOTE 1

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
B. Basis of Accounting and Measurement Focus (Continued) Government-Wide Financial Statements (Continued)
Program revenues include charges for serv ices, special assessments, and payments made by parties outside of the reporting government’s citizenry if that money is restricted to a particular program. Program revenues are netted with program expenses in the Statement of Activities to present the net cost of each program.

Amounts paid to acquire capital assets are capitalized as assets in the government- wide financial statements, rather than reported as expenditures. Proceeds of long- te rm debt are recorded as a liabilit y in the governmen t-wide financial statements, rather than as other financing sources. Amounts paid to reduce long-term indebtedness of the reporting government are reported as a reduction of the related liability, rather than as expenditures.

Franchise fees and business license charges have been reported as general revenues because the fees are based on gross receipts, not charges for services.

Fund Financial Statements
The underlying account system of the City is organized and operated on the basis of separate funds. A fund is defined as an independent fiscal and accounting entity with a self-balancing set of accounts, recording resources, related liabilities, obligations, reserves, a nd equities segregated for the purpose of carrying out specific activities or attaining certain objectives in accordance with special regulations, restrictions or limitations. Fund financial statements for the primary government’s governm ental, proprietary, and fiduciary funds are presented after the government-wide financial statements. These stat ements display information about major funds individually and nonmajor funds in the aggregate for governmental funds. Proprietary stat ements include financial information for internal service funds. Fiduciary statements include financial information for agency and private purpose trust funds. Fiduciary funds of the City represent assets held by the City in a custodial capacity for other individuals or organizations.

Governmental Funds
In the fund financial statements, governmental funds are presented using the modified accrual basis of accounting. Revenues are recognized when they become measurable and available as net current assets. Measurable means that the amounts can be estimated or otherwise determined. Available means that the amounts were collected during the reporting period or soon enough thereafter to be available to finance the expenditures accrued for the reporting period.

The City uses an availability period of 60 days for all governm ental fund revenue, except for grant revenue which uses an availability period of 90 days. 1479

CITY OF COSTA MESA, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025
(36)
NOTE 1

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
B. Basis of Accounting and Measurement Focus (Continued) Governmental Funds (Continued)
Sales taxes, property taxes, franchise taxes, motor vehicle in lieu, transient occupancy taxes, grants, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period to the extent normally collected within the availability period. Other revenue items are considered to be measurable and available when cash is received by the government.

Revenue recognition is subject to the measurable and availability criteria for the governmental funds in the fund financial statements. Exchange transactions are recognized as revenues in the period in which they are earned (i.e., the related goods or services are provided). Locally imposed derived tax revenues are recognized as revenues in the period in which the underlying exchange transaction upon which they are based takes place. Imposed nonexchange transactions are recognized as revenues in the period for which they were imposed. If the period of use is not specified, they are recognized as revenues when an enforceable legal claim to the revenues arises or when they are r eceived, whichever occurs first. Government-mandated and voluntary nonexchange transactions are recognized as revenues when all a pplicable eligibility requirements have been met.

In the fund financial statements, governmental funds are presented using the current financial resources measurement focus . This means that generally only current assets, current liabilities and deferred inflows of resources are included on their balance sheets.

The reported fund balance is considered to be a measure of “available spendable resources.” Governmental fund operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in fund balance. Accordingly, they are said to present a summary of source s and uses of “available spendable resources” during a period.

Noncurrent portions of long-term receivables due to gover nmental funds are reported on the balance sheet in spite of their spending measurement focus. Special reporting treatments are used to indicate, however, that they should not be considered “available spendable resources,” since they do not represent fund balance.

Recognition of governmental fund type revenues represented by unavailable revenues are reported as deferred inflows of revenues.

Due to the nature of their spending measurement focus, expenditure recognition for governmental fund types excludes amounts represented by noncurrent liabilities. Since they do not affect net current assets, such long-term amounts are no t recognized as governmental fund type expenditures or fund liabilities. 1480

CITY OF COSTA MESA, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025
(37)
NOTE 1

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
B. Basis of Accounting and Measurement Focus (Continued) Governmental Funds (Continued)
Amounts expended to acquire capital assets are recorded as expenditures in the year that resources were expended, rather than as fund assets. Proceeds of long-term debt are recorded as other financing sources, rather than a fund liability. Amounts paid to reduce long-term indebtedness are reported as fund expenditures.

When both restricted an d unrestricted resources are combined in a fund, expenses are considered to be paid first from restricted resources, and then from unrestricted resources.

Proprietary and Fiduciary Funds
The City’s internal service funds are proprietary funds. In the fund financial statements, proprietary and all fiduciary funds are presented using the accrual basis of accounting.

Revenues are recognized when they are earned and expenses are recognized when related goods or services are delivered.

In the fund financial statements, proprietary and all fiduciary funds are presented using the economic resources measurement focus. This means that all assets and all liabilities (whether current or noncurrent) associated with their activity are included in the Statement of Net Position. Proprietary fund type operating statements present increa ses (revenues) and decreases (expenses) in total net position.

Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives us essentially equal values. Nonoperating revenues, such as investment income, gain or loss on sale of equipment and miscellaneous revenues result from nonexchange transactions or ancillary activities.

Operating expenses for internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All expenses not meeting this definition are reported as nonoperating expenses. Amounts paid to acquire capital assets are capitalized as assets in the internal service fund financial st atements, rather than being reported as expenses. Proceeds of long-term debt are recorded as liabilities in the internal service fund financial statements, rather than being reported as other financing sources. Amounts paid to reduce long-term indebtedness of the internal service fund are reported as reductions of the related liability, rather than as expenses.

The City’s custodial funds are fiduciary funds and use the accrual basis of accounting. 1481

CITY OF COSTA MESA, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025
(38)
NOTE 1

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
C. Property Tax Calendar
Property tax revenues a re recognized in the fiscal year for which the taxes have b een levied, provided this accrual meets the availa ble criteria. “Available” means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. The Co unty of Ora nge collects property taxes for the City tax liens attached 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 not paid as of December 10th and April 10th, respectively. Unsecured pe rsonal property taxes become due on March 1st each year and are delinquent if not paid as of Au gust 31st.

D. Fund Classifications
The City reports the following major governmental funds:

General Fund – The General Fund is the general operatin g fund of the City. All general tax revenues and other receipts that are not restricted by law or contractual agreement to some other fund are accounted for in this fund. Expenditures of this fund include the general operating expenditures and other costs, which are not paid through other funds.

Special Revenue Fund
Government Grants – Established to account for receipt and disbursement of grant monies provided by federal, state, and county governmental agencies for various programs.

Gas Tax – Established to account for the receipt and disbursement of funds required to be used for construction and maintenance of the City’s road network system. Financing is provided by the City’s share of State gasoline taxes, including allocations from the Highway Users Tax Account (HUTA) and the Road Maintenance and Rehabilitation Account (RMRA).

American Rescue Plan Act – Established to account for receipt and disbursement of ARPA monies received under the American Rescue Plan Act.

Capital Projects Fund
Measure M2 Fund – This capital projects fund was established to account for construction of capital facilities financed by Measure M2 monies.

Capital Improvements Fund – This capital projects fund was established to accoun t for construction of capital facilities fi nanced by the City’s General Fund and various governmental grants.
1482

CITY OF COSTA MESA, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025
(39)
NOTE 1

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. Fund Classifications (Continued)
Capital Projects Fund (Continued)
The City’s fund structure also includes the following fund types:

Special Revenue Funds – The special revenue funds are used to account for the proceeds of specific revenue sources that are restricted by law or administrative ac tion for a specified purpose.

Debt Service Funds – The debt service funds are used to account for t he accumulation of resource s for, and the payment of, long-term liabilities, interest, and related fi scal agent costs.

Capital Projects Fund s – The capital projects funds are used to account for financial resources segregated for the acquisition and construction of major capital facilities (other than those financed by the proprietary funds).

Internal Service Funds – The internal service funds are used to finance and account for activities involved in rendering equipment replacement, self-insurance services, and information technology replacement to departments within the City. Costs of materials, equipment, and services used are accumulated in these funds and charged to th e user departments as such goods are delivered or services rendered.

Custodial Funds – The custodial funds are used to account for assets held by the City as an agent for individuals, private organizations, and other governments. The custodial funds are used to account for fees, assessments, seizures, and donations for which the City is acting in an agent capacity.
1483

CITY OF COSTA MESA, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025
(40)
NOTE 1

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
E. Cash and Investments
Certain assets and liabilities are required to be reported at fair value. The fair value framework provides a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority t o unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of fair value hierarchy are described as follows:

Level 1 – Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets.

Level 2 –Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly and fair value is determined through the use of models or other valuation methodologies including:
 quoted prices for similar assets or liabilities in active markets;  quoted prices for identical or similar assets or liabilities in markets that are inactive;
 inputs other than quoted prices that are observable for the asset or liability;  inputs that are derived principally from or corroborated by observable ma rket data by correlation or other means.

Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement. These unobservable inputs reflect the City’s own assumptions about the inputs market participants would use in pricing the asset or liability (including assumptions about risk). These unobservable inputs are developed based on the best information available in the circumstances and may include the City’s own data.

F. Cash Equivalents
For purpose s of the Statement of Cash Flows, cash equivalents are defined as short- term, highly liquid investments that are both readily convertible to known amounts of cash or so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Cash and cash equivalents include all invest ments with origina l purchase maturities of three months or less. Cash equivalents also represent the proprietary funds share in the cash and investment pool of the City.

The City pools idle cash from all funds in order to maximize income from investment activities. Investments are recorded on the City’s books at fair value (quoted market price or best available estimate thereof). Interest income on investments is allocated to individual funds on the basis of monthly cash and investment balances. 1484

CITY OF COSTA MESA, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025
(41)
NOTE 1

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
G. Inventories
Inventories of materials and supplies are carried at cost on an average cost basis. The City uses the consumption method of accounting for inventories.

Prepaids
The City uses the consumption method to recor
d prepaid items.

Leases
The City is a lessor a nd lessee f
or leases as detailed in Notes 6 and 9. The City
recognizes a lease receivable, a deferred inflow of resources, and a lease payable in the financial statements.

At the commencement of the lease, the City initially measures the lease receivab le at the present value of payments expected to be received and paid during the lease te rm.

Subsequently, the lease receivable is reduced by the principal portion of lease payments received and the lease payable is reduced by the principal portion of lease payments made. The deferred inflow of resources is initially measured as the initial amount of the lease receivable, adjusted for lease payments received at or before the lease commencement date. Subsequently, the deferred inflows of resources is recognized as revenue over the life of the lease term.

Key estimates and judgments inclu de how the City determines the discount rate it uses to discount t he expected lease receipts and payments to present value, lease term and lease receipts.
 The City uses the estimated cost of capital rate as the discount rate for leases.  The lease term includes the noncancellable period of the lease.

The City monitors chang es in circumstances that would require a remeasurement of its leases and will remeasure the lease receivable and deferred inflows of resources if certain changes occur that are expected to significantly affect the amount of the lease receivable.

J. Subscription-Based Information (IT) Arrangements
The City is a participant in subscription-based IT arrangements as detailed in No te 9.

The City re cognizes a subscription-based IT payable and right to use IT assets in the financial statements. At the commencement of the arr angement, the City initially measures the payable at the present value of payments expected to be paid during the arrangement term. Subsequently, the payable is reduced by the principal portion of payments made. The right to use assets are initially measured at the initial amount of the subscription-based IT payable. Subsequently, the right to use assets ar e amortized over the life of the arrangement term.
1485

CITY OF COSTA MESA, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025
(42)
NOTE 1

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
K. Capital Assets
Capital assets (includin g infrastructure) are recorded at historical cost at the ti me of purchase. Assets acquired from gifts or contributions are recorded at acquisition value on the date received. Generally, capital asset purchases in excess of $5,000 are capitalized if they have an expected useful life of two years or more.

Capital assets include public domain (infrastructure) capital assets consisting of certain improvements including roads, streets, sidewalks, medians, sewers, and storm drai ns.

Public domain assets acquired prior to 1980 have been included in the accompan ying financial statements.

Capital assets used in operations are depreciated or amortized over their estimated useful lives using the straight-line method in the government-wide financial statements and in the fund financial statements of proprietary funds. It is the City’s policy to begin depreciating or amortizing assets when they are placed in service. Depreciation and amortization are charged as expenses against operations and accumulated depreciati on and amortization are reported on the respective Statement of Net Position.

The ranges of lives used for computing depreciation and amortization for each capita l asset class are as follows:

Building Improvements and Structures 10 to 20 Years
Landscaping and Sprinklers 35 to 40 Years
Automotive Equipment 2 to 20 Years
Office Furniture 5 to 20 Years
Office Machines 3 to 20 Years
Office Equipment 5 to 60 Years
Intangible Assets 7 to 10 Years
Right-to-Use Lease Assets 2 to 7 Years
Right-to-Use Subscription Assets 2 to 7 Years
Park System and Facilities 10 to 25 Years
Infrastructure – Roads 10 to 50 Years
Infrastructure – Storm Drains 50 to 100 Years
1486

CITY OF COSTA MESA, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025
(43)
NOTE 1

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
L. Deferred Outflows/Inflows of Resources
The Statement of Net Position and the governmental funds balance shee t will sometimes report a separate section for deferred outflows of resources. This finan cial 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 (expenditure) until that time. The City has two items that qualify for repo rting in this category. The items are deferred outflows related to pensions and OPEB.

The Statement of Net Position and the governmental funds balance shee t will sometimes report a se parate section for deferred inflows of resources. This fina ncial statement element, deferred inflows of resources, represents an acquisition of net assets that applies to future periods and so will not be recognized as an in flow of resources (revenue) until that time. The City has four types of items which qualify for reporting in this category. Three of the items are deferred inflows related to pensions, OPEB, and leases which are prese nted on the government-wide Statement of Net Position. The fourth item, unavailable revenue, is reported only in the governmental funds bala nce sheet. The governmental funds report unavailable revenues from accounts, taxes, grant and lease receivable s. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available.

M. Fund Balances
Fund balances are reported in the fund statements in the following classifications:

Nonspendable Fund Balance – This includes amounts that cannot be spent because they are either not spendable in form (such as inventory) or legally or contract ually required to be maintained intact (such as endowments).

Restricted Fund Balance – This includes amounts that can be spent only for spec ific purposes st ipulated by constitution, external resource providers, or through enabling legislation. If Council action limiting the use of funds is included in the same action (legislation) that created (enables) the funding source, then it is restricted.

Committed Fund Balance – This includes amounts that can be used only for specific purposes d etermined by formal action of a city ordinance by the Council. It includes legislation (Council action) that can only be ov erturned by new legislation requiring the same type of voting co nsensus that created the original action. Ther efore, if Council action limiting the use of funds is separate from the action (legislation) that created (enables) th e funding source, then it is committed, not restricted. For the purposes of establishing, modifying, and rescinding a co mmitted fund balance, the City considers an ordinance more binding than a resolution or a minute action by City Council. 1487

CITY OF COSTA MESA, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025
(44)
NOTE 1

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
M. Fund Balances (Continued)
Assigned Fund Balance – This includes amounts that are designated or expres sed by the Council, but does not require a formal action like a resolution or ordinance. The Council may delegate the ability to an employee or committee to assign uses of spec ific funds for specific purpo ses. In June 2011, the City Council passed Resolution 11-27, delegating authority to establish, modify, or rescind a fund balance assignment to the finance director.

Unassigned Fund Balance – Th is includes amounts that are the residual balance for the City’s general fund and includes all spendable amounts not contained in other classifications. In other funds, the unassigned classification is used only to re port a deficit balance resulting from overspending for specific purposes for which amounts had been restricted, committed or assigned.

In order to calculate the amounts to report as restricted, committed, assigned, and unassigned fund bala
nce in the governmental fund financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the government’s policy to consider restricted fund balance to have been depleted before using any components of unrestricted fund balance. Further, when components of the unrestricted fund balance can be used for the same purpose, committed fund balance is depleted first, followed by assigned fund balance.

Unassigned fund balance is applied last.

N. Net Position
Net position is comprised of three components: net investment in capital assets, restricted, and unrestricted.

Net Invest ment in Capital Assets - Consists of capital assets, net of accumulated depreciation/amortization and reduced by outstanding balances of bonds, notes, and other debt that are attributable to the acquisition, construction, or improvement of those assets. Def erred outflows of resources and deferred inflows of resources that are attributable to the acquisition, construction, or improvement of those assets or related debt are included in this component of net position.

Restricted Net Position - Is reported when there are limitations imposed on use eit her through enabling legislation or through external restrictions imposed by creditors, grants, laws or regulations of other governments.

Unrestricted Net Position - Is the amount of net position that does not meet the definition of the two preceding categories.

When both restricted and unrestricted resources are available for use, it is the City of Costa Mesa’s policy to use restricted resources first, then unrestricted resources as they are needed.
1488

CITY OF COSTA MESA, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025
(45)
NOTE 1

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
O. Employee Leave Benefits
The liabilit y for employee leave benefits reported in the government-wide statements consists of leave that has not been used that is attributable to services already rendered, accumulates and is more likely than not to be used for time off or otherwise paid in cash or settled through noncash means. The liability also includes amounts for leave that has been used f or time off but has not yet been paid in cash or settled th rough noncash means and certain other types of leave.

Claims and Judgments
The City re cords a liability for
litigation, judgments, and claims when it is probable t hat an asset ha s been impaired or a liability has been incurred prior to year-end and the probable amount of loss (net of any insurance coverage) can be reasonably estimated.

This liability is recorded in an internal service fund, which accounts for the City’s self- insurance activities.

Q. Pensions
For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expe nse, information about the f iduciary 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, be nefit payments (including ref unds of employee contributions) are recognize d when currently due and payable in accordance with the benefit terms. Investments are reported at fair value.

GASB 68 requires that the reported results must pertain to liability and asset information within certain defined timeframe. For this report, the following timeframes are used:

CalPERS Plans
Valuation Date June 30, 2023
Measurement Date June 30, 2024
Measurement Period July 1, 2023 to June 30, 2024
Supplemental Plan
Valuation Date June 30, 2024
Measurement Date June 30, 2025
Measurement Period July 1, 2024 to June 30, 2025
1489

CITY OF COSTA MESA, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025
(46)
NOTE 1

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
R. Other Post-Employment Benefits (OPEB)
For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources relate d to OPEB, and OPEB expense and information about the plan (OPEB Plan), have been determi ned by an independent actuary. For this purpose, benefit payments are recognize d when currently due and payable in accordance with the benefit terms.

Generally accepted accounting principles require that the reported results must pertain to liability 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
S. Use of Estimates
The prepar ation of financial statements in accordance with accounting prin ciples generally a ccepted in the United States of America requires manag ement to make estimates a nd assumptions that affect certain reported amounts and disclosur es.

Accordingly, actual results could differ from those estimates.

T. Prior Year In formation
Comparative amounts for the prior year have been presented in the basic fina ncial statements to provide an understanding of changes in the City's financial position and operations. The comparative amounts may be summarized in total and not at the level of detail required for a presentation in conformity with generally accepted accounting principles. Accordingly, such information should be read in conjunction with the City's financial st atements for the year ended June 30, 2024, from which the summarized information was derived.
1490

CITY OF COSTA MESA, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025
(47)
NOTE 2

CASH AND INVESTMENTS
Cash and investments are reported as follows:

Statement of Net Position:

Cash and Investments 184,451,972 $
Cash and Investments with Fiscal Agent 30,711
Statement of Fiduciary Net Position:

Cash and Investments 253,253
Total Cash and Investments 184,735,936$
Cash and investments a
t June 30, 2025, consisted of the following:

Petty Cash on Hand 52,200$
Demand Deposits 39,460,156
Investments 145,223,580
Total Cash and Investments 184,735,936$
Investments Authorized by the California Government Co
de and the City of Costa
Mesa’s Investment Policy
The table below identifies investment types that are authorized for the City by the California Government Code and investment policies of the City. 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 trustee 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.

Maximum Percentage of Investment in
Authorized Investments Maturity* Portfolio* One Issuer* U.S. Treasury Securities 5 years None None
Federal Agency Securities 5 years None 35%
Municipal Securities 5 years None 5%
Banker's Acceptances 180 days 40% 5%
Commercial Paper 270 days 25% 5%
Federally Insured Time Deposit 5 years None None
Nonnegotiable Certificates of Deposit 5 years 20% 5%
Certificate of Deposit Placement Service 5 years 30% None Negotiable Certificates of Deposit 5 years 30% 5%
Repurchase Agreements 1 year 30% None
Medium-Term Corporate Notes 5 years 30% 5%
Money Market Mutual Funds n/a 20% 10%
Asset Backed Securities 5 years 20% 5%
County Pooled Investment Funds n/a 35% None
Local Agency Investment Fund n/a None None
Supranational Securities 5 years 15% 5%
* Based on state law requirements or investment policy requirements, whichever is more restrictive. 1491

CITY OF COSTA MESA, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025
(48)
NOTE 2

CASH AND INVESTMENTS (CONTINUED)
Investments Authorized by Debt Agreements
Investment of debt proceeds held by bond trustees are governed by provisions of the debt agreements, rather than the general provisions of the California Government Code or the City’s investment policy. The table below identifies the investment types that are authorized for investments held by bond trustees. The table also identifies certain provisions of these debt agreements that address interest rate risk, credit risk, and concentration of credit risk Generally, the following investment types are authorized by the City’s debt agreements:

Maximum Maximum
Maximum Percentage Investment in
Authorized Investments Maturity Portfolio One Issuer
U. S. Treasury Securities None None None
Federal Agency Securities 1 year None None
Banker's Acceptances 30 days None None
Commercial Paper 270 days None None
Money Market Mutual Funds None None None
Investment Agreements None None None
Interest Bearing Time Deposits 30 days None None
Repurchase Agreements 270 days None None
Local Agency Investment Fund None None None
State Obligations None None None
Pre-Funded Municipal Obligations None None None
Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the City manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer-term investments, and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations. Information about the sensitivity of the fair values of the City’s investments (including investments held by bond trustee) to market interest rate fluctuations is provided by the following table that shows the distribution of the City’s investments by maturity:
12 Months 13 to 24 2 to 60
Investment Type or Less Months Months Total
Federal Agency Securities 3,432,723$ -$ 5,595,167 $ 9,027,890$ State Investment Pool (LAIF) 75,074,322 - - 75,074,322 U.S. Treasury Securities 1,164,656 4,113,795 28,679,293 33,957,744 Medium-Term Corporate Notes 1,408,471 3,081,573 12,276,552 16,766,596 Asset Backed Securities 20,146 307,332 7,169,063 7,496,541 Money Market Mutual Funds 807,126 - - 807,126 PARS Section 115 Trust: -
Pooled Balanced Index Plus 2,092,360 - - 2,092,360 Held by Trustee:

Money Market Mutual Funds 1,001 - - 1,001 Total 84,000,805$ 7,502,700$ 53,720,075$ 145,223,580$ 1492

CITY OF COSTA MESA, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025
(49)
NOTE 2

CASH AND INVESTMENTS (CONTINUED)
Investments with Fair Values Highly Sensitive to Interest Rate Fluctuations The City (including investments held by bond trustees) held no investments that were highly sensitive to interest rate fluctuations (to a greater degree than already indicated in the information provided above).

Disclosures Relating to 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. Presented below is the minimum rating required by (where applicable) the California Government C ode, the City’s investment policy, or debt agreements, and the actual rating as of year-end for each investment type:

Minimum
Investment Type Legal Rating AAA AA A Not Rated Total
Federal Agency Securities n/a - $ 9,027,890$ -$ -$ 9,027,890$ U.S. Treasury Securities* n/a - - - 33,957,744 33,957,744 Medium-Term Corporate Notes A - 3,743,106 13,023,490 - 16,766,596 State Investment Pool (LAIF) n/a - - - 75,074,322 75,074,322 Asset Backed Securities AA 7,496,541 - - 7,496,541 Money Market Mutual Funds AAA 807,126 - - - 807,126 PARS Section 115 Trust:

Pooled Balanced Index Plus n/a - - - 2,092,360 2,092,360 Held by Trustee:

Market Mutual Funds AAA 1,001 - - - 1,001 Total 8,304,668$ 12,770,996$ 13,023,490$ 111,124,426$ 145,223,580$ * Not required to be rated.

GASB requires the disclosure of more than 5% total investments with a single issuer. At

June 30, 2025, there were no investments in any single issuer exceeded 5%.

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., broker-dealer) 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 the state or local governmental uni ts by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit).
1493

CITY OF COSTA MESA, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025
(50)
NOTE 2

CASH AND INVESTMENTS (CONTINUED)
Custodial Credit Risk (Continued)
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 City deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits.

Investment in State Investment Pool
The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 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.

Investment in Public Agency Retirement Services
The City is a voluntary participant in the Public Agency Retirement Services (PARS). In 2021, the City funded an Internal Revenue Services Section 115 irrevocable trust with PARS for pension and OPEB benefits. The trust account allows more control and flexibility in investment allocations compared to the City’s portfolio which is restricted by state regulations to fixed income instruments. OPEB and Pension trust fund assets are held on behalf of the City by PARS. The City provides investment direction and determines the amount and timing of disbursements of PARS trust fund assets.

Fair Value Measurements
Fair value measurements for the year ended June 30, 2025, are as follows:

Quoted Observable Unobservable
Prices Inputs Inputs
Level 1 Level 2 Level 3 Total
Federal Agency Securities -$ 9,027,890$ -$ 9,027,890$ U.S. Treasury Securities - 33,957,744 - 33,957,744
Medium-Term Corporate Notes - 16,766,596 - 16,766,596
Asset Backed Securities - 7,496,541 - 7,496,541
Investments Measured
at Fair Value -$ 67,248,771$ -$ 67,248,771 State Investment Pool (LAIF)* 75,074,322
Money Market Mutual Funds* 807,126
PARS Section 115 Trust
Pooled Balanced Index Plus* 2,092,360
Held by Trustee:

Money Market Mutual Funds* 1,001
Total Investment
Portfolio 145,223,580$
*Not subject to fair value categorization.
1494

CITY OF COSTA MESA, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025
(51)
NOTE 3

INTERFUND RECEIVABLES AND PAYABLES
Interfund receivable and payable balances at June 30, 2025, are as follows:

Receivable Fund Payable Fund Amount
General Fund Nonmajor Governmental Funds 181,028$
All receivables resulted f
rom short-term borrowing to cover negative cash balances.

NOTE 4 TRANSFERS IN AND OUT
Transfers in and out for the year ended June 30, 2025, are as follows:

Transfers Out Transfers In Total
General Fund Capital Improvements Fund 3,949,994$ (a1) General Fund Nonmajor Governmental Funds 4,042,220 (a2 to a3) General Fund Internal Service Funds 2,856,000 (a4)
American Rescue Plan Act Nonmajor Governmental Funds 2,925,504 (b1 to b2) Nonmajor Governmental Funds Nonmajor Governmental Funds 203,717 (c) Total 13,977,435$
(a) The General Fund transf
erred the following:

1. $3,949,994 to the Capital Improvements Capital Projects Fund for capita l improvement projects;

2. $2,777,227 to the Financing Authority Debt Service Fund for debt service payments;

3. $1,264,993 to the Housing Authority for subsidy of homeless program costs;

4. $2,856,000 to the Internal Service Funds for pursuant to the Municipal Code’s 1.5% transfer to the Information Technology
(b) The American Rescue Plan Act Fund transferred the following:

1. $454,308 to the Housing Authority for tenant based rental assistance

2. $2,471,196 to the Housing Asset Trust Fund for affordable housing. (c) The Housing Asset Trust Fund transferred $203,717 to the Housing Authority Fun d for tenant relocation assistance.
1495

CITY OF COSTA MESA, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025
(52)
NOTE 5

LOANS RECEIVABLE
The City’s loans receivable at June 30, 2025, by loan program are as follows:

HOME Program 2,393,754$
Community Development Loan Program 152,795
Rental Rehabilitation Program 200,477
First Time Home Buyer Program 1,338,476
Single Family Rehabilitation Program 142,500
Neighborhood Stabilization Program 115,250
Motel 6 Construction 850,000
Travelodge North Housing Project 2,100,000
Capital Improvements Loans 231,760
Other Programs 509,272
Total 8,034,284
Less: Allowance for Uncollectible Loans (3,194,849)
Loans Receivable, Net 4,839,435$
Allowance for uncollectible accounts are established for various loans.

NOTE 6 LEASES RECEIVABLE
Land
On July 1, 1985, the City entered into a 55-year ground lease agreement with Costa Mesa Family Village for use of three parcels of City-owned land. The lease began in July 1985 and will end in October 2039. The lessee is required to make annual fixed payments ranging from $6,750 to $13,500 with an interest rate of 2.015%. As of June 30, 2025, the lease receivable is $1,273,732, and deferred inflows of resources is $1,232,268. The City recognized $91,279 of lease revenue and interest revenue of $26,694 during the fiscal year.

Buildings and Infrastructure
The City entered into three leases for use of building and infrastructure assets with lease terms of five years with the option to extend. The lessee is required to make annual fixed payments ranging from $27,376 to $42,083 with interest rates of 2.015%. As of June 30, 2025, the lease receivable is $1,896,960, and deferred inflows of resources is $1,700,922.

The City recognized $271,066 of lease revenue and interest revenue of $42,522 during the fiscal year.

