Tuesday, December 3, 2024
Meeting Agenda
No Closed Session
Regular Meeting - 6:30 PM
HESPERIA CITY COUNCIL
SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY
HOUSING AUTHORITY
COMMUNITY DEVELOPMENT COMMISSION
WATER DISTRICT
City Council Chambers
9700 Seventh Ave., Hesperia CA, 92345
City Clerk's Office: (760) 947-1007
City Council Members
Larry Bird, Mayor
Rebekah Swanson, Mayor Pro Tem
Brigit Bennington, Council Member
Cameron Gregg, Council Member
Allison Lee, Council Member
Rachel Molina, City Manager
Pam K. Lee, City Attorney
Amended Agenda
Green Sheet Item #1 Election Certification - Information updated after posting of the Agenda 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.
To leave a Public Comment by phone, call and leave a recorded message at (760) 947-1056 up to 5:30 pm on the day of the scheduled meeting. City Council meetings may be viewed live or after the event on the City’s website at www.cityofhesperia.us.
December 3, 2024City Council Meeting Agenda
REGULAR MEETING AGENDA
HESPERIA CITY COUNCIL
SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY
HESPERIA HOUSING AUTHORITY
HESPERIA COMMUNITY DEVELOPMENT COMMISSION
HESPERIA WATER DISTRICT
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.
NO CLOSED SESSION
CALL TO ORDER - 6:30 PM
A.
Invocation
B. Pledge of Allegiance to the Flag
C. Roll Call
Mayor Larry Bird
Mayor Pro Tem Rebekah Swanson
Council Member Brigit Bennington
Council Member Cameron Gregg
Council Member Allison Lee
D. Agenda Revisions and Announcements by City Clerk
ELECTION CERTIFICATION
1. Certification of November 5, 2024 Election Results
Recommended Action:
It is
recommended that the City Council adopt Resolution No. 2024-54 declaring the results of the November 5, 2024 General Municipal Election for filling one (1)
December 3, 2024City Council Meeting Agenda
open seat each in City Council Districts one (1), and five (5).
Staff Person: Deputy City Manager/City Clerk Melinda Sayre SR Certification of November 5, 2024 Election Results 12/3/2024 Resolution 2024-54
Attachments:
OATH OF OFFICE FOR NEWLY ELECTED COUNCIL MEMBERS
1. The Oath of Office administered to incoming Council Members.
RECESS AND REFRESHMENTS
1. Meeting attendees are invited to join us in the lobby for a brief recess to honor incoming Council
Members. The meeting will reconvene immediately following the reception.
CALL TO ORDER NEWLY ELECTED COUNCIL MEMBERS
Roll Call
COUNCIL/BOARD REORGANIZATION
1. Election of Officers:
A. Selection of
the Mayor/Chair to serve for the City Council, Successor Agency to the Hesperia Community Redevelopment Agency, Community Development Commission, Housing Authority, Hesperia Fire Protection District and Hesperia Water District (term to expire at the first regular meeting held in December 2025).
B. Selection of the Mayor Pro Tem/Vice Chair to serve for the City Council, Successor Agency to the Hesperia Community Redevelopment Agency, Community Development Commission, Housing Authority, Hesperia Fire Protection District and Hesperia Water District (term to expire at the first regular meeting held in December 2025).
Staff Person: Deputy City Manager/City Clerk Melinda Sayre SR Council/Board Reorganization 12/3/2024Attachments:
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.
December 3, 2024City Council Meeting Agenda
JOINT CONSENT CALENDAR
1. Consideration of the Draft Minutes from the Special Meeting held Tuesday, November 19, 2024.
Recommended Action:
It is
recommended that the City Council approve the Draft Minutes from the Special Meeting held Tuesday, November 19, 2024.
Staff Person: Assistant City Clerk Erin Baum
SR Draft CC Min 2024-11-19Attachments:
2. Consideration of the Draft Minutes from the Special Meeting held Monday, November 18, 2024.
Recommended Action:
It is
recommended that the City Council approve the Draft Minutes from the Special Meeting held Monday, November 18, 2024.
Staff Person: Assistant City Clerk Erin Baum
SR Draft SPECIAL CC Min 2024-11-18Attachments:
3. 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
SR Warrant Run 12/3/2024
Attachment 1 - Warrant Run
Attachments:
4. Treasurer's Cash Report for the unaudited period ended September 30, 2024 Recommended Action:
It is
recommended that the Council/Board accept the Treasurers 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 12/3/2024
Attachments 1-5 September 2024 Treasurer's Reports
Attachments:
5. 2024-25 Statement of Investment Policy
December 3, 2024City Council Meeting Agenda
Recommended Action:
It is
recommended that the Council/Board/Commission adopt Joint Resolution No. 2024-63, Successor Agency to the Hesperia Community Redevelopment Agency Resolution No. SA 2024-01, Hesperia Housing Authority Resolution No.
HHA 2024-08, Community Development Commission Resolution No. CDC 2024-02, Hesperia Fire Protection District Resolution No. HFPD 2024-04, and Hesperia Water District Resolution No. HWD 2024-19, approving the Fiscal Year 2024-25 Statement of Investment Policy.
Staff Person: Assistant City Manager Casey Brooksher
SR Statement of Investment Policy 12/3/2024
Attachment 1 - Statement of Investment Policy for FY 2024-25 (clean) Attachment 2 - Statement of Investment Policy for FY 24-25 (track changes) Joint Resolution 2024-63
Attachments:
6. Annual 2025-26 Recognized Obligation Payment Schedule Recommended Action:
It is
recommended that the Successor Agency adopt Resolution No. SA 2024-02, approving the Annual 2025-26 Recognized Obligation Payment Schedule (ROPS), including the Successor Agency’s FY 2025-26 Administrative Budget, and authorizing staff to present the ROPS to the Oversight Board for its consideration and approval.
Staff Person: Assistant City Manager Casey Brooksher
SR Recognized Obligation Payment Schedule 12/3/2024
Resolution SA 2024-02
Attachment 2 - Exhibit A Annual ROPS Schedule 25-26
Attachment 3 - Exhibit B FY 2025-26 Administrative Budget Attachments:
7. Parcel Map No. 20643
Recommended Action:
It is
recommended that the City Council adopt Resolution No. 2024-62 approving Parcel Map No. 20643 to create 2 parcels from an existing 3.4 acres of land within the Regional Commercial (RC) zone of the Main Street and Freeway Corridor Specific Plan located on the north side of Main Street and approximately 200 feet west of Cataba Road (Applicant: Quick Quack Car Wash; Doug Livingston, APN: 3064-471-04).
Staff Person: Administrative Analyst Dena Alcayaga
SR Parcel Map 20643 12/3/2024
Resolution 2024-62
Attachment 2- Parcel Map 20643
Attachments:
8. 2024 Permanent Water Rights Purchases
Recommended Action:
December 3, 2024City Council Meeting Agenda
It is recommended that the Board of Directors of the Hesperia Water District receive and
file this report regarding the calendar year 2024 purchase of 65 acre-feet and 10 acre-feet of permanent Base Annual Production water rights in the Alto Subarea from Donna Polich and Paula McKinney respectively, as well as the transfer of Carryover rights from the same.
Staff Person: Director of Public Works/City Engineer Cassandra Sanchez SR 2024 Permanent Water Rights Purchases 12/3/2024Attachments:
9. Final Tract Map No. 18989-2
Recommended Action:
It is
recommended that the City Council adopt Resolution No. 2024-60 approving Final Map No. 18989-2 being a subdivision of the remainder parcels and lots “A” through “C”, inclusive of Tract Map 18989-1, creating 3 numbered lots and 4 lettered lots of the Tapestry Specific Plan. (Applicant: Silverwood Development Phase I, LLC).
Staff Person: Director of Public Works/City Engineer Cassandra Sanchez SR Final Tract Map 18989-2 12/3/2024
Resolution 2024-60
Attachment 2 - Final Tract Map 18989-2
Attachments:
10. Final Tract Map No. 18955-2
Recommended Action:
It is
recommended that the City Council adopt Resolution No. 2024-61 approving Final Map No. 18955-2 to create 32 residential lots on approximately
12.11 gross acres and accept right-of-way necessary to develop Tract 18989-2 Lot 2, Planning Area 1 of the Tapestry Specific Plan (Applicant: Silverwood Development Phase I, LLC).
Staff Person: Director of Public Works/City Engineer Cassandra Sanchez SR Final Tract Map 18955-2 12/3/2024
Resolution 2024-61
Attachment 2 - Final Tract Map 18955-2
Attachments:
11. American Rescue Plan Act (ARPA) Grant Service Line Replacement Project Recommended Action:
It is
recommended that the City Council and Board of Directors of the Hesperia Water District authorize the City Manager to enter into an agreement with Big Ben Inc. for the replacement of water service lines in the not-to-exceed amount of $1,782,000, which includes a 10% contingency.
Staff Person: Director of Public Works/City Engineer Cassandra Sanchez SR ARPA Grant Service Line Replacement 12/3/2024
Attachment 1 - Bid Comparison
Attachments:
12. American Rescue Plan Act (ARPA) Grant - City Wide Sidewalk Repair
December 3, 2024City Council Meeting Agenda
Recommended Action:
It is
recommended that the City Council authorize the City Manager to enter into an agreement with H L Hitchcock Construction to repair or replace sidewalks in twenty-five (25) locations city-wide for a not-to-exceed amount of $182,061, which includes a 10% contingency.
Staff Person: Director of Public Works/City Engineer Cassandra Sanchez SR ARPA Grant – City Wide Sidewalk Repair 12/3/2024
Attachment 1 - Bid Comparison
Attachments:
13. American Rescue Plan Act (ARPA) Manhole Repair - Lid Replacement Project Recommended Action:
It is
recommended that the City Council and Board of Directors of the Hesperia Water District authorize the City Manager to enter into an agreement with Creative Home/DBA:CHI Construction for the Manhole Repair - Lid Replacement project, for the bid amount of $1,312,500, plus a 10% contingency for a not-to-exceed total of $1,443,750.
Staff Person: Director of Public Works/City Engineer Cassandra Sanchez SR ARPA Manhole Repair - Lid Replacement Project 12/3/2024Attachments:
14. American Rescue Plan Act (ARPA) Replace Roofing - Plants 5, 18, 24 & 25 Recommended Action:
It is
recommended that the City Council and Board of Directors of the Hesperia Water District authorize the City Manager to enter into an agreement with Best Contracting Services, Inc. to repair or replace roofing at four Plant locations in the amount of $287,243 which includes a 10% contingency.
Staff Person: Director of Public Works/City Engineer Cassandra Sanchez SR ARPA Replace Roofing - Plants 5, 18, 24 & 25 12/3/2024 Attachment 1 - Bid Result Summary
Attachments:
15. Construction Contract for Tank Coatings - Plant 23-R23/1, Plant 21-R21/1, Plant 22-R22/2 - ARPA
Recommended Action:
It is recommended that the City Council and Board of Directors of the Hesperia Water District 1) award a construction contract for the Tank Coatings - Plant 23-R23/1, Plant 21-R21/1, Plant 22-R22/2 project to the responsive and responsible bidder, Polytech Industrial Incorporated., for the bid amount of $2,790,660, add Alternate A for the amount of $20,000, plus a 10% contingency for a not-to-exceed total of $3,091,726; 2) approve the project as represented by the specifications; and 3) authorize the City Manager or designee to execute the contract and any other necessary documents related to the project.
Staff Person: Senior Project Manager Tina Souza
December 3, 2024City Council Meeting Agenda
SR Construction Contract for Tank Coatings 12/3/2024
Attachment 1 - Bid Results Summary
Attachments:
16. 2024 Edward Byrne Justice Assistance Grant (JAG)
Recommended Action:
It
is recommended that the City Council adopt Resolution No. 2024-64, accepting the allocation of $36,200 from the U.S. Department of Justice, for the purpose of partially funding operational overtime.
Staff Person: Hesperia Police Department Captain Jeremy Dean SR 2024 Edward Byrne Justice Assistance Grant (JAG) 12/3/2024 Resolution 2024-64
Attachments:
CONSENT ORDINANCES
WAIVE READING OF ORDINANCES
Approve the reading by title of all ordinances and declare that said titles which appear on the public agenda shall be determined to have been read by title and further reading waived.
17. Development Code Amendment DCA24-00002; Applicant: City of Hesperia; Area affected: City-wide
Recommended Action:
Place on second reading and adopt by title waiving the text of Ordinance No. 2024-13 approving Development Code Amendment DCA24-00002 modifying development standards associated with Accessory Dwelling Units (ADUs).
Staff Person: Principal Planner Ryan Leonard
SR Development Code Amendment DCA24-00002 11/19/2024
Ordinance 2024-13
Attachment 2 - Exhibit "A"
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
December 3, 2024City Council Meeting Agenda
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 27, 2024 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.
City of Hesperia
STAFF REPORT
DATE: December 3, 2024
TO: Mayor and Council Members
FROM: Rachel Molina, City Manager
BY: Melinda Sayre, Deputy City Manager/City Clerk
SUBJECT: Certification of November 5, 2024 Election Results
RECOMMENDED ACTION
It is recommended that the City Council adopt Resolution No. 2024-54 declaring the results of the November 5, 2024 General Municipal Election for filling one (1) open seat each in City Council Districts one (1), and five (5).
BACKGROUND
The City Council adopted Resolution 2024-15 on June 18, 2024 calling for a General Municipal Election to fill one (1) open seat each in City Council Districts one (1), and five (5), for four-year terms. The Council also adopted Resolution 2024-16 requesting that the San Bernardino County Registrar of Voters consolidate the Municipal Election with the State -wide General Election and canvass the returns as required by the State Election Codes.
ISSUES/ANALYSIS
The City held the consolidated General Municipal Election on November 5, 2024 to fill two open City Council seats. At the time of printing, the San Bernardino County Registrar of Voters Office has not completed the canvass of returns. Staff expects that the canvass will be complete prior to the December 3rd City Council meeting and will green sheet the official certification upon receipt from the San Bernardino County Registrar of Voters. Approval o f the resolution declaring the results is required to satisfy Sections 10263 and 10264 of the CA Elections Code.
CITY GOAL SUPPORTED BY THIS
Organizational Health – Foster a high performing organization that provides opportunities for professional growth.
FISCAL IMPACT
Final election costs will not be known for several months.
