Tuesday, November 21, 2023
Meeting Agenda
Closed Session - 5:00 PM
HESPERIA CITY COUNCIL
SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY
HOUSING AUTHORITY
COMMUNITY DEVELOPMENT COMMISSION
WATER DISTRICT
HESPERIA FIRE PROTECTION DISTRICT - SPECIAL MEETING
City Council Chambers
9700 Seventh Ave., Hesperia CA, 92345
City Clerk's Office: (760) 947-1007
City Council Members
Brigit Bennington, Mayor
Larry Bird, Mayor Pro Tem
Allison Lee, Council Member
Cameron Gregg, Council Member
Rebekah Swanson, Council Member
Rachel Molina, City Manager
Pam K. Lee, City Attorney
See page (3) for details on public meeting guidelines during the COVID-19 (Coronavirus) Pandemic
NOTE: In compliance with the Americans with Disability Act, if you need special assistance to participate in this meeting, please contact the City Clerk’s Office at (760) 947-1007 or (760) 947-1026. Notification 48 hours prior to the meeting will enable the City to make reasonable arrangements to ensure accessibility.
B
rigit Bennington, Mayor 9700 Seventh Avenue
Larry Bird, Mayor Pro Tem Hesperia, CA 92345
Cameron Gregg, Council Member
Allison Lee, Council Member 760-947-1000
Rebekah Swanson, Council Member TD 760-947-1119
Rachel Molina, City Manager www.cityofhesperia.us
Gateway to the High Desert
City of Hesperia
Public Access to City Council Meetings:
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ublic Comments can be made in -person at City Council Meetings and/or can be submitted via telephone recording that will be played during the meeting.
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November 21, 2023City Council Meeting Agenda
HESPERIA CITY COUNCIL
SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY
HESPERIA HOUSING AUTHORITY
HESPERIA COMMUNITY DEVELOPMENT COMMISSION
HESPERIA WATER DISTRICT
HESPERIA FIRE PROTECTION DISTRICT - SPECIAL MEETING
9700 7th Avenue, Council Chambers, Hesperia, CA 92345
As a courtesy, please silence your cell phones and other electronic devices while the meeting is in session. Thank you.
Prior to action of the Council, any member of the audience will have the opportunity to address the legislative body on any item listed on the agenda, including those on the Consent Calendar.
Individuals wishing to speak during General Public Comments or on a particular numbered item must submit a speaker slip to the City Clerk with the agenda item noted. Speaker slips should be turned in prior to the public comment portion of the agenda or before an agenda item is discussed. Comments will be limited to three minutes for General Public Comments, Consent Calendar items and New Business items. Comments are limited to five minutes for Public Hearing items.
In compliance with the Brown Act, the City Council may not discuss or take action on non-agenda items or engage in question and answer sessions with the public. The City Council may ask brief questions for clarification; provide a reference to staff or other resources for factual information and direct staff to add an item to a subsequent meeting.
CLOSED SESSION - 5:00 PM
Roll Call
Mayor Brigit Bennington
Mayor Pro Tem Larry Bird
Council Member Allison Lee
Council Member Cameron Gregg
Council Member Rebekah Swanson
Conference with Legal Counsel - Potential Litigation:
Government Code Section 54956.9(d)2
1. Two (2) Cases
Conference with Real Property Negotiators – Property Negotiations Government Code Section – 54956.8
1. Property: APN 0398-031-34
Agency negotiator: City Manager/Executive Director
Negotiating parties: Hesperia Water District and Hesperia Recreation and Park District
Under negotiation: Terms of Agreement Renewal
CALL TO ORDER - 6:30 PM
A. Invocation
November 21, 2023City Council Meeting Agenda
B. Pledge of Allegiance to the Flag
C. Roll Call
Mayor Brigit Bennington
Mayor Pro Tem Larry Bird
Council Member Allison Lee
Council Member Cameron Gregg
Council Member Rebekah Swanson
D. Agenda Revisions and Announcements by City Clerk
E. Closed Session Reports by City Attorney
GENERAL PUBLIC COMMENTS (For items and matters not listed on the agenda) Individuals wishing to speak during General Public Comments or on a particular numbered item are requested to submit a speaker slip to the City Clerk with the agenda item noted. Speaker slips should be turned in prior to the public comment portion of the joint agenda or before an agenda item is discussed. Comments will be limited to three minutes for General Public Comments, Consent Calendar items and New Business items. Comments are limited to five minutes for Public Hearing items.
In compliance with the Brown Act, the City Council may not discuss or take action on non-agenda items or engage in question and answer sessions with the public. The City Council may ask brief questions for clarification; provide a reference to staff or other resources for factual information and direct staff to add an item to a subsequent meeting.
JOINT CONSENT CALENDAR
1. Consideration of the Draft Minutes from the Regular Meeting held Tuesday, November 7, 2023.
Recommended Action:
It
is recommended that the City Council approve the Draft Minutes from the Regular Meeting held Tuesday, November 7, 2023.
Staff Person: Assistant City Clerk Erin Baum
Draft CC Min 2023-11-07Attachments:
2. Warrant Run Report (City - Successor Agency - Housing Authority - Community Development Commission - Water)
Recommended Action:
It is recommended that the Council/Board ratify the warrant run and payroll report for the City, Successor Agency to the Hesperia Community Redevelopment Agency, Hesperia Housing Authority, Community Development Commission, and Water District.
Staff Person: Assistant City Manager Casey Brooksher
November 21, 2023City Council Meeting Agenda
SR Warrant Run 11-21-2023
Attachment 1 - Warrant Run
Attachments:
3. Treasurer’s Cash Report for the unaudited period ended September 30, 2023 Recommended Action:
It
is recommended that the Council/Board accept the Treasurer’s Cash Report for the City, Successor Agency to the Hesperia Community Redevelopment Agency, Hesperia Housing Authority, Community Development Commission, and Water District.
Staff Person: Assistant City Manager Casey Brooksher
SR Treasurer's Report 11-21-2023
Attachment 1-Treasurer's Report
Attachments:
4. 2023-24 Statement of Investment Policy
Recommended Action:
It
is recommended that the Council/Board/Commission adopt Joint Resolution No. 2023-47, Successor Agency to the Hesperia Community Redevelopment Agency Resolution No. SA 2023-01, Hesperia Housing Authority Resolution No.
HHA 2023-08, Community Development Commission Resolution No. CDC 2023-02, Hesperia Fire Protection District Resolution No. HFPD 2023-08, and Hesperia Water District Resolution No. HWD 2023-15, approving the Fiscal Year 2023-24 Statement of Investment Policy.
Staff Person: Assistant City Manager Casey Brooksher
SR 2023-24 Statement of Investment Policy 11-21-2023
Attachment 1 - Investment Policy for FY 2023-24 Clean Version Attachment 2 - Investment Policy for FY 2023-24 Track Changes Attachment 3 - Joint Resolution 2023-47
Attachments:
5. Amend Agreement with InfoSend for Interactive Voice Response, Online Bill Pay,
Presentment Services, Data Processing, and Printing and Mailing Services for Water/Sewer Utility Bills
Recommended Action:
It is recommended that the City Council and Board of Directors of the Hesperia Water District authorize the City Manager to amend the existing agreement with lnfoSend, Inc. (lnfoSend) in the amount of $160,000, for a total revised not-to-exceed amount of $609,066, and approve a one-year contract extension for continued Interactive Voice Response, Online Bill Pay, Presentment Services, Data Processing, and Printing and Mailing Services for Water/Sewer utility bills.
Staff Person: Assistant City Manager Casey Brooksher
SR InfoSend Amendment 11-21-2023Attachments:
6. Final Tract Map No. 20396
November 21, 2023City Council Meeting Agenda
Recommended Action:
It
is recommended that the City Council adopt Resolution No. 2023-52 approving Final Tract Map No. 20396 to create seven (7) single-family residential lots and one (1) common letter lot on 2.38 gross acres, located on the west side of Topaz Avenue (approximately 610 feet north of Live Oak Street - APN 0405-261-69) and within the Main Street and Freeway Corridor Specific Plan, with a categorical exemption under CEQA Section 15332 Infill Development Projects (Applicant: San Luis Concrete Corp).
Staff Person: Director of Development Services Nathan Freeman and Deputy City Engineer Cassandra Sanchez
SR Final Tract Map No. 20396 11-21-2023
Resolution 2023-52
Attachment 2 - Final Tract Map No. 20396
Attachments:
7. Amend Professional Services Agreement for Bidding and Construction Support Services
for the Ranchero Road Improvements Project (C.O. Nos. 7094, 7131, 7146, and 7154)
Recommended Action:
It is recommended that the City Council and Board of Directors of the Hesperia Water District authorize the City Manager to amend the existing Professional Services Agreement (PSA) 2021-22-040 with Parsons Transportation Group, Inc. (Parsons) for Bidding and Construction Support Services for the Ranchero Road Improvements Project, [Construction Order (C.O.) Nos. 7094, 7131, 7146, and 7154], in the amount of $32,698.50 and authorize a 10% contingency amount of $3,269.85 to be released as may be necessary for the completion of the project, totaling $35,968.35, with an overall PSA not-to-exceed total of $307,726.35.
Staff Person: Director of Development Services Nathan Freeman and Deputy City Engineer Cassandra Sanchez
SR Amend PSA for Support Services for Ranchero Road 11-21-2023 Attachment 1 - Cost Proposal
Attachments:
NEW BUSINESS
8. Consideration of Animal Shelter Evaluation
Recommended Action:
It
is recommended that the City Council receive and file the findings from the most recent independent Animal Shelter evaluation.
Staff Person: Deputy City Manager/City Clerk Melinda Sayre SR Animal Shelter Evaluation 11-21-2023Attachments:
9. Fiscal Year 2023-24 First Quarter Budget Review
Recommended Action:
November 21, 2023City Council Meeting Agenda
It is recommended that the City Council and Board of Directors of the Hesperia Water
District receive and file the Fiscal Year (FY) 2023-24 First Quarter Budget Review, and the related following resolutions, amending the FY 2023-24 Budgets for the City of Hesperia and the Hesperia Water District, be approved:
1) City of Hesperia Resolution No. 2023-66
2) Hesperia Water District HWD No. 2023-23
Staff Person: Assistant City Manager Casey Brooksher
SR Fiscal Year 2023-24 First Quarter Budget Review 11-21-2023 Attachment 1 - Fiscal Year 2023-24 First Quarter Budget Review Report Resolution No. 2023-66
Resolution HWD 2023-23
Attachments:
COUNCIL COMMITTEE REPORTS AND COMMENTS
The Council may report on their activities as appointed representatives of the City on various Boards and Committees and/or may make comments of general interest or report on their activities as a representative of the City.
CITY MANAGER/CITY ATTORNEY/STAFF REPORTS
The City Manager, City Attorney or staff may make announcements or reports concerning items of interest to the Council and the public.
ADJOURNMENT
I, Erin Baum, Assistant City Clerk of the City of Hesperia, California do hereby certify that I caused to be posted the foregoing agenda on Wednesday, November 15, 2023 at 5:30 p.m. pursuant to California Government Code §54954.2.
_____________________________
Erin Baum,
Assistant City Clerk
Documents produced by the City and distributed less than 72 hours prior to the meeting regarding items on the agenda will be made available in the City Clerk's Office during normal business hours.
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City of Hesperia
City of Hesperia
Meeting Minutes - Draft
City Council
Tuesday, November 7, 2023 6:30 PM
REGULAR MEETING AGENDA
HESPERIA CITY COUNCIL
SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY
HESPERIA HOUSING AUTHORITY
HESPERIA COMMUNITY DEVELOPMENT COMMISSION
HESPERIA WATER DISTRICT
CLOSED SESSION - 5:00 PM
Roll Call
Present: 5 - Mayor Pro Tem Bird, Council Member Swanson, Council Member Gregg, Mayor Ben
nington, and Council Member Lee
Conference with Legal Counsel - Potential Litigation: Government Code Section 54956.9(d)2
1. Two (2) Cases
Conference
with Legal Counsel – Existing Litigation: Government Code Section 54956.9(d)1
1. Apex HM, LLC et al. v. City of Hesperia, et al. (San Bernardino County Superior Court Case No. CI VBS 2208845)
CALL TO ORDER - 6:30 PM
A. Invocation
B. Pledge of Allegiance to the Flag
C. Roll Call
Present: 5 - Mayor Pro Tem Bird, Council Member Swanson, Council Member Gregg, Mayor Ben
nington, and Council Member Lee
D. A genda Revisions and Announcements by City Clerk
The City
Manager announced that item number 6 would be removed from the agenda as it was not representative of the item for discussion re
quested by the Council.
E. Closed Session Reports by City Attorney
City Council Chambers
9700 Seventh Ave.
Hesperia CA, 92345
City of Hesperia
GENERAL PUBLIC COMMENTS (For items and matters not listed on the agenda) Gina Whelan commented on the Animal Shelter.
Robert Davie commented on the Animal Shelter.
The meeting went into recess.
The meeting reconvened.
Dr. Cisneros commented on transparency.
Stephanie James commented on the Animal Shelter.
Al Vogler commented on property tax rates.
Chris Ochoa commented on affordable housing.
Jerri Pike commented on the Animal Shelter.
Robin Fox commented via phone message on various community issues.
Bob Nelson commented via phone message on speaking limits.
JOINT CONSENT CALENDAR
A motion was made by Bird, seconded by Lee, that the Joint Consent Calendar be approved. The motion carried by the following vote:
Aye: 5 - Bird, Swanson, Gregg, Bennington, and Lee
Nay: 0
1. Consideration of the Draft Minutes from the Regular Meeting held Tuesday, October 17, 2023.
Recommended A
ction:
It is recomm
ended that the City Council approve the Draft Minutes from the Regular Meeting held Tuesday, October 17, 2023
.
Sponsors: Assistant City Clerk Erin Baum
2. Warrant Run Report (City - Successor Agency - Housing Authority - Community Development Comm
ission - Water)
Recommended Action:
It is recommended that the Council/Board ratify the warrant run and payroll report for the City, Succes sor Agency to the Hesperia Co
mmunity Redevelopment Agency, Hesperia Housing Authority, Comm unity Developm
ent Commission, and Water District.
Sponsors: Assistant City Manager Casey Brooksher
3. Treasurer’s Cash Report for the unaudited period ended August 31, 2023 Recommended Action:
It is recommended that the Council/Board accept the Treasurer’s Cash Report for the City, Succes sor Agency to the Hesperia Co
mmunity Redevelopment Agency, Hesperia Housing Authority, Comm unity Developm
ent Commission, and Water District.
Sponsors: Assistant City Manager Casey Brooksher
4. Amend Agreement with Routeware DBA Recyclist
Recommended Action:
It is recommended that the City Council authorize the City Manager to approve a two-year extension for the software services agreem
ent with Routeware DBA Recyclist, in the amount of $56,780, for a
City of Hesperia
not-to-exceed contract amount of $90,680.
Sponsors: Assistant City Manager Casey Brooksher and Assistant to the City Manager Tammy Pelayes
5. Fiscal Year 2022-23 Final Budget Amendments and Update to Accounting Policy Recommended Action:
It is recommended that the following resolutions be adopted, amending the respective Fiscal Year (FY)
2022-23 Budgets for the Cit
y of Hesperia, Hesperia Housing Authority, and the Hesperia Water District, along with an
update to the Accounting Policy related to revenue recognition:
1)
City of Hesperia No. 2023-64
2)
Hesperia Housing Authority HHA 2023-12
3)
Hesperia Water District Resolution HWD 2023-22
Sponsors: Assistant City Manager Casey Brooksher
NEW BUSINESS
Item number six was removed from the agenda and not considered during this meeting.
6. Discussion on Alternative Funding Sources
Recommended Action:
It is recommended that the City Council receive and file this staff report, which provides information about
potential funding sources to
address the needs of the community and provide direction to staff.
Sponsors: Assistant City Manager Casey Brooksher
COUNCIL COMMITTEE REPORTS AND COMMENTS
The Mayor, Mayor Pro Tem, and Council Members reported from various events and Committees.
Council Member Lee requested a future item regarding developer installation of a pipeline in the street.
Councilmember Swanson concurred.
CITY MANAGER/CITY ATTORNEY/STAFF REPORTS
The City Manager thanked various staff for their efforts.
ADJOURNMENT
The meeting was adjourned in honor of Veterans, Council Member Gregg’s military service, and Council Member Gregg’s Daughter Emily’s 16
th birthday at 7:44 p.m.
_____________________________
Erin Baum,
Assistant City Clerk
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City of Hesperia
STAFF REPORT
DATE: November 21, 2023
TO: Mayor and Council Members
City Council, as Successor Agency to the Hesperia Community Redevelopment Agency
Chair and Commissioners, Hesperia Housing Authority
Chair and Commissioners, Community Development Commission Chair and Board Members, Hesperia Water District
FROM: Rachel Molina, City Manager
BY: Casey Brooksher, Assistant City Manager
Anne Duke, Deputy Finance Director
Shirley Domacio Calderon, Accountant
SUBJECT: Warrant Run Report (City – Successor Agency – Housing Authority – Community Development Commission – Water)
RECOMMENDED ACTION
It is recommended that the Council/Board ratify the warrant run and payroll report for the City, Successor Agency to the Hesperia Community Redevelopment Agency, Hesperia Housing Authority, Community Development Commission, and Water District.
BACKGROUND
The Warrant Run totals represented below are for th e period October 7 , 2023 through October 20, 2023.
ATTACHMENT(S)
1. Warrant Runs
Agency/District Accounts Payable Payroll Wires Totals
City of Hesperia $1,407,620.96 $295,612.83 $0.00 $1,703,233.79 Successor Agency 2,500.00 0.00 0.00 2,500.00
Housing Authority 813.93 193.40 0.00 1,007.33
Community Development Commission 0.00 0.00 0.00 0.00
Water 730,634.39 122,665.13 0.00 853,299.52
Totals $2,141,569.28 $418,471.36 $0.00 $2,560,040.64
* Includes debt service payments made via Automated Clearing House (ACH) electronic deposit of funds.
YEAR-TO PRIOR FY YT D
W/E W/E WARRANT DATE DATE
FUND # FUND NAME 10/13/2023 10/20/2023 TOTALS Wires TOTALS * TOTALS Accounts Payable
100 GENERAL 121,782.00 $ 77,464.08 $ 199,246.08$ - $ 11,678,878.67$ 10,201,327.68$ 105 PENSION OBLIGATION TRUST -$ -$ -$ - $ -$ -$ 106 OPEB TRUST -$ -$ -$ - $ -$ -$ 200 HESPERIA FIRE DISTRICT -$ -$ -$ - $ -$ -$ 204 MEASURE I - RENEWAL 465.41$ 27,465.29$ 27,930.70$ - $ 433,773.43$ 173,443.94$ 207 LOCAL TRANSPORT-SB 325 45,155.41$ -$ 45,155.41$ - $ 967,882.81$ 1,146.68$ 209 GAS TAX-RMRA -$ -$ -$ - $ -$ -$ 210 HFPD (PERS) -$ -$ -$ - $ 907,316.00$ 1,093,204.87$ 251 CDBG 12,135.68$ 1,381.94$ 13,517.62$ - $ 224,746.91$ 40,178.81$ 254 AB2766 - TRANSIT -$ -$ -$ - $ -$ -$ 255 AB3229 SUPPLEMENTAL LAW -$ -$ -$ - $ -$ -$ 256 ENVIRONMENTAL PROGRAMS GRANT 5,118.94$ -$ 5,118.94$ - $ 10,138.19$ 11,884.87$ 257 NEIGHBORHOOD STABILIZATION PROG -$ -$ -$ - $ -$ -$ 262 SB 1383 LOCAL ASSISTANCE GRANT -$ -$ -$ - $ -$ 6,000.00$ 263 STREETS MAINTENANCE 25,163.38$ 18,129.15$ 43,292.53$ - $ 845,426.89$ 813,853.33$ 300 DEV. IMPACT FEES - STREET -$ -$ -$ - $ 3,600.00$ 2,721.18$ 301 DEV. IMPACT FEES - STORM DRAIN -$ -$ -$ - $ -$ 17,460.50$ 302 DEV. IMPACT FEES - FIRE -$ -$ -$ - $ -$ -$ 303 DEV. IMPACT FEES - POLICE -$ -$ -$ - $ -$ -$ 304 DEV. IMPACT FEES - PUBLIC WKS. -$ -$ -$ - $ -$ -$ 306 DEV. IMPACT FEES - 2018-STREETS 108,710.52$ -$ 108,710.52$ - $ 1,159,312.50$ 1,812,898.84$ 312 DIF 2018-POLICE FACILITIES -$ -$ -$ - $ -$ -$ 313 DIF A-04 DRAINAGE -$ -$ -$ - $ 317,748.35$ -$ 402 WATER RIGHTS ACQUISITION -$ 112,673.61$ 112,673.61$ - $ 1,217,911.69$ 1,090,323.17$ 403 2013 REFUNDING LEASE REV BONDS -$ -$ -$ - $ 568,901.39$ 655,055.62$ 504 CITY WIDE STREETS - CIP 421,653.64$ -$ 421,653.64$ - $ 3,652,555.76$ 3,566,844.49$ 509 CITY FACILITIES CIP -$ -$ -$ - $ -$ -$ 800 EMPLOYEE BENEFITS 26,258.25$ 213,634.62$ 239,892.87$ - $ 2,954,227.17$ 2,980,783.63$ 801
TRUST/AGENCY 163,893.41$ 12,267.13$ 176,160.54$ - $ 487,833.74$ 605,858.24$ 802 AD 91-1 AGENCY -$ -$ -$ - $ -$ -$ 804 TRUST-INTEREST BEARING -$ 10,614.00$ 10,614.00$ - $ 108,432.90$ 26,625.00$ 806 SUMMIT VALLEY -$ -$ -$ - $ -$ -$ 807 CFD 2005-1 3,654.50$ -$ 3,654.50$ - $ 986,388.74$ 962,956.49$ 808 HFPD (TRANSITION) -$ -$ -$ - $ 347,796.19$ 317,384.59$ 815 PLAN REVIEW TRUST - FRONTIER -$ -$ -$ - $ -$ 6,584.08$ CITY 933,991.14$ 473,629.82$ 1,407,620.96$ - $ 26,872,871.33$ 24,386,536.01$ 163 REDEVELOP OBLIG RETIREMENT-2018 2,500.00$ -$ 2,500.00$ - $ 8,079,433.89$ 7,740,169.98$ 173 SUCCESSOR AGENCY ADMINISTRATION -$ -$ -$ - $ -$ -$ SUCCESSOR AGENCY 2,500.00$ -$ 2,500.00$ - $ 8,079,433.89$ 7,740,169.98$ 370 HOUSING AUTHORITY -$ 813.93$ 813.93$ - $ 4,936.37$ 4,419.77$ HOUSING AUTHORITY -$ 813.93$ 813.93$ - $ 4,936.37$ 4,419.77$ 170 COMMUNITY DEVELOPMENT COMMISSION -$ -$ -$ - $ -$ -$ COMMUNITY DEVELOPMENT COMMISSION -$
-$ -$ - $ -$ -$ 700 WATER OPERATING 130,806.94$ 98,056.06$ 228,863.00$ 4,047,828.78$ 3,023,870.77$ 701 WATER CAPITAL -$ -$ -$ - $ 298,109.99$ 8,087.00$ 710 SEWER OPERATING 496,125.42$ 3,740.12$ 499,865.54$ - $ 2,165,101.31$ 1,333,511.79$ 711 SEWER CAPITAL -$ -$ -$ - $ 525,100.10$ 148,914.12$ 713 SEWER CAPITAL REHAB AND REPLACE -$ -$ -$ - $ -$ -$ 720 RECLAIMED WATER OPERATIONS 1,905.85$ -$ 1,905.85$ - $ 12,683.23$ 7,961.69$ WATER 628,838.21$ 101,796.18$ 730,634.39$ - $ 7,048,823.41$ 4,522,345.37$ ACCOUNTS PAYABLE TOTAL 1,565,329.35$ 576,239.93$ 2,141,569.28$ - $ 42,006,065.00$ 36,653,471.13$ REG. PAYROLL
City 295,612.83$ -$ 295,612.83$ - $ 2,398,856.40$ 2,184,499.24$ Housing Authority 193.40 $ - $ 193.40$ - $ 1,581.22$ 1,463.11$ Water 122,665.13$ -$ 122,665.13$ - $ 1,033,175.83$ 895,776.60$ PAYROLL TOTAL 418,471.36$ -$ 418,471.36$ - $ 3,433,613.45$ 3,081,738.95$ *No payments were issued on July 1, 2023.
City of Hesperia
WARRANT RUNS
10/7/2023-10/20/2023
City of Hesperia
STAFF REPORT
DATE: November 21, 2023
TO: Mayor and Council Members
City Council, Serving as Successor Agency to the Hesperia Community Redevelopment Agency
Chair and Commissioners, Hesperia Housing Authority
Chair and Commissioners, Community Development Commission Chair and Board Members, Hesperia Water District
FROM: Rachel Molina, City Manager
BY: Casey Brooksher, Assistant City Manager
Anne Duke, Deputy Finance Director
Cristina Hall, Accountant
SUBJECT: Treasurer’s Cash Report for the unaudited period ended September 30, 2023
RECOMMENDED ACTION
It is recommended that the Council/Board accept the Treasurer’s Cash Report for the City, Successor Agency to the Hesperia Community Redevelopment Agency, Hesperia Housing Authority, Community Development Commission, and Water District.
BACKGROUND
This report is presented to the City Council pursuant to Government Code Section 53646 (b) setting forth the City’s investment portfolio.
ISSUES/ANALYSIS
The Treasurer’s Cash Reports are presented on the following pages for each agency.
FISCAL IMPACT
These reports reflect unaudited cash balances as of September 30, 2023.
ALTERNATIVE(S)
Provide alternative direction to staff.
