Hesperia City Council
February 20, 2024

FISCAL YEAR 2023-24
MI

D-YEAR BUDGET REVIEW
F
ebruary 20, 2024
Attachment 1
2023-24 MID-YEAR BUDGET REVIEW REPORT
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T A B L E O F C O N T E N T S

Page
Executive Summary ............................................................................................................................ 3 Status of FY 2023-24 Budget, Budget Amendments, and Reserves:

General Fund .......................................................................................................................... 5 Water District .......................................................................................................................... 6 Streets Maintenance ............................................................................................................... 7 FY 2023-24 December 31, 2023 Year-To-Date Revenue Review:

Major Funds Revenue Summary ............................................................................................ 8 General Fund Revenues ......................................................................................................... 9 Community Development Block Grant Revenue ..................................................................... 10 Community Development Commission Revenue .................................................................... 11 Hesperia Housing Authority Revenue ..................................................................................... 11 Street Related Funds Revenue ............................................................................................... 12 Other City Funds Revenue ..................................................................................................... 13 Water District Revenue ........................................................................................................... 15 Department FY 2023-24 Budget Expenditure Status Summary ........................................................... 18 Total Expenditures By Department and Program ................................................................................. 18 Proposed Budget Amendments – Summary ........................................................................................ 23 Proposed Budget Amendments – Narrative ......................................................................................... 23 2024-25 Tentative Budget Calendar ................................................................................................ .... 26

2023-24 MID-YEAR BUDGET REVIEW REPORT
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EXECUTIVE SUMMARY
The following chart compares the FY 2023-24 Budget and December 2023 year-to-date (YTD) revenue and expenditure totals. The percentage comparisons for revenues and expenditures are based on comparing the December 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 six months of the fiscal year.

Status of Overall City Fiscal Year 2023-24 Budget

• Revenue: Based upon the analysis of the revenue performance through December 2023, total revenue collected is $48.5 million, which is $7.9 million or 14% less than December 2022 YTD revenue of $56.4 million. Overall, revenue is at 35% collected of the budget, which is typical due to the timing of payments related to some larger revenue sources such as several tax -based revenues, Development Impact Fees, and Capital Improvement Projects. Additional details are provided further within the report.

• Expenditures: As referenced in the chart above, expenditures are 44% of the amended budget through December 2023. Operating expenditures are 46% expended which is typical for the first half of the fiscal year. Non-operating expenditures are 40% expended YTD, which is due to multiple capital improvement projects (CIP) funds that have minimal expenditures through the second quarter and will increase as projects move forward. It should be noted that there are eight (8) budget amendments totaling $12,030,600 included in this report.

• Reserves: The General Fund and Water District (operating and capital) exceed the City Council’s R eserve Policy which established that a minimum of two (2) months of the annual expenditures be held in cash. The following estimated reserve calculations are based on the June 30, 2023 ending cash balances included in the June 30, 2023 audited Annual Comprehensive Financial Report (ACFR). Using the ACFR audited data assures that the estimated reserves are based on actual information. In addition, t he eight (8) Mid-Year Budget Amendments, totaling $12,030,600, are reflected below where appropriate:

*This total includes strategic res erves, such as permanent water right purchases, as well as the operating funds, contamination mitigation funds, asset rehab funds, and capital funds. 2023-24 2023-24 December Revised %
Budget Revised 2023 YTD Received/Expended
Revenue 137,967,681$ 139,041,808$ 48,501,142$ 35% Use of Reserves 11,356,960 13,664,929
Total Resources 149,324,641 152,706,737
Expenditures 136,996,564 138,028,227 60,133,803 44% Difference 12,328,077$ 14,678,510$
10% Cash Reserves 4,914,038$ 10% 3,830,270$ 10%
Cash Reserves Above 10% Reserve 16,814,643 34% 31,469,818 79% Total Estimated Cash Reserves 21,728,681 $ 44% 35, 300,088$ 89% Months of Cash 5.3 11. 3 *
Water DistrictGeneral Fund
2023-24 MID-YEAR BUDGET REVIEW REPORT
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EXECUTIVE SUMMARY (Continued)

Proposed Budget Amendments – 8 Budget Amendments are proposed for $12,030,600 The FY 2023-24 Mid-Year Budget Review includes eight (8) items as proposed budget amendments totaling $12,030,600. The proposed budget amendments are included in the fund balance analyses where appropriate:

Revenues and Expenditures through December 31, 2023 for the City’s main funds are summarized as follows:

General Other
FY 2023-24 Mid-Year Budget Requests Fund Funds Totals

1. Goals and Priorities Consultant $ 16,900 0$ 16,900$

2. Golf Course (driving range purchase, booster pump 844,869 0 844,869 repairs, property taxes)

3. General Plan Update 398,076 0 398,076

4. Spay/Neuter Supplies and Equipment 38,122 0 38,122

5. Contract Services Increase 76,000 0 76,000

6. County Contract Amendment 100,926 0 100,926

7. 2013 Refunding Lease Revenue Bonds (Refinancing) 0 10,514,660 10,514,660

8. Vehicle Replacement 0 41,047 41,047 Total Mid-Year Amendment Requests $ 1,474,893 $ 10,555,707 12,030,600$ General Fund Revised Budget December
% of Revised
Received
Amended
Budget December
%
Expended
City Council 819,204$ 692,263$ 85%
City Manager 1,682,770 891,316 53%
Management Services 10,056,774 6,399,300 64% Economic Development 422,711 239,965 57% D.S.-Community Development 2,502,575 1,173,977 47% D.S.-Code Compliance 5,237,933 2,239,763 43% D.S.-Public Works (G.F.) 2,585,545 1,073,451 42% Police 21,972,838 10,716,496 49%
Total General Fund 47,466,791$ 14,320,482 $ 30% 45,280,350$ 23,426,531$ 52% Community Development Block Grant 997,511 82,615 8% 100,932 61,723 61% Community Development Commission 696,696 696,696 0% 0 0 n/a Hesperia Housing Authority 301,021 273,812 91% 75,781 24,652 33% D.S.-Public Works 14,890 21,536 145% 4,265,058 1,851,164 43% Streets CIP Funds 48,973,924 9,948,344 20% 42,675,699 10,061,912 24% Other City Related Funds 4,085,355 3,752,990 92% 6,431,097 11,366,179 177% D.S.-Water Operating and Capital 28,287,028 15,713,374 56% 25,324,837 9,012,236 36% D.S.-Sewer Operating and Capital 8,162,264 3,570,421 44% 12,936,815 3,422,091 26% Fire District 56,328 120,872 215% 937,658 907,316 97% Total 139,041,808$ 48,501,142 $ 35% 138,028,227$ 60,133,803$ 44% 2023-24 Revenue 2023-24 Expenditures
2023-24 MID-YEAR BUDGET REVIEW REPORT
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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

1. Budgeted Reserves 0$ 0$

2. Mid-Year Budget Amendment Reserves 0 1,474,893 Total Budgeted Reserves 0$ 1,474,893$ Total General Fund Resources 47,666,791$ 49,141,684$ 1,474,893$ 3%

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
Approved Adjustments to Expenditure Budget
First Quarter Budget Amendments - Approved 0 148,686 Total Approved Amendments 0$ 148,686$ Total Approved Budget 47,516,797$ 47,665,483$
Mid-Year Budget Amendment Requested

1. Goals and Priorities Consultant 0 16,900

2. Golf Course 0 844,869

3. General Plan Update 0 398,076

4. Spay/Neuter Supplies and Equipment 0 38,122

5. Contract Services Increase 0 76,000

6. County Contract Amendment 0 100,926
Total Mid-Year Budget Amendments - Requested 0 1,474,893 Total Recommended Expenditure Budget 47,516,797$ 49,140,376$ 1,623,579$ 3% DIFFERENCE TOTAL RESOURCES/TOTAL EXPENDITURES 149,994$ 1,308$ Fund Balance
July 1 Beginning Balance 33,783,024$ 36,134,450$
Total Budgeted Reserves 0 ( 1,474,893) Difference Total Resources/Total Expenditures 149,994 1,308 Estimated June 30 Ending Fund Balance 33,933,018$ 34,660,865$ Months of Cash to Pay Expenditures and Transfers Out
Beginning Cash July 01, 21,899,077$ 23,202,266$
Estimated Resources Less Budgeted Reserves 47,666,791 47,666,791 Estimated Expenditures (47,516,797) (49,140,376)
22,049,071$ 2 1,728,681$
Months of Cash to Pay Expenditures and Transfers Out 5.6 5.3 Estimated Cash Reserves Percentage 46% 4 4%
Estimated Ending Cash June 30,
Change