ALTERNATIVES
1. Provide alternative direction to staff.
Staff Report to the Mayor & City Council
Certification of Election Results
December 3, 2024
ATTACHMENTS
The Registrar of Voters Certification and Statement of Votes Cast, and Resolution 2024-54 Certifying the Election results, will be attached to the Green Sheet amendment.
HIGHLIGHTED SECTIONS NOT AVAILABLE AT TIME THE AGENDA WAS POSTED. WILL BE SUPPLIED AT THE CITY COUNCIL MEETING.
RESOLUTION NO. 2024-54
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HESPERIA,
CALIFORNIA, RECITING THE FACT OF THE GENERAL MUNICIPAL
ELECTION HELD ON NOVEMBER 5, 2024, DECLARING THE RESULT
AS PROVIDED BY LAW
WHEREAS, a General Municipal Election was c onducted in the City of Hesperia, California on Tuesday, November 5, 2024 as required by law; and WHEREAS, notice of the election was given in time, form and manner as provided by law; that voting precincts were properly established; that election officer s were appointed and that in all respects the election was held and conducted and the votes were cast, received and canvassed and the returns made and declared in time, form and manner as required by the provisions of the Elections Code of the State of California for the holding of elections in general law cities; and WHEREAS, pursuant to Resolution 20 24-16, the San Bernardino Registrar of Voters Office canvassed the returns of the election and certified the results to this City Council, the results are received, attached, and made a part hereof as “Exhibit A.” NOW THEREFORE, BE IT RESOLVED BY THE CITY OF HESPERIA CITY COUNCIL:
Section 1. That the whole number of ballots cast in the City was XXXXX.
Section 2. That the names of persons voted for at the election to fill one (1) open seat each in City Council Districts one (1 ), and five (5) for four -year terms are as follows:
District 1 District 5
Chris Ochoa Bill Jensen
Rebekah Swanson James Roberts
Josh Pullen
James Blocker
Section 3. That the number of votes given in the City to each of the persons named for the respective offices for which the person were candidates were as listed in Exhibit “A” attached.
Section 4. The City Council does declare and determine that xxxx (District 1) and xxxxx (District 5 ) were elected to the City Council for a full term . These terms to expire following certification of the November 2028 General Election.
Section 5. That the City Clerk shall enter on the record s o f the City C ouncil a statement of the results of the election to be provided at the Council Meeting as Exhibit “B” certifying the election results showing: (a) the whole number of votes cast in the city; (b) the names of the persons voted for; (c) for wha t offi ce eac h
Resolution No. 2024-54
person was voted for; (d) the number of votes given at each precinct to each person, and (e) the total number of votes given to each person.
Section 6. That the City Clerk shall imme diately make and deliver to the person so elected a Certificate of Election signed by the City Clerk and authenticated; that the City Clerk (or deputized official) shall administer to the person elected the Oath of Office prescribed in the Constitution of the State of California and shall have him/her subscribe to it and fi le it in the office of the City Clerk. The person so elected shall then be inducted into the respective office to which they have been elected.
Section 7. That the City Clerk shall cer tify to the passage and adoption of this resolution and enter it into the book of original resolutions.
ADOPTED AND APPROVED this 3rd day of December 2024.
______________________________
Larry Bird, Mayor
ATTEST:
_________________________
Erin Baum
Assistant City Clerk
City of Hesperia
STAFF REPORT
DATE: December 3, 2024
TO: Mayor and Council Members
FROM: Rachel Molina, City Manager
BY: Melinda Sayre, Deputy City Manager/City Clerk
Erin Baum, Assistant City Clerk
SUBJECT: Council/Board Reorganization
RECOMMENDED ACTION
It is recommended the City Council/Subsidiary Boards select their Mayor/Chair and Mayor Pro Tem/Vice Chair to serve for one year.
BACKGROUND
CA Government Code requires the installation of the Mayor and Mayor Pro Tempore at the first meeting in December. In March of 2010, the Council adopted the City Council Procedures Manual which outlined guidelines for the annual reorganization of the Council and set the term of office for the Mayor/Chair and Mayor Pro Tem/Vice Chair for one year following nomination.
ISSUES/ANALYSIS
The recommended action is in compliance with the Government Code requirements and the City Council adopted Council Procedures Manual.
CITY GOAL SUPPORTED BY THIS ITEM
Organizational Health - Foster a high performing organization that provides opportunities for professional growth.
FISCAL IMPACT
There is no fiscal impact associated with this item.
ALTERNATIVE(S)
1. Provide alternative direction to staff (Include alternatives if appropriate. This one should be last).
ATTACHMENT(S)
None
THIS PAGE LEFT INTENTIONALLY BLANK
City of Hesperia
City of Hesperia
Meeting Minutes – Draft
City Council
Tuesday, November 19, 2024 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
HESPERIA FIRE PROTECTION DISTRICT - SPECIAL MEETING
CLOSED SESSION - 6:00 PM
Roll Call
Present: 5 - Mayor Bird, Mayor Pro Tem Swanson, Council Member Gregg, Council Member Bennington, and Council Member Lee
Conference
with Legal Counsel – Existing Litigation Government Code Section 54956.9(d)1
1. Assistant Secretary for FHEO v. City of Hesperia, California, et al.; Case Number 09-16-4717-8 Conference
with Real Property Negotiators – Property Negotiations Government Code Section – 54956.8
1. Negotiating Parties: City of Hesperia and Faith Lutheran Church of Hesperia Location: APN: 0
413-031-05
Under Negotiations: Price & Terms
CALL TO ORDER - 6:30 PM
A. Invocation
B. Pledge of Allegiance to the Flag
C. Roll Call
Present: 5 - Mayor Bird, Mayor Pro Tem Swanson, Council Member Gregg, Council Member Bennington, and Council Member Lee
D.
Agenda Revisions and Announcements by City Clerk
City Council Chambers
9700 Seventh Ave.
Hesperia CA, 92345
City of Hesperia
E. Closed Session Reports by City Attorney
ANNOUNCEMENTS/PRESENTATIONS
1. Presentation to outgoing Mayor, Larry Bird, by Mayor Pro Tem, Rebekah Swanson.
2. Presentation to outgoing Mayor Pro Tem, Rebekah Swanson, by Mayor, Larry Bird.
GENERAL PUBLIC COMMENTS (For items and matters not listed on the agenda) The following individuals commented;
Bob Nelson
Kim Jones
JOINT CONSENT CALENDAR
A motion was made by Lee, seconded by Swanson, 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, November 5, 2024.
Recommended Action:
It is recommended that the City Council approve the Draft Minutes from the Regular Meeting held Tuesday, November 5, 2024.
Sponsors: Assistant City Clerk Erin Baum
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 Communit
y Redevelopment Agency, Hesperia Housing Authority, Community Development Commission, and Water District.
Sponsors: Assistant City Manager Casey Brooksher
3. Treasurer’s Cash Report for the unaudited period ended August 31, 2024.
Recommended Action:
It is recommended that the Council/Board accept the Treasurer’s Cash Report for the City, Successor Agency to the Hesperia Communit
y Redevelopment Agency, Hesperia Housing Authority, Community Development Commission, and Water District.
Sponsors: Assistant City Manager Casey Brooksher
4. Fiscal Year 2023-24 Final Budget Amendments
Recommended Action:
City of Hesperia
It is recommended that the following resolutions be adopted, amending the respective Fiscal Year (FY) 2023-24 Budgets for the City of Hesperia and the Hesperia Community Development Commission:
1) City of Hesperia No. 2024-55
2)
Community Development Commission CDC 2024-01
Sponsors: Assistant City Manager Casey Brooksher
5. American Rescue Plan Act (ARPA) Grant Equipment Procurement - Eight Chlorine Analyzers Recommended Action:
It is recommended that the City Council and Board of Directors of the Hesperia Water District authorize the Cit
y Manager to enter into an agreement
with Doane and Hartwig Water Systems for the purchase of eight (8) chlorine analyzers in the not-to-exceed amount of $63,664.
Sponsors: Director of Public Works/City Engineer Cassandra Sanchez
PUBLIC HEARING
6. Public Hearing to Gather Public Input on Community Needs and Priorities for the 2025-2029 Consolidated P
lan and 2025-2026 Action
Plan
Recommended Action:
It is recommended that the City Council conduct a public hearing to receive comments from members of the public concerning housing and community
needs, proposed activities, program perform ance,
strategies f
or furthering fair housing, and eligible uses of Community Development Block Grants (CDBG) funds.
Sponsors: Director of De
velopment Services Nathan Freeman
A motion was made by Swanson, seconded by Gregg, that this item be approved. The motion carried by th
e following vote:
Aye: 5 - Bird, Swanson, Gregg, Bennington, and Lee
Nay: 0
7. Vacate a Portion of Hercules Avenue
Recommended Action:
It is recommended that the City Council hold a public hearing to receive public comments pursuant to Section 8320, subdivision (a) of the California Streets and Highways Code, and adopt Resolution
2024-57 to vacate the southerly 10 feet of Hercules Avenue between Third Avenue and Hesperia Road as
described in attachments Exhibit “A” and Exhibit “B.”
Sponsors: Administrative Analyst Dena Alcayaga
A motion was made by Gregg, seconded by Bennington, that this item be approved. The motion carried by th
e following vote:
Aye: 5 - Bird, Swanson, Gregg, Bennington, and Lee
Nay: 0
8. Development Code Amendment DCA24-00002; Applicant: City of Hesperia; Area affected: City-wide Recommended Action:
City of Hesperia
The Planning Commission recommends that the City Council introduce and place on first reading Ordinance No. 2024-13 approving Development Code Amendment DCA24-00002 modifying development standards associated with Accessory Dwelling Units (ADUs).
Sponsors: Principal Planner Ryan Leonard
A motion was made by Swanson, seconded by Mayor Bird, that this item be approved. The motion carried by the following vote:
Aye: 3 - Bird, Swanson, and Bennington
Nay: 1 - Gregg
Abstain: 1 - Lee
NEW BUSINESS
9. Fiscal Year 2024-25 First Quarter Budget Review
Recommended Action:
It is recommended that the City Council and Board of Directors of the Hesperia Housing Authority and Hesperia Water District receive and file the Fiscal
Year (FY) 2024-25 First Quarter Budget Review, and
the related following resolutions, amending the FY 2024-25 Budgets for the City of Hesperia, Hesperia Housing Authority, and the Hesperia Water District, be approved:
1) City of Hesperia Resolution No. 2024-59
2) Hesperia Housing Authority HHA No. 2024-07
3) Hesperia Water District HWD No. 2024-18
4) Joint Resolution No. 2024-58, HHA 2024-06, and HWD 2024-17 Sponsors: Assistant City Manager Casey Brooksher
A motion was made by Gregg, seconded by Swanson, that this item be approved. The motion carried by the following vote:
Aye: 5 - Bird, Swanson, Gregg, Bennington, and Lee
Nay: 0
COUNCIL COMMITTEE REPORTS AND COMMENTS
The Mayor, Mayor Pro Tem, and Council Members reported from various events and Committees.
CITY MANAGER/CITY ATTORNEY/STAFF REPORTS
ADJOURNMENT
The meeting was adjourned in observance of Veteran’s Day honoring the military service of Council Member Gregg and the birthdays of Chris Lee, Kyle Bird, Aiden Bird and Rick Bird at 8:25 p.m. _____________________________
Erin Baum,
Assistant City Clerk
City of Hesperia
City of Hesperia
Meeting Minutes – Draft
City Council
General Plan Workshop
Monday, November 18, 2024 4:00 PM
SPECIAL MEETING AGENDA
HESPERIA CITY COUNCIL
SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY
HESPERIA HOUSING AUTHORITY
HESPERIA COMMUNITY DEVELOPMENT COMMISSION
HESPERIA WATER DISTRICT
9700 7th Avenue, Council Chambers, Hesperia, CA 92345
CALL TO ORDER - 4:00 PM
A. Invocation
B. Pledge of Allegiance to the Flag
C. Roll Call
Present: 5 - Mayor Bird, Mayor Pro Tem Swanson, Council Member Gregg, Council Member Bennington, and Council Mem
ber Lee
NEW BUSINESS
1. General Plan Update Workshop
Sponsors: City Manager Rachel Molina
Bill Jensen commented on this item.
ADJOURNMENT
The meeting was adjourned at 6:35 p.m.
_____________________________
Erin Baum,
Assistant City Clerk
City Council Chambers
9700 Seventh Ave.
Hesperia CA, 92345
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City of Hesperia
STAFF REPORT
DATE: December 3, 2024
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
Verenise Fierros, 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 19, 2024 through November 1, 2024.
CITY GOAL SUPPORTED BY THIS ITEM
Financial Health – Maintain a balanced budget and adequate reserves.