The future principal and interest payments as of June 30, 2025, are as follows:

Year Ending June 30, Principal Interest Total
2026 254,277$ 63,264$ 317,541$
2027 199,667 58,129 257,796
2028 213,774 54,093 267,867
2029 353,679 69,133 422,812
2030 - 2034 1,111,110 165,841 1,276,951
2035 - 2039 1,007,762 58,382 1,066,144
2040 - 2044 30,423 613 31,036
Total 3,170,692$ 469,455$ 3,640,147$
1496

CITY OF COSTA MESA, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025
(53)
NOTE
7 CAPITAL ASSETS
A summary of changes in capital assets is as follows:

Balance at Balance at
July 1, 2024 Additions Deletions Transfers June 30, 2025 Capital Assets, Not Being Depreciated:

Land 34,579,306$ -$ -$ -$ 34,579,306$
Land Rights Related to Streets 29,821,224 - - - 29,821,224 Construction-in-Progress 27,432,761 18,531,380 - (31,363,463) 14,600,678 Total Capital Assets, Not Being Depreciated 91,833,291 18,531,380 - (31,363,463) 79,001,208 Capital Assets, Being Depreciated/Amortized:

Building Improvements and Structures 125,768,378 - - 2,891,289 128,659,667 Landscaping and Sprinklers 10,076,675 - - - 10,076,675 Automotive Equipment 23,173,608 2,904,178 (588,350) - 25,489,436 Office Furniture 954,586 - - - 954,586 Office Machines 8,748,325 - - - 8,748,325 Other Equipment 21,776,754 1,910,635 - (1,909,245) 21,778,144 Intangible Assets 1,714,343 - - 1,932,537 3,646,880 Right-to-Use Lease Assets 1,434,585 - (365,808) - 1,068,777 Right-to-Use Subscription Assets 193,154 1,036,210 (193,154) - 1,036,210 Park System and Facilities 23,108,912 - - 3,602,533 26,711,445 Infrastructure - Roads 301,279,835 - - 24,846,349 326,126,184 Infrastructure - Storm Drains 101,566,209 - - - 101,566,209 Total Capital Assets, Being
Depreciated/Amortized 619,795,364 5,851,02 3 (1,147,312) 31,363,463 655,862,538 Less: Accumulated Depreciation/Amortization:

Building Improvements and Structures (61,303,864) (4,658,841) - - (65,962,705) Landscaping and Sprinklers (9,668,840) (156,182) - - (9,825,022) Automotive Equipment (11,311,698) (1,483,142) 529,515 - (12,265,325) Office Furniture (760,023) (51,015) - - (811,038) Office Machines (8,378,172) (239,118) - - (8,617,290) Other Equipment (11,818,497) (1,422,360) - - (13,240,857) Intangible Assets (1,646,766) (14,472) - - (1,661,238) Right-to-Use Lease Assets (746,687) (229,929) 365,808 - (610,808) Right-to-Use Subscription Assets (193,154) (287,836) 193,154 - (287,836) Park System and Facilities (15,728,265) (900,570) - - (16,628,835) Infrastructure - Roads (212,767,690) (7,330,188) 177,927 - (219,919,951) Infrastructure - Storm Drains (90,651,509) (1,402,448) - - (92,053,957) Total Accumulated Depreciation/
Amortization (424,975,165) (18,176,101) 1,266,404 - (441,884,862) Total Capital Assets, Being
Depreciated/Amortized, Net 194,820,199 (12,325,078) 119,092 31,363,463 213,977,676 Total Capital Assets, Net 286,653,490$ 6,206,302$ 119,092$ -$ 292,978,884$ 1497

CITY OF COSTA MESA, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025
(54)
NOTE 7

CAPITAL ASSETS (CONTINUED)
Depreciation expense is charged to the following functions for the year ended June 30, 2025:

Governmental Activities:

General Government 2,936,227$
Protection of Persons and Property 2,407,205
Community Programs 1,387,468
Public Services 11,445,201
Total Depreciation/Amortization Expense -
Governmental Activities 18,176,101$
The City h as active construction
projects as of June 30, 2025. The significant projects
include the following:

Total Spent Remaining
Construction Project Budget to Date Commitment
Sunflower Avenue Rehabilitation 2,570,782$ -$ 2,570,782$ Fairview Road Rehabilitation 2,780,829 - 2,780,829 Newport (Victoria/22nd to 19th) 1,178,820 94,496 1,084,324 SB Newport Boulevard Improvement
(Mesa/Victoria) 1,965,652 97,040 1,868,612 Newport Boulevard NB 22nd Bristol
SB Bristol Mesa 2,134,145 94,186 2,039,959 TeWinkle Skate Park Expansion 2,132,158 91,724 2,040,434 TeWinkle Park Lakes Repairs 2,132,475 143,553 1,988,922 Mesa Restoration/Cultural Restoration 2,000,000 92,313 1,907,687 Stabilize/Restore Fairview Park 2,000,000 36,331 1,963,669 Total 18,894,861$ 649,643$ 18,245,218$ 1498

CITY OF COSTA MESA, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025
(55)
NOTE 8

CHANGES IN LONG-TERM LIABILITIES
A summary of changes in long-term liabilities in primary government for the year ended June 30, 2025, is as follows:

Balance at Balance at Due Within
July 1, 2024 Additions Reductions June 30, 2025 One Year Bonds Payable:

Financing Authority
2017 Lease Revenue
Bonds 19,360,000$ -$ (2,015,000)$ 17,345,000$ 2,115,000$ Unamortized Premium 2,696,745 - (147,767) 2,548,978 147,767 Total Bonds Payable 22,056,745 - (2,162,767) 19,893,978 2,262,767 Other Liabilities:

Lease Payable - Facility 82,489 - (82,489) - - Lease Payable - Warehouse 657,778 - (152,052) 505,726 160,099 Loans Payable 66,693 - (15,391) 51,302 15,391
SBITA Payable - Microsoft 3,575 1,036,210 (344,794) 694,991 344,312 Claims Payable 14,960,567 2,528,677 (1,134,429) 16,354,815 1,293,969 Fire Truck Note Payable 1,058,422 - (143,086) 915,336 145,710 Mobile Command
Note Payable 1,674,377 - (193,810) 1,480,567 198,045 Police Armored Vehicle
Finance Lease 325,273 - (77,275) 247,998 79,910 Ambulance Note Payable 682,804 - (161,586) 521,218 167,516 Pumpers, Water, and
Asphalt Trucks
Finance Lease 2,275,000 - (288,982) 1,986,018 300,230 Employee Leave
Benefits Payable (1) (2) 8,767,333 1,811,696 - 10,579,029 4,606,428 Total Other Liabilities 30,554,311 5,376,583 (2,593,894) 33,337,000 7,311,610 Total Long-Term
Liabilities 52,611,056$ 5,376,583$ (4,756,661)$ 53,230,978$ 9,574,377$ (1) The beginning balance was restated due to the implementation of GASB Statement No. 101, See Note 18.
(2) The change in the compensated absence liability is presented as a net change.

NOTE
9 LONG-TERM LIABILITIES
Costa Mesa Financing Authority Bonds - 2017 Lease Revenue Bonds On October 1, 2017, the Costa Mesa Financing Authority issued $29,735,000 of 2017 Lease Revenue Bonds to finance certain capital improvements of the City of Costa Mesa and to advance refund $16,765,000 of outstanding Costa Mesa Public Financing Authority 2007 Certificates of Participation (2007 Certificates). The bond issue also included a bond premium of $3,694,172. The bonds mature from October 1, 2018 through October 1, 2042 in annual installments ranging from $570,000 to $2,220,000. Interest is payable semi-annually on April 1 and October 1 of each year, commencing on April 1, 2018 at a rate ranging from 2% to 5%. As of June 30, 2025, the principal outstanding is $17,345,000 and the unamortized bond premium balance is $2,548,978.
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CITY OF COSTA MESA, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025
(56)
NOTE
9 LONG-TERM LIABILITIES (CONTINUED)
Costa Mesa Financing Authority Bonds - 2017 Lease Revenue Bonds (Continued) Bond proceeds of $14,530,520, along with $2,302,225 of 2007 Certificates sinking fund monies, were used to purchase U.S. government securities. Those securities were deposited in an irrevocable trust with an escrow agent to provide for all future debt service payments on the 2007 Certificates. As a result, the 2007 Certificates are considered to be defeased and the liability for those certificates have been removed from the government- wide Statement of Net Position.

The annual debt service requirements for the bonds as of June 30, 2025, are as follows:

Year Ending June 30, Principal Interest Total
2026 2,115,000$ 677,925$ 2,792,925$
2027 2,220,000 569,550 2,789,550
2028 570,000 499,800 1,069,800
2029 600,000 470,550 1,070,550
2030 630,000 439,800 1,069,800
2031 - 2035 3,660,000 1,680,250 5,340,250
2036 - 2040 4,495,000 865,094 5,360,094
2041 - 2043 3,055,000 151,044 3,206,044
Total 17,345,000$ 5,354,013$ 22,699,013$
Leases Payable
Community Service Facility
On July 1, 2012, the City entered into a 13-year lease agreement for the use of a community service facility. The total lease liability is $309,105 at 2.20% interest. The lease ended during the year.

Warehouse
On May 17, 2021, the City entered into a seven-year lease agreement for the use of a warehouse. The total lease liability is $1,068,577 at 2.015% interest. As of June 30, 2025, the value of the lease liability is $505,726. The City is required to make monthly principal and interest payments of $12,500. The future principal and interest payments as of June 30, 2025, are as follows:

Year Ending June 30, Principal Interest Total
2026 160,099$ 8,717$ 168,816$
2027 168,466 5,414 173,880
2028 177,161 1,939 179,100
Total 505,726$ 16,070$ 521,796$
1500

CITY OF COSTA MESA, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025

(57)
NOTE 9 LONG-TERM LIABILITIES (CONTINUED)
Subscription-Based Information Technology Arrangements (SBITAs) Microsoft – Dell Technologies
On September 1, 2024, the City entered into a three-year subscription-based IT arrangement for the use of software. The total lease liability is $1,036,210 at 1.834% interest. As of June 30, 2025, the value of the lease liability is $694,991. The City is required to make annually principal and interest payments of $350,679. The future principal and interest payments as of June 30, 2025, are as follows:

Year Ending June 30, Principal Interest Total
2026 344,312 6,367 350,679$
2027 350,679 - 350,679
Total 694,991$ 6,367$ 701,358$

Loans Payable – SCE On-Bill Financing (OBF) Loans
During the year ended June 30, 2019, the City entered into loan agreements with Southern California Edison to finance certain street lighting projects. The total amount of the loans was $153,914. The loan’s term is 10 years with monthly payments of approximately $1,282.

The loans bear no interest.

The annual debt service requirements for loans payable as of June 30, 2025, are as follows:

Year Ending June 30, Amount
2026 15,391 $
2027 15,391
2028 15,391
2029 5,129
Total 51,302 $

Firetruck Note Payable
On February 25, 2021, the City entered into a Master Lease – Purchase Agreement and financed the purchase of a Pierce Arrow XT Firetruck for $1,472,402. The note matures annually on March 5th of each year with annual payments of $162,497. The note bears an interest rate of 1.8340% per annum.

The annual debt service requirements for the note as of June 30, 2025, is as follows:

Year Ending June 30, Principal Interest Total
2026 145,710$ 16,787$ 162,497$
2027 148,382 14,115 162,497
2028 151,103 11,394 162,497
2029 153,875 8,622 162,497
2030 156,697 5,800 162,497
2031 159,569 2,927 162,496
Total 915,336$ 59,645$ 974,981$

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CITY OF COSTA MESA, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025
(58)
NOTE
9 LONG-TERM LIABILITIES (CONTINUED)
Mobile Command Center Note Payable
On January 7, 2022, the City entered into a Master Lease – Purchase Agreement and financed the purchase of a Mobile Command Center and a Pumping Engine for $2,049,652.

The note matures annually on March 7th of each year with annual payments of $230,395.

The note bears an interest rate of 2.0150% per annum. The annual debt service requirements for the note as of June 30, 2025, is as follows:

Year Ending June 30, Principal Interest Total
2026 198,045$ 32,350$ 230,395$
2027 202,372 28,023 230,395
2028 206,794 23,601 230,395
2029 211,312 19,083 230,395
2030 215,929 14,466 230,395
2031 - 2032 446,115 104,674 550,789
Total 1,480,567$ 222,197$ 1,702,764$
Police Armored Vehicle Note Payable
On August 15, 2022, the City entered in a Master Lease – Purchase Agreement and financed the purchase of a Police Armored Vehicle for $400,000. The lease payment is due annually on August 17th of each year with annual payments of $88,367. The note bears an interest rate of 3.410% per annum.

The annual debt service requirements for the finance lease as of June 30, 2025, is as follows:

Year Ending June 30, Principal Interest Total
2026 79,910$ 8,457$ 88,367$
2027 82,635 5,732 88,367
2028 85,453 2,913 88,366
Total 247,998$ 17,102$ 265,100$
Ambulances Note Payable
On August 16, 2022, the City entered in a Master Lease – Purchase Agreement and financed the purchase of four CCL150 Type III Ambulances for $841,068. The lease payment is due annually on September 16th of each year with annual payments of $186,645. The note bears an interest rate of 3.670% per annum.

The annual debt service requirements for the finance lease as of June 30, 2025, is as follows:

Year Ending June 30, Principal Interest Total
2026 167,516$ 19,129$ 186,645$
2027 173,664 12,981 186,645
2028 180,038 6,605 186,643
Total 521,218$ 38,715$ 559,933$
1502

CITY OF COSTA MESA, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025
(59)
NOTE
9 LONG-TERM LIABILITIES (CONTINUED)
Pumpers, Water, and Asphalt Trucks Finance Lease
On July 28, 2023, the City entered into a Master Lease – Purchase Agreement and financed the purchase of pumpers, water truck street cleaners, asphalt roller truck, and other essential equipment and attachments for $2,275,000. The lease payment is due annually on July 28th of each year with annual payments of $377,526. The note bears an interest rate of

3.892% per annum.

The annual debt service requirements for the finance lease as of June 30, 2025, is as follows:

Year Ending June 30, Principal Interest Total
2026 300,230$ 77,296$ 377,526$
2027 311,915 65,611 377,526
2028 324,055 53,471 377,526
2029 336,666 40,890 377,556
2030 349,770 27,756 377,526
2031 363,382 14,143 377,525
Total 1,986,018$ 279,167$ 2,265,185$
NOTE 10

FUND BALANCES
Fund balances consisted of the following at June 30, 2025:

American
Government Gas Tax Rescue Plan Measure Capital Nonmajor General Fund Grants Fund Act Fund "M2" Improvements Funds Nonspendable:

Prepaid Items 809,471 $ - $ -$ -$ -$ -$ -$ Inventories 73,601 - - - - - 28 Restricted:

Pension and OPEB 2,092,360 - - - - - - Protection of Persons and - - - - - - - Property - - - - - - 1,360,808 Community Programs - - - 502,739 - - 10,203,576 Public Services (1) - 579,799 24,769,525 - 5,719,590 - 5,190,420 Debt Service - - - - - - 1,001 Committed:

Declared Disasters (2) 14,125,000 - - - - - - Self-Insurance (3) 2,000,000 - - - - - - Economic Reserves 9,000,000 - - - - - - Assigned:

Compensated Absences 5,982,021 - - - - - - Po
lice Retirement 1% 1,572,306
Supplemental - - - - - - - Workers' Compensation 2,000,000 - - - - - - Facilities Reserve 2,000,000 - - - - - - Strategic Plan Projects 2,000,000 - - - - - - Protection of Persons and
Property - - - - - - 700,807 Public Services - - - - - 33,467,728 10,148,093 Unassigned 19,307,045 - - - - - (41,269) Total Fund Balance 60,961,804$ 579,799$ 24,769,525$ 502,739$ 5,719,590$ 33,467,728$ 27,563,464$ 1503

CITY OF COSTA MESA, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025
(60)
NOTE 10

FUND BALANCES (CONTINUED)

1. Restricted fund balances in the Public Services category consist of fund balances in the Gas Tax, Air Quality Improvement, Lions Park Capital Improvements, and Measure M2 Construction funds.

Revenues received in these funds are legally restricted for specific purposes , such as transportation and facility related capital projects.

2. The fund balance committed for declared disa sters was adopted by Ordinance No. 91-20 and Municipal Code Section 2-206 to provide required funding as a result of a declared emergency by the City Cou ncil for an unanticipated but urgent event threatening the public health, safety, and welfare of the City. Any fund balance utilized has to be replenished.

3. The fund balance committed for self-insurance was codified in the Ordinance No. 96-14 and City Municipal Code Section 2-154 to provide a self-insurance reserve to be used to pay actual lo sses not covere d by insurance policies or insura nce pools. Any fund balance utilized ha s to be replenished.

The following funds had deficits at June 30, 2025:

Nonmajor Governmental Funds
Special Revenue Funds
Supplemental Law Enforcement Services 34,112$
Office of Traffic Safety 7,157
The deficit fund balance
s will be eliminated through receipts of future revenues.

NOTE 11 DEFINED BENEFIT PENSION PLANS
A. General Information about the Pension Plans
Employees of the City are me mbers of the California Pu blic Employees’ Retirement System (CalPERS), the cost of which is paid by the City. The information below includes the aggregate total pension plan related items:

Miscellaneous Police Safety Fire Safety 1% Total
Net Pension Liability (108,315,359)$ (138,218,500)$ (89,256,235)$ (335,790,094)$ 1% Supplemental Liability - - - (1,385,976) (1,385,976) Deferred Outflows of
Resources - Pension 21,031,028 25,808,218 29,297,904 - 76,137,150 Deferred Inflows of
Resources - Pension - (1,221,923) (4,401,104) - (5,623,027) Pension Expense (Credit) 15,627,318 17,063,159 15,431,662 (5,650) 48,116,489 1504

CITY OF COSTA MESA, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025
(61)
NOTE 11

DEFINED BENEFIT PENSION PLANS (CONTINUED)
A. General Information about the Pension Plans (Continued) Below are descriptions of the retirement plans along with selected inform ation regarding benefits, contributions, liabilities, and actuarial assumptions.

Plan Descriptions
All qualified permanent and probationary employees are eligible to participate in the City’s separate Miscellaneous and Police Safety Plans, agent multiple-employer defined benefit pension plans and the Fire Safety cost sharing plans. The plans are administered by CalPERS, which acts as a common investment and administrative agent for its participating member employers. Benefit provisions under the Plans are established by State statute and City resolution. CalPERS issues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumption s and membership information that can be found on the CalPERS website.

Benefits Provided
CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employee s 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 to 62 with statutorily reduced benefits. For employees hired into a plan with the 1.5% at 65 formula, eligibility for service retirement is age 55 with at least five years of service.

Public Employees’ Pension Reform Act of 2013 (PEPRA) miscellaneous members become eligible for service retirement upon attainment of age 52 with at least five years of service. All members are eligible for nonduty disability benefits after five 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.

Safety members can receive a special death benefit if the member dies while actively employed and the death is job-rela ted. Fire members may receive the alternate death benefit in lieu of the Basic Death Benefit or the 1957 Survivor Benefit if the member dies while actively employed and has at least 20 years of total CalPERS service. The cost of living adjustments for each plan are applied as specified by the Public Employees’ Retirement Law.
1505

CITY OF COSTA MESA, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025
(62)
NOTE 11

DEFINED BENEFIT PENSION PLANS (CONTINUED)
A. General Information about the Pension Plans (Continued) Benefits Provided (Continued)
The Plans’ provisions and benefits in effect at June 30, 2025, are summarized as follows:

Prior to On or After On or After
Hire Date March 11, 2012 March 11, 2012 January 1, 2013 Benefit Formula 2.5% at 55 2.0% at 60 2.0% at 62
Benefit Vesting Schedule 5 years of service 5 years of service 5 years of service Benefit Payments monthly for life monthly for life monthly for life Retirement Age 50 - 55 50 - 63 52 - 67
Monthly Benefits, as a Percent of
Eligible Compensation 2.0% - 2.5% 1.092% - 2.418% 1.0% - 2.5% Required Employee Contribution Rates 10.47% 7.5% 8.50%
Required Employer Contribution Rates 7.94% 10.41% 10.41% Miscellaneous (Agent Multiple-Employer)
Prior to On or After
Hire Date March 11, 2012 January 1, 2013
Benefit Formula 3.0% at 55 2.0% at 60
Benefit Vesting Schedule 5 years of service 5 years of service Benefit Payments monthly for life monthly for life
Retirement Age 50 50 - 63
Monthly Benefits, as a Percent of
Eligible Compensation 3.0% 2.0% - 2.7%
Required Employee Contribution Rates 14.0% 14.0%
Required Employer Contribution Rates 17.54% 22.54%
Police Safety (Agent Multiple-Employer)
Prior to On or After On or After
Hire Date December 30, 2012 December 30, 2012 January 1, 2013 Benefit Formula 3.0% at 50 2.0% at 50 2.7% at 57
Benefit Vesting Schedule 5 years of service 5 years of service 5 years of service Benefit Payments monthly for life monthly for life monthly for life Retirement Age 50 50 - 55 50 - 57
Monthly Benefits, as a Percent of
Eligible Compensation 3.0% 2.0% - 2.7% 2.0% - 2.7%
Required Employee Contribution Rates 14.0% 9.0% 13.75%
Required Employer Contribution Rates 24.30% 20.09% 13.76% Fire Safety (Cost Sharing Multiple-Employer)
1506

CITY OF COSTA MESA, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025
(63)
NOTE 11

DEFINED BENEFIT PENSION PLANS (CONTINUED)
A. General Information about the Pension Plans (Continued) Employees Covered
At the June 30, 1899 measurement date, the following employees were covered by each plan’s benefit terms:

Miscellaneous Police Safety Fire Safety
Inactive Employees or Beneficiaries
Currently Receiving Benefits 652 225 132
Inactive Employees Entitled to but
not yet Receiving Benefits 866 74 34
Active Employees 412 136 82
Total 1,930 435 248
Contributions
Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers are determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through 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 plan member contribution requirements as identified by the pension plan terms are classified as plan member contributions. For the year ended June 30, 2025, the employer contributions for the Miscellaneous, Police Safety and Fire Safety were $14,236,977, $14,905,682 and $10,645,047, respectively B. Net Pension Liability
The City’s net pension liability for each Plan is measured as the total pension liabili ty, less the pe nsion plan’s fiduciary net position. The net pension liability of each Pl an is measured as of June 30, 1899, based on an annual actuarial valuation as of June 30, 1899 and rolled forward to June 30, 1899 using standard update procedures. A summary of principal a ssumptions and methods used to determine the net pension liability is shown below.

Actuarial Methods and Assumptions Used to Determine Total Pension Liability For the three CalPERS Plans, the June 30, 1899 valuation was rolled forward to determine the June 30, 1899 pension liability, based on the following actuarial methods and assumptions:
1507

CITY OF COSTA MESA, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025
(64)
NOTE 11

DEFINED BENEFIT PENSION PLANS (CONTINUED)
B. Net Pension Liability (Continued)
Actuarial Valuation Date June 30, 2023
Measurement Date June 30, 2024
Actuarial Cost Method Entry-Age Normal in accordance with the requirements of GASB 68
Assumptions:

Discount Rate 6.90%
Inflation 2.30%
Salary Increases Varies by entry age and service
Investment Rate of Return 6.90%
Mortality Rate Table1 Derived using CalPERS membership data for all funds
Post-Retirement Benefit The lesser of contract COLA or 2.30% until Increase Purchasing Power Protection Allowance Floor on Purchasing Power applies, 2.30% thereafter
1 The mortality table used was developed based on CalPERS-specific data. The probabilities of mortality are based on the 2021 CalPERS Experience Study and Review of Actuarial Assumptions. Mortality rates incorporate full generational mortality improvement using 80% of Scale MP-2020 published by the Society of Actuaries. For more details on this table, please refer to the 2021 experience study report from No vember 2021 that can be found on the CalPERS website.

Discount Rate
The discount rate used to measure the total pension liability was 6.90%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made at the 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 on investment was applied to all periods of projected benefit payments to determine the total pension liability.

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. 1508

CITY OF COSTA MESA, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025
(65)
NOTE 11

DEFINED BENEFIT PENSION PLANS (CONTINUED)
B. Net Pension Liability (Continued)
Discount Rate (Continued)
The expected real rate of return by asset class are as follows:

Assumed
Asset Real Return
Asset Class1 Allocation Years 1-10 1,2
Global Equity - Cap-Weighted 30.00 % 4.54 %
Global Equity - Non-Cap-Weighted 12.00 3.84
Private Equity 13.00 7.28
Treasury 5.00 0.27
Mortgage-Backed Securities 0.05 0.50
Investment Grade Corporates 10.00 1.56
High Yield 5.00 2.27
Emerging Market Debt 5.00 2.48
Private Debt 5.00 3.57
Real Assets 15.00 3.21
Leverage (5.00) (0.59)
1 An expected inflation of 2.30% used for this period.
2 Figures are based on the 2021 Asset Liability Management study.

Changes in Net Pension Liability
The changes in the net pension liability for the Miscellaneous (Agent Multiple Employer) Plan, using the measurement date of June 30, 1899, are as follows:
(A) (B) (A - B)
Total Plan Net
Pension Fiduciary Pension
Liability Net Position Liability (Asset)
Balances - June 30, 2023 335,445,836$ 222,698,544$ 112,747,292$ Changes in the Year:

Service Cost 5,721,926 - 5,721,926
Interest on Total Pension Liability 22,953,564 - 22,953,564 Difference Between Expected
and Actual Experience 4,199,393 - 4,199,393
Contributions - Employer - 12,798,677 (12,798,677)
Contributions - Employees - 3,282,484 (3,282,484)
Net Investment Income - 21,406,865 (21,406,865)
Administrative Expenses - (181,210) 181,210
Benefit Payments, Including
Refunds of Employee
Contributions (19,691,688) (19,691,688) -
Net Changes 13,183,195 17,615,128 (4,431,933) Balances - June 30, 2024 348,629,031$ 240,313,672$ 108,315,359$ 1509

CITY OF COSTA MESA, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025
(66)
NOTE 11

DEFINED BENEFIT PENSION PLANS (CONTINUED)
B. Net Pension Liability (Continued)
Changes in Net Pension Liability
The changes in the net pension liability for the Police Safety (Agent Multiple Employer) Plan, using the measurement date of June 30, 1899, are as follows:
(A) (B) (A - B)
Total Plan Net
Pension Fiduciary Position
Liability Net Position Liability (Asset)
Balances - June 30, 2023 368,714,588$ 225,479,353$ 143,235,235$ Changes in the Year:

Service Cost 5,777,255 - 5,777,255
Interest on Total Pension Liability 25,115,301 - 25,115,301 Difference Between Expected
and Actual Experience 2,338,711 - 2,338,711
Net Plan to Plan Resource
Contributions - Employer - 13,718,693 (13,718,693)
Contributions - Employees - 2,948,851 (2,948,851)
Net Investment Income - 21,763,931 (21,763,931)
Administrative Expenses - (183,473) 183,473
Benefit Payments, Including
Refunds of Employee
Contributions (19,904,122) (19,904,122) -
Net Changes 13,327,145 18,343,880 (5,016,735) Balances - June 30, 2024 382,041,733$ 243,823,233$ 138,218,500$ Proportionate Share of the Net Pension Liability for the Fire Safety Plan As of June 30, 2025, the City reported net pension liabilities for its proportionate share of the net pension liability of the Fire Safety Plan as follows:

Share of Net
Pension Liability
Balance at June 30, 2023 91,243,941 $
Balance at June 30, 2024 89,256,235
Net Changes During 2023 - 2024 (1,987,706) $
The City’s p
roportionate share of the net pension liability was based on a projection of the City’s long-term share of contributions to the pension plans relative to the projected contributions of all participating employers, actuarially determined. The City’s proportionate share of the net pension liability for this plan as of the measurement dates of June 30, 2023 and 2024, was as follows:

Fire Safety
Proportion - June 30, 2023 1.22067%
Proportion - June 30, 2024 1.22423%
Change - Increase (Decrease) 0.00356%
1510

CITY OF COSTA MESA, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025
(67)
NOTE 11

DEFINED BENEFIT PENSION PLANS (CONTINUED)
B. Net Pension Liability (Continued)
Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the City’s net pension liability for each Plan, calculated using the Plan’s discount rate, as well as what the City ’s net pension liability would be if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate:

Current
1% Decrease Discount Rate 1% Increase
(5.90%) (6.90%) (7.90%)
Net Pension Liability - Miscellaneous 153,242,912$ 108,315,359$ 71,378,853$ Current
1% Decrease Discount Rate 1% Increase
(5.90%) (6.90%) (7.90%)
Net Pension Liability - Police Safety 189,911,674$ 138,218,500 $ 96,028,482 $ Current
1% Decrease Discount Rate 1% Increase
(5.90%) (6.90%) (7.90%)
Net Pension Liability - Fire Safety 121,378,061$ 89,256,235$ 62,985,098$ Pension Plan Fiduciary Net Position
Detailed information about each pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports.