ATTACHMENT(S)
1. City of Hesperia Investment Report
2. Successor Agency to the Hesperia Community Redevelopment Agency Investment Report
3. Hesperia Housing Authority Investment Report
4. Community Development Commission Investment Report
5. Hesperia Water District Investment Report
Staff Report to the Mayor and City Council/Board Members Treasurer’s Cash Report
November 21, 2023
FUND VALUE
General Fund (100 & 800) 20,273,777.40
Pension Obligation Trust (105) 77,028.81
OPEB Trust (106) -
HFPD (PERS) (210) 1,341,866.49
AB27666 - Transit (254) 24,480.66
AB3229 Supplemental Law (255) 155,770.16
AD No. 91-1 (802) 381,347.93
Beverage Recycling Grant (256) 261,199.32
CFD 2005-1 (807) 670,030.20
HFPD Transition (808) -
City Wide-Capital Projects (504) (6,966,857.18)
Community Dev Block Grant (251, 252, & 253) 3,302,651.30 American Rescue Plan Grant (261) 23,910,059.07
SB 1383 Local Assistance Grant (262) 105,542.83
Development Impact Fund (300-304) 5,161,568.43
Development Impact Fund 2018 (306-312) 18,757,954.43
Development Impact Fund A-04 Drainage (313) 716,951.84
Disaster (260) 45,220.91
Gas Tax Fund (205) 1,591,283.00
Gas Tax - RMRA (209) 5,352,814.21
Gas Tax Swap (206) 1,290,261.10
Local Transportation SB325 (207) 1,911,595.11
Measure I - Renewal (204) 10,216,961.90
Public Works Street Maint (263) 638,963.18
Public Art (230) 250,000.00
Trust Fund (801, 803-806, & 815) 1,651,650.67
2012 Water Rights Acquisition (402) 558,872.98
2013 Refunding Lease Rev Bonds (403) 1,936,870.47
2023 Refunding Lease Rev Bonds (404) (568,901.39)
TOTAL CITY FUNDS 93,048,963.83$
CITY OF HESPERIA
FUND VALUE
RORF Retention - (163) 319,192.67$
SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY
Staff Report to the Mayor and City Council/Board Members Treasurer’s Cash Report
November 21, 2023
FUND VALUE
Hesperia Housing Authority Fund (370) 4,052,017.94$
VVEDA Housing Authority (371) 1,867,347.66
TOTAL HOUSING AUTHORITY FUNDS 5,919,365.60$
HESPERIA HOUSING AUTHORITY
FUND VALUE
Community Development Commission Fund (170) (600,672.50)$
COMMUNITY DEVELOPMENT COMMISSION
VALUE
Water Operating (700) 14,860,886.24$
Water Capital (701) 684,151.84
Water Capital Rehab and Replace (703) 2,728,016.00
Water Contamination Mitigation (704) 2,552,693.28
Sewer Operating (710) 13,671,694.11
Sewer Capital (711) 2,789,630.77
Sewer Capital Rehab and Replace (713) 768,196.60
Reclaimed Water Operations (720) 113,869.48
TOTAL WATER FUNDS 38,169,138.32$
1 WATER
FUND
Type of Investment
Investments under the direction of the Ci
Institution/
Fiscal Agent
Interest
Rate
Local Agency Investment Funds State of Calif. 3.534%
Local Bank Checking Accounts U.S. Bank n/a
Total Unaudited Investments under the direction of the City Investments under the direction of fiscal agents·
2012 Lease Revenue Bonds US Bank 0.443%
2012 Lease Revenue Bonds US Bank 0.428%
2012 Lease Revenue Bonds US Bank 0.443%
2012 Lease Revenue Bonds US Bank 0.000%
2013 Refundina Lease Revenue Bonds US Bank 0.443%
2013 Refunding Lease Revenue Bonds US Bank 0.443%
2013 Refunding Lease Revenue Bonds US Bank 0.000%
2013 Refunding Lease Revenue Bonds Escrow US Bank 0.000% 2023 Refunding Lease Revenue Bonds US Bank 0.406%
2014 CFO 2005-1 Refundina US Bank 0.216%
2014 CFO 2005-1 Refunding US Bank 0.444%
2014 CFO 2005-1 Refunding US Bank 0.443%
Deposits - Workers' Comp PERMA n/a
Sully Miller Retention - Ranchero US Bank 0.000%
City of Hesperia Stabalized Trust Charles Schwab n/a
City of Hesperia OPES Trust Charles Schwab n/a
Hesperia Fire Protection PST Charles Schwab n/a
City of Hesperia Settlement Escrow Account US Bank 0.000% City of Hesperia
Investment Report
Unaudited
September 30, 2023
Date of Date of Par Value
Purchase Maturity at Maturity
30-Sep-23 Demand $ 91 ,326,124.63
30-Sep-23 Demand 1,722,839.20
$ 93,048,963.83
30-Sep-23 Demand 1,105,714.02
30-Seo-23 Demand 62,086.45
30-Sep-23 Demand 1,452, 131.28
30-Sep-23 Demand 0.31
30-Seo-23 Demand 650.23
30-Sep-23 Demand 6,515.43
30-Sep-23 Demand 0.31
30-Sep-23 n/a 0.52
30-Sep-23 Demand 13,728.19
30-Sep-23 Demand 36,540.58
30-Sep-23 Demand 1,434,556.62
30-Sep-23 Demand 25,026.96
30-Sep-23 n/a 542,901.06
30-Sep-23 n/a 1.08
30-Sep-23 n/a 3,347,392.53
30-Sep-23 n/a 590,697.02
30-Sep-23 n/a 1,181,081.95
30-Sep-23 n/a 300,009.18
Book
Value
91 ,326,124.63
1,722,839.20
s 93,048,963.83 s
1,105,714.02
62,086.45
1,452,131.28
0.31 650.23
6,515.43
0.31 0.52
13,728.19
36,540.58
1,434,556.62
25,026.96
542,901.06
1.08 3,347,392.53
590,697.02
1,181,081.95
300,009.18
Marl<et
Value
91 ,326,124.63
1,722,839.20
93,048,963.83
1,105,714.02
62,086.45
1,452,131.28
0.31 650.23
6,515.43
0.31 0.52
13,728.19
36,540.58
1,434,556.62
25,026.96
542,901.06
108
3,347,392.53
590,697.02
1,181,081.95
300,009.18
Account
Description
ATTACHMENT 1
2012 -Water Riahts Revenue Fund
2012 -Water Rights Interest Fund
2012 -Water Rights Reserve Fund
2012 - Water Rights Surplus Revenue Fund
2005 Civic Plaza - Revenue Fund
2005 Civic Plaza - Reserve Fund
2005 Civic Plaza - Surplus Rev Fund
2013 Refunding Lease Revenue Bonds Escrow
2023 Refunding Lease Revenue Bonds
2014 CFO 05-1 - Soecial Tax Fund
2014 CFO 05-1 - Reserve Fund
2014 CFO 05-1 Administrative Expense Bonds
GL 1352
Ranchero Road - Escrow Account
City Pension
City OPES
Fire Pension
Settlement Escrow Account
Total Unaudited Investments under the direction of fiscal agents $ 10,099,033.72 $ 10,099,033.72 $ 10,099,033.72 Please Note: All market value data is provided courtesy of the City's fiscal agent, US Bank.
I certify that this investment portfolio is in compliance with the statement of investment po/icy of the City of Hesperia and the investment program provides sufficient liquidity to meet expenditure requirements for the next six months, as required by the California Government Code sections 53646(b)(2) and (3), respectively. • Note: 2005 Certificates of Participation began in May 2005 for the finacing of the Civic Plaza.
Investment • City
Nichole heppa,eniorAccot ant
Issuer/
Type of Investment Institution
Investments under the direction of the Cit :
Local Agency Investment Funds State of Calif.
Local Bank Checking Accounts U.S. Bank
Successor Agency to the Redevelopment Agency
Investment Report
Unaudited
September 30, 2023
Interest D ate of Date of Par Value Book
Rate Purchase Maturity at Maturity ya1ue
3.534% 30-Sep-23 Demand $ 313,282.69 $ 313,282.69
n/a 30-Sep-23 Demand 5,909.98 5,909.98
Total Unaudited Investments under the direction of the City $ 319,192.67 $ 319,192.67 Investments under the direction of fiscal agents:
2018 Refunding Bonds US Bank 0.475% 30-Sep-23 Demand 12.63 12.63 2018 Refunding Bonds US Bank 0.129% 30-Sep-23 Demand 10,068.96 10,068.96 2018 Refunding Bonds US Bank 0.128% 30-Sep-23 Demand - - 2018 Refunding Bonds US Bank 0.000% 30-Sep-23 Demand 1.00 1.00 $
Total Unaudited Investments under the direction of fiscal agents $ 10,082.59 $ 10,082.59 $ Please Note: All market value data is provided courtesy of the City's fiscal agent US Bank.
The 2018 Refunding Bonds are supported by a $9,799,443.76 bond insurance policy.
I certify that this investment portfolio is in compliance with the statement of investment policy of the City of Hesperia and the investment program provides sufficient liquidity to meet expenditure requirements for the next six months, as required by the California Government Code sections 53646(b)(2) and (3), respectively. • Note: The 2005 and 2007 Series Bonds were refinanced to 2018 Series Bonds in November 2018.
Investment - SA
ATTACHMENT 2
Market Account
Value Description
313,282.69
5,909.98
319,192.67
12.63 2018A & 2018B - Debt Service Account
10,068.96 2018A & 2018B - Interest Account
- 2018A & 2018B - Principal Account
1.00 2018A & 2018B - Reserve Account
10,082.59
ountant
Type of Investment
Issuer/
Institution
Investments under the direction of the City:
Hesperia Housing Authority
Investment Report
Unaudited
September 30, 2023
Interest Date of Date of
Rate Purchase Maturity
Par Value
at Maturity
Book
Value
ATTACHMENT 3
Market
Value
Local Agenc Investment Funds State of California 3.534% 30-Se -23 Demand $ 5,809,766.15 5,809,766.15 5,809,766.15 Local Bank Checkin Accounts U.S. Bank n/a 30-Se -23 Demand 109,599.45 109,599.45 109,599.45 Total Unaudited Investments under the direction of the City $ 5,919,365.60 $ 5,919,365.60 $ 5,919,365.60 I certify that this investment portfolio is in compliance with the statement of investment policy of the City of Hesperia and the investment program provides sufficient liquidity to meet expenditure requirements for the next six months, as required by the California Government Code sections 53646(b)(2) and (3), respectively. , ..
Investment - HHA
Hesperia Community Development Comission
Investment Report
Unaudited
Type of Investment
Issuer/
Institution
Investments under the direction of the City:
September 30, 2023
Interest
Rate
Date of Date of
Purchase Maturity
Local Agency Investment Funds State of California 3.534% 30-Sep-23 Demand Local Bank Checking Accounts U.S. Bank n/a 30-Sep-23 Demand Total Unaudited Investments under the direction of the City $
$
Par Value
at Maturity
(589,550.81)
11 ,121.69
(600,672.50) $
I certify that this investment portfolio is in compliance with the statement of investment policy of the City of Hesperia and the investment program provides sufficient liquidity to meet expenditure requirements for the next six months, as required by the California Government Code sections 53646(b)(2) and (3), respectively.
ATTACHMENT 4
Book
Value
(589,550.81
11 ,121.69
(600,672.50) $
Market
Value
589,550.81)
11 ,121.69
(600,672.50)
Nichole Sheppari,sniorAcc
Investment - CDC
Type of Investment
Investments under the direction of the Cit :
Local Agency Investment Funds
Local Bank Checking Accounts
Issuer/
Institution
State of California
U.S. Bank
Hesperia Water District
Investment Report
Unaudited
September 30, 2023
Interest Date of Date of
Rate Purchase Maturity
3.534% 30-Se -23 Demand
n/a 30-Sep-23 Demand
Total Unaudited Investments under the direction of the City Investments under the direction of fiscal agents:
De osits - Workers' Com PERMA n/a 31-Oct-22 n/a
$
$
Total Unaudited Investments under the direction of fiscal agents $ Par Value
at Maturity
37,462,421.29
706,717.03
38,169,138.32
877,475.29
877,475.29
$
$
Please Note: All market value data is provided courtesy of the City's fiscal agent, US Bank.
I certify that this investment portfolio is in compliance with the statement of investment policy of the City of Hesperia and the investment program provides sufficient liquidity to meet expenditure requirements for the next six months, as required by the California Government Code sections 53646(b)(2) and (3), respectively.
Book
Value
37,462,421.29
706,717.03
38,169,1 38.32
877,475.29
877,475.29
Nichole
Investment - ENT
$
$
ATTACHMENT 5
Market
Value
37,462,421.29
706,717.03
38,169,138.32
Account
Description
877,475.29 GL 1352
877,475.29
City of Hesperia
STAFF REPORT
DATE: November 21, 2023
TO: Mayor and Council Members
City Council, as Successor Agency to the Hesperia Community Redevelopment Agency
Chair and Board Members, Hesperia Housing Authority
Chair and Commissioners, Community Development Commission Chair and Board Members, Hesperia Fire Protection District Chair and Board Members, Hesperia Water District
FROM: Rachel Molina, City Manager
BY: Casey Brooksher, Assistant City Manager
Anne Duke, Deputy Finance Director
Nichole Sheppard, Senior Accountant
SUBJECT: 2023-24 Statement of Investment Policy
RECOMMENDED ACTION
It is recommended that the Council/Board /Commission adopt Joint Resolution No. 2023-47, Successor Agency to the Hesperia Community Redevelopment Agency Resolution No.
SA 2023-01, Hesperia Housing Authority Resolution No. HHA 2023-08, Community Development Commission Resolution No. CDC 2023-02, Hesperia Fire Protection District Resolution No. HFPD 2023-08, and Hesperia Water District Resolution No. HWD 2023-15, approving the Fiscal Year 2023-24 Statement of Investment Policy.
BACKGROUND
The City Treasurer is authorized to invest public funds in accordance with California Government Code (CGC) Sections 53600 et seq. and 5922(d). The Statement of Investment Policy (Policy) that guides the investment activity of the City, Successor Agency to the Hesperia Redevelopment Agency, Hesperia Housing Authority, Community Development Commission, Fire District, and Water District was adopted by the City Council consistent with CGC Section 53646, and any changes to the Policy are considered by the Council on an annual b asis. The external auditors of the Council/Agency/Authority/Commission/ Districts also review the Statement of Investment Policy during the annual financial audit process.
ISSUES/ANALYSIS
During the past year, all funds under the control of the City Trea surer that were not required for the immediate cash flow needs of the City, or were otherwise invested in accordance with bond indentures and trust agreements, were placed with the State Local Agency Investment Fund (LAIF). The quarterly interest rates on funds invested with LAIF for the last four fiscal years are provided on the following page.
Staff Report to the City Council, Chair, and Board Members 2023-24 Statement of Investment Policy
November 21, 2023
An advantage of investing in LAIF is that the funds are available same day, based upon the cash management needs of the City. LAIF is part of the Pooled Money Investment Account that was created by statue and governed by a five-member board which is chaired by the State Treasurer.
Under Government Code Section 16429.3, funds deposited are precluded from being transferred or seized by any State agency. The FY 2023-24 Budget contains an estimated average interest rate of 2.96%. Due to grant and reimbursement-funded construction projects included in the FY 2023-24 Budget, such as the Ranchero Road Widening and Aqueduct Crossing projects, the ability to draw funds same day (free of penalties) for payment of peak cash flow obligations is important in the City’s ability to ef fectively manage cash for City operations. For this reason, continued investments with LAIF is recommended.
In comparing LAIF’s average annual rates with the following table, reflecting information provided by the Federal Reserve, the average annual LAIF rates are typically higher than the average annual rate of return of US Government securities with a three -month maturity. Due to multiple recent rate increases by the Federal Reserve however, LAIF rates for FY 2022 -23 were 1.92% less than securities wit h a three -month maturity. For the reasons stated above related to construction cash flow needs, the City’s ability to withdraw immediately available funds is essential. Consistent with Government Code 53600.5, the City’s primary objective is to safeguard the principal of the funds under its control, with a secondary objective of meeting the liquidity needs of the organization, and a tertiary objective of achieving return on invested funds. As such, during FY 2023 -24, staff will contin ue to monitor LAIF p erformance and, if improvement is not seen in the results, present an option for a more active investment function for consideration. This would require dedicated staffing to ensure proper oversight and reporting, along with an enhanced collaborative effort with Development Services staff to precisely project the timing of construction costs, in order to ensure the availability of sufficient liquid funds to pay the City’s obligations.
US Government Securities Rate of Interest with a three - month maturity per the Federal Reserve System
The Association of Public Treasurers of the United States and Canada Model Investment Policy, as well as the California Local Agency Inve stment Guidelines, were models used to guide the Policy. Further, the 2023 Local Agency Investment Guidelines (LAIG), as presented by the California Debt and Investment Advisory Commission, have been reviewed in order to identify statutory changes arising from the 2022 Legislative session for inclusion in the annual update to the Policy. The summary of statutory changes referenced Chapter 427, Statutes of 2022 (SB 1489), the Local Government Omnibus Act , which amended Government Code sections 53601 and 53646(b)(1) related to the investment of surplus funds by treasurers and extended reporting Interest Rate September December March June Annual Averages Fiscal Year 2019-20 2.45% 2.29% 2.03% 1.47% 2.06%
Fiscal Year 2020-21 0.84% 0.63% 0.44% 0.33% 0.56%
Fiscal Year 2021-22 0.24% 0.23% 0.32% 0.75% 0.39%
Fiscal Year 2022-23 1.35% 2.07% 2.74% 3.15% 2.33%
Federal
Interest Rate September December March June Annual Averages Fiscal Year 2019-20 2.03% 1.61% 1.10% 0.14% 1.22%
Fiscal Year 2020-21 0.11% 0.09% 0.05% 0.03% 0.07%
Fiscal Year 2021-22 0.05% 0.05% 0.31% 1.11% 0.38%
Fiscal Year 2022-23 2.75% 4.19% 4.78% 5.27% 4.25%
Staff Report to the City Council, Chair, and Board Members 2023-24 Statement of Investment Policy
November 21, 2023
timeframes for quarterly reporting . Specifically, this bill amended Government Code Section 53601 to clarify that a public agency investment’s term or remaining maturity is to be measured from the settlement date to final maturity. In addition this code section was amended to prohibit the purchase of a security with a forward settlement date exceeding 45 days from the time of investment. Government Code Section 53646(b)(1) extends the timeline for quarterly reporting, from 30 to 45 days foll owing the end of the quarter. The Policy has been upd ated for the applicable code section.
In addition to the limited changes referenced above, the dates referenced in the Policy have been updated to reflect that the Policy has been reviewed for any potential impact in statutory changes, along with a title change referencing the Assistant City Manager as City Treasurer . These changes to the P olicy ar e as shown in a “track changes” version (Attachment 2) of the draft Statement of Investment Policy for Fiscal Year (FY) 2023-24. These changes have also been included in the “clean” version (Attachment 1) of the FY 2023-24 Policy and are recommended for approval.
FISCAL IMPACT
Adoption of the Statement of Investment Policy has no direct financial impact on the City’s Budget.
ALTERNATIVE(S)
1. Failure to adopt a n update to the Statement of Investment Policy could result in an audit exception, as the Policy indicates the need for an annual review and approval by the City Council.
2. Provide alternative direction to staff.
ATTACHMENT(S)
1. Statement of Investment Policy for FY 2023-24 (clean)
2. Statement of Investment Policy for FY 2023-24 (track changes)
3. Joint Resolution No. 2023-47, SA 2023-01, HHA 2023-08, CDC 2023-02, HFPD 2023-08, and HWD 2023-15
Council Meeting: 11/21/2023
i
Attachment #1
City of Hesperia
STATEMENT
OF
INVESTMENT
POLICY
FISCAL YEAR 2023-24
ii
TABLE OF CONTENTS
I. POLICY ................................................................................................................... 1
II. SCOPE .................................................................................................................... 1
III. PRUDENCE ............................................................................................................ 1
IV. OBJECTIVE ............................................................................................................. 2
V. MAXIMUM MATURITIES ......................................................................................... 3
VI. PERFORMANCE STANDARDS .............................................................................. 3
VII. DELEGATION AND GRANTS OF AUTHORITY ...................................................... 3
VIII. INVESTMENT COMMITTEE ................................................................................... 3
IX. ETHICS AND CONFLICT OF INTEREST ................................................................ 4
X. SAFEKEEPING AND CUSTODY AGREEMENTS ................................................... 4
XI. INTERNAL CONTROLS .......................................................................................... 4
XII. FINANCIAL REPORTING ........................................................................................ 4
XIII. AUTHORIZED FINANCIAL DEALERS & INSTITUTIONS ........................................ 5
XIV. COLLATERAL REQUIREMENTS ............................................................................ 5
XV. AUTHORIZED AND ACCEPTABLE INVESTMENTS ............................................... 5
XVI. PROHIBITED INVESTMENTS ............................................................................... 10
XVII. LEGISLATIVE CHANGES ..................................................................................... 10
XVIII. INTEREST EARNINGS ......................................................................................... 10
XIX. L IMITING MARKET VALUE EROSION .................................................................. 10
XX. PORTFOLIO MANAGEMENT ACTIVITY ............................................................... 11
XXI. INVESTMENT POLICY REVIEW ........................................................................... 11
XXII. INDEMNIFICATION OF INVESTMENT OFFICIALS .............................................. 12
GLOSSARY ........................................................................................................... 13
Council Meeting: 11/21/2023
CITY OF HESPERIA
STATEMENT OF INVESTMENT POLICY
1 I. POLICY
This Statement of Investment Policy while conforming to all applicable statutes at the time of adoption is intended to provide guidelines under the “prudent investor” rule, for the investment of public funds, and outline the policies for maximizing the effectiveness and efficiency of Hesperia’s cash managemen t system. The goal is twofold: one is to enhance the economic status of Hesperia while preserving its capital resources ; the second is to provide guidelines for authorized investments.
II. SCOPE
The City Treasurer is authorized to invest public funds in accordance with California Government Code (CGC) Sections 53600 et seq. and 5922 (d). This investment policy applies to all financial assets and investment activities of the City of Hesperia and includes, but is not limited to, the following funds:
• General Fund
• Special Revenue Funds
• Debt Service Funds
• Capital Project Funds
• Enterprise Funds
• Agency Fund
• Any new fund, unless specifically exempted
This policy, however, specifically excludes employees’ retirement, pension and deferred compensation funds. Additionally, moneys held by a trustee or fiscal agent shall be governed by CGC Sections 53601 (m) and 5922 (d).
III. PRUDENCE
All moneys entrusted to the City Treasurer will be pooled in an actively managed portfolio. The City of Hesperia shall participate in standards within the content of the Standard as set forth in CGC Section 53600.3 which states in part:
“When investing, reinvesting, purchasing, acquiring, exchanging, selling and managing public funds, a trustee shall act with care; skill and prudence and diligence under the circumstances then prevailing, that a prudent investor acting in like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims to safeguard the principal and maintain the liquidity needs of the agency.”
Section 53600.3 of the government code declares each person, treasurer, or governing body authorized to make investment decisions on behalf of local agencies to be a trustee, and therefore, a fiduciary subject to the prudent investor standard. These persons shall act with care, skill and diligence under the circumstances then prevailing when investing, reinvesting, purchasing, acquiring, exchanging, selling, and managing funds. Section 53600.5 further stipulates that the primary objective of any person investing funds is to safeguard principal; secondly, to meet liquidity needs; and lastly, to achieve a return or yield on invested funds.
Council Meeting: 11/21/2023
CITY OF HESPERIA
STATEMENT OF INVESTMENT POLICY
2 IV. OBJECTIVE
The City’s treasury management system is designed to monitor and forecast expenditures and revenues, thus enabling the City to invest funds to the fullest extent possible. The City attempts to obtain the highest yield available, while investments meet the criteria established for safety, liquidity, and yield, in that order of priority.
A. SAFETY
Safety of principal is the foremost objective of the City of Hesperia. Each investment transaction shall seek to ensure capital losses are avoided, whether from securities default, rating downgrades, broker-dealer defaults, or erosion of market value. The City of Hesperia shall seek the preservation of capital by mitigating two types of risk: credit risk and market risk.
1. Credit risk is the risk of loss due to failure of the issuer and is mitigated by investing in safe securities, and diversifying the investment portfolio so the failure of any one issuer would not materially affect the cash flow of the City.
2. Market risk is the risk of market value fluctuations due to changes in the general level of interest rates, and shall be mitigated by limiting the average maturity of the City’s investment portfolio to three and one-half years, and the maximum maturity of any one security to five years. Market risk shall also be mitigated by structuring the portfolio so maturing securities match cash outflows, eliminating the need to sell securities prior to their maturity, and to avoid taking positions in securities for the purpose of selling those securities within a short period of time in order to realize a short term profit. It is recognized that within a diversified portfolio, occasional measured losses are inevitable, and must be considered within the context of the overall return on the investment.
B. LIQUIDITY
The City of Hesperia’s investment portfolio will remain satisfactorily liquid to enable the City to meet all anticipated and operating cash flow requirements.
C. MATURITY MATRIX
Maturities of investments will be selected based on liquidity requirements in order to minimize interest rate risk and maximize earnings. Current and expected yield curve analysis will be monitored, and the portfolio will be invested accordingly. As a general investment guideline, the following percentages of the pooled portfolio should be utilized in the investment maturity sectors:
Maturity Range Suggested Percentage Less than 1 year 0 to 100%
1 - 3 years 0 to 50%
3 - 5 years 0 to 50%
D. DIVERSIFICATION
The City of Hesperia’s investment pool will be diversified to avoid incurring unreasonable and avoidable risks. The investments will be diversified by security type and institution.
Regarding specific security types indicated in Section XV of this Investment Policy, no more than 10% of the City’s portfolio will be placed with any single private financial institution.
Council Meeting: 11/21/2023
CITY OF HESPERIA
STATEMENT OF INVESTMENT POLICY
3 E. RETURN ON INVESTMENTS
The City of Hesperia’s investment portfolio shall be designed to attain a market rate of return throughout economic cycles. Whenever possible with respect to budgetary and cash flow requirements, and consistent with risk limitations and prudent investment principles, the City Treasurer shall seek to augment returns above the market rate of return.
V. M
AXIMUM MATURITIES
The City of Hesperia will match its investments with anticipated cash flow requirements.
Per California Government Code Sections 53601 et seq., maximum maturities shall not exceed five (5) years. An investment’s term or remaining maturity shall be measured from the settlement date to final maturity. A security purchased in accordance with this section shall not have a forward settlement date exceeding 45 days from the time of investment. The average maturity of funds should not exceed 1,275 days (3.5 years), and the cash flow requirements shall prevail at all times.
VI. P
ERFORMANCE STANDARDS
The City’s investment portfolio will be designed to obtain a market average rate of return during budgetary and economic cycles, taking into account the City of Hesperia’s investment risk constraints and cash flow requirements.
The City of Hesperia will operate in an active capacity in the investment strategy. The benchmark to be used by the City Treasurer to determine whether market yields are achieved shall be the State of California Local Agency Investment Fund (L.A.I.F.).