ATTACHMENT(S)
1. Warrant Runs
Agency/District Accounts Payable Payroll Wires Totals
City of Hesperia $2,702,627.69 $322,131.27 $0.00 $3,024,758.96 Successor Agency 0.00 0.00 0.00 0.00
Housing Authority 0.00 205.85 0.00 205.85
Community Development Commission 0.00 0.00 0.00 0.00
Water 529,545.31 140,482.51 0.00 670,027.82
Totals $3,232,173.00 $462,819.63 $0.00 $3,694,992.63
YEAR-TO PRIOR FY YTD
W/E W/E WARRANT DATE DATE
FUND # FUND NAME 10/25/2024 11/1/2024 TOTALS Wires TOTALS * TOTALS Accounts Payable
100 GENERAL 1,898,280.72$ 138,433.72$ 2,036,714.44$ -$ 14,817,552.22$ 11,942,488.41$ 105 PENSION OBLIGATION TRUST -$ -$ -$ -$ -$ -$
106 OPEB TRUST -$ -$ -$ -$ -$ -$
110 SILVERWOOD 3,066.50$ -$ 3,066.50$ -$ 9,684.16$ -$ 200 HESPERIA FIRE DISTRICT -$ -$ -$ -$ -$ -$
204 MEASURE I - RENEWAL -$ -$ -$ -$ 13,687.41$ 433,773.43$ 207 LOCAL TRANSPORT-SB 325 -$ -$ -$ -$ -$ 967,882.81$ 209 GAS TAX-RMRA -$ -$ -$ -$ -$ -$
210 HFPD (PERS) -$ -$ -$ -$ 1,755,819.00$ 907,316.00$ 241 CFD 2021-1 Resid Maint. & Serv -$ 640.00$ 640.00$ -$ 640.00$ -$ 242 CFD 2022-1 Non-Resd Maint & Serv -$ 640.00$ 640.00$ -$ 640.00$ -$ 243 CFD 2023-1 Silverwood Maint -$ 640.00$ 640.00$ -$ 640.00$ -$ 251 CDBG -$ -$ -$ -$ 2,668,922.09$ 224,746.91$
254 AB2766 - TRANSIT -$ -$ -$ -$ -$ -$
255 AB3229 SUPPLEMENTAL LAW -$ -$ -$ -$ -$ -$
256 ENVIRONMENTAL PROGRAMS GRANT -$ -$ -$ -$ 19,422.51$ 10,139.69$ 262 SB 1383 LOCAL ASSISTANCE GRANT -$ -$ -$ -$ -$ -$ 263 STREETS MAINTENANCE 34,329.33$ 13,344.86$ 47,674.19$ -$ 663,410.54$ 887,759.11$ 300 DEV. IMPACT FEES - STREET 1,853.67$ 10,137.47$ 11,991.14$ -$ 34,379.75$ 3,600.00$ 301 DEV. IMPACT FEES - STORM DRAIN -$ 5,000.00$ 5,000.00$ -$ 5,000.00$ -$ 303 DEV. IMPACT FEES - POLICE -$ -$ -$ -$ -$ -$
304 DEV. IMPACT FEES - PUBLIC WKS. -$ -$ -$ -$ -$ -$ 306 DEV. IMPACT FEES - 2018-STREETS 148,337.68$ 189,325.33$ 337,663.01$ -$ 849,790.45$ 1,160,348.13$ 312 DIF 2018-POLICE FACILITIES -$ -$ -$ -$ -$ -$
313 DIF A-04 DRAINAGE -$ -$ -$ -$ 498.79$ 317,748.35$ 402 WATER RIGHTS ACQUISITION -$ -$ -$ -$ 1,664,308.80$ 1,217,911.69$ 403 2013 REFUNDING LEASE REV BONDS -$ -$ -$ -$ -$ 568,901.39$ 404 2023 REFUNDING LEASE REV BONDS -$ -$ -$ -$ -$ -$ 504 CITY WIDE STREETS - CIP 1,293.48$ 7,073.85$ 8,367.33$ -$ 2,603,732.05$ 3,652,555.76$ 509 CITY FACILITIES CIP -$ -$ -$ -$ -$ -$
800 EMPLOYEE BENEFITS 143,071.47$ 94,931.61$ 238,003.08$ -$ 3,309,575.35$ 3,064,480.17$ 801 TRUST/AGENCY 478.00$ 80.00$ 558.00$ -$ 513,247.29$ 488,702.74$ 802 AD 91-1 AGENCY -$ -$ -$ -$ -$ -$
804 TRUST-INTEREST BEARING -$ -$ -$ -$ 41,105.51$ 108,432.90$ 807 CFD 2005-1 8,150.00$ 3,520.00$ 11,670.00$ -$ 1,029,920.47$ 986,388.74$ 808 HFPD (TRANSITION) -$ -$ -$ -$ 317,435.02$ 347,796.19$ 815 PLAN REVIEW TRUST - FRONTIER -$ -$ -$ -$ -$ -$ CITY 2,238,860.85$ 463,766.84$ 2,702,627.69$ -$ 30,319,411.41$ 27,290,972.42$ 163 REDEVELOP OBLIG RETIREMENT-2018 -$ -$ -$ -$ 7,922,197.73$ 8,079,433.89$ SUCCESSOR AGENCY -$ -$ -$ -$ 7,922,197.73$ 8,079,433.89$ 370 HOUSING AUTHORITY -$ -$ -$ -$ 7,073.81$ 4,936.37$ HOUSING AUTHORITY -$ -$ -$ -$ 7,073.81$ 4,936.37$ 170 COMMUNITY DEVELOPMENT COMMISSION -$ -$ -$ -$ -$ -$ COMMUNITY DEVELOPMENT COMMISSION -$ -$ -$ -$ -$ -$ 700 WATER OPERATING 72,644.03$ 53,991.14$ 126,635.17$ -$ 4,384,244.23$ 4,243,267.55$ 705 WATER PENSION OBLIGATION TRUST -$ -$ -$ -$ 750,000.00$ -$ 701 WATER CAPITAL -$ -$ -$ -$ 16,473.00$ 298,109.99$ 710 SEWER OPERATING 261,742.03$ 2,399.62$ 264,141.65$ -$ 2,259,271.67$ 2,169,842.53$ 711 SEWER CAPITAL 5,365.00$ 130,502.55$ 135,867.55$ -$ 1,067,627.44$ 525,100.10$ 720 RECLAIMED WATER OPERATIONS 2,900.94$ -$ 2,900.94$ -$ 28,906.17$ 12,683.23$ WATER 342,652.00$ 186,893.31$ 529,545.31$ -$ 8,506,522.51$ 7,249,003.40$ ACCOUNTS PAYABLE TOTAL 2,581,512.85$ 650,660.15$ 3,232,173.00$ -$ 46,755,205.46$ 42,624,346.08$ REG. PAYROLL
City 322,131.27$ -$ 322,131.27$ -$ 2,819,335.74$ 2,696,773.09$ Housing Authority 205.85$ -$ 205.85$ -$ 2,029.21$ 1,774.62$ Water 140,482.51$ -$ 140,482.51$ -$ 1,357,548.80$ 1,167,172.01$ PAYROLL TOTAL 462,819.63$ -$ 462,819.63$ -$ 4,178,913.75$ 3,865,719.72$ City of Hesperia
WARRANT RUNS
10/19/2024-11/01/2024
Attachment 1
City of Hesperia
STAFF REPORT
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.
CITY GOAL SUPPORTED BY THIS ITEM
Financial Health – Maintain a balanced budget and adequate reserves.
FISCAL IMPACT
These reports reflect unaudited cash balances as of September 30, 2024.
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
DATE: December 3, 2024
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
Jonathan Settle, Accountant
SUBJECT: Treasurer’s Cash Report for the unaudited period ended September 30, 2024.
Staff Report to the Mayor and City Council/Board Members Treasurer’s Cash Report
December 3, 2024
FUND VALUE
General Fund (100 & 800) 22,664,307.40
Pension Obligation Trust (105) 79,899.35
OPEB Trust (106) -
Silverwood 17,752.85
HFPD (PERS) (210) 772,876.84
CFD 2021-1 Resid Maint & Serv 1,287.47
CFD 2022-1 Non-Resid Maint & Serv 1,287.47
CFD 2023-1 Silverwood Maint 1,425.00
AB27666 - Transit (254) 25,392.96
AB3229 Supplemental Law (255) 255,686.47
AD No. 91-1 (802) 395,680.45
Beverage Recycling Grant (256) 269,658.06
CFD 2005-1 (807) 923,036.34
HFPD Transition (808) -
City Wide-Capital Projects (504) (10,089,767.18)
Community Dev Block Grant (251, 252, & 253) 2,995,526.59 American Rescue Plan Grant (261) 24,801,087.49
SB 1383 Local Assistance Grant (262) 347,937.19
Development Impact Fund (300-304) 5,294,951.46
Development Impact Fund 2018 (306-312) 24,479,067.95
Development Impact Fund A-04 Drainage (313) 1,679,082.86 Disaster (260) 61,505.66
Gas Tax Fund (205) 2,088,790.08
Gas Tax - RMRA (209) 8,177,842.61
Gas Tax Swap (206) 1,636,138.47
Local Transportation SB325 (207) 1,707,685.38
Measure I - Renewal (204) 12,626,068.26
Public Works Street Maint (263) 720,481.64
Public Art (230) 259,316.46
Trust Fund (801, 803-806, & 815) 479,240.93
2012 Water Rights Acquisition (402) 661,984.34
2013 Refunding Lease Rev Bonds (403) -
2023 Refunding Lease Rev Bonds (404) 1,896,331.68
TOTAL CITY FUNDS 105,231,562.53$
CITY OF HESPERIA
Staff Report to the Mayor and City Council/Board Members Treasurer’s Cash Report
December 3, 2024
FUND VALUE
RORF Retention - (163) 445,398.89$
SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY
FUND VALUE
Hesperia Housing Authority Fund (370) 4,286,326.90$
VVEDA Housing Authority (371) 1,943,161.62
TOTAL HOUSING AUTHORITY FUNDS 6,229,488.52$
HESPERIA HOUSING AUTHORITY
FUND VALUE
Community Development Commission Fund (170) 3,511,087.06$
COMMUNITY DEVELOPMENT COMMISSION
Staff Report to the Mayor and City Council/Board Members Treasurer’s Cash Report
December 3, 2024
VALUE
Water Operating (700) 16,508,585.16$
Water Capital (701) 4,211,701.72
Water Capital Rehab and Replace (703) 3,601,385.35
Water Contamination Mitigation (704) 2,656,332.14
Water Pension Obilgation Trust (705) 2,578.05
Water OPEB Trust (706) -
Sewer Operating (710) 13,052,384.55
Sewer Capital (711) 1,504,920.55
Sewer Capital Rehab and Replace (713) 819,453.97
Reclaimed Water Operations (720) 275,540.27
TOTAL WATER FUNDS 42,632,881.76$
WATER
FUND
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City of Hesperia
STAFF REPORT
DATE: December 3, 2024
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
Jonathan Settle, Accountant
SUBJECT: 2024-25 Statement of Investment Policy
RECOMMENDED ACTION
It is recommended that the Council/Board /Commission adopt Joint Resolution No. 2024-63, Successor Agency to the Hesperia Community Redevelopment Agency Resolution No.
SA 2024-01, Hesperia Housing Authority Resolution No. HHA 2024-08, Community Development Commission Resolution No. CDC 2024-02, Hesperia Fire Protection District Resolution No. HFPD 2024-04, and Hesperia Water District Resolution No. HWD 2024-19, approving the Fiscal Year 2024-25 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 Sect ion 53646, and any changes to the Policy are considered by the Council on an annual basis . 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 Treasurer 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 2024-25 Statement of Investment Policy
December 3, 2024
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 is governed by a five -member board , which is chaired by the St ate Treasurer. Under Government Code Section 16429.3, funds deposited are precluded from being transferred or seized by any State agency. The FY 202 4-25 Budget contains an estimated average interest rate of 4.05%. Due to grant and reimbursement -funded construction projects included in the FY 2024-25 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 effectively 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 have historically been higher than the average annual rate of return of US Government securities with a three -month maturity. Due to multiple rate increases by the Federal Reserve through July 2023 however, LAIF rates for FY 2023-24 were 1.39% less than securities with 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 2024-25, staff will continue to monitor LAIF performance, while also evaluating the potential incorporation of other investment options that may offer higher yields , without compromising on safety and liquidity. Potential viable options that can maintain safety and liquidity, along with enhancing return will be presented to the City Council in the future for consideration.
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 2024 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 2023 Legislative session for inclusion in the annual update to the Policy. The statutory changes include a clarification to the limitations imposed on public investments in privately issued mortgage passthrough securities and collateralized mortgage Interest Rate September December March June Annual Averages 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%
Fiscal Year 2023-24 3.59% 4.00% 4.30% 4.55% 4.11%
Federal
Interest Rate September December March June Annual Averages 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%
Fiscal Year 2023-24 5.54% 5.52% 5.45% 5.47% 5.50%
Staff Report to the City Council, Chair, and Board Members 2024-25 Statement of Investment Policy
December 3, 2024
obligations, however the City’s Investment Policy does not allow for investments in these securities, so there are no recommended adjustments to the policy for these clarifications.
Other changes, which are recommended for inclusion in the City’s Investment Policy , include 1) a clarification regarding mutual funds and money market funds related to the i mpermissibility of exchange-traded funds (ETFs) for public investment portfolios, and 2) an update to the glossary, for the term “Secured Overnight Financing Rate ” (SOFR). The Investment Policy has been updated within the applicable sections for these changes.
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.
These changes to the Policy are as shown in a “track changes” version (Attachment 2) of the draft Statement of Investment Policy for Fiscal Year (FY) 2024-25. These changes have also been included in the “clean” version (Attachment 1) of the FY 2024-25 Policy and are recommended for approval.
CITY GOAL SUPPORTED BY THIS ITEM
Financial Health – Maintain a balanced budget and adequate reserves.
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 2024-25 (clean)
2. Statement of Investment Policy for FY 2024-25 (track changes)
3. Joint Resolution No. 2024-63, SA 2024-01, HHA 2024-08, CDC 2024-02, HFPD 2024-04, and HWD 2024-19
Council Meeting: 12/3/2024
i
Attachment #1
City of Hesperia
STATEMENT
OF
INVESTMENT
POLICY
FISCAL YEAR 2024-25
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: 12/3/2024
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 pr eserving 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: 12/3/2024
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 mitigati ng 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: 12/3/2024
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 prude nt 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 (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 abse nce 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: 12/3/2024
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 cou ld 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 potenti al 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, providin g 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 t he 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: 12/3/2024
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 t he 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. 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.
There is no limitation as to the percentage of the portfolio, which can be invested in the category.
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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 Ho me 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) . The entity that issues the commercial paper shall meet all of the following co nditions 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: 12/3/2024
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 wit h Section 118 of the Financial C ode, 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: 12/3/2024
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 rankin g 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.
While similar to mutual funds, exchange -traded funds (ETFs) are not a permissible investment for local agencies.
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 of the portfolio in this category. The maximum term of investment is five (5) years, u nless otherwise approved by City Council. To exceed the five-year
Council Meeting: 12/3/2024
CITY OF HESPERIA
STATEMENT OF INVESTMENT POLICY
9 maturity limit, the authority must be approved by the City Council at least three months prior to the purchase of any se curity exceeding the five -year maturity limit.
K. Investment Pools - Maximum of 30%
Investment structure s 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, Internatio nal 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 Section s 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.
Council Meeting: 12/3/2024
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 agreemen ts, 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 n ot qualify as Qualified Institu tional 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 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: 12/3/2024
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 maturit y 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 portf olio 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 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 v erified 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: 12/3/2024
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: 12/3/2024
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 bondhol ders 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 t he 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: 12/3/2024
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 t hrough 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 commer cial 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.
SOFR: Acronym for “Secured Overnight Financing Rate,” which represents a broad measure of the cost of borrowing cash overnight collateralized by Treasury securities.
TREASURY BILLS: A non-interest bearing discount security issue d 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: 11/21/2312/3/2024
i
Attachment #2
City of Hesperia
STATEMENT
OF
INVESTMENT
POLICY
FISCAL YEAR 2023-242024-25
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: 11/21/2312/3/2024
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: 11/21/2312/3/2024
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 securit y 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.