Amortization of Deferred Outflows and Inflows of Resources Under GASB 68, 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 pens ion 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 5-year straight-line amortization and actual earnings on pension
plan investments
All other amounts Straight-line amortization over the
expected average remaining service
lifetime (EARSL) of all members that are
provided with benefits (active, inactive,
and retired) as of the beginning of the
measurement period
1511

CITY OF COSTA MESA, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025
(68)
NOTE 11

DEFINED BENEFIT PENSION PLANS (CONTINUED)
B. Net Pension Liability (Continued)
Pension Expense and Deferred Outflows/Inflows of Resources Related to Pension At June 30, 2025, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Deferred
Outflows of Inflows of
Resources Resources
Pension Contributions Subsequent to
Measurement Date 14,236,977 $ - $
Differences Between Expected and Actual Experience 3,516,056 - Change in Assumptions - -
Net Differences Between Projected and Actual
Earnings on Plan Investments 3,277,995 -
Total 21,031,028$ -$
Miscellaneous
Deferred Deferred
Outflows of Inflows of
Resources Resources
Pension Contributions Subsequent to
Measurement Date 14,905,682 $ - $
Differences Between Expected and Actual Experience 4,522,746 (1,221,923) Change in Assumptions 3,174,418 -
Net Differences Between Projected and Actual
Earnings on Plan Investments 3,205,372 -
Total 25,808,218 $ (1,221,923) $
Police Safety
Deferred Deferred
Outflows of Inflows of
Resources Resources
Pension Contributions Subsequent to
Measurement Date 10,645,047 $ - $
Differences Between Expected and Actual Experience 7,284,102 (236,837) Change in Assumptions 2,199,090 -
Change in Employer's Proportion - (4,164,267)
Net Differences Between Projected and Actual
Earnings on Plan Investments 4,314,240 -
Differences Between Employer's Contributions and
Change in Employer's Proportion 4,855,425 -
Total 29,297,904$ (4,401,104)$
Fire Safety
1512

CITY OF COSTA MESA, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025
(69)
NOTE 11

DEFINED BENEFIT PENSION PLANS (CONTINUED)
B. Net Pension Liability (Continued)
At June 30 , 2025, deferred outflows of resources in the amounts of $14,236,977, $14,905,682, and $10,645,047 were related to contributions subsequent to the measurement date for the Miscellaneous, Police Safety, and Fire Safety Plans, respectively. They will be recognized as a reduction of the net pension liability in the fiscal year ending June 30, 2026. Other amounts reported as deferred outflow s of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:

Year Ending June 30, Miscellaneous Police Safety Fire Safety 2026 2,222,893 $ 3,498,111 $ 5,060,633 $
2027 6,789,821 7,887,482 10,550,953
2028 (979,106) (439,498) 116,305
2029 (1,239,557) (1,265,482) (1,476,138)
NOTE 12
POLICE 1% SUPPLEMENTAL RETIREMENT PLAN
A. General Information about the Pension Plan
Plan Description
The plan was effective on July 1, 1993 for sworn members of the City of Costa Mesa Police Department. The plan was originally a 1% supplemental plan to the City’s 2%@50 benefit. Under the Retirement Plan for Safety Employees of the City of Costa Mesa, the City joined CalPERS with 3%@50 Safety benefit as of December 31, 2000 and transferred active members to CalPERS. Employees who retired prior to July 1, 1999 were not transferred to CalPERS.

The Police 1% Supplemental Retirement Plan is a single employer defined benefit plan.

This Plan currently has only retired participants as all active employees were transferred to the CalPERS 3%@ 50 benefit plan. The number of participants at June 30, 202 5 was

17. The aver
age monthly benefit being paid is $931.33. The retirement benefit is 1% of the highest 12-month earnings for credited services up to 25 years. Maximum benefit is 75% of the highest 12-month earnings for service retirement including all public plan pension benefits but not including Social Security. The 75% is proportionately reduced for less than 25 years of Costa Mesa Police Department service.

Contributions
The City has not adopted a funding policy for this supplemental retirement plan and accordingly plan benefits impact financial resources as benefits are paid. As such, there are no assets accumulated in a trust for the plan. For the year ended June 30, 2025, the City paid $1,945,254 in form of insurance premiums for retiree health insurance and implicit subsidy of $955,626 for a total contribution of $2,900,880. 1513

CITY OF COSTA MESA, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025
(70)
NOTE 12
POLICE 1% SUPPLEMENTAL RETIREMENT PLAN (CONTINUED)
B. Pension Liability
The City’s pension liability for the Plan is measured as the total pension liability, as the pension plan has no fiduciary net position. The pension liability of the Plan is measured as of June 30, 2025, using an annual actuarial valuation as of June 30, 202 5. A summary of principal a ssumptions and methods used to determine the net pension liability is shown below.

Actuarial Methods and Assumptions
The total pension liabilities in the June 30, 2025 actuarial valuations were determined using the following actuarial assumptions:

Measurement Date June 30, 2025
Actuarial Assumptions:

Discount Rate 4.90% per annum. The discount rate is the average, rounded to 5 basis points, of the range of 3 to 20-year municipal bod rate indices: S&P Municipal Bond 20-Year High Grade Rate Index, Bond Buyer 20-Bond GO Index, Fidelity GO AA 20-Year Bond Index.

Payroll Growth N/A; all participants have retied
Inflation Rate 2.75% per year
Cost Method Entry Age Normal as a level percentage of payroll Employer Funding Policy Pay-as-you-go
Census Data Census information was provided by the Plan Sponsor as of June 2025
Retirement Disability/
Turnover Rate N/A; all participants have retired
Mortality Rates are based on the 2021 CalPERS Experience Study for Public Agency Police as shown below
Age Male Female Male Female
50 0.27
% 0.20 % 1.70 % 1.44 %
60 0.58 0.46 2.71 1.96
70 1.33 1.00 4.00 2.91
80 4.37 3.40 7.94 6.11
90 14.54 11.09 16.61 14.40
100 36.20 31.58 36.20 31.58
110 100.00 100.00 100.00 100.00
Healthy Retirees
Non-Industrial
Disabled Retirees
1514

CITY OF COSTA MESA, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025
(71)
NOTE 12
POLICE 1% SUPPLEMENTAL RETIREMENT PLAN (CONTINUED)
B. Pension Liability (Continued)
Discount Rate
The discount rate used to measure the total pension liability was 4.90%. There are no assets accumulated in a trust, therefore the discount rate is the average, rounded to 5 basis points, of the range of three 20 year municipal bond rate indices as of June 30, 2025: S&P Municipal Bond 20 Year High Grade Rate Index, Bond Buyer 20-Bond GO Index, Fidelity GO AA 20 Year Bond Index.

The discount rate changed from 4.05% as of June 30, 1899 to 4.90% as of Ju ne 30, 2025 measurement date.

Changes in the Pension Liability
Balance - June 30, 2024 1,572,306$
Changes in the Year:

Interest on the Total Pension Liability 60,020
Differences Between Actual Expected and
Actual Experience -
Changes in Assumptions (65,670)
Benefit Payments, Including Refunds of
Member Contributions (180,680)
Net Changes (186,330)
Balance - June 30, 2025 1,385,976$
Sensitivity o
f the Total Pension Liability to Changes in the Discount Rate The following presents the total pension liability, calculated using the discount rate of

4.90%, as well as what the net pension liability would be if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate.

Current
1% Decrease Discount Rate 1% Increase
(3.90%) (4.90%) (5.90%)
Net Pension Liability - Supplemental Plan 1,463,829$ 1,385,976 $ 1,315,436 $ D. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions
For the fiscal year ended
June 30, 2025, the City recognized pension credit of $5,650. At June 30, 2025, the City did not report any deferred outflows/inflows of resources rela ted to the Police 1% Supplemental Retirement Plan.
1515

CITY OF COSTA MESA, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025
(72)
NOTE 13

DEFINED CONTRIBUTION PLAN
On January 1, 2000, the City adopted a Defined Contribution Plan (Plan) for part-time employees that work under 1,000 hours during the fiscal year and do not meet the eligibility requirements to be enrolled in the California Public Employee Retirement System (CalPERS). The Plan is administered by the Public Agency Retirement Services (PARS). As of June 30, 2025, there were 186 active participants in the Plan. Both the City and employees are required to each contribute 3.75% of gross wages. The City’s contribution to the defined contribution plan for the year ended June 30, 2025 was $75,182.

NOTE 14 OTHER POST EMPLOYMENT BENEFITS PLAN (OPEB)
Plan Description
The City administers a single-employer defined benefit plan, which provides medical insurance benefits to eligible retirees and their spouses in accordance with various labor agreements. The plan covers employees hired before January 1, 2004 who retire directly from the City with 10 years or more of City service. The City provides a contribution up to a percentage of the lesser of $500 per month or the premium for the most popular medical plan elected by the employees. The percentage varies by retirement date and years of City service. For employees hired on or after January 1, 2004, the City will only pay for the PEMHCA subsidy once they meet the definition of a retiree under CalPERS. The City provides retiree life insurance of $1,000 for the retiree and $500 for the retiree’s spouse.

Employees Covered
As of the June 30, 1899 measurement date, the following current and former employees were covered by the benefit terms under the plan:

Active Employees 641
Inactive Employees or Beneficiaries Currently
Receiving Benefits 409
Inactive Employees Entitled to but not yet
Receiving Benefits -
Total 1,050
Contributions
The contribution requirements of plan members and the City are established and may be amended by the City Council. The contribution required to be made under the City Council and labor agreement requirements is on a pay-as-you-go basis (i.e., as medical insurance premiums become due). For the fiscal year ended June 30, 2025, the City contributed $2,900,880 to the plan. The City has not established a trust for the purpose of holding assets accumulated for plan benefits.
1516

CITY OF COSTA MESA, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025
(73)
NOTE 14

OTHER POST EMPLOYMENT BENEFITS PLAN (OPEB) (CONTINUED)
Contributions (Continued)
The City’s total OPEB liability was measured as of June 30, 2024 by an actuarial valuation based on the following actuarial methods and assumptions.

Discount Rate: 4.21% for accounting disclosure purposes. The rate is based on a yield for 20-year tax-exempt general obligation municipal bonds with an average rating of AA/Aa or higher (or equivalent quality on another rating scale). For the current valuation, the discount rate was selected from the range of indices as shown in the table below:

As of 6/30/24
Bond Buyer Go 20 - Municipal Bond Index 3.93 %
S&P Municipal Bond 20-Year High Grade Rate Index 4.21 % Fidelity 20-Year Go Municipal Bond Index 3.97 %
Bond Index Range 3.93% - 4.21%
Actual Index Used 4.21 %
Aggregate Payroll Incr eases: 2.80
% per year. This assumption is used to amortize the
unfunded actuarial accrued liability and to determine the Entry Age Normal actuarial liabilities.

Mortality Rate: Based on rates used in the most recent CalPERS pension valuation.

Turnover Rate: Assumption used to project terminations (voluntary and involuntary) prior to meeting minimum retirement eligibility for retiree health coverage. The rates represent the probability of termination in the next 12 months. The termination rates are based on those used in the most recent CalPERS pension valuation.

Retirement Rate: Annual retirement rates are based on those used in the most recent CalPERS pension valuation.

Changes in the Total OPEB Liability
The changes in the plan’s total OPEB liability is as follows:

Net OPEB
Liability (Asset)
Balance - June 30, 2024 45,452,076 $
Changes Recognized for the Measurement Period:

Service Cost 1,419,494
Interest 1,878,907
Differences Between Expected and Actual Experience 622,499 Changes of Assumptions (163,741)
Benefit Payments (2,783,065)
Net Changes 974,094
Balance - June 30, 2025
(Measurement Date June 30, 2024) 46,426,170$
1517

CITY OF COSTA MESA, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025
(74)
NOTE 14

OTHER POST-EMPLOYMENT BENEFITS PLAN (OPEB) (CONTINUED)
Sensitivity of the OPEB Liability to Changes in the Discount Rate The following presents the City’s OPEB liability if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate, for the measurement period ended June 30, 2025:

Current
1% Decrease Discount Rate 1% Increase
(3.21%) (4.21%) (5.21%)
OPEB Liability 52,007,091$ 46,426,170 $ 41,788,980 $ Sensitivity of the OPEB Liability to Changes in the Health Care Cost Trend Rates The following presents the 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 the measurement period ended June 30, 2025:

Current Healthcare
1% Decrease Cost Trend Rates 1% Increase
(7.00% decreasing (8.00% decreasing (9.00% decreasing
to 3.50%) to 4.50%) to 5.50%)
OPEB Liability 43,160,878$ 46,426,170 $ 51,068,651 $ Recognition of Deferred Outflows and Deferred Inflows of Resources Gains and losses related to changes in total OPEB liability are recognized in OPEB expense systematically over time. Amounts are first recognized in OPEB expense for the year the gain or loss occurs.

The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to OPEB and ar
e to be recognized in future OPEB expense. The initial
amortization period for deferred inflows and deferred outflows is three years.

OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB For the fiscal year ended June 30, 2025, the City recognized OPEB expense of $2,858,347.

At June 30, 2025, the City reported deferred outflows and inflows of resources related to OPEB from the following sources:

Deferred Deferred
Outflows of Inflows of
Resources Resources
OPEB Contributions Subsequent to Measurement Date 2,900,880$ -$ Differences Between Expected and Actual Experience 857,675 (8,624,445) Changes in Assumptions 5,088,251 (10,670,546)
Total 8,846,806$ (19,294,991)$
The $2,900,880 reported as deferred outflows of resources related to contributions subsequent to the June 30, 1899 measurement date will be recognized as a reduction of the net OPEB liability during the fiscal year ending June 30, 2026. 1518

CITY OF COSTA MESA, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025
(75)
NOTE 14

OTHER POST-EMPLOYMENT BENEFITS PLAN (OPEB) (CONTINUED)
OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB (Continued)
Other amounts reported as deferred inflows of resources related to OPEB will be recognized as expense as follows:

Deferred
Outflows/(Inflows)
Year Ending June 30, of Resources
2026 (440,055) $
2027 (1,226,141)
2028 (1,226,141)
2029 (1,660,984)
2030 (2,030,969)
Thereafter (6,764,775)
Total (13,349,065)$
NOTE 15

POST-EMPLOYMENT BENEFITS RHS (DEFINED CONTRIBUTION)
On January 1, 2004, the City adopted a new Retirement Health Savings Plan (RHS) for all full-time active employees. This benefit was ratified in the City’s contractual agreements (MOU) with the Costa Mesa Employees Association (CMCEA), Costa Mesa Police Association (CMPA), Costa Mesa Police Management Association (CMPMA), and the Costa Mesa Firefighters Association (CMFA). This po st-employment medical benefit is to assist employees with their qualifying medical expenses or premiums upon retirement or separation from the City with no minimum age requirement. The RHS plan is a defined contribution plan for all full time employees at the City. Under this plan, the employee and the City each make a mandatory 1% of base pay contribution. If the employee separates from the City prior to the 10-year vesting period, the employee forfeits his or her share of the City’s contribution.

The City has no payment obligations once the employee separates from the City. Per a side letter agreement with employees, the RHS program was suspended starting November 7, 2010. For the CMPMA, effective July 2014, a 1% employee contribution is required to the plan, but no employer contribution is required. The City’s contribution to the defined contribution post-retirement plan for the year ended June 30, 2025 was $0. 1519

CITY OF COSTA MESA, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025
(76)
NOTE 16

EXPENDITURES IN EXCESS OF APPROPRIATIONS
Excess of expenditures over appropriations in individual funds at the function level (level of budgetary control) is as follows at June 30, 2025:

Actual Final Budget
Function Expenditures Appropriations Excess
Major Fund:

General Fund
City Attorney 1,107,716 $ 1,086,750 $ (20,966) $
Information Technology 6,710,372 6,030,365 (680,007) Facilities and
Equipment Maintenance 13,124,814 12,585,530 (539,284) Building and Safety 3,590,671 3,584,859 (5,812)
Planning 2,582,541 1,996,962 (585,579)
Public Services
Administration 2,498,764 2,385,716 (113,048)
Transportation 3,721,711 3,398,116 (323,595)
Special Revenue
Funds:

Supplemental Law Protection of Persons
Enforcement and Property 376,562 343,882 (32,680) Services Fund
NOTE
17 RISK MANAGEMENT
For the fiscal year ended June 30, 2025, the City participated in the California Municipal Excess Liability (CAMEL) Program. The membership of CAMEL consists of 21 cities with similar interests and needs regarding liability insurance. The Board of Directors sets the premiums for each participant and each participant is represented on the Board. Premiums are based upon the losses incurred by each member and are not affected by losses incurred by other members.

In the Self-Insurance Workers’ Compensati on/General Liability/Unemployment Internal Service Fund, the City has recorded liabilities of $16,354,815 for lawsuits and other claims arising in the ordinary course of business. The City is also self-insured for the first $2,000,000 of each claim arising for workers’ compensation and has purchased outside insurance coverage in excess of the $2,000,000 up to an unlimited maximum. The City is self-insured for the first $2,000,000 of each claim arising for general liability. The City has purchased outside insurance coverage in excess of the $2,000,000 up to a maximum of $25,000,000 per occurrence. For the past three years, claim payments have not exceeded the amount of applicable insurance coverage.
1520

CITY OF COSTA MESA, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025
(77)
NOTE 17

RISK MANAGEMENT (CONTINUED)
The City has estimated losses for claims and judgments and has established liabilities of $12,678,373 for workers’ compensation and $3,676,442 for general liability. Losses for claims incurred but not reported are recorded when the probable amount of loss can be reasonably estimated. These amounts represent estimates of amounts to be paid for reported claims and incurred but not yet reported claims based upon past experience, modified for current trends and information. While the ultimate amount of losses incurred through June 30, 2025 is dependent on future developments, based upon information from the City Attorney, the City’s claims administrators and others involved with the administration of the programs, City management believes the accrual is adequate to cover such losses.

The City is contingently liable for additional losses not reported in the accompanying financial statements in the range of approximately $25,000 to $2,000,000 for which the likelihood of an unfavorable outcome is only reasonably possible, as determined by legal counsel.

Changes in claims payable for the past two fiscal years are as follows:

Claims Incurred
Beginning and Changes Claim
Fiscal Year Balance in Estimates Payments Ending Balance 2023-24 13,827,398 $ 1,932,581 $ (799,412) $ 14,960,567 $ 2024-25 14,960,567 2,528,677 (1,134,429) 16,354,815 NOTE 18

RESTATEMENT OF BEGINNING NET POSITION AND FUND BALANCE
A. Changes to or within Financial Reporting Entity
Change in Fund Presentation from Major to Nonmajor
Measure M2 Special Revenue Fund previously did not meet the criteria to be reported as a major governmental fund. However, effective July 1, 2024, the met the criteria to be reported as a major fund and is reported as a major governmental fund for the fiscal year ended June 30, 2025. The effect of that change to or within the financial reporting en tity is shown in column A of the table below
B.

Change in Accounting Principle
Effective July 1, 2024,
the City implemented GASB Statement No. 101, Compensated Absences. This statement updated the recognition and measurement guidance for compensated absences and associated salary-related payments and amended certain previously required disclosures. As a result of the implementation of this standard, the compensated absences liability as of July 1, 2024 was understated by $2,785,312. This resulted to a restatement of the beginning net position of t he governmental activities by $2,785,312. The effect of the implementation of this standard is show n in column B of the table below.
1521

CITY OF COSTA MESA, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025
(78)
NOTE 18

RESTATEMENT OF BEGINNING NET POSITION AND FUND BALANCE (CONTINUED) Change in Change in
June 30, 2024, Reporting Accounting 30-Jun-24
As Previously Entity Principle As Adjusted or
Reported (A) (B) Restated
Government-Wide:

Governmental Activities 113,204,885 $ - $ (2,785,312)$ 110,419,573$ Total Primary Government 113,204,885$ -$ (2,785,312) $ 110,419,573$ Governmental Funds:

Major Funds:

General Fund 60,362,901$ -$ -$ 60,362,901$
Government Grants Special Revenue Fund (1,538,018) - - (1,538,018) Gas Tax Special Revenue Fund 21,830,719 - - 21,830,719 American Rescue Plan Act Special Revenue Fund 425,256 - - 425,256 Measure M2 Capital Projects Fund - 7,767,460 - 7,767,460 Capital Improvements Capital Projects Fund 35,387,391 - - 35,387,391 Nonmajor Funds 33,283,813 (7,767,460) - 25,516,353 Total Governmental Funds 149,752,062$ -$ -$ 149,752,062$ 1522

REQUIRED SUPPLEMENTARYINFORMATION

ANNUAL COMPREHENSIVE

FINANCIAL REPORT

REQUIRED SUPPLEMENTARY INFORMATION
1523
1524

CITY OF COSTA MESA, CALIFORNIA

SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS

MISCELLANEOUS PLAN

LAST TEN FISCAL YEARS
See accomp
anying Notes to Required Supplementary Information.
(79)
2024 2023 2022 2021 2020 2019 2018 2017 2016 2015
Total Pension Liability:

Service Cost 5,721,926$ 4,882,865$ 4,524,340$ 4,114,686$ 4,081,002$ 3,828,540$ 3,528,896$ 3,659,618$ 3,269,125$ 3,187,235$ Interest on Total Pension Liability 22,953,564 22,111,904 21,200,745 20,957,522 20,506,212 19,990,625 19,188,563 18,996,998 18,633,944 18,262,096 Differences Between Expected and
Actual Experience 4,199,393 5,590,884 (2,514,720) (1,467,232) (324,784) 4,152,146 (3,837,320) (1,038,444) (2,818,846) (2,016,112) Changes in Assumptions - - 9,049,210 - - - (1,071,584) 15,484,252 - (4,399,842) Changes in Benefit Terms - 372,418 - - - - - - - - Benefit Payments, Including Refunds
of Employee Contributions (19,691,688) (19,139,741) (18,185,189) (17,147,887) (16,501,681) (16,317,568) (15,285,935) (14,720,378) (14,145,202) (13,476,175) Net Change in Total Pension Liability 13,183,195 13,818,330 14,074,386 6,457,089 7,760,749 11,653,743 2,522,620 22,382,046 4,939,021 1,557,202 Total Pension Liability - Beginning 335,445,836 321,627,506 307,553,120 301,096,031 293,335,282 281,681,539 279,158,919 256,776,873 251,837,852 250,280,650 Total Pension Liability - Ending (a) 348,629,031 335,445,836 321,627,506 307,553,120 301,096,031 293,335,282 281,681,539 279,158,919 256,776,873 251,837,852 P
lan Fiduciary Net Position:

Contributions - Employer 12,798,677 12,048,314 10,995,829 10,097,843 9,336,852 8,320,570 7,300,573 6,712,045 6,226,072 5,768,827 Contributions - Employees 3,282,484 2,616,057 2,265,758 2,062,454 2,205,872 2,055,169 1,906,040 1,936,240 1,966,557 1,978,052 Net Investment Income 21,406,865 13,272,083 (17,866,615) 44,605,186 9,609,644 11,863,211 15,161,548 18,711,484 897,287 3,881,685 Benefit Payments (19,691,688) (19,139,741) (18,185,189) (17,147,887) (16,501,681) (16,317,568) (15,285,935) (14,720,378) (14,145,205) (13,476,175) Plan to Plan Resource Movement - - - - - - (1,077) - 3,064 13,634 Administrative Expense (181,210) (157,409) (147,635) (197,367) (272,363) (133,740) (279,147) (246,188) (104,766) (193,604) Othe Miscellaneous Income (Expense) - - - - - 435 (530,105) - - - Net Change in Plan Fiduciary Net Position 17,615,128 8,639,304 (22,937,852) 39,420,229 4,378,324 5,788,077 8,271,897 12,393,203 (5,156,991) (2,027,581) Plan Fiduciary Net Position - Beginning 222,698,544 214,059,240 236,997,092 197,576,863 193,198,539 187,410,462 179,138,565 166,745,362 171,902,353 173,929,934 Pl
an Fiduciary Net Position - Ending (b) 240,313,672 222,698,544 214,059,240 236,997,092 197,576,863 193,198,539 187,410,462 179,138,565 166,745,362 171,902,353 Net Pension Liability (Asset) - Ending (a) - (b) 108,315,359$ 112,747,292$ 107,568,266$ 70,556,028$ 103,519,168$ 100,136,743$ 94,271,077$ 100,020,354$ 90,031,511$ 79,935,499$ Plan Fiduciary Net Position as a Percentage
of the Total Pension Liability 68.93% 66.39% 66.56% 77.06% 65.62% 65.86% 66.53% 64.17% 64.94% 68.26% Covered Payroll 33,906,374$ 27,755,413$ 26,486,277$ 26,206,105$ 24,012,483$ 24,394,495$ 20,067,193$ 19,532,886$ 19,890,931$ 17,928,997$ Net Pension Liability as a Percentage of
Covered Payroll 319.45% 406.22% 406.13% 269.24% 431.11% 410.49% 469.78% 512.06% 452.63% 445.84% 1525

CITY OF COSTA MESA, CALIFORNIA

SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS (CONTINUED)

MISCELLANEOUS PLAN

LAST TEN FISCAL YEARS
See accomp
anying Notes to Required Supplementary Information.
(80)
Notes to Schedule:

Benefit Chan
ges – The figures above generally include any liabili ty impact that may have resulted from voluntary benefit changes that occurred on or before the Measurement Date.

However, offers of Two Years Additional Service Credit (a.k.a. Golden Handshakes) that occurred after the Valuation Date are no t included in the figures above, unless the liability impact is deemed to be material by the plan actuary.

In 2022, SB 1168 increased the standard retiree lump sum death ben efit from $500 to $2,000 for any death occurring on or after July 1, 2023. The impact, if any, is included in the changes of benefit terms.

Changes in Assumptions – There were no assumption changes in 2023 to 2025. Effective with the June 30, 2021 valuation date (June 30, 2022 measurement date), the accounting discount rate was reduced from 7.15% to 6.90%. In determining t he long-term expected rate of retu rn, CalPERS took into account long-term market return expectations as well as the expected pension fund cash flows. In addition, demographic a ssumptions and the price inflation assumption were changed in accordance with the 2021 CalPERS Experience Study and Review of Actuarial Assumptions. The accounting disco unt rate was 7.15% for measurement dates June 30, 2017 through J une 30, 2021, 7.65% for measurement dates June 30, 2015 through 2016, and 7.50% for measurement date June 30, 2014. 1526

CITY OF COSTA MESA, CALIFORNIA

SCHEDULE OF CONTRIBUTIONS

MISCELLANEOUS PLAN

LAST TEN FISCAL YEARS

See accompanying Notes to Required Supplementary Information. (81)

2025 2024 2023 2022 2021 2020 2019 2018 2017 2016
Actuarially Determined Contribution 14,236,977$ 12,578,180$ 11,953,509$ 11,072,097$ 10,249,971$ 9,876,401$ 9,256,492$ 6,913,866$ 6,522,784$ 6,056,123$ Contributions in Relation to the Actuarially
Determined Contributions (14,236,977) (12,578,180) (11,953,509) (11,072,097) (10,249,971) (9,876,401) (9,256,492) (6,913,866) (6,522,784) (6,056,123) Contribution Deficiency (Excess) -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Covered Payroll 37,136,028$ 33,906,374$ 27,755,413$ 26,486,277$ 26,206,105$ 24,012,483$ 24,394,495$ 20,067,193$ 19,532,886$ 19,890,931$ Contributions as a Percentage of
Covered Payroll 38.34% 37.10% 43.07% 41.80% 39.11% 41.13% 37.95% 34.45% 33.39% 30.45%

Notes to Schedule:

Valuation date for June 30, 2025 6/30/22

Methods and assumptions used to determine contribution rates:

Single and agent employers Entry Age Actuarial Cost Method Amortization method/period Varies by date est ablished and source. May be level dollar or level percent of pay and may include direct rate smoothing
Asset valuation method Market value of assets
Inflation 2.30%
Salary increases Varies by category, entry age, and duration of service Investment rate of return 6.80%, net of pension plan investment and administrative expense; Includes inflation

Other Information:

For changes to previous year’s information, refer to past GASB 68 reports.

1527

CITY OF COSTA MESA, CALIFORNIA

SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS

POLICE SAFETY PLAN

LAST TEN FISCAL YEARS
See accomp
anying Notes to Required Supplementary Information.
(82)
2024 2023 2022 2021 2020 2019 2018 2017 2016 2015
Total Pension Liability:

Service Cost 5,777,255$ 5,660,455$ 5,458,052$ 4,811,521$ 4,912,766$ 4,959,915$ 4,653,580$ 4,475,641$ 4,011,055$ 4,048,034$ Interest on Total Pension Liability 25,115,301 24,218,751 23,094,674 22,650,069 21,872,003 21,235,614 20,611,486 20,072,034 19,519,447 18,452,568 Differences Between Expected and
Actual Experience 2,338,711 5,683,147 (4,554,440) 503,266 (1,729,542) (2,112,152) (1,494,789) (2,148,051) 4,436,634 1,744,508 Changes in Assumptions - - 11,831,923 - - - (1,540,347) 17,608,748 - (4,744,823) Changes in Benefit Terms - 99,834 - - - - - - - - Benefit Payments, Including Refunds
of Employee Contributions (19,904,122) (18,661,561) (17,630,306) (16,651,882) (16,058,867) (15,024,883) (14,129,155) (13,984,335) (13,319,431) (12,625,831) Net Change in Total Pension Liability 13,327,145 17,000,626 18,199,903 11,312,974 8,996,360 9,058,494 8,100,775 26,024,037 14,647,705 6,874,456 Total Pension Liability - Beginning 368,714,588 351,713,962 333,514,059 322,201,085 313,204,725 304,146,231 296,045,456 270,021,419 255,373,714 248,499,258 Total Pension Liability - Ending (a) 382,041,733 368,714,588 351,713,962 333,514,059 322,201,085 313,204,725 304,146,231 296,045,456 270,021,419 255,373,714 P
lan Fiduciary Net Position:

Contributions - Employer 13,718,693 13,196,625 12,366,023 11,583,086 10,608,592 9,471,893 8,263,652 7,592,902 5,992,098 5,228,944 Contributions - Employees 2,948,851 2,402,021 2,367,983 2,166,528 2,285,323 2,222,313 2,120,029 2,012,546 1,988,684 2,191,295 Net Investment Income 21,763,931 13,524,316 (18,004,303) 44,470,479 9,465,284 11,872,172 14,402,562 17,309,154 825,770 3,618,253 Benefit Payments (19,904,122) (18,661,561) (17,630,306) (16,651,882) (16,058,867) (15,024,883) (14,129,155) (13,984,335) (13,319,431) (12,625,831) Plan to Plan Resource Movement - - - - - - 222 - 72 - Administrative Expense (183,473) (158,230) (147,153) (194,644) (266,185) (128,739) (265,711) (233,009) (98,993) (182,933) Othe Miscellaneous Income (Expense) - - - - - 420 (504,590) - - - Net Change in Plan Fiduciary Net Position 18,343,880 10,303,171 (21,047,756) 41,373,567 6,034,147 8,413,176 9,887,009 12,697,258 (4,611,800) (1,770,272) Plan Fiduciary Net Position - Beginning 225,479,353 215,176,182 236,223,938 194,850,371 188,816,224 180,403,048 170,516,039 157,818,781 162,430,581 164,200,853 Pl
an Fiduciary Net Position - Ending (b) 243,823,233 225,479,353 215,176,182 236,223,938 194,850,371 188,816,224 180,403,048 170,516,039 157,818,781 162,430,581 Net Pension Liability (Asset) - Ending (a) - (b) 138,218,500$ 143,235,235$ 136,537,780$ 97,290,121$ 127,350,714$ 124,388,501$ 123,743,183$ 125,529,417$ 112,202,638$ 92,943,133$ Plan Fiduciary Net Position as a Percentage
of the Total Pension Liability 63.82% 61.15% 61.18% 70.83% 60.47% 60.29% 59.31% 57.60% 58.45% 63.61% Covered Payroll 23,135,065$ 20,069,395$ 17,075,363$ 15,883,165$ 16,175,525$ 17,534,445$ 14,529,255$ 14,696,132$ 14,161,162$ 13,714,558$ Net Pension Liability as a Percentage of
Covered Payroll 597.44% 713.70% 799.62% 612.54% 787.30% 709.40% 851.68% 854.17% 792.33% 677.70% 1528

CITY OF COSTA MESA, CALIFORNIA

SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS (CONTINUED)

POLICE SAFETY PLAN

LAST TEN FISCAL YEARS

See accompanying Notes to Required Supplementary Information. (83)

Notes to Schedule:

Benefit Changes – The figures above generally include any liabili ty impact that may have resulted from voluntary benefit changes that occurred on or before the Measurement Date.