2. Fund 402 - 2012 Water Rights Acquisition Debt Service 2023-24 MID-YEAR BUDGET REVIEW REPORT
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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
Budgeted Reserves 4,785,619$ 4,785,619$
First Quarter Budget Amendment-Approved 0 110,500 Total Budgeted Reserves 4,785,619$ 4,896,119$ 110,500$ 2% Total Water District Resources 41,234,911$ 41,345,411$ 110,500$ 0% Expenditures by Program
Water Operating and Capital and Transfer Out 24,370,831$ 24,370,831$ 0$ 0% 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$ 37,596,762$ 0$ 0% Approved Adjustments to Water Operating Expenditure Budget Board Approved Budget Amendments - Staff Reports 0$ 554,390$ First Quarter Budget Amendments - Approved 0 110,500 Total Approved Amendments 0$ 664,890$ Total Approved Budget 37,596,762$ 38,261,652$ 664,890$ 2% Mid-Year Budget Amendments - Requested
0 41,047
0 4 1,047
Total Expenditures and Amendments 37,596,762$ 38,302,699$ 705,937$ 2% Establishment of Reserve Balances
Permanent Water Rights $ 1,146,888 1,146,888$ Total Reserve Balances 1,146,888 1,146,888 Total Water Expenditures & Reserve Balance Funding $ 38,743,650 $ 39,449,587 Difference Total Resources/Total Expenditures 2,491,261$ 1,895,824$ July 1 Beginning Balance 116,800,903$ 119,433,922$ Budgeted Reserves (4,785,619) (4,896,119)
Difference Resources/Expenditures 2,491,261 1,895,824 Reserve Balances 1,146,888 1,146,888
Estimated June 30 Ending Fund Balance 115,653,433$ 117,580,515$ Months of Cash to Pay Expenditures
Beginning Cash July 01, 26,848,587$ 37,153,495$ Estimated Resources Less Budgeted Reserves 36,449,292 36,449,292 Estimated Expenditures (37,596,762) (38,302,699) 25,701,117$ 35,300,088$
Months of Cash to Pay Expenditures and Transfers Out 8.2 11.3 Estimated Ending Cash June 30,
Change

1. Vehicle Replacement
Total Mid-Year Budget Amendments - Requested
2023-24 MID-YEAR BUDGET REVIEW REPORT
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STATUS OF STREETS 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

1. Budgeted Reserves 253,785$ 253,785$

2. First Quarter Budget Amendment Reserves 0 19,500 Total 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% Approved Adjustments to Expenditure Budget
First Quarter Budget Amendments - Approved 0$ 19,500$ Total Approved Amendments 0$ 19,500$
Total Approved Budget 4,245,558$ 4, 265,058 $ 19,500$ 0% Total Recommended Expenditure Budget 4,245,558$ 4, 265,058 $ DIFFERENCE RESOURCES/EXPENDITURES 0$ 0$ 0$ n/a Fund Balance
July 1 Beginning Balance 295,183$ 608,077$
Total Budgeted Reserves (253,785) (273,285)
Difference Resources/Expenditures 0 0 Estimated June 30 Ending Balance 41,398$ 334,792$ Change
2023-24 MID-YEAR BUDGET REVIEW REPORT
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FISCAL YEAR 2023-24 DECEMBER 31, 2023 YEAR-TO-DATE REVENUE REVIEW

Overall – Through December 2023, total revenue is $ 48.5 million, or 35% percent of the total budgeted revenue of $138.0 million. 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. I n this section, discussions will pertain to the revenue activity through the 2nd quarter of FY 2023-24.

As of December 31, 2023, the General Fund received revenues of $14.3 million which is 30% of the annual budget.

This is typical as several major revenues such as Vehicle License Fees and Franchise Fees are primarily received in the second half of the Fiscal Year. The Other General Fund Revenues are currently performing above original budget estimates primarily due to $0.5 million in one -time revenue from the Army Corps of Engineers to reimburse the City for project-related funds previously held in trust.

Street Related Funds revenue is at $10.0 million, or 20% of the $49.0 million originally budgeted, which is expected as a majority of the budgeted revenue is attributed to Street related CIP projects. Development Impact Fees for streets and storm drains is another aspect of this revenue group. This revenue group is largely driven by the timing of the completion of various projects.

As a whole, the Water District revenue is performing as anticipated through December 2023 with 53% of budgeted revenue received to date.

The following pages will detail the current revenue collections for each fund.

December Change From
2023-24 2023- 24 Percent 2023-24 Budget To
Budget Actual Received Revised Revised
General Fund 47,466,791$ 14,320,482$ 30% 47,466,791$ 0$ Community Development Block Grant 997,511 82,615 8% 997,511 0 Community Development Commission 0 696,696 n/a 696,696 696,696 Hesperia Housing Authority 173,590 273,812 158% 301,021 127,431 Street Related Funds 48,988,814 9,969,880 20% 48,988,814 0 Other City Related Funds 3,363,977 3,334,779 99% 3,613,977 250,000 Water Operating 26,662,353 14,870,307 56% 26,662,353 0 Water Capital 1,221,486 495,922 41% 1,221,486 0 Water Reserves 64,000 116,700 182% 64,000 0 Reclaimed Water 339,189 230,445 68% 339,189 0 Total Water Operating & Capital 28,287,028 15,713,374 56% 28,287,028 0 Sewer Operating 6,135,096 3,174,770 52% 6,135,096 0 Sewer Capital 2,021,200 382,439 19% 2,021,200 0 Sewer Reserves 5,968 13,212 221% 5,968 0 Total Sewer Operating & Capital 8,162,264 3,570,421 44% 8,162,264 0 Water District 36,449,292 19,283,795 53% 36,449,292 0 Sub-total 137,439,975 47,962,059 35% 138,514,102 1,074,127 American Rescue Plan Grant 527,706 539,083 102% 527,706 0 Total All Funds 137,967,681$ 48,501,142$ 35% 139,041,808$ 1,074,127$

MAJOR FUNDS REVENUE SUMMARY
2023-24 MID-YEAR BUDGET REVIEW REPORT
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FISCAL YEAR 2023-24 DECEMBER 31, 2023 YEAR-TO-DATE REVENUE REVIEW (Continued)

General Fund Revenue Comments:

General Fund Revenue – Through December 2023, revenues totaled $14.3 million, or 30% of the budgeted estimate.

Overall, General Fund revenues are performing as anticipated. Several large revenue sources such as Sales Tax, Vehicle License Fees and Franchise Fees are expected to increase later in the fiscal year due to the timing of receiving the revenue.

Sales and Use Tax – Through December 2023, the City has received $4.5 million, which is 31% of the $14.4 million FY 2023-24 Budget. Due to timing of receiving revenue, the State has remitted tax payments through October 2023. Tax payments received from this revenue source is trending nearly as expected and will continue to be monitored.

Vehicle License Fee (VLF) – This revenue is bas ed 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 December 2023, as the first installment of the VLF of $6.1 million, or 53% of the budget, was received in January 2024. The second installment expected to be received in May 2024.

Franchise Fees – Franchise fees for Cable TV, Advance Disposal, Southwest Gas, Southern California Edison, and Water for December 2023 YTD total $773,139 , which is a slight increase over the December 2022 of $771,654 YTD.

As mentioned, the majority of franchise fees are received in the second half of the fiscal year.

Transient Occupancy Tax (TOT) – Through December 2023, YTD revenue is $ 550,300, which is $ 197,875 less than the December 202 2 YTD of $7 48,175. TOT tax es received through December have been collected at 32 % of the budgeted amount, which is primarily due to delays in the timing of payments . The City is taking active measures by placing liens on properties that are delinquent in remittance and will continue to monitor collections.

