Agenda — Hesperia City Council, March 4, 2025

HESPERIA CITY COUNCIL

SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY

HOUSING AUTHORITY

COMMUNITY DEVELOPMENT COMMISSION

WATER DISTRICT

HESPERIA FIRE PROTECTION DISTRICT-SPECIAL MEETING
Meeting Agenda
Tuesday, March 4, 2025
Closed Session - 5:15 PM
Regular Meeting - 6:30 PM
City Council Chambers
9700 Seventh Ave., Hesperia CA, 92345
City Clerk's Office: (760) 947-1007
City Council Members
Allison Lee, Mayor
Cameron Gregg, Mayor Pro Tem
Brigit Bennington, Council Member
Chris Ochoa, Council Member
Josh Pullen, Council Member
Rachel Molina, City Manager
Pam K. Lee, City Attorney
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. 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) 947-1026 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.

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March 4, 2025City 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

HESPERIA FIRE PROTECTION DISTRICT-SPECIAL MEETING
9700 7th Avenue, Council Chambers, Hesperia, CA 92345
As a courtesy, please silence your cell phones and other electronic devices while the meeting is in session. Thank you.

Prior to action of the Council, any member of the audience will have the opportunity to address the legislative body on any item listed on the agenda, including those on the Consent Calendar.

Individuals wishing to speak during General Public Comments or on a particular numbered item must submit a speaker slip to the City Clerk with the agenda item noted. Speaker slips should be turned in prior to the public comment portion of the agenda or before an agenda item is discussed. Comments will be limited to three minutes for General Public Comments, Consent Calendar items and New Business items. Comments are limited to five minutes for Public Hearing items.

In compliance with the Brown Act, the City Council may not discuss or take action on non-agenda items or engage in question and answer sessions with the public. The City Council may ask brief questions for clarification; provide a reference to staff or other resources for factual information and direct staff to add an item to a subsequent meeting.

CLOSED SESSION - 5:15 PM
Roll Call
Mayor Allison Lee
Mayor Pro Tem Cameron Gregg
Council Member Brigit Bennington
Council Member Chris Ochoa
Council Member Josh Pullen
Conference with Legal Counsel - Potential Litigation:

Government Code Section 54956.9(d)2

1. Two (2) Cases
Conference with Legal Counsel - Potential Litigation:

Government Code Section 54956.9(d)4

1. Two (2) Cases
CALL TO ORDER - 6:30 PM
A. Invocation
B. Pledge of Allegiance to the Flag

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March 4, 2025City Council Meeting Agenda
C. Roll Call
Mayor Allison Lee
Mayor Pro Tem Cameron Gregg
Council Member Brigit Bennington
Council Member Chris Ochoa
Council Member Josh Pullen
D. Agenda Revisions and Announcements by City Clerk
E. Closed Session Reports by City Attorney
GENERAL PUBLIC COMMENTS (For items and matters not listed on the agenda) Individuals wishing to speak during General Public Comments or on a particular numbered item are requested to submit a speaker slip to the City Clerk with the agenda item noted. Speaker slips should be turned in prior to the public comment portion of the joint agenda or before an agenda item is discussed. Comments will be limited to three minutes for General Public Comments, Consent Calendar items and New Business items. Comments are limited to five minutes for Public Hearing items.

JOINT CONSENT CALENDAR

1. Consideration of the Draft Minutes from the Regular Meeting held Tuesday, February 18, 2025.

Recommended Action:

It
is recommended that the City Council approve the Draft Minutes from the Regular Meeting held Tuesday, February 18, 2025.

Staff Person: Assistant City Clerk Erin Baum
Draft CC Min 2025-02-18Attachments:

2. Warrant Run Report (City- Successor Agency- Housing Authority- Community Development Commission- Water)
Recommended Action:

It is recommended that the Council/Board ratify the warrant run and payroll report for the City, Successor Agency to the Hesperia Community Redevelopment Agency, Hesperia Housing Authority, Community Development Commission, and Water District.

Staff Person: Assistant City Manager Casey Brooksher
SR Warrant Run 3-4-2025
Attachment 1 - Warrant Run
Attachments:

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March 4, 2025City Council Meeting Agenda

3. Approval of Improvement and Reimbursement Agreement with CRP/Hesperia Owner, LLC (Newcastle)
Recommended Action:

It is recommended
that the City Council approve the attached Improvement
and Reimbursement Agreement (Agreement) between the City and CRP/NC Hesperia Owner, LLC (Newcastle) for 1) the construction of a traffic signal at the intersection of U.S. Highway 395 and Poplar Street, to enhance public safety and support future development in the area, and which is related to Newcastle’s development and construction of an approximately 408,977 square-foot industrial building, located at the southwest corner of Mesa Linda Street and Sultana Avenue; and 2) allow Newcastle to utilize an interim truck route for access to and from their project site until such time that a traffic signal is completed at the intersection of Highway 395 and Poplar Street and require Newcastle to place a bond into an escrow account that is equal to the amount of the estimated traffic signal costs; and authorize the City Manager, or designee, to execute the Agreement.

Staff Person: Director of Development Services Nathan Freeman SR Newcastle Improvement and Reimbursement Agreement 3-4-2025 Attachment 1 - Newcastle Improvement and Reimbursement Agreement (Final) Attachment 2 - Site Map
Attachments:

NEW BUSINESS

4. Fiscal Year 2024-25 Mid-Year Budget Review
Recommended Action:

It is recommended
that the Fiscal Year (FY) 2024-25 Mid-Year Budget Review be received and filed and the related following resolutions, which amend the respective FY 2024-25 Budgets for the City of Hesperia and the Hesperia Water District be approved:

Staff Person: Assistant City Manager Casey Brooksher
SR 2024-25 Mid-Year Budget 3-4-2025
Attachment 1 - FY 2024-24 Mid-Year Budget Report
Resolution 2025-05
Resolution HWD 2025-01
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

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1) City of Hesperia Resolution No. 2025-05
2) Hesperia Water District HWD No. 2025-01

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March 4, 2025City Council Meeting Agenda
The City Manager, City Attorney or staff may make announcements or reports concerning items of interest to the Council and the public.

ADJOURNMENT
I, Erin Baum, Assistant City Clerk of the City of Hesperia, California do hereby certify that I caused to be posted the foregoing agenda on Thursday, February 27th 2025 at 5:30 p.m. pursuant to California Government Code §54954.2.
_____________________________
Erin Baum,
Assistant City Clerk
Documents produced by the City and distributed less than 72 hours prior to the meeting regarding items on the agenda will be made available in the City Clerk's Office during normal business hours.

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City of Hesperia
City of Hesperia
Meeting Minutes – Draft
City Council
Tuesday, February 18, 2025 6:30 PM

REGULAR MEETING AGENDA

HESPERIA CITY COUNCIL

SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY

HESPERIA HOUSING AUTHORITY

HESPERIA COMMUNITY DEVELOPMENT COMMISSION

HESPERIA WATER DISTRICT
CLOSED SESSION - 5:00 PM
Roll Call

Present: 5 - Mayor Lee, Mayor Pro Tem Gregg, Council Member Bennington, Council Member Ochoa and Council Member Pullen
Conference with Legal Counsel -
Potential Litigation: Government Code Section 54956.9(d)2

1. Two (2) Cases
Conference
with Legal Counsel – Existing Litigation Government Code Section 54956.9(d)1

1. Sully-Miller Contracting, et al. v. City of Hesperia et al., SBSC Case No. CIVSB2410614 CALL TO ORDER - 6:30 PM
A. Invocation
B. Pledge of Allegiance to the Flag
C. Roll Call

Present: 5 - Mayor Lee, Mayor Pro Tem Gregg, Council Member Bennington, Council Member Ochoa and Council Member Pullen
D. Agend
a Revisions and Announcements by City Clerk – None
E.

Closed Session Reports by City Attorne y- No reportable action taken City Council Chambers
9700 Seventh Ave.

Hesperia CA, 92345

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City of Hesperia

ANNOUNCEMENTS/PRESENTATIONS

1. Presentation by Judith Pina from the California Department of Insurance with an overview of the actions that the California D
epartment of Insurance has taken to address the issue of insurance availability.

2. Presentatio
n by representatives from Advanced Disposal with an SB 1383 Compliance Progress.

GENERAL PUBLIC COMMENTS (For items and matters not listed on the agenda) The following people commented:

Resident (voicemail)
Kim Jones
Bob Nelson
Lynne Litchfield
Ben Litchfield
Susan Garcia
Jimmy Capps
Gina Whelan
Stephanie James
Bill Jensen
Robert Davie
Yvonne Molles

JOINT CONSENT CALENDAR
A motion was made by Ochoa, seconded by Pullen that the Joint Consent Calendar be approved.

The motion carried by the following vote:

Aye: 5 - Gregg, Bennington, Lee, Ochoa, and Pullen
Nay: 0

1. Consideration of the Draft Minutes from the Regular Meeting held Tuesday, February 4, 2025.

Recommended Action:

It is recommended that the City Council approve the Draft Minutes from the Regular Meeting held Tuesday, February 4, 2025.

Sponsors: Assistant City Clerk Erin Baum

2. Warrant Run Report (City - Successor Agency - Housing Authority - Community Developm ent Comm
ission - 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 Redevelopm
ent Agency, Hesperia Housing Authority, Community
Development Commission, and Water District.

Sponsors: Assistant City Manager Casey Brooksher

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City of Hesperia

3. Treasurer’s Cash Report for the unaudited period ended December 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 Community Redevelopment Agency, Hesp eria Housing Authority, Community
Development Commission, and Water District.

Sponsors: Assistant City Manager Casey Brooksher

4. Contract for new truck chassis and Swaploader conversion Recommended Action:

It is recommended that the City Council authorize the City Manager to enter into an agreement with PB Loader Corporation for the
purchase of a 2025 Freightliner with a Swaploader conversion for a not-to-exceed amount of $273,000 which includes a contingency of $23,362 for unanticipated retrofit modifications.

Sponsors: Director of Public Works/City Engineer Cassandra Sanchez

5. Acceptance of I-15 Lift Station Completion
Recommended Action:

It is recommended that the City Council and Board of Directors of the Hesperia Water District approve
the completion and operational acceptance of the I-15 Corridor Sewer Lift Station. The Lift Station is fully operational, and all construction work has been completed. The facility is now under a one-year warranty.

Sponsors: Director of Public Works/City Engineer Cassandra Sanchez

6. Acceptance of Public Improvements for Tract Map No. 20046 Recommended Action:

It is recommended that the City Council and the Board of Directors of the Hesperia Water District adopt Resolution No. 2025-03 acc epting
the public improvements for Tract Map No. 20046 located on the west side of Maple Avenue, 290 feet south of Muscatel (Applicant: Harris Homes Inc).

Sponsors: Administrative Analyst Dena Alcayaga

7. Final Tract Map No. 17915-2
Recommended Action:

It is recommended that the City Council adopt Resolution No. 2025-04 approving Final Tract Map No. 17915-2 to create 205 Single-fam
ily Residential lots and 5 Lettered lots on approximately 35.15 gross acres within the low density residential (LDR) zone of the Main Street and Freeway Corridor Specific Plan located on the north side of Mojave Street and the south side of Valencia Street, west of Topaz (Applicant: NV Hesperia Investors, LLC APN: 0405-052-37).

Sponsors: Administrative Analyst Dena Alcayaga

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City of Hesperia

NEW BUSINESS

8. Consideration of Animal Shelter Services, LLC Agreement Recommended Action:

It is recommended that the City Council authorize the City Manager to enter into a sole source Professional Services Agreem ent
(PSA) with Animal Shelter Services, LLC in the not-to-exceed amount of $40,000 for an on-site animal shelter evaluation.

Sponsors: Deputy City Manager/City Clerk Melinda Sayre
Kim Koones (voicemail)
Kim Jones commented.

Gina Whelan commented.

Robert Davie commented.

A motion was made by Ochoa, seconded by Gregg, that this item be amended to be brought back to provide a scope of
services and a request for RFPs to other vendors and consultants. The motion carried by the following vote:

Aye: 5 - Gregg, Bennington, Lee, Ochoa, and Pullen
Nay: 0

9. Consideration of the 2025 Legislative Platform and Funding Priorities Recommended Action:

It is recommended that the City Council adopt the 2025 Legislative Platform consisting of Legislative Policy Statements and Funding Priorities.

Sponsors: Assistant to the City Manager Tammy Pela
yes
Susan Garcia commented.

Robert Davie commented.

Kristin Guidry commented.

A motion was made by Bennington, seconded by Pullen, that this item be approved. The motion carried by the following vote:

Aye: 5 - Lee, Gregg, Bennington, O
choa and Pullen
Nay: 0

COUNCIL COMMITTEE REPORTS AND COMMENTS
The Mayor, Mayor Pro Tem and Council Members reported on various events and Committees.

Council Member Ochoa requested the City to partner with the High Desert Hispanic Chamber Commerce.

Mayor Pro Tem Gregg requested information on the DIF funds being allocated to the new animal shelter and a report on the relocation of Code Enforcement to the Animal Shelter.

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City of Hesperia

CITY MANAGER/CITY ATTORNEY/STAFF REPORTS
City Manager commented on the Ranchero project.

ADJOURNMENT
The meeting was adjourned in memory of the passing of Jim Klapinksy and Council Member Bennington’s daughter’s 34th birthday at 8:32 p.m.
_____________________________
Erin Baum,
Assistant City Clerk

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City of Hesperia

STAFF REPORT
DATE: March 4, 2025
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 January 25, 2025 through February 7, 2025.