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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 ye ars), 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. DELE
GATION 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 specify ing 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.
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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. SAFEK EEPING 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 so required by the City Council or by amendment to the above sect ion 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
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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 Cit y’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. AUTHORIZED AND AC
CEPTABLE 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.
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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:
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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 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 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 se
curities with a maximum remaining maturity of five years or less, issued by corporations organized and operating within the United States or by depository
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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’ 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 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.
While similar to mutual funds, exchange- traded funds (ETFs) are not a permissible investment for local agencies.
J. Collateralized Bank Deposits - Maximum of 10%
The City may invest in collateralized bank deposits in the form of notes, bonds, or ot
her 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 of the portfolio in this category. The maximum term of investment is five (5) years, unless otherwise approved by City Council. T o exceed the five -year
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9 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 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.
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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 agreemen ts, 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 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
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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 investment 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 of the City of Hesperia.
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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
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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.
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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.
SOFR: Acronym for “Secured Overnight Financing Rate,” which represents a broad measure of the cost of borrowing cash overnight collateralized by Treasury securities.
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. 2024-63
RESOLUTION NO. SA 2024-01
RESOLUTION NO. HHA 2024-08
RESOLUTION NO. CDC 2024-02
RESOLUTION NO. HFPD 2024-04
RESOLUTION NO. HWD 2024-19
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 funds under the direction of the City Treasurer that are not required for immediate cash flow needs, or were otherwise invested in accordance with bond indentures and trust agreements, and are under the 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 Housi ng 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. 2024-63, SA 2024-01, HHA 2024-08, CDC 2024-02, HFPD 2024-04, & HWD 2024-19
WHEREAS, the attached Statement of Investment Policy has been developed using the California Debt and Investment Advisory Commission’s Local Agency Investment Guidelines and the Municipal Treasurers Association Model Investment Policy as guides, 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 conducted and the policy is in compliance with California Gove rnment 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 3rd day of December 2024.
________________________________
Mayor/Chair
ATTEST:
______________________________________
Erin Baum, Assistant City Clerk
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City of Hesperia
STAFF REPORT
DATE: December 03, 2024
TO: City Council, as Successor Agency to the Hesperia Community Redevelopment Agency
FROM: Rachel Molina, City Manager
BY: Casey Brooksher, Assistant City Manager
SUBJECT: Annual 2025-26 Recognized Obligation Payment Schedule
RECOMMENDED ACTION
It is recommended that the Successor Agency adopt Resolution No. SA 2024-02, approving the Annual 2025-26 Recognized Obligation Payment Schedule (ROPS), including the Successor Agency’s FY 2025-26 Administrative Budget, and authorizing staff to present the ROPS to the Oversight Board for its consideration and approval.
BACKGROUND
Pursuant to Section 34177(l) of the Health and Safety Code (HSC), the Successor Agency to the former Hesperia Community Redevelopment Agency (SA) is required to prepare a Recognized Obligation Payment Schedule (ROPS) for each fiscal year period (commencing each July 1). The ROPS must list the estimated payment amounts for enforceable obligations , as well as sources of funds for each such payment during the fiscal period. Each ROPS must be submitted to the Countywide Oversight Board (the Oversight Board) and the State Department of Finance (the DOF) for approval.
Upon notification of the approval by the DOF, the County Auditor-Controller will prepare the redevelopment property tax trust fund (RPTTF) distribution to the SA. The RPTTF is the funding amount identified on the ROPS to pay enforceable obligations.
ISSUES/ANALYSIS
As mentioned, the ROPS lists the outstanding enforceable obligations to the SA. The SA requires and requests $9,588,930 in enforceable obligations. The following listing discusses the changes to the 2025-26 ROPS:
2018 Bonds (Items 76 and 77) – The ROPS 24-25 requests $8.5 million to make debt service payments on the 2018 Tax Allocation Refunding Bonds, Series A and B (“2018 Bonds”), of which $7.4 million is from RPTTF and $1 million is from Reserve Balance. 2018 Bond Reserve (Item 78) - $1 million in RPTTF is requested in the ROPS 25-26B period to retain as a reserve for a debt service payment due in the ROPS 26-27A period.
Dissolution law permits the SA to request a debt service reserve if a shortfall is projected in the following six -month ROPS period. Without the reserve, there will not be enough RPTTF revenues available to make the debt service owed in the ROPS 26-27A period.
Staff Report to the City Council, as Successor Agency to the Hesperia Community Redevelopment Agency Annual 2025-26 Recognized Obligation Payment Schedule
December 03, 2024
2018 Bond Trustee Fees (Items 79 to 80) – $8,000 in RPTTF is requested to pay for bond trustee administration fees on the 2018 Bonds.
2018 Bond Arbitrage (Item 82) - No RPTTF is being requested regarding the bond trustee arbitrage calculation for the 2018 Bonds. An arbitrage calculation is due every five years. Administrative Cost Allowance (Item 74) – The SA is requesting a $99,524 administrative cost allowance to pay for staffing and professional services necessary to administer ROPS obligations and prepare the ROPS. This is below the $290,273 maximum permitted by law and consistent with the budget for FY 2025-26.
The ROPS 25-26 includes a Report of Cash Balances for Fiscal Year 20 22-23. As of June 30, 2023, the SA had a $1.0 million remaining balance, which is committed to ROPS 23-24 and 24-25 obligations.
CITY GOAL SUPPORTED BY THIS ITEM
Financial Health – Maintain a balanced budget and adequate reserves.
FISCAL IMPACT
The adoption of Resolution No. SA 2024-02 (Attachment 1) and ROPS 25-26 (Attachment 2) is the first step in the process to ensure that the Enforceable Obligations of the Successor Agency are paid in full for FY 2025-26.
ALTERNATIVE(S)
1. Provide alternative direction to staff.
ATTACHMENT(S)
1. Resolution No. SA 2024-02
2. Exhibit A Annual ROPS Schedule 25-26 (July 1, 2025 – June 30, 2026)
3. Exhibit B FY 2025-26 Administrative Budget (July 1, 2025 – June 30, 2026)
RESOLUTION NO. SA 2024-02
A RESOLUTION OF THE SUCCESSOR AGENCY TO THE HESPERIA
COMMUNITY REDEVELOPMENT AGENCY , APPROVING THE ANNUAL
2025-26 RECOGNIZED OBLIGATION PAYMENT SCHEDULE FOR
SUBMISSION TO THE COUNTYWIDE OVERSIGHT BOARD
WHEREAS, pursuant to Health and Safety Code (HSC) Section 34172 (a)(1), the Hesperia Community Redevelopment Agency was dissolved on February 01, 2012; and WHEREAS, the City of Hesperia elected to serve as the Successor Agency to the former Hesperia Community Redevelopment Agency (“Successor Agency”) pursuant to Assembly Bill x1 26 (“Abx1 26”) as codified in the California Health and Safety Code (“HSC”); and WHEREAS, Abx1 26 was amended by Assembly Bill 1484 and Senate Bill 107 (collectively, the “Dissolution Act”); and
WHEREAS, among the duties of successor agencies under the Dissolution Act as amended is the preparation of an annual Recognized Obligation Payment Schedule (“ROPS”), per HSC Section 34177 (i); and
WHEREAS, pursuant to HSC Section 34177( l) of the Health an d Safety Code ("HSC"), the Successor Agency must prepare a Recognized Obligation Payment Schedule (ROPS ) for each fiscal year period (commencing each July 1), listing the estimated payment amounts for enforceable obligations and the source of funds for each such payment during such fiscal period; and
WHEREAS, each ROPS prepared by the Successor Agency must be submitted to the Countywide Oversight Board (Oversight Board) and the State Department of Finance (DOF ) for approval; and
WHEREAS, the County will n ot make any redevelopment property tax trust fund (RPTTF) distributions to the Successor Agency for use in payment of the obligations listed on the ROPS until the ROPS has been approved by the Countywide Oversight Board and DOF; and WHEREAS, the Successor Agency has prepared a ROPS for the period of July 01, 2025 through June 30, 2026 which is attached hereto as Exhibit A and the Successor Agency has prepared the Fiscal Year 2025-26 Administrative Budget which is attached hereto as Exhibit B; and NOW THEREFORE, BE IT RESOLVED by the City Council of the City of Hesperia, as Successor Agency to the Hesperia Community Redevelopment Agency, as follows:
Section 1. The Successor Agency herby finds that all of the facts set forth in this Resolution are true and correct and are a substantive part of this Resolution, incorporated herein by this reference.
Section 2. The Successor Agency herby approves and adopts the ROPS 25-26 covering the period of July 1, 2025 to June 30, 2026 in substantially the form attached hereto as Exhibit A, as required by the Dissolution Act. The Successor Agency accepts changes made by the Consolidated Oversight Board in advance in order to enable the Successor Agency to submit the ROPS 25-26 to the DOF.
Resolution No. SA 2024-02
Section 3. Pursuant t o the Dissolution Act, the Successor Agency approves the Fiscal Year 2025-26 Administrative Budget for the period July 1, 2025 to June 30, 2026 submitted herewith as Exhibit B, which is incorporated herein by this reference.
Section 4. The City Manager or another representative of the Successor Agency is her eby authorized and directed to post a copy of the ROPS 25-26 on the City’s website and transmit a copy of this Resolution along with the approved ROPS to the San Bernardino Countywide Oversight Board for consideration and approval.
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 3rd day of December 2024.
_____________________________
Mayor
ATTEST:
____________________________
Erin Baum, Assistant City Clerk
Attachment 3
EXHIBIT B
HESPERIA SUCCESSOR AGENCY
ADMINISTRATIVE BUDGET FY 2025-26
FOR JULY 1, 2025 to JUNE 30, 2026
Expense Category Responsibilities
FY 2025-26
Proposed
Budget
1. AGENCY STAFF
Finance
Process payment of enforceable obligations
Maintain documentation of Agency records
Coordinate with consultant to answer questions and provide documentation as requested by Oversight Board, County Auditor-Controller, and Department of Finance
$28,202
City Manager Provide direction to other staff and consultants as needed $10,544 Economic Development Administration and Implementation of Agency meetings and wind-down $11,451 City Clerk Administration of Agency meetings $7,567
AGENCY STAFF TOTAL $57,764
2. PROFESSIONAL SERVICES
Administrative services (RSG)
Prepare ROPS, PPA, staff reports, and resolutions
Assist with administration of the Owner Participation Agreement (“OPA”) and other reporting
Coordinate with and answer questions for Oversight Board, County Auditor-Controller, and Department of Finance
Attend Oversight Board meeting
Monitor and project cash flow to ensure sufficient revenues for obligations and to inform Agency staff of expected revenues
$20,000
Legal Provide general legal services as needed $3,000
Attachment 3
Expense Category Responsibilities
FY 2025-26
Proposed
Budget
Review staff reports and resolutions
Audit Costs Prepare Successor Agency portion of audited financial statements $6,810 Disclosure/Dissemination Agent
Services – 2018 TARBS Series
A&B
Annual continuing disclosure and dissemination agent reporting fees $1,950 Property Disposition LRPMP property disposition expenses such as appraisals and staff time related to property disposition $10,000
PROFESSIONAL SERVICES TOTAL $41,760
TOTAL BUDGET $99,524
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City of Hesperia
STAFF REPORT
DATE: December 03, 2024
TO: Mayor and Council Members
FROM: Rachel Molina, City Manager
BY: Cassandra Sanchez, Director of Public Works/City Engineer Dena Alcayaga, Administrative Analyst
SUBJECT: Parcel Map No. 20643
RECOMMENDED ACTION
It is recommended that the City Council adopt Resolution No. 2024-62 approving Parcel Map No. 20643 to create 2 parcels from an existing 3.4 acres of land within the Regional Commercial (RC) zone of the Main Street and Freeway Corridor Specific Plan located on the north side of Main Street and approximately 200 feet west of Cataba Road (Applicant: Quick Quack Car Wash; Doug Livingston, APN: 3064-471-04).
BACKGROUND
On November 10, 2022, the Planning Commission approved Tentative Parcel Map No. 20643 to create 2 parcels from an existing 3.4 acres of land within the Regional Commercial (RC) zone of the Main Street and Freeway Corridor Specific Plan located on the north side of Main Street and approximately 200 feet west of Cataba Road. It was approved in conjunction with Conditional Use Permit (CUP22-00001) to construct a 3,596 square foot Quick Quack Car Wash on 1.3 gross acres (Applicant: Quick Quack Car Wash; Doug Livingston, APN: 3064-471-04).
Staff has reviewed the map and determined that it complies with all the General Plan and zoning regulations and with all local ordinances related to the creation of these parcels.
ISSUES/ANALYSIS
There are no issues identified with this item.
CITY GOAL SUPPORTED BY THIS ITEM
Future Development- Facilitate balanced growth to ensure cohesive community development and pursue economic development.
FISCAL IMPACT
There are no significant fiscal impacts to the City related to this action.
ALTERNATIVE(S)
1. Provide alternative direction to staff.
Staff Report to the Mayor and Council Members
Parcel Map No. 20643
December 03, 2024
ATTACHMENT(S)
1. Resolution No. 2024-62
2. Parcel Map No. 20643
RESOLUTION NO. 2024-62
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HESPERIA, CALIFORNIA, APPROVING PARCEL MAP NO. 20643 TO CREATE 2
PARCELS FROM AN EXISTING 3.4 ACRES OF LAND WITHIN THE REGIONAL
COMMERCIAL ( RC) ZONE OF THE MAIN STREET AND FREEWAY
CORRIDOR SPECIFIC PLAN LOCATED ON THE NORTH SIDE OF MAIN STREET AND APPROXIMATELY 200 FEET WEST OF CATABA ROAD
(APPLICANT: QUICK QUACK CAR WASH ; DOUG LIVINGSTON, APN: 3064- 471-04).
WHEREAS, On November 10, 2022, the Planning Commission approved Tentative Parcel Map No. 20643 to create 2 parcels from an existing 3.4 acres of land within the Regional Commercial (RC) zone of the Main Street and Freeway Corridor Specific Plan located on the north side of Main Street and approximately 200 feet west of Cataba Road (Applicant: Quick Quack Car Wash; Doug Livingston, APN: 3064-471-04); and
WHEREAS, Tentative Parcel Map No. 20643 was approved in conjunction with conditional use permit CUP22-00001 to construct a 3,596 square foot Quick Quack Car Wash on 1.3 gross acres; 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. Parcel Map No. 20643 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 3rd day of December 2024.