Secured Property Tax – Through December 2023 , YTD revenue is $590,876, which is $46,608 more than the December 2022 YTD $544,268. This revenue is on track through December 2023, with 53% of the budgeted amount received.

December Change From
2023-24 2023-24 Percent 2023-24 Budget To
Budget Actual Received Revised Revised
Sales and Use Tax 14,439,963$ 4,500,676$ 31% 14,439,963$ 0$ Vehicle License Fee (VLF) 11,565,002 0 0% 11,565,002 0 Franchise Fees 4,308,213 773,139 18% 4,308,213 0 Sub-Total Top Three Revenues 30,313,178 5,273,815 17% 30,313,178 0 General & Administrative Recovery 3,750,935 1,875,468 50% 3,750,935 0 Transient Occupancy Tax 1,700,000 550,300 32% 1,700,000 0 Secured Property Tax 1,118,712 590,876 53% 1,118,712 0 Business License 824,243 378,050 46% 824,243 0 Community Facilities District 2005-1 379,185 193,982 51% 379,185 0 Leased Water Rights 2,152,605 0 0% 2,152,605 0 Development Related Revenues
Planning 563,260 290,646 52% 563,260 0 Building & Safety 1,666,784 1,046,339 63% 1,666,784 0 Engineering 955,830 354,460 37% 955,830 0 Sub-Total Development Related Revenues 3,185,874 1,691,445 53% 3,185,874 0 Sub-Total Top 10 Revenue Sources 43,424,732 10,553,936 24% 43,424,732 0 All Other General Fund Revenues 4,042,059 3,766,546 93% 4,042,059 0 Total General Fund Revenues 47,466,791$ 14,320,482$ 30% 47,466,791$ 0$

GENERAL FUND REVENUES
2023-24 MID-YEAR BUDGET REVIEW REPORT
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FISCAL YEAR 2023-24 DECEMBER 31, 2023 YEAR-TO-DATE REVENUE REVIEW (Continued)

General Fund Revenue Comments (Continued):

Business License – The City taxes businesses for conducting business within the City. YTD December 2023 collections of $378,050 is $48,574 or 11% less than the December 2022 YTD of $426,624. The decrease in revenue is due to the decrease of new business licenses paid in FY 2023-24. There were 3,044 total business licenses paid during the first six months of FY 2023- 24 compared to the 3,267 licenses paid December 2022 YTD. There are no recommendations to decrease this revenue as new rates will go into effect March 1, 2024 from adopted fee schedule.

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 December 2023 YTD of $193,982, which is 7 % more than December 2022 YTD of $180,564, is trending as expected.

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 revenue is collected at the end of the year and will be recorded in June 2024.

Development Related Revenue – This revenue source accounts primarily for development related fees such as Planning, Building and Safety , and Engineeri ng. Overall, the FY 2023- 24 revenue through December 2023 of $1.7 million represents 53% of the budget. Planning and Building & Safety revenues are trending as expected. Engineering revenue is at 37% collected through December 2023 as Construction Inspection Fees related to the Silverwood project are anticipated to be received by the end of FY 2023-24.

All Other General Fund Revenue – The numerous all other general fund revenue accounts are $ 3.8 million or 93 % collected through December 2023 . This revenue group includes various revenues such as Animal Control and Code Enforcement Administrative Fines, Vehicle Code Fines, Property Transfer Tax, Cannabis, and Police Service Fees.

Compared to the December 2022 YTD of $2. 5 million collected, this revenue is showing a $1.3 million or 49% increase.

This increase is primarily due to $0.5 million in one -time revenue from the Army Corps of Engineers to reimburse the City for mitigation and monitoring costs related to the Ranchero Road Undercrossing project previously held in trust.

Other contributing factors for the increase include reimbursements for state mandated costs from the State of California and interest-related income.

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 202 3-24 Budget revenue estimates represent anticipated reimbursements that are primarily expected to be received during the third and fourth quarter of the fiscal year.

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. December 2023 YTD revenue of $82,615 has been received, which consists of loan repayments related to the Housing Rehabilitation Loan Program , the 1999 HOME repayment program, and interest related income.

December 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 82,615 84% 98,148 0 Total CDBG Revenues 997,511$ 82,615$ 8% 997,511$ 0$

COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) REVENUE
2023-24 MID-YEAR BUDGET REVIEW REPORT
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FISCAL YEAR 2023-24 DECEMBER 31, 2023 YEAR-TO-DATE REVENUE REVIEW (Continued)

Community Development Commission (CDC) Revenue Comments:

The Community Development Commission revenue reflects the proceeds from the Maple Park property sale. The FY 2023-24 Revised has been increased to reflect the revenues received through December 2023.

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 budgeted revenues primarily consist of loan repayments and interest income. The increase in revenue is primarily due to $127,431 received for the sale of vacant land. The Revised revenue estimates has been increased to reflect the proceeds from the property sale.

December Change From
2023-24 2023-24 Percent 2023-24 Budget To
Budget Actual Received Revised Revised
Proceeds from Land Sale 0$ 696,696$ n/a 696,696$ 696,696$ Total CDC Revenues 0$ 696,696$ n/a 696,696$ 696,696$

COMMUNITY DEVELOPMENT COMMISSION (CDC) REVENUE
December Change From
2023-24 2023-24 Percent 2023-24 Budget To
Budget Actual Received Revised Revised
Interest Income 50,244$ 45,588$ 91% 50,244$ 0$ Loan Repayments 91,846 0 0% 91,846 0 Proceeds from Land Sale 0 127,431 n/a 127,431 127,431 Miscellaneous Income 1,500 56,458 3764% 1,500 0 Sub-Total HHA Revenue 143,590 229,477 160% 271,021 127,431 VVEDA Housing Authority Revenue 30,000 44,335 148% 30,000 0 Total HHA Revenues 173,590$ 273, 812$ 158% 301,021$ 127,431$

HESPERIA HOUSING AUTHORITY (HHA) REVENUE
2023-24 MID-YEAR BUDGET REVIEW REPORT
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FISCAL YEAR 2023-24 DECEMBER 31, 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. Measure I Renewal is received from San Bernardino County Transportation Authority (SBCTA). Through December 2023, a total of $1.2 million from three (3) monthly payments has been collected, which is the same as December 2022 total of $1.2 million. At this time, there are no revisions to this revenue source.

Gas Tax – Monthly apportionments are received throughout the fiscal year and can vary from year-to-year due to timing differences by the State schedule of monthly apportionments. The City’s apportionments through December 2023 total $662,911 from four (4) monthly apportionments , which is $55,332 or 9% more than the December 2022 total of $607,579 from four (4) month apportionments. FY 2023- 24 Gas Tax revenue is at 37% received with remittanc es trending as originally budgeted.

Gas Tax S wap – Through December 2023, the total apportionments of $391,003 from four (4) apportionments is $69,800 or 22% more than the December 2022 YTD of $321,203 from four (4) apportionments. This budgeted revenue source is at 41% with apportionments being received as expected.

Local Transportation – This revenue source has been funded by the County ¼ cent sales tax, and the primary use of this revenue is transportation related, including supporting operations of the Victor Valley Transit Authority (VVTA). The FY 2023-24 Budget is comprised of only interest earnings as the City has been notified that, due to the increased transit needs, FY 2022 -23 was the last year the City would receive residual allocations for use in road improvements. The $57,668 in revenue reflects the interest income received through December 2023.

Gas Tax RMRA – This source of revenue, which is mainly State- funded and took effect in November 2017 during FY 2017-18, 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. The vehicle registration fee also increased depending on the value of the vehicle. As of December 2023, revenue received from the State is $938,742 or 37% of the budgeted amount, an increase of $162,831 or 21% compared to December 2022 total of $775,911.

AQMD (AB2766 Transit) – The revenue in this fund is interest earnings from retained cash.