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 $477,562.94 $339,968.72 $0.00 $817,531.66 Successor Agency 0.00 0.00 0.00 0.00
Housing Authority 0.00 156.68 0.00 156.68
Community Development Commission 0.00 0.00 0.00 0.00
Water 1,540,709.58 153,248.94 0.00 1,693,958.52
Totals $2,018,272.52 $493,374.34 $0.00 $2,511,646.86

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YEAR-TO PRIOR FY YTD

W/E W/E WARRANT DATE DATE
FUND # FUND NAME 1/31/2025 2/7/2025 TOTALS Wires TOTALS * TOTALS Accounts Payable
100 GENERAL 50,134.61 $
98,909.52$
149,044.13$
-$
22,949,386.68$ 21,910,616.95$
105 PENSION OBLIGATION TRUST -$
-$
-$
-$
-$
-$
106
OPEB TRUST -$
-$
-$
-$
-$
-$
110
SILVERWOOD -$
-$
-$
-$
57,911.23$
-$
200
HESPERIA FIRE DISTRICT -$
-$
-$
-$
-$
-$
204
MEASURE I - RENEWAL -$
-$
-$
-$
28,289.71$
460,043.37$
207 LOCAL TRANSPORT-SB 325 -$
-$
-$
-$

1.64$
967,882.81$
209 GAS TAX-RMRA -$
-$
-$
-$
-$
-$
210
HFPD (PERS) -$
-$
-$
-$
1,755,819.00$ 907,316.00$
241 CFD 2021-1 Resid Maint. & Serv -$
-$
-$
-$
1,280.00$
-$
242
CFD 2022-1 Non-Resd Maint & Serv -$
-$
-$
-$
1,280.00$
-$
243
CFD 2023-1 Silverwood Maint -$
-$
-$
-$
1,280.00$
-$
251
CDBG 4,603.75$
5,949.00$
10,552.75$ -$ 2,883,217.91$ 297,186.19$
254
AB2766 - TRANSIT -$ -$ -$ -$ -$ -$
255
AB3229 SUPPLEMENTAL LAW -$ -$ -$ -$ -$ -$
256 ENVIRONMENTAL PROGRAMS GRANT 90.93$ -$ 90.93$ -$ 26,142.00$ 19,642.25$ 262 SB 1383 LOCAL ASSISTANCE GRANT 31,231.92$ -$ 31,231.92$ -$ 31,231.92$ -$ 263
STREETS MAINTENANCE 9,834.46$ 40,135.57$ 49,970.03$ -$ 1,036,103.11$ 1,331,090.52$ 300
DEV. IMPACT FEES - STREET -$ -$ -$ -$ 34,379.75$ 3,600.00$ 301
DEV. IMPACT FEES - STORM DRAIN -$ -$ -$ -$ 129,647.43$ -$ 306
DEV. IMPACT FEES - 2018-STREETS -$ -$ -$ -$ 1,133,846.70$ 1,458,389.10$ 307
DIF 2018-DRAINAGE FACILITIES -$ -$ -$ -$ 168,099.30$ -$ 309
DIF 2018-CITY HALL FACILITIES -$ -$ -$ -$ -$ -$
312
DIF 2018-POLICE FACILITIES -$ -$ -$ -$ -$ -$
313
DIF A-04 DRAINAGE -$ -$ -$ -$ 1,154,638.51$ 317,748.35$ 402
WATER RIGHTS ACQUISITION -$ -$ -$ -$ 1,666,463.80$ 1,220,101.69$ 403
2013 REFUNDING LEASE REV BONDS -$ -$ -$ -$ -$ 571,151.39$ 404 2023 REFUNDING LEASE REV BONDS -$ -$ -$ -$ 2,500.00$ -$ 504
CITY WIDE STREETS - CIP -$ -$ -$ -$ 2,720,693.14$ 9,426,550.13$ 509
CITY FACILITIES CIP -$ -$ -$ -$ -$ -$
800 EMPLOYEE BENEFITS 125,187.91$ 97,028.80$ 222,216.71$ -$ 5,786,354.05$ 5,273,739.57$ 801 TRUST/AGENCY 188.00$ 14,268.47$ 14,456.47$ -$ 1,036,737.89$ 1,449,902.32$ 802
AD 91-1 AGENCY -$ -$ -$ -$ -$ -$
804
TRUST-INTEREST BEARING -$ -$ -$ -$ 41,287.31$ 245,719.00$ 807
CFD 2005-1 -$ -$ -$ -$ 1,049,640.47$ 990,190.30$ 808
HFPD (TRANSITION) -$ -$ -$ -$ 317,435.02$ 347,796.19$ 815
PLAN REVIEW TRUST - FRONTIER -$ -$ -$ -$ -$ -$
CITY 221,271.58$ 256,291.36$ 477,562.94$ -$ 44,013,666.57$ 47,198,666.13$ 163
REDEVELOP OBLIG RETIREMENT-2018 -$ -$ -$ -$ 7,928,267.73$ 8,085,433.89$ SUCCESSOR AGENCY -$ -$ -$ -$ 7,928,267.73$ 8,085,433.89$ 370
HOUSING AUTHORITY -$ -$ -$ -$ 28,762.30$ 21,911.89$
HOUSING AUTHORITY -$ -$ -$ -$ 28,762.30$ 21,911.89$
170
COMMUNITY DEVELOPMENT COMMISSION -$ -$ -$ -$ -$ -$
COMMUNITY DEVELOPMENT COMMISSION -$ -$ -$ -$ -$ -$
700
WATER OPERATING 53,789.74$ 642,284.76$ 696,074.50$ -$ 8,406,911.10$ 6,891,603.64$ 705 WATER PENSION OBLIGATION TRUST -$ -$ -$ -$ 750,000.00$ -$ 701 WATER CAPITAL -$ -$ -$ -$ 16,473.00$ 320,389.00$
710
SEWER OPERATING 482,627.19$ 360,532.04$ 843,159.23$ -$ 4,065,398.23$ 4,107,038.75$ 711
SEWER CAPITAL -$ -$ -$ -$ 1,617,183.15$ 1,199,851.35$ 720
RECLAIMED WATER OPERATIONS -$ 1,475.85$ 1,475.85$ -$ 270,966.91$ 270,716.08$ WATER 536,416.93$ 1,004,292.65$ 1,540,709.58$ -$ 15,126,932.39$ 12,789,598.82$ ACCOUNTS PAYABLE TOTAL 757,688.51$ 1,260,584.01$ 2,018,272.52$ -$ 67,097,628.99$ 68,095,610.73$ REG. PAYROLL
City 339,968.72$ -$ 339,968.72$ -$ 5,082,950.95$ 4,775,191.07$ Housing Authority 156.68$ -$ 156.68$ -$ 4,352.12$ 3,101.32$ Water 153,248.94$ -$ 153,248.94$ -$ 2,372,808.46$ 2,019,363.87$ PAYROLL TOTAL 493,374.34$ -$ 493,374.34$ -$ 7,460,111.53$ 6,797,656.26$ City of Hesperia

WARRANT RUNS
1/25/2025-2/7/2025

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Attachment 1
01071.0006/1054006.1
City of Hesperia

STAFF REPORT
DATE: March 4, 2025
TO: Mayor and Council Members
FROM: Rachel Molina, City Manager
BY: Nathan R. Freman, Director of Development Services
Cassandra Sanchez, Director of Public Works/City Engineer Ryan Leonard, Principal Planner
SUBJECT: Approval of Improvement and Reimbursement Agreement with CRP/Hesperia Owner, LLC (Newcastle)

RECOMMENDED ACTION
It is recommended that the City Council approve the attached Improvement and Reimbursement Agreement (Agreement) between the City and CRP/NC Hesperia Owner, LLC (Newcastle) for 1) the construction of a traffic signal at the intersection of U.S. Highway 395 and Poplar Street, to enhance public safety and support future development in the area, and which is related to Newcastle’s development and construction of an approximately 408,977 square -foot industrial building, located at the southwest corner of Mesa Linda Street and Sultana Avenue; and 2) allow Newcastle to utilize an interim truck route for access to and from their project site until such time that a traffic signal is completed at the intersection of Highway 395 and Poplar Street and require Newcastle to place a bond into an escrow account that is equal to the amount of the estimated traffic signal costs; and authorize the City Manager, or designee, to execute the Agreement.

BACKGROUND
The area surrounding U.S. Highway 395 and Poplar Street is being developed for industrial use by multiple developers. Currently, the intersection is unsignalized and controlled by a one -way stop sign on Poplar Street. Increased development and truck traffic will negatively impact traffic flow and circulation in the area. Therefore, as a condition of project approval, several developers are required to construct a traffic signal to convert the unsignalized intersection into a signalized one.

One of these developers is Newcastle, which, as noted above, is constructing a 408,977-square- foot industrial building at the southwest corner of Mesa Linda Street and Sultana Avenue.

Additionally, since the traffic signal is located along Highway 395, CalTrans must approve the plans before construction can begin.

All surrounding developments are required to either construct the traffic signal or contribute a fair share of its cost if it is built by others. Since this requirement applies to all projects, the first development to proceed must fully construct the signal. However, the d eveloper will be reimbursed by subsequent developers who pay their fair share. The City will collect these fair share contributions and reimburse a portion of the costs to the developer responsible for constructing the traffic signal.

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Staff Report to the Mayor and Council Members
Newcastle Improvement and Reimbursement Agreement

01071.0006/1054006.1

ISSUES/ANALYSIS

Newcastle is required to construct the traffic signal, estimated to cost $800,000. Alternatively, if another developer builds the signal, Newcastle will contribute its fair share of the cost, estimated at $32,000. To secure this obligation, Newcastle will deposit the estimated construction costs into an escrow account with American Title Company for the City’s benefit. If CalTrans does not approve the traffic signal plans within two years, Newcastle’s obligation to construct the signal will end, and the esc row funds will be disbursed to the City and allocated to another developer responsible for construction. If another party completes the signal, Newcastle will contribute its fair share, and any remaining escrow funds will be returned.

The Agreement memori alizes the arrangement, and its approval is essential for meeting Newcastle’s development conditions and ensuring the timely construction of public infrastructure that supports community growth. Specifically, the traffic signal will enhance public safety a nd traffic flow, support future developments near U.S. Highway 395 and Poplar Street, and ensure equitable cost -sharing among benefiting properties. Poplar Street will serve as the primary access to the Newcastle project site from Highway 395 once the traf fic signal is completed.

However, if the signal is not completed by the time a temporary certificate of occupancy is issued, the Agreement will authorize Newcastle to use Three Flags Avenue and Three Flags Street for site access from Highway 395 until the traffic signal is operational.

Since CalTrans is responsible for processing the traffic signal plans, the City acknowledges that the timing and completion are beyond both Newcastle’s and the City’s control. Therefore, the City will not withhold or delay i ssuing a Temporary Certificate of Occupancy as long as Newcastle secures the traffic signal costs by funding the escrow account or another City-approved method, and all other conditions are met. If CalTrans does not approve the plans within two years of th e Agreement’s effective date, Newcastle’s obligation to construct the signal will end upon full payment of the estimated costs to the City. The City will then issue a final Certificate of Occupancy upon receipt of payment, and Newcastle will remain eligibl e for cost reimbursement as outlined in the Agreement.

Importantly, the Agreement does not obligate the City to construct the traffic signal. The responsibility remains with Newcastle and neighboring developers.

CITY GOAL SUPPORTED BY THIS ITEM

Future Development: Facilitate balanced growth to ensure cohesive community development and pursue economic development.

FISCAL IMPACT

There is no impact to the General Fund associated with this report.

ALTERNATIVE(S)

Provide alternative direction to staff.

ATTACHMENT(S)

1. Improvement and Reimbursement Agreement with CRP/Hesperia Owner, LLC (Newcastle)

2. Site Map

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01071.0006/1047125.2 1
Improvement and Reimbursement Agmt 001
775895452.2
51077771.1/203084.0009

RECORDING REQUESTED BY AND
WHEN RECORDED RETURN TO:

C
RP/NC Hesperia Owner, LLC
c/o Matthew Wm. Nelson, Esq.

Fennemore LLP
550 E. Hospitality Lane, Suite 350
San Bernardino, CA 92408
APNs: _____________, __________________, (SPACE ABOVE THIS LINE FOR RECORDER’S USE) I

MPROVEMENT AND REIMBURSEMENT AGREEMENT
This Improvement and Reimbursement Agreement (“ Agreement”), is made and entered into this ___ day of _____________, 2025 between the City of Hesperia, a General Law City (the “City”) and CRP/NC Hesperia Owner, LLC, a Delaware limited liability company (“Newcastle”).

Hereafter, the City and Newcastle are sometimes individually referred to as a “Party ” and collectively, as the “Parties”.

RECITALS
WHEREAS, the City has approved and issued conditions of approval for Newcastle’s development and construction of an approximately 408,977 square-foot industrial building located at the southwest corner of Mesa Linda Street and Sultana Street in the City of Hesperia, California (SCH No. 2022090381) (the “Newcastle Project”);
WHEREAS, a condition of approval for the Newcastle Project requires the construction of a traffic signal to convert the unsignalized intersection of U.S. Highway 395/Poplar Street into a signalized intersection (the Traffic Signal ), consistent with design plans being processed (“Traffic Signal Plans”) through the California Department of Transportation (“ CalTrans”), which Traffic Signal will benefit all future projects located in the vicinity of the Highway 395/Poplar Street Intersection (collectively, the “Vicinal Projects”); and WHEREAS, N ewcastle (sometimes referred to herein as “Developer”) has agreed to cause the construct ion of the Traffic Signal and City has agreed to reimburse Newcastle for a portion of said costs , or, alternatively, Newcastle has agreed to pay its fair share for the construction costs of the Traffic Signal, if constructed by others, all in accordance with the terms of this Agreement.