1529

CITY OF COSTA MESA, CALIFORNIA

SCHEDULE OF CONTRIBUTIONS

POLICE SAFETY PLAN

LAST TEN FISCAL YEARS
See accomp
anying Notes to Required Supplementary Information.
(84)
2025 2024 2023 2022 2021 2020 2019 2018 2017 2016
Actuarially Determined Contribution 14,905,682$ 12,295,561$ 13,172,096$ 11,680,985$ 11,803,904$ 11,174,155$ 10,894,754$ 8,098,773$ 7,592,899$ 5,994,277$ Contributions in Relation to the Actuarially
Determined Contributions (14,905,682) (12,295,561) (13,172,096) (11,680,985) (11,803,904) (11,174,155) (10,894,754) (8,098,773) (7,592,899) (5,994,277) Contribution Deficiency (Excess) -$ -$ -$ -$ -$ -$ -$ -$ -$ Covered Payroll 22,606,971$ 23,135,065$ 20,069,395$ 17,075,363$ 15,883,165$ 16,175,525$ 17,534,445$ 14,529,255$ 14,696,132$ 14,161,162$ Contributions as a Percentage of
Covered Payroll 65.93% 53.15% 65.63% 68.41% 74.32% 69.08% 62.13% 55.74% 51.67% 42.33% Notes to Schedule:

Valuation date for June 30, 2025 6/30/22
Methods and assumptions used to determine contribution rates:

Single and agent employers Entry Age Actuarial Cost Method Amortization method/period Varies by date established and source. May be level dollar or level percent of pay and may include direct rate smoothing
Asset valuation method Market value of assets
Inflation 2.30%
Salary increases Varies by category, entry age, and duration of service Investment rate of return 6.80%, net of pension plan investment and administrative expense; Includes inflation
Other Information:

For changes to previous year’s information, refer to past GASB 68 reports. 1530

CITY OF COSTA MESA, CALIFORNIA

SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY

FIRE SAFETY PLAN

LAST TEN FISCAL YEARS

See accompanying Notes to Required Supplementary Information. (85)

Fiscal Year 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 Measurement Date 6/30/2024 6/30/2023 6/30/2022 6/30/202 1 6/30/2020 6/30/2019 6/30/2018 6/30/2017 6/30/2016 6/30/2015 Plan's Proportion of the Net Pension Liability 1.22423% 0.61 916% 0.63698% 0.67861% 0.74962% 0.75901% 0.78122% 0.75976% 0.78750% 0.85980% Plan's Proportionate Share of the 89,256,235$ 91,243,941$ 88,285,197$ 61,763,064$ 81,561,540$ 77,775,545$ 75,280,246$ 75,347,795$ 68,144,130$ 59,018,969$ Net Pension Liability
Plan's Covered Payroll 12,297,318$ 10,924,436$ 9,845,473$ 9,203,544$ 9,034,047$ 9,614,585$ 9,057,608$ 9,116,708$ 9,235,056$ 8,616,507$ Plan's Proportionate Share of the
Net Pension Liability as a Percentage
of Covered Payroll 725.82% 835.23% 896.71% 671.08% 902.82% 808.93% 831.13% 826.48% 737.89% 684.95% Plan's Proportionate Share of the Fiduciary
Net Position as a Percentage
of the Plan's Total Pension Liability 0.00% 60.18% 60.47% 71.38% 73.12% 73.37% 73.39% 71.74% 74.06% 78.40% Plan's Proportionate Share of Aggregate
Employer Contributions 9,446,737$ 9,408,864$ 9,072,094$ 7,555,477$ 6,865,279$ 5,855,909$ 5,040,152$ 5,040,152$ 4,087,020$ 4,600,229$

Notes to Schedule:

Benefit Changes – There were no changes to benefit terms that appli ed to all members of the Public Agency Pool. However, indivi dual employer in the plan may have provided a benefit improvement to their employees such as Golden Handshakes, service purchases, and other prior service costs. Employers that have done so may ne ed to report this information as a separate liability in their financial statement as CalPERS considers such amount to be separately financed employer-specific liabilitie s. These employers should consult with their auditors/ Additionally, the figures above do not include any liability impact that occurred after the June 30, 2022 valuation date, unless the liability impact is deemed to be material to the Public Agency Pool.

In 2022, SB 1168 increased the standard retiree lump sum death benefit from $500 to $2,000 for any death occurring on or after July 1, 2023. For pooled plans, this is a Class 3 benefit and there is no normal cost surcharge. The impact on the unfunded liability is included in the pool’s differences between expected and actual experience.

Changes in Assumptions – There were no assumption changes in 2023. Effective with the June 30, 2021 valuation date (June 30, 20 22 measurement date), the accounting discount rate was reduced from 7.15% to 6.90%. In determining the long-term expected rate of return, CalPERS took into account long-term market return ex pectations, as well as the expected pens ion fund cash flows. In addition, demographic assumptions and the price inflat ion assumption were changed in accordance with the 2021 CalPERS Experience Study an d Review of Actuarial Assumptions. The accounting discount rate was 7.15% for measurement dates June 30, 2017 through June 30, 2021, 7.65% for measurement dates June 30, 2015 through 2016, and 7.50% for measurement date June 30, 2014. 1531

CITY OF COSTA MESA, CALIFORNIA

SCHEDULE OF CONTRIBUTIONS

FIRE SAFETY PLAN

LAST TEN FISCAL YEARS

See accompanying Notes to Required Supplementary Information. (86)

2025 2024 2023 2022 2021 2020 2019 2018 2017 2016
Contractually Required Contribution
(Actuarially Determined) 10,645,047$ 9,446,737$ 9,408,864$ 9,072,094$ 7,555,477$ 6,865,279$ 5,855,909$ 5,040,152$ 3,598,782$ 3,286,280$ Contributions in Relation to the Actuarially
Determined Contributions (10,645,047) (9,446,737) (9,804,864) (9,072,094) (7,555,477) (6,865,279) (5,855,909) (5,040,152) (3,598,782) (3,786,280) Contribution Deficiency (Excess) -$ -$ -$ -$ -$ -$ -$ -$ (500,000)$ Covered Payroll 12,859,916$ 12,297,318$ 10,924,436$ 9,845,473$ 9,203,544$ 9,034,047$ 9,614,585$ 9,057,608$ 9,116,708$ 9,235,056$ Contributions as a Percentage of
Covered Payroll 82.78% 76.82% 86.13% 92.14% 82.09% 75.99% 60.91% 55.65% 39.47% 41.00%

Notes to Schedule:

Valuation date for June 30, 2025 6/30/22

Methods and assumptions used to determine contribution rates:

Asset valuation method Market value of assets
Inflation 2.30%
Salary increases Varies by category, entry age, and duration of service Investment rate of return 6.90%, net of pension plan investment and administrative expense; Includes inflation

Other Information:

For changes to previous year’s information, refer to past GASB 68 reports.

1532

CITY OF COSTA MESA, CALIFORNIA

SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS POLICE 1% SUPPLEMENTAL RETIREMENT PLAN

LAST TEN FISCAL YEARS

See accompanying Notes to Required Supplementary Information. (87)

2025 2024 2023 2022 2021 2020 2019 2018 2017 2016
Total Pension Liability:

Interest on Total Pension Liability 60,020$ 64,074$ 66,959$ 45,623$ 55,426$ 69,134$ 79,579$ 82,454$ 77,214$ 80,950$ Differences Between Expected and
Actual Experience - (26,421) - 101,666 - 80,298 - (9,704) - (19) Changes in Assumptions (65,670) (13,865) (16,007) (332,850) 59,262 122,873 46,602 (18,938) (107,900) - Benefit Payments, Including Refunds
of Employee Contributions (180,680) (188,828) (198,365) (204,445) (204,445) (205,036) (205,233) (205,233) (208,260) (211,287) Net Change in Total Pension Liability (186,330) (165,040) (147,413) (390,006) (89,757) 67,269 (79,052) (151,421) (238,946) (130,356) Total Pension Liability - Beginning 1,572,306 1,737,346 1,884,759 2,274,765 2,364,522 2,297,253 2,376,305 2,527,726 2,766,672 2,897,028 Total Pension Liability - Ending (a) 1,385,976$ 1,572,306$ 1,737,346$ 1,884,759$ 2,274,765$ 2,364,522$ 2,297,253$ 2,376,305$ 2,527,726$ 2,766,672$ Plan Fiduciary Net Position as a Percentage
of the Total Pension Liability 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Covered Payroll N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Net Pension Liability as a Percentage of
Covered Payroll N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

Notes to Schedule:

There are no assets accumulated in a trust that meets the criteria of GASB codification P22.101 or P52.101 to pay related benefits for the pension plan.

The discount rate changed from 3.50% as of June 30, 2018 to 3.15% as of June 30, 2019 measurement date.

The discount rate changed from 3.15% as of June 30, 2019 to 2.45% as of June 30, 2020 measurement date.

The discount rate changed from 2.45% as of June 30, 2020 to 2.10% as of June 30, 2021 measurement date.

The discount rate changed from 2.10% as of June 30, 2021 to 3.75% as of June 30, 2022 measurement date.

The discount rate changed from 3.75% as of June 30, 2022 to 3.90% as of June 30, 2023 measurement date.

The discount rate changed from 3.90% as of June 30, 2023 to 4.05% as of June 30, 2024 measurement date.

The discount rate changed from 4.05% as of June 30, 2024 to 4.90% as of June 30, 2025 measurement date.

1533

CITY OF COSTA MESA, CALIFORNIA

SCHEDULE OF CHANGES IN TOTAL OPEB LIABILITY AND RELATED RATIOS LAST TEN FISCAL YEARS*
See accomp
anying Notes to Required Supplementary Information.
(88)
Fiscal Year 06/30/25 06/30/24 6/30/2023 06/30/22 06/30/21 06/30/20 06/30/19 06/30/18 Measurement Period 06/30/24 6/30/2023 06/30/22 06/30/21 06/30/20 06/30/19 06/30/18 06/30/17 Total OPEB Liability:

Service Cost 1,419,494$ 1,359,650$ 2,123,135$ 1,469,582$ 1,145,090$ 1,110,733$ 1,098,145$ 1,229,918$ Interest on Total OPEB Liability 1,878,907 2,146,489 1,470,020 1,675,650 2,060,874 1,852,821 1,812,069 1,622,474 Differences Between Expected and
Actual Experience 622,499 (8,133,352) (480,791) (894,275) (3,128,209) 2,081,994 - - Changes in Assumptions (163,741) 238,216 (14,469,369) 3,854,176 6,606,929 3,420,614 (670,841) (3,959,316) Benefit Payments (2,783,065) (2,535,920) (2,520,497) (2,732,910) (2,719,892) (2,751,358) (2,469,425) (2,318,709) Net Change in Total OPEB Liability 974,094 (6,924,917) (13,877,502) 3,372,223 3,964,792 5,714,804 (230,052) (3,425,633) Total OPEB Liability - Beginning 45,452,076 52,376,993 66,254,495 62,882,272 58,917,480 53,202,676 53,432,728 56,858,361 Total OPEB Liability - Ending (a) 46,426,170$ 45,452,076$ 52,376,993$ 66,254,495$ 62,882,272$ 58,917,480$ 53,202,676$ 53,432,728$ Plan Fiduciary Net Position as a Percentage
of the Total OPEB Liability 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Covered Em
ployee Payroll1 62,513,350$ 62,202,706 $ 53,773,706 $ 48,101,217 $ 45,645,442 $ 43,828,141 $ 43,392,898 $ 41,026,788 $ Notes to Schedule:
1 OPEB benefits are not based on employee payroll.

In fiscal year 2021, the City created a trust that meets the cr iteria of GASB codification P22.101 or P52.101 to pay related benefit s for the OPEB plan. The f
unds are in a pooled account – balanced index. As of June 30, 2024, the market value of the investments held in the trust was $1,867,408 and is reflected as a contribution subsequent to the measurement date as of fiscal year 2023.

Changes in Assumptions – The discount rate as of the June 30, 2016 measurement date was 2.85%. The discount rate as of the June 30, 20 1 7 measurement date was 3.40%. The discount rate as of the June 30, 2018 measurement date was 3.50%. The discount rate as of the June 30, 2019 measurement date was 3.51%. The discount rate as of the June 30, 2020 measurement date was 2.66%. The discount rate as of the June 30, 2021 measurement date was 2.19%. The discount rate as of the June 30, 2022 measurement date was 4.09%. The discount rate as of June 30, 2023 was 4.13%.

Historical information is required only for measurement periods for which GASB 75 is applicable. Future year s’ information will be displayed up to 10 years as information becomes available.
*Fiscal year 2018 was the first year of implementation; therefore, only eight years are shown. 1534
1535
See accompanying Notes to Required Supplementary Information. (89)

GENERAL FUND
The General Fund is used to account for all general revenues of the City not specifically levied or collected for special purposes, and for expenditures related to the provision of general services by the City. The General Fund is used to account for all resources not required to be accounted for in another fund.

GOVERNMENT GRANTS FUND
The Government Grants Fund is used to account for receipt and disbursement of grant monies provided by Federal, State, and County governmental agencies for various programs.

GAS TAX FUND
The Gas Tax Fund is used to account for the receipt and disbursement of funds required to be used for construction and maintenance of the City’s road netwo rk system. Financing is provided by the City’s share of State gasoline taxes, including allocation s from the Highway Users Tax Account (HUTA) and the Road Maintenance and Rehabilitation Account (RMRA).

AMERICAN RESCUE PLAN ACT FUND (ARPA)
The ARPA Fund is used to account for the receipt and disbursement of grant monies under the American Rescue Plan Act.
1536

CITY OF COSTA MESA, CALIFORNIA
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL – GENERAL FUND
YEAR ENDED JUNE 30, 2025
See accompanying Notes to Required Supplementary Information. (90)
Variance with
Final Budget
Original Final Positive Prior Year
Budget Budget Actual (Negative) Actual

REVENUES
Taxes:

Sales Tax 80,063,389 $ 78,163,389 $ 78,244,492 $ 81,103 $ 76,400,160$ Property Tax 60,473,546 59,367,751 59,317,656 (50,095) 56,465,749 Transient Occupancy Tax 10,136,373 9,962,373 9,962,421 48 10,150,696 Franchise Tax 6,675,334 6,701,334 6,637,150 (64,184) 6,542,802 Cannabis Business Tax 3,896,284 4,106,284 4,082,109 (24,175) 3,195,393 Business License Tax 940,807 978,807 978,401 (406) 707,121 Total Taxes 162,185,733 159,279,938 159,222,229 (57,709) 153,461,921 Licenses and Permits 6,401,512 6,831,965 6,809,704 (22,261) 5,982,422 Fines and Forfeitures 1,302,091 1,521,634 1,455,764 (65,870) 1,297,319 Intergovernmental:

Motor Vehicle In-Lieu 115,307 177,378 177,378 - 138,951 Prop172 1,504,501 1,394,501 1,392,219 (2,282) 1,396,143 Advances Repayment - - - - 1,368,045 Grants and Other Reimbursements 750,779 2,089,958 2,032,425 (57,533) 2,091,131 Total Intergovernmental 2,370,587 3,661,837 3,602,022 (59,815) 4,994,270 Charges for Services 11,595,929 11,295,560 11,235,537 (60,023) 10,213,746 Rental 4,772,207 4,792,117 4,811,425 19,308 4,512,794 I
nvestment Income (Loss) 588,493 2,110,563 2,671,680 561,117 2,250,512 Miscellaneous 1,154,207 1,238,213 1,092,678 (145,535) 1,174,798 Total Revenues 190,370,759 190,731,827 190,901,039 169,212 183,887,782

EXPENDITURES
General Government:

City Council 874,089 797,887 797,517 370 749,750 City Manager
Administration 5,516,390 5,679,586 5,709,470 (29,884) 4,771,870 City Clerk 1,224,687 1,269,687 1,292,523 (22,836) 1,078,738 Personnel Services 2,523,135 2,601,006 2,403,168 197,838 2,594,988 Risk Management Services 330,163 352,698 495,151 (142,453) 458,487 City Attorney 1,086,750 1,086,750 1,107,716 (20,966) 977,061 Financial Services 6,073,764 5,075,600 5,057,429 18,171 4,416,585 Information Technology 6,402,558 6,030,365 6,710,372 (680,007) 5,471,390 Facilities and Equipment Maintenance 13,405,985 12,585,530 13,124,814 (539,284) 14,290,076 Nondepartmental 8,073,183 7,710,612 7,425,461 285,151 6,636,224 Total General Government 45,510,704 43,189,721 44,123,621 (933,900) 41,445,169 1537

CITY OF COSTA MESA, CALIFORNIA
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL – GENERAL FUND (CONTINUED)
YEAR ENDED JUNE 30, 2025
See accompanying Notes to Required Supplementary Information. (91)
Variance with
Final Budget
Original Final Positive Prior Year
Budget Budget Actual (Negative) Actual
EXPENDITURES (Continued)
Protection of Persons and Property:

Police Protection 61,967,050 $ 66,750,444 $ 66,637,869 $ 112,575 $ 61,846,778$ Fire Protection 37,734,622 39,129,583 39,086,455 43,128 35,159,633 Building and Safety 3,596,502 3,584,859 3,590,671 (5,812) 3,375,682 Total Protection of Persons and Property 103,298,174 109,464,886 109,314,995 149,891 100,382,093 Community Programs:

Community Recreation 9,430,560 10,871,175 10,688,629 182,546 9,988,871 Planning 2,099,267 1,996,962 2,582,541 (585,579) 2,455,636 Community Improvement 2,326,218 2,089,417 1,568,924 520,493 1,757,726 Development Services Administration 2,119,116 2,137,376 1,811,078 326,298 1,493,742 Total Community Programs 15,975,161 17,094,930 16,651,172 443,758 15,695,975 Public Services:

Administration 2,370,716 2,385,716 2,498,764 (113,048) 2,358,665 Engineering 4,616,915 4,445,465 3,468,792 976,673 2,681,200 Transportation 3,265,386 3,398,116 3,721,711 (323,595) 3,772,021 Total Public Services 10,253,017 10,229,297 9,689,267 540,030 8,811,886 Debt Service:

Principal 3,450,000 2,450,000 594,726 1,855,274 566,391 Interest and Fiscal Charges 1,067,905 854,405 116,351 738,054 62,126 Total Debt Service 4,517,905 3,304,405 711,077 2 ,593,328 628,517 Total Expenditures 179,554,961 183,283,239 180,490,132 2,793,107 166,963,640

EXCESS (DEFICIENCY) OF REVENUES OVER
(UNDER) EXPENDITURES BEFORE OTHER
FINANCING SOURCES (USES) 10,815,798 7,448,588 10,410,907 (2,623,895) 16,924,142

OTHER FINANCING SOURCES (USES)
Subscriptions Proceeds - - 1,036,210 1,036,210 - Transfers to Other Funds (10,970,988) (8,070,988) (10,848,214) (2,777,226) (16,486,813) Transfers from Other Funds - - - - 888,618 Total Other Financing Sources (Uses) (10,970,988) (8,070,988) (9,812,004) (1,741,016) (15,598,195) NET CHANGE IN FUND BALANCE (155,190) (622,400) 598,903 (4,364,911) 1,325,947 Fund Balance - Beginning of Year 60,362,901 60,362,901 60,362,901 - 59,036,954 FUND BALANCE - END OF YEAR 60,207,711$ 59,740,501$ 60,961,804$ (4,364,911)$ 60,362,901$ 1538

CITY OF COSTA MESA, CALIFORNIA
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL – GOVERNMENT GRANTS FUND – MAJOR FUND YEAR ENDED JUNE 30, 2025
See accomp
anying Notes to Required Supplementary Information.
(92)
Variance with
Final Budget
Original Final Positive Prior Year
Budget Budget Actual (Negative) Actual

REVENUES
Intergovernmental 6,883,580 $ 26,688,063 $ 7,840,461 $ (18,847,602) $ 3,275,113 $ Investment Income (Loss) - - 87,654 87,654 78,230 Total Revenue 6,883,580 26,688,063 7,928,115 (18,759,948) 3,353,343

EXPENDITURES
Current:

General Government - 9,558,471 2,483,286 7,075,185 2,014,351 Protection of Persons and Property 350,491 6,733,644 1,004,012 5,729,632 1,238,622 Community Programs - 2,726,699 503,154 2,223,545 1,711,393 Public Services 6,342,090 11,565,449 1,819,846 9,745,603 189,845 Total Expenditures 6,692,581 30,584,263 5,810,298 24,773,965 5,154,211

EXCESS (DEFICIENCY) OF REVENUES OVER
(UNDER) EXPENDITURES 190,999 (3,896,200) 2,117,817 6,014,017 (1,800,868)

OTHER FINANCING SOURCES (USES
Transfers Out - (631) - (631) -
NET CHANGE IN FUND BALANCE 190,999 (3,896,831) 2,117,817 6,013,386 (1,800,868) Fund Balance - Beginning of Year (1,538,018) (1,538,018) (1,538,018) - 262,850 FUND BALANCE - END OF YEAR (1,347,019)$ (5,434,849)$ 579,799$ 6,013,386$ (1,538,018)$ 1539

CITY OF COSTA MESA, CALIFORNIA
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL – GAS TAX FUND – MAJOR FUND
YEAR ENDED JUNE 30, 2025
See accomp
anying Notes to Required Supplementary Information.
(93)
Variance with
Final Budget
Original Final Positive Prior Year
Budget Budget Actual (Negative) Actual

REVENUES
Intergovernmental 5,996,053 $ 6,256,916 $ 6,236,356 $ (20,560) $ 5,981,892 $ Investment Income (Loss) - - 1,142,498 1,142,498 845,794 Miscellaneous - 218,959 218,959 - 167,874
Total Revenue 5,996,053 6,475,875 7,597,813 1,121,938 6,995,560

EXPENDITURES
Current:

Public Services 6,869,372 25,883,611 4,659,007 21,224,604 2,721,195 NET CHANGE IN FUND BALANCE (873,319) (19,407,736) 2,938,806 (20,102,666) 4,274,365 Fund Balance - Beginning of Year 21,830,719 21,830,719 21,830,719 - 17,556,354 FUND BALANCE - END OF YEAR 20,957,400$ 2,422,983$ 24,769,525$ (20,102,666)$ 21,830,719$ 1540

CITY OF COSTA MESA, CALIFORNIA
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL – AMERICAN RESCUE PLAN ACT – MAJOR FUND YEAR ENDED JUNE 30, 2025
See accomp
anying Notes to Required Supplementary Information.
(94)
Variance with
Final Budget
Original Final Positive Prior Year
Budget Budget Actual (Negative) Actual

REVENUES
Intergovernmental 2,972,172 $ 4,894,160 $ 4,894,160 $ - $ 3,620,652$ Investment Income (Loss) - - 77,484 77,484 166,877 Total Revenue 2,972,172 4,894,160 4,971,644 77,484 3,787,529

EXPENDITURES
Current:

Protection of Persons and Property 46,668 2,018,656 1,968,657 49,999 1,600,000

EXCESS (DEFICIENCY) OF REVENUES OVER
(UNDER) EXPENDITURES BEFORE
OTHER FINANCING SOURCES (USES) 2,925,504 2,875,504 3,002,987 127,483 2,187,529

OTHER FINANCING SOURCES (USES)
Transfer Out (2,925,504) (2,925,504) (2,925,504) - (2,020,652) NET CHANGE IN FUND BALANCE - (50,000) 77,483 127,483 166,877 Fund Balance - Beginning of Year 425,256 425,256 425,256 - 258,379 FUND BALANCE - END OF YEAR 425,256$ 375,256$ 502,739$ 127,483$ 425,256$ 1541

CITY OF COSTA MESA

NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
JUNE 30, 2025
(95)
NOTE 1

BUDGETARY DATA
Annual budgets are legally adopted or amended for all governmental funds on a basis consistent with accounting principles generally accepted in the United States of America, except for the following funds for which annual budgets were not adopted or amended:
 Special Revenue Funds:

Local Law Enforcement Block Grant
Opioid Settlement
Disaster Fund
 Capital Projects Funds:

Fire System Development Fees
Park Acquisition Fund
Lions Park
 Debt Service Funds:

Financing Authority Debt Service Fund
The City Council adop ts an annual budget submitted by the City Manager prior to the beginning of each new fiscal year. Public hearings are conducted prior to budget adoption by the Council. Supplemental appropriations, when required during the period, are also approved by the City Council. Interfunctional budget adjustments are approved by the City Manager. Expenditures may not legally exceed appropriations at the department functional level. At fiscal year-end, all operating budget appropriations lapse. 1542
1543

SUPPLEMENTARYSCHEDULES

ANNUAL COMPREHENSIVE

FINANCIAL REPORT

SUPPLEMENTARY SCHEDULES
1544
(97)

NONMAJOR GOVERNMENTAL FUNDS

SPECIAL REVENUE FUNDS
Special Revenue Funds are used to account for revenue derived from specific taxes or other earmarked revenues sources (other than expendable trust or for major capital projects) that are restricted by law or administrative action to expenditures for specified purposes.

The following funds have been classified as nonmajor governmental funds in the accompanying fund financial statements:

HOME Program Fund
Established to account for the receipt and disbursement of funds received under the Federal Home Investment Partnership Program of the Department of Housing and Urban Development. These revenues must be expended for acquisition, rehabilitation, and new construction of rental housing.

Air Quality Improvement Fund
Established to account for the receipt and disbursement of the City’s share of funds received under Health & Safety Code 44223 (AB 2766) to finance mobile source air pollution reduction programs consistent with the California Clean Air Act of 1988.

Community Development Fund
This fund accounts for the receipt and disbursement of the Department of Housing and Urban Development grants. These revenues must be expended to accomplish one of the following objectives:
elimination of slum or blighted areas to benefit low and moderate income persons, or to meet certain urgent community development needs.

Supplemental Law Enforcement Services Fund (SLESF)
Established to account for the receipt and disbursement of funds received under the State Citizen’s Option for Public Safety (COPS) Program allocated pursuant to Government Code Section 30061 enacted by Assembly Bill 3229, Chapter 134 of the 1996 statutes. These COPS/SLESF funds are allocated based on population and can only be spent for “front line municipal police services” as per Government Code Section 30061(c)(2).

Rental Rehabilitation Program Fund
Established to account for the receipt and disbursement of grants received from the Department of Housing and Urban Development under Section 17 of the U.S. Housing Act of 1937. These revenues must be expended to provide assistance to rehabilitate primarily privately-owned residential rental property.

Narcotics Forfeiture Fund
Established to account for the receipt and disbursement of narcotic forfeitures received from county, state, and federal agencies pursuant to Section 11470 of State Health and Safety Code and federal statute 21USC Section 881.

Local Law Enforcement Block Grant Fund
Established to account for the receipt and disbursement of federal grant monies provided by the 1998 Appropriations Act, Public Law 105-119. These funds are restricted for projects utilized to reduce crime and improve public safety.
1545
(98)
Office of Tr
affic Safety Fund
Established to account for the receipt and disbursement of federal grant monies received through the State Office of Traffic Safety. These funds are restricted for operations utilized to enhance traffic safety and to reduce drunk driving within the City.

Opioid Settlement Fund
Established to account
for receipt and disbursements from settlements related to opioid litigation.

These funds are restricted for purposes aligned with mitigating the adverse effects of opioid abuse and supporting initiatives aimed at prevention, treatment, recovery, and community support.

Housing Authority Fund
Established pursuant t
o the California Health and Safety Code, Section 34176(a). The Housing Authority serves two distinct functions: Low and Moderate Income Housing Asset Fund (LMIHAF) and homeless program. The LMIHAF is to promote a ffordable housing for families of low and moderate income within the City. The homeless program is to provide temporary assistance including housing to homeless individuals.

Disaster Fund
Established to account for receipt and disbursement of fe deral and state grant monies received for
declare disasters.