December Change From
2023-24 2023-24 Percent 2023-24 Budget To
Budget Actual Received Revised Revised
204 Measure I - Renewal 4,091,797$ 1,216,561$ 30% 4,091,797$ 0$ 205 Gas Tax Fund 1,805,700 662,911 37% 1,805,700 0 206 Gas Tax Swap Fund 953,626 391,003 41% 953,626 0 207 Local Transportation Fund 70,374 57,668 82% 70,374 0 209 Gas Tax - RMRA 2,504,413 938,742 37% 2,504,413 0 254 AQMD Fund 540 552 102% 540 0 263 Public Works Street Maintenance Fund 14,890 21,536 145% 14,890 0 Sub-Total 9,441,340 3,288,973 35% 9,441,340 0 DIF Streets & Storm Drain
300 Development Impact Fee-Streets 26,682 59,333 222% 26,682 0 301 Development Impact Fee-Storm Drain 70,112 71,625 102% 70,112 0 306 Development Impact Fee 2018-Streets 13,548,158 4,899,270 36% 13,548,158 0 307 Development Impact Fee 2018-Drainage Facilit 1,059,206 882,075 83% 1,059,206 0 313 Development Impact Fee-A-04 Drainage 370,497 768,153 207% 370,497 0 Sub-Total DIF Streets & Storm Drain 15,074,655 6,680,456 44% 15,074,655 0 504 City Streets CIP 24,472,819 451 0% 24,472,819 0 Total Street Related Funds 48,988,814$ 9,969,880$ 20% 48,988,814$ 0$

STREET RELATED FUNDS REVENUE
2023-24 MID-YEAR BUDGET REVIEW REPORT
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FISCAL YEAR 2023-24 DECEMBER 31, 2023 YEAR-TO-DATE REVENUE REVIEW (Continued)

Streets Related Funds Revenue Comments (Continued):

Public Works -Street Maintenance – The estimated revenues are primarily interest earnings. This fund will occasionally receive miscellaneous reimbursements on an inconsistent basis. The revenue received YTD of $21,536, includes $17,979 in interest earnings and $3,557 in proceeds from sale of equipment and reimbursements for damaged city property and equipment.

Development Impact Fees for Streets and Storm Drain – Through December 202 3 YTD, the combined revenue received of $6.7 million is 44% of the annual budget of $15.1 million. The collections on this revenue source can vary depending on the timing of the completion of projects. The FY 2023-24 Budget of $15.1 million primarily consists of $3.9 million for Hesperia Commerce Center 1- Building 3, $1.7 million for the Pixior Industrial building, and a total of $9.5 million from Silverwood/Tapestry that is expected to be received later in the fiscal year.

City Streets CIP – This fund tracks grant and developer funded projects such as the Ranchero Road Improvements (7th Avenue to Mariposa Road), Ranchero Aqueduct crossing, a Traffic Signal at Main Street and Sultana Street/Timberlane Avenue, Ranchero Aqueduct crossing, a Traffic Signal at Ranchero Road/Cottonwood Avenue, and a Traffic S ignal at Ranchero Road/Maple Avenue. Although December 2023 YTD reimbursements have not been received from the California Department of Transportation (Caltrans), San Bernardino County Transportation Authority (SBCTA), or related grant, staff anticipates payments to start to be received by the end of FY 2023-24.

Other City Funds Revenue Comments: Many of these funds only receive interest income during the fiscal year.

December Change From
2023-24 2023-24 Percent 2023-24 Budget To
Budget Actual Received Revised Revised
105 Pension Obligation Trust 0$ 243,228$ n/a 0$ 0$ 106 OPEB Trust 0 36,051 n/a 0 0 210 HFPD (PERS) Interest Income 56,328 120,872 215% 56,328 0 230 Public Art 0 252,170 n/a 250,000 250,000 255 AB3229 Supplemental Law Fund 255,697 202,210 79% 255,697 0 256 Environmental Programs Grant 78,555 10,448 13% 78,555 0 260 Disaster Preparedness Grant 998 1,020 102% 998 0 262 SB 1383 Local Assistance Grant 28,713 2,395 8% 28,713 0 DIFs 302-304, 308-312
302 Development Impact Fee-Fire 33,079 33,794 102% 33,079 0 303 Development Impact Fee-Police 146 150 103% 146 0 304 Development Impact Fee-Public Services 373 0 0% 373 0 308 Development Impact Fee 2018-Fire Suppressio 1,439,784 1,111,585 77% 1,439,784 0 309 Development Impact Fee 2018-City Hall Facilitie 1,298,664 980,318 75% 1,298,664 0 310 Development Impact Fee 2018-Animal Control 36,932 50,866 138% 36,932 0 311 Development Impact Fee 2018-Records Storage 64,555 49,510 77% 64,555 0 312 Development Impact Fee 2018-Police Facilities 24,753 18,992 77% 24,753 0 Sub-Total DIFs 302-304, 308-312 2,898,286 2,245,215 77% 2,898,286 0 402 2012 Water Rights Debt Service 12,141 68,389 563% 12,141 0 403 2013 Refunding Debt Service 33,259 152,311 458% 33,259 0 404 2023 Refunding Lease Revenue Bonds 0 470 n/a 0 0 261 American Rescue Plan Act Grant 527,706 539,083 102% 527,706 0 Total Other City Funds 3,891,683$ 3,873,862$ 100% 4,141,683$ 250,000$

OTHER CITY FUNDS REVENUE
2023-24 MID-YEAR BUDGET REVIEW REPORT
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FISCAL YEAR 2023-24 DECEMBER 31, 2023 YEAR-TO-DATE REVENUE REVIEW (Continued)

Other City Funds Revenue Comments (Continued):

Pension Obligation Trust and OPEB Trust – These Section 115 Trust funds were established to manage and mitigate the liabilities resulting from other post-employment benefits liabilities and the unfunded pension liability. The revenue in this fund reflects investment income. Through December 2023, the rate of return from the Section 115 Trust funds of

5.97% was higher than the Local Agency Investment Fund (LAIF) interest rate of 3.59%.

HFPD (PERS) Interest Income – This revenue is investment income related to funds held for the CalPERS obligations of the former Hesperia Fire Protection District personnel.

Public Art – This fund is to manage revenue received by the City to be utilized towards public art disp lays. The revenue received as of December 2023 largely reflects a $250,000 one -time payment as part of a billboard relocation along interstate 15 (I-15).

AB3229 Supplemental Law Fund – The passage of Senate Bill (SB) 89 allowed for the continued funding of the Supplemental Law Enforcement Funding (SLE SF). Through December 2023, $202,210 or 79% of the budgeted revenue has been received as expected.

Environmental Programs Grant – This fund tracks grant reimbursements for various environmental events. Thr ough December 2023 YTD, $10,448 or 13% has been received. Reimbursements are largely received later in the fiscal year.

Disaster Preparedness Grant – The revenue in this fund is interest earnings from retained cash.

SB 1383 Local Assistance Grant – This fund is to track the grant funds related to Senate Bill 1383 to reduce organic waste. The revenue in this fund consists of investment income.

Development Impact Fees-Fire, Police, Public Services, City Hall, Animal Control, and Records Storage – At the halfway mark of the fiscal year, a total of $2.2 million, or 77% of budgeted revenue, has been received for t his revenue group. The revenue received through December 2023 is primarily due to a total of $1.8 million received from the completion of Hesperia Commerce Center 1 -Building 3. An additional $0.6 million is expected to be received for the completion of the Pixior Industrial building before the end of the Fiscal Year.

2012 Water Rights and 2013 Refunding Debt Service , and 2023 Refunding Lease Revenue Bonds – The revenue in these funds is interest earnings from cash held with the fiscal agent.

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 rec eived in September 2021, and the second allocation was received in September 2022. This ARPA funding must be spent on eligible costs incurred during the period that began on March 3, 2021, and ending on December 31, 2024 . Eligible costs include expenditures for necessary improvements to water infrastructure to improve access to clean drinking water, wastewater treatment infrastructure, projects that address the impacts of climate change, projects for managing and treating storm water or subsurface drainag e water, facilitating water reuse, and securing publicly owned treatment works.