AGREEMENT
NOW, THEREFORE, in consideration of the foregoing Recitals, which Recitals are incorporated herein by this reference, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and for the mutual covenants contained herein and intending to be legally bound hereby, the Parties agree as follows:

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Attachment 1
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1. Traffic Signal. Newcastle shall construct the Traffic Signal pursuant to the Traffic Signal Plans approved by CalTrans , for an estimated cost of Eight Hundred Thousand Dollars ($800,000.00), plus a five percent (5%) contingency (collectively, the “Estimated Traffic Signal Costs”). Attached hereto as Exhibit “A” and incorporated herein by this reference is a description of the Traffic Signal . Following the completion of the Traffic Signal , Newcastle shall submit invoices to the City which evidence the final, actual cost of the Traffic Signal (the “Final Traffic Signal Costs”).

1.1 Pre-approva l of Traffic Signal Plans. Newcastle is prohibited from commencing work on any portion of the Traffic Signal until all Traffic Signal Plans have been submitted to and approved by CalTrans.

1.2 Permits and Notices. Prior t o commencing any work, Newcastle (through its contractors) shall, at its sole cost and expense, obtain all necessary permits and licenses and give all necessary and incidental notices required for the lawful construction of the Traffic Signal and performance of Newcastle’s obligations under this Agreement. Newcastle (through its contractors) shall conduct the work in full compliance with the regulations, rules, and other requirements contained in this Agreement, any applicable law, and any permit or license issued to Newcastle.

1.3 Public Works Requirements. Newcastle shall ensure that the bidding, awarding, and construction of the Traffic Signal is undertaken as if such Traffic Signal were constructed as a public works project under the direction and authority of City, pursuant to the applicable provisions of the Public Contract Code. Newcastle shall obtain bids for the construction of the Traffic Signal in a manner which has been approved by the Public Works Director.

Newcastle shall provide the Public Works Director with copies of all bids received from contractors and a bid summary in a form approved by the Public Works Director to assure that the contractor/subcontractors adhere to the applicable legal requirements for public works projects.

1.4 Compliance with Traffic Signal Plans . The Tr
affic Signal shall be
completed in accordance with the Traffic Signal Plans as approved by CalTrans.

1.5 Standard of Performance . Newcas tle and its contractors shall perform all work required, constructing the Traffic Signal in a skillful and workmanlike manner, and consistent with the standards generally recognized as being employed by professionals in the same discipline in the State of California. Newcastle represents and maintains that it or its contractors shall be skilled in the professional calling necessary to perform the work. Newcastle warrants that all of its employees and contractors shall have sufficient skill and experience to perform the work assigned to them, and that they shall have all licenses, permits, qualifications and approvals of whatever nature that are legally required to perform the work, and that such licenses, permits, qualifications and approvals shall be maintained throughout the term of this Agreement.

1.6 Maintenance. City shall not be responsible or liable for the maintenance or care of, and shall exercise no control over, the Traffic Signal until accepted. Newcastle shall maintain the Traffic Signal in a state of good repair until they are completed by Newcastle and accepted, and until the security for the performance of this Agreement is released. Prior to acceptance, it shall be Newcastle’s responsibility to initiate all maintenance work, but if it shall

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fail to do so, it shall promptly perform such maintenance work when notified to do so by City. If Newcastle fails to properly prosecute its maintenance obligation under this section, City may, upon written notice and Newcastle’s failure to remedy as provided, do all work necessary for such maintenance, and the cost thereof shall be the responsibility of Newcastle and its surety under this Agreement. City shall not be responsible or liable for any damages or injury of any nature in any way related to or caused by the Public Improvements or their condition prior to acceptance, except to the extent such damage or injury is caused by the negligence or willful misconduct of City, its elected officials, employees and/or agents.

2. Security. To sec
ure the obligation to construct the Traffic Signal, Newcastle shall deposit, through a bond, cash or other financial instrument of its own choosing, an amount equivalent to the Estimated Traffic Signal Costs into an escrow account (“Escrow Account”) held by American Title Company (“Escrow Holder”) for the benefit of the City, subject to the terms and conditions set forth in that certain Escrow Agreement between Newcastle, the City, and Escrow Holder of even date herewith (“Escrow Agreement ”). As set forth in the Escrow Agreement in more detail, Newcastle shall deposit the Estimated Traffic Signal Costs into the Escrow Account prior to the issuance of a Temporary Certificate of Occupancy . If Caltrans has not provided its final approval of the Traffic Signal Intersection Improvement Plans within two years after the Effective Date of this Agreement , then notwithstanding the foregoing, (i) Newcastle’s obligation to construct the Traffic Signal shall terminate; (ii) Escrow Holder shall disburse the Estimated Traffic Signal Costs to the City ; (i ii) Newcastle shall have no further obligations hereunder to construct the Traffic Signal; and (iv) Newcastle shall continue to have the right to use the Three Flags Access Route until such time as the Traffic Signal is completed, approved and accepted by the City and CalTrans. Furthermore, i f the Traffic Signal is completed by others (other than any successor or assign of Newcastle, including, without limitation, any lender, mortgagee, trustee or beneficiary under a mortgage, deed of trust or similar security instrument encumbering any portion of the Newcastle Project , or their respective designee (each, a “Mortgagee”), then Newcastle shall obtain the City Approval and deliver the City Approval to Escrow Holder. Upon receipt of the City Approval, Escrow Holder shall disburse Newcastle’s fair share for the Final Traffic Signal Costs (which at the time of this Agreement is estimated at Thirty Two Thousand Dollars ($32,000) , but which will be calculated in accordance with Section 3 below) from the then -remaining Escrowed Funds to the City and then disburse any remaining amount of the Escrowed Funds to Newcastle.

3. Reimbu rsement of Final Traffic Signal Costs. The Parties intend that the Final Traffic Signal Costs shall be shared among Newcastle and the other owners of the properties upon which the Vicinal Projects are located (collectively, the “Vicinal Properties”). Newcastle, as well as each of the Vicinal Properties (identified by their respective Assessor's Parcel Number s on Exhibit “B” attached hereto), shall pay a fair share of the Final Traffic Signal Costs, based upon the fair-share percentage established in Table 10 of the Approved Traffic Study for the Newcastle Project (each, a “Fair-Share Percentage”).

The Parties acknowledge and agree that (a) the “ Newcastle Fair-Share Percentage” shall be four percent (4%) of the Final Traffic Signal Costs ; and (b) upon completion of the Traffic Signal to the reasonable satisfaction of CalTrans and the City, the City shall reimburse Newcastle the actual cost of the Traffic Signal (less Newcastle’s respective Fair-Share Percentage) in the following manner:

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(i) the City shall impose and collect from each Vicinal Property its respective Fair-Share Percentage of the Final Traffic Signal Costs (each, an “Vicinal Property Fair-Share Percentage”) in connection with the issuance of any discretionary permit for development on such property; and (ii) Within forty-five (45) days of the City’s receipt thereof, the City shall remit each Vicinal Property Fair-Share Percentage to Newcastle at its respective address set forth in Section 9, below.

The City shall collect all Vicinal Property Fair -Share Percentage fees contemplated hereunder, and shall not waive any Vicinal Property Fair-Share Percentage fee, nor enter into any agreement after the Effective Date of this Agreement which alters the use or application of the Vicinal Property Fair-Share Percentage fees from that which is contemplated herein . Any non- payment by any of the owners of the Vicinal Properties of their applicable Vicinal Property Fair - Share Percentage shall not affect Newcastle’s rights under this Agreement.

4. Certif icate of Occupancy. The City acknowledges that, as the Traffic Signal Plans are currently being processed through CalTrans, the timing and completion of the Traffic Signal is beyond the control of Newcastle. In that regard, and notwithstanding anything to the contrary contained in the Conditions of Approval, the City shall not withhold or otherwise delay the issuance of a Temporary Certificate of Occupancy for the Newcastle Project based on the status of the Traffic Signal, provided that Newcastle has provided security for the Traffic Signal Costs, either by funding the Escrow Account in accordance with Section 2, above, or in some other form as reasonably approved by the City. If Caltrans has not provided its final approval of the Traffic Signal Intersection Improvement Plans within two years after the Effective Date of this Agreement, then Newcastle’s obligation to construct the Traffic Signal Intersection Improvements shall terminate after remittance of the entire Estimated Traffic Signal Costs to the City , and the City will issue a Final Certificate of Occupancy upon receipt of payment. Newcastle will still be entitled to Reimbursement of the Traffic Signal Cost, as governed by Section 3 above.

Notwithstanding the City’s receipt of the Estimated Traffic Signal Costs from Newcastle, nothing in thi
s Agreement shall obligate the City to construct the Traffic Signal, as such construction remains a condition of approval for Newcastle and the developer s of the Vicinal Projects.

5. Interim Access to Newcastle Project. The Parties intend that Poplar Street will be the primary access to the Newcastle Project from Highway 395 following the completion of the Traffic Signal . However, as the Traffic Signal is not likely to be completed by the time the Temporary Certificate of Occupancy is issued, the Newcastle Project shall have the right to use Three Flags Avenue and Three Flags Street to access the Newcastle Project from Highway 395, as shown in Exhibit “C” (the “Three Flags Access Route”), until such time as the Traffic Si gnal is completed, approved and accepted by the City and CalTrans.

In consideration for access to the Th
ree Flags Access Route, Newcastle agrees to do the
following:

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a) Install signage at the southerly egress driveway on Mesa Linda Street, as shown in Exhibit “D,” that shows the recommended interim truck route. The sign shall be 24” x 24” and shall be mounted at a height that is easily visible to the truck driver as they prepare to exit the site;
b) Require the warehouse building occupant through the lease agreement to provide educational information to truck drivers about the required truck route as a normal course of the building's operational management, including specific instruction that truck access to Highway 395 from Poplar Avenue is restricted until such time as the Traffic Signal is completed;
c) Construct the striping recommendations at the intersection of Mesa Linda Street and Poplar Street as shown in Exhibit “E”; and
d) Construct the improvements needs at the intersection of Three Flags Avenue and Poplar Street, as shown in Exhibit “ F,” which includes paving of the intersection and modifications to accommodate a 45-foot curb radius on the southeast corner of the intersection. These improvements can be accommodated within the e xisting right of way.

6. Representations and Warranties of Newca
stle. As of the Effective Date of this
Agreement, Newcastle makes the following representations and warranties for the benefit of the other Parties:
(a) Organization. New castle represents and warrants that it is duly organized under the laws of the State of Delaware and is in good standing and is authorized to do business under the laws of the State of California; and (b) Authority. Newcastle repres ents and warrants that it has the power and authority to enter into this Agreement , and that once this Agreement has been executed and delivered to the other Parties , a ll requisite corporate action shall have been taken by Newcastle in connection with executing and delivering this Agreement.

7. Represent ations, Warranties and Covenants of the City. As of the Effective Date of this Agreement, the City represents and warrants, for the benefit of the other Parties , that the City has the power and authority to enter into this Agreement, and that once this Agreement has been executed and delivered to the other Parties , all requisite government action shall have been taken by the City in connection with executing and delivering this Agreement. The City agrees to fully cooperate with Newcastle, at no cost or expense to the City , with respect to the Intersection Improvements.

8. Indemnification. Newcast
le shall defend, indemnify, and hold harmless City, its elected officials, employees, and agents from any and all actual or alleged claims, demands, causes of action, liability, loss, damage, or injury to property or persons, including wrongful death, whether imposed by a court of law or by administrative action of any federal, state, or local governmental agency, arising out of or incident to any acts, omissions, negligence or willful

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misconduct of Newcastle in connection with the performance of this Agreement (“Claims”). This indemnification includes, without limitation, the payment of all penalties, fines, judgments, awards, decrees, attorneys’ fees, and related costs or expenses, and the reimbursement of City, its elected officials, employees, and/or agents for all legal expenses and costs incurred by each of them. This indemnification excludes only such portion of any Claim which is caused by the negligence or willful misconduct of City, as determined by a court or administrative body of competent jurisdiction. Newcastle ’s obligation to indemnify shall survive the expiration or termination of this Agreement, and shall not be restricted to insurance proceeds, if any, received by City, its elected officials, employees, or agents. In no event shall Newcastle be liable for any consequential, special, punitive or similar damages hereunder.

9. Insurance.

9.1 Types; Amounts. Newcastle shall procure and maintain, and shall require its contractors to procure and maintain, during performance of this Agreement, insurance of the types and in the amounts described below (“ Required Insurance ”). If any of the Required Insurance contains a general aggregate limit, such insurance shall apply separately to this Agreement or be no less than two times the specified occurrence limit.

9.1.1 General Liability. Occurr
ence version general liability insurance, or
equivalent form, with a combined single limit of not less than Two Million Dollars ($2,000,000) per occurrence for bodily injury, personal injury, and property damage.

9.1.2 Business Automobile Liability. Business automobile liability insurance, or equivalent form, with a combined single limit of not less than One Million Dollars ($1,000,000) per occurrence. Such insurance shall include coverage for the ownership, operation, maintenance, use, loading, or unloading of any auto owned, leased, hired, or borrowed by the insured or for which the insured is responsible.

9.1.3 Workers’ Compensation. Workers’ compensation insurance with limits as required by the Labor Code of the State of California and employers’ liability insurance with limits of not less than One Million Dollars ($1,000,000) per occurrence, at all times during which insured retains employees.

9.2 Additional Insured; Separation of Insureds. The Required Insurance, except for the professional liability and workers’ compensation insurance, shall name City as an additional insured with respect to work performed by or on behalf of Newcastle or its contractors, including any materials, parts, or equipment furnished in connection therewith. The Required Insurance shall contain standard separation of insureds provisions, and shall contain no special limitations on the scope of its protection to City, its elected officials, officers, employees, or agents.