VII. DE
LEGATION AND GRANTS OF AUTHORITY
Management responsibility for the investment program is delegated to the City Treasurer (Assistant City Manager ) who shall establish written procedures and policies for the operation of the investment program consistent with this investment policy.
No person shall engage in an investment transaction except as provided under the terms of this policy and the procedures established by the City Treasurer. The procedures established by the City Treasurer shall contain internal accounting controls specifying delegation and grants of authority for the verification and recording of investment transactions to regulate the activities of subordinate representatives.
In the absence of the City Treasurer, the authority to direct investment transactions affecting City moneys will be restricted to the Deputy Finance Director as to maturity, investment instrument, and dollar size of the investment.
VIII. I
NVESTMENT COMMITTEE
The City of Hesperia City Council shall act as the investment committee consisting of five (5) Council members to include the Mayor and four (4) Council Members as elected by the people; to provide general oversight and guidance concerning the investment policy related to the management of the City’s investment pool. The committee shall meet monthly to review the Treasurer’s Cash Report.
Council Meeting: 11/21/2023
CITY OF HESPERIA
STATEMENT OF INVESTMENT POLICY
4 IX. ETHICS AND CONFLICT OF INTEREST
The City Treasurer and all investment personnel shall refrain from personal business activity which could create a conflict with proper execution of the investment program, or which could impair the ability to execute impartial investment decisions. The C ity Treasurer and all investment personnel shall disclose to the City Attorney any material financial interests in financial institutions that conduct business within the jurisdiction, and shall disclose any material financial investment positions that could be related in a conflicting manner to the performance of the City of Hesperia’s investment portfolio.
The City Treasurer shall complete on an annual basis, State of California Form 721, Statement of Economic Interests Disclosure.
X. S AFEKEEPING AND CUSTODY AGREEMENTS
To protect against potential losses caused by collapse of individual securities dealers, all securities owned by the City shall be kept in safekeeping by a third party bank trust department, acting as agent for the City under the terms of a custody agreement executed by the bank and the City. All securities will be received and delivered using standard delivery versus payment procedures with the City’s custodial bank, and evidenced by safekeeping receipts. Custodial statements are reconciled to transaction schedules by the Deputy Finance Director on a monthly basis.
XI. I NTERNAL CONTROLS
Separation of duties among the employees involved in investment activities are designed to provide an ongoing internal review to prevent the potential for converting assets or concealing transactions.
Proper documentation obtained from confirmation and cash disbursement wire transfers is required for each investment transaction. Timely bank reconciliations are conducted to ensure proper handling of all transactions.
The investment portfolio and all related transactions are reviewed and balanced to appropriate general ledger accounts on a monthly basis.
An independent analysis by an external auditor shall be conducted annually to review internal control, account activity, and compliance with policies and procedures.
XII. FINANCIAL REPORTING
Under provision of Section 53646 of the California Government Code, the City Treasurer may render a quarterly or monthly report to the City Council, providing the type of investment, financial institution from which the investment was purchased, the date of maturity, the date upon which the investment becomes subject to redemption provisions, amount (to include both par and book value) of the investment, and the current market value of all investments. The report shall also include the source of the market value.
Additionally, the report shall also include the rate of interest, accrued interest earned, the amortized portion of the investment purchased at a premium or discount, and other data so required by the City Council or by amendment to the above section of California Government Code and its successors. The report shall include a statement denoting the City’s ability to meet its expenditure requirements for the following six month period, or an explanation as to why sufficient moneys will not be available. Additionally , the City
Council Meeting: 11/21/2023
CITY OF HESPERIA
STATEMENT OF INVESTMENT POLICY
5 Treasurer shall state whether the City is in compliance with its investment policy and shall sign the Treasurer’s Report . Pursuant to Section 53607, local agency treasurers to whom the authority to invest or reinvest funds or to sell or exchange securities has been delegated by the legislative body of a local agency are required to submit a monthly report of transactions to the legislative body. The City renders a monthly Treasurer’s Report to the City Council.
XIII. AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS
The City of Hesperia shall transact business only with banks, savings and loan institutions, and registered investment securities dealers, managers, and advisors. The dealers should either be primary dealers authorized to buy and sell government securities in direct dealings with the Federal Reserve Bank of New York, or regional dealers qualifying under the Securities and Exchange Commission Rule 15C3-1.
The City Treasurer shall send a copy of the current Statement of Investment Policy to all dealers approved to do business with the City of Hesperia. Confirmation of the dealer’s understanding of the City’s investment policy shall be provided in writing by the dealer.
The City Treasurer shall examine financial institutions that wish to perform business with the City, in order to confirm whether the participating financial institutions are satisfactorily capitalized, are market makers in securities appropriate to the City’s financial investment universe and agree to comply with the conditions set forth in the City of Hesperia’s Statement of Investment Policy.
XIV. COLLATERAL REQUIREMENTS
Collateralization is required for investments of public deposits in Certificates of Deposits (in excess of the FDIC insured amount) and all Repurchase Agreements. In order to reduce market risk, the collateral level will be at least 110% of market value of principal and accrued interest of eligible securities for Certificate of Deposit. The percentage of collateralization on repurchase agreements shall adhere to CGC Section 53601 (i) (2).
In order to conform with provisions of the Federal Bankruptcy Code, which provides for the liquidation of securities held as collateral for Repurchase Agreements, the only securities acceptable as collateral shall be eligible Negotiable Certificates of Deposit, eligible Banker’s Acceptances, or securities that are fully guaranteed as to principal and interest by the United States or by any agency of the United States government. All securities held as collateral shall have a maximum maturity of five (5) years.
XV. A
UTHORIZED AND ACCEPTABLE INVESTMENTS
The City of Hesperia is subject to California Government Code, Section 53601 et seq.
Within the context of the governing language, the following investments are authorized and accepted as defined:
A. United States Treasury Bills, Notes and Bonds - Maximum of 100% United States Treasury Bills, Notes, and Bonds, or those for which the full faith and credit of the United States are pledged for payment of principal and interest.
There is no limitation as to the percentage of the portfolio, which can be invested in the category.
Council Meeting: 11/21/2023
CITY OF HESPERIA
STATEMENT OF INVESTMENT POLICY
6 B. Obligations issued by the Federal Government, State of California or California Local Agency - Maximum of 100%
Obligations issued by the Government National Mortgage Association (GNMA), the Federal Farm Credit Bank System (FFCB), the Federal Home Loan Bank Board (FHLB), the Federal Home Loan Mortgage Corporation (FHLMC), the Federal National Mortgage Association (FNMA), Student Loan Marketing Association (SLMA), State of California or California Local Agency. Although there is no percentage limitation on “governmental agency” issues, the prudent investor standard shall apply for a single agency name.
C. Bankers’ Acceptances - Maximum of 25%
Bankers’ Acceptances (BAs) otherwise known as bills of exchange or t ime drafts that are drawn on and accepted by a commercial bank . Purchases of Bankers’ Acceptances shall not exceed 180 days’ maturity or 25% of the market value of the portfolio. No more than 5% of the market value of the portfolio may be invested in Bankers’ Acceptances issued by any one commercial bank.
D. Commercial Paper - Maximum of 15%
Commercial Paper of “prime” quality of the highest ranking or of the highest letter and number rating as provided for by a nationally recognized statistical rating organization (NRSRO) as set forth in CGC 53601(h) . T he entity that issues the commercial paper shall meet all of the following conditions in either paragraph 1 or 2:
1. The entity meets the following criteria:
a) Is organized and operating in the United States as a general corporation.
b) Has total assets in excess of five hundred million dollars ($500,000,000).
c) Has debt other than commercial paper, if any, that is rated in a rating category of “A” or its equivalent or higher by an NRSRO.
2. The entity meets the following criteria:
a) Is organized within the United States as a special purpose corporation, trust, or limited liability company.
b) Has program-wide credit enhancements including, but not limited to, overcollateralization, letters of credit, or surety bond.
c) Has commercial paper that is rated “A-1” or higher, or the equivalent, by an NRSRO.
Commercial Paper purchases shall have a maximum maturity of 270 days or less and cannot exceed 15% of the market value of the portfolio (30% if the dollar weighted average maturity of all commercial paper does not exceed 31 days). Purchase of commercial paper may not exceed 10% of outstanding paper of an issuing corporation pursuant to CGC 53635(a)(2).
E. Negotiable Certificates of Deposit - Maximum of 25%
Negotiable Certificates of Deposit (NCD) issued by a nationally or state- chartered bank or a state or federal savings and loan association. Pursuant to CGC 53601 (i) and 53638, the NCD must meet the following criteria:
Council Meeting: 11/21/2023
CITY OF HESPERIA
STATEMENT OF INVESTMENT POLICY
7 1. The deposit should not exceed the shareholder’s equity of any depository bank. The shareholder’s equity shall be determined in accordance with Section 118 of the Financial Code, but shall be deemed to include capital notes and debentures.
2. The deposit shall not exceed the total of the net worth of any depository savings association or federal association, except that deposits not exceeding a total of five hundred thousand dollars ($500,000) may be made to a savings association or federal association without regard to the net worth of that depository, if such deposits are insured or secured as required by law.
3. The deposit to the share accounts of any regularly chartered credit union shall not exceed the total of the unimpaired capital and surplus of the credit union, as defined by rule of the Commissioner of Financial Institutions, except that the deposit to any credit union share account in an amount not exceeding five hundred thousand dollars ($500,000) may be made if the share accounts of that credit union are insured or guaranteed pursuant to Section 14858 of the Financial Code or are secured as required by law.
4. The deposit in investment certificates of a federally insured industrial loan company shall not exceed the total of the unimpaired capital and surplus of the insured industrial loan company.
Purchases of negotiable certificates of deposits may not exceed 25% of the market value of the portfolio. A maturity limitation of five (5) years is applicable on NCDs.
F. Repurchase Agreements - Maximum of 20%
The City may i nvest in Repurchase Agreements with banks and dealers with which the City has entered into a Master Repurchase Agreement which specifies terms and conditions of Repurchase Agreements. A signed copy of the Master Repurchase Agreement shall be required from the authorized financial dealer prior to the execution of any applicable transaction. The maturity of Repurchase Agreements shall not exceed one year. The market value of securities used as collateral for Repurchase Agreements shall be monitored daily, and will not be allowed to fall below 102% of the value of the Repurchase Agreement as set forth in CGC Section 53601 (j) (2).
G. Local Agency Investment Fund - Maximum of $75 million per account The City may invest in the Local Agency Investment Fund (L.A.I.F.) established by the State Treasurer, for the benefit of local agencies, up to the maximum permitted by State law, which is currently $75 million dollars per account. There is no limitation as to the percentage of the portfolio a local agency can invest in L.A.I.F. under CGC 16429.1, which allows a local agency to remit to the Treasurer any money not required for immediate needs and gives the agency the exclusive determination of the length of time its money will be on deposit with the Treasurer.
H. Medium Term Notes - Maximum of 30%
Medium Term Notes, defined as all corporate and depository institution debt securities with a maximum remaining maturity of five years or less, issued by corporations organized and operating within the United States or by depository
Council Meeting: 11/21/2023
CITY OF HESPERIA
STATEMENT OF INVESTMENT POLICY
8 institutions licensed by the United States or any state and operating within the United States. Notes eligible for investment shall be rated in a rating category of “A” or its equivalent or better by an NRSRO. No more than 30% of the market value of the portfolio may be invested in Medium-Term Notes pursuant to CGC 53601 (k), and no more than 10% of the total assets of the investments may be invested in any one issuer’s medium term notes pursuant to CGC 53635(a)(2).
I. Mutual and Money Market Funds - Maximum of 20%
Shares of beneficial interest issued by diversified management companies that are funds registered with the Securities and Exchange Commission under the Investment Company Act of 1940, as defined in Section 53601 (l) of the California Government Code. For securities and obligations investments above two hundred fifty thousand dollars ($250,000), the investments must comply with the investment restrictions pursuant to Section 53601 (l), companies shall either:
1. Attain the highest ranking or the highest letter and numerical ranking provided by not less than two NRSROs.
2. Retain an investment advisor registered or exempt from registration with the Securities and Exchange Commission with not less than five years’ ex perience managing mutual funds with assets under management in excess of five hundred million dollars ($500,000,000).
The purchase price of shares of beneficial interest purchased pursuant to this section shall not include any commission that these companies may charge and shall not exceed 20% of the agency’s money s that may be invested in mutual funds. In addition, no more than 10% of the agency’s funds may be invested in shares of beneficial interest of any one mutual fund. Further, the City may invest only in mutual and money market funds which have an average maturity of 90 days or less per Securities & Exchange Commission regulations.
3. All positions in government-sponsored investment pools and permitted mutual and money market funds (per Sections G and I, above) shall be subject to periodic review by the City Treasurer, or a designee thereof, in order to ensure that the moneys in question are managed in a manner consistent with the standards and objectives set forth elsewhere in this Policy.
J. Collateralized Bank Deposits - Maximum of 10%
The City may invest in collateralized bank deposits in the form of notes, bonds, or other obligations which are at all times secured by a valid first priority security interest. The securities serving as collateral shall be placed by delivery or book entry into the custody of a trust company or the trust department of a bank which is not affiliated with the issuer of the secured obligation, and the security interest shall be perfected in accordance with the require ments of the Uniform Commercial Code or Federal regulations applicable to the types of securities in which the security interest is placed. For purposes of Time Deposits issued by financial institutions, the City may not invest more than 10% of the market value of the portfolio in this category. The maximum term of investment is five (5) years, unless otherwise approved by City Council. To exceed the five -year maturity limit, the authority must be approved by the City Council at least three months prior to the purchase of any security exceeding the five- year maturity limit.
Council Meeting: 11/21/2023
CITY OF HESPERIA
STATEMENT OF INVESTMENT POLICY
9 K. Investment Pools - Maximum of 30%
Investment structures other than L.A.I.F., rated AA or higher, incorporating investment pools permitted in California Government Code Sections 53601, 53635, and 5922 (d). Government Code Section 53635 (c) allows the City to invest in commercial paper, debt securities, or other obligations of a public bank, as defined in Section 57600. California Government Code Section 53635.2 added public banks to the list of depository institutions. However, Section 53601 shall apply to investment pools that have the same governing body.
L. Municipal Bonds - Maximum of 10%
The City may invest in bonds issued by a state or local government agency.
Bonds eligible for investment shall be rated in a rating category of “A” or its equivalent or better by an NRSRO.
M. Bonds Issued by the City of Hesperia – Maximum of 25% The City may acquire its own bonds, pursuant to Section 53601 (a) and (d), including bonds payable solely out of the revenues from a revenue– producing property owned, controlled, or operated by the local agency or by a department, board, agency, or authority of the local agency.
N. Supranational Obligations – Maximum of 30%
Pursuant to Government Code Section 53601 (q), the City may invest in United States dollar denominated senior unsecured unsubordinated obligations issued or unconditionally guaranteed by the International Bank for Reconstruction and Development, International Finance Corporation, or Inter -American Development Bank, with a maximum remaining maturity of five years or less, and eligible for purchase and sale within the United States. Investments shall be rated in a rating category of “AA” or its equivalent or better by an NRSRO and shall not exceed 30 percent of the City’s moneys that may be invested pursuant to this section.
O. Public Bank Obligations – Maximum 100%
Pursuant to Government Code Sections 53 601 (r), 53635 (c), and 57603, the City may invest in commercial paper, debt securities, or other obligations of a public bank, as defined in Section 57600. The maximum term of investment is five (5) years.
Council Meeting: 11/21/2023
CITY OF HESPERIA
STATEMENT OF INVESTMENT POLICY
10 Summary of Maximum % Limitations of Investments by Investment Type:
The following summary of maximum percentage limits, by investment type, is established for the City’s total pooled funds portfolio:
XVI. P ROHIBITED INVESTMENTS
In accordance with CGC Section 53601.6, the City will not invest any funds in inverse floaters, range notes, or interest only strips that are derived from a pool of mortgages.
Additionally, the City will not invest any funds in reverse repurchase agreements, mortgage pass -through securities or collateralized mortgage obligations currently permitted under CGC Section 53601. Further, per the Securities and Exchange Commission (SEC), local governments do not qualify as Qualified Institutional Buyers (QIBs) and are not allowed to purchase Rule 144A securities. As such, the City will not invest in Rule 144A securities.
XVII. LEGISLATIVE CHANGES
Any State of California legislative action that further restricts allowable maturities, investment type, or percentage allocations will be incorporated into the City of Hesperia’s Investment Policy, and supersede any and all previous applicable language.
XVIII. I NTEREST EARNINGS
All moneys earned and collected from investments authorized in this policy shall be allocated on a quarterly basis to various fund accounts where required by law based on the cash balance in each fund as a percentage of the entire pooled portfolio. However, accounts requiring full liquidity will receive their proportional distribution of moneys based on the lower of pooled or overnight rates.
XIX. LIMITING MARKET VALUE EROSION
The longer the maturity of securities, the greater the potential for market price volatility, therefore, it is the general policy of the City to limit the potential effects from erosion in market values by adhering to the following guidelines:
A. All immediate and anticipated liquidity requirements will be addressed prior to purchasing all investments.
Authorized Investment Type
Maximum
Maturity
Maximum
Percentage
Of Portfolio
Maximum
Investment
In One Issuer
U.S. Treasury Obligations 5 years 100% None
U.S. & State or Local Agency Securities 5 years 100% None Banker’s Acceptances 180 days 25% 5%
Commercial Paper 270 days 15% 10%
Negotiable Certificates of Deposit 5 years 25% None
Repurchase Agreements 1 year 20% None
Local Agency Investment Fund (LAIF) N/A 100% None
Medium-Term Notes 5 years 30% None
Mutual & Money Market Funds N/A 20% 10%
Collateralized Bank Deposits 5 years 10% None
Investment Pools N/A 30% None
Municipal Bonds 5 years 10% None
Supranational Obligations 5 years 30% None
Public Bank Obligations 5 years 100% None
Council Meeting: 11/21/2023
CITY OF HESPERIA
STATEMENT OF INVESTMENT POLICY
11 B. Maturity dates for long-term investments will coincide with significant cash flow requirements where possible, to assist with short term cash requirements at maturity.
C. All long-term securities will be purchased with the intent to hold all investments to maturity under then-prevailing economic conditions. However, economic or market conditions may change, making it in the City’s best interest to sell or trade a security prior to maturity.
XX. PORTFOLIO MANAGEMENT ACTIVITY
The investment program shall seek to augment returns consistent with the intent of this policy, identified risk limitations and prudent investment principles. The objectives will be achieved by use of the following strategies:
A. Active Portfolio Management Through active fund and cash flow management taking advantage of current economic and interest rate trends, the portfolio yield may be enhanced with limited and measurable increases in risk by extending the weighted maturity of the total portfolio (not to exceed 1,275 days).
B. Portfolio Maturity Management When structuring the maturity composition of the portfolio, the City shall evaluate current and expected interest rate yields and necessary cash flow requirements. It is recognized that in normal market conditions longer maturities produce higher yields. However, the securities with longer maturities also experience greater price fluctuations when the level of interest rates change.
C. Security Swaps The City may take advantage of security swap opportunities to improve the overall portfolio yield. A swap, which improves the portfolio yield, may be selected even if the transactions result in an accounting loss.
Documentation for swaps will be included in the City’s permanent invest ment file documents.
D. Competitive Bidding It is the policy of the City to require competitive bidding for investment transactions that are not classified as “new issue” securities. For the purchase of non-”new issue” securities, and the sale of all securities, at least three bidders must be contacted. Competitive bidding for security swaps is also suggested, however, it is understood that certain time constraints and broker portfolio limitations exist which would not accommodate the competitive bidding process. If a time or portfolio constraining condition exists, the pricing of the swap should be verified to current market conditions and documented for auditing purposes.
XXI. INVESTMENT POLICY REVIEW
This Statement of Investment Policy is intended to conform to all applicable statutes at the time of adoption. The Investment Policy shall be reviewed and approved annually by the City Council at a public meeting to ensure consistency with the overall objectives of the preservation of capital, liquidity, and return of the portfolio. The Investment Policy shall also be reviewed to ensure its compliance and relevance to the current law, financial and economic trends, and to meet the cash flow requirements o f the City of Hesperia.
Council Meeting: 11/21/2023
CITY OF HESPERIA
STATEMENT OF INVESTMENT POLICY
12 Investment operations are reviewed monthly during the reconciliation process of investment transactions to the third party statements, and by the Management Services Department in the proof of cash process. The investment portfolio is audited annually by the City’s independent auditors which shall include a review for compliance with the City’s Statement of Investment Policy.
XXII. IN DEMNIFICATION OF INVESTMENT OFFICIALS
Any investment officer exercising his or her assigned authority with due diligence and prudence, and in accordance with the City’s Investment Policy, will not be held personally liable for any individual investment losses or for total portfolio losses.
_____________________________________ ______________________ Casey Brooksher Date
City Treasurer, City of Hesperia
Council Meeting: 11/21/2023
CITY OF HESPERIA
STATEMENT OF INVESTMENT POLICY
13 GLOSSARY
AGENCIES: Federal agency securities and/or Government-sponsored enterprises.
BANKERS’ ACCEPTANCE: A draft of bill or exchange accepted by a bank or trust company.
The accepting institution guarantees payment of bill, as well as the issuer.
BID: The price offered by a buyer of securities.
BROKER: A broker brings buyers and sellers together for a commission.
CERTIFICATE OF DEPOSIT (CD): A time deposit with a specific maturity evidenced by a certificate. Large-denomination CDs are typically negotiable.
COLLATERAL: Securities, evidence of deposit, or other property that a borrower pledges to secure repayment of a loan. Also, refers to securities pledged by a bank to secure deposits of public monies.
COLLATERIALIZED MORTGAGE OBLIGATION: A se curity backed by a pool of pass through rates, structured so that there are several classes of bondholders with varying maturities, called tranches. The principal payments from the underlying pool of pass through securities are used to retire the bonds on a priority basis as specified in the prospectus.
DERIVATIVE: Contracts, such as options and futures, whose price is derived from the price of an underlying financial asset.
DIVERSIFICATION: Dividing investment funds among a variety of securities offering independent returns.
FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC): A federal agency that insures bank deposits, currently up to $250,000 per deposit.
FEDERAL FUNDS RATE: The interest rate that banks with excess reserves charge other banks that need overnight loans.
FEDERAL RESERVE SYSTEM: The central bank of the United States created by Congress and consisting of a seven member Board of Governors in Washington, D.C., and 12 regional banks.
It is responsible for regulating monetary policy.
INTEREST-ONLY STRIP: A security based solely on the interest payments from a pool of mortgages, Treasury Bonds, or other bonds. Once the principal on the mortgages or bonds has been repaid, interest payments stop and the value of the interest–only strip falls to zero.
INVERSE FLOATER: A derivative instrument whose coupon rate is linked to the market rate of interest in an inverse relationship.
INVESTMENT POOL: The aggregate of all funds from political subdivisions that are placed in the custody of the Treasurer for investment.
LIQUIDITY: A liquid asset is one that can be converted easily and rapidly into cash without a substantial loss of value. In the money market, a security is said to be liquid if the spread between bid and asked prices is narrow and reasonable size and can be done at those quotes.
Council Meeting: 11/21/2023
CITY OF HESPERIA
STATEMENT OF INVESTMENT POLICY
14 GLOSSARY
MARKET RISK: The risk that the value of investments may decline over a given time period due to economic changes or other events that impact large portions of the market.
MARKET VALUE: The price at which a security is trading and could presumably be purchased or sold.
MASTER REPURCHASE AGREEMENT : A written contract covering all future transactions between the parties to repurchase—reverse repurchase agreements that establishes each party’s rights in the transactions.
MATURITY: The date upon which the principal or stated value of an investment becomes due and payable.
MONEY MARKET: The market in which short -term debt instruments (bills, commercial paper, banker’s acceptances, etc.) are issued and traded.
MORTGAGE PASS-THRU SECURITY: A security created when one or more mortgage holders form a collection (pool) of mortgages sells shares or participation certificates in the pool. The cash flow from the collateral pool is passed through to the security holder as monthly payments of principal, interest, and prepayments.
PORTFOLIO: Collection of securities held by an investor.
PRUDENT PERSON RULE: An investment standard. The trustee may invest in a security that someone in that same position would seek as reasonable income and preservation of capital.
PUBLIC BANK: a corporation, organized under the Nonprofit Mutual Benefit Corporation Law or the Nonprofit Public Benefit Corporation Law for the purpose of engaging in the commercial banking business or industrial banking business, that is wholly owned by a local agency, local agencies, or a joint powers authority formed pursuant to the Joint Exercise of Powers Act that is composed only of local agencies (California Government Code 57600 (b) (1)).
REPURCHASE AGREEMENTS: An agreement with a commitment by the seller (dealer) to buy a security back from the purchaser (customer) at a specified price at a designated future date.
REVERSE REPURCHASE AGREEMENT: Refers to a repurchase a greement. From the customer’s perspective, the customer provides a collateralized loan to the seller.
SAFEKEEPING: A service to customers rendered by banks for a fee whereby securities and valuables of all types and descriptions are held in the bank’s vaults for protection.
TREASURY BILLS: A non- interest bearing discount security issued by the U.S. Treasury to finance the national debt. Most bills are issued to mature in three months, six months, or one year.
YIELD: The rate of annual income return on an investment, expressed as a percentage.
Council Meeting: 11/15/202211/21/23
i
Attachment #2
City of Hesperia
STATEMENT
OF
INVESTMENT
POLICY
FISCAL YEAR 2022-232023-24
ii
TABLE OF CONTENTS
I. POLICY ..................................................................................................................... 1
II. SCOPE ..................................................................................................................... . 1
III. PRUDENCE .............................................................................................................. 1
IV. OBJECTIVE ............................................................................................................... 2
V. MAXIMUM MATURITIES ........................................................................................... 3
VI. PERFORMANCE STANDARDS ............................................................................... 3
VII. DELEGATION AND GRANTS OF AUTHORITY ....................................................... 3
VIII. INVESTMENT COMMITTEE ..................................................................................... 3
IX. ETHICS AND CONFLICT OF INTEREST ................................................................. 4
X. SAFEKEEPING AND CUSTODY AGREEMENTS .................................................... 4
XI. INTERNAL CONTROLS ............................................................................................ 4
XII. FINANCIAL REPORTING .......................................................................................... 4
XIII. AUTHORIZED FINANCIAL DEALERS & INSTITUTIONS ........................................ 5
XIV. COLLATERAL REQUIREMENTS ............................................................................. 5
XV. AUTHORIZED AND ACCEPTABLE INVESTMENTS ............................................... 5
XVI. PROHIBITED INVESTMENTS ................................................................................ 10
XVII. LEGISLATIVE CHANGES ....................................................................................... 10
XVIII. INTEREST EARNINGS ........................................................................................... 10
XIX. LIMITING MARKET VALUE EROSION ................................................................... 10
XX. PORTFOLIO MANAGEMENT ACTIVITY ................................................................ 11
XXI. INVESTMENT POLICY REVIEW ............................................................................ 11
XXII. INDEMNIFICATION OF INVESTMENT OFFICIALS ............................................... 12
GLOSSARY ............................................................................................................. 13
Council Meeting: 11/15/202211/21/23
CITY OF HESPERIA
STATEMENT OF INVESTMENT POLICY
1 I. POLICY
This Statement of Investment Policy while conforming to all applicable statutes at the time of adoption is intended to provide guidelines under the “prudent investor” rule, for the investment of public funds, and outline the policies for maximizing the effectiveness and efficiency of Hesperia’s cash management system. The goal is twofold: one is to enhance the economic status of Hesperia while preserving its capital resources; the second is to provide guidelines for authorized investments.