2023-24 MID-YEAR BUDGET REVIEW REPORT
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FISCAL YEAR 2023-24 DECEMBER 31, 2023 YEAR-TO-DATE REVENUE REVIEW (Continued)

Water District Revenue Comments:

Effective August 1, 2022, 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 collect outstanding balances as part of property tax collections during the following year. For FY 2023-24 as of December 31, 2023, the Water District has collected $243,350 of the $585,031 placed on the tax roll this Fiscal Year, representing collections from the first of the two property tax installment due dates. The Water District is utilizing such liens in lieu of water disconnections and traditional collection services as the primary mechanism for collections.

Overall Water District Revenue – Revenue through December 2023, is $19.3 million, which is $174,089, or 0.9% less than December 2022 YTD of $19.5 million. The overall slight decrease can primarily be attributed to decreases in Water Sales and Water Capital Charges offset by increases in tax lien collections and investment income. Overall, Water District revenue is progressing as anticipated with 53% of the budgeted amount received.

December Change From
2023-24 2023-24 Percent 2023-24 Budget To
Budget Actual Received Revised Revised
Water Sales 24,759,387$ 13,288,406$ 54% 24,759,387$ 0$ Interest Income 308,000 131,429 43% 308,000 0 Property Taxes 550,633 385,047 70% 550,633 0 Sub-Total 25,618,020 13,804,882 54% 25,618,020 0 All Other Water Operating Revenues 1,044,333 1,065,425 102% 1,044,333 0 Total Water Operating Revenues 26,662,353$ 14,870,307$ 56% 26,662,353$ 0$ Capital Facilities Charges 1,146,486 489,250 43% 1,146,486 0 Grant Reimbursement 75,000 0 0% 75,000 0 All Other Capital Facilities Revenues 0 6,672 n/a 0 0 Total Water Capital Revenues 1,221,486 495,922 41% 1,221,486 0 Reclaimed Water 339,189 230,445 68% 339,189 0 All Other Water Reserves Revenues 64,000 116,700 182% 64,000 0 Total Water Operating & Capital Revenues 28,287,028$ 15,713,374$ 56% 28,287,028$ 0$ Sewer Operating Revenue
Sewer Billing 5,670,896$ 2,789,616$ 49% 5,670,896$ 0$ All Other Sewer Operating Revenues 464,200 385,154 83% 464,200 0 Total Sewer Operating Revenue 6,135,096 3,174,770 52% 6,135,096 0 Sewer Connections 450,000 312,164 69% 450,000 0 Grant Reimbursement 1,491,200 0 0% 1,491,200 0 All Other Sewer Capital Revenues 80,000 70,275 88% 80,000 0 Total Sewer Capital Revenue 2,021,200 382,439 19% 2,021,200 0 All Other Sewer Reserves Revenues 5,968 13,212 221% 5,968 0 Total Sewer Operating & Capital Revenues 8,162,264$ 3,570,421$ 44% 8,162,264$ 0$ Total Hesperia Water District Revenue 36,449,292$ 19,283,795$ 53% 36,449,292$ 0$

WATER DISTRICT REVENUE
2023-24 MID-YEAR BUDGET REVIEW REPORT
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FISCAL YEAR 2023-24 DECEMBER 31, 2023 YEAR-TO-DATE REVENUE REVIEW (Continued)

Water District Revenue Comments (Continued):

Water Sales – Water sales through the second quarter of FY 2023 -24 were $13.3 million, which is $469,458 or 3.4%, lower than the December 2022 YTD of $13.8 million, due in large part to the decrease in Water Sales Construction that was factored into the FY 2023- 24 Budget. Through December 2023, Water Sales Construction of $286,115 was $262,377 less than the $548,492 collected through December 2022. The higher Water Sales Construction in FY 2022-23 was due to construction related to a large development project. Of the Water Sales revenue received through December 2023, $151,651 was a result of the Low Income Household Water Assistant Program (LIHWAP). On December 2020, Congress funded a program to help low -income households pay down their outstanding residential water or wastewater bills. This federal program provides financial assistance to low-income Californians to help manage their residential water and wastewater utility costs to up to $ 15,000 per qualifying household. Since t he City started collecting these payments at the beginning of Fiscal Year 2022 -23, a total of $292,448 has been received. Overall, Water sales have been collected at 54% of projection as anticipated.

Property Taxes – Property tax revenue is normally received from November 2023 through July 20 24. Through December 2023, the YTD of $385,047 is $53,499 or 1 6.1% more than the December 2022 YTD of $331,548. Property taxes revenue is on track at Mid-Year with 70% of the budgeted amount received.

All Other Water Operating Reven ue – Through December 2023, total revenue collected is $1,065,425, which is 30 % more than December 2022 YTD of $819,786. This increase is largely related to service charges and delinquency fees received as a result of County Property Tax collections. Revenue through December 2 023 is 102% of the original budget.

Capital Facilities Surcharge – Revenue through December 2023 YTD is $ 489,250, which is 43% of the budgeted amount to date . The revenue received during the second quarter of 202 3 primarily consists of payments for single family residential water meters.

Reclaimed Water – Reclaimed (recycled) water is used at the Hesperia Golf Course and the Township area. As of December 31, 2023, the Water District collected $230,445 , which is 68% of budgeted amount to date. Curr ent Reclaimed Water customers are the Golf Course, Hesperia Township (NW corner of 5 th & Smoke Tree) and Hesperia Recreation and Parks District (HRPD). In the future, the District anticipates that additional customers, such as Hesperia City Hall, Hesperia Civic Park, Hesperia Police Station, The High Desert Government Center, and 8th Avenue Paseo will begin utilizing the reclaimed water system.

Sewer Billing – Revenue through December 2023 is $2.8 million, which is $ 59,858, or 2.2% more than the revenue received in th e Second Quarter of FY 2022 -23. Increases in this revenue source is associated with additional sewer residential and commercial customers connected to the sewer system. Revenue received through December 2023 is at 49% of the budgeted amount and is trending as expected.

Sewer Connections – Revenue through the second quarter of FY 2023 -24, is $312,164, or 69% budget. This revenue is driven by the completion of developme nt projects in areas served by Sewer. This budget revenue will continue to be monitored in the second half of the Fiscal Year as ongoing development projects progress.

Sewer Grant Reimbursement – This revenue source is associated with grant reimbursement s related to sewer construction projects. The budgeted revenue will be anticipated as these projects move forward.

2023-24 MID-YEAR BUDGET REVIEW REPORT
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FISCAL YEAR 2023-24 DECEMBER 31, 2023 YEAR-TO-DATE REVENUE REVIEW (Continued)

Revenue Comments (Continued):

Investment Income – This revenue source reflects the activity of the cash investments of the City for the various funds.

The cash investments are held with the Local Agency Investment Fund (LAIF), which regularly earns interest income based upon the LAIF interest rates. The FY 2023-24 Budget estimated an interest rate of 2.57%. The interest income received through December 2023 reflected a higher interest rate of 3.59%. Additionally, valuation adjustments are recorded based upon the market value on the City’s investments at the end of the Fiscal Year. The investment income revenue of the various City funds is anticipated to meet the FY 2023 -24 Budget once the market valuation adjustments are completed at the end of the Fiscal Year.

2023-24 2023-24 Percent
Budget December Received
General Fund 338,600$ 518,747$ 153%
Community Development Block Grant 88,148 78,081 89% Hesperia Housing Authority 80,244 146,381 182% Street Related Funds 672,527 815,989 121% Other City Related Funds 735,972 1,321,461 180% Water District 451,968 770,665 171% Total 2,367,459$ 3,651,325$ 154%
Investment Income
2023-24 MID-YEAR BUDGET REVIEW REPORT
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DEPARTMENT FY 2023-24 BUDGET EXPENDITURE STATUS SUMMARY

Total City Expenditures – With the exception of the eight (8) mid-year budget amendments totaling $12,030,600, the overall assessment of the City’s expenditures through mid-year of the fiscal year is that expenditures are exp ected to stay within the FY 2023-24 Amended Budget.

TOTAL EXPENDITURES BY DEPARTMENT AND PROGRAMS

The City Council Department is 85% expended through December 2023. The City Council Division has expended 44%, which is due to budgeted items that are typically expended later during the fiscal year, such as annual memberships, conferences, seminars, community outreach programs, and events. The City Attorney Division is higher than expected, with 118% expended. This is mainly due to the unanticipated increase in legal fees pertaining to litigation matters , with invoices paid through November. Staff will continue to monitor the program and if needed will request an amend ment during the FY 2023-24 Fourth Quarter Budget Review as the actual amount needed will be known. There is one budget amendment of $16,900 for consultant services that are essential in updating the City goals and priorities.