9.3 Primary Insurance; Waiver of Subrogation. The Required Insurance shall be primary with respect to any insurance or self -insurance programs covering City, its elected officials, officers, employees, or agents. The policy required for workers’ compensation insurance shall provide that the insurance company waives all right of recovery by way of subrogation against City in connection with any damage or harm covered by such policy.

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9.4 Certificates; Verification. Newcastle and its contractors shall furnish City with original certificates of insurance and endorsements effecting coverage for the Required Insurance. The certificates and endorsements for each insurance policy shall be signed by a person authorized by that insurer to bind coverage on its behalf. All certificates and endorsements must be received and approved by City before work pursuant to this Agreement can begin. City reserves the right to require complete, certified copies of all required insurance policies, at any time.

9.5 Term; Cancellation Notice. Newcas
tle and its contractors shall maintain the
Required Insurance for the term of this Agreement and shall replace any certificate, policy, or endorsement which will expire prior to that date. All policies shall, to the extent available from commercially reasonable insurance providers, be endorsed to provide that the Required Insurance shall not be suspended, voided, reduced, canceled, or allowed to expire except on thirty (30) days’ prior written notice to City.

10. Notices. All notic
es relating to this Agreement must be provided in writing, to the addresses set forth below, and will be deemed sufficiently provided when delivered: (a) personally, in which case it will be deemed received on delivery; (b) by generally recognized overnight courier service, in which case it will be deemed delivered on the next business day if timely delivered to such service for next-day delivery, postage pre-paid; (c) three (3) days after deposit in the United States mail certified or registered, return receipt requested, with postage prepaid; or (d) by e-mail, in which case it will be deemed received as long as any such e-mail is sent to the address set forth below before 5:00 p.m. Pacific Time (otherwise it will be deemed provided on the next business day), provided that a copy of such e -mailed notice is also sent concurrently via one of the other methods set forth hereinabove. Notices shall be addressed as follows:

If to N
ewcastle:

Newcastle Partners, Inc.

Attn: Courtney Wing or Jackson Smith
4740 Green River Road, Suite 110
Corona, CA 92878
Email:

With a copy to: Matthew Wm. Nelson, Esq.

Fennemore LLP
550 East Hospitality Lane, Suite 350
San Bernardino, CA 92408
Email:

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If to City: City of Hesperia
9700 Seventh Avenue
Hesperia, CA 92345
Attn: City Manager
Phone: (760) 947-1018
Email: [email protected]

with a copy to: Aleshire & Wynder, LLP
1 Park Plaza, Suite 1000
Irvine, CA 92614
Attn: Pam K. Lee, Esq.

Phone: (949) 223-1170
Email: [email protected]

Any Party may change its address by written notice to the other s given in the manner set forth above.

11. Force Majeure. If the performance by a Party of any provision of this Agreement is delayed or prevented by any act of God, strike, lockout, shortage of material or labor, restriction by any governmental authority, civil riot, flood, or any other cause not within the control of the Party required to perform, then the period for the performing Party’s performance of the provision shall be automatically extended for the same time such performing Party is so delayed or hindered; provided, however, that in no event shall the foregoing apply to the delayed payment of the Vicinal Property Fair-Share Percentage by the City to Developer.

12. Severab
ility. If any provision of this Agreement is found by any court of competent jurisdiction to be invalid, illegal, or unenforceable, then such portion shall be deemed severed from this Agreement and the Parties shall negotiate in good faith to modify this Agreement to fulfill as closely as possible the original intent and purpose of this Agreement.

13. Entire
Agreement. This Agreement contains the entire agreement between or among the Parties with respect to the subject matter herein and supersedes any and all prior or contemporaneous negotiations, correspondence, or oral or written agreements between or among the Parties.

14. Amendm ent and Inurement. This Agreement may not be modified, amended, or supplemented except by an instrument in writing signed by the Parties, and this Agreement shall bind and inure to the benefit of the Parties hereto and their respective successors and assigns; provided, however, that without the other Part ies’ prior written approval, which written approval may be withheld in a Party’s sole and absolute discretion, no Party may assign its rights or delegate its obligations under this Agreement. Notwithstanding the foregoing, Newcastle may collaterally assign its rights under this Agreement and the Escrow Agreement to any Mortgagee, and upon acquiring title to the Newcastle Project through foreclosure of a Mortgage, deed in- lieu, or in aid thereof, any such Mortgagee shall automatically be deemed entitled to exercise all rights and perform all obligations of Newcastle under this Agreement.

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15. No Third-Party Beneficiaries. This Agreement is made solely for the benefit of the City, Newcastle and each of their respective successors and assigns, and no other person, firm, or entity shall be entitled to rely upon or receive any benefit from this Agreement or any provision herein.

16. Waiver. A waiver by any Party he reto of a breach of any of the covenants or agreements hereof to be performed by any of the other Parties shall not be construed as a waiver of any succeeding breach of the same or other covenants, agreements, restrictions or conditions hereof.

17. Survival. All agreemen
ts, covenants, representations, and warranties contained herein shall survive the full performance or earlier termination of this Agreement.

18. Further Acts. A Party shall, whenever and as often as it shall be requested to do so by any other Party, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, any and all additional documents, approvals, or consents and perform any and all other acts as may be necessary to carry out the intent and purpose of this Agreement.

19. No Joint Venture. Nothing in this Agreement shall be interpreted as creating any form of partnership, joint venture, or other relationship between or among the Parties with respect to the ownership, design, development, financing, or other operations or uses proposed for the Intersection Improvements or the Newcastle Project.

20. Attorneys’ Fees . In th
e event of an action by any Party against another Party arising out of this Agreement, the prevailing Party shall be entitled to recover from the other Party all reasonable costs and expenses incurred, including attorneys’ fees and the fees of other professionals.

21. Counterparts; Electronic Signatures . This A
greement may be executed in
counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same instrument. Furthermore, this Agreement may be executed and delivered by facsimile, DocuSign, AdobeSign or other electronic transmission (including, without limitation, signatures transmitted by e -mail in .pdf format). The Parties intend that faxed and electronic signatures constitute original signatures and that a faxed or electronic copy or counterparts of this Agreement containing the signature (original, faxed or electronic) of a Party is binding upon that Party. The Parties intend to be bound by such electronic signatures and waive any defenses to the enforcement of the terms of this Agreement based upon the use of such electronic signatures.

22. Effectiv
e Date. The Effective Date of this Agreement shall be the last date on which all Parties have executed this Agreement.

23. Governi ng Law . This Agreement shall be governed by and construed in accordance with the laws of the State of California.

24. Interpret ation. Unless the context of this Agreement clearly requires otherwise:
(a) plural and singular numbers shall each be deemed to include the other; (b) the masculine, feminine and neuter genders shall each be deemed to include the others; (c) “shall,” “will,” “must,” “agrees” and “covenants” are each mandatory; (d) “may” is permissive; (e) “or” is not exclusive;

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and (f) “includes” and “including” are not limiting. Time is of the essence for each and every term, condition, covenant, obligation and provision of this Agreement. This Agreement has been negotiated at arm’s length and among persons sophisticated and knowledgeable in the matters dealt with in this Agreement. In addition, each Party has been or has had the opportunity to be represented by experienced and knowledgeable counsel. Accordingly, any rule of law (including California Civil Code §1654) or legal decision that would require interpretation of any ambiguities in this Agreement against the Party that has drafted it, is not applicable and is waived. T he provisions of this Agreement shall be interpreted in a reasonable manner to effect the purpose of the Parties and this Agreement. Captions and section headings are included in this Agreement as a matter of convenience only; they are not a part of this Agreement, do not modify any of the terms of this Agreement, and shall not be used in the interpretation of this Agreement. If a day for any performance or the last date of any period specified in this Agreement is a Saturday, Sunday or national bank holiday, such performance date or period end shall be extended to the next day that is not a Saturday, Sunday or national bank holiday.
[signatures appear on following page]

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date.

CITY:

CITY OF HESPERIA, a General Law City
By:

Name:

Its:

Date:

NEWCASTLE:

CRP/NC HESPERIA OWNER, L.L.C., a Delaware limited
liability company
By: CRP/NC Hesperia Venture, L.L.C.,
a Delaware limited liability company, its sole member
By: Newcastle/Hesperia Logistics LLC,
a California limited liability company, its
authorized member
By:

Name:

Its:

Date:

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State of ___________________
County of _________________
On ____________________, before me, ____________________________, a Notary Public, personally appeared _______________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument, and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of _______________ that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature __________________________________

(Seal)
A notary public or other officer
completing this certificate verifies only
the identity of the individual who signed
the document to which this certificate is
attached, and not the truthfulness,
accuracy, or validity of that document.

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I certify under PENALTY OF PERJURY under the laws of the State of _______________ that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature __________________________________

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EXHIBIT “A”

DESCRIPTION OF INTERSECTION IMPROVEMENTS

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EXHIBIT “B”
APNs OF VICINAL PROPERTIES
3064-581-01-0000
3064-581-02-0000
3064-581-04-0000
3064-591-01-0000
3064-591-03-0000
3064-591-04-0000
3064-591-12-0000
3064-591-13-0000
3064-591-17-0000
3064-591-18-0000
3064-591-19-0000
3064-621-01-0000
3064-631-01-0000
3064-641-08-0000
3064-641-09-0000
3064-641-10-0000
3064-641-11-0000
3064-641-12-0000
3064-641-13-0000
3064-641-14-0000

3064-641-15-0000
3064-641-16-0000
3064-641-17-0000
3064-641-18-0000
3064-641-19-0000
3064-641-20-0000
3064-641-21-0000
3064-641-22-0000
3064-641-23-0000
3064-641-24-0000
3064-641-25-0000
3064-641-26-0000
3064-641-27-0000
3064-641-28-0000
3064-641-29-0000
3064-641-30-0000
3064-641-31-0000
3064-641-32-0000
3064-641-33-0000
3064-641-34-0000

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EXHIBIT “C”
Three Flags Access Route

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EXHIBIT “D”
Three Flags Access Route Signage

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EXHIBIT “E”
Mesa Linda Street and Poplar Street Intersection Striping Improvements

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EXHIBIT “F”
Three Flags Avenue and Poplar Street Intersection Improvements

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Poplar Street
Highway 395
Three Flags Road
Newcastle
Property
Mesa Linda Street
X
Traffic Signal
Location

Page 34 ends

City of Hesperia

STAFF REPORT

RECOMMENDED ACTION

It is recommended that the Fiscal Year (FY) 2024-25 Mid-Year Budget Review be received and filed and the related following resolutions, which amend the respective FY 2024-25 Budgets for the City of Hesperia and the Hesperia Water District be approved:

1) City of Hesperia Resolution No. 2025-05
2) Hesperia Water District HWD No. 2025-01

BACKGROUND
In compliance with the City Council’s policy direction, staff has prepared the FY 2024-25 Mid-Year Budget Review for the City Council , the Hesperia Housing Authority , Community Development Commission, the Hesperia Fire Protection District and the Hesperia Water District Board’s consideration and action.

ISSUES/ANALYSIS
The attached document entitled “ FY 2024-25 Mid-Year Budget Review” includes a report on the status of the City’s FY 2024-25 Budget and financial pl an for the first six months o f the current fiscal year. The report format is designed to facilitate the review of complex financial information for an efficient and effective financial review process.

CITY GOAL SUPPORTED BY THIS ITEM

Financial Health: Maintain a balanced budget and adequate reserves

FISCAL IMPACT
See FY 2024-25 Mid-Year Budget Review attached.

ALTERNATIVE

1. Provide alternative direction to staff.

ATTACHMENTS

1. FY 2024-25 Mid-Year Budget Review

2. Resolution No. 2025-05

3. Resolution HWD No. 2025-01
DATE: March 4, 2025
TO: Mayor and Council Members
Chair and Commission, Hesperia Housing Authority
Chair and Commission, 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
Lorraine Carmona, Budget/Finance Specialist
SUBJECT: Fiscal Year 2024-25 Mid-Year Budget Review

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FISCAL YEAR 2024-25
MI

D-YEAR BUDGET REVIEW
M
arch 4, 2025

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Attachment 1
2024-25 MID-YEAR BUDGET REVIEW REPORT
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T A B L E O F C O N T E N T S

Page
Executive Summary ............................................................................................................................ 3 Status of FY 2024-25 Budget, Budget Amendments, and Reserves:

General Fund .......................................................................................................................... 5 Water District .......................................................................................................................... 6 Streets Maintenance ............................................................................................................... 7 FY 2024-25 December 31, 2024 Year-To-Date Revenue Review:

Major Funds Revenue Summary ............................................................................................ 8 General Fund Revenues ......................................................................................................... 9 Community Development Block Grant Revenue ..................................................................... 10 Community Development Commission Revenue .................................................................... 11 Hesperia Housing Authority Revenue ..................................................................................... 11 Street Related Funds Revenue ............................................................................................... 12 Other City Funds Revenue ..................................................................................................... 13 Water District Revenue ........................................................................................................... 15 Department FY 2024-25 Budget Expenditure Status Summary ........................................................... 17 Total Expenditures By Department and Program ................................................................................. 17 Proposed Budget Amendments – Summary ........................................................................................ 22 Proposed Budget Amendments – Narrative ......................................................................................... 23 Position Changes – Summary.............................................................................................................. 25 2025-26 Tentative Budget Calendar .................................................................................................... 26 Appendix A – ARPA Listing ................................................................................................ ................. 27

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2024-25 MID-YEAR BUDGET REVIEW REPORT
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EXECUTIVE SUMMARY
The following chart compares the FY 2024-25 Budget and December 2024 year-to-date (YTD) revenue and expenditure totals. The percentage comparisons for revenues and expenditures are based on comparing the December 202 4 YTD to the FY 2024-25 Amended Budget. The Amended Budget is used to accurately reflect any changes to the adopted budget that occur from City Council approving budget amendments during the first six months of the fiscal year.