II. SCOPE
The City Treasurer is authorized to invest public funds in accordance with California Government Code (CGC) Sections 53600 et seq. and 5922 (d). This investment policy applies to all financial assets and investment activities of the City of Hesperia and includes, but is not limited to, the following funds:
General Fund
Special Revenue Funds
Debt Service Funds
Capital Project Funds
Enterprise Funds
Agency Fund
Any new fund, unless specifically exempted
This policy, however, specifically excludes employees’ retirement, pension and deferred compensation funds. Additionally, moneys held by a trustee or fiscal agent shall be governed by CGC Sections 53601 (m) and 5922 (d).
III. PRUDENCE
All moneys entrusted to the City Treasurer will be pooled in an actively managed portfolio. The City of Hesperia shall participate in standards within the content of the Standard as set forth in CGC Section 53600.3 which states in part:
“When investing, reinvesting, purchasing, acquiring, exchanging, selling and managing public funds, a trustee shall act with care; skill and prudence and diligence under the circumstances then prevailing, that a prudent investor acting in like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims to safeguard the principal and maintain the liquidity needs of the agency.”
Section 53600.3 of the government code declares each person, treasurer, or governing body authorized to make investment decisions on behalf of local agencies to be a trustee, and therefore, a fiduciary subject to the prudent investor standard. These persons shall act with care, skill and diligence under the circumstances then prevailing when investing, reinvesting, purchasing, acquiring, exchanging, selling, and managing funds. Section 53600.5 further stipulates that the primary objective of any person investing funds is to safeguard principal; secondly, to meet liquidity needs; and lastly, to achieve a return or yield on invested funds.
Council Meeting: 11/15/202211/21/23
CITY OF HESPERIA
STATEMENT OF INVESTMENT POLICY
2 IV. OBJECTIVE
The City’s treasury management system is designed to monitor and forecast expenditures and revenues, thus enabling the City to invest funds to the fullest extent possible. The City attempts to obtain the highest yield available, while investments meet the criteria established for safety, liquidity, and yield, in that order of priority.
A. SAFETY
Safety of principal is the foremost objective of the City of Hesperia. Each investment transaction shall seek to ensure capital losses are avoided, whether from securities default, rating downgrades, broker-dealer defaults, or erosion of market value. The City of Hesperia shall seek the preservation of capital by mitigating two types of risk: credit risk and market risk.
1. Credit risk is the risk of loss due to failure of the issuer and is mitigated by investing in safe securities, and diversifying the investment portfolio so the failure of any one issuer would not materially affect the cash flow of the City.
2. Market risk is the risk of market value fluctuations due to changes in the general level of interest rates, and shall be mitigated by limiting the average maturity of the City’s investment portfolio to three and one-half years, and the maximum maturity of any one security to five years. Market risk shall also be mitigated by structuring the portfolio so maturing securities match cash outflows, eliminating the need to sell securities prior to their maturity, and to avoid taking positions in securities for the purpose of selling those securities within a short period of time in order to realize a short term profit. It is recognized that within a diversified portfolio, occasional measured losses are inevitable, and must be considered within the context of the overall return on the investment.
B. LIQUIDITY
The City of Hesperia’s investment portfolio will remain satisfactorily liquid to enable the City to meet all anticipated and operating cash flow requirements.
C. MATURITY MATRIX
Maturities of investments will be selected based on liquidity requirements in order to minimize interest rate risk and maximize earnings. Current and expected yield curve analysis will be monitored, and the portfolio will be invested accordingly. As a general investment guideline, the following percentages of the pooled portfolio should be utilized in the investment maturity sectors:
Maturity Range Suggested Percentage Less than 1 year 0 to 100%
1 - 3 years 0 to 50%
3 - 5 years 0 to 50%
D. DIVERSIFICATION
The City of Hesperia’s investment pool will be diversified to avoid incurring unreasonable and avoidable risks. The investments will be diversified by security type and institution.
Regarding specific security types indicated in Section XV of this Investment Policy, no more than 10% of the City’s portfolio will be placed with any single private financial institution.
Council Meeting: 11/15/202211/21/23
CITY OF HESPERIA
STATEMENT OF INVESTMENT POLICY
3 E. RETURN ON INVESTMENTS
The City of Hesperia’s investment portfolio shall be designed to attain a market rate of return throughout economic cycles. Whenever possible with respect to budgetary and cash flow requirements, and consistent with risk limitations and prudent investment principles, the City Treasurer shall seek to augment returns above the market rate of return.
V. MAXIMUM MATURITIES
The City of Hesperia will match its investments with anticipated cash flow requirements.
Per California Government Code Sections 53601 et seq., maximum maturities shall not exceed five (5) years. An investment’s term or remaining maturity shall be measured from the settlement date to final maturity. A security purchased in accordance with this section shall not have a forward settlement date exceeding 45 days from the time of investment. The average maturity of funds should not exceed 1,275 days (3.5 years), and the cash flow requirements shall prevail at all times.
VI. PERFORMANCE STANDARDS
The City’s investment portfolio will be designed to obtain a market average rate of return during budgetary and economic cycles, taking into account the City of Hesperia’s investment risk constraints and cash flow requirements.
The City of Hesperia will operate in an active capacity in the investment strategy. The benchmark to be used by the City Treasurer to determine whether market yields are achieved shall be the State of California Local Agency Investment Fund (L.A.I.F.).
VII. DELEGATION AND GRANTS OF AUTHORITY
Management responsibility for the investment program is delegated to the City Treasurer (Director of Administrative ServicesAssistant City Manager ) who shall establish written procedures and policies for the operation of the investment program consistent with this investment policy.
No person shall engage in an investment transaction except as provided under the terms of this policy and the procedures established by the City Treasurer. The procedures established by the City Treasurer shall cont ain internal accounting controls specifying delegation and grants of authority for the verification and recording of investment transactions to regulate the activities of subordinate representatives.
In the absence of the City Treasurer, the authority to direct investment transactions affecting City moneys will be restricted to the Deputy Finance Director as to maturity, investment instrument, and dollar size of the investment.
VIII. INVESTMENT COMMITTEE
The City of Hesperia City Council shall act as the investment committee consisting of five (5) Council members to include the Mayor and four (4) Council Members as elected by the people; to provide general oversight and guidance concerning the investment policy related to the management of the City’s investment pool. The committee shall meet monthly to review the Treasurer’s Cash Report.
Council Meeting: 11/15/202211/21/23
CITY OF HESPERIA
STATEMENT OF INVESTMENT POLICY
4 IX. ETHICS AND CONFLICT OF INTEREST
The City Treasurer and all investment personn el shall refrain from personal business activity which could create a conflict with proper execution of the investment program, or which could impair the ability to execute impartial investment decisions. The City Treasurer and all investment personnel shall di sclose to the City Attorney any material financial interests in financial institutions that conduct business within the jurisdiction, and shall disclose any material financial investment positions that could be related in a conflicting manner to the performance of the City of Hesperia’s investment portfolio.
The City Treasurer shall complete on an annual basis, State of California Form 721, Statement of Economic Interests Disclosure.
X. SAFEKEEPING AND CUSTODY AGREEMENTS
To protect against potential losses caused by collapse of individual securities dealers, all securities owned by the City shall be kept in safekeeping by a third party bank trust department, acting as agent for the City under the terms of a custody agreement executed by the bank and the City. All securities will be received and delivered using standard delivery versus payment procedures with the City’s custodial bank, and evidenced by safekeeping receipts. Custodial statements are reconciled to transaction schedules by the Deputy Finance Director on a monthly basis.
XI. INTERNAL CONTROLS
Separation of duties among the employees involved in investment activities are designed to provide an ongoing internal review to prevent the potential for converting assets or concealing transactions.
Proper documentation obtained from confirmation and cash disbursement wire transfers is required for each investment transaction. Timely bank reconciliations are conducted to ensure proper handling of all transactions.
The investment portfolio and all related transactions are reviewed and balanced to appropriate general ledger accounts on a monthly basis.
An independent analysis by an external auditor shall be conducted annually to review internal control, account activity, and compliance with policies and procedures.
XII. FINANCIAL REPORTING
Under provision of Section 53646 of the California Government Code, the City Treasurer may render a quarterly or monthly report to the City Council, providing the type of investment, financial institution from which the investment was purchased, the date of maturity, the date upon which the investment becomes subject to redemption provisions, amount (to include both par and book value) of the investment, and the current market value of all investments. The report shall also include the source of the market value.
Additionally, the report shall also include the rate of interest, accrued interest earned, the amortized portion of the investment purchased at a premium or discount, and other data
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CITY OF HESPERIA
STATEMENT OF INVESTMENT POLICY
5 so required by the City Council or by am endment to the above section of California Government Code and its successors. The report shall include a statement denoting the City’s ability to meet its expenditure requirements for the following six month period, or an explanation as to why sufficient moneys will not be available. Additionally, the City Treasurer shall state whether the City is in compliance with its investment policy and shall sign the Treasurer’s Report. Pursuant to Section 53607, local agency treasurers to whom the authority to invest or reinvest funds or to sell or exchange securities has been delegated by the legislative body of a local agency are required to submit a monthly report of transactions to the legislative body . The City renders a monthly Treasurer’s Report to the City Council.
XIII. AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS
The City of Hesperia shall transact business only with banks, savings and loan institutions, and registered investment securities dealers, managers, and advisors. The dealers should either be primary dealers authorized to buy and sell government securities in direct dealings with the Federal Reserve Bank of New York, or regional dealers qualifying under the Securities and Exchange Commission Rule 15C3-1.
The City Treasurer shall send a copy of the current Statement of Investment Policy to all dealers approved to do business with the City of Hesperia. Confirmation of the dealer’s understanding of the City’s investment policy shall be provided in writing by the dealer.
The City Treasurer shall examine financial institutions that wish to perform business with the City, in order to confirm whether the participating financial institutions are satisfactorily capitalized, are market makers in securities appropriate to the City’s financial investment universe and agree to comply with the conditions set forth in the City of Hesperia’s Statement of Investment Policy.
XIV. COLLATERAL REQUIREMENTS
Collateralization is required for investments of public deposits in Certificates of Deposits (in excess of the FDIC insured amount) and all Repurchase Agreements. In order to reduce market risk, the collateral level will be at least 110% of market value of principal and accrued interest of eligible securities for Certificate of Deposit. The percentage of collateralization on repurchase agreements shall adhere to CGC Section 53601 (i) (2).
In order to conform with provisions of t he Federal Bankruptcy Code, which provides for the liquidation of securities held as collateral for Repurchase Agreements, the only securities acceptable as collateral shall be eligible Negotiable Certificates of Deposit, eligible Banker’s Acceptances, or securities that are fully guaranteed as to principal and interest by the United States or by any agency of the United States government. All securities held as collateral shall have a maximum maturity of five (5) years.
XV. AUTHORIZED AND ACCEPTABLE INVESTMENTS
The City of Hesperia is subject to California Government Code, Section 53601 et seq.
Within the context of the governing language, the following investments are authorized and accepted as defined:
A. United States Treasury Bills, Notes and Bonds - Maximum of 100% United States Treasury Bills, Notes, and Bonds, or those for which the full faith and credit of the United States are pledged for payment of principal and interest.
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CITY OF HESPERIA
STATEMENT OF INVESTMENT POLICY
6 There is no limitation as to the percentage of the portfolio, which can be invested in the category.
B. Obligations issued by the Federal Government, State of California or California Local Agency - Maximum of 100%
Obligations issued by the Government National Mortgage Association (GNMA), the Federal Farm Credit Bank System (FFCB), the Federal Home Loan Bank Board (FHLB), the Federal Home Loan Mortgage Corporation (FHLMC), the Federal National Mortgage Association (FNMA), Student Loan Marketing Association (SLMA), State of California or California Local Agency. Although there is no percentage limitation on “governmental agency” issues, the prudent investor standard shall apply for a single agency name.
C. Bankers’ Acceptances - Maximum of 25%
Bankers’ Acceptances (BAs) otherwise known as bills of exchange or time drafts that are drawn on and accepted by a commercial bank. Purchases of Bankers’ Acceptances shall not exceed 180 days’ maturity or 25% of the market value of the portfolio. No more than 5% of the market value of the portfolio may be invested in Bankers’ Acceptances issued by any one commercial bank.
D. Commercial Paper - Maximum of 15%
Commercial Paper of “prime” quality of the highest ranking or of the highest letter and number rating as provided for by a nationally recognized statistical rating organization (NRSRO) as set forth in CGC 53601(h). The entity that issues the commercial paper shall meet all of the following conditions in either paragraph 1 or 2:
1. The entity meets the following criteria:
a) Is organized and operating in the United States as a general corporation.
b) Has total assets in excess of five hundred million dollars ($500,000,000).
c) Has debt other than commercial paper, if any, that is rated in a rating category of “A” or its equivalent or higher by an NRSRO.
2. The entity meets the following criteria:
a) Is organized within the United States as a special purpose corporation, trust, or limited liability company.
b) Has program-wide credit enhancements including, but not limited to, overcollateralization, letters of credit, or surety bond.
c) Has commercial paper that is rated “A-1” or higher, or the equivalent, by an NRSRO.
Commercial Paper purchases shall have a maximum maturity of 270 days or less and cannot exceed 15% of the market value of the portfolio (30% if the dollar weighted average maturity of all commercial paper does not exceed 31 days). Purchase of commercial paper may not exceed 10% of outstanding paper of an issuing corporation pursuant to CGC 53635(a)(2).
Council Meeting: 11/15/202211/21/23
CITY OF HESPERIA
STATEMENT OF INVESTMENT POLICY
7 E. Negotiable Certificates of Deposit - Maximum of 25% Negotiable Certificates of Deposit (NCD) issued by a nationally or state- chartered bank or a state or federal savings and loan association. Pursuant to CGC 53601 (i) and 53638, the NCD must meet the following criteria:
1. The deposit should not exceed the shareholder’s equity of any depository bank. The shareholder’s equity shall be determined in accordance with Section 118 of the Financial Code, but shall be deemed to include capital notes and debentures.
2. The deposit shall not exceed the total of the net worth of any depository savings association or federal association, except that deposits not exceeding a total of five hundred thousand dollars ($500,000) may be made to a savings association or federal association without regard to the net worth of that depository, if such deposits are insured or secured as required by law.
3. The deposit to the share accounts of any regularly chartered credit union shall not exceed the total of the unimpaired capital and surplus of the credit union, as defined by rule of the Commissioner of Financial Institutions, except that the deposit to any credit union share account in an amount not exceeding five hundred thousand dollars ($500,000) may be made if the share accounts of that credit union are insured or guaranteed pursuant to Section 14858 of the Financial Code or are secured as required by law.
4. The deposit in investment certificates of a federally insured industrial loan company shall not exceed the total of the unimpaired capital and surplus of the insured industrial loan company.
Purchases of negotiable certificates of deposits may not exceed 25% of the market value of the portfolio. A maturity limitation of five (5) years is applicable on NCDs.
F. Repurchase Agreements - Maximum of 20%
The City may invest in Repurchase Agreements with banks and dealers with which the City has entered into a Master Repurchase Agreement which specifies terms and conditions of Repurchase Agreements. A signed copy of the Master Repurchase Agreement shall be required from the authorized financial dealer prior to the execution of any applicable transaction. The maturity of Repurchase Agreements s hall not exceed one year. The market value of securities used as collateral for Repurchase Agreements shall be monitored daily, and will not be allowed to fall below 102% of the value of the Repurchase Agreement as set forth in CGC Section 53601 (j) (2).
G. Local Agency Investment Fund - Maximum of $75 million per account The City may invest in the Local Agency Investment Fund (L.A.I.F.) established by the State Treasurer, for the benefit of local agencies, up to the maximum permitted by State law, which is currently $75 million dollars per account. There is no limitation as to the percentage of the portfolio a local agency can invest in L.A.I.F. under CGC 16429.1, which allows a local agency to remit to the Treasurer any money not required for immediate needs and gives the agency the exclusive determination of the length of time its money will be on deposit with the Treasurer.
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CITY OF HESPERIA
STATEMENT OF INVESTMENT POLICY
8 H. Medium Term Notes - Maximum of 30%
Medium Term Notes, defined as all corporate and depository institution debt securities with a maximum remaining maturity of five years or less, issued by corporations organized and operating within the United States or by depository institutions licensed by the United States or any state and operating within the United States. Notes eligible for investment shall be rated in a rating category of “A” or its equivalent or better by an NRSRO. No more than 30% of the market value of the portfolio may be invested in Medium-Term Notes pursuant to CGC 53601 (k), and no more than 10% of the total assets of the investments may be invested in any one issuer’s medium term notes
pursuant to CGC 53635(a)(2).
I. Mutual and Money Market Funds - Maximum of 20%
Shares of beneficial interest issued by diversified management companies that are funds registered with the Securities and Exchange Commission under the Investment Company Act of 1940, as defined in Section 53601 (l) of the California Government Code. For securities and obligations investments above two hundred fifty thousand dollars ($250,000), the investments must comply with the investment restrictions pursuant to Section 53601 (l), companies shall either:
1. Attain the highest ranking or the highest letter and numerical ranking provided by not less than two NRSROs.
2. Retain an investment advisor registered or exempt from registration with the Securities and Exchange Commission with not less than five years’ experience managing mutual funds with assets under management in excess of five hundred million dollars ($500,000,000).
The purchase price of shares of beneficial interest purchased pursuant to this section shall not include any commission that these companies may charge and shall not exceed 20% of the agency’s moneys that may be invested in mutual funds. In addition, no more than 10% of the agency’s funds may be invested in shares of beneficial interest of any one mutual fund. Further, the City may invest only in mutual and money market funds which have an average maturity of 90 days or less per Securities & Exchange Commission regulations.
3. All positions in government-sponsored investment pools and permitted mutual and money market funds (per Sections G and I, above) shall be subject to periodic review by the City Treasurer, or a designee thereof, in order to ensure that the moneys in question are managed in a manner consistent with the standards and objectives set forth elsewhere in this Policy.
J. Collateralized Bank Deposits - Maximum of 10%
The City may invest in collateralized bank deposits in the form of notes, bonds, or other obligations which are at all times secured by a valid first priority security interest. The securities serving as collateral shall be placed by delivery or book entry into the custody of a trust company or the trust department of a bank which is not affiliated with the issuer of the secured obligation, and the security interest shall be perfected in accordance with the requirements of the Uniform Commercial Code or Federal regulations applicable to the types of securities in which the security interest is placed. For purposes of Time Deposits issued by financial institutions, the City may not invest more than 10% of the market value
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CITY OF HESPERIA
STATEMENT OF INVESTMENT POLICY
9 of the portfolio in this category. The maximum term of investment is five (5) years, unless otherwise approved by City Council. To exceed the five-year maturity limit, the authority must be approved by the City Council at least three months prior to the purchase of any security exceeding the five-year maturity limit.
K. Investment Pools - Maximum of 30%
Investment structures other than L.A.I.F., rated AA or higher, incorporating investment pools permitted in California Government Code Sections 53601, 53635, and 5922 (d). Government Code Section 53635 (c) allows the City to invest in commercial paper, debt securities, or other obligations of a public bank, as defined in Section 57600.
California Government Code Section 53635.2
added public banks to the list of depository institutions. However, Section 53601 shall apply to investment pools that have the same governing body.
L. Municipal Bonds - Maximum of 10%
The City may invest in bonds issued by a state or local government agency.
Bonds eligible for investment shall be rated in a rating category of “A” or its equivalent or better by an NRSRO.
M. Bonds Issued by the City of Hesperia – Maximum of 25% The City may acquire its own bonds, pursuant to Section 53601 (a) and (d), including bonds payable solely out of the revenues from a revenue–producing property owned, controlled, or operated by the local agency or by a department, board, agency, or authority of the local agency.
N. Supranational Obligations – Maximum of 30%
Pursuant to Government Code Section 53601 (q), the City may invest in United States dollar denominated senior unsecured unsubordinated obligations issued or unconditionally guaranteed by the International Bank for Reconstruction and Development, International Finance Corporation, or Inter-American Development Bank, with a maximum remaining maturity of five years or less, and eligible for purchase and sale within the United States. Investments shall be rated in a rating category of “AA” or its equivalent or better by an NRSRO and shall not exceed 30 percent of the City’s moneys that may be invested pursuant to this section.
O. Public Bank Obligations – Maximum 100%
Pursuant to Government Code Sections 53601 (r), 53635 (c), and 57603, the City may invest in commercial paper, debt securities, or other obligations of a public bank, as defined in Section 57600. The maximum term of investment is five (5) years.
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CITY OF HESPERIA
STATEMENT OF INVESTMENT POLICY
10 Summary of Maximum % Limitations of Investments by Investment Type:
The following summary of maximum percentage limits, by investment type, is established for the City’s total pooled funds portfolio:
XVI. PROHIBITED INVESTMENTS
In accordance with CGC Section 53601.6, the City will not invest any funds in inverse floaters, range notes, or interest only strips that are derived from a pool of mortgages.
Additionally, the City will not invest any funds in reverse repurchase agreements, mortgage pass-through securities or collateralized mortgage obligations currently permitted under CGC Section 53601. Further, per the Securities and Exchange Commission (SEC), local governments do not qualify as Qualified Institutional Buyers (QIBs) and are not allowed to purchase Rule 144A securities. As such, the City will not invest in Rule 144A securities.
XVII. LEGISLATIVE CHANGES
Any State of California legislative action that further restricts allowable maturities, investment type, or percentage allocations will be incorporated into the City of Hesperia’s Investment Policy, and supersede any and all previous applicable language.
XVIII. INTEREST EARNINGS
All moneys earned and collected from invest ments authorized in this policy shall be allocated on a quarterly basis to various fund accounts where required by law based on the cash balance in each fund as a percentage of the entire pooled portfolio. However, accounts requiring full liquidity will receive their proportional distribution of moneys based on the lower of pooled or overnight rates.
XIX. LIMITING MARKET VALUE EROSION
The longer the maturity of securities, the greater the potential for market price volatility, therefore, it is the general policy of the City to limit the potential effects from erosion in market values by adhering to the following guidelines:
A. All immediate and anticipated liquidity requirements will be addressed prior to purchasing all investments.
A uthorized Investm ent Ty pe
Maximum
Maturity
Maximum
Percentage
Of Portfolio
Maximum
Investm ent
In One Issuer
U.S. Treasury Obligations 5 years 100% None
U.S. & State or Local Agency Securities 5 years 100% None Banker’s Acceptances 180 days 25% 5%
Commercial Paper 270 days 15% 10%
Negotiable Certificates of Deposit 5 years 25% None
Repurchase Agreements 1 year 20% None
Local Agency Investment Fund (LAIF) N/A 100% None
Medium-Term Notes 5 years 30% None
Mutual & Money Market Funds N/A 20% 10%
Collateralized Bank Deposits 5 years 10% None
Investment Pools N/A 30% None
Municipal Bonds 5 years 10% None
Supranational Obligations 5 years 30% None
Public Bank Obligations 5 years 100% None
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CITY OF HESPERIA
STATEMENT OF INVESTMENT POLICY
11 B. Maturity dates for long-term investments will coincide with significant cash flow requirements where possible, to assist with short term cash requirements at maturity.
C. All long-term securities will be purchased with the intent to hold all investments to maturity under then-prevailing economic conditions. However, economic or market conditions may change, making it in the City’s best interest to sell or trade a security prior to maturity.
XX. PORTFOLIO MANAGEMENT ACTIVITY
The investment program shall seek to augment returns consistent with the intent of this policy, identified risk limitations and prudent investment principles. The objectives will be achieved by use of the following strategies:
A. Active Portfolio Management Through active fund and cash flow management taking advantage of current economic and interest rate trends, the portfolio yield may be enhanced with limited and measurable increases in risk by extending the weighted maturity of the total portfolio (not to exceed 1,275 days).
B. Portfolio Maturity Management When structuring the maturity composition of the portfolio, the City shall evaluate curr ent and expected interest rate yields and necessary cash flow requirements. It is recognized that in normal market conditions longer maturities produce higher yields. However, the securities with longer maturities also experience greater price fluctuations when the level of interest rates change.
C. Security Swaps The City may take advantage of security swap opportunities to improve the overall portfolio yield. A swap, which improves the portfolio yield, may be selected even if the transactions result in an accounting loss.
Documentation for swaps will be included in the City’s permanent investment file documents.
D. Competitive Bidding It is the policy of t he City to require competitive bidding for investment transactions that are not classified as “new issue” securities. For the purchase of non-”new issue” securities, and the sale of all securities, at least three bidders must be contacted. Competitive bidding for security swaps is also suggested, however, it is understood that certain time constraints and broker portfolio limitations exist which would not accommodate the competitive bidding process. If a time or portfolio constraining condition exists, the pricing of the swap should be verified to current market conditions and documented for auditing purposes.
XXI. INVESTMENT POLICY REVIEW
This Statement of Investment Policy is intended to conform to all applicable statutes at the time of adoption. The Investment Policy shall be reviewed and approved annually by the City Council at a public meeting to ensure consistency with the overall objectives of the preservation of capital, liquidity, and return of the portfolio. The Investment Policy shall also be reviewed to ensure its compliance and relevance to the current law, financial and economic trends, and to meet the cash flow requirements of the City of Hesperia.
Council Meeting: 11/15/202211/21/23
CITY OF HESPERIA
STATEMENT OF INVESTMENT POLICY
12 Investment operations are reviewed monthly during the reconciliation process of investment transactions to the third party statements, and by the Management Services Department in the proof of cash process. The investment portfolio is audited annually by the City’s independent auditors which shall include a review for compliance with the City’s Statement of Investment Policy.