Mayor
ATTEST:
Erin Baum
Assistant City Clerk
Attachment 2
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City of Hesperia
STAFF REPORT
DATE: December 3, 2024
TO: Chair and Board Members, Water District
FROM: Rachel Molina, General Manager
BY: Cassandra Sanchez, Director of Public Works/City Engineer Tina Souza, Senior Project Manager
SUBJECT: 2024 Permanent Water Rights Purchases
RECOMMENDED ACTION
It is recommended that the Board of Directors of the Hesperia Water District receive and file this report regarding the calendar year 2024 purchase of 65 acre-feet and 10 acre-feet of permanent Base Annual Production water rights in the Alto Subarea from Donna Polich and Paula McKinney respectively, as well as the transfer of Carryover rights from the same.
BACKGROUND
The Adjudication (City of Barstow et al, v. City of Adelanto et al) is intended to remediate overdraft in the Mojave Basin Area by limiting the amount of water produced in specific subareas. The Free Production Allowance (FPA) is the maximum amount of water a producer may pump in one year without incurring a replacement or make -up obligation. As a result of the judgment, Hesperia Water District (District) incurs replacement water obligations in the Alto Subarea when verified production amounts exceed the FPA for the water year.
The District may meet these replacement water obligations by three mechanisms: 1) assignment of Carryover right or temporary transfer of unused FPA (i.e. lease) from interested water rights owners in the respective subarea at negotiated rates (this is a cost effective short-term option to meeting the production demands); 2) purchase water from the Mojave Basin Area Watermaster (Watermaster) at the current per acre-foot (AF) water rate which is derived from the State Water Project water rates, and/or; 3) purchase permanent Base Annual Production (BAP) rights from interested parties in the Alto Subarea at negotiated rates (purchase provides a long-term solution, but is costly and difficult to acquire).
With the ramp down related to the Adjudication, the growing demands of the District’s service area, water availability, and the competitive nature of assignment water, the District incurs a significant replacement obligation annually and has had to meet this obligation by purchasing water from the Watermaster.
It was brought to the District’s attention that Donna Polich was interested in selling 65 AF and Paula McKinney 10 AF for a total of 75 AF of permanent BAP rights. Due to the ramp down of
50.4 percent required by the Adjudication, the BAP equates to 38 AF (33 from Donna Polich and 5 from Paula McKinney) of FPA that can be used to offset annual replacement obligations. Along with this permanent BAP, each held carryover rights which may be applied one time toward replacement obligations that were transferred to the District.
Staff Report to the Chair and Board Members, Water District 2024 Permanent Water Rights Purchases
December 3, 2024
ISSUES/ANALYSIS
During the 2022-23 Water Year (October 2022 to September 2023), the District produced 12,906 AF of water. The District’s FPA is 7,905 AF leaving a replacement obligation of 5,001 AF. The City owns 6,736 AF which equates to 3, 665 AF of FPA that can be used to offset annual replacement obligations by leasing to the District; subsequently leaving a replacement obligation balance of 1,336 AF. The purchase of permanent water rights, while costly, provides a long-term solution to the inevitable water production overrun the District faces annually.
Opportunities to purchase permanent water are scarce and purchasing permanent water rights when feasible is a vital component to planni ng for future water supply. Due to the nature and sensitivity of water transactions and the need to act quickly or lose the opportunity, the purchase of water rights held by Donna Polich and Paula McKinney was presented to the District Board of Directors during a closed session. The District Board authorized staff to negotiate and finalize the purchases with Donna Polich and Paula McKinney of 65 AF and 10 AF respectively of permanent BAP at $7,025 per AF for a total cost of $ 526,875 ($456,625 for Donna Polich and $70,250 for Paula McKinney). The permanent BAP was inclusive of the temporary transfer of 33 AF and 5 AF, respectively, of Carryover rights in the negotiations. The total transaction amount for the permanent and temporary assignment of water rights is $526,875.
CITY GOAL SUPPORTED BY THIS ITEM
Financial Health - Maintain a balanced budget and adequate reserves.
FISCAL IMPACT
Water District cash reserves are available for the purchase of the permanent water rights. A mid- year Budget Amendment will be presented for the corresponding expenditure authority.
ALTERNATIVE(S)
None
ATTACHMENT(S)
None
City of Hesperia
STAFF REPORT
DATE: December 3, 2024
TO: Mayor and Council Members
FROM: Rachel Molina, City Manager
BY: Cassandra Sanchez, Director of Public Works/City Engineer Bethany Hudson, Assistant Project Manager
SUBJECT: Final Tract Map No. 18989-2
RECOMMENDED ACTION
It is recommended that the City Council adopt Resolution No. 2024-60 approving Final Map No. 18989-2 being a subdivision of the remainder parcels and lots “A” through “C”, inclusive of Tract Map 18989 -1, creating 3 numbered lots and 4 lettered lots of the Tapestry Specific Plan. (Applicant: Silverwood Development Phase I, LLC).
BACKGROUND
On January 26, 2016, the City Council approved Tentative Tract Map No. 18989 to create 39 lots on 986 gross acres within the Tapestry Specific Plan , now known as the Silverwood Project , located south of Ranchero Road at the intersection of I Avenue. The Final Map 18989-1 dedicates the backbone right -of-way for future utility infrastructure and streets and creates the planning areas that will be subdivided in the future under Tentative Tract Map No. 18955 to create single family residential lots, parks, open space, public facilities and commercial development within the Silverwood project.
On March 22, 2023 , the Design Review Committee approved a Tentative Tract Revision for Tentative Tract Map 18 989 to make minor modifications to Tentative Tract Map 18989 which consists of 986 gross acres and was previously approved for 39 lots and rights-of-way necessary to develop Phase 1 of the Tapestry Specific Plan. The proposed minor adjustments consist of modifying some of the planning area boundaries and planning area acre ages resulting in final road alignments, grading plans and other refinements. The minor modifications will not result in an increase in the total number of units or modifications to any of the previously approved development standards.
On May 16, 2023, City Council approved Final Map 18989-1 which created 14 numbered lots, 7 lettered lots, remainder parcels and roadway dedications.
Staff has reviewed the Final Map 18989-2 and determined that it complies with the Tapestry Specific Plan, the Tapestry Development Agreement, the General Plan and zoning regulations , all required conditions of approval, and all local ordinances related to the creation of these parcels.
Roadway dedications were recorded and bonded through Final Map 18989-1.
Staff Report to the Mayor and Council Members
Final Tract Map 18989-2
December 3, 2024
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
CITY GOAL SUPPORTED BY THIS ITEM
Future Development- Facilitate balanced growth to ensure cohesive community development and pursue economic development.
ALTERNATIVE(S)
1. Provide alternative direction to staff.
ATTACHMENT(S)
1. Resolution No. 2024-60
2. Final Tract Map No. 18989-2
RESOLUTION NO. 2024-60
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HESPER IA, CALIFORNIA, APPROVING FINAL TRACT MAP NO. 18989-2 BEING A SUBDIVISION OF THE REMAINDER PARCELS AND LOTS “A” THROUGH “C”, INCLUSIVE OF FINAL TRACT MAP 18989 -1, CREATING 3 NUMBERED LOTS AND 4 LETTERED LOTS OF THE TAPESTRY SPECIFIC PLAN
(APPLICANT: SILVERWOOD DEVELOPMENT PHASE I, LLC)
WHEREAS, on January 26, 2016 the City Council recommended that Tentative Tract Map No. 18989 for approval; and
WHEREAS, on March 22, 2023 the Design Review Committee approved a revision to Tentative Tract Map No. 18989; and
WHEREAS, Tract Map No. 18989-1 is to create 39 lots on 986 gross acres within the Tapestry Specific Plan; and
WHEREAS, Tract Map No. 18989-1 is to accept right-of-way for the backbone infrastructure; and WHEREAS, on May 16, 2023 the City Council approved Final Tract Map No. 18989-1; and WHEREAS, Tract Map No. 18989-2 is to create 3 numbered lots and 4 lettered lots; 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. 18989-2 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 3rd day of December, 2024.
Mayor
ATTEST:
Erin Baum
Assistant City Clerk
Attachment 2
City of Hesperia
STAFF REPORT
DATE: December 3, 2024
TO: Mayor and Council Members
FROM: Rachel Molina, City Manager
BY: Cassandra Sanchez, Director of Public Works/City Engineer Bethany Hudson, Assistant Project Manager
SUBJECT: Final Tract Map No. 18955-2
RECOMMENDED ACTION
It is recommended that the City Council adopt Resolution No. 2024-61 approving Final Map No. 18955-2 to create 32 residential lots on approximately 12.11 gross acres and accept right-of-way necessary to develop Tract 18989 -2 Lot 2, Planning Area 1 of the Tapestry Specific Plan (Applicant: Silverwood Development Phase I, LLC).
BACKGROUND
On January 26, 2016, the City Council approved Tentative Tract Map No. 18955 to create 2,104 residential unit lots on 986 gross acres within the Tapestry Specific Plan , now known as the Silverwood Project, located south of Ranchero Road at the intersection of I Avenue. On November 27, 2024, the Design Review Committee approved amended Tentative Tract Map No. 18955 to make minor modifications to the street alignments, utility easements and parks.
Final Map 18955-2 subdivides Lot 2, Planning Area 1 of Final Map 18989-2 to create 32 residential lots on approximately 12.11 gross acres and dedicates the in-tract right-of-way for utility infrastructure, streets, easements, open space and parks within the Silverwood project.
Staff has reviewed the final map and determined that it complies with the Tapestry Specific Plan, the Tapestry Development Agreement, the General Plan and zoning regulations , all required conditions of approval, and all local ordinances related to the creation of these parcels. The developer has executed a Subdivision Improvement Agreement in accordance with local ordinances and the Subdivision Map Act and posted the necessary bonds for offsite improvements.
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.
Staff Report to the Mayor and Council Members
Final Tract Map 18955-2
December 3, 2024
CITY GOAL SUPPORTED BY THIS ITEM
Future Development- Facilitate balanced growth to ensure cohesive community development and pursue economic development.
ALTERNATIVE(S)
1. Provide alternative direction to staff.
ATTACHMENT(S)
1. Resolution No. 2024-61
2. Final Tract Map No. 18955-2
RESOLUTION NO. 2024-61
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HESPER IA, CALIFORNIA, APPROVING FINAL TRACT MAP NO. 18955-2 TO CREATE 32 LOTS ON APPROXIMATELY 12.11 GROSS ACRES AND ACCEPT RIGHT-OF- WAY NECESSARY TO DEVELOP TRACT 18989-2, LOT 2, PLANNING AREA 1 OF THE TAPESTRY SPECIFIC PLAN (APPLICANT: SILVERWOOD
DEVELOPMENT PHASE I, LLC)
WHEREAS, on January 26, 2016 the City Council recommended that Tentative Tract Map No. 18955 for approval; and
WHEREAS, Tentative Tract Map No. 18955 is to create a total of 2,104 residential unit lots on 986 gross acres; and
WHEREAS, on November 27, 2024 the Design Review Committee approved amended Tentative Tract Map No. 18955; and
WHEREAS, Final Tract Map No. 18955-2 is to create 32 lots on 12.11 gross acres within the Tapestry Specific Plan; and
WHEREAS, Final Tract Map No. 18955-2 is to accept right-of-way for the in-tract infrastructure; 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. 18955-2 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 3rd day of December, 2024.
Mayor
ATTEST:
Erin Baum
Assistant City Clerk
Attachment 2
City of Hesperia
STAFF REPORT
DATE: December 3, 2024
TO: Mayor and City Council Members
Chair and Board Members, Hesperia Water District
FROM: Rachel Molina, City Manager
BY: Cassandra Sanchez, Director of Public Works / City Engineer Jeremy McDonald, Water Operations Manager
SUBJECT: American Rescue Plan Act (ARPA) Grant Service Line Replacement Project
RECOMMENDED ACTION
It is recommended that the City Council and Board of Directors of the Hesperia Water District authorize the City Manager to enter into an agreement with Big Ben Inc. for the replacement of water service lines in the not-to-exceed amount of $1,782,000, which includes a 10% contingency.
BACKGROUND
The City’s water distribution system contains over twenty-nine thousand (29,000) service lines . A water service line is the pipe that connects the water main to the water meter. The diameter of these pipes ranges between one (1) and eight (8) inches in diameter, depending on the volumetric needs of the consumer. Approximately 95% of the service lines in the City’s service area are one (1) inch in diameter.
Due to a significant rise in service line leaks , in 2018 the City revised its Approved Materials List by no longer allowing polyethylene pipe as an approved material type for water service l ines. Due to several factors, including ultra-violet resistance, impact and abrasion resistance, and affordability compared to copper, the City only accepts MUNICIPEX pipe for its water service lines up to two (2) inches in diameter.
The proposed service line replacement project will allow for the replacement of three hundred three (303) water service lines that will remo ve polyethylene pipe from service. The areas identified for replacement include tract developments where high-density housing is found and Cottonwood Avenue from Main Street to Eucalyptus Street . These areas were prioritized based on work order history and the tendency of the trench lines failing due to moisture intrusion.
ISSUES/ANALYSIS
The Water Service Line Replacement project was advertised for bids beginning on October 30, 2024.
The project was posted on Public Purchase, the City’s online bidding platform where sixty-six (66) contractors were notified of the project. On November 18, 2024, eight (8) bids were received, opened, and publicly read.
Staff recommends entering into the agreement with Big Ben Inc., which has been determined to be the lowest responsive/responsible bidder. The total bid amount is $1,620,000, with a 10% contingency of $162,000.
Staff Report to the Mayor and Board of the Hesperia Water District American Rescue Plan Act (ARPA) Grant Service Line Replacement Project December 3, 2024
The City has identified available American Rescue Plan Act (ARPA) Grant funds that are an eligible funding source for the program.
CITY GOAL
Public Safety: Ensure public safety resources adequately protect our community.
Financial Health: Maintain a balanced budget and adequate reserves.
FISCAL IMPACT
ARPA Grant funding in the amount of $1,782,000 has been identified for the proposed project. If approved, an amendment to the Fiscal Year (FY) 2024-25 Budget will be presented at the Mid-Year Budget Review to appropriate the necessary funds.