Status of Overall City Fiscal Year 2024-25 B udget

• Revenue: Ba s ed upon the analysis of the revenue performance through December 2024 , the total revenue collected is $45.8 million, is at 37% collected of the budget, which is typical due to the timing of payments related to some larger revenue sources such as several tax -based revenues, Development Impact Fees, and Capital Improvement Projects. Additional details are provided in the report.

• Expenditures: As referenced in the chart above, expenditures are 38% of the amended budget through December 2024. Operating expenditures are 49% expended, which is typical for the first half of the fiscal year. Non-operating expenditures are 17% expended YTD, which is due to multiple capital improvement projects (CIP) funds that have minimal expenditures through the second quarter and will increase as projects move forward. It should be noted that there are fifteen (15) budget amendments totaling $29,556,303 included in this report; much of the amendments is related to the allocation of American Rescue Plan Act (ARPA) funds.

• Reserves: The General Fund and Water District (operating and capital) exceed the City Council’s R eserve Policy which established that a minimum of two (2) months of the annual expenditures be held in cash. Th e following estimated reserve calculations are based on the June 30, 2024 ending cash balances included in the June 30, 2024 audited Annual Comprehensive Financial Report (ACFR). Using the ACFR audited data assures that the estimated reserves are based on actual information. In addition, t he fifteen (15) Mid-Year Budget Amendments, totaling $29,556,303, are reflected below where appropriate:

*This total includes strategic res erves, such as permanent water rights purchases, as well as the operating funds, contamination mitigation funds, asset rehab funds, and capital funds. 2024-25 2024-25 December Revised %
Budget Revised 2024 YTD Received/Expended
Revenue 122,450,412$ 122,450,412$ 45,838,183$ 37% Use of Reserves 10,782,164 17,733,350
Total Resources 133,232,576 140,183,762
Expenditures 122,991,324 130,692,510 49,297,269 38% Di
fference 10,241,252$ 9,491,252$
10% Cash Reserves 5,698,614$ 10% 5,576,810$ 10%
Cash Reserves Above 10% Reserve 15,063,916 26% 31,808,219 57% Total Estimated Cash Reserves 20,762,530 $ 36% 37,385,029$ 67% Months of Cash 4.4 8.0
Water DistrictGeneral Fund
*

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EXECUTIVE SUMMARY (Continued)

Proposed Budget Amendments – 15 Budget Amendments are proposed for $29,556,303 The FY 2024-25 Mid-Year Budget Review includes fifteen (15) items as proposed budget amendments totaling $29,556,303. The proposed budget amendments are included in the fund balance analyses where appropriate:

Revenues and Expenditures through December 31, 2024 for the City’s main funds are summarized as follows:

General Other
Fund Funds Totals

1. Land Management System Implementation (January 2025) $ 388,392 0$ 388,392$

2. Golf Course Equipment (August 2024) 104,000 0 104,000

3. Building Inspection Services (December 2024) 104,000 0 104,000

4. CFD Annexation Services (June 2024) 55,000 0 55,000

5. Purchase of APN 3064-561-07 (January 2025) 0 69,612 69,612

6. Water Rights Purchase (December 2024) 0 526,875 526,875

7. ARPA Allocation 3,738,739 19,664,948 23,403,687

8. ARPA Interest Allocation 0 1,645,884 1,645,884

9. Water Fund Balance Projects 0 1,353,034 1,353,034

10. CalRecycle and Organic Waste Grant 0 71,714 71,714

11. Vacant Parcel Purchase (City Hall Complex) 296,514 0 296,514

12. Security Camera System/Laptops 116,351 0 116,351

13. Contract Services for Community Development 105,100 0 105,100

14. APEX Judgement 0 1,154,140 1,154,140

15. Drainage Property Purchase 0 162,000 162,000 Total Mid-Year Amendment Requests $ 4,908,096 $ 24,648,207 $ 29,556,303 FY 2024-25 Mid-Year Budget Requests
General Fund Revised Budget December
% of Revised
Received
Amended
Budget December
%
Expended
City Council 1,056,754$ 747,028$ 71%
City Manager 1,796,947 967,880 54%
Management Servi
ces 10,917,148 6,724,816 62%
Economic Development 476,492 280,991 59% D.S.-Community Development 3,161,062 1,503,067 48% D.S.-Code Compliance 5,570,094 2,552,440 46% D.S.-Public Works (G.F.) 3,143,502 1,155,007 37% Police 22,682,805 11,059,765 49%
Total General Fund 51,019,157$ 14,477,583 $ 28% 48,804,804$ 24,990,994$ 51% Community Development Block Grant 1,878,240 58,865 3% 150,896 48,577 32% Community Development Commission 0 39,324 n/a 0 0 n/a Hesperia Housing Authority 222,269 77,864 35% 78,976 30,081 38% D.S.-Public Works 21,345 10,013 47% 4,171,648 1,698,466 41% Streets CIP Funds 29,905,232 9,135,936 31% 33,303,873 4,041,115 12% Other City Related Funds 2,895,555 1,083,143 37% 7,086,829 1,748,928 25% D.S.-Water Operating and Capital 29,491,462 17,324,821 59% 25,489,144 11,707,022 46% D.S.-Sewer Operating and Capital 6,947,713 3,577,722 51% 9,791,805 3,276,267 33% Fire District 69,439 52,912 76% 1,814,535 1,755,819 97% Total 122,450,412$ 45,838,183 $ 37% 130,692,510$ 49,297,269$ 38% 2024-25 Revenue 2024-25 Expenditures

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2024-25 MID-YEAR BUDGET REVIEW REPORT
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STATUS OF CITY GENERAL FUND 2024-25 BUDGET, BUDGET AMENDMENTS, AND RESERVES

2024-25 2024-25
Budget Revised Dollars Percent

RESOURCES
General Fund Operating Revenue 51,019,157$ 51,019,157$ 0$ 0% Mid-Year - ARPA Grant Revenue 0 3,738,739 Transfers In

1. Fund 255 - AB 3229 COPS Grant 200,000 200,000

2. Mid-Year ARPA Interest Transfer 0 1,645,884 Total Transfers In 200,000 1,845,884
Budgeted Reserves

1. Budgeted Reserves 900,000$ 900,000$

2. Mid-Year Budget Amendment Reserves 0 1,169,357 Total Budgeted Reserves 900,000$ 2,069,357$
Total General Fund Resources 52,119,157$ 58,673,137$ 6,553,980$ 13%

EXPENDITURES
Total General Fund Operating Expenses 48,804,804$ 48,804,804$ Transfers Out

1. Fund 210 - HFPD CalPERS 1,814,535 1,814,535

2. CFD Administration (2021-1, 2022-1, and 2023-1) 16,000 16,000 1,442,703 1,442,703
Total Transfers Out 3,273,238 3,273,238
Total General Fund Expenditures & Transfers Out 52,078,042$ 52,078,042$ Mid-Year Budget Amendment Requested

1. ARPA Police/Technology 0 3,738,739

2. Land Management System 0 388,392

3. Golf Course Equipment 0 104,000

4. Vacant Parcel Purchase 0 296,514

5. Security Camera System/Laptops 0 116,351

6. Contract Services for Community Development 0 105,100

7. CFD Annexation Services 0 55,000

8. Building Inspection Services 0 104,000 Total Mid-Year Budget Amendments - Requested 0 4,908,096 Total Recommended Expenditure Budget 52,078,042$ 56,986,138$ 4,908,096$ 9% DIFFERENCE TOTAL RESOURCES/TOTAL EXPENDITURES 41,115$ 1,686,999$ Fund Balance
July 1 Beginning Balance 36,850,298$ 41,232,501$
Total Budgeted Reserves (900,000) (2,069,357) Difference Total Resources/Total Expenditures 41,115 1,686,999 Estimated June 30 Ending Fund Balance 35,991,413$ 40,850,143$ Months of Cash to Pay Expenditures and Transfers Out
Beginning Cash July 01, 23,918,114$ 21,144,888$
Estimated Resources Less Budgeted Reserves 51,219,157 56,603,780 Estimated Expenditures (52,078,042) (56,986,138)
23,059,229$ 20,762,530$
Months of Cash to Pay Expenditures and Transfers Out 5.3 4.4 Estimated Cash Reserves Percentage 44% 36%
Estimated Ending Cash June 30,
Change

3. Fund 402 - 2012 Water Rights Acquisition Debt Service

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STATUS OF WATER DISTRICT 2024-25 BUDGET, BUDGET AMENDMENTS, AND RESERVES

2024-25 2024-25
Resources Budget Revised Dollars Percent
Revenue
Water Operating and Capital 29,151,462$ 29,151,462$ Sewer Operating and Capital 6,947,713 6,947,713 Reclaimed Water Operations 340,000 340,000 Midyear ARPA Grant Revenue - Water 0 15,888,275 Midyear ARPA Grant Revenue - Sewer 0 2,718,962 Total Revenue 36,439,175 55,046,412 18,607,237 51% Budgeted Reserves
Budgeted Reserves 2,855,092$ 2,855,092$
Budget Amendment - Vehicle Repair 0 17,000 Midyear Amendment - Water Rights 0 526,875 Midyear Amendment - ARPA Reallocation 0 1,353,034 Total Budgeted Reserves 2,855,092$ 4,752,001$ 1,896,909$ 66% Total Water District Resources 39,294,267$ 59,798,413$ 20,504,146 $ 52% Expenditures by Program
Water Operating and Capital 25,169,718$ 25,169,718$ 0$ 0% Sewer Operating and Capital 9,791,805 9,791,805 Reclaimed Water Operations 302,426 302,426 Total Water District Expenditures & Transfers Out 35,263,949$ 35,263,949$ 0$ 0% Approved Adjustments to Water Operating Expenditure Budget Board Approved Budget Amendments - Staff Reports 0$ 17,000$ Total Approved Amendments 0$ 17,000$ Total Approved Budget 35,263,949$ 35,280,949$ 17,000$ 0% Mid-Year Budget Amendments - Requested
0 526,875
0 15,888,275
0 2,718,962
0 1,353,034
0 20,487,146
Total Expenditures and Amendments 35,263,949$ 55,768,095$ 20,504,146 $ 58% Establishment of Reserve Balances
Permanent Water Rights $ 1,146,888 1,146,888$ Total Reserve Balances 1,146,888 1,146,888 Total Water Expenditures & Reserve Balance Funding $ 36,410,837 $ 56,914,983 Difference Total Resources/Total Expenditures 2,883,430$ 2,883,430$ July 1 Beginning Balance 123,286,172$ 124,800,184$ Budgeted Reserves (2,855,092) (4,752,001)
Difference Resources/Expenditures 2,883,430 2,883,430 Water Rights Reserve Balances 1,146,888 1,146,888 Estimated June 30 Ending Fund Balance 124,461,398$ 124,078,501$ Months of Cash to Pay Expenditures
Beginning Cash July 01, 35,426,550$ 41,506,712$ Estimated Resources Less Budgeted Reserves 36,439,175 55,046,412 Estimated Expenditures (35,263,949) (55,768,095) VVWRA Cash Retention - Zone V (3,400,000) (3,400,000) 33,201,776$ 37,385,029$
Months of Cash to Pay Expenditures and Transfers Out 11.3 8.0 Total Estimated Cash Reserves Percentage 94% 67%
Estimated Ending Cash June 30,
Change

1. Water Rights Purchase

2. ARPA Water Projects
Total Mid-Year Budget Amendments - Requested

3. Sewer Water Projects

4. ARPA Reallocation

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2024-25 MID-YEAR BUDGET REVIEW REPORT
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STATUS OF STREETS MAINTENANCE FUND 2024-25 BUDGET, FUND BALANCE, AND RESERVES

2024-25 2024-25
RESOURCES Budget Revised Dollars Percent
Street Maintenance Operating Revenue 21,345$ 21,345$ Mid-Year - ARPA Grant Revenue 0 1,057,711 Subtotal $ 21,345 $ 1,079,056 1,057,711 $ 4955% Transfers In
Fund 100 - General Fund 0$ 0$
Fund 204 - Measure I - Renewal 1,750,000 1,750,000
Fund 205 - Gas Tax Fund 1,400,000 1,400,000
Fund 206 - Gas Tax Swap 669,000 669,000
Fund 207 - Local Transportation Fund 226,883 226,883 Total Transfers In 4,045,883 4,045,883
Total Revenues 4,067,228 5,124,939
Budgeted Reserves

1. Budgeted Reserves 104,420$ 104,420$
Total Budgeted Reserves 104,420$ 104,420$
Total Street Maintenance Resources 4,171,648$ 5,229,359 $ EXPENDITURES 4,171,648$ 4,171,648 $ 0$ 0% Mid-Year Budget Amendments - Requested

1. ARPA - Flashing Flood Signs 0$ 43,276$

2. ARPA - Sidewalk Repair 17 locations 0 120,109

3. ARPA - Sidewalk Repairs 25 locations 0 182,061

4. ARPA - Tamarisk Basin Rehabilitation 0 662,915

5. ARPA - Rip rap storm crossing materials 0 49,350 Total Mid-Year Budget Amendments - Requested 0 1,057,711 Total Recommended Expenditure Budget 4,171,648$ 5,229,359 $ 1,057,711 $ 25% DIFFERENCE RESOURCES/EXPENDITURES 0$ 0$ Fund Balance
July 1 Beginning Balance 204,357$ 604,058$
Total Budgeted Reserves (104,420) (104,420)
Difference Resources/Expenditures 0 0 Estimated June 30 Ending Balance 99,937$ 499,638$ Change

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2024-25 MID-YEAR BUDGET REVIEW REPORT
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FISCAL YEAR 2024-25 DECEMBER 31, 2024 YEAR-TO-DATE REVENUE REVIEW

Overall – Through December 202 4, total revenue is $45.8 million, or 37 % of the total budgeted revenue of $122.5 million. It should be noted that changes in the local , state, and national economic environments can impact each of these revenue sources and trends going forward. In this section, discussions will pertain to the revenue activity through the 2nd quarter of FY 2024-25.