XXII. INDEMNIFICATION OF INVESTMENT OFFICIALS
Any investment officer exercising his or her assigned authority with due diligence and prudence, and in accordance with the City’s Investment Policy, will not be held personally liable for any individual investment losses or for total portfolio losses.
_____________________________________ ______________________ Casey Brooksher Date
City Treasurer, City of Hesperia
Council Meeting: 11/15/202211/21/23
CITY OF HESPERIA
STATEMENT OF INVESTMENT POLICY
13 GLOSSARY
AGENCIES: Federal agency securities and/or Government-sponsored enterprises.
BANKERS’ ACCEPTANCE: A draft of bill or exchange accepted by a bank or trust company.
The accepting institution guarantees payment of bill, as well as the issuer.
BID: The price offered by a buyer of securities.
BROKER: A broker brings buyers and sellers together for a commission.
CERTIFICATE OF DEPOSIT (CD): A time deposit with a specific maturity evidenced by a certificate. Large-denomination CDs are typically negotiable.
COLLATERAL: Securities, evidence of deposit, or other property that a borrower pledges to secure repayment of a loan. Also, refers to securities pledged by a bank to secure deposits of public monies.
COLLATERIALIZED MORTGAGE OBLIGATION: A security backed by a pool of pass through rates, structured so that there are several classes of bondholders with varying maturities, called tranches. The principal payments from the underlying pool of pass through securities are used to retire the bonds on a priority basis as specified in the prospectus.
DERIVATIVE: Contracts, such as options and futures, whose price is derived from the price of an underlying financial asset.
DIVERSIFICATION: Dividing investment funds among a variety of securities offering independent returns.
FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC): A federal agency that insures bank deposits, currently up to $250,000 per deposit.
FEDERAL FUNDS RATE: The interest rate that banks with excess reserves charge other banks that need overnight loans.
FEDERAL RESERVE SYSTEM: The central bank of the United States created by Congress and consisting of a seven member Board of Governors in Washington, D.C., and 12 regional banks.
It is responsible for regulating monetary policy.
INTEREST-ONLY STRIP: A security based solely on the interest payments from a pool of mortgages, Treasury Bonds, or other bonds. Once the principal on the mortgages or bonds has been repaid, interest payments stop and the value of the interest–only strip falls to zero.
INVERSE FLOATER: A derivative instrument whose coupon rate is linked to the market rate of interest in an inverse relationship.
INVESTMENT POOL: The aggregate of all funds from political subdivisions that are placed in the custody of the Treasurer for investment.
LIQUIDITY: A liquid asset is one that can be converted easily and rapidly into cash without a substantial loss of value. In the money market, a security is said to be liquid if the spread between bid and asked prices is narrow and reasonable size and can be done at those quotes.
Council Meeting: 11/15/202211/21/23
CITY OF HESPERIA
STATEMENT OF INVESTMENT POLICY
14 GLOSSARY
MARKET RISK: The risk that the value of investments may decline over a given time period due to economic changes or other events that impact large portions of the market.
MARKET VALUE: The price at which a security is trading and could presumably be purchased or sold.
MASTER REPURCHASE AGREEMENT : A written contract covering all future transactions between the parties to repurchase—reverse repurchase agreements that establishes each party’s rights in the transactions.
MATURITY: The date upon which the principal or stated value of an investment becomes due and payable.
MONEY MARKET: The market in which short-term debt instruments (bills, commercial paper, banker’s acceptances, etc.) are issued and traded.
MORTGAGE PASS-THRU SECURITY: A security created when one or more mortgage holders form a collection (pool) of mortgages sells shares or participation certificates in the pool. The cash flow from the collateral pool is passed through to the security holder as monthly payments of principal, interest, and prepayments.
PORTFOLIO: Collection of securities held by an investor.
PRUDENT PERSON RULE: An investment standard. The trustee may invest in a security that someone in that same position would seek as reasonable income and preservation of capital.
PUBLIC BANK: a corporation, organized under the Nonprofit Mutual Benefit Corporation Law or the Nonprofit Public Benefit Corporation Law for the purpose of engaging in the commercial banking business or industrial banking business, that is wholly owned by a local agency, local agencies, or a joint powers authority formed pursuant to the Joint Exercise of Powers Act that is composed only of local agencies (California Government Code 57600 (b) (1)).
REPURCHASE AGREEMENTS: An agreement with a commitment by the seller (dealer) to buy a security back from the purchaser (customer) at a specified price at a designated future date.
REVERSE REPURCHASE AGREEMENT: Refers to a repurchase agreement. From the customer’s perspective, the customer provides a collateralized loan to the seller.
SAFEKEEPING: A service to customers rendered by banks for a fee whereby securities and valuables of all types and descriptions are held in the bank’s vaults for protection.
TREASURY BILLS: A non-interest bearing discount security issued by the U.S. Treasury to finance the national debt. Most bills are issued to mature in three months, six months, or one year.
YIELD: The rate of annual income return on an investment, expressed as a percentage.
JOINT RESOLUTION NO. 2023-47
RESOLUTION NO. SA 2023-01
RESOLUTION NO. HHA 2023-08
RESOLUTION NO. CDC 2023-02
RESOLUTION NO. HFPD 2023-08
RESOLUTION NO. HWD 2023-15
A JOINT RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HESPERIA,
CALIFORNIA, SUCCESSOR AGENCY FOR THE HESPERIA COMMUNITY
REDEVELOPMENT AGENCY, THE BOARD OF DIRECTORS OF THE
HESPERIA HOUSING AUTHORITY, COMMISSIONERS OF THE COMMUNITY
DEVELOPMENT COMMISSION, THE BOARD OF DIRECTORS OF THE
HESPERIA FIRE PROTECTION DISTRICT, AND THE BOARD OF DIRECTORS
FOR THE HESPERIA WATER DISTRICT ANNUALLY APPROVING THE
STATEMENT OF INVESTMENT POLICY
WHEREAS, it is the responsibility of the City Treasurer to protect, preserve and maint ain cash and investments of the City of Hesperia (City), Successor Agency for the Hesperia Community Redevelopment Agency, Hesperia Housing Authority, Hesperia Community Development Commission, Hesperia Fire Protection District, and Hesperia Water District , on behalf of the citizens of this community; and
WHEREAS, it is the City Treasurer’s responsibility to review and/or amend and present to the City Council, Commissioners, and Board of Directors for approval, a Statement of Investment Policy which is intended to provide guidelines for the prudent investment of public funds while maintaining compliance with all applicable local, state and federal laws and regulations; and
WHEREAS, it is the polic y of the City , Successor Agency for the Hesperia Community Redevelopment Agency, Hesperia Housing Authority, Hesperia Community Development Commission, Hesperia Fire Protection District, and Hesperia Water District to invest public funds not required for immediate day-to-day operations in safe and liquid investments having a market- average rate of return, while conforming to all federal, state and local statutes governing the prudent investment of public funds, with the City’s , Successor Agency for the Hesp eria Community Redevelopment Agency, Hesperia Housing Authority, Hesperia Community Development Commission, Hesperia Fire Protection District, and Hesperia Water District’s ultimate goal being to enhance its economic status while protecting funds, taking t he “Prudent Investor Rule” as its guide in carrying out this goal; and
WHEREAS, it is the City’s , Successor Agency for the Hesperia Community Redevelopment Agency, Hesperia Housing Authority, Hesperia Community Development Commission, Hesperia Fire Protection District, and Hesperia Water District’s position that the Statement of Investment Policy shall apply to the investment activities of all inactive cash balances under the direct authority of the City, Commissioners, and Board of Directors, which shall include investments of the City of Hesperia , Successor Agency for the Hesperia Community Redevelopment Agency, Hesperia Housing Authority, Hesperia Community Development Commission, Hesperia Fire Protection District, and Hesperia Water District itself, which investments shall be pooled in a diversified portfolio; and
Joint Resolution No. 2023-47, SA 2023-01, HHA 2023-08, CDC 2023-02, HFPD 2023-08, & HWD 2023-15
WHEREAS, the attached Statement of Investment Policy has been developed using the Municipal Treasurers Association Model Investment Policy as a guide, assuring compliance with current state legislation, while providing a management tool to implement future investment decisions by the City Treasurer; and
WHEREAS, an annual review of the Statement of Investment Policy has recently been concluded and the policy is in compliance with Calif ornia Government Code Sections 53600 et. seq. and 5922(d).
NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF HESPERIA,
CALIFORNIA, SUCCESSOR AGENCY FOR THE HESPERIA COMMUNITY
REDEVELOPMENT AGENCY, THE BOARD OF DIRECTORS OF THE HESPERIA HOUSING
AUTHORITY, COMMISSIONERS OF THE COMMUNITY DEVELOPMENT COMMISSION, THE
BOARD OF DIRECTORS OF THE HESPERIA FIRE PROTECTION DISTRICT, AND BOARD OF DIRECTORS OF THE HESPERIA WATER DISTRICT, AS FOLLOWS:
Section 1. That the recitals above are true and correct and adopted as findings.
Section 2. The Statement of Investment Policy, included herein as “Attachment 1” of this Joint Resolution, as the Statement of Investment Policy for the City of Hesperia is hereby adopted.
Section 3. That the City Clerk shall certify to th e passage and adoption of this R esolution and enter it into the book of original resolutions.
ADOPTED AND APPROVED this 21st day of November 2023.
_________________________________
Brigit Bennington, Mayor/Chair
ATTEST:
______________________________________
Erin Baum, Assistant City Clerk
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City of Hesperia
STAFF REPORT
DATE: November 21, 2023
TO: Chair and Board Members, Hesperia Water District
FROM: Rachel Molina, City Manager
BY: Casey Brooksher, Assistant City Manager
Keith Cheong, Senior Accountant
SUBJECT: Amend Agreement with InfoSend for Interactive Voice Response, Online Bill Pay, Presentment Services, Data Processing, and Printing and Mailing Services for Water/Sewer Utility Bills
RECOMMENDED ACTION
It is recommended that the City Council and Board of Directors of the Hesperia Water District authorize the City Manager to amend the existing agreement with lnfoSend, Inc. (lnfoSend) in the amount of $160,000, for a total revised not -to-exceed amount of $609,066, and approve a one- year contract extension for continued Interactive Voice Response, Online Bill Pay, Presentment Services, Data Processing, and Printing and Mailing Services for Water/Sewer utility bills.
BACKGROUND
The Hesperia Water District (District) has u sed lnfoSend since 2010 to provide customers with the ability to pay their water/sewer bills online. lnfoSend hosts a secure website that is available 24- hours a day where the customer can view and pay their bill. A customer can make a one - time payment as a guest or, upon enrolling for an online payment account, the customer can setup automatic payments. Additionally, the customer can elect paperless billing. To help remedy wait times, as well as provide further customer options, the District, as a result of an Request for Proposal (RFP), added additional payment options, including, Interactive Voice Response System (processing electronic ACH and debit/credit card transactions, via phone), as well as a text-to-pay option for mobile payments. In addition, for cost efficiencies, bill printing and mailing services were also added to the agreement with lnfosend.
The added components have provided District customers with additional options for payment, including automate d English and Spanish phone service; reduced need for face-to-face transactions; ability to pay multiple accounts under one shopping cart; ability for text message notifications and text -to-pay. In addition, the inclusion of printing and mailing services into the lnfosend agreement has enabled the District to substantially reduce its printing and postage costs.
ISSUES/ANALYSIS
InfoSend has agreed to maintain their current contract pricing for the Interactive Voice Response System, Online Bill Pay, Presentment Services, and Data Processing services. A minor increase in mailing and return envelope pricing would be included as part of the Printing and Mailing services for Water/Sewer utility bills that would result in an approximate 1% increase in the annual cost.
An amendment to the agreement with InfoSend is needed to facilitate the continuation of timely and efficient water/sewer utility billing services through December 31, 2024.
Staff Report to the Chair and Board Members of the Hesperia Water District Amend Agreement with InfoSend for Interactive Voice Response, Online Bill Pay, Presentment Services, Data Processing, and Printing and Mailing Services for Water/Sewer Utility Bills November 21, 2023
FISCAL IMPACT
The Fiscal Year (FY) 2023-24 Budget includes sufficient funding for Interactive Voice Response, Online Bill Pay, Presentment Services, Data Processing, and Printing and Mailing Services for Water/Sewer utility bills for the District. Funding will be included in the FY 2024-25 Budget for the ongoing services through the remainder of the contract extension period.
ALTERNATIVES
1. Provide alternative direction to staff.
ATTACHMENTS
None
City of Hesperia
STAFF REPORT
DATE: November 21, 2023
TO: Mayor and Council Members
FROM: Rachel Molina, City Manager
BY: Nathan Freeman, Director of Development Services
Cassandra Sanchez, Deputy City Engineer
SUBJECT: Final Tract Map No. 20396
RECOMMENDED ACTION
It is recommended that the City Council adopt Resolution No. 2023-52 approving Final Tract Map No. 20396 to create seven (7) single-family residential lots and one (1) common letter lot on 2.38 gross acres, located on the west side of Topaz Avenue (approximately 610 feet north of Live Oak Street – APN 0405-261-69) and within the Main Street and Freeway Corridor Specific Plan, with a categorical exemption under CEQA Section 15332 Infill Development Projects (Applicant: San Luis Concrete Corp).
BACKGROUND
On May 13, 2021, the Planning Commission approved Tentative Tract Map No. 20396 to create seven (7) single-family residential lots on 2.38 gross acres located on the west side of Topaz Avenue, approximately 610 feet north of Live Oak Street.
Staff has reviewed the map and has determined that it complies with all General Plan and zoning regulations, all required conditions of approval, was timely filed , and complies with all local ordinances related to the creation of these parcels. The developer has executed a Subdivision Improvement Agreement and furnished the required securities for the public improvements in accordance with local ordinances and the Subdivision Map Act.
ISSUES/ANALYSIS
There are no issues identified with this item.
FISCAL IMPACT
There are no significant fiscal impacts to the City related to this action.
ALTERNATIVE(S)
1. Provide alternative direction to staff.
ATTACHMENT(S)
1. Resolution No. 2023-52
Staff Report to the Mayor and Council Members
Final Tract Map No. 20396
November 21, 2023
2. Final Tract Map No. 20396
RESOLUTION NO. 2023-52
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HESPER IA, CALIFORNIA, APPROVING FINAL TRACT MAP NO. 20396 TO CREATE SEVEN ( 7) SINGLE-FAMILY RESIDENTIAL LOTS AND ONE ( 1) COMMON LETTER LOT ON 2.38 GROSS ACRES , LOCATED ON THE WEST SIDE OF TOPAZ AVENUE (APPROXIMATELY 610 FEET NORTH OF LIVE OAK
STREET, APN 0405-261-69) AND WITHIN THE MAIN STREET AND FREEWAY
CORRIDOR SPECIFIC PLAN, WITH A CATEGORICAL EXEMPTION UNDER CEQA SECTION 15332 INFILL DEVELOPMENT PROJECTS ( APPLICANT:
SAN LUIS CONCRETE CORP).
WHEREAS, on May 13, 2021, the Planning Commission approved Tentative Tract Map No. 20396; and
WHEREAS, Tract Map No. 20 396 is to create seven (7) Single-family Residential lots and one (1) common letter lot on 2.38 gross acres , located on the west side of Topaz Avenue (approximately 610 feet north of Live Oak Street, APN 0405 -261-69) and within the Main Street and Freeway Corridor Specific Plan, with a categorical exemption under CEQA Secti on 15332 Infill Development Projects; and
WHEREAS, all legal prerequisites to the adoption of this resolution have occurred.
NOW THEREFORE , BE IT RESOLVED BY THE CITY OF HESPERIA CITY COUNCIL AS FOLLOWS:
Section 1. Final Tract Map No. 20396 is hereby approved, and the City Clerk is authorized to present same to the County Recorder to be filed for record.
Section 2. That the City Clerk shall certify to the passage and adoption of this resolution and enter it into the book of original resolutions.
ADOPTED AND APPROVED this 21st day of November 2023.
Brigit Bennington, Mayor
ATTEST:
Erin Baum, Assistant City Clerk
11-06-2024
Attachment 2
City of Hesperia
STAFF REPORT
DATE: November 21, 2023
TO: Mayor and Council Members
Chair and Board Members, Hesperia Water District
FROM: Rachel Molina, City Manager
BY: Nathan Freeman, Director of Development Services
Cassandra Sanchez, Deputy City Engineer
Tina Souza, Senior Project Manager
SUBJECT: Amend Professional Services Agreement for Bidding and Construction Support Services for the Ranchero Road Improvements Project (C.O. No s. 7094, 7131, 7146, and 7154)
RECOMMENDED ACTION
It is recommended that the City Council and Board of Directors of the Hesperia Water District authorize the City Manager to amend the existing Professional Services Agreement (PSA) 2021- 22-040 with Parsons Transportation Group, Inc. (Parsons) for Bidding and Construction Support Services for the Ranchero Road Improvements Project, [Construction Order (C.O.) Nos. 7094, 7131, 7146, and 7154], in the amount of $32,698.50 and authorize a 10% contingency amount of $3,269.85 to be released as may be necessary for the completion of the project , totaling $35,968.35, with an overall PSA not-to-exceed total of $307,726.35.
BACKGROUND
The Ranchero Road Corridor project (Project), Phase III consists of widening the five -mile roadway segment of Ranchero Road from two lanes to five lanes between Seventh Avenue to just west of Royal View Lane, including replacing and widening the bridge over the California Department of Water Resources (DWR) aqueduct, as well as widening the at -grade crossing of Union Pacific Railroad (UPRR) railroad tracks. The Project is currently the City’s highest priority for roadway capital construction.
A contract for bidding and construction support services for the roadway portion of the Project was approved by the City Council and Board of Directors on August 3, 2021. Amendment No. 1 to the subject PSA was approved by the City Council and Board of Directors March 21, 2023.
ISSUES/ANALYSIS
The Project is currently under construction and a second amendment is required to continue with construction support services through project close -out. Attached is the estimated number of hours to complete the remaining work on the Project. These services are vital to the continuation of Project construction and final as-built plans.
Staff Report to the Mayor and Council Members and Chair and Board Members of the Hesperia Water District
Amend Professional Services Agreement for Bidding and Construction Support Services for the Ranchero Road Improvements Project (C.O. Nos. 7094, 7131, 7146, and 7154) November 21, 2023
FISCAL IMPACT
Funding for the Project is budgeted in the F iscal Year 2023-24 Capital Improvement Program (CIP) Budget under Funds 204, 207, 300, 306 and 504. Subsequent fiscal year’s CIP will include adequate appropriation authority for these services as needed. The Project is identified in the CIP under Ranchero Road Improvements – 7th Avenue to Mariposa Road, C.O. No. 7094, Traffic Signal @ Ranchero Road/Maple Avenue – C.O. 7131, Traffic Signal @ Ranchero Road/Cottonwood Avenue – C.O. 7146, and Traffic Signal @ Ranchero Road/Seventh Avenue – C.O. 7154.
The County will reimburse the City for their proportionate share of the project. At this time, the ratio of bidding and construction support services required is estimated at approximately 50% in the City and 50% in the County. This is an estimate subject to change throughout the course of construction based on the work performed by Parsons.
ALTERNATIVE(S)
1. Provide alternative direction to staff.
ATTACHMENT(S)
1. Attachment 1 – Cost Proposal
Tasks Total Hours Senior
Engineer
Associate
Engineer
Average
Billing
Rates
Total Cost
Project Management, Meeting & Coordination 12 217.25$ 2,607.00$ Project Management
12 2,607.00$
Respond to Information (RFI) and Prepare CCO plans
Respond to RFIs and Prepare CCOs as requested by city 100 20 80 151.45$ 15,145.00$ Complete remaining UPRR grade crossing revisions 20 4 16 151.45$ 3,029.00$ Prepare revised UPRR waterline casing design 20 20 0 217.25$ 4,345.00$ As-built
Prepare as-builts 50 10 40 151.45$ 7,572.50$
Design Support During Construction (DSDC) 190 30,091.50$ -$
32,698.50$
EXHIBIT B
Amendment No. 2 - Design Support During Construction
TASK SUMMARY
Total
Other Direct Cost (ODC)
Attachment 1
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City of Hesperia
STAFF REPORT
DATE: November 21, 2023
TO: Mayor and Council Members
FROM: Rachel Molina, City Manager
BY: Melinda Sayre, Deputy City Manager/City Clerk
SUBJECT: Consideration of Animal Shelter Evaluation
RECOMMENDED ACTION
It is recommended that the City Council receive and file the findings from the most recent independent Animal Shelter evaluation.
BACKGROUND
Concerns raised by the City Council, staff, and the public beginning in June of 2023 necessitated an independent evaluation of the current state and function of the City’s animal shelter. Animal Shelter Services, LLC was contracted to perform a comprehensive evaluation of the City’s animal shelter.
ISSUES/ANALYSIS
Animal Shelter Services auditors were on-site from September 25 through September 28, 2023, after which time they compiled the information gathered , and authored the report , and its associated recommendations, being presented to you at this time.
FISCAL IMPACT
There is no fiscal impact in receiving this item.
ALTERNATIVE(S)
1. Provide alternative direction to staff.
ATTACHMENT(S)
None
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City of
Hesperia
STAFF REPORT
DATE: November 21, 2023
TO: Mayor and City Council Members
Chair and Commission, Hesperia Housing Authority
Chair and Board Members, Hesperia Fire Protection District Chair and Board Members, Hesperia Water District
FROM: Rachel Molina, City Manager
BY: Casey Brooksher, Assistant City Manager
Lorraine Carmona, Budget/Finance Specialist
SUBJECT: Fiscal Year 2023-24 First Quarter Budget Review
RECOMMENDED ACTION
It is recommended that the City Council and Board of Directors of the Hesperia Water District receive and file the Fiscal Year (FY) 2023-24 First Quarter Budget Review , and the related following resolutions, amending the FY 2023-24 Budgets for the City of Hesperia and the Hesperia Water District, be approved:
1) City of Hesperia Resolution No. 2023-66
2) Hesperia Water District HWD No. 2023-23
BACKGROUND
In compliance with the City Council’s policy direction, staff has prepared the FY 2023-24 First Quarter Budget Review for the City Council, Hesperia Housing Authority, Hesperia Fire Protection District, and the Hesperia Water District Board’s consideration and action.
ISSUES/ANALYSIS
The attached document entitled “Fiscal Year 2023-24 First Quarter Budget Review” includes a report on the status of the City’s FY 2023-24 Budget and a financial review of the first three months experience of the current fiscal year. The report format is used to facilitate the review of complex financial information for an efficient and effective financial review process.
FISCAL IMPACT
See attached Fiscal Year 2023-24 First Quarter Budget Review Report document.
ALTERNATIVE
1. Provide alternative direction to staff.
ATTACHMENTS
1. Fiscal Year 2023-24 First Quarter Budget Review Report
2. Resolution No. 2023-66
3. Resolution HWD No. 2023-23
FISCAL YEAR 2023-24
FIRST QUARTER BUDGET REVIEW
November 21, 2023
- 2 -
2023-24 FIRST QUARTER BUDGET REVIEW REPORT
- 3 -
T A B L E O F C O N T E N T S
Page
Executive Summary ............................................................................................................................ 4 Status of FY 2023-24 Budget, Budget Amendments and Reserves:
General Fund .......................................................................................................................... 6 Water District .......................................................................................................................... 7 Streets Maintenance ............................................................................................................... 8 FY 2023-24 September 30, 2023 Year-To-Date Revenue Review:
Major Funds Revenue Summary ............................................................................................ 9 General Fund Revenues ......................................................................................................... 10 Community Development Block Grant Revenue ..................................................................... 12 Hesperia Housing Authority Revenue ..................................................................................... 12 Street Related Funds Revenue ............................................................................................... 13 Other City Funds Revenue ..................................................................................................... 14 Water District Revenue ........................................................................................................... 16 Department FY 2023-24 Budget Expenditure Status Summary ........................................................... 18 FY 2023-24 Total Expenditures By Department and Program ............................................................. 18 Proposed Budget Amendments – Summary ........................................................................................ 26 Proposed Budget Amendments – Narrative ......................................................................................... 26 2023-24 First Quarter Budget Salaries and Positions .......................................................................... 28 California Public Employees Retirement System (CalPERS) Update .................................................. 32
2023-24 FIRST QUARTER BUDGET REVIEW REPORT
- 4 -
EXECUTIVE SUMMARY
The following chart compares the FY 2023-24 Budget and September 2023 year-to-date (YTD) revenue and expenditure totals. The percentage comparisons for revenues and expenditures are based on comparing the September 202 3 YTD to the FY 202 3-24 Amended Budget. The Amended Budget is used to accurately reflect any changes to the adopted budget that occur from City Council approving budget amendments during the first three months of the fiscal year.
Status of Overall City Fiscal Year 2023-24 Budget
• Revenue: Based on the analysis of first quarter performance to date, revenue totals collected is $ 19.5 million, which is $6.8 million or 26 % less than was received through first quarter FY 2022-23. Overall, revenue is 14% collected of the budget, which is due to the timing of payments related to larger revenue sources such as Measure I, Franchise Tax, and Vehicle License Fees. Additional details are provided further within the report.