Behavioral Health Fund
The City received an award for the B
ehavioral Health Bridge Housing ( BHBH) from the Orange County Health Care Agency (OCHCA) to provide emergen cy shelter and behavioral health services at the Costa Mesa Bridge Shelter. The program implements a wide range of behavioral health care services, which include housing navigation, workforce development, case management, and housing retention.

Housing Asset Trust Fund
The Housing Trust Fund was created to set aside funding for the deve lopment of affordable housing.

City Council has emphasized the importance of developing affordable housing for residents of Costa Mesa and this Fund will assist in creating a pathway to achieving the long-term goal of housing affability for different income levels
Senior Transportation Fund
Established to account
for funding and expenditures related to the Senior Transportation Program.

These programs are designed to provide access to seniors for medical and personal visits. Funding sources may include but are not limited to: Enhanced Mobility for Senior and Individuals with Disabilities grant; Orange County Transit Authority Measure M2 grant; and Hoag Hospital grant.

CAPITAL PROJECTS FUNDS
Capital Projects Funds are established to account for financial resources segregated for acquisition and construction of major capital facilitie
s (other than those financed by proprietary funds).

The following have been classified as a major fund in the accompanying government-wide financial statements:

Capital Improvements Fund
Established to account
for construction of capital facilities funded by the City’s General Fund and various governmental grants.
1546
(99)
Measure M2 Fund
Established to account for the receipt and expenditure of the 2006 voter-approved one-half percent sales tax for local transportation improvements. Measure M2 is a 30-year extension of the earlier Measure M program.

The following have been classified as nonmajor funds in the accompanying fund financial statements:

Parking Districts Fund
Established under the Vehicle Parking District Law of 1943, this fund supports the development and upkeep of public parking facilities in designated downtown areas (along Newport Boulevard). Revenue from dedicated property tax levies can be used for projects such as building or repairing parking lots and structures, installing meters or payment systems, improving lighting and safety features, and enhancing accessibility. These investments help ensure that downtown districts remain accessible, functional, and supportive of local businesses.

Golf Course Improvements Fund
Established to account the receipt and disbursement of funds for Costa Mesa Country Club capital improvements. Funding is provided by the receipt of two and one-half percent of monthly gross receipts of green and tournament fees.

Park Development Fund
Established to account for the receipt and disbursement of funds for development, expansion, replacement and improvement of the City’s parks, trails and recreational facilities. The funding is provided by fees levied on new real estate and commercial development. Fees collected help to ensure the improvement of public amenities necessary to match the growth of the City.

Drainage Fees Fund
Established to account for the receipt and disbursement of funds for construction and maintenance of the City’s drainage system. Funding is provided by fees charged to residential and commercial developers.

Traffic Impact Fees Fund
Established to account for the receipt and disbursement of funds for transportation improvements Citywide. Funding is provided by fees charged to residential and commercial developers.

Fire System Development Fees Fund
Established to account for receipt and disburse ment of development impact fees established by Ordinance 89-1 for future construction of fire protection facilities and equipment for the North Costa Mesa area.

Jack Hammett Sports Complex Fund
Established to account for receipt and disbursement of funds related to on-going maintenance of Jack Hammett Sports Complex. Funding is provided by the facility’s rental income.

Lions Park Capital Improvements Fund
Established to account for the receipt and disbursement of funds for construction of a new library and renovation of the existing library into a neighbor hood community center. Project funding is partially provided by bond proceeds with the remaining balance provided by the Capital Improvements Fund.

Park Acquisition Capital Improvements Fund
Established to account future purchase of park acquisition, design and construction. 1547
(100)

DEBT SER

VICE FUNDS
Debt Service Funds are used to account for accumulated resources for and payment of general long- term debt.

The following have been classified as nonmajor funds in the accompanying fund financial statements:

Financing Authority Debt Service Fund
To accumulate monies for the payment of the 2017 Lease Revenue Bonds. The 2017 Lease Revenue bonds refunded the Public Financing Authority 2007 Certificates of Participation and provided partial funding for the Lion’s Park Project.
1548
1549

CITY OF COSTA MESA, CALIFORNIA

COMBINING BALANCE SHEET

NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2025
(101)
Supplemental
Air Law Rental
HOME Quality Community Enforcement Rehabilitation
Program Improvement Development Services Program
ASSETS
Cash and Cash Equivalents 401,829$ 614,553$ 1,045,157$ -$ 342,364$ Cash and Investments with Fiscal Agents - - - - - Due from Other Governments 74,113 38,088 50,083 - - Accounts Receivable, Net - - - - - Interest Receivable 2,460 3,785 1,661 - 2,173 Loans Receivable, Net 1,500,000 - - - - Leases Receivable - - - - - Rent Receivable - - - - -
Inventory - - - - -
Total Assets 1,978,402$ 656,426$ 1,096,901$ -$ 344,537$

LIABILITIES AND FUND BALANCES

LIABILITIES
Accounts Payable 103,647$ 4,633$ 22,816$ -$ -$ Accrued Liabilities 295 - 15,640 14,581 -
Retentions Payable - - - - - Deposits Payable 24 - - - -
Due to Other Funds - - - 19,531 - Unearned Revenue - - - - -
T
otal Liabilities 103,966 4,633 38,456 34,112 -

DEFERRED INFLOWS OF RESOURCES
Lease Related - - - - -
Unavailable Revenues - - - - - Total Deferred Inflows of Resources - - - - -

FUND BALANCES
Nonspendable - - - - -
Restricted for:

Protection of Persons and Property - - - - - Community Programs 1,874,436 - 1,058,445 - 344,537 Public Services - 651,793 - - -
Debt Service - - - - -
Assigned for:

Protection of Persons and Property - - - - - Public Services - - - - -
Unassigned - - - (34,112) - Total Fund Balances 1,874,436 651,793 1,058,445 (34,112) 344,537 Total Liabilities and Fund Balances 1,978,402$ 656,426$ 1,096,901$ -$ 344,537$ Special Revenue
1550

CITY OF COSTA MESA, CALIFORNIA

COMBINING BALANCE SHEET (CONTINUED)

NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2025
(102)
Local Law
Enforcement Office of
Narcotics Block Traffic Opioid Housing
Forfeiture Grant Safety Settlement Authority
ASSETS
Cash and Cash Equivalents 1,658,507$ 36,815$ -$ 1,328,669$ 3,775,321$ Cash and Investments with Fiscal Agents - - - - 29,710 Due from Other Governments - - 93,070 331,118 - Accounts Receivable, Net - - - - 330,870 Interest Receivable 11,126 234 - 8,432 20,639 Loans Receivable, Net - - - - 3,338,705 Leases Receivable - - - - 1,273,732 Rent Receivable - - - - 13,290
Inventory - - - - -
Total Assets 1,669,633$ 37,049$ 93,070$ 1,668,219$ 8,782,267$

LIABILITIES AND FUND BALANCES

LIABILITIES
Accounts Payable -$ -$ 688$ -$ 528,115$ Accrued Liabilities - - 2,347 - 66,118 Retentions Payable - - - - -
Deposits Payable 345,874 - - - 26,196 Due to Other Funds - - 97,192 - - Unearned Revenue - - - 13,165 - T
otal Liabilities 345,874 - 100,227 13,165 620,429

DEFERRED INFLOWS OF RESOURCES
Lease Related - - - - 1,232,265 Unavailable Revenues - - - - 3,415 Total Deferred Inflows of Resources - - - - 1,235,680

FUND BALANCES
Nonspendable - - - - -
Restricted for:

Protection of Persons and Property 1,323,759 37,049 - - - Community Programs - - - - 6,926,158 Public Services - - - 1,655,054 - Debt Service - - - - -
Assigned for:

Protection of Persons and Property - - - - - Public Services - - - - -
Unassigned - - (7,157) - - Total Fund Balances 1,323,759 37,049 (7,157) 1,655,054 6,926,158 Total Liabilities and Fund Balances 1,669,633$ 37,049$ 93,070$ 1,668,219$ 8,782,267$ Special Revenue
1551

CITY OF COSTA MESA, CALIFORNIA

COMBINING BALANCE SHEET (CONTINUED)

NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2025
(103)
Capital Projects
Disaster Behavioral Housing Senior Parking
Fund Health Asset Trust Transportation Districts
ASSETS
Cash and Cash Equivalents - $ -$ 2,345,140$ -$ 219,228$ Cash and Investments with Fiscal Agents - - - - - Due from Other Governments 63,574 134,358 - - 1,406 Accounts Receivable, Net - 63,335 - - -
Interest Receivable - - 15,535 - 1,391
Loans Receivable, Net - - - - -
Leases Receivable - - - - -
Rent Receivable - - - - -
Inventory 28 - - - -
Total Assets 63,602$ 197,693$ 2,360,675$ -$ 222,025$

LIABILITIES AND FUND BALANCES

LIABILITIES
Accounts Payable 366$ 93,034$ -$ -$ -$ Accrued Liabilities - 4,371 - - -
Retentions Payable - - - - -
Deposits Payable - - - - -
Due to Other Funds 14,609 49,696 - - -
Unearned Revenue - - - - -
To
tal Liabilities 14,975 147,101 - - -

DEFERRED INFLOWS OF RESOURCES
Lease Related - - - - -
Unavailable Revenues - - - - - Total Deferred Inflows of Resources - - - - -

FUND BALANCES
Nonspendable 28 - - - -
Restricted for:

Protection of Persons and Property - - - - - Community Programs - - - - - Public Services 48,599 50,592 2,360,675 - - Debt Service - - - - -
Assigned for:

Protection of Persons and Property - - - - - Public Services - - - - 222,025 Unassigned - - - - -
Total Fund Balances 48,627 50,592 2,360,675 - 222,025 Total Liabilities and Fund Balances 63,602$ 197,693$ 2,360,675$ -$ 222,025$ Special Revenue
1552

CITY OF COSTA MESA, CALIFORNIA

COMBINING BALANCE SHEET (CONTINUED)

NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2025
(104)
Traffic Fire System
Golf Course Park Drainage Impact Development
Improvements Development Fees Fees Fees
ASSETS
Cash and Cash Equivalents 824,252$ 2,039,952$ 2,385,582$ 4,819,961$ 696,388$ Cash and Investments with Fiscal Agents - - - - - Due from Other Governments - - - - - Accounts Receivable, Net - - - 46 - Interest Receivable 48,550 13,755 15,102 30,690 4,419 Loans Receivable, Net - - - - - Leases Receivable - - - - - Rent Receivable 19,015 - - - - Inventory - - - - -
Total Assets 891,817$ 2,053,707$ 2,400,684$ 4,850,697$ 700,807$

LIABILITIES AND FUND BALANCES

LIABILITIES
Accounts Payable 43,120$ 32,870$ 237,018$ 443,927$ -$ Accrued Liabilities - - - - - Retentions Payable - - 9,938 57,054 - Deposits Payable - - - - -
Due to Other Funds - - - - - Unearned Revenue - - - - -
To
tal Liabilities 43,120 32,870 246,956 500,981 -

DEFERRED INFLOWS OF RESOURCES
Lease Related - - - - -
Unavailable Revenues - - - - - Total Deferred Inflows of Resources - - - - -

FUND BALANCES
Nonspendable - - - - -
Restricted for:

Protection of Persons and Property - - - - - Community Programs - - - - - Public Services - - - - -
Debt Service - - - - -
Assigned for:

Protection of Persons and Property - - - - 700,807 Public Services 848,697 2,020,837 2,153,728 4,349,716 - Unassigned - - - - -
Total Fund Balances 848,697 2,020,837 2,153,728 4,349,716 700,807 Total Liabilities and Fund Balances 891,817$ 2,053,707$ 2,400,684$ 4,850,697$ 700,807$ Capital Projects
1553

CITY OF COSTA MESA, CALIFORNIA

COMBINING BALANCE SHEET (CONTINUED)

NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2025
(105)
Debt Service
Jack Hammett Lions Park
Sports Capital Park Financing
Complex Improvements Acquisition Authority 2025 2024
ASSETS
Cash and Cash Equivalents 567,142 $ 12,725 $ 408,375 $ -$ 23,521,960$ 29,875,711$ Cash and Investments with Fiscal Agents - - - 1,001 30,711 381,491 Due from Other Governments - - - - 785,810 2,762,815 Accounts Receivable, Net - - - - 394,251 297,039 Interest Receivable 948 1,959 648 - 183,507 39,896 Loans Receivable, Net - - - - 4,838,705 2,795,210 Leases Receivable - - - - 1,273,732 1,355,038 Rent Receivable - - - - 32,305 - Inventory - - - - 28 28 Total Assets 568,090$ 14,684 $ 409,023 $ 1,001 $ 31,061,009$ 37,507,228$

LIABILITIES AND FUND BALANCES

LIABILITIES
Accounts Payable -$ - $ -$ -$ 1,510,234 1,587,115 Accrued Liabilities - - - - 103,352 95,325 Retentions Payable - - - - 66,992 119,686 Deposits Payable 15,000 - - - 387,094 39,902 Due to Other Funds - - - - 181,028 65,076 Unearned Revenue - - - - 13,165 245,258 Total Liabilities 15,000 - - - 2,261,865 2,152,362

DEFERRED INFLOWS OF RESOURCES
Lease Related - - - - 1,232,265 1,323,545 Unavailable Revenues - - - - 3,415 747,508 Total Deferred Inflows of Resources - - - - 1,235,680 2,071,053

FUND BALANCES
Nonspendable - - - - 28 - Restricted for:

Protection of Persons and Property - - - - 1,360,808 1,272,224 Community Programs - - - - 10,203,576 10,475,793 Public Services - 14,684 409,023 - 5,190,420 9,085,173 Debt Service - - - 1,001 1,001 17,449 Assigned for:

Protection of Persons and Property - - - - 700,807 668,391 Public Services 553,090 - - - 10,148,093 11,800,193 Unassigned - - - - (41,269) (35,410) Total Fund Balances 553,090 14,684 409,023 1,001 27,563,464 33,283,813 Total Liabilities and Fund Balances 568,090$ 14,684 $ 409,023 $ 1,001 $ 31,061,009$ 37,507,228$ Totals
Capital Projects
1554

CITY OF COSTA MESA, CALIFORNIA

COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES

IN FUND BALANCES

NONMAJOR GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30, 2025
(106)
Supplemental
Air Law Rental
HOME Quality Community Enforcement Rehabilitation
Program Improvement Development Services Program

REVENUES
Taxes - $ -$ -$ -$ -$
Charges for Services - - - - -
Fines and Forfeitures - - - - -
Intergovernmental 560,386 145,853 1,509,889 332,622 - Investment Income (Loss) 14,655 26,873 1,665 (42) 15,764 Rental Income - - - - - Miscellaneous 134,836 - - - 40,000 Total Revenues 709,877 172,726 1,511,554 332,580 55,764

EXPENDITURES
Current:

General Government - - - - - Protection of Persons and Property - - - 376,562 - Community Programs 551,644 - 605,824 - - Public Services - 19,642 - - -
Debt Service:

Principal - - - - -
Interest - - - - -
Total Expenditures 551,644 19,642 605,824 376,562 -

EXCESS (DEFICIENCY) OF REVENUES

OVER (UNDER) EXPENDITURES BEFORE
OTHER FINANCING SOURCES (USES) 158,233 153,084 905, 730 (43,982) 55,764

OTHER FINANCING SOURCES (USES)
Transfer In - - - - -
Transfer Out - - - - -
Total Other Financing Sources (Uses) - - - - - NET CHANGE IN FUND BALANCES 158,233 153,084 905,730 (43,982) 55,764 Fund Balances - Beginning of Year,
As Previously Reported Presented 1,716,203 498,709 152,715 9,870 288,773 Change within financial reporting entity
(nonmajor to major fund) - - - - - Fund Balances - Beginning of Year 1,716,203 498,709 152,715 9,870 288,773 FUND BALANCES - END OF YEAR 1,874,436$ 651,793$ 1,058,445$ (34,112)$ 344,537$ Special Revenue
1555

CITY OF COSTA MESA, CALIFORNIA

COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES

IN FUND BALANCES (CONTINUED)

NONMAJOR GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30, 2025
(107)
Local Law
Enforcement Office of
Narcotics Block Traffic Opioid Housing
Forfeiture Grant Safety Settlement Authority

REVENUES
Taxes - $ -$ -$ -$ -$
Charges for Services - - - - -
Fines and Forfeitures 18,655 - - - - Intergovernmental - - 329,559 756,892 1,429,643 Investment Income (Loss) 78,086 1,713 - 61,944 206,698 Rental Income - - - - 472,261
Miscellaneous - - - - 339,002
Total Revenues 96,741 1,713 329,559 818,836 2,447,604

EXPENDITURES
Current:

General Government - - - - 4,960,209 Protection of Persons and Property - - 301,306 - - Community Programs - - - - 802,357 Public Services - - - - -
Debt Service:

Principal - - - - -
Interest - - - - -
Total Expenditures - - 301,306 - 5,762,566

EXCESS (DEFICIENCY) OF REVENUES

OVER (UNDER) EXPENDITURES BEFORE
OTHER FINANCING SOURCES (USES) 96,741 1,713 2 8,253 818,836 (3,314,962)

OTHER FINANCING SOURCES (USES)
Transfer In - - - - 1,923,018 Transfer Out - - - - -
Total Other Financing Sources (Uses) - - - - 1,923,018 NET CHANGE IN FUND BALANCES 96,741 1,713 28,253 818,836 (1,391,944) Fund Balances - Beginning of Year,
As Previously Reported Presented 1,227,018 35,336 (35,410) 836,218 8,318,102 Change within financial reporting entity
(nonmajor to major fund) - - - - - Fund Balances - Beginning of Year 1,227,018 35,336 (35,410) 836,218 8,318,102 FUND BALANCES - END OF YEAR 1,323,759$ 37,049$ (7,157)$ 1,655,054$ 6,926,158$ Special Revenue
1556

CITY OF COSTA MESA, CALIFORNIA

COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES

IN FUND BALANCES (CONTINUED)

NONMAJOR GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30, 2025
(108)
Capital Projects
Disaster Behavioral Housing Senior
Fund Health Asset Trust Transportation Measure M2

REVENUES
Taxes - $ -$ -$ -$ -$
Charges for Services - - - - -
Fines and Forfeitures - - - - -
Intergovernmental 63,578 945,217 - - -
Investment Income (Loss) - - 93,196 - - Rental Income - - - - - Miscellaneous - - - 65,660 - Total Revenues 63,578 945,217 93,196 65,660 -

EXPENDITURES
Current:

General Government 9,357 920,330 - - - Protection of Persons and Property 1,925 - - - - Community Programs 782 - - 65,660 - Public Services 53,414 - - - -
Debt Service:

Principal - - - - -
Interest - - - - -
Total Expenditures 65,478 920,330 - 65,660 -

EXCESS (DEFICIENCY) OF REVENUES

OVER (UNDER) EXPENDITURES BEFORE
OTHER FINANCING SOURCES (USES) (1,900) 24,887 93,196 - -

OTHER FINANCING SOURCES (USES)
Transfer In - - 2,471,196 - - Transfer Out - - (203,717) - - Total Other Financing Sources (Uses) - - 2,267,479 - - NET CHANGE IN FUND BALANCES (1,900) 24,887 2,360,675 - - Fund Balances - Beginning of Year,
As Previously Reported Presented 50,527 25,705 - - 7,767,460 Change within financial reporting entity
(nonmajor to major fund) - - - - (7,767,460) Fund Balances - Beginning of Year 50,527 25,705 - - - FUND BALANCES - END OF YEAR 48,627$ 50,592$ 2,360,675$ -$ -$ Special Revenue
1557

CITY OF COSTA MESA, CALIFORNIA

COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES

IN FUND BALANCES (CONTINUED)

NONMAJOR GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30, 2025
(109)
Traffic
Parking Golf Course Park Drainage Impact
Districts Improvements Development Fees Fees

REVENUES
Taxes 27,912 $ - $ -$ -$ -$
Charges for Services - - 262,786 150,933 573,484 Fines and Forfeitures - - - - - Intergovernmental - - - - - Investment Income (Loss) 9,717 79,757 104,338 109,517 234,705 Rental Income - 186,142 - - -
Miscellaneous - - - - -
Total Revenues 37,629 265,899 367,124 260,450 808,189

EXPENDITURES
Current:

General Government - - 250,000 - - Protection of Persons and Property - - - - - Community Programs - - - - - Public Services - 49,871 428,009 266,580 1,584,595 Debt Service:

Principal - - - - -
Interest - - - - -
Total Expenditures - 49,871 678,009 266,580 1,584,595

EXCESS (DEFICIENCY) OF REVENUES

OVER (UNDER) EXPENDITURES BEFORE
OTHER FINANCING SOURCES (USES) 37,629 216,028 (310,885) ( 6,130) (776,406)

OTHER FINANCING SOURCES (USES)
Transfer In - - - - -
Transfer Out - - - - -
Total Other Financing Sources (Uses) - - - - - NET CHANGE IN FUND BALANCES 37,629 216,028 (310,885) (6,130) (776,406) Fund Balances - Beginning of Year,
As Previously Reported Presented 184,396 632,669 2,331,722 2,159,858 5,126,122 Change within financial reporting entity
(nonmajor to major fund) - - - - - Fund Balances - Beginning of Year 184,396 632,669 2,331,722 2,159,858 5,126,122 FUND BALANCES - END OF YEAR 222,025$ 848,697$ 2,020,837$ 2,153,728$ 4,349,716$ Capital Projects
1558

CITY OF COSTA MESA, CALIFORNIA

COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES

IN FUND BALANCES (CONTINUED)

NONMAJOR GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30, 2025
(110)
Debt Service
Fire System Jack Hammett Lions Park
Development Sports Capital Park Financing
Fees Complex Improvements Acquisition Authority 2025 2024

REVENUES
Taxes -$ -$ -$ - $ -$ 27,912$ 24,610$
Charges for Services - - - - - 987,203 355,005
Fines and Forfeitures - - - - - 18,655 125,118
Intergovernmental - - - - - 6,073,639 8,493,174
Investment Income (Loss) 32,416 23,882 17,473 17,065 2,500 1,131,922 1,186,310 Rental Income - - - - - 658,403 883,398
Miscellaneous - - - - - 579,498 271,788
Total Revenues 32,416 23,882 17,473 17,065 2,500 9,477,232 11,339,403

EXPENDITURES
Current:

General Government - - - - - 6,139,896 -
Protection of Persons and Property - - - - - 679,793 812,424 Community Programs - - - - - 2,026,267 7,494,849 Public Services - - 353,603 - - 2,755,714 5,308,611 Debt
Service:

Principal - - - - 2,015,000 2,015,000 1,920,000 Interest - - - - 781,175 781,175 879,550 Total Expenditures - - 353,603 - 2,796,175 14,397,845 16,415,434

EXCESS (DEFICIENCY) OF REVENUES

OVER (UNDER) EXPENDITURES BEFORE
OTHER FINANCING SOURCES (USES) 32,416 23,882 (336,130) 17,065 (2,793,675) (4,920,613) (5,076,031)

OTHER FINANCING SOURCES (USES)
Transfer In - - - - 2,777,227 7,171,441 7,111,763 Transfer Out - - - - - (203,717) -
Total Other Financing Sources (Uses) - - - - 2,777,227 6,967,724 7,111,763 NET CHANGE IN FUND BALANCES 32,416 23,882 (336,130) 17,065 (16,448) 2,047,111 2,035,732 Fund Balances - Beginning of Year,
As Previously Reported Presented 668,391 529,208 350,814 391,958 17,449 33,283,813 31,248,081 Change within financial reporting entity
(nonmajor to major fund) - - - - - (7,767,460) - Fund Balances - Beginning of Year 668,391 529,208 350,814 391,958 17,449 25,516,353 31,248,081 FUND BALANCES - END OF YEAR 700,807$ 553,090 $ 14,684 $ 409,023$ 1,001$ 27, 563,464$ 33,283,813$
Totals
Capital Projects
1559

CITY OF COSTA MESA, CALIFORNIA
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL – NONMAJOR SPECIAL REVENUE FUNDS

HOME PROGRAM FUND
YEAR ENDED JUNE 30, 2025
(111)
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual

REVENUES
Intergovernmental 567,760 $ 560,386 $ (7,374) $ 930,234 $ Investment Income (Loss) 14,803 14,655 (148) 38,292 Miscellaneous 135,900 134,836 (1,064) 123,856 Total Revenues 718,463 709,877 (8,586) 1,092,382

EXPENDITURES
Current:

Community Programs 1,920,807 551,644 1,369,163 788,957

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (1,202,344) 158,233 1,360,577 303,425 NET CHANGE IN FUND BALANCE (1,202,344) 158,233 1,360,577 303,425 Fund Balance - Beginning of Year 1,716,203 1,716,203 - 1,412,778 FUND BALANCE - END OF YEAR 513,859$ 1,874,436$ 1,360,577$ 1,716,203$ 1560

CITY OF COSTA MESA, CALIFORNIA
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL – NONMAJOR SPECIAL REVENUE FUNDS

AIR QUALITY IMPROVEMENT FUND
YEAR ENDED JUNE 30, 2025
(112)
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual

REVENUES
Intergovernmental 145,800 $ 145,853 $ 53 $ 150,191$ Investment Income (Loss) - 26,873 26,873 17,512 Total Revenues 145,800 172,726 26,926 167,703

EXPENDITURES
Current:

Public Services 374,185 19,642 354,543 114,998 NET CHANGE IN FUND BALANCE (228,385) 153,084 381,469 52,705 Fund Balance - Beginning of Year 498,709 498,709 - 446,004 FUND BALANCE - END OF YEAR 270,324$ 651,793$ 381,469$ 498,709$ 1561

CITY OF COSTA MESA, CALIFORNIA
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL – NONMAJOR SPECIAL REVENUE FUNDS

COMMUNITY DEVELOPMENT FUND
YEAR ENDED JUNE 30, 2025
(113)
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual

REVENUES
Intergovernmental 1,510,506 $ 1,509,889 $ (617) $ 619,833$ Investment Income (Loss) - 1,665 1,665 6
Total Revenues 1,510,506 1,511,554 1,048 650,739

EXPENDITURES
Current:

Community Programs 775,008 605,824 169,184 587,184 Public Services 350,000 - 350,000 -
Total Expenditures 1,125,008 605,824 519,184 587,184 NET CHANGE IN FUND BALANCE 385,498 905,730 520,232 63,555 Fund Balance - Beginning of Year 152,715 152,715 - 89,160 FUND BALANCE - END OF YEAR 538,213$ 1,058,445$ 520,232$ 152,715$ 1562

CITY OF COSTA MESA, CALIFORNIA
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL – NONMAJOR SPECIAL REVENUE FUNDS

SUPPLEMENTAL LAW ENFORCEMENT SERVICES FUND
YEAR ENDED JUNE 30, 2025
(114)
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual

REVENUES
Intergovernmental 331,480 $ 332,622 $ 1,142 $ 321,103 $ Investment Income (Loss) - (42) (42) 258
Total Revenues 331,480 332,580 1,100 321,361

EXPENDITURES
Current:

Protection of Persons and Property 343,882 376,562 (32,680) 359,983 NET CHANGE IN FUND BALANCE (12,402) (43,982) (31,580) (38,622) Fund Balance - Beginning of Year 9,870 9,870 - 48,492 FUND BALANCE - END OF YEAR (2,532)$ (34,112)$ (31,580)$ 9,870$ 1563

CITY OF COSTA MESA, CALIFORNIA
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL – NONMAJOR SPECIAL REVENUE FUNDS

RENTAL REHABILITATION FUND
YEAR ENDED JUNE 30, 2025
(115)
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual

REVENUES
Investment Income (Loss) - $ 15,764$ 15,764$ 11,293$ Miscellaneous 40,000 40,000 - -
Total Revenues 40,000 55,764 15,764 11,293

EXPENDITURES
Current:

Community Programs 80,000 - 80,000 -
Total Expenditures 80,000 - 80,000 -

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (40,000) 55,764 95,764 11,293 NET CHANGE IN FUND BALANCE (40,000) 55,764 95,764 11,293 Fund Balance - Beginning of Year 288,773 288,773 - 277,480 FUND BALANCE - END OF YEAR 248,773$ 344,537$ 95,764$ 288,773$ 1564

CITY OF COSTA MESA, CALIFORNIA
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL – NONMAJOR SPECIAL REVENUE FUNDS

NARCOTICS FORFEITURE FUND
YEAR ENDED JUNE 30, 2025
(116)
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual

REVENUES
Fines and Forfeitures 19,000$ 18,655$ (345)$ 125,118$ Investment Income (Loss) - 78,086 78,086 62,501
Total Revenues 19,000 96,741 77,741 187,619

EXPENDITURES
Current:

Protection of Persons and Property 531,271 - 531,271 254,705

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (512,271) 96,741 609,012 (67,086)

OTHER FINANCING SOURCES (USES)
Transfers In 248,380 - 248,380 254,705
NET CHANGE IN FUND BALANCE (263,891) 96,741 857,392 (67,086) Fund Balance - Beginning of Year 1,227,018 1,227,018 - 1,294,104 FUND BALANCE - END OF YEAR 963,127$ 1,323,759$ 857,392$ 1,227,018$ 1565

CITY OF COSTA MESA, CALIFORNIA
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL – NONMAJOR SPECIAL REVENUE FUNDS

OFFICE OF TRAFFIC SAFETY FUND
YEAR ENDED JUNE 30, 2025
(117)
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual

REVENUES
Intergovernmental 422,635$ 329,559$ (93,076)$ 170,221$

EXPENDITURES
Current:

Protection of Persons and Property 422,635 301,306 121,329 197,736 Total Expenditures 422,635 301,306 121,329 197,736 NET CHANGE IN FUND BALANCE - 28,253 28,253 (27,515)
Fund Balance - Beginning of Year (35,410) (35,410) - (7,895) FUND BALANCE - END OF YEAR (35,410)$ (7,157)$ 28,253$ (35,410)$ 1566