As of December 31, 2024, the General Fund received revenues of $14.5 million which is 28% of the annual budget.

This is typical as several major revenues such as Vehicle License Fees and Franchise Fees are primarily received in the second half of the Fiscal Year. Development Related Revenue of $3.2 million is 81% of the FY 2024 -25 Budget, which is primarily due to an increase in Building Permit and Construction Inspection Fees for single -family residential construction, as well as a one -time $0.1 million grant reimbursement related to the General Plan Update. The Other General Fund Revenues are currently performing above original budget estimates due to the timing of payments of fees for Industrial-related development.

Street-related funds revenue is $9.1 million, or 31% of the $30 million budgeted. This grouping of funds includes Street and Storm Drain Development Impact Fees (DIF) and City Street CIP reimbursements. The collections on these revenue sources can vary depending on the timing of project completion.

As a whole, the Water District revenue is performing as anticipated through December 2024, with 57% of budgeted revenue received to date.

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

December Change From
2024-25 2024-25 Percent 2024-25 Budget To
Budget Actual Received Revised Revised
General Fund 51,019,157$ 14,477,583$ 28% 51,019,157$ 0$ Community Development Block Grant 1,878,240 58,865 3% 1,878,240 0 Community Development Commission 0 39,324 n/a 0 0 Hesperia Housing Authority 222,269 77,864 35% 222,269 0 Street Related Funds 29,926,577 9,145,949 31% 29,926,577 0 Other City Related Funds 2,964,994 1,136,055 38% 2,964,994 0 Water Operating 27,807,565 16,006,395 58% 27,807,565 0 Water Capital 1,179,897 1,019,920 86% 1,179,897 0 Water Reserves 164,000 65,094 40% 164,000 0 Reclaimed Water 340,000 233,412 69% 340,000 0 Total Water Operating & Capital 29,491,462 17,324,821 59% 29,491,462 0 Sewer Operating 6,341,713 3,393,436 54% 6,341,713 0 Sewer Capital 596,000 181,279 30% 596,000 0 Sewer Reserves 10,000 3,007 30% 10,000 0 Total Sewer Operating & Capital 6,947,713 3,577,722 51% 6,947,713 0 Water District 36,439,175 20,902,543 57% 36,439,175 0 Total All Funds 122,450,412$ 45,838,183$ 37% 122,450,412$ 0$

MAJOR FUNDS REVENUE SUMMARY

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FISCAL YEAR 2024-25 DECEMBER 31, 2024 YEAR-TO-DATE REVENUE REVIEW (Continued)

General Fund Revenue Comments:

General Fund Revenue – Through December 2024, revenues totaled $14.5 million, or 28% of the budgeted estimate.

Sales and Use Tax – Through December 2024, the City has received $4.3 million, or 30% of the $14.3 million FY 2024-25 Budget. Due to the timing of receiving revenue, the State has remitted tax payments through October 2024.

Tax payments received from this revenue source are being received 5%, or $300,000, less than expected due to the lower-than-expected fuel prices from July through October . With four months of activity and recent economic changes, staff closely monitors sales taxes and will provide revisions during the development of the FY 2025-26 Budget.

Vehicle License Fee (VLF) – This revenue is based on the City’s assessed valuation of the properties within the City .

As the assessed valuation changes from the prior year, this revenue changes by the same percentage. No revenue was reported through December 2024, as the first installment of the VLF of $ 6.7 million, or 53% of the budget, was received in January 2025. The second installment is expected to be received in May 2025.

Franchise Fees – Franchise fees for Cable TV, Advance Disposal, Southwest Gas, Southern California Edison, and Water for December 2024 YTD total $ 800,350, which is a slight increase over the December 2023 of $773,139 YTD .

Franchise Fees received through December 2024 have been collected at 17% of the budgeted amount. As mentioned, most franchise fees are received in the second half of the fiscal year.

Transient Occupancy Tax (TOT) – Through December 2024, YTD revenue is $449,080, which is $101,220 less t han the December 2023 YTD of $550,300. TOT taxes received through December 2024 have been collected at 26% of the budgeted amount. This decrease is primarily due to delays in the timing of monthly receipts from the hotel operators and delinquency of TOT from two hotels, for which the City is currently pursuing collections.

Secured Property Tax – Through December 20 24, YTD revenue is $640,817, which is $49,941 more than the December 2023 YTD of $590,876. This revenue is on track through December 2024, with 54% of the budgeted amount received.

December Change From
2024-25 2024-25 Percent 2024-25 Budget To
Budget Actual Received Revised Revised
Sales and Use Tax 14,349,979$ 4,282,670$ 30% 14,349,979 $ 0$ Vehicle License Fee (VLF) 12,718,621 0 0% 12,718,621 0 Franchise Fees 4,577,756 800,350 17% 4,577,756 0 Sub-Total Top Three Revenues 31,646,356 5,083,020 16% 31,646,356 0 General & Administrative Recovery 4,596,356 2,298,178 50% 4,596,356 0 Transient Occupancy Tax 1,700,000 449,080 26% 1,700,000 0 Secured Property Tax 1,195,253 640,817 54% 1,195,253 0 Business License 843,000 372,320 44% 843,000 0 Community Facilities District 2005-1 399,314 0 0% 399,314 0 Leased Water Rights 1,931,594 0 0% 1,931,594 0 Development Related Revenues
Planning 477,513 368,637 77% 477,513 0 Building & Safety 2,009,482 1,580,846 79% 2,009,482 0 Engineering 1,538,390 1,293,047 84% 1,538,390 0 Sub-Total Development Related Revenues 4,025,385 3,242,530 81% 4,025,385 0 Sub-Total Top 10 Revenue Sources 46,337,258 12,085,945 26% 46,337,258 0 All Other General Fund Revenues 4,681,899 2,391,638 51% 4,681,899 0 Total General Fund Revenues 51,019,157$ 14,477,583$ 28% 51,019,157 $ 0$

GENERAL FUND REVENUES

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FISCAL YEAR 2024-25 DECEMBER 31, 2024 YEAR-TO-DATE REVENUE REVIEW (Continued)

General Fund Revenue Comments (Continued):

Business License – The City taxes businesses for conducting business within the City. YTD December 2024 collections of $372,320 are $5,730 or 2% less than the December 2023 YTD of $378,050. While there is a slight decrease in revenue , the YTD December 202 4 collection reflects the elimination of new cannabis business licenses.

Total collections for the first six months of FY 2024 -25 represent 3,167 licenses paid compared to 3,044 paid through December 2023 . Business license revenue received through December 2024 have been collected at 44% of the budgeted amount and is trending as expected.

Community Facilities District 2005-1 – This special assessment district (generally west of Maple Avenue and south of Main Street) was formed to refinance the bonds of CFD 91 -3 and assess the properties within the district to repay the bonds. The annual assessment includes a public safety portion to offset some of the residential development costs for the City’s public safety providers. Due to the refinance agreement, the revenue will be received at the fiscal year’s end and recorded in June 2025.

Leased Water Rights – The permanent water rights owned by the General Fund can be leased annually and the lease revenue is used to pay for the 2012 Bonds, which financed the purchase of the water rights. The leasing of water rights revenue is collected at the end of the year and will be recorded in June 2025.

Development Related Revenue – This revenue source accounts primarily for development-related fees such as Planning, Building and Safety , and Engineering. Overall, the FY 202 4-25 revenue through December 202 4 of $3.2 million represents 81% of the budget. Planning revenues are 77% collected , which is primarily related to a one-time grant reimbursement of $132,312 from the Local Early Action Plan (LEAP) for the General Plan Update. Building & Safety revenues are collected at 79%, which is primarily related to greater-than-anticipated Building Permit Fees for single-family residential permits from Lennar Homes (30 budgeted; 54 received through December 2024), as well as the revised rates that went into effect December 1, 2024. Building Permit Fee revenue for other single-family residential, multi-family residential, commercial, and industrial projects, as originally budgeted, are anticipated to be received later in the fiscal year. Engineering revenue is at 84% collected through December 202 4. The increase is primarily related to Construction Inspection Fees related to the Silverwood Development and Len nar Homes , which were higher than anticipated.

All Other General Fund Revenue – A ll other general fund revenue accounts are $2.4 million or 51% collected through December 2024. This source of revenue is primarily made up of Administrative Fines and Interest Income.

Community Development Block Grant Revenue Comments:

These revenues are grant reimbursements that promote economic and housing development and rehabilitation projects, emphasizing activities that create jobs, build or enhance infrastructure, and provide affordable housing to Hesperia residents. This grant must be spent before submitting for reimbursement. The FY 202 4-25 Budget revenue estimates the anticipated reimbursements that are primarily expected to be received during the third and fourth quarter s of the fiscal year.

All Other CDBG Revenues – This revenue includes CDBG program income and interest revenue for the HOME Grant fund and the CDBG Revolving Loan fund. These revenues are more one- time in nature and are not received on a schedule as other revenue. December 2024 YTD revenue of $58,865 consists of loan repayments related to the Housing Rehabilitation Loan Program, the 1999 HOME repayment program, and interest-related income.

December Change From
2024-25 2024-25 Percen t 2024-25 Budget To
Budget Actual Received Revised Revised
CDBG Administration Reimbursement 1,779,362$ 0$ 0% 1,779,362$ 0$ All Other CDBG Revenues 98,878 58,865 60% 98,878 0 Total CDBG Revenues 1,878,240$ 58,865$ 3% 1,878,240$ 0$

COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) REVENUE

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FISCAL YEAR 2024-25 DECEMBER 31, 2024 YEAR-TO-DATE REVENUE REVIEW (Continued)

Community Development Commission (CDC) Revenue Comments:

The Community Development Commission revenue reflects the interest income earned through December 2024.

Hesperia Housing Authority (HHA) Revenue Comments:

This program was developed to promote projects that improve the City’s housing stock and provide affordable housing opportunities. The budgeted revenues primarily consist of loan repayments and interest income. Loan repayments are typically received in the fourth quarter of the fiscal year.

December Change From
2024-25 2024-25 Percent 2024-25 Budget To
Budget Actual Received Revised Revised
Interest Income 0$ 39,324$ n/a 0$ 0$ Total CDC Revenues 0$ 39,324$ n/a 0$ 0$

COMMUNITY DEVELOPMENT COMMISSION (CDC) REVENUE
December Change From
2024-25 2024-25 Percen t 2024-25 Budget To
Budget Actual Received Revised Revised
Interest Income 98,000$ 56,022$ 57% 98,000$ 0$ Loan Repayments 92,769 0 0% 92,769 0 Miscellaneous Income 1,500 75 5% 1,500 0 Sub-Total HHA Revenue 192,269 56,097 29% 192,269 0 VVEDA Housing Authority Revenue 30,000 21,767 73% 30,000 0 Total HHA Revenues 222,269$ 77,864$ 35% 222,269$ 0$

HESPERIA HOUSING AUTHORITY (HHA) REVENUE

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FISCAL YEAR 2024-25 DECEMBER 31, 2024 YEAR-TO-DATE REVENUE REVIEW (Continued)

Street Related Funds Revenue Comments:

Measure I - Renewal – This fund accounts for the renewed Measure I sales tax based on revenue generated from the ½ cent added tax on sales tax and interest received on cash ba lances. Measure I Renewal is obtained from the San Bernardino County Transportation Authority (SBCTA). Through December 2024, a total of $0.9 million from three (3) monthly payments has been collected, which is $ 58,959 or 6% less than the December 2023 total of $1. 0 million. This decrease was anticipated and is reflected in the FY 2024 -25 Budget. At this time, there are no revisions to this revenue source.

Gas Tax – Monthly apportionments are received throughout the fiscal year and can vary yearly due to timing differences in the State schedule of monthly apportionments. The City’s apportionments through December 2024 total $648,889 from four (4) monthly apportionments , $20,217 or 3% more than the December 2023 total of $628,672 from four (4) month apportionments. Interest revenue is also r eceived on cash balances. FY 2024-25 revenue is at 35 % obtained, with remittances trending as initially budgeted.

Gas Tax S wap – Through December 2024, revenue of $372,243 from four (4) apportionments is $8,478 or 2% more than the December 2023 YTD of $363,765 from four (4) apportion ments. Interest revenue is also received on cash balances. This budgeted revenue source is 42%, with apportionments being received as expected.

Local Transportation – The County ¼ cent sales tax has funded this revenue source, and the primary use of this revenue is transportation -related, including supporting operations of the Victor Valley Transit Authority (VVTA). This revenue source is no longer expected to be received due to the allocation bei ng fully utilized by VVTA for transit purposes from a decision made by VVTA in April 2022. The $17,302 in revenue reflects the interest income received through December 2024.

Gas Tax RMRA – This source of revenue, which is mainly State-funded and took effect in November 2017, can be used for street and road -related maintenance and rehabilitation projects. SB 1, the Road Repair and Accountability Act of 2017, increased the gas tax by 12 cents and 20 cents for diesel. The vehicle registration fee also increased depending on the value of the vehicle. As of December 2024, revenue received from the State is $912,373 or 37% of the budgeted amount, an increase of $ 81,550 or 10% compared to the December 2023 total of $830,823 . Interest revenue is also received on cash balances. This increase was anticipated and is reflected in the FY 2024-25 Budget.