• Expenditures: At 18% utilized, the FY 20 23-24 Budget is proceeding as planned. Overall , the September 2023 YTD expenditures of $ 24,680,758 are $2.3 million or 11% more than the September 2022 YTD of $22,330,256. It should be noted that there are five (5) budget amendments totaling $477,273 included in this report. • Reserves: The cash reserve policy for the General Fund and Water District (operating and capital) exceed the City Council’s minimum policy of two (2) months of the annual expenditures be held in cash. The following estimated reserve calculations are based on the June 30, 20 22 ending cash balances included in the June 30, 20 22 audited Annual Comprehensive Financial Report ( ACFR). Using the ACFR audited data assures that the estimated reserves are based on a ctual information. The ending cash balance will be revised in the Mid -Year report with the June 30, 202 3 ACFR figures. In addition, the five (5) First Quarter Budget Amendments, totaling $4 77,273, are reflected below where appropriate:
2023-24 2023-24 S eptember Revised %
Budget Revised 2023 Y TD Received/Expended
Revenue 137,967,681$ 137,967,681$ 19,456,434$ 14% Use of Reserves 11,356,960 12,190,036
Total Resources 149,324,641 150,157,717
Expenditures 136,996,564 137,550,954 24,680,758 18% Difference 12,328,077$ 12,606,763$
10% Cash Reserves (Council/Board Policy) 4,766,548$ 10% 3,826,165$ 10% Cash Reserves Above 10% Reserve 16,985,151 36% 21,210,062 54% Total Estimated Cash Reserves 21,751,699 $ 46% 25,036,227$ 64% Months of Cash 5.5 7 .9
Water DistrictGeneral Fund
2023-24 FIRST QUARTER BUDGET REVIEW REPORT
- 5 -
EXECUTIVE SUMMARY (Continued)
Proposed Budget Amendments – Five (5) Budget Amendments are proposed for $477,273 The FY 2023-24 First Quarter Budget Review includes five (5) items as proposed budget amendments totaling $477,273. A complete discussion of the budget amendments is included on page 26 . The proposed budget amendments are included in the fund balance analyses where appropriate:
Revenues and Expenditures through September 30, 2023 for the City’s main funds are summarized as follows:
General Other
FY 2023-24 1st Quarter Budget Requests Fund Funds Totals
1. Software licensing and support renewal 109,500$ 0$ 109,500$
2. Camera upgrades (Animal Services facility) 17,786 0 17,786
3. Fair Housing Activities 21,400 0 21,400
4. Vacant Land Purchase (Cataba Rd CO 7901) 0 198,587 198,587
5. Skip Loader Purchase 0 130,000 130,000 Total 1st Quarter Budget Amendments Requests 148,686$ 328,587$ 477,273$ General Fund
Amended
Budget September
% of Amend.
Received
Amended
Budget September
%
Expended
City Council 819,204$ 205,494$ 25%
City Manager 1,680,770 568,701 34% Management Services 9,929,488 3,906,340 39% Economic Development 401,311 135,773 34% D.S.-Community Development 2,502,575 696,995 28% D.S.-Code Compliance 5,239,933 1,302,679 25% D.S.-Public Works (G.F.) 2,585,545 578,122 22% Police 21,972,838 5,411,316 25%
Total General Fund 47,466,791$ 4,791,796$ 10% 45,131,664$ 12,805,419$ 28% Community Development Block Grant 997,511 51,312 5% 100,932 18,767 19% Hesperia Housing Authority 173,590 215,248 124% 75,781 6,396 8% D.S.-Public Works 14,890 13,021 87% 4,245,558 988,753 23% Streets CIP Funds 48,973,924 4,931,073 10% 42,477,112 4,108,690 10% Other City Related Funds 3,835,355 2,575,456 67% 6,431,097 1,153 0% D.S.-Water Operating and Capital 28,287,028 5,478,733 19% 25,214,337 4,792,119 19% D.S.-Sewer Operating and Capital 8,162,264 1,390,599 17% 12,936,815 1,052,145 8% Fire District 56,328 9,195 -84% 937,658 907,316 97% Total 137,967,681$ 19,456,434$ 14% 137,550,954$ 24,680,758$ 18% 2023-24 Revenue 2023-24 Expenditures
2023-24 FIRST QUARTER BUDGET REVIEW REPORT
- 6 -
STATUS OF CITY GENERAL FUND 2023-24 BUDGET, BUDGET AMENDMENTS, AND RESERVES
2023-24 2023-24
Budget Revised D ollars Percent
RESOURCES
General Fund Operating Revenue 47,466,791$ 47,466,791$ 0$ 0% Transfers In
1. Fund 255 - AB 3229 COPS Grant 200,000 200,000 Total Transfers In 200,000 200,000
Budgeted Reserves 0 0
First Quarter Budget Amendment Reserves 0 148,686 Total Budgeted Reserves 0$ 148,686$ Total General Fund Resources 47,666,791$ 47,815,477$ 148,686$ 0%
EXPENDITURES
Total General Fund Operating Expenses 45,131,664$ 45,131,664$ Transfers Out
1. Fund 210 - HFPD CalPERS 937,658 937,658
1,447,475 1 ,447,475
Total Transfers Out 2,385,133 2,385,133
Total General Fund Expenditures & Transfers Out 47,516,797$ 47,516,797$ 0$ 0% First Quarter Budget Amendments Requested
1. Software licensing and support renewal 0$ 109,500$
2. Camera upgrades (Animal Services facility) 0 17,786
3. Fair Housing Activities 0 21,400 Total First Quarter Budget Amendments 0 148,686 Total Expenditures and Amendments 47,516,797$ 47,665,483$ 148,686$ 0% DIFFERENCE TOTAL RESOURCES/TOTAL EXPENDITURES 149,994$ 149,994$ 0$ 0% Fund Balance
July 1 Beginning Balance 33,783,024$ 33,783,024$
Total Budgeted Reserves 0 ( 148,686) Difference Total Resources/Total Expenditures 149,994 149,994 Estimated June 30 Ending Fund Balance 33,933,018$ 33,784,332$ (148,686)$ 0% Months of Cash to Pay Expenditures and Transfers Out
Beginning Cash July 01, 21,899,077$ 21,899,077$
Estimated Resources Less Budgeted Reserves 47,666,791 47,518,105 Estimated Expenditures (47,516,797) (47,665,483)
22,049,071$ 2 1,751,699$
Months of Cash to Pay Expenditures and Transfers Out 5.6 5.5 Estimated Cash Reserves Percentage 46% 4 6%
Estimated Ending Cash June 30,
Change
2. Fund 402 - 2012 Water Rights Acquisition Debt Service
2023-24 FIRST QUARTER BUDGET REVIEW REPORT
- 7 -
STATUS OF WATER DISTRICT 2023-24 BUDGET, BUDGET AMENDMENTS, AND RESERVES
2023-24 2023-24
Resources Budget Revised Dollars Percent
Revenue
Water Operating and Capital 27,947,839$ 27,947,839$ Sewer Operating and Capital 8,162,264 8,162,264 Reclaimed Water Operations 339,189 339,189
Total Revenue 36,449,292 36,449,292 0 0% Budgeted Reserves 4,785,619 5,450,509
Total Water District Resources 41,234,911$ 41,899,801$ 664,890$ 2% Expenditures by Program
Water Operating and Capital and Transfer Out 24,370,831$ 24,925,221$ 554,390$ 2% Sewer Operating and Capital 12,936,815 12,936,815 Reclaimed Water Operations 289,116 289,116
Total Water District Expenditures & Transfers Out 37,596,762$ 38,151,152$ 554,390$ 1% First Quarter Budget Amendment - Requested
0 110,500
0 110,500
Total Expenditures and Amendments 37,596,762$ 38,261,652$ 664,890$ 2% Establishment of Reserve Balances
Permanent Water Rights $ 1,146,888 1,146,888$
1998A Retirement 0 0
Total Reserve Balances 1,146,888 1,146,888
Total Water Expenditures & Reserve Balance Funding $ 38,743,650 $ 39,408,540 Difference Total Resources/Total Expenditures 2,491,261$ 2,491,261$ July 1 Beginning Balance 116,800,903$ 116,800,903$
Budgeted Reserves (4,785,619) (5,450,509)
Difference Resources/Expenditures 2,491,261 2,491,261 Reserve Balances 1,146,888 1,146,888
Estimated June 30 Ending Fund Balance 115,653,433$ 114,988,543$ Months of Cash to Pay Expenditures
Beginning Cash July 01, 26,848,587$ 26,848,587$
Estimated Resources Less Budgeted Reserves 36,449,292 36,449,292 Estimated Expenditures (37,596,762) (38,261,652)
25,701,117$ 25,036,227$
Months of Cash to Pay Expenditures and Transfers Out 8.2 7.9 Total Estimated Cash Reserves Percentage 68% 66%
Estimated Ending Cash June 30,
Change
1. Skip Loader Purchase
Total First Quarter Budget Amendment - Requested
2023-24 FIRST QUARTER BUDGET REVIEW REPORT
- 8 -
STATUS OF STREET MAINTENANCE FUND 2023-24 BUDGET, FUND BALANCE, AND RESERVES
2023-24 2023-24
RESOURCES Budget R evised Dollars Percent
Street Maintenance Operating Revenue 14,890$ 14,890$ 0$ 0% Transfers In
Fund 100 - General Fund 0$ 0$
Fund 204 - Measure I - Renewal 1,750,000 1,750,000
Fund 205 - Gas Tax Fund 1,400,000 1,400,000
Fund 206 - Gas Tax Swap 600,000 600,000
Fund 207 - Local Transportation Fund 226,883 226,883 Total Transfers In 3,976,883 3,976,883
Total Revenues 3,991,773 3,991,773
Budgeted Reserves 253,785 273,285
Total Street Maintenance Resources 4,245,558$ 4, 265,058 $ EXPENDITURES 4,245,558$ 4, 245,558 $ 0$ 0% First Quarter Budget Amendment Request
1. Skip Loader Purchase 0 19,500
Total First Quarter Budget Amendments 0 19,500 Total Expenditures and Amendments 4,245,558$ 4, 265,058 $ 19,500$ 0% DIFFERENCE RESOURCES/EXPENDITURES 0$ 0$ 0$ n/a Fund Balance
July 1 Beginning Balance 295,183$ 295,183$
Total Budgeted Reserves (253,785) (273,285)
Difference Resources/Expenditures 0 0 Estimated June 30 Ending Balance 41,398$ 21,898$
Change
2023-24 FIRST QUARTER BUDGET REVIEW REPORT
- 9 -
FISCAL YEAR 2023-24 SEPTEMBER 30, 2023 YEAR-TO-DATE REVENUE REVIEW
Overall – First quarter analysis reveals that $19.5 million or 1 4% percent of the total budgeted revenue has been collected. It should be noted that changes in the local state and national economic environments can impact each of these revenue sources and trends going forward; however, in this section, discussions will pertain to the revenue activity during the first quarter of Fiscal Year (FY) 2023-24.
General Fund revenues received through the first quarter of FY 2023 -24 totaled $4,791,796 or 10% of the total annual projected revenues of $47,466,791. This is $211,488 or 4% less than September 2022 YTD revenue of $5,003,284 due to a decrease in revenue sources such as Transient Occupancy Tax, Property Transfer Tax and Development related revenue. This decrease is also offset by the increase in revenue due to a one- time reimbursement from the State of California and an increase in Code Enforcement citation revenue compared to September 2022.
The Water District revenues received through the first quarter totaled $6.9 million or 19% of the total annual projected revenues of $ 36.5 million. Even though the Water District is trending as expected, t his revenue source is being monitored as delinquent accounts are being applied to the tax roll to recapture the missing revenue.
Staff will continue to monitor the FY 202 3-24 revenue and make any necessary recommendations for revisions during the Mid-Year Budget Review in February 202 4. The following pages will detail the current revenue collections for each fund.
September Change From
2023-24 2023-24 Percent 2023-24 Budget To
Budget Actual Received Revised Revised
General Fund 47,466,791$ 4,791,796$ 10% 47,466,791$ 0$ Community Development Block Grant 997,511 51,312 5% 997,511 0 Hesperia Housing Authority 173,590 215,248 124% 173,590 0 Street Related Funds 48,988,814 4,944,094 10% 48,988,814 0 Other City Related Funds 3,891,683 2,584,651 66% 3,891,683 0 Water Operating 26,662,353 5,056,980 19% 26,662,353 0 Water Capital 1,221,486 292,068 24% 1,221,486 0 Water Reserves 403,189 129,685 32% 403,189 0 Total Water Operating, Capital, & Reserves 28,287,028 5,478,733 19% 28,287,028 0 Sewer Operating 6,135,096 1,247,921 20% 6,135,096 0 Sewer Capital 2,021,200 131,875 7% 2,021,200 0 Sewer Reserves 5,968 10,802 181% 5,968 0 Total Sewer Operating, Capital, & Reserves 8,162,264 1,390,599 17% 8,162,264 0 Water District 36,449,292 6,869,332 19% 36,449,292 0 Total All Funds 137,967,681$ 19,456,434$ 14% 137,967,681$ 0$
MAJOR FUNDS REVENUE SUMMARY
2023-24 FIRST QUARTER BUDGET REVIEW REPORT
- 10 -
FISCAL YEAR 2023-24 SEPTEMBER 30, 2023 YEAR-TO-DATE REVENUE REVIEW (Continued)
General Fund Revenue Comments:
In total, General Fund is trending as expected for First Quarter. As demonstrated in the discussions to follow, there tends to be a lag of revenue collection at the beginning of the fiscal year. This is normal and much of the revenue, especially tax based, typically is received during October and November.
Sales and Use Tax – For the first quarter of FY 2023- 24, the City received $1,026,496 for (1) month (July 2023) of activity, which is 4% or $40,439 less than the $1,066,935 for the July 2022 activity collected September 2022. This decrease is not necessarily alarming but staff will continue to monitor Sales Tax in the coming months as data is received. There is typically a two month delay from the month close to when the State reports to the City. As an example, the second installment of $1,048,913 for the month of August 2023 was received in October 2023 and it is 2% or $16,826 less than second installment of $1,065,739 for the month of August 2022.
Vehicle License Fee (VLF) – This revenue is based on the City’s assessed valuation of the properties within the City.
As the assessed valuation changes from the prior year, this revenue changes by the same percentage. There is no revenue reported through September 2023, as the first installment of the VLF is expected to be received during January 2024.
Franchise Fees – The City receives f ranchise fees for Cable TV, Advance Disposal, Southwest Gas, Southern California Edison, and Water service providers within the City as “rent” for the use of streets and public right -of-way within our municipality . Revenue through September 2023 YTD total $78,818 , which $16,318 or 26% more than September 2022 YTD of $62,500. Please note that the majority of franchise fees are received in the second half of the fiscal year.
September Change From
2023-24 2023-24 Percent 2023-24 Budget To
Budget Actual Received Revised Revised
Sales and Use Tax 14, 439,963$ 1,026,496$ 7% 14,439,963$ 0$ Vehicle License Fees 11,565,002 0 0% 11,565,002 0 Franchise Fees 4,308,213 78,818 2% 4,308,213 0 Total Top Three Revenues 30,313,178 1,105,314 4% 30,313,178 0 General & Administrative Recovery 3,750,935 937,734 25% 3,750,935 0 Transient Occupancy Tax 1,700,000 186,108 11% 1,700,000 0 Property Transfer Tax 300,000 31,074 10% 300,000 0 Secured Property Tax 1,118,712 0 0% 1,118,712 0 Business License 824,243 223,325 27% 824,243 0 Commercial Cannabis Tax 350,000 33,311 10% 350,000 0 Community Facilities District 2005-1 379,185 96,991 26% 379,185 0 Leased Water Rights 2,152,605 0 0% 2,152,605 0 Development Related Revenues
Planning 563,260 180,482 32% 563,260 0 Building & Safety 1,666,784 563,774 34% 1,666,784 0 Engineering 955,830 167,462 18% 955,830 0 Sub-Total Development Related Revenues 3,185,874 911,718 29% 3,185,874 0 Sub-Total Top 12 Revenue Sources 44,074,732 3,525,575 8% 44,074,732 0 All Other General Fund Revenues 3,392,059 1,266,221 37% 3,392,059 0 Total General Fund Revenues 47,466,791$ 4,791,796$ 10% 47,466,791$ 0$
GENERAL FUND REVENUES
2023-24 FIRST QUARTER BUDGET REVIEW REPORT
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FISCAL YEAR 2023-24 SEPTEMBER 30, 2023 YEAR-TO-DATE REVENUE REVIEW (Continued)
General Fund Revenue Comments (Continued):
Transient Occupancy Tax (TOT) – TOT is a tax of 10% applied to the cost of hotel and other lodging stays of less than 30 days. Through September 2023, the City collected $186,108, which is a decrease of $96,653 or 34% less than the September 202 2 YTD of $ 282,761. This decrease is primarily due to the timing of monthly receipts from the hotel operators. T welve (12) receipts have been received through September 2023 YTD compared to the fourt een (14) received September 2022 YTD. When comparing the twelve receipts received to the FY 2023-24 Budget of $1.7 million, this revenue source is trending as expected.
Property Transfer Tax – This revenue is based upon the change in property valuation upon the change in ownership within the City. This revenue source is volatile and changes with the assessed values of local properties and changes in the housing market. The decrease in revenue is largely due to the timing of receipts as the $31,074 received through September 2023 is $39,699 less than the $70,081 received in the prior fiscal year for two receipts. When factoring in the second receipt of $25,382 received in October 2023, the total revenue collections of $56,456 is 19% collected and is trending slightly above the FY 2023-24 Budget of $300,000.
Secured Property Tax – The first remittance from the County will be received in November 2023; therefore, there is no revenue to report through September 2023.
Business License – The City taxes businesses for conducting business within the City. The FY 2023 -24 Budget of $824,243 projects a slight increase in the total number of business licenses. The FY 2023 -24 First Quarter revenue collections is performing as anticipated with total revenue collection of 27% of the FY 2023-24 Budget.
Commercial Cannabis Tax – All commercial cannabis businesses operating within the City pay a variable tax, currently 4%, on gross receipts from business operation s. T he September 2023 YTD receipts of $33, 311 is being received as budgeted. The City currently has five (5) businesses operating licenses within the City.
Community Facilities District 2005-1 – This special assessment district (generally west of Maple Avenue and south of Main Street), was formed to refinance the bonds of CFD 91-3 and assesses the properties within the district to repay the bonds. Part of the annual assessment includes a public safety portion to offset some of the costs that residential development places on the City’s public safety providers. The September 2023 YTD of $ 96,991 is being received as budgeted.
Leased Water Rights – The permanent water rights owned by the General Fund can be leased annually and the lease revenue is used to pay for the 2012 Bonds, which financed the purchase of the water rights. The leasing of water rights will occur later during the fiscal year.
Development Related Revenue – This revenue source accounts primarily for development related fees such as Planning, Building and Safety, and Engineering. As of September 30, 2023, total revenue collected is $911,718 or 28% of the total budgeted revenue of $3,158,874. This revenue source is performing as anticipated. Compared to the September 2022 YTD of $1,571,908 collected, this revenue is showing a 42% or $660,190 decrease; however, this was anticipated when developing the FY 2023 -24 Budget, as the City received permits for over one million square foot of industrial related revenue in FY 2022-23.
All Other General Fund Revenue – Other General Fund Revenue accounts are $1,266,221 or 37% collected through September 30, 2023. Compared to the 1
st Quarter September 2022 YTD of $724,778 collected, this revenue is showing a $541,443 or 74% increase, which is largely due to a one -time reimbursement from the State of California and an increase in Code Enforcement citation revenue.
2023-24 FIRST QUARTER BUDGET REVIEW REPORT
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FISCAL YEAR 2023-24 SEPTEMBER 30, 2023 YEAR-TO-DATE REVENUE REVIEW (Continued)
Community Development Block Grant Revenue Comments:
These revenues are grant reimbursements that promote economic and housing development and rehabilitation projects, with an emphasis on activities that create jobs, build or enhance infrastructure, and provide affordable housing to Hesperia residents. This grant must be spent prior to submitting for reimbursements. The FY 2023 -24 Budget revenue estimates represent anticipated reimbursements to be claimed during the fiscal year. It is anticipated that the majority of the reimbursements will be received after December 2023.
All Other CDBG Revenues – This revenue includes CDBG Program income and interest revenue for the HOME Grant fund and the CDBG Revolving Loan fund. These revenues are more one -time in nature and are not received on a time schedule as other revenue. First Quarter revenue of $51,312 has been received, which is for loan repayments related to Housing Rehabilitation Loan Program and gains from changes in the market value on investment.
Hesperia Housing Authority (HHA) Revenue Comments:
This program was developed to promote projects that improve the City’s housing stock and provide affordable housing opportunities. The revenue received as of September 2023 YTD of $215,248 is primarily proceeds from a vacant land sale and interest income from investments.
September Change From
2023-24 2023-24 Percent 2023-24 Budget To
Budget Actual Received Revised Revised
CDBG Administration Reimbursement 899,363$ 0$ 0% 899,363$ 0$ All Other CDBG Revenues 98,148 51,312 52% 98,148 0 Total CDBG Revenues 997,511$ 51,312$ 5% 997,511$ 0$
COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) REVENUE
September Change From
2023-24 2023-24 Percent 2023-24 Budget To
Budget Actual Received Revised Revised
Interest Income 50,244$ 60,763$ 121% 50,244$ 0$ Loan Repayments 91,846 0 0% 91,846 0 Miscellaneous Income 1,500 127,431 8495% 1,500 0 Sub-Total HHA Revenue 143,590 188,194 131% 143,590 0 VVEDA Housing Authority Revenue 30,000 27,054 90% 30,000 0 Total HHA Revenue 173,590$ 215,248$ 124% 173,590$ 0$
HESPERIA HOUSING AUTHORITY (HHA) REVENUE
2023-24 FIRST QUARTER BUDGET REVIEW REPORT
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FISCAL YEAR 2023-24 SEPTEMBER 30, 2023 YEAR-TO-DATE REVENUE REVIEW (Continued)
Street Related Funds Revenue Comments:
Measure I - Renewal – This fund is used to account for the renewed Measure I sales tax based on revenue generated from the ½ cent added tax on sales tax in San Bernardino County. For Hesperia , there are no distinctions for Arterial, Local, or Transit, and the revenue is remitted by San Bernardino County Transportation Authority (SBCTA) to the City.
Due to a lag in receiving the revenue, there are no remittances to report as of September 2023.
Gas Tax – As of September 30, 2023 YTD, Gas Tax revenue primarily consists of one installment totaling $ 162,522, which is $7,471 more than the first installment received September 2022 of $155,051.
Gas Tax S wap – As of September 30, 2023 YTD, Gas Tax Swap revenue largely consists of one installment totaling $116,408, which is $17,100 higher than the first installment in FY 2022-23 of $99,308.
Local Transportation – This revenue source is mainly funded by the county ¼ cent sales tax and the primary use of this revenue is transportation related, including supporting the operations of Victor Valley Transit Authority . The revenue received through September 2023 of $40,218 consists of interest income.
Gas Tax RMRA – This revenue source is State- funded and took effect November 2017 during FY 2017 -18. This revenue is used to repair and maintain roads, freeways, and bridges. SB 1, the Road Repair and Accountability Act of 2017, increased the gas tax by 12 cents and 20 cents for diesel, which is adjusted for inflation each July starting in July 2020. The vehicle registration fee also increased depending on the value of the vehicle. As of September 30, 2023 YTD, Gas Tax RMRA revenue largely consists of one installment totaling $210,352.
Public Works-Street Maintenance – The estimated revenues are primarily interest earnings. In addition, this fund will occasionally receive miscellaneous reimbursements on an inconsistent basis, making comparisons to prior years irrelevant. The revenue received through September 2023 of $13,021 primarily consists of interest income.
Development Impact Fees for Streets and Storm Drain/Drainage – Through September 202 3 YTD, the combined revenue received is $4,186,121, which is $2,798,027 or 202% more than September 2022 YTD revenue of $1,388,094.
The primary reason for the increase between the two periods is due to the fees collected related to the 1,003,483 industrial square foot Hesperia Commerce 1-Building 3 and the payments received for 51 of 96 multi- family residential (MFR) projected to be received during FY 2023 -24. This revenue source varies each fiscal year depending on the completion of individual projects.
September Change From
2023-24 2023-24 Percent 2023-24 Budget To
Budget Actual Received Revised Revised
204 Measure I - Renewal 4,091,797$ 135,730$ 3% 4,091,797$ 0$ 205 Gas Tax Fund 1,805,700 162,522 9% 1,805,700 0 206 Gas Tax Swap Fund 953,626 132,563 14% 953,626 0 207 Local Transportation Fund 70,374 40,218 57% 70,374 0 209 Gas Tax - RMRA 2,504,413 273,580 11% 2,504,413 0 254 AQMD Fund 540 339 63% 540 0 263 Public Works Street Maintenance Fund 14,890 13,021 87% 14,890 0 300 Development Impact Fee-Streets 26,682 55,173 207% 26,682 0 301 Development Impact Fee-Storm Drain 70,112 44,051 63% 70,112 0 306 Development Impact Fee 2018 - Streets 13,548,158 3,126,499 23% 13,548,158 0 307 Development Impact Fee 2018 - Drainage 1,059,206 749,266 71% 1,059,206 0 313 Development Impact Fee 2018 - A-04 Drainage 370,497 211,132 57% 370,497 0 Sub-Total DIF Streets & Storm Drain 15,074,655 4,186,121 28% 15,074,655 0 504 City Streets CIP 24,472,819 0 0% 24,472,819 0 Total Street Related Funds 48,988,814$ 4,944,094$ 10% 48,988,814$ 0$
STREET RELATED FUNDS REVENUE
2023-24 FIRST QUARTER BUDGET REVIEW REPORT
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FISCAL YEAR 2023-24 SEPTEMBER 30, 2023 YEAR-TO-DATE REVENUE REVIEW (Continued)
Street Related Funds Revenue Comments (Continued):
City Streets CIP – This fund tracks grant/reimbursement funded projects such as the Ranchero Road Improvements (7th Avenue to Mariposa Road), Walnut Street H -01 Retention Basin, the T raffic Signal at Main Street, Sultana Street/Timberlane Avenue and the Ranchero Aqueduct crossing. The bulk of the budgeted revenue is for the reimbursement of Ranchero Road with the expectation of a reimbursement to be received later in the fiscal year.
Other City Funds Revenue Comments: Revenue for Other City funds are comprised of various grants, assessments, charges for services, intergovernmental, and other sources. Many of these funds only receive interest income during the fiscal year.
Pension Obligation Trust and OPEB Trust are fund s established to manage and mitigate the unfunded pension liability and the post-employment benefits liabilities. The negative revenue in these funds consist of investment losses.
The market did experience a rating increase in late October and November which, if continues , will offset these 1 st quarter losses.
Public Art – This fund is funded through donations. As of September 30, 2023 YTD, the Public Art Fund revenue largely consists of one payment totaling $250,000 designated for the Ranchero’s Interchange art project.
AB3229 Supplemental Law Fund – The passage of Senate Bill (SB) 89 allowed for the continued funding of the Supplemental Law Enforcement Funding (SLE SF). The City expects to receive $255,697 of SLESF funding , which is typically received later in the fiscal year. Through the first quarter 1% or $3,084 has been received which consist of gains from changes in the market value on investments. The first installment received in October is $133,589, which is $121,661 more than the first installment of FY 2022-23 of $11,928.