CITY OF COSTA MESA, CALIFORNIA
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL – NONMAJOR SPECIAL REVENUE FUNDS

HOUSING AUTHORITY FUND
YEAR ENDED JUNE 30, 2025
(118)
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual

REVENUES
Intergovernmental 1,418,060 $ 1,429,643$ 11,583$ 1,320,654$ Investment Income (Loss) 112,029 206,698 94,669 231,987 Rental Income 455,421 472,261 16,840 538,955
Miscellaneous 337,101 339,002 1,901 117,032
Total Revenues 2,322,611 2,447,604 124,993 2,208,628

EXPENDITURES
Current:

General Government 10,820,226 4,960,209 5,860,017 - Community Programs 870,957 802,357 68,600 6,118,708 Total Expenditures 11,691,183 5,762,566 5,928,617 6,118,708

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES BEFORE (9,368,572) (3,314,962) 6,053,610 (3,910,080)

OTHER FINANCING SOURCES (USES)

OTHER FINANCING SOURCES (USES)
Transfers In 1,923,018 1,923,018 - 3,927,637
NET CHANGE IN FUND BALANCE (7,445,554) (1,391,944) 6,053,610 17,557 Fund Balance - Beginning of Year 8,318,102 8,318,102 - 8,300,545 FUND BALANCE - END OF YEAR 872,548$ 6,926,158$ 6,053,610$ 8,318,102$ 1567

CITY OF COSTA MESA, CALIFORNIA
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL – NONMAJOR SPECIAL REVENUE FUNDS

BEHAVIORAL HEALTH FUND
YEAR ENDED JUNE 30, 2025
(119)
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual

REVENUES
Intergovernmental 1,253,590$ 945,217$ (308,373)$ 25,705$ Total Revenues 1,253,590 945,217 (308,373) 25,705

EXPENDITURES
Current:

General Government 2,097,051 920,330 1,176,721 - Total Expenditures 2,097,051 920,330 1,176,721 -

EXCESS (DEFICIENCY) OF REVENUES

OVER (UNDER) EXPENDITURES BEFORE
OTHER FINANCING SOURCES (USES) (843,461) 24,887 (1,485,094) 25,705 NET CHANGE IN FUND BALANCE (843,461) 24,887 868,348 25,705 Fund Balance - Beginning of Year 25,705 25,705 - - FUND BALANCE - END OF YEAR (817,756)$ 50,592$ 868,348$ 25,705$ 1568

CITY OF COSTA MESA, CALIFORNIA
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL – NONMAJOR SPECIAL REVENUE FUNDS

SENIOR TRANSPORTATION FUND
YEAR ENDED JUNE 30, 2025
(120)
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual

REVENUES
Miscellaneous 237,600 $ 65,660 $ (171,940) $ - $ Total Revenues 237,600 65,660 (171,940) -

EXPENDITURES
Current:

Community Programs 237,600 65,660 171,940 - Total Expenditures 237,600 65,660 171,940 -

EXCESS (DEFICIENCY) OF REVENUES

OVER (UNDER) EXPENDITURES - - - -

NET CHANGE IN FUND BALANCE - - - -
Fund Balance - Beginning of Year - - - -
FUND BALANCE - END OF YEAR -$ -$ -$ -$
1569

CITY OF COSTA MESA, CALIFORNIA
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL – MAJOR AND NONMAJOR CAPITAL PROJECTS FUNDS

CAPITAL IMPROVEMENTS
YEAR ENDED JUNE 30, 2025
(121)
Variance with
Final Budget
Original Final Positive Prior Year
Budget Budget Actual (Negative) Actual

REVENUES
Intergovernmental -$ -$ 566,334$ 566,334$ 152,972$ Investment Income (Loss) - - 1,570,269 1,570,269 1,203,727 Miscellaneous - - 22,401 22,401 35,852
Total Revenue - - 2,159,004 2,159,004 1,392,551

EXPENDITURES
Current:

General Government - 3,971,814 37,180 3,934,634 7,200 Protection of Persons and Property 400,000 1,070,883 215,911 854,972 792,490 Community Programs 55,000 156,183 103,963 52,220 256,672 Public Services 8,700,010 30,223,797 7,671,607 22,552,190 3,297,238 Total Expenditures 9,155,010 35,422,677 8,028,661 27,394,016 4,353,600

EXCESS (DEFICIENCY) OF REVENUES OVER
(UNDER) EXPENDITURES BEFORE
OTHER FINANCING SOURCES (USES) (9,155,010) (35,422,677) (5,869,657) 29,553,020 (2,961,049)

OTHER FINANCING SOURCES (USES)
Transfer In 6,849,994 3,950,030 3,949,994 (36) 7,194,994 Transfer Out - - - - (384,576) Total Other Financing Sources (Uses) 6,849,994 3,950,030 3,949,994 (36) 6,810,418 NET CHANGE IN FUND BALANCE (2,305,016) (31,472,647) (1,919,663) 29,552,984 3,849,369 Fund Balance - Beginning of Year 35,387,391 35,387,391 35,387,391 - 31,538,022 FU
ND BALANCE - END OF YEAR 33,082,375$ 3,914,744$ 33,467,728$ 29,552,984$ 35,387,391$ 1570

CITY OF COSTA MESA, CALIFORNIA
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL – MAJOR AND NONMAJOR CAPITAL PROJECTS FUNDS MEASURE M2
YEAR ENDED JUNE 30, 2025
(122)
Variance with
Final Budget
Original Final Positive Prior Year
Budget Budget Actual (Negative) Actual

REVENUES
Intergovernmental 4,256,148 $ 4,022,211 $ 3,860,654 $ (161,557) $ 4,207,029 $ Investment Income (Loss) - - 374,600 374,600 295,795 Total Revenue 4,256,148 4,022,211 4,235,254 213,043 4,502,824

EXPENDITURES
Current:

Public Services 5,146,442 12,263,466 6,283,124 5,980,342 2,484,874 NET CHANGE IN FUND BALANCE (890,294) (8,241,255) (2,047,870) 6,193,385 2,017,950 Fund Balance - Beginning of Year 7,767,460 7,767,460 7,767,460 - 5,749,510 FUND BALANCE - END OF YEAR 6,877,166$ (473,795)$ 5,719,590$ 6,193,385$ 7,767,460$ 1571

CITY OF COSTA MESA, CALIFORNIA
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL – MAJOR AND NONMAJOR CAPITAL PROJECTS FUNDS

PARKING DISTRICTS FUND
YEAR ENDED JUNE 30, 2025
(123)
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual

REVENUES
Taxes 21,434 $ 27,912 $ 6,478 $ 24,610$ Investment Income (Loss) - 9,717 9,717 6,885
Total Revenues 21,434 37,629 16,195 31,495
Fund Balance - Beginning of Year 184,396 184,396 - 152,901 FUND BALANCE - END OF YEAR 205,830$ 222,025$ 16,195$ 184,396$ 1572

CITY OF COSTA MESA, CALIFORNIA
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL – MAJOR AND NONMAJOR CAPITAL PROJECTS FUNDS

GOLF COURSE IMPROVEMENTS FUND
YEAR ENDED JUNE 30, 2025
(124)
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual

REVENUES
Investment Income (Loss) -$ 79,757$ 79,757$ 24,763$ Rental Income 187,000 186,142 (858) 179,443 Total Revenues 187,000 265,899 78,899 204,206

EXPENDITURES
Current:

Public Services 652,078 49,871 602,207 247,921 NET CHANGE IN FUND BALANCE (465,078) 216,028 681,106 (43,715) Fund Balance - Beginning of Year 632,669 632,669 - 676,384 FUND BALANCE - END OF YEAR 167,591$ 848,697$ 681,106$ 632,669$ 1573

CITY OF COSTA MESA, CALIFORNIA
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL – MAJOR AND NONMAJOR CAPITAL PROJECTS FUNDS

PARK DEVELOPMENT FUND
YEAR ENDED JUNE 30, 2025
(125)
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual

REVENUES
Charges for Services 263,000$ 262,786$ (214)$ 142,598$ Investment Income (Loss) - 104,338 104,338 103,835 Total Revenues 263,000 367,124 104,124 246,433

EXPENDITURES
Current:

Community Programs 250,000 250,000 - - Public Services 2,205,397 428,009 1,777,388 787,433 Total Expenditures 2,455,397 678,009 1,777,388 787,433 NET CHANGE IN FUND BALANCE (2,192,397) (310,885) 1,881,512 (541,000) Fund Balance - Beginning of Year 2,331,722 2,331,722 - 2,872,722 FUND BALANCE - END OF YEAR 139,325$ 2,020,837$ 1,881,512$ 2,331,722$ 1574

CITY OF COSTA MESA, CALIFORNIA
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL – MAJOR AND NONMAJOR CAPITAL PROJECTS FUNDS

DRAINAGE FEES FUND
YEAR ENDED JUNE 30, 2025

(126)

Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual

REVENUES
Charges for Services 151,000 $ 150,933 $ (67) $ 81,806$ Investment Income (Loss) - 109,517 109,517 86,162 Total Revenues 151,000 260,450 109,450 167,968

EXPENDITURES
Current:

Public Services 2,276,327 266,580 2,009,747 183,061

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (2,125,327) (6,130) 2,119,197 (15,093) NET CHANGE IN FUND BALANCE (2,125,327) (6,130) 2,119,197 (15,093) Fund Balance - Beginning of Year 2,159,858 2,159,858 - 2,174,951 FUND BALANCE - END OF YEAR 34,531$ 2,153,728 $ 2,119,197 $ 2,159,858 $

1575

CITY OF COSTA MESA, CALIFORNIA
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL – MAJOR AND NONMAJOR CAPITAL PROJECTS FUNDS

TRAFFIC IMPACT FEES FUND
YEAR ENDED JUNE 30, 2025
(127)
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual

REVENUES
Charges for Services 600,000$ 573,484$ (26,516)$ 130,601$ Investment Income (Loss) - 234,705 234,705 209,507 Total Revenues 600,000 808,189 208,189 340,108

EXPENDITURES
Current:

Public Services 5,048,160 1,584,595 3,463,565 1,490,324 NET CHANGE IN FUND BALANCE (4,448,160) (776,406) 3,671,754 (1,150,216) Fund Balance - Beginning of Year 5,126,122 5,126,122 - 6,276,338 FUND BALANCE - END OF YEAR 677,962$ 4,349,716$ 3,671,754$ 5,126,122$ 1576

CITY OF COSTA MESA, CALIFORNIA
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL – MAJOR AND NONMAJOR CAPITAL PROJECTS FUNDS

JACK HAMMETT SPORTS COMPLEX FUND
YEAR ENDED JUNE 30, 2025
(128)
- Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual

REVENUES
Investment Income (Loss) -$ 23,882$ 23,882$ 17,337$ Rental Income (Loss) - - - 165,000
Total Revenues - 23,882 23,882 182,337

EXPENDITURES
Current:

Public Services 400,000 - 400,000 -
NET CHANGE IN FUND BALANCE (400,000) 23,882 423,882 182,337 Fund Balance - Beginning of Year 529,208 529,208 - 346,871 FUND BALANCE - END OF YEAR 129,208$ 553,090$ 423,882$ 529,208$ 1577

CITY OF COSTA MESA, CALIFORNIA
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL – MAJOR AND NONMAJOR CAPITAL PROJECTS FUNDS

LIONS PARK CAPITAL IMPROVEMENTS FUND
YEAR ENDED JUNE 30, 2025
(129)
Variance with
Final Budget
Final Positive Prior Year
Budget Actual (Negative) Actual

REVENUES
Investment Income (Loss) -$ 17,473$ 17,473$ 16,678$

EXPENDITURES
Current:

Public Services 353,603 353,603 - -

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (353,603) (336,130) 17,473 16,678

OTHER FINANCING SOURCES (USES)
Transfers In 353,602 - (353,602)
Transfers Out (334,136) - 334,136
Total Other Financing Sources (Uses) 19,466 - (19,466) 16,678 NET CHANGE IN FUND BALANCE (334,137) (336,130) (1,993) 16,678 Fund Balance - Beginning of Year 350,814 350,814 - 334,136 FUND BALANCE - END OF YEAR 16,677$ 14,684$ (1,993)$ 350,814$ 1578
(130)

INTERNAL SERVICE FUNDS
Internal Service Funds are used to account for the financing of goods and services provided by one City department to another City department on a cost-reimbursement basis.

Equipment Replacement Fund
Established to account for all motorized equipment used by City departments.

Self-Insurance Fund – Workers’ Compensation/General Liability/Unemployment Established to account for receipt and disbursement of funds used to pay workers’ compensation, general liability, and unemployment premiums and claims filed against the City.

Information Technology Replacement Fund
Established to provide funds for future replacements and upgrades to City computer equipment, systems, and supporting infrastructure.
1579

CITY OF COSTA MESA, CALIFORNIA

COMBINING STATEMENT OF NET POSITION

INTERNAL SERVICE FUNDS
JUNE 30, 2025
(WITH COMPARATIVE DATA FOR PRIOR YEAR)
(131)
Self-Insurance
Workers'
Compensation/
General Information
Equipment Liability/ Technology
Replacement Unemployment Replacement 2025 2024
ASSETS
Current Assets:

Cash and Investments 6,725,689 $ 17,531,763 $ 12,975,521 $ 37,232,973 $ 38,731,062 $ Accounts Receivable 232 12,528 - 12,760 54,020
Interest Receivable 41,850 110,895 74,671 227,416 54,020 Prepaid Items 2,880,331 - - 2,880,331 4,245,906 Inventories 401,974 - - 401,974 266,236 Total Current Assets 10,050,076 17,655,186 13,050,192 40,755,454 43,351,244 Capital Assets:

Intangible Assets - - 1,932,537 1,932,537 - Motorized Equipment 24,570,988 - - 24,570,988 22,875,746 Other Equipment 8,645,091 - 187,799 8,832,890 5,928,501 Accumulated Depreciation (18,725,686) - (101,411) (18,827,097) (13,732,948) Capital Assets, Net 14,490,393 - 2,018,925 16,509,318 15,071,299 Total Assets 24,540,469 17,655,186 15,069,117 57,264,772 58,422,543

LIABILITIES
Current Liabilities:

Accounts Payable 128,282 165,493 76,208 369,983 2,083,460 Accrued Liabilities 80,343 17,596 27,471 125,410 122,911 Notes Payable 891,411 - - 891,411 864,738 Claims Payable - 1,293, 969 - 1,293,969 862,543
Total Current Liabilities 1,100,036 1,477,058 103,679 2,680,773 3,933,652 Long-Term Liabilities:

Notes Payable 4,259,726 - - 4,259,726 5,151,138 Claims Payable - 15,060,846 - 15,060,846 14,098,024
Total Long-Term Liabilities 4,259,726 15,060,846 - 19,320,572 19,249,162 Total Liabilities 5,359,762 16,537,904 103,679 22,001,345 23,182,814

NET POSITION
Net Investment in Capital Assets 9,339,256 - 2,018,925 11,358,181 9,055,423 Unrestricted 9,841,451 1,117,282 12,946,513 23,905,246 26,130,286 -
Total Net Position 19,180,707$ 1,117,282$ 14,965,438$ 35,263,427$ 35,185,709$ Total
1580

CITY OF COSTA MESA, CALIFORNIA

COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION

INTERNAL SERVICE FUNDS
YEAR ENDED JUNE 30, 2025
(WITH COMPARATIVE DATA FOR PRIOR YEAR)
(132)
Self-Insurance
Workers'
Compensation/
General Information
Equipment Liability/ Technology
Replacement Unemployment Replacement 2025 2024

OPERATING REVENUES
Charges for Services 6,143,747 $ 5,092,315 $ - $ 11,236,062$ 10,938,708$ Total Operating Revenues 6,143,747 5,092,315 - 11,236,062 10,938,708

OPERATING EXPENSES
Allocated Administrative Costs 2,296,702 832,847 2,102,266 5,231,815 4,288,668 Depreciation 1,632,720 - - 1,632,720 1,532,452 Fuel and Repair Parts 974,182 - - 974,182 1,423,961 Claims and Premiums - 7,892,862 - 7,892,862 6,768,057
Total Operating Expenses 4,903,604 8,725,709 2,102,266 15,731,579 14,151,483 OPERATING INCOME 1,240,143 (3,633,394) (2,102,266) (4,495,517) (3,212,775)

NONOPERATING REVENUES (EXPENSES)
Investment Income (Loss) 288,900 812,494 551,500 1,652,894 1,469,458 Intergovernmental - - - - -
Other Nonoperating Revenue 44,420 29,258 - 73,678 10,000 Interest Expense (78,332) - - (78,332) (55,041) Gain (Loss) on Disposal of Equipment 68,995 - - 68,995 145,438 Total Nonoperating Revenues
(Expenses) 323,983 841,752 551,500 1,717,235 1,569,855 INCOME (LOSS) BEFORE TRANSFERS 1,564,126 (2,791,642) (1,550,766) (2,778,282) (1,642,920) Transfers In - - 2,856,000 2,856,000 3,716,386 Transfers Out - - - - (19,720) Total Transfers - - 2,856,000 2,856,000 3,696,666 CHANGE IN NET POSITION 1,564,126 (2,791,642) 1,305,234 77,718 2,053,746 Net Position - Beginning of Year 17,616,581 3,908,924 13,660,204 35,185,709 33,131,963 NET POSITION - END OF YEAR 19,180,707$ 1,117,282$ 14,965,438$ 35,263,427$ 35,185,709$ Total
1581

CITY OF COSTA MESA, CALIFORNIA

COMBINING STATEMENT OF CASH FLOWS

INTERNAL SERVICE FUNDS
YEAR ENDED JUNE 30, 2025
(WITH COMPARATIVE DATA FOR PRIOR YEAR)
(133)
Self-Insurance
Workers'
Compensation/
General Information
Equipment Liability/ Technology
Replacement Unemployment Replacement 2025 2024

CASH FLOWS FROM OPERATING ACTIVITIES
Cash Received from Customers and User Departments 6,143,515 $ 5,079,787 $ - $ 11,223,302$ 10,938,708$ Cash Payments to Suppliers for Goods and Services (2,859,418) (6,811,809) (1,351,803) (11,023,030) (7,197,189) Cash payments to Employees for Services (1,056,950) (434,209) (671,563) (2,162,722) Cash Received from Other Sources 44,420 29,258 - 73,678 (2,926,462) Net Cash Provided (Used) by Operating Activities 2,271,567 (2,136,973) (2,023,366) (1,888,772) 815,057

CASH FLOWS FROM NONCAPITAL

FINANCING ACTIVITIES
Cash Received from Other Funds - - 2,856,000 2,856,000 3,716,386 Cash Paid to Other Funds - - - - (19,720)
Net Cash Provide (Used) by Noncapital
Financing Activities - - 2,856,000 2,856,000 3,696,666

CASH FLOWS FROM CAPITAL AND

RELATED FINANCING ACTIVITIES
Principal Paid on Capital Debt (864,739) - - (864,739) (563,165) Interest Paid on Capital Debt (78,332) - - (78,332) (55,041) Proceeds from Note Payable - - - - 2,276,449
Proceeds from Insurance Settlement - - - - 10,000
Proceeds from Sale of Capital Assets 127,830 - - 127,830 178,217 Acquisition of Capital Assets (3,129,574) - - (3,129,574) (6,896,181) Net Cash Provided (Used) by Capital and
Related Financing Activities (3,944,815) - - (3,944,815) (5,049,721)

CASH FLOWS FROM INVESTING ACTIVITIES
Investment Income (Loss) 258,791 728,189 492,518 1,479,498 1,459,030

NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (1,414,457) (1,408,784) 1,325,152 (1,498,089) 921,032 Cash and Cash Equivalents - Beginning of Year 8,140,146 18,940,547 11,650,369 38,731,062 37,810,030 CASH AND CASH EQUIVALENTS - END OF YEAR 6,725,689$ 17,531,763$ 12,975,521$ 37,232,973$ 38, 731,062$

RECONCILIATION OF OPERATING INCOME
(LOSS) TO NET CASH PROVIDED
(USED) BY OPERATING ACTIVITIES
Operating Income (Loss) 1,240,143$ (3,633,394)$ (2,102,266)$ (4,495,517)$ (3,212,775)$ Adjustments to Reconcile Operating Income
(Loss) to Net Cash Provided (Used) by
Operating Activities:

Depreciation 1,632,720 - - 1,632,720 1,532,452
Other Revenues 44,420 29,258 73,678
(Increase) Decrease in Accounts Receivable (232) (12,528) - (12,760) 242,026 (Increase) Decrease in Prepaid Items 1,365,575 - - 1,365,575 (Increase) Decrease in Inventories (135,738) - - (135,738) (117,033) Increase (Decrease) in Accounts Payable (1,868,676) 82,512 72,687 (1,713,477) 1,247,568 Increase (Decrease) in Accrued Liabilities (6,645) 2,931 6,213 2,499 (10,349) Increase (Decrease) in in Claims Payable - 1,394,248 - 1,394,248 1,133,168 Net Cash Provided by Operating Activities 2,271,567$ (2,136,973)$ (2,023,366)$ (1,888,772)$ 815,057$ Total
1582
(134)
Intentionally left blank page.
1583
1584

STATISTICAL SECTION

ANNUAL COMPREHENSIVE

FINANCIAL REPORT

STATISTICAL SECTION
1585
(135)

STATISTICAL SECTION
This part of the City’s annual comprehensive financial report presents detailed information as a context for understanding what information in the financial statements, note disclosures, and required supplementary information says about the government’s overall financial health.

FINANCIAL TRENDS TABLES 1 – 4
These schedules contain financial trend information to help the reader understand how the government’s financial performance and well- being have changed over time.

REVENUE CAPACITY TABLES 5 – 12
These schedules contain revenue information to help the reader assess the government’s most significant local revenue source.

DEBT CAPACITY TABLES 13 – 15
These schedules present information to help the reader assess the affordability of the government’s current levels of outstanding debt and the government’s ability to issue additional debt in the future.

DEMOGRAPHIC AND ECONOMIC INFORMATION TABLES 16 – 17
These schedules offer demographic and economic indicators to help the reader understand the environment within which the government’s financial activities take place.

OPERATING INFORMATION TABLES 18 – 20
These schedules contain service and infrastructure data to help the reader understand how the information in the government’s financial report relates to the services the government provides and the activities it performs.
1586
TABLE 1
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Governmental Activities
Net investment in capital assets 216,195,466$ 219,280,752$ 235,177,233$ 248,255,931$ 248,815,081$ 255,443,158$ 249,096,798$ 258,068,790$ 257,950,628$ 270,080,000$ Restricted
Pension - - - - - - - - - 2,092,360
Protection of Persons and
Property 1,022,546 217,303 150,169 872,898 1,628,892 1,329,350 1,333,365 1,672,814 1,568,489 1,863,547 Community programs 12,793,475 9,588,998 3,767,377 6,162,341 5,687,227 6,176,036 6,796,140 10,118,512 12,663,845 10,206,991 Public services 15,495,090 20,253,747 13,625,826 14,845,159 17,051,750 18,047,015 20,103,188 7,236,370 9,246,161 37,019,168 Debt service - - - - - - - - - 1,001
Unrestricted (159,357,224) (161,805,274) (224,657,548) (241,478,263) (251,417,100) (243,934,825) (225,702,393) (166,151,695) (168,224,238) (209,490,787) Total governmental activities
net position 86,149,353 $ 87,535,526 $ 28,063,057 $ 28,658,066 $ 21,765,850 $ 37,060,734 $ 51,627,098 $ 110,944,791 $ 113,204,885 $ 111,772,280 $ Source: Government-Wide Financial Statements

NET POSITION BY COMPONENT

LAST TEN FISCAL YEARS
(accrual basis of accounting)

CITY OF COSTA MESA, CALIFORNIA
(136)
1587
TABLE 2
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Expenses
Governmental Activities:

General government 24,631,010$ 28,474,037$ 31,695,402$ 34,008,731$ 32,124,703$ 36,763,868$ 31,808,370$ 34,980,361$ 46,273,963$ 57,099,994$ Protection of persons and
property 63,956,413 70,786,483 86,777,544 86,440,751 96,625,585 88,643,852 98,324,072 73,551,002 112,351,024 116,454,036 Community programs 4,639,743 12,069,675 10,126,755 16,363,506 17,285,898 22,007,275 14,887,015 21,097,340 29,965,511 20,681,772 Public services 22,498,495 21,415,061 20,062,183 27,937,004 16,269,612 17,663,842 21,645,247 13,379,020 22,489,959 30,882,547 Interest on long-term debt 1,081,605 974,233 1,082,361 1,138,694 1,083,190 986,593 929,979 962,189 1,033,694 807,311 Total primary government
expenses 116,807,266 133,719,489 149,744,245 165,888,686 163,388,988 166,065,430 167,594,683 143,969,912 212,114,151 225,925,660 Program Revenues
Governmental Activities:

Charges for services:

Protection of persons and
property 2,707,819 2,819,809 3,805,473 7,267,233 7,461,872 5,497,350 6,846,240 8,548,513 9,792,484 10,670,393 Community programs 8,232,995 7,577,878 9,536,570 8,207,122 4,816,413 5,243,843 6,220,199 5,440,973 6,118,182 6,735,983 Public services 3,721,366 3,232,506 5,046,984 6,179,653 7,096,062 6,372,272 8,896,422 8,551,558 7,080,894 8,564,419 Operating grants and
contributions 4,907,815 4,487,089 7,727,382 9,339,283 10,576,719 32,519,129 14,404,940 19,907,594 23,659,800 26,016,091 Capital grants and
contributions 3,370,260 7,114,471 4,755,573 9,142,040 6,251,484 8,267,623 5,528,637 3,905,958 4,395,853 4,477,056 Total primary government
revenues 22,940,255 25,231,753 30,871,982 40,135,331 36,202,550 57,900,217 41,896,438 46,354,596 51,047,213 56,463,942 Total primary government
net expense (93,867,011) $ (108,487,736) $ (118,872,263) $ (125,753,355) $ (127,186,438) $ (108,165,213) $ (125,698,245) $ (97,615,316) $ (161,066,938) $ (169,461,718) $ General Revenues and Other
Changes in Net Position
Governmental Activities:

Taxes:

Property taxes 26,168,612$ 37,925,385$ 40,373,351$ 43,226,688$ 45,548,585$ 47,891,698$ 49,706,079$ 53,806,587$ 56,411,786$ 59,494,432$ Sales and use taxes 58,524,162 57,591,889 56,971,636 62,689,811 55,866,831 63,738,411 77,165,533 79,851,289 76,400,160 78,244,492 Transient occupancy tax 8,622,505 8,924,854 8,819,617 8,595,417 6,587,224 4,282,802 8,366,278 9,830,790 10,150,696 9,962,421 Franchise taxes 5,060,402 4,593,631 4,965,515 5,042,551 4,822,964 4,895,574 5,318,541 6,094,232 6,542,802 6,637,150 Business/Cannabis tax 973,521 918,928 919,450 1,093,154 1,663,100 1,227,843 1,468,202 1,907,551 3,902,514 5,060,510 Other intergovernmental
unrestricted 11,209,989 51,340 60,031 55,343 91,674 84,182 130,289 275,292 138,951 349,375 Investment income (loss) 1,871,216 496,650 256,438 4,264,987 4,075,623 (80,831) (3,609,117) 1,821,815 7,200,904 8,709,004 Gain on sale of capital assets - - - - - - - - - 68,995 Miscellaneous 913,351 1,333,610 1,903,266 1,380,413 1,638,221 1,420,418 1,718,804 3,345,453 2,579,219 2,288,046 Settlements - - - - - - - - - -
Total primary government 113,343,758 111,836,287 114,269,304 126,348,364 120,294,222 123,460,097 140,264,609 156,933,009 163,327,032 170,814,425 Change in Net Position 19,476,747$ 3,348,551$ (4,602,959)$ 595,009$ (6,892,216)$ 15,294,884$ 14,566,364$ 59,317,693$ 2,260,094$ 1,352,707$ Source: Government-Wide Financial Statements

CHANGES IN NET POSITION

LAST TEN FISCAL YEARS
(accrual basis of accounting)

CITY OF COSTA MESA, CALIFORNIA
Fiscal Years
(137)
1588
TABLE 3
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
General fund
Nonspendable 2,486,085$ 2,253,843$ 2,038,518$ 280,195$ 362,189$ 964,846$ 603 ,547$ 458 ,687$ 630 ,182$ 883 ,072$ Restricted - - - - - 1,778,220 3,061,154 3 ,178,229 3 ,367,408 2 ,092,360 Committed 16,125,000 16,125,000 16,125,000 23,625,000 25,125,000 25,125,000 25,125,000 25 ,125,000 25 ,125,000 25 ,125,000 Assigned 13,820,663 13,819,088 13,730,832 8,940,072 9,151,062 8,195,429 12,469,067 13 ,946,622 13 ,554,327 13 ,554,327 Unassigned 32,040,713 30,867,198 23,329,730 20,451,232 18,825,417 17,428,766 16,517,079 16 ,328,416 17 ,685,984 19 ,307,045 Total general fund 64,472,461$ 63,065,129$ 55,224,080$ 53,296,499$ 53,463,668$ 53,492,261$ 57,775,847$ 59,036,954$ 60,362,901$ 60,961,804$ All other governmental funds
Restricted 19,309,083$ 28,056,898$ 30,108,463$ 21,753,832$ 25,676,330$ 25,200,380$ 26 ,636,885$ 35 ,221,550$ 43 ,106,614$ 48 ,327,486$ Assigned 23,738,380 27,619,480 25,415,708 24,337,823 25,474,636 31,173,285 34 ,939,313 44 ,680,442 47 ,855,975 44 ,316,628 Unassigned (139,064) (248,979) (6,353) (9,453) (2,312,520) (451,068) (1,850,787) 961,694 (1,573,428) (41,269) To
tal all other governmental funds 42,908,399$ 55,427,399$ 55,517,818$ 46,082,202$ 48,838,446$ 55,922,597$ 59,725,411$ 80,863,686$ 89,389,161$ 92,602,845$ Source: Fund Financial Statements