ALTERNATIVE(S)
1. Provide alternative direction to staff.
ATTACHMENT(S)
1. Bid Comparison
Bid Comparison Type: Non-Taxable
Bid Comparison Completed By:
Date:
Item
No. Qty Description Unit Cost Extended Amount Unit Cost Extended Amount Unit Cost Extended
Amount Unit Cost
Extended
Amount Unit Cost
Extended
Amount Unit Cost
Extended
Amount Unit Cost
Extended
Amount Unit Cost Extended Amount
1 LS
Mobilization, bonds, insurance, field office,
clean-up, relocations, demobilization, all
misc. work, etc. complete and in place
N/A $80,000.00 N/A $80,000.00 N/A $100,000.00 N/A $152,000.00 N/A $250,000.00 N/A $50,000.00 N/A $100,000.00 N/A $300,000.00 2 LS
Complete removal and replacement of
each water service line and the replacement of asphalt concrete as identified in the Scope
of Work. Materials, labor, equipment, and
traffic control shall be included with all
improvements fully functional, complete and
in place.
N/A $1,540,000.00 N/A $1,677,367.00 N/A $1,957,250.00 N/A $2,531,200.00 N/A $2,580,500.00 N/A $3,000,000.00 N/A $3,200,000.00 N/A $1,108,000.00 Total Bid $1,620,000.00 Total Bid $1,757,367.00 Total Bid $2,057,250.00 Total Bid $2,683,200.00 Total Bid $2,830,500.00 Total Bid $3,050,000.00 Total Bid $3,300,000.00 Total Bid $1,408,000.00 Submitted $1,620,000.00 Submitted $1,757,367.00 Submitted $2,057,250.00 Submitted $2,683,200.00 Submitted $2,830,500.00 Submitted $3,050,000.00 Submitted $3,300,000.00 Submitted $1,408,000.00 Difference $0.00 Difference $0.00 Difference $0.00 Difference $0.00 Difference $0.00 Difference $0.00 Difference $0.00 Difference $0.00 Creative Home Corporation S Christensen Engineering Inc.
WINNING BID
Cristina Hall
11/18/2024
Big Ben Inc. Weka, Inc. Dominguez General Eng, Inc. RE Chaffee Construction Inc. Kirtley Construction Christensen Brothers Gen Eng, Inc.
INCOMPLETE
Attachment 1
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City of Hesperia
STAFF REPORT
DATE: December 3, 2024
TO: Mayor and Council Members
FROM: Rachel Molina, City Manager
BY: Cassandra Sanchez, Director of Public Works / City Engineer Brian Blackwell, Streets Operations Manager
SUBJECT: American Rescue Plan Act (ARPA) Grant – City Wide Sidewalk Repair
RECOMMENDED ACTION
It is recommended that the City Council authorize the City Manager to enter into an agreement with H L Hitchcock Construction to repair or replace sidewalks in twenty-five (25) locations city- wide for a not-to-exceed amount of $182,061, which includes a 10% contingency.
BACKGROUND
Citywide, twenty -five (25) sidewalk locations ha ve been identified as needing repairs or replacement. Sidewalks are a vital part of our city’s infrastructure that allows our residents a safe walking path to navigate around our community to reach needed services. Damaged sidewalks can be challenging to transverse and can create problems for children, seniors, individuals who are visually impaired, or others with special needs. All pedestrians benefit from safe sidewalks.
ISSUES/ANALYSIS
The Public Works Division released Request for Bid (RFB) on October 30, 2024, for repair or replacement of sidewalks citywide at twenty-five (25) locations. Bids closed on November 18th with four (4) responses received. Staff recommends awarding the bid to H L Hitchcock Construction who have been deemed the lowest responsive/responsible vendor with a total bid amount of $165,510.
The City has identified available American Rescue Plan Act (ARPA) Grant funds that are an eligible funding source for sidewalk repairs.
CITY GOAL SUPPORTED BY THIS ITEM
Public Safety: Ensure public safety resources adequately protect our community.
FISCAL IMPACT
American Rescue Plan Act (ARPA) Grant funding in the amount of $182,061 has been identified for this project to repair or replace sidewalks in twenty-five (25) locations citywide. If approved, an amendment to the Fiscal Year 2024-25 Budget will be presented at the Mid-Year Budget Review to appropriate the necessary funds.
Staff Report to the Mayor and Council Members
American Rescue Plan Act (ARPA) Grant- City Wide Sidewalk Repair December 3, 2024
ALTERNATIVE(S)
1. Provide alternative direction to staff.
ATTACHMENT(S)
1. Bid Comparison
Bid Comparison Type: Non-Taxable
Bid Comparison Completed By:
Date:
Item
No. Qty Description Unit Cost Extended Amount Unit Cost Extended Amount Unit Cost Extended
Amount Unit Cost
Extended
Amount
1 LS
Mobilization, bonds, insurance, field office,
clean-up, relocations, demobilization, all
misc. work, etc. complete and in place N/A $14,775.00 N/A $34,000.00 N/A $35,000.00 N/A $75,000.00 2 LS
Complete removal and replacement of
concrete for Civic Plaza Park & Surrounding
areas at City Hall as identified in the Scope
of Work. Materials, labor, equipment, and
traffic control shall be included with all
improvements fully functional, complete and
in place. N/A $64,705.00 N/A $96,000.00 N/A $99,000.00 N/A $100,000.00 3 LS
Complete removal and replacement of
concrete panel for twenty-four (24) City-wide
locations as identified in the Scope of Work.
Materials, labor, equipment, and traffic
control shall be included with all
improvements fully functional, complete and
in place. N/A $76,030.00 N/A $92,000.00 N/A $126,000.00 N/A $104,000.00 Total Bid $155,510.00 Total Bid $222,000.00 Total Bid $260,000.00 Total Bid $279,000.00 Submitted $165,510.00 Submitted $222,000.00 Submitted $260,000.00 Submitted $274,000.00 Difference ($10,000.00) Difference $0.00 Difference $0.00 Difference $5,000.00
WINNING BID
Cristina Hall
11/18/2024
H L Hitchcock We R Builders, Inc. Carter Enterprise Group, Inc. Gentry General Engineering Inc.
Attachment 1
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City of Hesperia
STAFF REPORT
DATE:
TO:
FROM:
BY:
December 3, 2024
Mayor and Council Members
Chair and Board Members, Hesperia Water District
Rachel Molina, City Manager
Cassandra Sanchez, Director of Public Works/City Engineer Enrique Villalobos, Associate Engineer
SUBJECT: American Rescue Plan Act (ARPA) Manhole Repair – Lid Replacement Project
RECOMMENDED ACTION
It is recommended that the City Council and Board of Directors of the Hesperia Water District authorize the City Manager to enter into an agreement with Creative Home/DBA:CHI Construction for the Manhole Repair – Lid Replacement project, for the bid amount of $1,312,500, plus a 10% contingency for a not-to-exceed total of $1,443,750.
BACKGROUND
Based on recent storm events, City staff has discovered that the stormwater runoff has been entering the City owned sewer manholes throughout the city, causing corrosion and other damages to the manholes. In addition, the water entering the manholes puts a strain on the wastewater treatment plants downstream due to the large influx of water. This influx also adds costs to the residents for treatment of this water. This project will replace the manhole lids with a new design that will deter water from entering the manholes, therefore preserving the integrity of the infrastructure locally and regionally. This project will utilize American Rescue Plan Act (ARPA) funding.
ISSUES/ANALYSIS
This project was advertised for bids on October 23, 2024. Contractors were notified about the project through Public Purchase, the City’s online bidding platform. On November 18, 2024, bids were received from four contractors. The bid results for the project were as follows:
Creative Home/DBA: CHI Construction. – Fullerton, CA: $1,312,500 S. Christensen Engineering, Inc. – Apple Valley, CA: $1,354,600 T.E. Roberts, Inc – Irvine, CA: $1,393,711
Staff reviewed the bid s, evaluating accuracy, costs, experience, and references. Staff recommends awarding the subject project to the responsive and responsible bidder, Creative Home/DBA: CHI Construction , based on their respective pricing, scope of work, and qualifications. Creative Home/DBA: CHI Construction has over 25 years’ experience and has delivered successful projects in Orange, Upland, Garden Grove and more. As specified in the bid documents, the contractor must execute and return the contract , along with other specifie d documents required within ten calendar days following receipt of this Notice to Award.
Staff Report to the Mayor and Council Members, Chair and Board Members, Hesperia Water District Award Contract for Manhole Repair – Lid Replacement Project December 3, 2024
Construction is anticipated to begin in early January 2024, assuming no complications with the contract execution processes.
CITY GOAL SUPPORTED BY THIS ITEM
Capital Improvement- Continually evaluate capital improvement priorities.
FISCAL IMPACT
The City has identified American Rescue Plan Act (ARPA) grant funds for this project. If approved, an amendment to the Fiscal Year (FY) 2024-25 Budget will be presented at the Mid-Year Budget Review to appropriate the necessary funds.
Construction Contract $1,312,500
10% Contingency $131,250
Total Construction $1,443,750
ALTERNATIVE(S)
1. Provide alternative direction to staff.
ATTACHMENT(S)
None
City of Hesperia
STAFF REPORT
DATE: December 3, 2024
TO: Mayor and Council Members
Chair and Board Members, Hesperia Water District
FROM: Rachel Molina, City Manager
BY: Cassandra Sanchez, Director of Public Works/City Engineer Enrique Villalobos, Associate Engineer
SUBJECT: American Rescue Plan Act (ARPA) Replace Roofing – Plants 5, 18, 24 & 25
RECOMMENDED ACTION
It is recommended that the City Council and Board of Directors of the Hesperia Water District authorize the City Manage r to enter into an agreement with Best Contracting Services, Inc. to repair or replace roofing at four Plant locations in the amount of $287,243 which includes a 10% contingency.
BACKGROUND
The Hesperia Water District (District) has multiple plant sites that house pump stations and other operating facilities. These buildings contain sensitive electrical and electronic equipment that are costly to replace, and the City’s water system is dependent on these facilities to deliver drinking water to the citizens. The City recently hired a consultant to inspect all of the roofs at the District’s plant sites and the report identified many roofs in need of repair ranging from minor to major repairs.
Staff will be using the report to prioritize the work to be done i n order to get all roofs at the plant sites repaired or replaced as recommended. In the meantime, the roofs at plant sites 5, 18, 24 and 25 were identified as a priority in need of complete removal and replacement.
This project will utilize American Rescue Plan Act (ARPA) funding.
ISSUES/ANALYSIS
This project was advertised for bids on October 23, 2024. Contractors were notified about the project through Public Purchase, the City’s online bidding platform. On November 18, 2024, bids were received from two contractors. The bid results for the project were as follows:
Best Contracting Services, Inc. - Gardena, CA: $261,130 Rite-Way Roof Corporation – Fontana, CA: $287,500
Staff reviewed the bid s, evaluating accuracy, costs, experience, and references. Staff recommends awarding the subject project to the responsive and responsible bidder, Best Contracting Services, Inc., based on their respective pricing, scope of work, and qualifications .
Best Contracting Services, Inc. has over 40 years of experience and has delivered successful
Staff Report to the Mayor and Council Members, Chair and Board Members, Hesperia Water District Award Contract for Replace Roofing – Plants 5, 18, 24, & 25 December 3, 2024
projects in Santa Monica, Calabasas, Malibu, and more. As specified in the bid documents, the contractor must execute and return the contract, along with other specified d ocuments required, within ten calendar days following receipt of this Notice to Award. Construction is anticipated to begin in early January 2024, assuming no complications with the contract execution processes.
CITY GOAL SUPPORTED BY THIS ITEM
Capital Improvement- Continually evaluate capital improvement priorities.
FISCAL IMPACT
The City has identified American Rescue Plan Act (ARPA) grant funds for this project. If approved, an amendment to the Fiscal Year (FY) 2024-25 Budget will be presented at the Mid-Year Budget Review to appropriate the necessary funds.
ARPA funds will cover the full amount of the contract amounting in $287, 243.
ALTERNATIVE(S)
1. Provide alternative direction to staff.
ATTACHMENT(S)
1. Bid Result Summary
Construction Contract $261,130
10% Contingency $26,113
Total Construction $287,243
Contractor Base Bid Amount
Addendum
Acknowledged
Bid
Security
Received
Best Contracting Services, Inc. 261,130.00$ Yes Yes
Rite-Way Roof Corporation 287,500.00$ Yes Yes
Tabulated By:
Associate Engineer/Engineering Division
Enrique Villalobos
City of Hesperia
Bid Results
Date: November 18, 2024
Time: 9:00 a.m.
Project: Replace Roofing 5, 18, 24 & 26
Attachment 1
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City of Hesperia
STAFF REPORT
DATE: December 3, 2024
TO: Mayor and Council Members
Chair and Board Members, Hesperia Water District
FROM: Rachel Molina, City Manager
BY: Cassandra Sanchez, Director of Public Works/City Engineer Tina Souza, Senior Project Manager
SUBJECT: Construction Contract for Tank Coatings – Plant 23-R23/1, Plant 21-R21/1, Plant 22-R22/2 – ARPA
RECOMMENDED ACTION
It is recommended that the City Council and Board of Directors of the Hesperia Water District 1) award a construction contract for the Tank Coatings – Plant 23-R23/1, Plant 21-R21/1, Plant 22- R22/2 project to the responsive and responsible bidder, Polytech Industrial Incorporated., for the bid amount of $2,790,660, add Alternate A for the amount of $20,000, plus a 10% contingency for a not -to-exceed total of $ 3,091,726; 2) approve the project as represented by the specifications; and 3) authorize the City Manager or designee to execute the contract and any other necessary documents related to the project.
BACKGROUND
Preservation of City infrastructure is paramount to providing adequate services to the community.
Water storage tanks are an integral part of the water production and distribution systems. Water storage tanks at Plant 23-R23/1, Plant 21-R21/1, and Plant 22 -R22/2 are in need of recoating .
The coating provides a protective barrier to prevent corrosion and deterioration to maintain the structural integrity of the storage tanks, ensure continued drinking water quality, and sustainable water supply to constituents.
The improvements are expected to increase the longevity of the storage tanks and offer continued protection for maintaining high water quality standards for drinking water.
ISSUES/ANALYSIS
This project was advertised for bids on October 24, 2024, through Public Purchase, the City’s online bidding platform. Bids were received November 22, 2024. The bid results for the project were as indicated in Attachment 1, Bid Results Summary. The project is awarded based on these base bid amounts.