September Change From
2023-24 2023-24 Percent 2023-24 Budget To
Budget Actual Received Revised Revised
105 Pension Obligation Trust 0$ (42,768)$ n/a 0$ 0$ 106 OPEB Trust 0 (14,310) n/a 0 0 210 HFPD (PERS) Interest Income 56,328 9,195 16% 56,328 0 230 Public Art 0 250,000 n/a 0 0 255 AB3229 Supplemental Law Fund 255,697 3,084 1% 255,697 0 256 Environmental Programs Grant 78,555 3,563 5% 78,555 0 260 Disaster Preparedness Grant 998 627 63% 998 0 261 American Rescue Plan Act Grant 527,706 331,546 63% 527,706 0 262 SB 1383 Local Assistance Grant 28,713 1,479 5% 28,713 0 # /0 302 Development Impact Fee-Fire 33,079 20,784 63% 33,079 0 303 Development Impact Fee-Police 146 92 63% 146 0 304 Development Impact Fee-Public Services 373 0 0% 373 0 308 Development Impact Fee 2018 - Fire 1,439,784 991,198 69% 1,439,784 0 309 Development Impact Fee 2018 - City Hall 1,298,664 889,998 69% 1,298,664 0 310 Development Impact Fee 2018 - Animal Control 36,932 17,231 47% 36,932 0 311 Development Impact Fee 2018 - Records Storage 64,555 44,514 69% 64,555 0 312 Development Impact Fee 2018 - Police Facilities 24,753 17,155 69% 24,753 0 Sub-Total 302, 303, 304, 308, 309, 310, 311, and 312 2,898,286 1,980,971 68% 2,898,286 0 402 2012 Water Rights Acquisition 12,141 36,178 298% 12,141 0 403 2013 Refunding Lease Rev Bonds 33,259 24,993 75% 33,259 0 404 2023 Refunding Lease Revenue Bon 0 92 n/a 0 0 Sub-Total 402, 403, and 404 45,400 61,263 135% 45,400 0 Total Other City Funds 3,891,683$ 2,584,651$ 66% 3,891,683$ 0$
OTHER CITY FUNDS REVENUE
2023-24 FIRST QUARTER BUDGET REVIEW REPORT
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FISCAL YEAR 2023-24 SEPTEMBER 30, 2023 YEAR-TO-DATE REVENUE REVIEW (Continued)
Other City Funds Revenue Comments (Continued):
Environmental Programs Grant – This fund tracks various grant reimbursements for various environmental events.
American Rescue Plan Act (ARPA) Grant – Coronavirus State and Local Fiscal Recovery Funds – This revenue is the Coronavirus State and Local Fiscal Recovery Funds in which the City received a total amount of $23.4 million in two installments of $11.7 million. The first allocation was received in September 2021, and the second allocation in September 2022. This ARPA funding must be spent on eligible costs incurred during the period that b egan on March 3, 2021 and ending on December 31, 2024. T he revenue received through September 2023 of $331,546 primarily consists of interest income.
SB 1383 Local Assistance Grant – This revenue source is state funded to assist local jurisdictions with the implementation of SB 1383, which is to reduce organic waste disposal and increase food waste diversion. The City expects to receive $28,713 for FY 2023-24 and as of September 30, 2023, $1,479 has been collected.
Development Impact Fees-Fire, Police, Public Services, City Hall, Animal Control, and Records Storage – The combined total of $ 1,980,971 for September 20 23 YTD is $1,804,574 more than September 20 22 YTD of $ 176,397.
This increase is due to the revenue received from the 1,003,483 industrial square foot Hesperia Commerce 1 -Building 3 and the 51 of 96 multi-family residential (MFR) projected to be received FY 2023-24.
2023-24 FIRST QUARTER BUDGET REVIEW REPORT
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FISCAL YEAR 2023-24 SEPTEMBER 30, 2023 YEAR-TO-DATE REVENUE REVIEW (Continued)
Water District Revenue Comments:
On December 2020, Congress funded a program to help low -income households pay down their outstanding residential water or wastewater bills. This new federal Low Income Household Water Assistance Program (LIHWAP) provides financial assistance to low income Californians to help manage their residential water and wastewater utility costs to a maximum amount of $15,000 per qualifying low -income household. The City started collecting these payments at the beginning of FY 2022-23 and as of September 30, 2023, collected $89,723.
The Hesperia Water District began applying liens to properties with outstanding water bills. Failure to pay within 60 days from the original bill due date, results in the Water District mailing the tenant and property owner a notice of lien. If the bill remains outstanding after an additional 10 days, the Water District will apply a lien on the property. During May of each year, all outstanding property liens will be converted to property tax liens. By doing so, the County will collec t outstanding balances as part of property tax collections during the following year. The Water District is utilizing such liens in lieu of water disconnections and traditional collection services as the primary mechanism for collections.
Water Sales – For the first quarter of FY 2023- 24, the Hesperia Water District collected $4,539,912 of sales revenue or 18% of the budgeted amount, which is comparable to the percentage collected through the first quarter in the prior year (FY 2022- 23). Overall, water sales revenue through September 2023 of $4,539,912 is lower than the FY 2022- 23 revenue for the same period ($4,756,931) by $217,019, or 5%. This is due to a decrease in Water Sales Construction and was anticipated in the FY 2023 -24 Budget. Through September 2023, Water Sales Construction of $186,458 was $214,904 less than the $401,362 collected through September 2022. The higher Water Sales Construction in FY 2022-23 was due to construction related to a large development project.
September Change From
2023-24 2023-24 Percent 2023-24 Budget To
Budget Actual Received Revised Revised
Water Operating Revenue
Water Sales 24,759,387$ 4,539,912$ 18% 24,759,387$ 0$ Interest Income 308,000 238,486 77% 308,000 0 Property Taxes 550,633 0 0% 550,633 0 Sub-Total 25,618,020 4,778,398 19% 25,618,020 0 All Other Water Operating Revenues 1,044,333 278,582 27% 1,044,333 0 Total Water Operating Revenues 26,662,353 5,056,980 19% 26,662,353 0 Capital Facilities Charges 1,146,486 292,067 25% 1,146,486 0 Grant Reimbursement 75,000 0 0% 75,000 0 Total Water Capital Revenue 1,221,486 292,067 24% 1,221,486 0 Reclaimed Water 339,189 62,721 18% 339,189 0 All Other Water Related Revenues 64,000 66,964 105% 64,000 0 Total Water Operating, Capital, & Related Revenues 28,287,028$ 5,478,733$ 19% 28,287,028$ 0$ Sewer Operating Revenue
Sewer Billing 5,670,896$ 1,015,301$ 18% 5,670,896$ 0$ All Other Sewer Operating Revenues 464,200 232,620 50% 464,200 0 Total Sewer Operating Revenue 6,135,096 1,247,921 20% 6,135,096 0 Sewer Connections 450,000 88,203 20% 450,000 0 All Other Sewer Capital Revenues 1,571,200 43,672 3% 1,571,200 0 Total Sewer Capital Revenue 2,021,200 131,875 7% 2,021,200 0 All Other Sewer Related Revenues 5,968 10,802 181% 5,968 0 Total Sewer Operating, Capital, & Related Revenues 8,162,264$ 1,390,599$ 17% 8,162,264$ 0$ Total Hesperia Water District Revenue 36,449,292$ 6,869,332$ 19% 36,449,292$ 0$
WATER DISTRICT REVENUE
2023-24 FIRST QUARTER BUDGET REVIEW REPORT
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FISCAL YEAR 2023-24 SEPTEMBER 30, 2023 YEAR-TO-DATE REVENUE REVIEW (Continued)
Water District Revenue Comments (Continued):
Property Taxes – Property tax revenue is normally received from November 2023 through July 2024.
Other Water Operating Revenue – Through September 2023, $278,582 has been received, which is $119,354 or 30% less than September 2022 YTD of $ 397,936. This decrease is mainly due to the decrease of Water Inspection fees received this quarter.
Capital Facilities Surcharge – This revenue source consist of fees for new water meter installations based on new developments. Revenue through September 2023 YTD is $292,067, is $346,933 or 87% less than September 2022 YTD of $639,000. This decrease can largely be attributed to the meter fees paid on 96 units for the new apartment complex development “The Villas at Hesperia” in the first quarter of FY 2022 -23. This revenue source is currently at 25% collected compared to the FY 2023-24 Budget and trending as expected as a decline in residential and commercial activity was expected.
Reclaimed Water – In FY 2022-23, the District began budgeting for the use of reclaimed (recycled) water to be used at the Hesperia Golf Course and the Township area. Current Reclaimed Water customers are the Golf Course, Hesperia Township (NW corner of 5
th & Smoke Tree), and Hesperia Community Park. As of September 30, 2023, the Water District has collected $62,721, which is 18% of the budgeted amount.
Sewer Billing – Revenue through September 2023 is $1,015,301, which is $33,702 or 3% more than the revenue received in First Quarter of 2022 -23. This increase is primarily attributed to the addition of new sewer residential and commercial customers over the last year. Revenue received through September 2023 is at 18% of the budgeted amount.
Sewer Connections revenue through September 2023 YTD is $88,203, which is $65,519 or 43% less than the $153,722 received through September 2022 YTD. The decrease between the two periods is a result of fewer customers connecting to sewer during FY 2023-24 than FY 2022-23. This revenue, which is driven by the completion of development projects in areas served by Sewer, is trending as expected when compared to the FY 20 23-24 Budget as a decline in residential and commercial is expected. This revenue source will continue to be monitored by staff and will report any updates in the FY 2023-24 Mid-Year report.
2023-24 FIRST QUARTER BUDGET REVIEW REPORT
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DEPARTMENT FY 2023-24 BUDGET EXPENDITURE STATUS SUMMARY
Total City Expenditures – With the exception of the five (5) first quarter budget amendments totaling $477,273 and the proposed staffing changes referenced on pages 28- 31, the overall assessment of the City’s expenditures through the first quarter of the fiscal year is that expenditures are expected to stay within the FY 2023-24 Amended Budget. Refer to page 26 for the detail pertaining to the requested budget amendments.
FY 2023-24 TOTAL EXPENDITURES BY DEPARTMENT AND PROGRAMS
The overall City Council Departmental expenditures are at 25% expended through September 2023. The City Council Division is 19% expended, which with a quarter of the year completed, is proceeding as planned . The City Attorney Division is 30% expended, which is primarily due to higher than anticipated July 2023 billing of $0.1 million.
The City Manager Department is 34% expended due to the annual City Manager Department portion of CalPERS unfunded liability payment, which for the City was paid in July 2023.
September Amended
2023-24 2023-24 2023 YTD Percent
Department Expenditure Summary Budget Amended Expenditures Expended City Council 819,204$ 819,204$ 205,494$ 25% City Manager 1,680,770 1,680,770 568,701 34% Management Services 9,929,488 9,929,488 3,906,340 39% Economic Development 578,024 578,024 160,936 28% Development Services - Community Development 2,502,575 2,502,575 696,995 28% Development Services - Code Compliance 5,239,933 5,239,933 1,302,679 25% Development Services - Public Works 6,831,103 6,831,103 1,566,875 23% Streets Capital Improvement Project (CIP) Funds 42,477,112 42,477,112 4,108,690 10% Other City Related Funds 6,431,097 6,431,097 1,153 0% Development Services - Water 24,659,947 25,214,337 4,792,119 19% Development Services - Sewer 12,936,815 12,936,815 1,052,145 8% Police 21,972,838 21,972,838 5,411,316 25% Fire District 937,658 937,658 907,316 97% TOTAL CITY EXPENDITURES 136,996,564$ 137,550,954$ 24,680,758$ 18% September Amended
2023-24 2023-24 2023 Y TD Percent
City Council Budget Amended Expenditures Expended
100 100 City Council 369,204$ 369,204$ 71,982$ 19% 100 102 City Attorney 450,000 450,000 133,512 30% Total City Council 819,204$ 819,204$ 205,494$ 25% September Amended
2023-24 2023-24 2023 YTD Percent
Budget Amended Expenditures Expended
City Manager 1,680,770$ 1,680,770$ 568,701$ 34%
2023-24 FIRST QUARTER BUDGET REVIEW REPORT
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FY 2023-24 TOTAL EXPENDITURES BY DEPARTMENT AND PROGRAMS (Continued)
The Management Services Department is currently at 39 % expended through the First Quarter, with Finance 31% expended and Information Technology 32% expended, while Human Resources is at 62%. Similar to years in the past, the higher percentage expended is due to the lump sum payment to CalPERS for the unfunded accrued liability and annual insurance premiums that are due at the beginning of the fiscal year. Non -Departmental expenditures are 12% expended and will increase as the year progresses. There are two budget amendments totaling a combined $1 27,286 (Cyber and system security, data protection renewal agreement $109,500, and upgrade of security cameras at Animal Services facility $17,786).
The Economic Development Department is 28% expended through the First Quarter. This department is made up of three (3) Divisions: Economic Development, Community Development Block Grant (CDBG), and Hesperia Housing Authority (HHA) funds.
The Economic Development Division performs the economic development functions for the City. General Fund funded, Economic Development is 34 % expended which, as with other area s, is due to the Division’s lump sum portion of the annual unfunded accrued liability assessed by CalPERS. One budget amendment for fair housing activity compliance in the amount of $21,400 has been requested.
Community Development Block Grant Administra tion is 19% expended of the adopted budget . This fund administers the City’s CDBG program and related activities, with expenditures proceeding as planned.
The Hesperia Housing Authority (HHA) funds oversee the affordable housing within the City. Through the end of September, the HHA funds are 8% expended, with the majority of the budgeted expenditures for affordable housing monitoring and annual financial audit reporting occurring later in the fiscal year.
The Community Devel opment Division is currently 28% expended through the First Quarter, with Planning 24 % expended and Building & Safe ty 31% expended. This Division’s portion of the CalPERS unfunded liability payment is the reason for increased First Quarter expenditures.
September Amended
2023-24 2023-24 2023 YTD Percent
Management Services Budget Amended Expenditures Expended 100 220 Finance 2,633,471$ 2,633,471$ 813,420$ 31% 100 225 Human Resources/ Risk Mgmt. 3,509,227 3,509,227 2,186,843 62% 100 228 Information Technology 2,246,150 2,246,150 719,847 32% 100 229 Non-Departmental 1,540,640 1,540,640 186,230 12% Total Management Services 9,929,488$ 9,929,488$ 3,906,340$ 39% September Amended
2023-24 2023-24 2023 YTD Percent
Economic Development Budget Amended Expenditures Expended 100 Economic Development 401,311$ 401,311$ 135,773$ 34% 251 CDBG Administration 100,932 100,932 18,767 19% 370 Hesperia Housing Authority 75,781 75,781 6,396 8% Total Economic Development 578,024$ 578,024$ 160,936$ 28% September Amended
2023-24 2023-24 2023 Y TD Percent
D. S. - Community Development Budget Amended Expenditures Expended 100 3000 Planning 1,156,825$ 1,156,825$ 278,560$ 24% 100 3020 Building & Safety 1,345,750 1,345,750 418,435 31% Total D. S. - Community Development 2,502,575$ 2,502,575$ 696,995$ 28%
2023-24 FIRST QUARTER BUDGET REVIEW REPORT
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FY 2023-24 TOTAL EXPENDITURES BY DEPARTMENT AND PROGRAMS (Continued)
The Code Compliance Division, which is comprised of Code Enforcement and Animal Control , is 25% expended. As shown by the table, Code Enforcement is 26% expended, while Animal Control is 24%.
Through the end of September, the Public Works Division is 23 % expended , which is as expec ted. While Building Maintenance, Street Maintenance, and Traffic are trending as expected, Engineering at 17% expended, is lower than expected due to pending contractual engineering services and pending payments for the National Pollutant Discharge Elimination System (NPDES) program. In addition, one budget amendment for the purchase of a Skip Loader is included in the amount of $19,500 (split-funded with Water Operating, for a total of $130,000).
Streets Capital Improvement expenditures will increase as progress continues on projects such as traffic signal construction, drainage improvements , FY 2021-22 Street Improvement Project , Ranchero Road Improvements and Aqueduct Crossing , and other streets related projects. As these projects move forward, the percentage of actual expenses to budget will increase accordingly. Please note that at the December 20, 2022 Council Meeting, approval was provided to proceed with eminent domain for the purchase of vacant land (APN 3064-461-03) to be used for the Cataba Road Basin and a budget amendment of $198,587 is requested (more information is provided on page 26).
The classication of Other City Related Funds is largely comprised of the principal and interest payments for the 2012 Water Rights Acquisition, 2013 Refunding Lease Revenue Bonds , and 2018 San Bernardino County Transportation Authority (SBCTA) Loan, which payments are made in the second quarter . In June 2023, the City Council approved refinancing the 2013 Civic Plaza Lease Revenue Bonds (2023 Refunding Lease Revenue Bonds), for overall debt service savings. Further, in May 2023, the City Council approved the early retirement of the SBCTA Loan, which was fully repaid in June 2023. As such, funds included in the FY 2023- 24 Budget for the SBCTA debt service will not be spent.
September Amended
2023-24 2023-24 2023 Y TD Percent
D. S. - Code Compliance Budget Amended Expenditures Expended 100 3010 Code Enforcement 2,643,565$ 2,643,565$ 677,398$ 26% 100 5000 Animal Control 2,596,368 2,596,368 625,281 24% Total D. S. - Code Compliance 5,239,933$ 5,239,933$ 1,302,679$ 25% September Amended
2023-24 2023-24 2023 YTD Percent
D. S. - Public Works Budget Amended Expenditures Expended 100 3100 Engineering 963,548$ 963,548$ 159,660$ 17% 100 3110 Building Maintenance 1,621,997 1,621,997 418,462 26% 263 3150 Street Maintenance 2,164,396 2,164,396 551,098 25% 263 3170 Traffic 2,081,162 2,081,162 437,655 21% Total D. S. - Public Works 6,831,103$ 6,831,103$ 1,566,875$ 23% September Amended
2023-24 2023-24 2023 Y TD Percent
Budget Amended Expenditures Expended
Streets Capital Improvement Project (CIP) Funds 42,477,112$ 42,477,112$ 4,108,690$ 10% September Amended
2023-24 2023-24 2023 Y TD Percent
Budget Amended Expenditures Expended
Other City Related Funds 6,431,097$ 6,431,097$ 1,153$ 0%
2023-24 FIRST QUARTER BUDGET REVIEW REPORT
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FY 2023-24 TOTAL EXPENDITURES BY DEPARTMENT AND PROGRAMS (Continued)
Overall, the Water Operating and Capital funds are 1 5% expended through September 30, 20 23. The following narrative details the progression of each program. In addition, one budget amendment for the purchase of a Skip Loader is included in the amount of $110,500 (split-funded with Streets Maintenance, for a total of $130,000). • Source of Supply’s primary responsibility is to secure make-up water lease rights to remedy overproduction. During First Quarter, the District has not purchased permanent water rights. • At the end of the First Quarter, Production has expended 18% of the budget. The primary reason expenditures are lower than expected is the timing of receiving electricity invoices. During the First Quarter, only two months of summertime activity has been expended, as the average summer month bill is approximately $0. 3 million. At the August 1, 2023 City Council Meeting, an amendment of $64,000 was approved for the purchase of two (2) 2023 Ford Ranger 4 x 4 trucks. Also, an amendment for $490,390 was approved at the September 5, 2023 City Council Meeting to repair and chemically treat Well 22, which failed and became inoperable. • Both Distribution, at 28 % expended, and Pipeline Maintenance, at 27% expended, are proceeding as expected during First Quarter.
• Engineering is currently 14% expended, which is due to pending expenditures for the National Pollutant Discharge Elimination System (NPDES) program and contractual services. • Customer Service is 17% expended and as progress is made with Advanced Metering Infrastructure (AMI) program, expenditures will increase.
• Utility Billing is 57 % expended, which is due to the $0.5 million write-offs of water service and the document recording costs related to placing delinquent accounts onto the County Property Tax Roll for collection. It should be noted that the subsequent collection of the tax liens will be reflected as revenue. • Administration is at 25% of the budget, which is proceeding as expected. • Property Management is 21 % expended for the First Quarter and anticipated to increase as facility maintenance projects are completed throughout the fiscal year.
• Reclaimed Water Operations expenditures will increase later in the second half of the fiscal year when Debt Service payments are due.
• Water and Sewer Capital have $7.0 million allocated in capital funds and are 1% expended, as typical with CIP projects, expenditures are expected towards the end of the fiscal year.
September Amended
2023-24 2023-24 2023 Y TD Percent
D.S. Water Operating & Capital Budget Amended Expenditures Expended 4010 Source of Supply 4,477,415$ 4,477,415$ 2,439$ 0% 4020 Production 5,466,358 6,020,748 1,099,171 18% 4030 Distribution 1,759,116 1,759,116 492,591 28% 4035 Pipeline Maintenance 1,262,485 1,262,485 337,691 27% 4040 Engineering 1,167,742 1,167,742 167,307 14% 4050 Customer Service 2,256,629 2,256,629 382,404 17% 4060 Utility Billing 1,648,761 1,648,761 941,843 57% 4070 Administration 4,819,585 4,819,585 1,219,860 25% 4080 Property Management 483,740 483,740 100,615 21% 720 Reclaimed Water Operations 289,116 289,116 3,357 1% Total Water Operatiions 23,630,947 24,185,337 4,747,277 20% 701 Water Capital 1,029,000 1,029,000 44,842 4% 711 Sewer Capital 5,984,200 5,984,200 234 0% Total D.S. Water Operating & Capital 30,644,147$ 31,198,537$ 4,792,352$ 15%
2023-24 FIRST QUARTER BUDGET REVIEW REPORT
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FY 2023-24 TOTAL EXPENDITURES BY DEPARTMENT AND PROGRAMS (Continued)
Sewer Operating Funds overall are 15% expended. More detailed information within each program is detailed below.
• Sewer Operations expenditures are 13% expended and proceeding as planned. It should be noted that onl y one month of treatment fees ( 77.27 MG) for July 202 3 has been expended for Victor Valley Wastewater Reclamation Authority (VVWRA); however August 2023 treatment fees (80.95 MG) was received and paid in October. • Sewer Engineering is currently 14% expended and proceeding as planned. • Sewer Utility Billing is 24% expended, which is expected for the first three months of the fiscal year. • Sewer Administration is proceeding as planned with 26 % expended and mainly due to the monthly general and administrative re-payment for annual indirect cost allocation.
The Police Department budget is 25% expended, which is expected for the first three months of the fiscal year for the monthly law enforcement services . First Quarter year -to-date does not include the quarterly invoice, which is for overtime, grant expenses, etc. as the County of San Bernardino has not provided to the City.
During FY 2018- 19, the City transferred all Hesperia Fire Protection District (Fire District) assets and liabilities to San Bernardino County Fire, with the exception of the former personnel obligations, for which the Fire District will continue to function with dedicated funding. The Fire District is 97% expended, which is due to paying the annual contractual retirement obligations related to the former Fire District employees at the beginning of the fiscal year versus paying monthly. The $3 0,342 in savings will be used to retain the funds in a trust for the payment of former Fire District personnel obligation.