CITY OF COSTA MESA, CALIFORNIA

FUND BALANCES OF GOVERNMENTAL FUNDS

LAST TEN FISCAL YEARS
(modified accrual basis of accounting)
(138)
1589
TABLE 4
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Revenues
Taxes 99,349,202$ 99 ,464,729$ 110 ,884,896$ 123 ,969,423$ 114 ,463,599$ 122 ,138,588$ 141 ,919,878$ 151 ,484,175$ 153 ,486,531$ 159 ,250,141$ Licenses and permits 2,983,081 2 ,933,305 3 ,837,564 5 ,104,022 5 ,496,049 4 ,368,740 7 ,331,252 6 ,342,557 5 ,982,422 6 ,809,704 Fines and forfeits 1 ,609,134 1 ,352,682 1 ,612,230 2 ,468,993 2 ,067,884 1 ,061,346 1 ,176,357 1 ,266,768 1 ,422,437 1 ,474,419 Intergovernmental 17,612,288 23 ,205,265 10 ,558,481 16 ,646,740 15 ,006,292 39 ,855,634 18 ,077,452 26 ,254,095 26 ,518,073 33 ,073,626 Charges for services 6,668,445 5 ,909,112 9 ,553,421 9 ,990,454 9 ,489,827 7 ,309,872 9 ,030,556 10 ,155,524 10 ,568,751 12 ,222,740 Rental 3 ,336,053 3 ,289,222 3 ,404,676 3 ,479,527 3 ,566,255 4 ,773,662 4 ,815,577 4 ,722,383 5 ,396,192 5 ,469,828 Investment income (loss) 1,775,765 420 ,561 244 ,606 3,616,606 3 ,394,398 (37,016) (2,767,803) 1,516,600 5 ,731,450 7 ,056,107 Miscellaneous 1 ,679,917 2 ,170,215 2 ,081,739 3 ,226,941 2 ,161,633 1 ,410,996 1 ,545,970 1 ,615,437 1 ,650,312 1 ,913,536 Total revenues 135 ,013,885 138 ,745,091 142 ,177,613 168 ,502,706 155 ,645,937 180 ,881,822 181 ,129,239 203 ,357,539 210 ,756,168 227 ,270,101 Expenditures
General government 25,102,067 26 ,518,266 29 ,048,355 29 ,219,530 30 ,808,182 31 ,851,632 33 ,567,585 36 ,619,271 43 ,466,720 52 ,783,983 Protection of persons and
property 64,426,376 66 ,141,703 70 ,198,327 78 ,762,212 82 ,939,180 84 ,027,648 90 ,698,363 98 ,044,159 104 ,825,629 113 ,183,368 Community programs 8,019,356 9 ,410,168 10 ,888,393 13 ,265,742 14 ,297,137 18 ,578,311 16 ,267,400 19 ,397,579 25 ,158,889 19 ,284,556 Public services 19 ,836,633 21 ,680,495 42 ,305,565 50 ,429,478 20 ,506,675 27 ,033,542 20 ,962,292 17 ,514,252 20 ,328,775 32 ,878,565 Debt service:

Principal 2,650,000 2 ,755,000 4 ,070,000 1 ,795,261 1 ,815,392 1 ,890,391 2 ,202,563 2 ,172,370 2 ,486,391 2 ,609,726 Interest 1 ,109,037 992 ,383 1 ,041,853 1 ,298,315 1 ,230,958 1 ,155,360 1 ,095,786 999 ,864 941,676 897 ,526 Bond issuance costs - - 344,858 - - - - -
Payment to refunded
bond escrow agent - - 2,302,225 - - - - -
Total expenditures 121,143,469 127 ,498,015 160 ,199,576 174 ,770,538 151 ,597,524 164 ,536,884 164 ,793,989 174 ,747,495 197 ,208,080 221 ,637,724 Excess of revenues over
(under) expenditures 13,870,416 11 ,247,076 (18,021,963) (6,267,832) 4,048,413 16 ,344,938 16 ,335,250 28 ,610,044 13 ,548,088 5 ,632,377 Other financing sources
(uses):

Subcription proceeds - - - - - - - - - 1,036,210 Transfers in 12 ,852,940 16 ,058,019 12 ,370,819 15 ,899,228 10 ,811,227 26 ,619,517 13 ,116,263 22 ,212,189 15 ,195,375 11 ,121,435 Transfers out (12,852,940) (19,658,019) (18,063,009) (21,148,507) (11,936,227) (35,851,711) (21,365,113) (28,422,851) (18,892,041) (13,977,435) Issuan
ce of debt - - 29,735,000 153 ,914 - - - -
Premium on debt issue - - 3,694,172 - - - - - - - Payment to bond
escrow agent - - (14,530,520) - - - - - - - Total other financing
sources (uses) - (3,600,000) 13,206,462 (5,095,365) (1,125,000) (9,232,194) (8,248,850) (6,210,662) (3,696,666) (1,819,790) Net change in fund
balances 13,870,416$ 7,647,076$ (4,815,501)$ (11,363,197)$ 2,923,413$ 7,112,744$ 8,086,400$ 22,399,382$ 9,851,422$ 3,812,587$ Debt service as a percentage
of noncapital expenditures 3.38% 3.18% 5.64% 2.21% 2.19% 2.10% 2.27% 2.03% 1.86% 1.74% Source: Fund Financial Statements

CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS

LAST TEN FISCAL YEARS
(modified accrual basis of accounting)

CITY OF COSTA MESA, CALIFORNIA
(139)
1590
TABLE 5
Transient Proposition
Fiscal Years Sales Pro perty Occupancy Franchise Business 172 Total 2016 57,593,561 26 ,168,612 8 ,622,505 5 ,060,402 973 ,521 930 ,601 99 ,349,202 2017 56 ,556,867 27 ,435,427 8 ,924,854 4 ,593,631 918 ,928 1 ,035,022 99 ,464,729 2018 54 ,656,183 40 ,458,402 8 ,819,617 4 ,965,515 919 ,450 1 ,065,729 110 ,884,896 2019 64 ,902,009 42 ,873,901 8 ,595,417 5 ,042,551 1 ,093,154 1 ,126,008 123 ,633,040 2020 55 ,866,831 45 ,548,585 6 ,587,224 4 ,822,964 1 ,663,100 1 ,102,506 115 ,591,210 2021 63 ,738,411 47 ,891,698 4 ,282,802 4 ,895,574 1 ,227,843 1 ,151,953 123 ,188,281 2022 77 ,165,533 49 ,706,079 8 ,366,278 5 ,318,541 1 ,468,199 1 ,467,173 143 ,491,803 2023 79 ,851,289 53 ,442,949 9 ,830,790 6 ,094,232 1 ,907,551 1 ,396,896 152 ,523,707 2024 76 ,400,160 56 ,465,749 10 ,150,696 6 ,542,802 3 ,902,514 1 ,396,143 154 ,858,064 2025 78 ,244,492 59 ,317,656 9 ,962,421 6 ,637,150 5 ,060,510 1 ,392,219 160 ,614,448 Source: Required Supplementary Information

CITY OF COSTA MESA, CALIFORNIA

TAX REVENUES BY SOURCE, GOVERNMENTAL FUNDS

LAST TEN FISCAL YEARS
(modified accrual basis of accounting)
(140)
1591
TABLE 6
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Apparel stores 727,073$ 754,197$ 714,478$ 814,593$ 835,594$ 569,776$ 1,031,162$ 1,167,167 $ 1,096,912 $ 1,062,460 $ General merchandise 618,702 582,500 565,635 534,747 512,500 315,884 515,117 553,045 547,467 468,976 Food stores 103,225 90,941 88,385 90,178 91,470 92,557 91,147 91,789 99,534 116,767 Eating and drinking
establishments 469,465 496,041 515,683 535,744 556,504 405,696 589,711 681,847 698,632 728,072 Building materials 205,343 224,225 236,497 242,750 251,846 251,117 314,137 351,411 320,238 315,552 Auto dealers and supplies 858,187 924,641 1,006,804 1,153,396 1,230,062 1,149,598 1,380,887 1,402,985 1,476,879 1,378,368 Service stations 215,707 190,969 200,170 235,572 232,911 161,495 242,199 315,387 274,997 251,408 Other retail stores 1,047,009 1,050,063 1,116,930 1,178,337 1,165,897 943,056 1,320,071 1,509,430 1,491,955 1,441,191 All other outlets 1,112,851 1,206,829 1,157,415 1,269,997 1,402,675 1,447,700 1,697,098 1,809,139 1,865,556 1,803,763 5,357,562$ 5,520,406$ 5,601,997$ 6,055,314$ 6,279,459$ 5,336,879$ 7,181,529$ 7,882,200 $ 7,872,170 $ 7,566,557 $ City direct sales tax rate 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% Source: State of California Board of Equalization, California Department of Taxes and Fees Administration, State Controller's Office and the HdL Companies

TAXABLE SALES BY CATEGORY

LAST TEN CALENDAR YEARS
(in thousands of dollars)

CITY OF COSTA MESA, CALIFORNIA
Calendar Years
(141)
1592
TABLE 7
PercentageP ercentage
of Total City of Total City
Taxable Taxable Taxable Taxable
Category Sales Rank Sales Sales Rank Sales
All other outlets 1,803,763$ 1 23.84% 1,112,851$ 1 20.77% Other retail stores 1,441,191 2 19.05% 1,047,009 2 19.54% Auto dealers and supplies 1,378,368 3 18.22% 858,187 3 16.02% Apparel stores 1,062,460 4 14.04% 727,073 4 13.57% Eating and drinking establishments 728,072 5 9.62% 469,465 6 8.76% General merchandise 468,976 6 6.20% 618,702 5 11.55% Building materials 315,552 7 4.17% 205,343 8 3.83% Service stations 251,408 8 3.32% 215,707 7 4.03% Food stores 116,767 9 1.54% 103,225 9 1.93% ,, ,,
Source: State of California Board of Equalization, California Department of Taxes and Fees Administration, State Controller's Office and the HdL Companies

CITY OF COSTA MESA, CALIFORNIA

PRINCIPAL SALES TAX REMITTERS BY CATEGORY

CURRENT YEAR AND NINE YEARS AGO
2024 2015
(142)
1593
TABLE 8
City Orange State of Total
Local Count y California Sales Tax
Fiscal Years Rate Rate Rate Rate
2016 1.00 0.50 6.50 8.00
2017 1.25 0.50 6.00 7.75
2018 1.25 0.50 6.00 7.75
2019 1.25 0.50 6.00 7.75
2020 1.25 0.50 6.00 7.75
2021 1.25 0.50 6.00 7.75
2022 1.25 0.50 6.00 7.75
2023 1.25 0.50 6.00 7.75
2024 1.25 0.50 6.00 7.75
2025 1.25 0.50 6.00 7.75
Source: State of California Board of Equalization

CITY OF COSTA MESA, CALIFORNIA

DIRECT AND OVERLAPPING SALES TAX RATES

LAST TEN FISCAL YEARS
(143)
1594
TABLE 9
Fiscal Year Taxes Levied Collected for
Ended for the Percenta geS u b s e quent Percentage
June 30, Fiscal Yea r Amount of Levy Years (2) Amount of Levy (1) 2016 24,960,369 24,222,713 97.04% 227,104 24,449,817 97.95% 2017 26,330,538 25,640,344 97.38% 216,963 25,857,308 98.20% 2018 27,825,846 27,272,459 98.01% 198,624 27,471,083 98.73% 2019 29,820,941 29,186,740 97.87% 196,710 29,383,450 98.53% 2020 31,300,931 30,714,805 98.13% 214,204 30,929,009 98.81% 2021 32,769,949 32,203,394 98.27% 294,030 32,497,424 99.17% 2022 33,917,865 33,032,650 97.39% 298,304 33,330,954 98.27% 2023 37,663,468 36,812,087 97.74% 268,998 37,081,085 98.45% 2024 38,940,043 38,085,358 97.81% 315,831 38,401,189 98.62% 2025 40,950,437 40,023,594 97.74% 361,547 40,385,141 98.62% (1) The Percentage of Levy may exceed 100% if the amounts collected for subsequent years exceed the delinquency. (2) The County of Orange only makes this data available by collection year. Data by levy year is not available.

Source: Orange County Assessor 2024/2025 Combined Tax Rolls

CITY OF COSTA MESA, CALIFORNIA
Fiscal Year of the Levy Total Collections to Date
Collected within the

PROPERTY TAX LEVIES AND COLLECTIONS

LAST TEN FISCAL YEARS
(144)
1595
TABLE 10
Less: Total Taxable Estimated Taxable Assessed
Residential Commercial Industrial Miscellaneous Tax-Exem pt Assessed Total Direct Actual Taxable Value as a Percenta ge Fiscal Years Property Property Property P roperty Property Value Tax Rate Value (1) of Actual Taxable Value 2016 10,456,976,124 3,766,616,981 1,190,970,066 1,118,171,362 - 16,532,734,533 0.15038% 16,532,734,533 100.00% 2017 11,033,602,522 3,918,807,590 1,336,961,702 1,180,683,099 - 17,470,054,913 0.15014% 17,470,054,913 100.00% 2018 11,685,011,850 4,096,390,455 1,500,236,782 1,222,877,713 - 18,504,516,800 0.15009% 18,504,516,800 100.00% 2019 12,557,043,739 4,473,583,090 1,646,413,988 1,223,132,784 - 19,900,173,601 0.15002% 19,900,173,601 100.00% 2020 13,389,240,208 4,687,990,535 1,744,806,502 1,290,509,110 - 21,112,546,355 0.14848% 21,112,546,355 100.00% 2021 14,143,690,438 4,858,631,950 1,822,103,130 1,295,199,231 - 22,119,624,749 0.14856% 22,119,624,749 100.00% 2022 14,753,436,539 4,866,777,961 1,875,392,912 1,244,087,188 - 22,739,694,600 0.14824% 22,739,694,600 100.00% 2023 15,853,782,350 5,070,138,124 2,052,311,019 1,390,912,662 - 24,367,144,155 0.15103% 24,367,144,155 100.00% 2024 17,022,360,496 5,352,310,983 2,214,212,560 1,426,931,653 - 26,015,815,692 0.14476% 26,015,815,692 100.00% 2025 18,100,710,527 5,455,410,264 2,365,280,527 1,623,354,452 - 27,544,755,770 0.14494% 27,544,755,770 100.00% (1) In 1978 the voters of the State of California passed Proposition 13 which limited taxes to a total maximum rate of 1%, based upon the assessed value of the property being taxed. Each year, the assessed value of property may be increased by an inflation factor (limited to a maximum of 2%). With few exceptions, property is only reassessed as a result of new construction or at the purchase price (market value) or economic value of the property sold. The assessed valuation data shown above, represents the only data currently available with respect to the actual market value of taxable property and is subject to the limitations described above. Therefore, the estimated actual taxable value e quals the total taxable assessed value.

Source: HdL Coren & Cone, Orange County Assessor 2015/2016 - 2024/2025 Combined Tax Rolls.

CITY OF COSTA MESA, CALIFORNIA

ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY

LAST TEN FISCAL YEARS
(modified accrual basis of accounting)
(145)
1596
TABLE 11
Total Count y of School S pecial
Basic Direct Oran ge District Districts
Fiscal Year Rate Rate (1) Debt Debt Debt
2016 0.14879 0.15038 0.36649 0.48300 0.00515 2017 0.14879 0.15014 0.36649 0.48300 0.00515 2018 0.14879 0.15009 0.36649 0.48300 0.00515 2019 0.14879 0.15002 0.36649 0.48300 0.00515 2020 0.14879 0.14848 0.36649 0.48300 0.00515 2021 0.14879 0.14856 0.36649 0.48300 0.00515 2022 0.14879 0.14824 0.36649 0.48300 0.00515 2023 0.14879 0.15103 0.36649 0.48300 0.00515 2024 0.14879 0.14476 0.36649 0.48300 0.00515 2025 0.14879 0.14494 0.36649 0.48300 0.00865 (1) Per the Government Finance Officers Association, the definition of "total direct rate" is as follows:
"The
weighted average of all individual rates applied by the government preparing the statistical section The "total direct rate" for the City of Costa Mesa is a weighted average derived by dividing total City revenue by taxable assessed value.

Source: HdL Coren & Cone, Orange County Assessor 2015/2016 - 2024/2025 Combined Tax Rolls.

City Direct Rates Overlappin g Rates

CITY OF COSTA MESA, CALIFORNIA

DIRECT AND OVERLAPPING PROPERTY TAX RATES

LAST TEN FISCAL YEARS
(146)
1597
TABLE 12
PercentageP ercentage
of Total City of Total City
Property Property Property Property
Tax Tax Tax Tax
Taxpayer Revenue Rank Revenue Revenue Rank Revenue
The Irvine Company LLC 759,111$ 1 1.90% 436,418$ 1 1.53% South Coast Plaza 534,700 2 1.34% 414,905 3 1.45% PR II MCC South Coast Property Owner 415,804 3 1.04% 398,970 4 1.40% Advanced Costa Mesa 23 LLC 337,261 4 0.84%
United Dominion Realty LP 335,387 5 0.84% 285,290 6 1.00% Automobile CLUB of Southern CA 271,486 6 0.68% 580 Anton Woner LLC 259,725 7 0.65%
LMC Costa Mesa Holdings LLC 245,984 8 0.62%
The Press Owner LLC 225,121 9 0.56%
Casden Lakes LP 216,047 10 0.54%
Behringer Harvard Pacifica Proj Owner 271,809 7 0.95% BRE LLC 271,608 8 0.95%
Trust Costa Mesa Courtyards LLC 419,807 2 1.47%
RREEF America Reit II Corporation
1901 Newport LLC Royal Street 336,284 5 1.18%
WWG TSQ Owner LLC 269,979 9 0.94%
Marjack LLC Irvine Company LLC 226,883 10 0.79% Total 3,600,626 $ 9.02% 3,331,952 $ 11.65%
Source: HdL Coren & Cone, Orange County Assessor 2024/2025 & 2015/2016 Combined Tax Rolls.

CITY OF COSTA MESA, CALIFORNIA

PRINCIPAL PROPERTY TAX PAYERS

CURRENT YEAR AND NINE YEARS AGO
2024-2025 2015-2016
(147)
1598
TABLE 13
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
General bonded debt outstanding
General obligation bonds -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Redevelopment bonds (1) - - - - - - - - - -
Total -$ -$ -$ -$ -$ -$ -$ -$ -$ -$
Percentage of taxable
assessed value 0.0000% 0.0000% 0.0000% 0.0000% 0.0000% 0.0000% 0.0000% 0.0000% 0.0000% 0.0000% Per capita -$ -$ -$ -$ -$ -$ -$ -$ -$ -$
Less: Amounts set aside to
repay general debt - - - - - - - - - -
Total net debt applicable to
debt limit - - - - - - - - - -
Legal debt limit
(3.75% of Assessed Value) 669,713,004 705,606,516 743,516,945 796,252,660 842,737,426 881,515,407 907,985,504 968,274,281 1,035,775,785 1,096,106,704 Legal debt margin 669,713,004 705,606,516 743,516,945 796,252,660 842,737,426 881,515,407 907,985,504 968,274,281 1,035,775,785 1,096,106,704 Legal debt margin as a
percentage of the debt limit 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% (1) As of February 1, 2012, the Successor Agency to the former Costa Mesa Redevelopment Agency is responsible for the outstanding R edevelopment debt.

Source: City of Costa Mesa Finance Department and Orange County Assessor 2024/2025 combined tax rolls

RATIO OF GENERAL BONDED DEBT OUTSTANDING AND LEGAL DEBT MARGIN

LAST TEN FISCAL YEARS

CITY OF COSTA MESA, CALIFORNIA

FISCAL YEARS
(148)
1599
TABLE 14
Percentage
Fiscal Year of Total Certificates Lease Total Percenta ge Ended Taxable Per Revenue of Loan Lease SBITA (2) Notes Purchase Primar y of Personal Pe r June 30, Assessed Value Capita Bonds (1) Participation Pa yable Pa yable Pa yable Pa yable Financin g Government Income Ca pita 2016 0.0000% - 4,600,000 19,775,000 - - 24 ,375,000 0.64% 732.66 2017 0.0000% - 3,325,000 18,295,000 - - 21 ,620,000 0.57% 649.85 2018 0.0000% - 34,103,345 - - - 34 ,103,345 0.77% 991.21 2019 0.0000% - 32,170,580 - 143,653 - 32 ,314,233 0.78% 906.39 2020 0.0000% - 30,222,813 - 128,261 - 30 ,351,074 0.69% 788.54 2021 0.0000% - 28,200,046 - 112,870 1,472,402 29 ,785,318 0.64% 721.65 2022 0.0000% - 26,102,279 - 97,479 1,336,909 27 ,536,667 0.55% 613.11 2023 0.0000% - 24,124,512 - 82,086 1,198,931 25 ,405,529 0.48% 528.74 2024 0.0000% - 22,056,745 - 66,693 740,267 3 ,575 3 ,415,603 2 ,600,273 28 ,883,156 0.48% 526.05 2025 0.0000% - 19,893,978 - 51,302 505,726 694 ,991 2,917,121 2 ,234,016 26 ,297,134 0.42% 463.50 (1)Amount includes the unamortized Bond Premium.
(2)Subscription-Based Information Technology Arrangements Source: City of Costa Mesa Finance Department

CITY OF COSTA MESA, CALIFORNIA

RATIOS OF OUTSTANDING DEBT BY TYPE

LAST TEN FISCAL YEARS
Other Governmental Activities Debt
(149)
1600
TABLE 15
Estimated
Share of
Estimated Direct and
Debt Percenta geO v e r l a pping
Governmental Unit Outstanding Applicable (2) Debt
Overlapping Debt
Newport Mesa Unified School District 206,519,744$ 26.092% 53,885,132$ Coast Community College District 854,816,084 13.423% 114,741,963 Santa Ana Unified School District 401,142,561 3.641% 14,605,601 Santa Ana Unified School District Certificates of Participation 38,301,736 3.641% 1,394,566 Rancho Santiago Community College District 132,145,756 1.569% 2,073,367 Rancho Santiago Community College District SFID No. 1 138,730,000 2.954% 4,098,084 Metropolitan Water District 17,155,000 0.676% 115,968
OC General Fund Obligation 429,065,000 3.396% 14,571,047 OC Board of Education Certificate of Participation 9,120,000 3.396% 309,715 Coast Community College District General Fund Obligations 1,125,000 13.423% 151,009 Total Overlapping Debt 2,228,120,881 205,946,451 City Direct Debt
Costa Mesa Public Financing Authority 2006 Revenue Refunding Bonds/ Costa Mesa Community Facilities District No. 91-1 -$ 100% -$ City of Costa Mesa General Fund Obligations (1) 19,893,978 100% 19,893,978 Financed Lease 2,234,016 100% 2,234,016
Lease Payable 505,726 100% 505,726
Loan Payable 51,302 100% 51,302
SBITA 694,991 100% 694,991
Note Payable 2,917,121 100% 2,917,121
Total Direct Debt 26,297,134 26,297,134
Total Direct and Overlapping Debt 232,243,585$
(1) See Note 8 in Finance Statement for more information about the City's direct debt. The amount included the unamortized Bond Premium $2,548,978
(2) Overlapping governments are those that coincide with the geographic boundaries of the city. The percentage of overlapping debt applicable is estimated by using taxable assessed values. Applicable percentages were estimated by determining the portion of another governmental unit’s taxable assessed value that is within the city’s boundaries and dividing it by each unit’s total taxable assessed value.

Source: California Municipal Statistics, Inc., Orange County Assessor and Auditor Combined 2024/25 Lien Data Tax Rolls.

AS OF JUNE 30, 2025

DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT

CITY OF COSTA MESA, CALIFORNIA
(150)
1601
TABLE 16
Personal
Income Per Capita Orange County
(thousands Personal Median School Unemployment
Year Population (2)
of dollars) Income (1)
Age
(1) Enrollment (3) Rate (4)
2016 114,603 3,722,083 32,478 34 21,392 4.40% 2017 114,044 3,794,132 33,269 34 20,801 3.80% 2018 115,296 3,966,839 34,406 35 20,853 3.30% 2019 115,830 4,129,505 35,651 35 20,316 3.00% 2020 114,778 4,417,883 38,490 35 20,008 13.60% 2021 112,780 4,654,963 41,274 35 20,173 6.50% 2022 111,394 5,003,062 44,913 36 17,962 5.40% 2023 111,183 5,342,262 48,049 36 17,816 3.70% 2024 109,423 6,007,994 54,906 36 17,768 4.00% 2025 110,321 6,259,245 56,736 37 17,635 4.50% Source: (1) - City of Costa Mesa Finance Department / and The HdL Companies (2) - California State Department of Finance
(3) - Newport-Mesa Unified School District.
(4) - State of California Employment Development Department as of June 30th each year.

CITY OF COSTA MESA, CALIFORNIA

DEMOGRAPHIC AND ECONOMIC STATISTICS

LAST TEN CALENDAR YEARS
(151)
1602
TABLE 17
PercentageP ercentage
of Total City of Total City
Employer Employees Rank Em ployment Employees Rank Em ployment Experian Information Solutions, Inc. 3,700 1 5.73% 3,998 1 6.53% Coast Community College District 2,900 2 4.49% 3,700 2 6.04% Anduril Industries 2,500 3 3.87% 2,900 3 4.73% Orange Coast Community College 1,900 4 2.94% 1,900 5 3.10% California State Hospital-Fairview Dev. Ctr. 1,215 5 1.88% 2,516 4 4.11% Automobile Club Enterprises 1,200 6 1.86%
Nationsbenefit LLC 740 7 1.15% 800 8 1.31% Monroe Operations LLC 681 8 1.05% 600 10 0.98% International Bus Mechanic Corp. 675 9 1.05% 1,500 6 2.45% Deloitte & Touche LLP 630 10 0.98% 1,184 7 1.93% 700 9 1.14%
Source: City of Costa Mesa Department of Economic Development, Dunn & Bradstreet, State of California Employment Development Department

CITY OF COSTA MESA, CALIFORNIA

PRINCIPAL EMPLOYERS

CURRENT YEAR AND NINE YEARS AGO
2024-2025 2015-2016
(152)
1603
TABLE 18
Function/Program 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 General Government
Number of residents served via
public services programs 785 750 700 700 700 700 1,042 1,123 1,058 973 Accounts payable checks issued 9,182 9,031 8,734 8,857 8,604 7,269 7 ,079 7 ,347 7 ,816 7 ,627 Total printshop photocopies produced 1 ,619,784 1 ,749,460 1 ,996,486 1 ,699,007 1 ,116,892 1 ,250,000 1 ,250,000 1 ,250,000 1 ,000,000 1 ,000,000 Protection of persons and property
Police protection
911 Emergency/Public Safety calls (3) N/A 1,000 1 ,029 882 876 847 1 ,027 1,248 954 46,398 Calls responded to within 5 minutes N/A 66% 72% 75% 72% 76% 96% 96% 80% 96% Assigned theft cases (3) 900 1,200 N/A N/A N/A N/A 2,171 1,597 3,442 2,880 Percentage of theft cases cleared 40% 60% 74% 64% 52% 31% 59% 59% 36% 25% Assigned burglary cases 400 200 N/A N/A N/A N/A 897 1,097 1,056 961 Percentage of burglary cases
cleared 40% 70% 69% 64% 50% 38% 54% 38% 37% 23%
Case and arrest reports processed 14,584 19,310 19 ,319 18 ,382 19,079 18,794 22 ,135 20 ,050 18 ,270 18 ,556 Fire protection
Number of calls for service 12,955 12,721 12 ,936 10 ,572 10,637 10,073 11 ,249 12 ,063 11 ,815 11 ,821 Fire related responses 238 271 218 261 245 246 222 251 261 253 Emergency medical aid responses 9,366 9,374 9,603 9,639 9,454 8,960 10 ,055 10 ,746 10 ,439 10 ,459 Community Programs
Number of Recreation program
enrollments processed (1) N/A N/A N/A N/A N/A N/A 6,400 7 ,700 8 ,000 11,000 Over-the-counter plan checks
reviewed within five working days (2) 240 240 522 630 630 630 N/A N/A N/A N/A Number of inspections performed (1) 29,100 31,040 29 ,585 29 ,100 18,966 28,012 35 ,000 37 ,000 32,000 25,000 Complaint response within two
working days (2) 90% 90% 90% 90% 90% 90% 100% 100% N/A N/A Public services
Number of trees trimmed annually 7,750 6,250 6,250 6,250 8,750 5,291 3 ,317 3 ,611 5 ,105 8 ,430 Number of catch basins cleaned
annually 1,165 1,115 1,100 1,100 1,165 1,165 1 ,165 1 ,165 1 ,165 1 ,165 (1) Previous statistical Performance Measures and Workload Indicators have been revised to reflect on-line software implementation, current Department goals and City Council priorities (2) Performance Measures and Workload Indicators for these programs are no longer tracked. (3) In November 2023 the department switched tracking methods from UCR (Part 1 and 2 Crimes) to NIBRS Federal Reporting Standards (Group A & B Offenses). Method not comparable to prior years Source: City of Costa Mesa Finance Department

LAST TEN FISCAL YEARS
Fiscal Years

CITY OF COSTA MESA, CALIFORNIA

OPERATING INDICATORS BY FUNCTION/PROGRAM
(153)
1604
TABLE 19
Function/Program 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 General Government
City Council 6.0 6.0 6.0 8.0 10.5 10.5 10.5 10.5 8.0 8.0 City Manager's Office 33.30 37.59 39.74 41.60 36.48 37.00 37.88 47.95 51.32 57.32 Financial Services 21.71 21.50 22.25 22.50 22.00 23.00 23.00 24.00 25.00 26.75 Information Technology 12.50 12.94 13.16 12.16 13.70 15.50 17.50 20.50 22.00 22.00 Administrative Services - - - - - - - - Development Services 43.50 46.23 45.95 44.80 48.79 51.64 52.64 53.34 55.34 58.34 Parks and Community
Services 70.70 74.00 80.54 87.23 96.71 95.67 96.73 88.16 88.82 88.57 Protection of Persons and Property
Police Protection 232.63 234.46 235.60 233.76 235.17 235.86 236.36 240.36 254.86 256.75 Fire Protection 87.25 87.50 94.00 94.00 95.00 96.25 97.25 98.75 99.25 99.25 Public Works 81.77 84.82 77.47 72.05 76.70 76.50 80.00 81.25 85.50 85.00 589.36 605.04 614.71 616.10 635.05 641.92 651.86 664.81 690.09 701.98 Source: City of Costa Mesa Finance Department

FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION/PROGRAM

CITY OF COSTA MESA, CALIFORNIA

LAST TEN FISCAL YEARS
(154)
1605
TABLE 20
Function/Program 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Police
Stations/substations 2 2 2 2 2 2 2 2 2 2 Fire
Fire stations 6 6 6 6 6 6 6 6 6 6
Other public works
Streets (lane miles) 529.0 529.0 535.6 535.6 535.6 540.0 522.0 522.0 522.0 522.0 Streetlights 6,674 6,674 6,674 6,881 6,869 6,869 6,882 6,882 6,904 6,911 Traffic signals 124 124 125 126 127 128 131 131 131 131 Parks and recreation
Acres of open space 1,957 1,957 1,957 1,957 2,067 2,067 2,067 2,067 2,067 2,067 Park sites 31 31 31 31 32 32 30 30 30 30 Baseball/softball diamonds 6 6 6 6 6 6 6 6 6 6 Soccer/football fields 10 10 10 10 6 6 6 6 6 6 Community centers 4 3 3 3 4 4 3 3 3 3 Wastewater (miles)
Sanitary sewers 325.7 325.7 325.7 325.7 325.7 325.7 325.7 325.7 325.7 325.7 Storm sewers 45.5 45.5 45.5 45.5 45.5 64.7 45.5 45.5 45.5 45.5 Source: City of Costa Mesa Finance Department

CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM

CITY OF COSTA MESA, CALIFORNIA

LAST TEN FISCAL YEARS
Fiscal Years
(155)
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CITY OF COSTA MESA, CALIFORNIA
APPR
OPRIATIONS LIMIT WORKSHEET NO. 6
INDEPENDENT ACCOUNTANTS’ REPORT

ON AGREED-UPON PROCEDURES APPLIED TO
APPROPRIATIONS LIMIT WORKSHEET NO. 6
YEAR ENDED JUNE 30, 2025
CPAs I CONSULTANTS I WEALTH ADVISORS
CLAconnect.corn
Atttachment 41616
CLA (CliftonLarsonAllen LLP) is an independent network member of CLA Global. See CLAglobal.com/disclaimer.