Staff reviewed the bid s, evaluating accuracy, costs, experience, and references. Staff recommends awarding the subject project to the lowest responsive and responsible bidder, Polytech Industrial Incorporated (Polytech). With 20 years of experience Polytech has delivered successful projects in Bakersfield, Five Points, Hemet and more . As specified in the bid documents, the contractor must execute and return the contract, along with other specified documents required within ten calendar days following receipt of this Notice of Award.
Staff Report to the City Council and Chair and Board Members, Hesperia Water District Construction Contract for Tank Coatings – Plant 23-R23/1, Plant 21-R21/1, Plant 22-R22/2 December 3, 2024
Construction is anticipated to begin in early Spring 2025 assuming no complications with the weather.
In addition, there was an add Alternate Bid Item A to structurally inspect the interior of the tanks at Plant 21 and 23, which the City may award to the contractor at its discretion. Because the bids were low enough to remain within budget, staff recommends also including Alternate Bid Item A in the amount of $20,000 in the contract award. The total award is as follows:
Base Bid: $2,790,660
Add Alternate A: 20,000
Contingency: 281,066
Total Contract: $3,091,726
CITY GOAL SUPPORTED BY THIS ITEM
Public Safety - Ensure public safety resources adequately protect our community.
Financial Health - Maintain a balanced budget and adequate reserves.
Capital Improvement - Continually evaluate capital improvement priorities.
FISCAL IMPACT
The City has identified American Rescue Plan Act (ARPA) grant funds for this project. If approved, an amendment to the Fiscal Year (FY) 2024-25 Budget will be presented at the Mid-Year Budget Review to appropriate the necessary funds.
ALTERNATIVE(S)
1. Provide alternative direction to staff.
ATTACHMENT(S)
Attachment 1 – Bid Results Summary
Contractor Base Bid Amount
Addendum
Acknowledged
Bid
Security
Received
Polytech Industrial Incorporated 2,790,660.00$ Yes Yes Skyway USA/Shaw Claypool 3,038,500.00$ Yes Yes
J. Colon Coatings, Inc. 3,078,000.00$ Yes Yes
Advanced Industrial Services, Inc. 3,166,900.00$ Yes Yes Capital Industrial Coatings, LLC 3,405,160.00$ Yes Yes Viking Painting, LLC 3,493,300.00$ Yes Yes
Tabulated By:
Senior Project Manager/Engineering Division
Tina Souza
City of Hesperia
Bid Results
Date: November 22, 2024
Time: 9:00 a.m.
Project: Tank coatings - Plant 23-R23/1, Plant 21-R21/2, Plant 22-R22/2 Attachment 1
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City of Hesperia
STAFF REPORT
DATE: December 3, 2024
TO: Mayor and Council Members
FROM: Rachel Molina, City Manager
BY: Jeremy Dean, Police Captain
Jon Rizzardi, Sergeant
SUBJECT: 2024 Edward Byrne Justice Assistance Grant (JAG)
RECOMMENDED ACTION
It is recommended that the City Council adopt Resolution No. 2024-64, accepting the allocation of $36,200 from the U.S. Department of Justice, for the purpose of partially funding operational overtime.
BACKGROUND
The Edward Byrne Justice Assistance Grant Program (JAG) is the leading source of federal justice funding to state and local jurisdictions. The JAG Program provides states, tribes, and local governments with critical funding necessary to support a range of program areas including law enforcement and crime prevention.
Historically, JAG allocations for all entities in the San Bernardino County area have been joined in what Department of Justice/Office of Justice Programs (DOJ/OJP) calls a “disparate” grouping.
DOJ/OJP determines the allocation amounts and groupings of local recipients by formulas, which are primarily based on population and violent crime. When a joint allocation determination was made, the localities in the disparate group would agree on which locality would serve as the fiscal agent and a Memorandum of Understanding that identifies which jurisdiction serve s as the applicant or fiscal agent for the disparate group must be completed and signed by the authorized representative for each participating jurisdiction. The fiscal agent is considered the pass-through entity and the relationship with the other disparate members i s considered a subaward/subrecipient for grant administrative purposes. The fiscal agent is the legal applicant responsible for submitting the application, reporting, and monitoring subawards, and retaining all paperwork and applicable certifications.
There was a significant organizational change affecting the County and participating jurisdictions with the JAG 2024 grant. DOJ/OJP has determined that only San Bernardino County and the City of San Bernardino will be joined as a disparate group, and the oth er 17 local municipalities will be independent, making the City of Hesperia its own fiscal agent for the JAG 2024 grant.
ISSUES/ANALYSIS
The City of Hesperia has chosen to distribute its Edward Byrne Justice Assistance Grant funds for the following purpose: Operational overtime to enhance gang enforcement, narcotics investigations, gun violence enforcement, traffic enforcement and special programs.
Staff Report to the Mayor and Council Members
2024 JAG Grant
December 3, 2024
CITY GOAL SUPPORTED BY THIS ITEM
Public Safety - Ensure public safety resources adequately protect our community.
FISCAL IMPACT
The funds from this grant will supplement the existing police budget and this will have no fiscal impact on the general budget.
ALTERNATIVE(S)
1. Provide alternative direction to staff.
ATTACHMENT(S)
1. Resolution No. 2024-64
RESOLUTION NO. 2024-64
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HESPERIA, CALIFORNIA, SPECIFYING THE INTENDED PURPOSE FOR THE 2024 ALLOCATION FROM THE EDWARD BYRNE JUSTICE ASSISTANCE GRANT (JAG).
WHEREAS, the Edward Byrne Justice Assista nce Grant provides for supplemental funding for local crime prevention and law enforcement activities; and WHEREAS, the funding is administered by the U.S. Department of Justice; and WHEREAS, the funds received from this grant are allocated to qualifying agencies for specific purposes.
NOW THEREFORE, BE IT RESOLVED BY THE CITY OF HES PERIA CITY COUNCIL AS FOLLOWS:
Section 1. All facts set forth in this resolution are true and correct.
Section 2. That the City Council approves the allocation of $36,200 from the U.S. Department of Justice, Edward Byrne Justice Assistance Grant (JAG), for the purpose of partially funding operational overtime to enhance gang enforcement, narcotics investigations, gun violence enforcement and special programs.
Section 3. The Director of Management Services shall establish a mechanism to provide for the receipt and expenditure of all allocated monies under the Edward Byrne Justice Assistance Grant (JAG).
Section 4. 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 3rd day of December 2024.
_____________________________
Mayor
ATTEST:
____________________________
Erin Baum, Assistant City Clerk
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City of Hesperia
STAFF REPORT
DATE: November 19, 2024
TO: Mayor and Council Members
FROM: Rachel Molina, City Manager SECOND READING AND ADOPTION BY: Nathan R. Freeman, Director of Development Services Ryan Leonard, Principal Planner
SUBJECT: Development Code Amendment DCA24-00002; Applicant: City of Hesperia; Area affected: City-wide
RECOMMENDED ACTION
The Planning Commission recommends that the City Council introduce and place on first reading Ordinance No. 2024 -13 approving Development Code Amendment DCA24-00002, modifying development standards associated with Accessory Dwelling Units (ADUs).
BACKGROUND
On October 10, 2024, t he Planning Commission reviewed and considered the subject Development Code Amendment and voted 5-0 to forward this item to the City Council with a recommendation for approval. During the meeting no one from the public spoke in favor or opposition to the subject Development Code Amendment.
In recent years, the State of California has enacted several laws that have imposed new limits on local authorities, such as Hesperia, to regulate ADUs with the objective of increasing ADU production to address the State’s housing needs. In such cases, the City has amended Section
16.12.360 of the Development Code pertaining to ADUs (ADU Ordinance) to remain consistent with ever-changing State law.
On May 19, 2020, the City Council adopted Ordinance No. 2020 -04 adopting development standards associated with ADUs. On August 16, 2022, the City Council adopted Ordinance No. 2022-13 modifying various sections of the ADU Ordinance fo r the purpose of providing added clarity and to be consistent with State requirements.
Most recently, o n May 23, 2024, the California Department of Housing and Community Development (HCD) provided written comments to staff regarding the City’s existing ADU Ordinance. The adopted ADU Ordinance addresses many of the State’s statutory requirements; however certain aspects of the ADU Ordinances must be revised to comply with State ADU Law.
ISSUES/ANALYSIS
An ADU is an additional dwelling unit that provides complete independent living facilities for one or more persons and is located on the same lot as an existing or proposed primary dwelling unit.
An ADU can be attached to the primary dwelling unit or detached from the unit. A Junior Accessory Dwelling Unit (JADU) is a unit that is no more than 500 square feet in size and is contained entirely
Staff Report to the Mayor and Council Members
Development Code Amendment DCA24-00002
November 19, 2024
within an existing or proposed single-family residence. The City’s existing ADU Ordinance currently allows ADUs in all single-family, multi-family, and mixed-use zoning designations.
As a result of new State laws and HCD’s comments from its May 23,2024 letter, City staff initiated Development Code Amendment DCA24 -00002 to make the City’s ADU regulations consistent with State requirements. Among other things, the draft Ordinance:
Clarifies that JADUs shall be contained entirely within an existing or proposed single-family structure; and that enclosed uses within the residence, such as attached garages, are considered a part of the existing or proposed JADU.
Requires that the City approve or deny an application to create an ADU within 60 days from the date the application was submitted.
Eliminates owner occupancy requirements for properties with ADUs. Allows for separate conveyance of an ADU to a qualified buy er, if the property was built or developed by a qualified nonprofit corporation and it meets certain conditions. Clarifies that an ADU may either be attached to, located within, or detached from the existing primary dwelling unit.
Updates references to State law and other Municipal Code sections to ensure that they are consistent with current regulations.
Amends the requirements that apply to attached ADUs when the entrance is located on the same wall plane as the primary dwelling.
Removes a requirement that detached ADUs must be located behind the primary dwelling unit.
Modifies the height allowances for ADUs to be consistent with State requirements. Eliminates the requirement to provide one uncovered parking space for an ADU. Amends the architectural requirements to require that an ADU match the same colors and materials as the primary dwelling.
For reference, attached is a redline showing the changes that the draft Ordinance would make to the City’s existing ADU regulations.
Environmental: Approval of the Development Code Amendment is exempt from the requirements of the California Environmental Quality Act per Section 15061(b)(3), where it can be seen with certainty that there is no significant effect on the environment. The proposed Development Code Amendment is also exempt from the requirements of the California Environmental Quality Act by Section 16.12.415(B)(10) of the City’s CEQA Guidelines, as a Development Code Amendment is exempt if it does not propose to increase the density or intensity allowed in the General Plan.
According to Government Code 65852.2, ADUs do not count towards the allowable density, and are a residential use consistent with the existing General Plan and zoning designation.
CITY GOAL SUPPORTED BY THIS ITEM
Future Development: Facilitate balanced growth to ensure cohesive community development and pursue economic development.
Conclusion: The Ordinance is consistent the goals, policies and objectives of the General Plan and will bring the City’s ADU regulations into compliance with State law.
FISCAL IMPACT
There is no fiscal impact associated with this report.
Staff Report to the Mayor and Council Members
Development Code Amendment DCA24-00002
November 19, 2024
ALTERNATIVE(S)
1. Provide alternative direction to staff.
ATTACHMENT(S)
1. Ordinance No. 2024-13
2. Exhibit “A”
ORDINANCE NO. 2024-13
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF HESPERIA,
CALIFORNIA, ADOPTING A DEVELOPMENT CODE AMENDMENT
MODIFYING DEVELOPMENT STANDARDS ASSOCIATED WITH
ACCESSORY DWELLING UNITS (ADUS) (DCA24-00002)
WHEREAS, on January 5, 1998, the City Council of the City of Hesperia adopted Ordinance No. 250, thereby adopting the Hesperia Municipal Code; and
WHEREAS, on May 19, 2020, the City Council adopted Ordinance No. 2020 -04 adopting development standards associated with Accessory Dwelling Units (ADUs), codifying it in Section
16.12.360 of the Hesperia Development Code (ADU Ordinance); and
WHEREAS, on June 1, 2021, the City Council adopted Ordinance No. 2021-01 modifying various sections of the ADU Ordinance for the purpose of providing added clarity and to be consistent with State requirements; and
WHEREAS, on August 16, 2022, the City Council adopted Ordinance No. 2022 -13 modifying various sections of the ADU Ordinance to be consistent with State requirements; and
WHEREAS, on May 23, 2024, the City received a letter from the California Department of Housing and Community Development (HCD) stating that the existing ADU Ordinance does not comply with certain State ADU laws; and
WHEREAS, the City proposes to amend the ADU Ordinance to be consistent with State ADU laws via Development Code Amendment DCA24-00002 (Development Code Amendment); and
WHEREAS, the City Council finds that the proposed Development Code Amendment relating to the ADU Ordinance provides necessary updates to bring the City’s Development Code into compliance with State law; and
WHEREAS, the proposed Development Code Amendment is exempt from the California Environmental Quality Act (CEQA) per Section 15061(b)(3), where it can be seen with certainty that there is no significant effect on the environment. The proposed Development Code Amendment is also exempt from the requirements of the California Environmental Quality Act by Section 16.12.415(B)(10) of the City’s CEQA Guidelines, as the Development Code Amendment is exempt if it does not propose to increase the density or intensity allowed in the General Plan; and
WHEREAS, on October 10, 2024, the Planning Commission of the City of Hesperia conducted a duly noticed public hearing pertaining to the proposed Development Code Amendment and voted 5-0 to forward this item to the City Council with a recommendation for approval; and
WHEREAS, on November 19, 2024, the City Council of the City of Hesperia conducted a duly noticed public hearing pertaining to the proposed Development Code Amendment and concluded said hearing on that date; and
WHEREAS, all legal prerequisites to the adoption of this Ordinance have occurred.
Ordinance No. 2024-13
NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF HESPERIA DOES ORDAIN AS FOLLOWS:
Section 1. The City Council hereby specifically finds that all the facts set forth in this Ordinance are true and correct and incorporated as findings herein.
Section 2. Based upon substantial evidence presented to the City Council, including written and oral staff reports, the City Council specifically finds that the proposed Development Code Amendment is consistent with the goals and objectives of the adopted General Plan.
Section 3. Based on the findings and conclusions set forth in this Ordinance, this City Council hereby adopts Development Code Amendment DCA24-00002, amending the ADU Ordinance as shown on Exhibit “A.”