December Change From
2024-25 2024-25 Percent 2024-25 Budget To
Budget Actual Received Revised Revised
204 Measure I - Renewal 4,102,238$ 1,058,391$ 26% 4,102,238$ 0$ 205 Gas Tax Fund 1,895,858 669,442 35% 1,895,858 0 206 Gas Tax Swap Fund 916,673 388,133 42% 916,673 0 207 Local Transportation Fund 72,951 17,302 24% 72,951 0 209 Gas Tax - RMRA 2,656,958 992,002 37% 2,656,958 0 254 AQMD Fund 590 254 43% 590 0 263 Public Works Street Maintenance Fund 21,345 10,013 47% 21,345 0 Sub-Total 9,666,613 3,135,537 32% 9,666,613 0 DIF Streets & Storm Drain
300 Development Impact Fee-Streets 102,141 4,465 4% 102,141 0 301 Development Impact Fee-Storm Drain 76,590 33,020 43% 76,590 0 306 Development Impact Fee 2018-Streets 8,831,835 2,935,023 33% 8,831,835 0 307 Development Impact Fee 2018-Drainage Facilities 614,165 238,231 39% 614,165 0 313 Development Impact Fee-A-04 Drainage 112,333 185,556 165% 112,333 0 Sub-Total DIF Streets & Storm Drain 9,737,064 3,396,295 35% 9,737,064 0 504 City Streets CIP 10,522,900 2,614,117 25% 10,522,900 0 Total Street Related Funds 29,926,577$ 9,145,949$ 31% 29,926,577 $ 0$

STREET RELATED FUNDS REVENUE

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2024-25 MID-YEAR BUDGET REVIEW REPORT
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FISCAL YEAR 2024-25 DECEMBER 31, 2024 YEAR-TO-DATE REVENUE REVIEW (Continued)

Streets Related Funds Revenue Comments (Continued):

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

Public Works-Street Maintenance – The estimated revenues are primarily interest earnings. This fund will occasionally receive miscellaneous reimbursements on an inconsistent basis. The revenue received YTD of $ 10,013 includes $6,683 in interest earnings , $1,987 in proceeds from the sale of equipment and scrap sales, and $1,343 in reimbursements for damaged city property and equipment.

Development Impact Fees for Streets and Storm Drain – Through December 2024 YTD, the combined revenue of $3.4 million is 35% of the annual budget of $9.7 million. The collections on this revenue source can vary depending on the timing of the completion of projects. The FY 2024 -25 Budget of $9.7 million primarily consists of Statewide Community Infrastructure Program (SCIP Series 2023) bonds available to be drawn for widening improvements on Ranchero Road.

City Streets CIP – This fund tracks grant and developer -funded projects such as the Ranchero Road Improvements , a Traffic Signal at Main Street and Sultana Street/Timberlane Avenue, Walnut Street H -01 Retention Basin, a Traffic Signal at Ranchero Road/Cottonwood Avenue, and a Traffic Signal at Ranchero Road/Maple Avenue. Through December 2024, $2.6 million has been received from the California Department of Transportation (Caltrans) for the Ranchero Road Widening Project. Reimbursements from the San Bernardino County Transit Authority (SBCTA) and other related grants are anticipated to be received by the end of FY 2024-25.

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

December Change From
2024-25 2024-25 Per
cent 2024-25 Budget To
Budget Actual Received Revised Revised
105 Pension Obligation Trust 50,000$ 144,829$ 290% 50,000$ 0$ 106 OPEB Trust 0 26,226 n/a 0 0 110 Silverwood 495,400 46,515 9% 495,400 0 210 HFPD (PERS) Interest Income 68,439 52,912 77% 68,439 0 230 Public Art 9,056 2,599 29% 9,056 0 241 CFD 2021-1 Resid Maint. & Serv 0 9 n/a 0 0 242 CFD 2022-1 Non-Resd Maint & Serv 0 9 n/a 0 0 243 CFD 2023-1 Silverwood Maint 0 10 n/a 0 0 255 AB3229 Supplemental Law Fund 294,203 213,496 73% 294,203 0 256 Environmental Programs Grant 61,021 23,648 39% 61,021 0 260 Disaster Preparedness Grant 1,090 616 57% 1,090 0 261 American Rescue Plan Act Grant 576,457 248,484 43% 576,457 0 262 SB 1383 Local Assistance Grant 36,675 3,486 10% 36,675 0 DIFs 302-304, 308-312
302 Development Impact Fee-Fire 36,136 15,579 43% 36,136 0 303 Development Impact Fee-Police 160 69 43% 160 0 308 Development Impact Fee 2018-Fire Suppression 622,131 146,134 23% 622,131 0 309 Development Impact Fee 2018-City Hall Facilities 534,681 100,685 19% 534,681 0 310 D
evelopment Impact Fee 2018-Animal Control 60,263 36,077 60% 60,263 0 311 Development Impact Fee 2018-Records Storage 27,313 6,108 22% 27,313 0 312 Development Impact Fee 2018-Police Facilities 10,037 2,229 22% 10,037 0 Sub-Total DIFs 302-304, 308-312 1,290,721 306,881 24% 1,290,721 0 402 2012 Water Rights Debt Service 33,932 46,742 138% 33,932 0 404 2023 Refunding Lease Revenue Bonds 48,000 19,594 41% 48,000 0 Total Other City Funds 2,964,994$ 1,136,055$ 38% 2,964,994$ 0$

OTHER CITY FUNDS REVENUE

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2024-25 MID-YEAR BUDGET REVIEW REPORT
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FISCAL YEAR 2024-25 DECEMBER 31, 2024 YEAR-TO-DATE REVENUE REVIEW (Continued)

Other City Funds Revenue Comments (Continued):

Pension Obligation Trust and OPEB Trust – These Section 115 Trust funds were established to manage and mitigate the liabilities resulting from other post -employment benefits and unfunded pension liability. The revenue in these funds reflects investment interest income and gain/losses from investments.

Silverwood – The revenue received in this fund is from reimbursements received for City costs incurred related to the Silverwood project. Through December 2024, $46,515 has been received.

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

Public Art – This fund is to manage revenue received by the City to be utilized towards public art displays. The revenue received as of December 2024 consists of interest income.

Community Facilities District (CFD) Funds – As development occurs and parcels annex into these districts, the primary source of revenue will come from special taxes, which will fund district expenditures. Through December 2024, revenue comprises minor investment earnings on initial deposits made by the General Fund to begin district operations.

AB3229 Supplemental Law Fund – The passage of Senate Bill (SB) 89 allowed for the continued funding of the Supplemental Law Enforcement Fund (SLESF). Through December 2024, $213,496 , or 73% of the budgeted revenue, has been received as expected.

Environmental Programs Grant – This fund tracks grant reimbursements for various environmental events. Through December 2024 YTD, $23,648, or 39% has been received. Reimbursements are received mainly later in the fiscal year.

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

American Rescue Plan Act (ARPA) Grant – Coronavirus State and Local Fiscal Recovery Funds – This revenue is the Coronavirus State and Local Fiscal Recovery Funds in which the City received a total amount of $23.4 million in two installments of $11.7 million. The first allocation was received in September 2021, and the second in September 2022.

This ARPA funding must be obligated on eligible costs incurred during the period that began on March 3, 2021 and ended on December 31, 2024. Once obligated, the funds must be spent by December 31, 2026. The revenue received through December 2024 of $248,484 consists of interest income. The City has obligated all funds by the December 31, 2024 deadline and is now working to spend all funds by December 31, 2026. This Mid -Year report includes a substantial budget amendment of $23.4 million, obligating the ARPA grant to the appropriate funds.

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

Development Impact Fees-Fire, Police, Public Services, City Hall, Animal Control, and Records Storage – At the halfway mark of the fiscal year, a total of $306,881, or 24% of budgeted revenue, has been received for this revenue group due to the timing of when projects are completed. The revenue received through December 2024 is primarily due to collections from two new establishments and single-family residential projects from K Hovnanian and Richmond American, which were anticipated in the FY 2024 -25 Budget. This revenue source will continue to be monitored as ongoing development projects near completion.

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

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FISCAL YEAR 2024-25 DECEMBER 31, 2024 YEAR-TO-DATE REVENUE REVIEW (Continued)

Water District Revenue Comments:

Effective August 1, 2022, the Hesperia Water District began applying liens to properties with outstanding water bills.

Failure to pay within 60 days from the original bill due date results in the Water District mailing the tenant and property owner a notice of lien. If the bill remains outstanding after an additional 10 days, the Water District will apply a lien on the property. All outstanding property liens will be converted to property tax liens in May of each year. By doing so, the County will collect outstanding balances as part of property tax collections during the following year. For FY 2024-25, as of December 31, 2024, the Water District has collected $400,513 of the $833,059 placed on the tax roll this Fiscal Year, representing collections from the first of the two property tax installment due dates. Typically, the first installment yields 55% collections while the second installment is 45%; based on this logic, the second installment should be approximately $330,000 for a total of $730,000. The remaining assumed uncollected balance of $100,000 or 12% of the lien total will be carried over to the next year for collections. The Water District utiliz es such liens instead of water disconnections and traditional collection services as the primary collection mechanism.

Overall Water District Revenue – Revenue through December 2024 is $20.9 million. It is primarily attributed to a slight increase in water consumption and water meters sold for ongoing projects for single-family residential. Water District revenue is progressing as anticipated, with 57% of the budgeted amount received.

December Change From
2024-25 2024-25 Percent 2024-25 Budget To
Budget Actual Received Revised Revised
Water Operating Revenue
Water Sales 24,756,381$ 14,074,684$ 57% 24,756,381 $ 0$ Interest Income 576,000 175,423 30% 576,000 0 Property Taxes 612,152 412,200 67% 612,152 0 Sub-Total 25,944,533 14,662,307 57% 25,944,533 0 All Other Water Operating Revenues 1,863,032 1,344,088 72% 1,863,032 0 Total Water Operating Revenues 27,807,565$ 16,006,395$ 58% 27,807,565 $ 0$ Capital Facilities Charges 1,139,897 974,377 85% 1,139,897 0 Grant Reimbursement 0 0 n/a 0 0 All Other Capital Facilities Revenues 40,000 45,543 114% 40,000 0 Total Water Capital Revenues 1,179,897 1,019,920 86% 1,179,897 0 Reclaimed Water 340,000 233,412 69% 340,000 0 All Other Water Reserves Revenues 164,000 65,094 40% 164,000 0 Total Water Operating & Capital Revenues 29,491,462$ 17,324,821$ 59% 29,491,462 $ 0$ Sewer Operating Revenue
Sewer Billing 5,737,158$ 2,863,206$ 50% 5,737,158$ 0$ All Other Sewer Operating Revenues 604,555 530,230 88% 604,555 0 Total Sewer Operating Revenue 6,341,713 3,393,436 54% 6,341,713 0 Sewer Connections 520,000 164,783 32% 520,000 0 All Other Sewer Capital Revenues 76,000 16,496 22% 76,000 0 Total Sewer Capital Revenue 596,000 181,279 30% 596,000 0 All Other Sewer Reserves Revenues 10,000 3,007 30% 10,000 0 Total Sewer Operating & Capital Revenues 6,947,713$ 3,577,722$ 51% 6,947,713$ 0$ Total Hesperia Water District Revenue 36,439,175$ 20,902,543$ 57% 36,439,175 $ 0$

WATER DISTRICT REVENUE

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FISCAL YEAR 2024-25 DECEMBER 31, 2024 YEAR-TO-DATE REVENUE REVIEW (Continued)

Water District Revenue Comments (Continued):

Water Sales – Water sales through the second quarter of FY 2024-25 were $14.1 million and primarily consist of a slight increase in water consumption from the same period in FY 2023-24. Through December 2024, Water Sales Residential of $5,598,427 is $581,094 more than the $5,017,333 collected through December 2023 . In addition, Water Sales Construction of $392,652 is $106,538 more than the $286,114 collected through December 2023, which was anticipated in the FY 2024 -25 Budget for the grading of an industrial project. Water sales have been collected at 57 % of the projection as anticipated. This modest increase is due to ne w customers, as the last Utility Rate Study increase occurred in December 2021.

Property Taxes – Property tax revenue i s typica lly received from November 20 24 through July 20 25. Through December 2024, the YTD of $412,200 is $27,153 or 7% more than the December 2023 YTD of $385,047. This increase was anticipated and is reflected in the FY 2024-25 Budget. Property tax revenue is on track at mid-year, with 67% of the budgeted amount received.

All Other Water Operating Revenue – Through December 2024, total revenue collected is $1,344,088, 26% more than December 2023 YTD of $1,065,425. This increase is primarily related to service charges and delinquency fees received due to County Property Tax collections. Revenue through December 2024 is 72% of the original budget.

Capital Facilities Surcharge – Revenue through December 2024 YTD is $974,377, 85% of the budgeted amount to date. The revenue received during the second quarter of 2024 primarily consists of payments for single-family residential water meters related to Lennar Homes, Richmond American, and K Hovnanian.

Reclaimed Water – Current Reclaimed Water customers are the Golf Course, Hesperia Township (NW corner of 5 th & Smoke Tree) and Hesperia Community Park. As of December 31, 2024, the Water District has collected $233,412, or 69% of budget.

Sewer Billing – R evenue through December 2024 is $2.9 million and is associated with sewer residential and commercial customers connected to the sewer system . Revenue received through December 2024 i s 50% of the budgeted amount and is trending as expected.