September Amended
2023-24 2023-24 2023 YTD Percent
D. S. - Sewer Operating Budget Amended Expenditures Expended 4200 Operations 5,537,541$ 5,537,541$ 723,239$ 13% 4240 Engineering 266,872 266,872 38,058 14% 4260 Utility Billing 274,255 274,255 66,507 24% 4270 Administration 873,947 873,947 224,107 26% Total D. S. - Sewer Operating 6,952,615$ 6,952,615$ 1,051,911$ 15% September Amended
2023-24 2023-24 2023 YTD Percent
Budget Amended Expenditures Expended
Police 21,972,838$ 21,972,838$ 5,411,316$ 25% September Amended
2023-24 2023-24 2023 YTD Percent
Budget Amended Expenditures Expended
Fire District 937,658$ 937,658$ 907,316$ 97%
2023-24 FIRST QUARTER BUDGET REVIEW REPORT
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FY 2023-24 TOTAL EXPENDITURES BY DEPARTMENT AND PROGRAMS
September
DEPARTMENT AND PROGRAM 2023-24 2023-24 2023 YTD Percent EXPENDITURES SUMMARY Budget Amended Expenditures Expended City Council
100 100 City Council 369,204$ 369,204$ 71,982$ 19% 100 102 City Attorney 450,000 450,000 133,512 30% Total City Council 819,204$ 819,204$ 205,494$ 25% City Manager 1,680,770$ 1,680,770$ 568,701$ 34% Management Services
100 220 Finance 2,633,471$ 2,633,471$ 813,420$ 31% 100 225 Human Resources/Risk Mgmt. 3,509,227 3,509,227 2,186,843 62% 100 228 Information Technology 2,246,150 2,246,150 719,847 32% 100 229 Non-Departmental 1,540,640 1,540,640 186,230 12% Total Management Services 9,929,488$ 9,929,488$ 3,906,340$ 39% Economic Development
100 Economic Development 401,311$ 401,311$ 135,773$ 34% 251 CDBG Administration 100,932 100,932 18,767 19% 370 Hesperia Housing Authority 75,781 75,781 6,396 8% Total Economic Development 578,024$ 578,024$ 160,936$ 28% Development Services - Community Development
100 3000 Planning 1,156,825$ 1,156,825$ 278,560$ 24% 100 3020 Building & Safety 1,345,750 1,345,750 418,435 31% Total D. S. Community Development 2,502,575$ 2,502,575$ 696,995$ 28% Development Services - Code Compliance
100 3010 Code Enforcement 2,643,565$ 2,643,565$ 677,398$ 26% 100 5000 Animal Control 2,596,368 2,596,368 625,281 24% Total D. S. Code Compliance 5,239,933$ 5,239,933$ 1,302,679$ 25% Development Services - Public Works
100 3100 Engineering 963,548$ 963,548$ 159,660$ 17% 100 3110 Building Maintenance 1,621,997 1,621,997 418,462 26% 263 3150 Street Maintenance 2,164,396 2,164,396 551,098 25% 263 3170 Traffic 2,081,162 2,081,162 437,655 21% Total D.S. - Public Works 6,831,103$ 6,831,103$ 1,566,875$ 23%
2023-24 FIRST QUARTER BUDGET REVIEW REPORT
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FY 2023-24 TOTAL EXPENDITURES BY DEPARTMENT AND PROGRAMS (Continued)
September
DEPARTMENT AND PROGRAM 2023-24 2023-24 2023 YTD Percent EXPENDITURES SUMMARY Budget Amended Expenditures Expended Streets Capital Improvement Project (CIP)
204 Measure I -2010 Renewal 1,911,691$ 1,911,691$ 396,732$ 21% 207 Local Transportation Fund 373,868 373,868 215,637 58% 209 Gas Tax - RMRA 1,997,385 1,997,385 0 0% 251 CDBG Streets 4,365,547 4,365,547 260 0% 254 AB 2766 24,306 24,306 0 0% 300 Streets Development Impact Fee 454,468 454,468 0 0% 301 Storm Drain Development Impact Fee 237,500 237,500 0 0% 306 DIF 2018-Streets 7,812,362 7,812,362 711,058 9% 313 A-04 Drainage Development Impact Fee 925,937 925,937 317,748 34% 504 City Streets CIP 24,374,048 24,374,048 2,467,255 10% Total Streets CIP Funds 42,477,112$ 42,477,112$ 4,108,690$ 10% Other City Related Funds
256 Beverage Recycling Grant 90,928$ 90,928$ 1,153$ 1% 261 American Rescue Plan Act 1,491,200 1,491,200 0 0% 262 SB 1383 Local Assistance Grant 88,556 88,556 0 0% 306 DIF 2018-Streets 2,251,488 2,251,488 0 0% 309 City Hall Facilities 2018 Development Impact Fee 160,000 160,000 0 0% 402 Water Rights Acquisition 1,447,475 1,447,475 0 0% 403 2013 Refunding Lease Rev Bonds 901,450 901,450 0 0% Total Other City Related Funds 6,431,097$ 6,431,097$ 1,153$ 0% Development Services - Water
Water Operating
4010 Source of Supply 4,477,415$ 4,477,415$ 2,439$ 0% 4020 Production 5,466,358 6,020,748 1,099,171 18% 4030 Distribution 1,759,116 1,759,116 492,591 28% 4035 Pipeline Maintenance 1,262,485 1,262,485 337,691 27% 4040 Engineering 1,167,742 1,167,742 167,307 14% 4050 Customer Service 2,256,629 2,256,629 382,404 17% 4060 Utility Billing 1,648,761 1,648,761 941,843 57% 4070 Administration 4,819,585 4,819,585 1,219,860 25% 4080 Property Management 483,740 483,740 100,615 21% Total Water Operating 23,341,831 23,896,221 4,743,920 20% 701 Water Capital Project 1,029,000 1,029,000 44,842 4% 720 Reclaimed Water Operations 289,116 289,116 3,357 1% Total D.S. Water Operating & Capital 24,659,947$ 25,214,337$ 4,792,119$ 19%
2023-24 FIRST QUARTER BUDGET REVIEW REPORT
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FY 2023-24 TOTAL EXPENDITURES BY DEPARTMENT AND PROGRAMS (Continued)
September
DEPARTMENT AND PROGRAM 2023-24 2023-24 2023 YTD Percent EXPENDITURES SUMMARY Budget Amended Expenditures Expended Development Services - Sewer
Sewer Operating
4200 Operations 5,537,541$ 5,537,541$ 723,239$ 13% 4240 Engineering 266,872 266,872 38,058 14% 4260 Utility Billing 274,255 274,255 66,507 24% 4270 Administration 873,947 873,947 224,107 26% Total Sewer Operating 6,952,615 6,952,615 1,051,911 15% Sewer Capital 711 5,984,200 5,984,200 234 0% Total D.S. Sewer Operating & Capital 12,936,815$ 12,936,815$ 1,052,145$ 8% Police 21,972,838$ 21,972,838$ 5,411,316$ 25% Fire District 937,658$ 937,658$ 907,316$ 97%
Total City Expenditures 136,996,564$ 137,550,954$ 24,680,758$ 18%
2023-24 FIRST QUARTER BUDGET REVIEW REPORT
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PROPOSED BUDGET AMENDMENTS – SUMMARY
The FY 2023-24 First Quarter Budget Review includes five (5) budget amendments totaling $477,273 . The following listing categorizes the proposed budget amendments, with the following pages providing detail for each request:
PROPOSED BUDGET AMENDMENTS – NARRATIVE
Management Services
Information Technology – Software licensing and support renewal $109,500 (100-19-228) – Unanticipated A renewal agreement for software licensing and support for cyber and system security and data protection was obtained in 2020, but was not identified as a multi -year agreement, as all costs were paid up -front per agreement terms. This software is required for the daily operation of equipment that hosts critical City business information systems, infrastructure services, and other platforms such as New World, TRAKiT, and Chameleon. D uring the FY 2023-24 Budget process these services were not included and procuring these services in this manner provide long-term savings to the City, as opposed to costlier single- year agreements; thus an amendment is being requested to renew the agreement.
Information Technology – Camera upgrades (Animal Services facility) $17,786 (100-19-228) – New The cameras at the Animal Services facility need to be updated to enhance video coverage. Staff is requesting an amendment in the amount of $17,786 to upgrade the existing cameras.
Economic Development
Economic Development – Fair Housing Activities (100-25-251) $21,400 – New The budget amendment will support training that is compliant with the Department of Justice (DOJ) on fair housing.
This is the first year of annual training.
Development Services
Citywide Projects – Cataba Road Basin Drainage Property Purchase (504-29-700) $198,587 – Previous Staff Report
On December 20, 2022 , City Council provided approval to proceed with eminent domain on vacant land ( located North of Yucca Terrace Drive abutting the California Aqueduct APN 3064 -461-03) related to Cataba Road Basin (CO 7901). The purchase of the property is necessary to construct a water retention basin between the end of Cataba Road and before the California Aqueduct to regulate the flow of stormwater and allow the sediment to settle into the basin rather than overflowing into the overchute. Due to the lengthy acquisition of the property, it was uncertain when the proceedings would conclude; therefore the purchase was not included in the FY 2023 -24 Budget and a budget amendment is requested.
Water Operating and Streets Maintenance – Skip Loader Purchase (263-29 and 700-29) $130,000 – New The City is in the process of reviewing its organizational structure and if approved, a new paving crew would be established and the need for new equipment purchased. This Skip Loader will primarily be utilized to fix and repair streets impacted from service line replacements.
General Other
FY 2023-24 1st Quarter Budget Requests Fund Funds Totals
1. Software licensing and support renewal 109,500$ 0$ 109,500$
2. Camera upgrades (Animal Services facility) 17,786 0 17,786
3. Fair Housing Activities 21,400 0 21,400
4. Vacant Land Purchase (Cataba Rd CO 7901) 0 198,587 198,587
5. Skip Loader Purchase 0 130,000 130,000 Total 1st Quarter Budget Amendments Requests 148,686$ 328,587$ 477,273$
2023-24 FIRST QUARTER BUDGET REVIEW REPORT
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PROPOSED BUDGET AMENDMENTS – NARRATIVE (Continued)
General Other
R
EQUESTED: Fund Funds Totals
General Fund
109,500$ 0$ 109,500$
Camera upgrades (Animal Services facility) (Management Services-IT) 17,786 0 17,786 Fair Housing Activities (Economic Development-EDD) 21,400 0 21,400 Total General Fund 148,686$ 0$ 148,686$ Development Services
Vacant Land Purchase (Cataba Rd CO 7901) 0$ 198,587$ 198,587$ Skip Loader Purchase (Water Operating and Streets Maintenance) 0 130,000 130,000 Total Development Services 0$ 328,587$ 328,587$ Total City Expenditures 148,686$ 328,587$ 477,273$ Source of Funds:
General Fund - 100 148,686$
Streets Maintenance - 263 19,500
Citywide Projects - 504 198,587
Water Operating - 700 110,500
Total Source of Funds 477,273$
Software licensing and support renewal (Management Services-IT)
2023-24 FIRST QUARTER BUDGET REVIEW REPORT
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2023-24 First Quarter Budget Salaries and Positions
Summary of Position Changes:
The Fiscal Year (FY) 2023-24 Budget primarily included a rollover of staffing due to the transition of City Managers. As detailed during the Budget Workshop on June 20, 2023, staffing changes would be recommended during FY 2023-24. The adopted FY 2023 -24 Budget included 195.20 full -time equivalents (FTE). It should be noted that all full - time and part-time positions are expressed as FTE to reflect the hours budgeted. A full-time position (1.00 FTE) reflects 2,080 hours of paid time for one year, while a part -time position is either budgeted for 960 hours equating to 0.46 FTE (not CalPERS eligible) or 1,500 hours equating to 0.73 FTE (retirement eligible).
By including both the approved positions on September 19, 2023 (3.00 FTE) and the proposed First Q uarter positions (5.78 FTE), total positions would increase to 203.98 FTE.
Position Changes Approved During the September 19, 2023, City Council Meeting – 3.00 FTE Increases and Proposed First Quarter position changes:
Management Services – 1.00 FTE Addition
• Add one new Administrative Secretary (Non -Represented) position (Range 30), which is in the General classification.
• Convert one vacant Finance Manager position, which is in the Management classification (Range 40) into a Senior Accountant position (Range 38), which is in the Professional/Supervisory classification. • Convert one Financial Analyst position, which is in Professional/Supervisory classification (Range 35) into a Senior Accountant position (Range 38) in the Professional/Supervisory classification. • Convert one Human Resources (HR) Analyst position (Range 37) into an HR Specialist position (Range 35), which will continue to be in the Professional/Supervisory classification. • Convert one Personnel Technician position (Range 32), from the General classification into one HR Specialist position (Range 35) in the Professional/Supervisory classification.
Development Services – 2.54 FTE Addition
• Add one new Deputy City Engineer position, which will be an Unclassified/At -Will position, with a Salary Range of 48.
• Convert an Administrative Analyst position (Range 34), which is a Professional/Supervisory classification to an Associate Engineer position (Range 40), which is in the Professional/Supervisory classification. • Replace one Principal Planner – P art-Time Retired Annuitant position (0.46 FTE) with a full -time equivalent position. The full-time position will be in the Management classification and be placed at a Range 44. • Convert the Deputy Community Development Director position, which is a Senior Management classification at a Range 45 to a Building Official position, which will be Management classification position at a Range 43. • Add one Building Inspector position, which is a Represented classification, at a Range 18.
Code Compliance Division – 2.00 FTE Reduction
• Eliminate two vacant Code Enforcement Officer positions, which are at a Range 17. • Convert one Code Enforcement Supervisor position (Range 39), which is in the Professional/Supervisory classification to a Code Compliance Manager, which is in the Management classification at a Range 44. This position will be competitively recruited during the latter part of the fiscal year.
Public Works Division – 1.46 FTE Addition
• Add one part-time Director of Public Works – Part-Time Retired Annuitant position (0.46 FTE) at a Range 52.
This position (FTE) will be temporarily added to the FY 2023 -24 Amended Budget, while the City commences recruitment of the full -time Director of Public Works, which is currently vacant. Upon successful recruitment, this part-time position will be removed from the budget. • Add one new Water Operations Manager position, which is a Management classification at a Range 44.
2023-24 FIRST QUARTER BUDGET REVIEW REPORT
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2023-24 First Quarter Budget Salaries and Positions (Continued)
Summary of Position Changes (Continued)
Position Changes Approved During the September 19, 2023, City Council Meeting (Continued):
The annualized costing of approved positions changes is $602,461. The funding breakdown is as follows: General Fund - $62,614, Streets Maintenance Fund - $88,705, and Water/Sewer Operating Funds $451,143. With the addition of staffing, the City will be able to reduce contract services, which saw a large increase in the FY 2023 -24 Budget. For example, the City’s budget for engineering services grew from FY 2022 -23 Actual of $178,883 to a FY 2023 -24 Budget of $515,000. Furthermore, the City spent $166,400 on contract building inspection services during FY 2022 -23 and through September 30, 2023, an additional $41,040 has been spent. It is important to not e that such professional services will still be needed going forward, but at a reduced amount. If approved, the fiscal impact for FY 2023- 24 will be included with the Mid-Year Budget review.
Position Recommendations for First Quarter:
As indicated, the City is in the process of reviewing its organizational structure. The goal with this review is to ensure that each area is appropriately staffed for the policies and goals set forth by the City Council. Careful consideration is given when proposing to add or change staffing. For this First Quarter review, approximately 5.78 FTE is recommended to be added for an annualized cost of $526,000. This annualized cost is broken down by $200,000 from the General Fund, $69,000 from the Streets Maintenance Fund, and $257,000 from the Water & Sewer Fund. The following details the changes by each functional area.
Public Works – 5.46 FTE Addition
It is recommended that the City Council approve the creation of a new paving crew. This paving crew will primarily be utilized to fix and repair streets impacted by service line replacements. The following table details the anticipated annualized cost for the new paving crew:
Should the City Council approve the addition of a new paving crew, the operating cost of $200,000 and equipment costs of $273 ,000 will be included in the FY 2024 -25 Budget. The City will begin the recruitment of the new positions after January 2024. The following is a listing of new positions to support the new paving crew. • Add one Senior Maintenance Worker position, which is a Represented classification at a Range 13. • Add one Equipment Operator position, which is a Represented classification at a Range 12.5. • Add two (2.0 FTE) Maintenance Worker positions, which is a Represented classification at a Range 10. • Add two Maintenance Worker Part- time positions at a Range 10 (on a part -time scale) that will be CalPERS eligible. Each position will have a FTE of 0.73 for a total of 1.46 FTE. • Convert the Public Works Supervisor position, which is a Range 40 in the Management classification to a Streets Operations Manager, which will be at a Range 44. With the addition of a new paving crew, this position will have oversight over a robust streets maintenance program.
New Paving Crew Costs
Streets
Maintenance
15%
Water
Operating
85%
Total
100%
Personnel Costs 69,000$ 392,000$ 461,000$
Operating Costs (Material and Fuel) 30,000 170,000 200,000 Total Annualized Cost 99,000$ 562,000$ 661,000$ One-time Equipment Cost (Use of Reserves)
Swap Loader 273,000$
Skip Loader 130,000
Total One-time Equipment Costs 403,000$
2023-24 FIRST QUARTER BUDGET REVIEW REPORT
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2023-24 First Quarter Budget Salaries and Positions (Continued)
Summary of Position Changes (Continued)
Position Recommendations for First Quarter (Continued):
Management Services/Utility Billing – 1.65 FTE Reduction Prior to calendar year 2020 the Water District enhanced the payment options for customers via website payments, pay-by-phone, and kiosks. These options have shifted the workload of Utility Billing from counter transactions to increased phone and email interactions. To provide the highest level of ser vice to utility customers, it is recommended to reorganize Utility Billing. For reference, the current makeup of Utility Billing includes 12.84 FTE and is as follows:
• One Customer Service Supervisor (1.00 FTE) position at a Range 37 (Professional/Supervis ory) – Provides oversight to Utility Billing.
• One Administrative Analyst (1.00 FTE) position at a Range 34 (Professional/Supervisory) – Oversee customer transactions and provides detailed account analyses as needed. • Two Senior Account Clerk (2.00 FTE) positions at a Range 12 (Represented) – Prepare all bi -monthly utility bills for the District’s 28,000 water service and 6,000 sewer accounts. • Three Customer Service Representative (3.00 FTE) positions at a Range 10 (Represented) – Process all counter transactions. Note, one position is vacant.
• Three Part -time Customer Service Representative (2.19 FTE) positions at a Part -time Range 10 (Non - Represented) – Assist with processing all counter transactions. • Five Part-time Office Assistant (3.65 FTE) positions at a Part-time Range 26 (Non-Represented) – Answer incoming customer calls.
The following details the proposed staffing changes to Utility Billing, which equates to a reduction of 1.65 FTE:
• Add one Senior Customer Service Representative (1.00 FTE) position at a Range 12 – New position to serve as lead and oversee complex counter transactions, as well as phone calls. • Two Customer Service Representative (2.00 FTE) positions – Reduction of one vacant position. • One Part -time Customer Service Representative positions (0.73 FTE) – Reduction of two part- time positions or a reduction of 1.46 FTE.
• Convert three of the five Part-time Office Assistant positions (2.19 FTE) into two new position of Customer Service Assistant (2.00 FTE), which will be a Represented classification at a Range 8 and will primarily assist with customer calls. Overall, a reduction of 0.19 FTE. • Convert the remaining two Part -time Office Assistant positions (1.46 FTE) into two part-time Customer Service Assistant (1.46 FTE) positions , which will be a Non -Represented classification at a Range 8 and CalPERS eligible. These positions will assist with answering customer phone calls.
The proposed staffing changes increases the nu mber of full -time personnel, while decreasing part -time positions. By doing so, Utility Billing can ensure adequate coverage to serve the customers of the Water District. Furthermore, the proposed changes will save the District approximately $135,000 annually.
Code Compliance/Animal Control – 1.97 FTE Addition
As indicated in previous staff reports to the City Council, the City is proposing changes to Animal Control. As shown in the FY 2023-24 Budget, Animal Control has 19.22 FTE. • One Field Services Supervisor (1.00 FTE) at a Range 3 6, which is in the General classification – Provides oversight to field operations.
• Four Animal Control Officers (4.00 FTE) at a Range 13, which are in the Represented classification – Field operations.
• One Animal Services Supervisor (1.00 FTE) at a Range 37, which is in the Professional/Supervisory classification – Provides oversight to kennel operations.
2023-24 FIRST QUARTER BUDGET REVIEW REPORT
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2023-24 First Quarter Budget Salaries and Positions (Continued)
Summary of Position Changes (Continued)
Position Recommendations for First Quarter (Continued):
Code Compliance/Animal Control (Continued)
• One Animal Services Specialist (1.00 FTE) at a Range 34, which is in the Professional/Supervisory classification – Oversees front counter and coordinates adoption events. • Three Office Assistant (3.00 FTE) positions at a Range 26, which are in the General Classification – Responds to Animal Control customers.
• Two Office Assistants-Part-Time (0.92 FTE) at a Part-time Range 26 – Provides assistance to customers. • Six Animal Care Technicians (6.00 FTE) at a Range 8 and are in the Represented classification – Provide care for animals in the kennel.
• Three Part -Time Animal Care Technicians (1.38 FTE) at a Part -time Range 8 – Assist with the care of animals.
• Two Part-Time Receptionists (0.92 FTE) at a Part-time Range 6 – Assist with calls from the citizens.
The following details the proposed staffing changes to Animal Control, which equates to an increase of 1.97 FTE:
• Convert the Animal Services Specialist to a new position of Volunteer/Outreach Coordinator, which will be a Represented classification at a Range 12. This position will coordinate the Animal Control volunteers, as well as adoption events.
• Convert three Office Assistant positions (3.00 FTE) to the following:
o One Senior Animal Services Representative (1.00 FTE), which will be a Represented classification at a Range 12. This position will serve as a lead for customer interactions. o Two Animal Services Representative (2.00 FTE) positions, which will be a R epresented classification at a Range 10 and will assist customers of Animal Control. • Convert one Part-time Office Assistant (0.46 FTE) to a Part -time Animal Services Representative position (0.73 FTE) with a Part -time Range 10 and CalPERS eligible. This part-time position will a ssist the customers of Animal Control. This conversion will have a net increase of 0.27 FTE • Eliminate one Part-time Office Assistant position (0.46 FTE). • Convert two Part-time Receptionist positions (0.92 FTE) to one full-time Animal Services Assistant position (1.00 FTE). This represented position will be placed at a Range 8 and assist with customer calls. • Reduce the number of Part-time Animal Care Technician positions from three which had an FTE allocation of 0.46 FTE for a total of 1.38 FTE to two positions at an FTE allocation of 0.73 FTE for a total of 1.46 FTE.
The net impact is an increase of 0.08 FTE, which allows for more workable hours. • Add one Senior Animal Care Technician (1.00 FTE) position, which is a Represented classification at a Range 12 – Serve as a lead for kennel operations.
• Add one Registered Veterinary Technician position (1.00 FTE), which will be a Represented classification at a Range 14. This position will provide enhanced animal care. • Change the range of the Animal Care Technicians from a Range 8 to a Range 10.
The proposed staffing changes increase the number of full -time personnel, while decreasing part -time positions. Having additional full- time positions will allow Animal Control to better serve the animals and community. The proposed changes will cost the General Fund approximately $200,000 annually.
Community Development – No change to FTE
• Convert one Senior Office Specialist position, which is a General classification at a Range 28 to a Planning Specialist at a Range 32 and in the same classification.
2023-24 FIRST QUARTER BUDGET REVIEW REPORT
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California Public Employees Retirement System (CalPERS):
During July 2023, the City received year ending June 30, 2022 actuarial valuation report (report) information. This report details the unfunded liability costs for FY 2024 -25 Budget. Based on the report, CalPERS experienced a June 30, 2022 rate of return of negative 6.1%, which is a change of negative 12.9% from the actuarial assumed rate of return of 6.8% ( -6.1% preliminary rate of return minus 6.8% assumed rate of return). The following table details the increased unfunded liability payment that will be included in the FY 2024-25 Budget.
It should be noted that the impact to the General Fund for FY 2024- 25 Budget will be appr oximately $1.0 million.
Furthermore, based on the preliminary reporting from CalPERS, the June 30, 2023 rate of return is 5.8 %, which is 1% less than the actuarial rate of return of 6.8%. This means that the unfunded liability payment due in FY 2025-26 w ill continue to increase, although the FY 2025-26 impact has not been determined at this time.
FY 2023-24 FY 2024-25 Difference
City of Hesperia Plans 1,657,465$ 1,962,986$ 305,521$ Water District Plans 548,089 666,182 118,093 Fire District Plans 937,658 1,814,535 876,877 Total 3,143,212$ 4,443,703$ 1,300,491$
RESOLUTION NO. 2023-66
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HESPERIA, CALIFORNIA, APPROVING THE FISCAL YEAR 2022-23 FIRST QUARTER BUDGET REVIEW AND AMENDING THE 2023-24 CITY OF HESPERIA
BUDGET TO FUND CERTAIN RELATED EXPENDITURES
WHEREAS, the City Council of the City of Hesperia was presented the Fiscal Year (FY) 2023-24 First Quarter Budget Review report by staff; and
WHEREAS, the City Council of the City of Hesperia has reviewed the FY 2023-24 First Quarter Budget Review report information and analysis and has found it acceptable; and
WHEREAS, the City Council of the City of Hesperia has reviewed and approves the budget amendments included in the FY 2023-24 First Quarter Budget Review report.
NOW THEREFORE, BE IT RESOLVED BY THE CITY OF HESPERIA CITY COUNCIL AS FOLLOWS:
Section 1. That the recitals above are true and correct and adopted as findings.
Section 2. That the City Council of the City of Hesperia approves the FY 2023-24 First Quarter Budget Review report and budget amendments.
Section 3. That the City Council also approves the FY 2023-24 First Quarter Budget Review expenditure amendments by making appropriations for:
Section 4. That the City Council approves the following position classification changes included in the 2023-24 First Quarter Budget Review as follows:
Section 4a. That the City Council approve s the new position classification title of Streets Operations Manager, which is a non -represented position in the management classification, with a salary range of 44.
Section 4b. That the City Council approves the change in classification for the non - represented Field Services Supervisor position from Professional/Supervisory classification to General classification, and approves the salary range change from a salary range 37 to a salary range 36.
Section 4c. That the City Council approves the new position classification title of Planning Specialist, which is a non-represented position in the general classification, with a salary range of 32.
Section 4d. That the City Council approves the new position classification title of Customer Service Assistant, which is a represented classification with a salary range 8.
Section 4e. That the City Council approves the increase in the salary range for the Registered Veterinary Technician position from range 10 to range 14, which is a represented classification.
Software licensing and support renewal (100) $109,500 Camera upgrades (Animal Services facility) (100) 17,786 Fair Housing Activities (100) 21,400
Skip Loader Purchase (263) 19,500
Vacant Land Purchase (Cataba Rd CO 7901) (504) 198,587 Total $366,773
Resolution No. 2023-66
Section 4f. That the City Council approves the increase in the salary range for the Animal Control Officer position from range 12 to range 13 , which is a represented classification.
Section 4g. That the C ity Council approves the new position classification title of Volunteer/Outreach Coordinator, which is a represented classification with a salary range 12.
Section 4h. That the City Council approves the new position classification title of Senior Animal Services Representative, which is a represented classification with a salary range 12.
Section 4i. That the City Council approves the increase in the salary range for the Senior Animal Care Technician position from range 10 to range 12, which is a represented classification.
Section 4j. That the City Council approves the new position classification title of Animal Services Representative, which is a represented classification with a salary range 10.
Section 4k. That the City Council approves the new position classification title of Animal Services Assistant, which is a represented classification with a salary range 8.
Section 4l. That the City Council approves the increase in the salary range for the Animal Care Technician position from range 8 to ra nge 10, which is a represented classification.
Section 5. That the City Clerk shall certify to the passage and adoption of this resolution and enter it into the book of original resolutions.
ADOPTED AND APPROVED this 21st day of November 2023.
_________________________________________
Brigit Bennington, Mayor
ATTEST:
_________________________________
Erin Baum, Assistant City Clerk
RESOLUTION NO. HWD 2023-23
A RESOLUTION OF THE HESPERIA WATER DISTRICT OF THE CITY OF HESPERIA, CALIFORNIA, APPROVING THE FISCAL YEAR 2023 -24 FIRST QUARTER BUDGET REVIEW AND AMENDING THE 2023-24 HESPERIA
WATER DISTRICT BUDGET TO FUND CERTAIN RELATED EXPENDITURES
WHEREAS, the Board of Directors of the Hesperia Water District was presented the Fiscal Year (FY) 2023-24 First Quarter Budget Review by staff; and
WHEREAS, the Board of Directors of the Hesperia Water District has reviewed the FY 2023-24 First Quarter Budget Review report information and analysis and has found it acceptable; and
WHEREAS, the Board of Directors of the Hesperia Water District has reviewed and approves the budget amendments included in the FY 2023-24 First Quarter Budget Review report.
NOW THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE HESPERIA WATER DISTRICT AS FOLLOWS:
Section 1. That the recitals above are true and correct and adopted as findings.
Section 2. That the Board of Directors of the Hesperia Water District approves the FY 2023-24 First Quarter Budget Review report and budget amendments.
Section 3. That the Board of Directors of the Hesperia Water District also approves the FY 2023 -24 First Quarter Budget Review expenditure amendments by making appropriations for:
Section 4. That the Board of Directors of the Hesperia Water District approves the following position classification change s included in the 2023-24 First Quarter Budget Review as follows:
Section 4a. That the Board of Directors approves the new position classification title of Streets Operations Manager, which is a non -represented position in the management classification, with a salary range of 44.
Section 4b. That the Board of Directors approves the new position classification title of Customer Service Assistant, which is a represented classification with a salary range 8.
Section 5. That the Board Secretary shall certify to the passage and adoption of this resolution and enter it into the book of original resolutions.
ADOPTED AND APPROVED this 21st day of November 2023.
_________________________________________
Brigit Bennington, Chair
ATTEST:
_______________________________
Erin Baum, Secretary to the Board
Skip Loader Purchase (700) $110,500