The City Manager Department expenditures are on track staying within the 202 3-24 Budget at 53 % expended and proceeding as expected.

December Amended
2023-24 2023-24 2023 YTD Percent
Expenditure Summary Budget Amended Expenditures Expended City Council 819,204$ 819,204$ 692,263$ 85% City Manager 1,680,770 1,682,770 891,316 53% Management Services 9,929,488 10,056,774 6,399,300 64% Development Services - Community Development 2,502,575 2,502,575 1,173,977 47% Development Services - Code Compliance 5,239,933 5,237,933 2,239,763 43% Development Services - Public Works 6,831,103 6,850,603 2,924,615 43% Development Services - Water 23,630,947 24,295,837 8,967,394 37% Development Services - Sewer 6,952,615 6,952,615 2,799,940 40% Police 21,972,838 21,972,838 10,716,496 49% Sub-Total Operating 79,559,473 80,371,149 36,805,064 46% Economic Development 578,024 599,424 326,340 54% Streets Capital Improvement Project (CIP) Funds 42,477,112 42,675,699 10,061,912 24% Water Capital 1,029,000 1,029,000 44,842 4% Sewer Capital 5,984,200 5,984,200 622,151 10% Other City Related Funds 6,431,097 6,431,097 11,366,179 177% Fire District 937,658 937,658 907,316 97% Sub-Total Others 57,437,091 57,657,078 23,328,740 40% TOTAL CITY EXPENDITURES 136,996,564$ 138,028,227$ 60,133,803$ 44% December Amended
2023-24 2023-24 2023 YTD Percent
City Council Budget Amended Expenditures Expended
100 100 City Council 369,204$ 369,204$ 161,692$ 44% 100 102 City Attorney 450,000 450,000 530,971 118% Total City Council 819,204$ 819,204$ 692,663$ 85% December Amended
2023-24 2023-24 2023 YTD Percent
Budget Amended Expenditures Expended
City Manager 1,680,770$ 1,682,770$ 891,316$ 53% 2023-24 MID-YEAR BUDGET REVIEW REPORT
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TOTAL EXPENDITURES BY DEPARTMENT AND PROGRAMS (Continued)

The Management Services Department is currently at 64% expended. Finance is 49% expended, while Information Technology is 53% expended and both are proceeding as planned. During the November 21, 2023 First Quarter Budget Review, the budget was amended to include $127,286 for software licensing/support renewal and upgrade of secu rity cameras at Animal Services facility. The Human Resources Division is 76% expensed due to the lump sum payment to CalPERS for the unfunded accrued liability and annual insurance premiums that were paid at the beginning of the fiscal year. Non-Departmental is 78% expended and higher than expected. An amendment in the amount of $797,044 (split - funded with Economic Development, for a total of $844,869) for the purchase of the driving range, booster pump repairs, and property taxes at the Golf Course is requested as part of this Mid-Year Budget Review.

As a whole, the Economic Development Department is 54% expended through the Second 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. Funded by the General Fund, Economic Development is 57% expended due in large part to the Division’s lump sum portion of the annual unfunded accrued liability assessed by CalPERS. During the first quarter budget review, a budget amendment for $21,400 was approved for the use of fair housing activity compliance . An amendment in the amount of $47,825 (split - funded with Management Services for a total of $844,869) for the purchase of the driving range, booster pump repairs, and property taxes at the Golf Course is requested as part of this Mid-Year Budget Review.

Community Development Block Grant (CDBG), which admin isters the City’s CDBG program and related activities, is 61% expended. The CDBG Annual Action Plan represents a significant use of contract services, and is nearly complete. Budgeted funds are anticipated to be adequate for the remainder of the year.

The Hesperia Housing Authority (HHA) funds oversee the affordable housing within the City. Through the end of December, the HHA funds are 33% expended, which is expected for normal housing activities.

The Community Development Division is 47% expended overall through the Second Quarter. Planning is 40% expended and Building & Safety is 53 % expended , both proceeding as expected . There is one budget amendment totaling $398,076 that is included in this report for a General Plan update.

December Amended
2023-24 2023-24 2023 YTD Percent
Management Services Budget Amended Expenditures Expended 100 220 Finance 2,633,471$ 2,634,846$ 1,288,857$ 49% 100 225 Human Resources/ Risk Mgmt. 3,509,227 3,509,227 2,652,110 76% 100 228 Information Technology 2,246,150 2,373,436 1,250,647 53% 100 229 Non-Departmental 1,540,640 1,539,265 1,207,686 78% Total Management Services 9,929,488$ 10,056,774$ 6,399,300$ 64% December Amended
2023-24 2023-24 2023 Y TD Percent
Economic Development Budget Amended Expenditures Expended 100 Economic Development 401,311$ 422,711$ 239,965$ 57% 251 Community Development Block Grant (CDBG) 100,932 100, 932 61,723 61% 370 Hesperia Housing Authority 75,781 75,781 24,652 33% Total Economic Development 578,024$ 599,424$ 326,340$ 54% December Amended
2023-24 2023-24 2023 YTD Percent
D. S. - Community Development Budget Amended Expenditures Expended 100 3000 Planning 1,156,825$ 1,156,825$ 461,647$ 40% 100 3020 Building & Safety 1,345,750 1,345,750 712,330 53% Total D. S. - Community Development 2,502,575$ 2,502,575$ 1,173,977$ 47% 2023-24 MID-YEAR BUDGET REVIEW REPORT
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TOTAL EXPENDITURES BY DEPARTMENT AND PROGRAMS (Continued)

The Code Compliance Division, which is comprised of Code Enforcement and Animal Control, are trending as expected at 43% through mid- year. There are two budget amendment requests for Animal Control totaling $114,122. The first amendment request is $38,122 for the purchase of supplies and equipment at the Animal Shelter’s medical suite where an onsite veterinarian will perform spay and neuter surgeries . T he second request of $76,000 is to accommodate the increase in contract services related to veterinarian fees.

As shown by the table above, th e overall Public Works Division is 43% expended through December 2023 and trending as expected. Engineering, Building Maintenance, Street Maintenance, and Traffic are trending as expected. During the November 21, 2023 First Quarter Budget Review, the City Council approved the establishment of a new program, Street Repair. This program at 1% expended creates a new paving crew which will primarily be utilized to fix and repair streets impacted by service line replacements. Also during the first quarter budget review, the budget was amended to include $19,500 for the purchase of a Skip Loader for the new Street Repair Program (split-funded with Water Street Repair, for a total of $130,000). As the program progresses, the percent of budget expended will increase.

Streets Capital Improvement Project (CIP) related expenditures is 24% expended through December 2023.

Expenditures will increase as progress continues on projects such as traffic signal construction, drainage improvements, FY 202 1-22 Street Improvement Project, Ranchero Road Improvements and Aqueduct Crossing, and other streets related projects. At the November 21, 2023 Council M eeting an amendment of $198,587 was approved to add additional funding to the Cataba Road Basin (CO 7901) project for the purchase of vacant land.

This classication is largely comprised of the principal and interest payments for the 2012 Water Rights Acquisition and 2023 Refunding Lease Revenue Bonds which refinance the 2013 Refunding Lease Revenue Bonds. To achieve an overall debt service savings, in June 2023 the City Council approved a refinancing of the 2013 Bonds which resulted in a FY 2023-24 principal payment of $9,150,000, and a transfer of the remaining cash within Fund 403 to the new 2023 Bond fund (Fund 404), which was not included in the FY 2023-24 Budget due to the refinance closing during July 2023.

As such, a combined amendment in the amount of $10,514,660 is requested as a result of the refinancing and the closure of Fund 403 into the 2023 Bond Fund 404.