CliftonLarsonAllen LLP
CLAconnect.com
INDEP
ENDENT ACCOUNTANTS’ REPORT
Honorable Mayor and
Members of the City Council
of the City of Costa Mesa
Costa Mesa, California
We have performed the procedures enumerated below on the accompanying Appropriations Limit Worksheet No. 6 of the City of Costa Mesa, California, (the City) for the year ended June 30, 2025. The City’s management is responsible for the Appropriations Limit Worksheet No. 6.

The City and the League of California Cities (as presented in the League publication entitled “Article XIII-B Appropriations Limit Uniform Guidelines”) have agreed to and acknowledged that the procedures performed are appropriate to meet the intended purpose of meeting the requirements of Section 1.5 of Article XIII-B of the California Consti tution. This report may not be suitable for any other purpose. The procedures performed may not address all the items of interest to a user of this report and may not meet the needs of all users of this report and, as such, users are responsible for determining whether the procedures performed are appropriate for their purposes.

The procedures and the associated findings are as follows:
a.

We obtained the completed Appropriations Limit Worksheet No. 6 for the year ended June 30 , 2025, and compared the limit and
annual adjustment factors included in that worksheet to the limit and annual adjustment factors that were adopted by resolution of the City Council. We also compared the populati
on and inflation options included in the aforementioned worksheet to those that were selected by a recorded vote of the City Council.

No exceptions were noted as a result of our performing this procedure. b.

For the Appropriations Limit Worksheet No. 6, we added last year’s limit to the total adjustments, and compared the resulting amount to this year’s limit. We also recalc ulated the adjustment factor and th
e adjustment for inflation and population, and compared the results to the amounts on Appropriations Limit Worksheet No. 6.

No exceptio
ns were noted as a result of our performing this procedure. c.

We compared the prior year appropriations limit presented in the accompanying Ap propriations Limit Worksheet No. 6 to the prior year appropr iations limit adopted by the City Council for the
prior year.

No exceptions were noted as a result of our performing this procedure. 1617
City Council
City of Costa Mesa
(3)
We were engaged by the City to perform this agreed-upon procedures engagement and conducted our engagement in accordance with attestation standards established by the American Institute of Certified Public Accountants. We were not engaged to and did not conduct an examination or review engagement, the objective of which would be the expression of an opinion or conclusion, respectively, on the accompanying Appropriations Limit Worksheet No. 6. Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you.

We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements related to our agreed-upon procedures engagement.

This report is intended solely for the information and use of the 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.

CliftonLarsonAllen LLP
Irvine, California
January 29, 2026
1618

CITY OF COSTA MESA
APPROPRIATIONS LIMIT WORKSHEET NO. 6
YEAR ENDED JUNE 30, 2025

See accompanying Notes to Appropriations Limit Worksheet No. 6. (4)

Appropriations Limit for Fiscal Year Ended June 30, 2024 (see Note 2) 298,356,781 $ Adjustments Factors for the Fiscal Year Ended June 30, 2025 (see Note 2):

Inflation Population
Factor Factor Combined
(Note 3) (Note 4) Factor

1.0362000 1.0031000 1.0394122 x 0.0394122
Adjustment for Inflation and Population 11,758,903
Other Adjustments (Note 5) -
Total Adjustments 11,758,903
Appropriations Limit for Fiscal Year Ended June 30, 2025 310,115,684 $

1619

CITY OF COSTA MESA
NOTES TO APPROPRIATIONS LIMIT WORKSHEET NO. 6
JUNE 30, 2025

(5)

NOTE 1 PURPOSE OF AGREED UPON PROCEDURES
Under Article XIIIB of the California Constitution (the Gann Spending Limitation Initiative), California governmental agencies are restricted as to the amount of annual appropriations from proceeds of taxes. Effective for years beginning on or after July 1, 1990, under Section 1.5 of Article XIIIB, the annual calculation of the appropriations limit is subject to agreed-upon procedures in connection with the annual audit.

NOTE 2 METHOD OF CALCULATION
Under Section 10.5 of Article XIIIB, for fiscal years beginning on or after July 1, 1990, the appropriations limit is required to be calculated based on the limit for the fiscal year 1986-87, adjusted for the inflation and population factors discussed at Notes 3 and 4 below.

NOTE 3 INFLATION FACTORS
A California governmental agency may adjust it s appropriations limit by either the percentage change in California per capita personal income from the preceding year (which is supplied by the State Department of Finance), or the percentage change in the local assessment roll from the preceding year due to the change of local nonresidential construction. The factor adopted by the City of Costa Mesa, California (the City) for fiscal year 2024-2025 represents the percentage change in California per capita personal income from the preceding year.

NOTE 4 POPULATION FACTORS
A California governmental agency may adjust its appropriations limit by either the annual percentage change of the jurisdiction’s own population, or the annual percentage change in population in the County where the jurisdiction is located. The factor adopted by the City for fiscal year 2024-2025 represents the annual percentage change in the population in the County where the City is located.

NOTE 5 OTHER ADJUSTMENTS
A California governmental agency may be required to adjust its appropriations limit when certain events occur, such as the transfer of responsibility for municipal services to, or from, another governmental agency or private entity. The City had no such adjustments for the year ended June 30, 2025.

1620

@Global

INDEPENDENT

NETWORK MEMBER
CLA (CliftonlarsonAllen LLP) is a network member of CLA Global. See CLAglobal.com/disclaimer.

Investment advisory services are offered through CliftonlarsonAllen Wealth Advisors, LLC, an SEC-registered investment advisor.
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Costa Mesa Housing Authority
Housing Successor Annual Report FY 2024-2025 P a g e | 1 Attachment 7

COSTA MESA HOUSING AUTHORITY ANNUAL REPORT

AS HOUSING AUTHORITY AND AS HOUSING SUCCESSOR
FOR FISCAL YEAR 2024-2025 UNDER CALIFORNIA
HEALTH & SAFETY CODE SECTIONS 34176.1 AND 34328
This annual report (Report) of the Costa Mesa Housing Authority (Housing Authority) is prepared under the California Health and Safety Code (HSC), Division 24, Parts 1.8 and

1.85 (Dissolution Law), in particular Section 34176.1 as the housing successor, and under the California Housing Authorities Law, HSC Section 34200, et seq. (HAL), in particular Section 34328 as a housing authority. The Dissolution Law and HAL respectively require preparation of an annual report on the housing successor and the housing authority’s activities for the prior fiscal year. This Report details the Housing Authority’s activities during Fiscal Year (FY) 2024-25 and is intended to satisfy the requirements under both HSC Sections 34176.1 and 34328. More specifically, this Report i ncludes information required about the Low and Moderate Income Housing Asset Fund (LMIHAF) and other information under Section 34176.1(f).

This Report is based on information prepared by City staff on behalf of the Housing Authority and data contained within the independent financial audit of the LMIHAF (Audit), which is prepared by CliftonLarsonAllen(CLA) LLP and accompanies this Report. The Audit is incorporated in the City of Costa Mesa’s Annual Comprehensive Financial Report (ACFR) for FY 2024 -25. The City Council and the Housing Authority will review and file the Report in an open meeting on March 3, 2026; upon their review and approval, this Report will be posted on the City’s websit e www.costamesaca.gov and thereafter appended to the City’s annual update report prepared under Section 65400 of the Government Code.

This Report conforms with and is organized into sections I through XIV, inclusive, under HSC Section 34176.1(f) of the Dissolution Law and Section 34328 of the HAL:

I. Amounts Received and Deposited Under 34191.4(b)(3)(A). This section provides the total amount of funds paid to the City and the amount deposited into the LMIHAF representing 20% of repayments on the reinstated City/Agency loan per Section 34191.4.
• All obligations have been paid off. The hou sing successor Agency was in process to dissolve in FY 2024-25.

II. Amount Deposited into LMIHAF. This section provides the total amount of funds deposited into the LMIHAF in FY 2024 -25 and itemized by amounts listed on Recognized Obligation Payment Schedul e (ROPS), amounts representing Section 34191.4 deposits, and other amounts deposited into the LMIHAF. • In August 23,2024, Department of Finance approved Costa Mesa Successor Agency (Agency) the dissolution of the Agency.
• $0 was held for items listed on the ROPS; and
• other deposits into the LMIHAF in FY 2024-25 were: (1) $471,955 rental income, (2) $337,207 loan repayments, and (3) $207,007 investment gain.

The cumulative total of all deposits into the LMIHAF was $1,016,169 during FY 2024 -

25. 1685
Costa Mesa Housing Authority
Housing Successor Annual Report FY 2024-2025 P a g e | 2

III. Ending Balance of LMIHAF. This section provides a statement of the balance in the LMIHAF as of the close of FY 2024 -25. Any amounts deposited for items listed on the ROPS and amounts representing Section 34191.4 deposits, must be distinguished from the other amounts deposited.

At the close of FY 2024-25 on June 30, 2025, the ending balance in the LMIHAF was $5,025,484 of which $0 was held for items listed on the ROPS.

IV. Description of Expenditures from LMIHAF. This section provides a description of expenditures made from the LMIHAF during FY 2024 -25. The expenditures are to be categorized among (A) administration for monitoring, preserving covenanted housing units; (B) homeless prevention and rapid rehousing services; and (C) development of housing.

The table below lists and describes FY 2024-25 LMIHAF expenditures by category:

Monitoring
and
Administration
Expenditures
Costs for monitoring, enforcement, and preserving
long-term affordable housing covenants imposed by
the former Costa Mesa Redevelo pment Agency
(Former Agency) or the Housing Authority, as
housing successor.

The maximum expenditure for this category in FY
2024-25 is the greater of (a) 5% of the statutory
value of (i) real property owned by the housing
successor and (ii) loans and grants receivable, or (b)
$200,000 (plus allowed CPI adjustments).

Based on the valuation listed in Section V, [lines 6+7
in that table=$8,882,775 for FY 2024 -25, the
Housing Authority as housing successor was
authorized to spend up to $444,139 (i.e., 5% of
$8,882,775), but only expended $340,621.
$340,621
Homeless
Prevention
and Rapid
Rehousing
Services
Expenditures
Costs for homeless prevention and rapid rehousing
supportive services for individuals and families who
are homeless or would be homeless without this
assistance.

The housing successor Agency was in process to
dissolve in FY 2024-25.
$250,000

1686
Costa Mesa Housing Authority
Housing Successor Annual Report FY 2024-2025 P a g e | 3

Housing
Development
Expenditures
Costs for housing “development”, which term is
defined to include: (a) new construction, (b)
acquisition and rehabilitation, (c) substantial
rehabilitation, (d) long -term affordability covenants
on multifamily units, and (e) preservation of assisted
affordable housing that is eligible for (i) prepayment, (ii) termination, or (iii) for which the expiration of
rental restrictions is scheduled to occur within five
years.

The costs in this category represent the operati ng
costs for a 30 -apartment low and very low income
housing property, which the housing successor
intends to solicit proposals from housing providers to
purchase and extend affordability.

The 30 apartments within eight properties commonly
referred to as J ames/W. 18 th Properties, were
acquired by the City and Housing Authority through
non-judicial foreclosure proceedings in FY 2015 -
2016. This acquisition was made in order to preserve
the long -term affordable housing covenants which
were at risk of terminati on and potential conversion
to market housing.

The eight properties are owned by the Housing
Authority and continue to be operated as affordable
housing units for low and very low income
households/tenants by a professional property
management company. The operating costs for the
property include staff salaries and benefits, utilities, supplies, repairs and maintenance, taxes, property
management fees, legal, and consulting costs. The
total amount spent in FY 2024-25 was $348,760.
348,760
Total FY 2024-25 LMIHAF Expenditures $939,381
V. Statutory Value of Assets Owned by Housing Successor. This section provides the statutory value of real property owned by the Housing Authority, as housing successor, the value of loans and grants receivables, and the sum of these two amounts.

Under Dissolution Law and for purposes of this Report, the “statutory value of real property” means the value of properties formerly held by the Former Agency as listed on the housing asset transfer schedule approved by the DOF under Section 34176(a)(2), the value of the properties transferred to the housing successor under Section 34181(f), and the purchase price of properties purchased by the Housing Authority. Further, the value of loans and grants receivable is included in these reported assets held in the LMIHAF.
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Costa Mesa Housing Authority
Housing Successor Annual Report FY 2024-2025 P a g e | 4

The following table provides the statutory value of assets owned by the Housing Authority as of the end of FY 2024-25:

VI. Description of Transfers. This section describes transfers, if any, to another housing successor made in previous fiscal year(s), inc luding whether the funds are unencumbered and the status of projects, if any, for which the transferred LMIHAF will be used. The sole purpose of the transfers must be for development of transit priority projects, permanent supportive housing, regional home less shelters, housing for agricultural employees, or special needs housing.

The Housing Authority, as housing successor, did not make any LMIHAF transfers to other housing successor(s) under Section 34176.1(c)(2) during FY 2024-25.

VII. Project Descriptions. This section describes any project for which the Housing Authority, as housing successor, receives or holds property tax revenue under the ROPS and the status of that project.

The Housing Authority, as housing successor, does not receive or hold property tax revenue under a ROPS.

VIII. Status of Compliance with Section 33334.16. As and if applicable, this section provides a status update on compliance with Section 33334.16 for interests in real property acquired by the former redevelopment agency prior to February 1, 2012. For interests in real property, if any, acquired on or after February 1, 2012, provide a status update on the project.

Section 34176.1 provides that Section 33334.16 does not apply to interests in real property acquired by the Housing Authority , as housing successor, on or after February 1, 2012.

With respect to interests in real property acquired by the Former Agency prior to February 1, 2012, the time periods described in Section 33334.16 shall be deemed to have commenced on the date that the DOF approved the property as a housing asset in the LMIHAF; thus, as to real property acquired by the Former Agency, now held by the Housing Authority as housing successor, in the LMIHAF, the Housing 1688
Costa Mesa Housing Authority
Housing Successor Annual Report FY 2024-2025 P a g e | 5

Authority as housing successor, must initiate activities consistent with development (as the term is explained in Section IV and Section 34176.1(a)(3)(D)) of the real property for the purpose for which it was acquired within five years of the date the DOF approved such property as a housing asset.

In this regard, the Housing Authority as housing successor, did not own any real property acquired for development (to be developed) as of dissolution on February 1, 2012 subject to this limitation so the five-year limitation of Section 33334.16 does not apply.

It is noted that the Former Agency held at dissolution, now the Housing Authority holds as landlord/ground lessor, the underlying fee interests in three Ground Leases with Costa Mesa Family Village, a California limited partnership, as tenant/ground lessee (affiliate of Shapell Properties) relating to the existing 72-unit multifamily affordable housing apartment development called Costa Mesa Family Village, located at 1924 and 1981 Wallace Avenue and 2015 Pomona Avenue. The three ground leases end/expire in 2039. Section 33334.16 does not apply to such ground leases and this existing affordable housing development as the subject property was not held for development; it is developed property.

IX. Description of Outstanding Obligations under Section 3 3413. This section describes outstanding inclusionary and replacement housing obligations, if any, under Section 33413 that remained outstanding prior to dissolution of the former redevelopment agency as of February 1, 2012, along with the Housing Authori ty’s progress, as housing successor, in meeting those prior obligations, if any, of the former redevelopment agency and how the Housing Authority, as housing successor, plans to meet unmet obligations, if any.

Replacement Housing. Under the Former Agency’ s last Implementation Plan in effect prior to dissolution (the 2010 -2014 plan), the Former Agency’s replacement housing obligations, if any, under Section 33413(a) were transferred to the Housing Authority as housing successor; however, the Former Agency h ad no outstanding replacement housing obligations as of dissolution on February 1, 2012.

Inclusionary/Production Housing. Under the Former Agency’s last Implementation Plan in effect prior to dissolution (the 2010-2014 plan), its inclusionary/production housing obligations, if any, under Section 33413(b) were transferred to the Housing Authority as housing successor; however, the Former Agency had no outstanding inclusionary/production housing obligations as of dissolution on February 1, 2012.

Therefore, th e Housing Authority, as housing successor, has no outstanding replacement or inclusionary/production housing obligations and thus no implementation obligation under Section 33413.

For information, the Former Agency’s Implementation Plan is posted on the Ci ty’s website at www.costamesaca.gov.
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Housing Successor Annual Report FY 2024-2025 P a g e | 6

X. Income Test. This section provides information required by Section 34176.1(a)(3)(B), or a description of expenditures by income category and restriction for the applicable five-year period, and whether the statutory thresholds have been met. The Housing Authority, as housing successor, previously reported on its expenditures for development sourced from the LMIHF for the initial five -year period of January 1, 2014 to June 30, 2019. The applicable provisions of Sectio ns 34176.1(a)(3)(A)(B)(C) require that the Housing Authority, as housing successor, must require at least 30% of the LMIHAF to be expended for development of rental housing affordable to and occupied by households earning 30% or less of the Area Median Income (AMI). If the Housing Authority as housing successor, fails to comply with the extremely low income requirement in a five-year reporting period, then the provisions of Section 34176.1(B) will apply in each fiscal year following the latest fiscal year f ollowing the Report are expended for the development of housing occupied by extremely low income households until the housing successor demonstrates compliance with such requirement in a subsequent annual report The term “development” is defined in Sectio n 34176.1(a)(3)(D): “For purposes of this subdivision, ‘development’ means new construction, acquisition and rehabilitation, substantial rehabilitation as defined in Section 33413, the acquisition of long term affordability covenants on multifamily units a s described in Section 33413, or the preservation of an assisted housing development that is eligible for prepayment or termination or for which within the expiration of rental restrictions is scheduled to occur within five years as those terms are defined in Section 65863.10 of the Government Code.”

The second five-year reporting period ended on June 30, 2024, in compliance with Section 34176.1(a)(3)(A)(f). Accordingly, this Report presents information for FY 2024–2025, which represents the first year of the third five-year reporting period.

XI. Senior Housing Test. This section provides the percentage of deed -restricted rental housing units restricted to seniors and assisted individually or jointly by the housing successor, its former redevelopment agency , and its host jurisdiction within the previous 10 years in relation to the aggregate number of units of deed restricted rental housing assisted individually or jointly by the housing successor, its former redevelopment agency and its host jurisdiction wit hin the same 10-year time period.

The housing successor is to calculate the percentage of units of deed -restricted rental housing restricted to seniors and assisted by the housing successor, the Former Agency and/or the City within the previous 10 years in relation to the aggregate number of units of deed-restricted rental housing assisted by the housing successor, the Former Agency, and/or City within the same time period. If this percentage exceeds 50%, then the housing successor cannot expend future LMIHAF funds to assist additional senior housing units until the Housing Authority as housing successor, or City assists and construction has commenced on a number of restricted rental units that is equal to 50% of the total amount of deed - restricted rental units.
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For the 10 -year period of July 1, 2015 to June 30 , 2025, the Housing Authority expended no funds ($0) for senior housing, -therefore 0% of funds were expended on development or assistance to develop senior housing units.

XII. Excess Surplus Test. This section provides the amount of excess surplus in the LMIHAF, if any, and the length of time that the housing successor has had excess surplus, and the housing successor’s plan for eliminating the excess surplus.

The term excess s urplus is defined in Section 34176.1(d) as: “an unencumbered amount in the LMIHAF account that exceeds the greater of one million dollars ($1,000,000) or the aggregate amount deposited into the account during the housing successor’s preceding four fiscal y ears, whichever is greater.” The table below provides the Excess Surplus test for the preceding four years. The LMIHAF does not have an excess surplus.

XIII. Inventory of Homeownership Units. This section provides a summary of covenanted homeownership uni ts assisted by the former redevelopment agency or the housing successor that include equity sharing and repayment provisions, including: (A) number of units; (B) number of units lost to the portfolio in the last fiscal year and the reason for those losses; and (C) any funds returned to the housing successor due to losses or repayments.

This section provides an inventory of homeownership units assisted by the Former Agency and assumed by the Housing Authority as housing successor, that are subject to covenan ts or restrictions or to an adopted program that protects the Former Agency’s investment of moneys from the Low and Moderate Income Housing Fund per Section 33334.3(f).
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Total homeownership inventory as of dissolution on February 1, 2012 (subparagraph (A) b elow) and inventory, losses, and repayments for the period from February 1, 2012 through June 30, 2025 (subparagraph (B) below) include:
(A) As of dissolution on February 1, 2012, the total number of homeownership units assisted by the Former Agency and had covenants and restrictions of record was 41 units, which included loans and restricted single-family homes assisted by the Former Agency through its (1) First Time Homebuyer (FTHB) Program, (2) Single -Family Rehabilitation (SF Rehab) Program, (3) affor dable housing projects with Habitat for Humanity of Orange County, and (4) Neighborhood Stabilization Program.
(B)The total number of homeownership units lost to the Housing Authority’s portfolio as housing successor between February 1, 2012, through June 30, 2025, along with the reasons for those losses.

Total losses between February 1, 2012, and June 30, 2025: 31 units Reasons for the units’ losses from the homeownership portfolio:

Principal Repayments: $1,359,392
Loan Impairment: $1,095,000
Foreclosure: $ 436,000
Funds returned to the Housing Authority as housing successor, as part of an adopted program that protects the Former Agency’s investment of moneys from the Low and Moderate Income Housing Fund, including loan principal, interest, and equity sharing payments between February 1, 2012 and June 30, 2025:
$1,901,973.
(C) The number of homeownership units lost to the Housing Authority’s portfolio as housing successor in FY 2024-25 and the reason for those losses. There were no homeownership units lost to the Housing Authority’s portfolio as housing successor in FY 2024 -25. One owner made partial payments on homeownership loans. Principal and interest payments received totaled $337,207 and were deposited into the LMIHAF.

The funds returned to the Housing Authority as housing successor, as part of an adopted program that protects the Former Agency’s investment of moneys from Low and Moderate Income Housing Fund, included repayments of FTHB program loans. Total principal, interest, and equity sharing payments during FY 2024-25 was $337,207.

(D) The Housing Authority as housing successor, has existing consulting agreements with: AmeriNational Community Services, Inc., a Minnesota Corporation (dba AmeriNat) and Farmers State Bank of Har tland, a Minnesota corporation. The agreements are related to certain, but not all, aspects of administration of the Former Agency’s SF Rehab and FTHB programs that provided second lien mortgages for homeownership units. The consulting services include assistance with oversight and administration of amortized loan 1692
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payments, if any, due; with tracking and calculation of loan balances in the event of payoff; and, other administrative activities for these outstanding SF Rehab and FTHB loans.

In addition, the H ousing Authority retains the services of Keyser Marston Associates, a professional housing economic consultant, and the Housing Authority legal counsels, City Attorney and Authority General Counsel Kimberly Hall Barlow of Jones & Mayer, and Celeste Brady of Stradling Yocca Carlson & Rauth (SYCR). Counsels assist staff in reviewing legal issues related to outstanding SF Rehab and FTHB program loans, such as the refinancing of first lien mortgages consistent with SF Rehab and FTHB program refinancing criteria, repayments, impairment analyses, defaults, foreclosures, bankruptcies, renting out part of the home, short sale requests, and other issues that arise in the administration of the former Agency’s loan programs for ownership housing.

XIV. Additional Information: Housing Authority’s Activities for the preceding year (FY 2023-24) under HSC Section 34328.

Without repeating the information presented above in this Report, the Housing Authority:
(A)continued to monitor and enforce housing assets transferred from the Former Agency to the Housing Authority as housing successor, as well as other Housing Authority (non-housing successor) assets;
(B)continued property management and operation of the James/W.18th Properties.

See Sections IV. And X. abo ve for more detailed discussion about these properties.
(C) As housing successor under Section 34176.1(a)(2), the Housing Authority may expend up to $250,000 per fiscal year “for homeless prevention and rapid rehousing services for individuals and families who are homeless or would be homeless but for this assistance, including the provision of short -term or medium-term rental assistance, housing relocation, and stabilization services including housing search, mediation, or outreach to property owners, cred it repair, security or utility deposits, utility payments, rental assistance for a final month at a location, moving cost assistance, and case management, or other appropriate activities for homelessness prevention and rapid rehousing of persons who have b ecome homeless.” In this regard in FY 2024 -25 and as detailed in this Report, the
Housing Authority’s LMIHAF provided partial funding for Community Outreach Workers who assertively work toward placing homeless individuals and families into temporary or pe rmanent housing as it becomes available.

Staff addresses the various needs represented by the local homeless population on a daily basis. Further, a part-time
Management Analyst maintains the database that Community Outreach Workers and volunteers from varied community groups utilize to streamline their reporting and recordkeeping processes relative to placement of homeless individuals and families into housing.
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CITY OF COSTA MESA
Agenda Report
77 Fair Drive
Costa Mesa, CA 92626
File #: 26-159 Meeting Date: 3/17/2026
TITLE:

PROFESSIONAL SERVICES AGREEMENT WITH PSOMAS FOR THE FAIRVIEW PARK WEST

BLUFF RESTORATION PROJECT
DEPARTMENT: PARKS AND COMMUNITY SERVICES
PRESENTED BY: BRIAN GRUNER. PARKS AND COMMUNITY SERVICES

DIRECTOR
CONTACT INFORMATION: KELLY DALTON, FAIRVIEW PARK ADMINISTRATOR (714) 754- 5135
RECOMMENDATION:

Staff recommends the City Council:

1. Award a Professional Services Agreement to PSOMAS to provide engineering design, environmental planning, cultural resource management, and related professional services for the Fairview Park West Bluff Restoration Project in an amount not to exceed $533,189 for a term of two (2) years from March 17, 2026 to March 16, 2028 with three (3) additional one- year renewal options.

2. Authorize a ten percent (10%) contingency in the amount of $53,319 for unforeseen costs.

3. Authorize the City Manager and the City Clerk to execute the Professional Services Agreement (Attachment 1) and future amendments to the agreement within City Council- authorized limits.

BACKGROUND:

Fairview Park is the City’slargest park, spanning over 200 acres of open space that forms an integral component of the lower Santa Ana River ecological corridor. Within Fairview Park’s208 acres, the site includes sacred tribal ancestral lands, a Nationally Registered Cultural Resource Historic Site, and several distinct habitat communities that provide critical habitat for an array of sensitive, rare, and endangered plant and animal species. The park provides passive and unique recreational opportunities while serving as a critical open space resource within the City. Due to the presence of protected habitats, sensitive cultural resources, and special-status wildlife species, projects within Fairview Park require careful planning, interdisciplinary coordination, and compliance with applicable local, state and federal environmental protection regulations.

The Fairview Park Master Plan (2008) is currently in the process of being updated, with an

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Costa Mesa City CouncilMarch 17, 2026

Costa Mesa City Council
March 17, 2026