Section 4. This Ordinance shall take effect thirty (30) days from the date of adoption.
Section 5. The City Clerk shall certify to the adoption of this Ordinance and shall cause the same to be posted in three (3) public places within the City of Hesperia pursuant to the provisions of Resolution No. 2007-101.
ADOPTED AND APPROVED on this 3rd day of December 2024.
_______________________________
Mayor
ATTEST:
_____________________________
Erin Baum, Assistant City Clerk
EXHIBIT “A”
The following are modifications to Article X of Chapter 16.12 (additions are in underlined red text and deletions are shown with red and strikethrough):
16.12.360 - Accessory dwelling units.
A. Purpose. The purpose of these provisions is to establish procedures for permitting an accessory dwelling unit (ADU); to implement state law requiring consideration for such uses. this section is to expand the variety of housing opportunities in the City of Hesperia by implementing State Government Code 66310 -66342 as they pertain to accessory dwelling units and junior accessory dwelling units. Implementation of these regulations wi ll ensure that accessory dwelling units and junior accessory dwelling units are located in areas where services are adequate to support them and that accessory dwelling units are designed and maintained as a compatible and integral part of the City’s resid ential zoning districts.
B. Definitions.
a. "Accessory dwelling unit" or "ADU" means an additional detached or attached dwelling unit which provides complete independent living facilities for one or more persons and is located on a lot with an existing or proposed primary residence.
The unit shall include permanent provisions for living, sleeping, eating, cooking, and sanitation on the same parcel as the primary unit is situated. An accessory dwelling unit also includes the following:
i. An efficiency unit, as defined in Section 17958.1 of the Health and Safety Code.
ii. A manufactured home, as defined in Section 18007 of the Health and Safety Code.
b. "Accessory structure" means a structure that is accessory and incidental to a dwelling located on the same lot.
c. "Junior accessory dwelling unit" or “JADU" means a unit that is no more than 500 square feet in size and contained entirely within an existing or proposed single- family structure. A junior accessory dwelling unit may include separate sanita tion facilities or may share sanitation facilities with the existing structure. For the purposes of this section, e nclosed uses within the residence, such as attached garages, are considered a part of the proposed or existing single-family residence.
C. Application Procedure—Accessory Dwelling Units. Application for a permit to construct an accessory dwelling unit shall be made by pursuant to the provisions and limitations of this article.
a. The review procedure shall be administrative review without notice (ministerial), pursuant to the provisions of Section 16.12.005(A)(3).
b. The City shall act on the application to create an ADU or a Junior ADU within 120 60 days from the date that the City receives a completed application, unless either:
(i) The Applicant requests for a delay, in which case the 120 60 day time period is tolled for the period of the requested delay, or
Attachment 2
(ii) An application of an Accessory Dwelling Unit or a Junior Accesso ry Dwelling Unit is submitted with a permit application to create a new primary residence on the lot, the City may delay acting on the permit application for the Accessory Dwelling Unit or the Junior Accessory Dwelling until Unit the City acts on the permit application to create the primary residence. The application of an Accessory Dwelling Unit or a Junior Accessory Dwelling Unit is still considered ministerially without discretionary review or a public hearing. c. Approval of a permit to construct an ac cessory dwelling unit shall be for a period not to exceed thirty-six (36) months.
D. Requirements for Approval.General Standards.
1. An accessory dwelling unit may only be permitted on lots that are zoned for agricultural, single family, multi -family, or mixed uses and that contain an existing or proposed single-family or multi-family dwelling.
2. A Junior Accessory Dwelling unit may o nly be permitted on lots that are zoned for agricultural or single family and that contain an existing or proposed single -family dwelling.
32. Accessory dwelling units are exempt from the density limitations of the General Plan and subject to the following:
a. Lots with an existing or proposed single -family residence may be permitted one (1) accessory dwelling, and one (1) junior accessory dwelling unit (see Section 16.12.360 F for additional regulations pertaining to junior accessory dwelling units).
b. Lots with existing multi-family units may convert non-habitable space within an existing multi -family structure into accessory dwelling units. The number of these types of units shall be limited to -one (1) accessory dwelling or up to 25 percent of the e xisting multi -family dwelling units, whichever is greater. In addition, no more than two (2) detached accessory dwelling units may be permitted. A detached accessory dwelling may be converted from non - habitable space, or newly constructed.
43. An accessory dwelling unit shall be located on the same lot as the proposed or existing primary dwelling.
54. The correction of a nonconforming zoning condition that would result in a physical improvement on the property shall not be a condition of approval for an accessory dwelling unit.
5. On lots with an existing or proposed single family residence, the primar y dwelling unit or accessory dwelling unit on the property shall be owner -occupied. (This provision is suspended for all permits until January 1, 2025, unless otherwise amended by California Government Code 65852.2).
66. The accessory dwelling unit shall provide complete and independent living facilities.
77. The accessory dwelling unit shall not be used for a rental term of less than 30 consecutive days. sold separately and may be rented for periods of not less than 30 days.
8. The accessory dwelling unit may not be sold or conveyed separately from the primary dwelling unit unless all of the following apply:
(i) The accessory dwelling unit was built or developed by a qualified nonprofit corporation. For the purposes of this section, a qualified nonprofit corporation means a nonprofit corporation organized pursuant to Section 501(c)(3) of the Internal Revenue Code that has received a welfare exemption under Section 214.15 of the California Revenue and Taxation Code for properties i ntended to be sold to low -income families who participate in a special no - interest loan program.
(ii) There is an enforceable restriction on the use of the land on which the ADU is located pursuant to a recorded contract between the qualified buyer and t he qualified nonprofit corporation. For the purposes of this section, a qualified buyer means very- low and low- income households as defined in Section 16.20.195. (iii) The property is held pursuant to a recorded tenancy in comm on agreement that includes an allocation to each qualified buyer of an undivided, unequal interest in the property based on the size of the dwelling that each qualified buyer occupies; a repurchase option that requires the qualified buyer to first offer the qualified nonprofit corporation to buy the accessory dwelling unit or primary dwelling if the buyer desires to sell or convey the property; a requirement that the qualified buyer occupy the property as the qualified buyer’s principal residence; and affordability restrictions on the sale and conveyance of the property that ensure s the property will be preserved for very - low income or low- income housing for 45 years for owner -occupied housing and will be sold or resold to a qualified buyer.
(iv) A grant deed naming the grantor, grantee, and describing the property interests being transferred shall be recorded with the County. A Preliminary Change of Ownership Report shall be filed concurrently with the grant deed pursuant to Section 480.3 of the Revenue and Taxation Code.
(v) If requested by a utility providing service to the primary residenc e, the accessory dwelling unit has separate water, sewer, or electrical connection to that utility.
89. The accessory dwelling unit shall have adequate water supply pursuant to specifications of the Uniform Plumbing Code.
109. In compliance with the State of California Lahontan Regional Water Quality Control Board, lots that are not connected to sewer facil ities shall be a minimum of one gross acre in size or install an approved Supplemental Treatment Septic System. 1011. The design and construction of each ADU shall conform to all applicable provisions of the Building Code. The ADU shall comply with all pr ovisions of the Code pertaining to the adequacy of water, sewer, electrical, drainage, and fire and emergency services to the property on which the ADU will be located as well as all applicable codes pertaining to building, fire, health, and/or safety.
E. Design and Development Standards—Accessory Dwelling Units.
1. The accessory dwelling unit may be either attached to , or located within, the proposed or existing primary dwelling, including attached garages, storage areas or similar uses, or an access ory structure, or detached from the proposed or existing primary dwelling and located on the same lot as the proposed or existing primary dwelling, including detached garages or detached from an existing or proposed primary residence, or converted from an exis ting accessory building, garage, storage area, or other similar non -habitable area. An accessory dwelling may be converted from non -habitable space within, or detached from, an existing or proposed multi-family structure.
2. A detached accessory unit shal l not exceed one thousand two hundred (1,200) square feet of livable floor area (excludes garage and any accessory structure) on any parcel. Accessory dwelling units attached to the principal unit may be up to fifty (50) percent of the area of the principal unit, up to a maximum of one thousand (1,000) square feet, except that if the principal unit has a floor area of one thousand six hundred (1,600) square feet or less, an attached accessory dwelling unit shall conform to the provisions of Section 16. 2012.360(E)(6), below. The area of an accessory dwelling unit is in addition to and shall not be considered as part of the allowable accessory building area authorized under Article X of Chapter
16.20. No accessory dwelling unit shall be less than one hundred and fifty (150) square feet in area. Further, a recreational vehicle, does not qualify for use as an accessory dwelling unit.
3. Independent access to an attached accessory dwelling unit is required and shal l not be located on the same wall plane elevatio n as the access to the primary dwelling. The entrance to an attached accessory dwelling unit shall be separate from the entrance to the primary unit and structure; the separate entrance shall be located on the side or rear of the structure and whenever pos sible, located facing toward the interior yard areas.
4. For new attached or detached accessory dwelling units, a minimum four -foot side yard and four-foot rear yard setback is allowed. The front yard and street side yard standards for the primary unit sh all apply to the accessory dwelling unit. In addition, detached accessory dwelling units shall be located to the rear of the primary dwelling unit.
5. No setback shall be required for the conversion of existing living area, conversion of an existing accessory structure, or for a new structure that is constructed in the same location and to the same dimensions as an existing structure.
6. The accessory dwelling unit shall be constructed in accordance with minimum standards for single -family residential use s on individual lots as specified in Section 16.20.160, unless otherwise specified herein.
7. No provisions within this Section, including lot coverage or legal nonconformity, shall preclude either an attached or detached 800 square - foot accessory dwelling unit that is at least sixteen (16) feet in height with four-foot side yard and rear yard setbacks, and that is constructed in compliance with all other development standards
8. A detached accessory dwelling unit created on a lot with an existing or proposed single-family or multi-family dwelling may not exceed 16 feet in height. However, a detached accessory dwelling unit may be up to 18 feet in height if it is l ocated within one-half mile walking distance of a major transit stop or a high-quality transit
corridor, as those terms are defined in Section 21155 of the Public Resources Code. Furthermore, a detached accessory dwelling unit may be up to two additional feet in height to accommodate a roof pitch on t he accessory dwelling unit that is aligned with the roof pitch of the primary dwelling unit. A detached accessory dwelling unit created on a lot with an existing or proposed multi-family dwelling that has more than one story above grade may not exceed 18 feet in height. An accessory dwelling unit that is attached to the primary dwelling may not exceed 25 feet in height or exceed two stories.
89. At least one covered or uncovered parking space for the accessory dwelling unit shall be provided by a minimum interior size of nine feet in width and nineteen (19) feet in depth. Parking can be tandem on an existing driveway. The City shall not impose parking standards for an accessory dwelling unit if the accessory dwelling unit is located within one -half mile of public transit, when the accessory dwelling unit is part of the proposed or existing primary residence or an existing accessory structure, when on -street parking permits are required but not offered to the occupant of the accessory dwelling unit, or when there is a car e share vehicle located within one block of the accessory dwelling unit. No setback shall be required for an existing garage that is converted to an accessory dwelling unit, and a setback of no more than four feet from the side and re ar lot lines shall be required for an accessory dwelling unit that is constructed above a garage. 910. When a garage, carport, or covered parking structure is demolished in conjunction with the construction of an accessory dwelling unit or converted to an accessory dwelling unit, those off-street parking spaces do not need to be replaced. 1011. The accessory dwelling unit shall be architecturally compatible with the design of the primary unit and the surrounding neighborhood in terms of landscaping, scale , height, length, width, bulk, lot coverage, and exterior treatment and shall match with the same colors and materials of the primary unit. 1112. The construction of an accessory dwelling unit shall not be considered when calculating minimum distance requirements for animal uses on the subject lot or on adjacent lots.
F. Junior Accessory Dwelling Units.
1. Purpose-This section provides standards for the establishment of junior accessory dwelling units, an alternative to the standard accessory dwelling un it. Junior accessory dwelling units will typically be smaller than an accessory dwelling unit, will be constructed within the walls of an existing single family residence, and requires owner occupancy of the single family residence where the unit is located.
2. Development Standards - Junior accessory dwelling units shall comply with the following standards:
a) Lots with an existing or proposed single family residence may be permitted one (1) accessory dwelling unit and one (1) junior accessory dwelling unit. b) In compliance with the State of California Lahontan Regional Water Quality Control Board, lots that are not connected to sewer facilities shall be a minimum of one gross acre in size or install an approved Supplemental Treatment Septic System.
c) A junior accessory dwelling unit shall not exceed 500 square feet in size and shall be contained entirely within a single family residence. However, an additional 150 square foot expansion beyond the physical dimensions of the existing structure is permitt ed strictly to accommodate ingress and egress to the junior accessory dwelling unit.
d) The junior accessory dwelling unit shall include a separate entrance from the main entrance to the proposed or existing single- family residence. e) The junior accessory dwelling unit must include an efficiency kitchen that includes a cooking facility with appliances, a food preparation counter, and storage cabinets that are of reasonable size in relation to the size of the junior accessory dwelling unit.
f) The junior accessory dwelling unit may have a bathroom or share with the proposed or existing singl e family residence. If a permitted junior accessory dwelling unit does not include a separate bathroom, then an interior entry to the main living area shall be provided.
g) Additional parking shall not be required.
h) A deed restriction, in a form to be approved and provided by the City, must be recorded and filed with the City, and must include the following stipulations: i) prohibition on the sale of the junior accessory dwelling unit separate from the sale of the single family residence; ii) restricti on on the size and attributes of the junior accessory dwelling unit; iii) if the unit is rented, the unit shall not be rented for a period of less than 30 consecutive calendar days; and iv) owner occupancy of one of the units on -site is required, unless th e owner is a governmental agency, land trust, or housing organization. These restrictions shall run with the land.
(Ord. 2003-05 § 4 (part), 2003; Ord. 299 § 4 (Exh. A § 3 (part)), 2000; Ord. 250 (part), 1997; Ord. 192 Exh. A (§ 83.10.020), 1994)
(Ord. No. 2009-08, § 3(Exh. A), 10-20-09; Ord. No. 2012-14, § 3(Exh. A), 8-7-12; Ord. No. 2017-12, § 3(Exh. A), 6-20-17; Ord. No. 2020-04, § 3(Exh. A), 5-19-20; Ord. No. 2021-01, 3(Exh. A), 6-1-21; Ord. No. 2022-13, § 3(Exh. A), 9-6-2022)