December Amended
2023-24 2023-24 2023 YTD Percent
D. S. - Code Compliance Budget Amended Expenditures Expended 100 3010 Code Enforcement 2,643,565$ 2,637,565$ 1,132,042$ 43% 100 5000 Animal Control 2,596,368 2,600,368 1,107,721 43% Total D. S. - Code Compliance 5,239,933$ 5,237,933$ 2,239,763$ 43% December Amended
2023-24 2023-24 2023 YTD Percent
D. S. - Public Works Budget Amended Expenditures Expended 100 3100 Engineering 963,548$ 963,548$ 381,176$ 40% 100 3110 Building Maintenance 1,621,997 1,621,997 692,275 43% 263 3150 Street Maintenance 2,164,396 2,164,396 983,560 45% 263 3160 Street Repair 0 19,500 160 1% 263 3170 Traffic 2,081,162 2,081,162 867,444 42% Total D.S. Public Works 6,831,103$ 6,850,603$ 2,924,615$ 43% December Amended
2023-24 2023-24 2023 Y TD Percent
Budget Amended Expenditures Expended
Streets Capital Improvement Project (CIP) Funds 42,477,112$ 42,675,699$ 10,061,912$ 24% December Amended
2023-24 2023-24 2023 Y TD Percent
Budget Amended Expenditures Expended
Other City Related Funds 6,431,097$ 6,431,097$ 11,366,179$ 177% 2023-24 MID-YEAR BUDGET REVIEW REPORT
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TOTAL EXPENDITURES BY DEPARTMENT AND PROGRAMS (Continued)

Overall, the Water Operating and Capital funds are 31% expended through December 31, 2023. The following narrative details the progression of each program.
• The primary responsibility of Source of Supply is to secure make- up water lease rights to remedy overproduction.

At Mid-Year, Source of Supply is only 2 % expended. Expenditures will increase significantly in the later part of the fiscal year due to the recording of leased water rights to offset the Alto and Centro Subarea replacement obligation. • Production, which is responsible for drawing the groundwater, has expended 39% of the budget by the end of the Second Quarter and is proceeding as expected. At the August 1, 2023 City Council meeting, an amendment in the amount of $64,000 was approved for the purchase of two mid -size trucks. In addition , at the September 5, 2023 City Council Meeting, an amendment of $490,390 was approved for the repair of Well 22. There is one budget amendment for the replacement of a damaged vehicle totaling $41,047. • Distribution has utilized 50% of its allocated budget and is proceeding as planned. • Through December 31, 2023, Pipeline Maintenance has expended 49% of the budget and proceeding as expected. • Engineering is currently 31% expended, which is primarily due to the timing of invoices. Expenditures are expected to increase in the second part of the fiscal year, as invoices are re ceived for contractual services and annual storm water program expenses.
• Customer Service is 35% expended and proceeding as planned , with the Advanced Metering Infrastructure (AMI) programs progress on schedule (76% of City on AMI).
• Utility Billing is 75 % expended and the increased percentage is due to the $0. 6 million in write-offs of delinquent customer accounts and the document recording costs related to placing those 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. Through December 2023, the District has received a total of $243,350 through the County Property Tax Roll collections process, representing collections from the first of two property tax installment due dates. Additional collections will be received through fiscal year end.
• Administration is 51% expended and proceeding as planned. • Property Managem ent is 39 % e xpended at mid -year and will increase as maintenance projects are completed throughout the fiscal year.

December 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$ 91,227$ 2% 4020 Production 5,466,358 6,020,748 2,344,708 39% 4030 Distribution 1,759,116 1,756,116 871,462 50% 4035 Pipeline Maintenance 1,262,485 1,269,485 625,077 49% 4040 Engineering 1,167,742 1,167,742 364,868 31% 4050 Customer Service 2,256,629 2,239,029 781,425 35% 4060 Utility Billing 1,648,761 1,648,761 1,232,003 75% 4070 Administration 4,819,585 4, 833,185 2,444,085 51% 4080 Property Management 483,740 483,740 187,857 39% 4160 Street Repair 0 110, 500 904 1% 720 Reclaimed Water Operations 289,116 289,116 23,778 8% Total Water Operations 23,630,947$ 24,295,837$ 8,967,394$ 37% 701 Water Capital 1,029,000 1,029,000 44,842 4% 711 Sewer Capital Projects 5,984,200 5,984,200 622,151 10% Total D.S. Water Operating & Capital 30,644,147$ 31,309,037$ 9,634,387$ 31% 2023-24 MID-YEAR BUDGET REVIEW REPORT
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TOTAL EXPENDITURES BY DEPARTMENT AND PROGRAMS (Continued)

D.S. Water Operating and Capital (Continued):

• Street Repair is 1% expended through December 31, 2023 and , as the program progresses, the percent of budget expended will increase. During the November 21, 2023 First Quarter Budget Review, the City Council approved the establishment of a new program, Street Repair. This program creates a new paving crew which will primarily be utilized to fix and repair streets impacted by service line replacements. Also , during the first quarter budget review, the budget was amended to include $110,500 for the purchase of a Skip Loader for the new Street Repair Program (split-funded with Streets Maintenance, for a total of $130,000). • Reclaimed Water Operations expenditures will increase later in the second half of the fiscal year when Debt Service payment is due.
• Projects in Water and Sewer Capital have $7. 0 million allocated in capital funds and are 10% expended.

Expenditures will increase as projects such as the I -15 Corridor water and sewer, Recoating the exterior of water tank at Plant 23, Plant 5 & 18 Roof Replacement and Repair, FY 2019 -20 Water Service Line Relocation, and Maple Avenue sewer line replacement.

The Sewer Operating Funds overall are 40% expended.

• Sewer Operations expenditures are 39 % expended, which is primarily due to receiving invoices for Victor Valley Wastewater Reclamation Authority (VVWRA) sewer treatment fees through October 2023. • Sewer Engineering is currently 25 % expended and is expected to increase in the second part of the fiscal year, as invoices are received for contractual professional engineering services, along with feasibility study expenses for the Silverwood Project.
• Sewer Utility Billing is 41% expended, which is expected for the first half of the fiscal year. • Sewer Administration is proceeding as planned with 5 2% expended and mainly due to the monthly general and administrative re-payment for the annual indirect cost allocation.

The Police Department budget is 4 9% expended, which is expected for the first half of the fiscal year with the County contract invoices paid through December 2023. There is one budget amendment request to increase the County of San Bernardino contract by $100,926.

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 $30,342 in savings will be placed in the District’s Section 115 trust for the payment of former Fire District personnel obligation.

December Amended
2023-24 2023-24 2023 Y TD Percent
D. S. - Sewer Operating Budget Amended Expenditures Expended 4200 Operations 5,537,541$ 5,537,541$ 2,163,131$ 39% 4240 Engineering 266,872 266,872 67,174 25% 4260 Utility Billing 274,255 274,255 113,135 41% 4270 Administration 873,947 873,947 456,500 52% Total D.S. Sewer Operating 6,952,615$ 6,952,615$ 2,799,940$ 40% December Amended
2023-24 2023-24 2023 YTD Percent
Budget Amended Expenditures Expended
Police 21,972,838$ 21,972,838$ 10,716,496$ 49%
December Amended
2023-24 2023-24 2023 Y TD Percent
Budget Amended Expenditures Expended
Fire District 937,658$ 937,658$ 907,316$ 97% 2023-24 MID-YEAR BUDGET REVIEW REPORT
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PROPOSED BUDGET AMENDMENTS – SUMMARY

The FY 2023-24 Mid-Year Budget Review includes eight (8) budget amendments totaling $12,030 ,600. The following listing categorizes the proposed budget amendments, with the following pages providing detail on each request:

PROPOSED BUDGET AMENDMENTS – NARRATIVE

City Council
 Goals and Priorities Consultant – City Council $16,900 (100-01-100) – New The City Council goals and priorities were previously updated on February 11, 2014. An update is necessary to evaluate current short and long-term goals and priorities. Since this was not included in the FY 2023 -24 Budget, a Mid-Year Budget amendment is requested.

Management Services
 Golf Course (driving range, booster pump repairs, and property taxes) – Non-Departmental and Economic Development $844,869 (100-19-229 and 100-25-251) – Unanticipated/New The amendment request includes three expenditures related to the Hesperia Golf Course. • The Hesperia Golf Course and Country Club (211.45 acres of vacant and real property) was purchased in May 2010 and the driving range (APN 0398-251-30) was not available for purchase at the time. At the beginning of FY 2023-24 the driving range became available for purchase and the City decided to purchase the property for $771,044. As indicated by the expense narrative, the amount of $771,044 has been expensed and the amendment will rectify the Non-Departmental budget.
• It was recently brought to the City’s attention that a city- owned property has outstanding property taxes. After much research, it was discovered that the property taxes from calendar years 2003, 2004, and 2005 were still outstanding from the previous owner and not included in the original purchase documents in 2010. Staff is requesting a budget amendment of $47,825 for this obligation. • The pump and electric motor at booster #2 located at the Golf Course has experienced failure and is in need of repair. Since this event was unforeseen, funding for the repair was not included in the FY 2023 -24. It is estimated that $26,000 is needed for the repair.

General Other
FY 2023-24 Mid-Year Budget Requests Fund Funds Totals
Goals and Priorities Consultant $ 16,900 0$ 16,900$ General Plan Update 398,076 0 398,076 Spay/Neuter Supplies and Equipment 38,122 0 38,122 Contract Services Increase 76,000 0 76,000 County Contract Amendment 100,926 0 100,926 Vehicle Replacement 0 41,047 41,047 Sub-Total Operating 630,024 41,047 671,071 Golf Course (driving range purchase, booster pump 844,869 0 844,869 repairs, property taxes)
Sub-Total Non-Operating 844,869 0 844,869 2013 Refunding Lease Revenue Bonds (Refinancing) 0 10,514,660 10,514,660 Sub-Total Debt 0 10,514,660 10,514,660 Total Mid-Year Amendment Requests $ 1,474,893 $ 10,555,707 12,030,600$ Source of Funds:

General Fund - 100 1,474,893$
2013 Refunding Lease Revenue Bonds - 403 10,514,660
Water Operating - 700 41,047
Total Source of Funds 12,030,600$
2023-24 MID-YEAR BUDGET REVIEW REPORT
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PROPOSED BUDGET AMENDMENTS – Narrative (Continued)

Development Services
 General Plan Update – Community Development Planning $398,076 (100-29-300) – Previous Staff Report The City’s General Plan includes seven elements: Land Use, Circulation, Housing, Noise, Conservation, OpenSpace, and Safety. Certain components or elements of Hesperia’s General Plan date back to 2010, and many changes have transpired since then. New housing developments have been built, new businesses and industries are thriving, and the City has grown significantly. To ensure the City is in compliance with State Law, updates to the General Plan’s Land Use, Safety, and Circulation Elements, as well as the creation of a new Environmental Justice Element need to be completed. This is a multi- year project with the balance (estimated at $451,851) being budgeted in FY 2024- 25. As identified in the December 19, 2023 staff report, a budget amendment would be presented with the Mid-Year report.

 Spay/Neuter Supplies and Equipment – Code C ompliance Animal Control $ 38,122 (100-29-305) – Unanticipated
In August 2023, the City unexpectedly lost services of the onsite contracted veterinarian . Since then, spay and neuter services have been performed by an offsite veterinarian, causing increases in costs and staff time transporting animals. This request would supply the Animal Shelter’s medical suite with supplies and equipment needed to perform spay and neuter surgeries by a newly contracted onsite veterinarian. An amendment of $38,122 is being requested.
 Contract Services – Code Compliance Animal Control $76,000 ( 100-29-305) – Unanticipated With the unexpected departure of the onsite veterinarian in August 2023, the Animal Services FY 2023- 24 Budget was based upon the discounted contract amounts. Since then, emergency animal services costs have increased and a budget amendment of $76,000 is requested to continue to provide services through the end of the fiscal year.

Police
 Amendment to County Contract – Police $100,926 (100-51-510) – Unanticipated The FY 2023 -24 County of San Bernardino Sheriff’s Department contract will include a mid -year increase of $100,926. This amendment includes the addition of one (1) Office Specialist and two (2) unmarked units. The unmarked units will be operated by the Investigators assigned to the Adult Protective Services and Child Protective Services program.

Other Funds
 Refinancing 2013 Refunding Lease Revenue Bonds $10,514,660 (403-19-220) – Previous Staff Report At the June 6, 2023 City Council meeting, the City Council approved t he refinancing of the 2013 Refunding Lease Revenue Bonds. The refinancing resulted in a principal payment of $9,150,000, and a transfer of the remaining cash, for a combined total of $10,514,660. As identified in the staff report, an amendment would be presented with the Mid-Year report.

Water
 Water Operating – Vehicle Replacement $41,047 (700-29-4020) – Previous Staff Report On January 5, 2024, a Water District vehicle was involved in a traffic accident and since the vehicle is part of the active Water District fleet, a replacement truck is requested. The City will seek reimbursement from the insurance company. As identified in the staff report, an amendment would be presented with the Mid-Year report.

2023-24 MID-YEAR BUDGET REVIEW REPORT
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PROPOSED BUDGET AMENDMENTS – Narrative (Continued)

General Other
Requested: Fund Funds Totals
General Fund
Goals and Priorities Consultant (City Council-City Council) 16,900$ 0$ 16,900$ Golf Course (driving range purchase, booster pump repairs, property taxes) (Management Services and Economic Development)
844,869 0 844,869
General Plan Update (Community Development-Planning) 398,076 0 398,076 Spay/Neuter Supplies & Equipment (Code Compliance-Animal Control) 38,122 0 38,122 Contract Services Increase (Code Compliance-Animal Control) 76,000 0 76,000 County Contract Amendment (Police) 100,926 0 100,926 Total General Fund 1,474,893$ 0$ 1,474,893$ Other Funds
2013 Refunding Lease Revenue Bonds (Refinancing) 0$ 10,514,660$ 10,514,660$ Total Other Funds 0$ 10,514,660$ 10,514,660$ Water
Vehicle Replacement (Water Operating-Production) $ 0 41,047$ 41,047$ Total Water 0$ 41,047$ 41,047$
Total City Expenditures 1,474,893$ 10,555,707$ 12,030,600$ Source of Funds:

General Fund - 100 1,474,893$
2013 Refunding Lease Revenue Bonds - 403 10,514,660
Water Operating - 700 41,047
Total Source of Funds 12,030,600$
2023-24 MID-YEAR BUDGET REVIEW REPORT
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2024-25 Tentative Budget Calendar

While the Mid-Year report is a gauge of the current year’s activity, it does serve as the official start for planning the next year’s budget. Below is the tentative calendar for the FY 2024-25 Budget.

OpenGov Training – FY 2024-25 Proposed Budget and FY 2023-24 Revised Budget February 7-9, 2024 Council FY 2023-24 Mid-Year Budget Review February 20, 2024 2024-25 Budget Instructions (Intranet) February 29, 2024 2024-25 Draft Division and/or Program Narratives March 7, 2024 FY 2023-24 Revised Revenue and 2024-25 Proposed Budget Revenue Estimates to Departments for Review (07/01/2023 thru 02/29/2024)
March 15, 2024 (Review)
March 25, 2024 (Due)
FY 2023-24 Revised Expenditure Estimates, 2024-25 Current Level Proposed Budget Expenditures
March 28, 2024
2024-25 Budget Increments-“Requested Expenditures Above Current Level” April 2, 2024 Budget Review with Departments/Divisions (Finance) Mid-April 2024-25 Final Proposed Budget Division and/or Program Narratives completed End of April Capital Improvement Program (CIP) Due from Department to Finance April 29, 2024 Workshop #1 – Current Level Budget to Council (Operating) May 7, 2024 Workshop #2 – Above Current Levels to Council May 21, 2024 2024-25 Proposed Budget completed May 24, 2024
Council Budget Workshop June 4, 2024
Council Adopts CIP Budget June 4, 2024
Council Adopts Operating Budget June 18, 2024

With this calendar, there are two planned budget workshops prior to requesting the City Council to adopt the CIP Budget on June 4, 2024 and the operating budget on June 18, 2024. • Budget Workshop #1 will highlight the current-level operating budget. • Budget Workshop #2 will highlight the use of reserves for major purchases, as well as the capital improvement program budget.