Sewer Connections – Revenue through the second quarter of FY 2024- 25 is $164,783, or 32% of the budget. This revenue is driven by the completion of development projects in areas served by Sewer. This budget revenue will continue to be monitored in the second half of the Fiscal Year as ongoing development projects progress.

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

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

The cash investments are held with the Local Agency Investment Fund (LAIF), which regularly earns interest income based on the LAIF interest rates. The FY 2024-25 Budget estimated an interest rate of 4.09%. The interest income received through December 202 4 reflected a higher interest rate of 4. 48%. Additionally, valuation adjustments are recorded based on the market value of the City’s investments at the end of the Fiscal Year. The investment income revenue of the various City funds is anticipated to meet the FY 202 4-25 Budget once the market valuation adjustments are completed at the end of the Fiscal Year.

2024-25 2024-25 Percent
Budget December Received
General Fund 840,000$ 241,939$ 29%
Comm
unity Development Block Grant 88,878 31,580 36% Hesperia Housing Authority 128,000 77,789 61% Street Related Funds 879,650 478,675 54% Other City Related Funds 891,085 625,518 70% Water District 770,000 290,403 38%
Total 3,597,613$ 1,745,905$ 49%
Investment Income

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2024-25 MID-YEAR BUDGET REVIEW REPORT
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DEPARTMENT FY 2024-25 BUDGET EXPENDITURE STATUS SUMMARY

Total City Expenditures – With the exception of the fifteen (15) mid-year budget amendments totaling $29,556,303, of which the majority is attributed to ARPA allocation, the overall assessment of the City’s expenditures through mid-year of the fiscal year is that expenditures are expected to stay within the FY 2024-25 Amended Budget.

TOTAL EXPENDITURES BY DEPARTME NT AND PROGRAMS

The City Council Department is 71% expended through December 2024. The City Council Division has expended 37% due to budgeted items typically expended later during the fiscal year, such as annual memberships, conferences , seminars, community outreach programs , and events. The City Attorney Division is higher than expected, with 92 % expended due to an unanticipated settlement agreement payment.

The City Manager Department expenditures are on track , staying within the 202 4-25 Budget at 5 4% expended and proceeding as expected.

December Amended
2024-25 2024-25 2024 YTD Percent
E
xpenditure Summary Budget Amended Expenditures Expended City Council 1,056,754$ 1,056,754$ 747,028$ 71% City Manager 1,796,947 1,796,947 967,880 54% Management Services 10,916,848 10,917,148 6,724, 816 62% Development Services - Community Development 3,162,562 3,161,062 1,503, 067 48% Development Services - Code Compliance 5,567,894 5,570,094 2,552,440 46% Development Services - Public Works 7,316,150 7,315,150 2,853, 473 39% Development Services - Water 24,747,144 24,764,144 11,707, 022 47% Development Services - Sewer 6,887,085 6,887,085 3,125, 921 45% Police 22,682,805 22,682,805 11,059, 765 49% Sub-Total Operating 84,134,189 84,151,189 41,241, 412 49% Economic Development 706,364 706,364 359,649 51% Streets Capital Improvement Project (CIP) Funds 29,725,155 37,409,341 4,041, 115 11% Water Capital 725,000 725,000 0 0% Sewer Capital 2,904,720 2,904,720 150,346 5% Other City Related Funds 2,981,361 2,981,361 1,748,928 59% Fire District 1,814,535 1,814,535 1,755, 819 97% Sub-Total Others 38,857,135 46,541,321 8,055, 857 17% TOTAL CITY EXPENDITURES 122,991,324$ 130,692,510$ 49,297,269$ 38% December Amended
2024-25 2024-25 2024 YTD Percent
C
ity Council Budget Amended Expenditures Expended
100 100 City Council 406,754$ 406,754$ 150,847$ 37% 100 102 City Attorney 650,000 650,000 596,181 92% Total City Council 1,056,754$ 1,056,754$ 747,028$ 71% December Amended
2024-25 2024-25 2024 YTD Percent
B
udget Amended Expenditures Expended
City Manager 1,796,947$ 1,796,947$ 967,880$ 54%

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2024-25 MID-YEAR BUDGET REVIEW REPORT
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TOTAL EXPENDITURES BY DEPARTMENT AND PROGRAMS (Continued)

The Management Services Department is currently at 62 % expended. Finance is 47 % expended, while Information Technology is 55% expended, and both are proceeding as planned. The Human Resources Division is 7 4% expensed due to the lump sum payment to CalPERS for the unfunded accrued liability and annual insurance premiums paid at the beginning of the fiscal year. Non -departmental expenditure is 63% due to purchasing vacant property (corner of 8 th Avenue and Juniper Street) and replacing aging golf course maintenance equipment; both are included in the Mid -Year Budget Amendments.

The Economic Development Department expended 51% through the Second Quarter. This department is made up of three (3) Divisions: Economic Development, Community Development Block Grant (CDBG), and Hesperia Housing Authority (HHA) funds.

The Economic Development Division performs the economic development functions for the City. Funded by the General Fund, Economic Development is 59 % expended due mainly to the Division’s lump sum portion of the annual unfunded accrued liability assessed by CalPERS.

Community Development Block Grant (CDBG) administers the City’s CDBG program and related activities and is 32% expended. Expenditures are expected to increase in the second part of the fiscal year as invoices are received to complete the Annual Action Plan and consultant administration fees.

The Hesperia Housing Authority (HHA) funds oversee the City’s affordable housing. Through the end of December, the HHA funds were 38% expended, which is expected for normal housing activities.

The Community Development Division is 48% expended overall through the Second Quarter. Planning is 46% expended, and Building & Safety is 49% expended; both are proceeding as expected.

December Amended
2024-25 2024-25 2024 YTD Percent
M
anagement Services Budget Amended Expenditures Expended 100 220 Finance 2,736,923$ 2,736,923$ 1,274,679$ 47% 100 225 Human Resources/ Risk Mgmt. 4,589,339 4,589,339 3,373, 659 74% 100 228 Information Technology 2,301,545 2,301,545 1,265, 089 55% 100 229 Non-Departmental 1,289,041 1,289,341 811,389 63% Total Management Services 10,916,848$ 10,917,148$ 6,724, 816$ 62% December Amended
2024-25 2024-25 2024 YTD Percent
E
conomic Development Budget Amended Expenditures Expended 100 Economic Development 476,492$ 476,492$ 280,991$ 59% 251 Community Development Block Grant (CDBG) 150,896 150,896 48,577 32% 370 Hes
peria Housing Authority 78,976 78,976 30,081 38% Total Economic Development 706,364$ 706,364$ 359,649$ 51% December Amended
2024-25 2024-25 2024 YTD Percent
D
. S. - Community Development Budget Amended Expenditures Expended 100 3000 Planning 1,667,612$ 1,667,612$ 775,434$ 46% 100 3020 Building & Safety 1,494,950 1,493,450 727,633 49% Total D. S. - Community Development 3,162,562$ 3,161,062$ 1,503, 067$ 48%

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2024-25 MID-YEAR BUDGET REVIEW REPORT
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TOTAL EXPENDITURES BY DEPARTMENT AND PROGRAMS (Continued)

The Code Compliance Division expenditures are trending as expected at 46% through mid -year. The table above shows that Code Enforcement is 51% expended, while Animal Control is 42% expended.

Overall, the Public Works Division is 39% expended through December 2024 and trending as expected . Engineering, Building Maintenance, Street Maintenance, and Traffic are trending as expected. Street Repair is 30% expended, and as the program progresses, the percentage of budget expended will increase. Capital Improvement Program expenditures are expected to rise later in the fiscal year as the Golf Course Trails project progresses.

Streets Capital Improvement Project (CIP) related expenditures are 11% expended through December 202 4.

Expenditures will increase a s progress continues on projects such as the Maple Avenue Street Improvement, FY 2021-22 Street Improvement Project and other road-related projects.

This classification comprises the principal and interest payments for the 2012 Water Rights Acquisition and 2023 Refunding Lease Revenue Bonds and reimbursable expenditures related to the Silverwood Project. Principal payments for both bonds occur in the fall of each fiscal year, explaining the 59% expended percentage through December 2024.

December Amended
2024-25 2024-25 2024 YTD Percent
D
. S. - Code Compliance Budget Amended Expenditures Expended 100 3010 Code Enforcement 2,352,917$ 2,343,617$ 1,200,229$ 51% 100 5000 Animal Control 3,214,977 3,226,477 1,352, 211 42% Total D. S. - Code Compliance 5,567,894$ 5,570,094$ 2,552, 440$ 46% December Amended
2024-25 2024-25 2024 YTD Percent
D
. S. - Public Works Budget Amended Expenditures Expended 100 3100 Engineering 1,024,101$ 1,024,101$ 435,505$ 43% 100 3110 Building Maintenance 1,670,401 1,669,401 719,502 43% 100 Capital Improvement Program 450,000 450,000 0 0% 263 3150 Street Maintenance 2,157,301 2,155,801 934,544 43% 263 3160 Street Repair 160,428 161,928 47,838 30% 263 3170 Traffic 1,853,919 1,853,919 716,084 39% Total D.S. Public Works 7,316,150$ 7,315,150$ 2,853, 473$ 39% December Amended
2024-25 2024-25 2024 YTD Percent
B
udget Amended Expenditures Expended
Streets Capital Improvement Project (CIP) Funds 29,725,155$ 37,409,341$ 4,041,115$ 11% December Amended
2024-25 2024-25 2024 YTD Percent
B
udget Amended Expenditures Expended
Other City Related Funds 2,981,361$ 2,981,361$ 1,748,928$ 59%

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2024-25 MID-YEAR BUDGET REVIEW REPORT
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TOTAL EXPENDITURES BY DEPARTMENT AND PROGRAMS (Continued)

Overall, the Water Operating and Capital funds are 42% expended through December 31, 2024. The following narrative details the progression of each program.
• The primary responsibility of the Source of Supply is to secure make -up water lease rights to remedy overproduction. During the second quarter, the District purchased 65 acre-feet of permanent water rights. Included in the Mid-Year amendments is the purchase of permanent water rights. While a budget amendment is needed, this is being funded from cash reserves retained specifically to purchase permanent water. • Production is responsible for drawing the groundwater, has expended 42% of the budget by the end of the Second Quarter, and is proceeding as expected.
• Distribution has utilized 51% of its allocated budget and is proceeding as planned. • Through December 31, 20 24, Pipeline Maintenance has expended 48% of the budget and is proceeding as expected. The budget was amended during the October 1, 2024, Council meeting to include $17,000 for repairing a vehicle involved in a traffic accident.
• Engineering is currently 35% expended, primarily due to the timing of invoices. Expenditures are expected to increase in the second part of the fiscal year as invoices are received for contractual services. • Customer Service is 31 % expended and proceeding as planned, with the Advanced Metering Infrastructure (AMI) programs progressing on schedule (81% of City on AMI).
• Utility Billing is 98% expended . T he increased percentage is due to the $0. 7 million in write-offs of delinquent customer accounts and the document recording costs related to placing those delinquent accounts onto the County Property Tax Roll for collection. It should be noted that the subsequent collection of the tax liens will be reflected as revenue. Through December 202 4, the District has received $ 0.4 million through the County Property Tax Roll collections process, representing collections from the first of two property tax installment s due dates. Additional collections will be received through the fiscal year-end. • Administration is 71% expended primarily due to general and administrati ve expenses and grant expenses related to the American Rescue Plan Act (ARPA).
• Property Managem ent is 43% e xpended at mid- year and will increase as maintenance projects are completed throughout the fiscal year.

December Amended
2024-25 2024-25 2024 YTD Percent
D.S. Water Operating & Capital Budget Amended Expenditures Expended 4010 Source of Supply 3,802,457$ 3,802,457$ 546,919$ 14% 4020 Production 5,621,196 5,614,296 2,364,707 42% 4030 Distribution 1,826,985 1,837,985 941,705 51% 4035 Pipeline Maintenance 1,117,190 1,142,090 548,957 48% 4040 Engineering 967,632 964,132 336,970 35% 4050 Customer Service 2,278,930 2,265,920 712,526 31% 4060 Utility Billing 1,400,116 1,400,116 1,371,638 98% 4070 Administration 5,660,456 5,661,216 3,998,500 71% 4080 Property Management 524,250 524,000 227,851 43% 4160 Street Repair 1,245,506 1,249,506 397,597 32% 720 Reclaimed Water Operations 302,426 302,426 259,652 86% Total Water Operations 24,747,144$ 24,764,144$ 11,707,022$ 47% 701 Water Capital 10,000 10,000 0 0% 703 Water Capital Rehab and Replace 715,000 715,000 0 0% 711 Sewer Capital Projects 2,904,720 2,904,720 150,346 5% Total D.S. Water Operating & Capital 28,376,864$ 28,393,864$ 11,857,368$ 42%

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2024-25 MID-YEAR BUDGET REVIEW REPORT
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TOTAL EXPENDITURES BY DEPARTMENT AND PROGRAMS (Continued)

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

• Street Repair is 32% expended through December 31, 2024, and will increase as material and equipment are purchased for the street repair program, as identified in the FY 2024-25 Budget. • Reclaimed Water Operations are 86% expended, mainly due to the December 2024 annual payment of the 2016 State Revolving Fund (SRF) Loan debt service.
• Projects in Water and Sewer Capital have $3.6 million allocated in capital funds and are 4 % expended overall.

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

The Sewer Operating Funds overall are 45% expended overall.

• Sewer Operations expenditures are 45% expended, primarily due to receiving invoices for Victor Valley Wastewater Reclamation Authority (VVWRA) sewer treatment fees through November 2024. • Sewer Engineering is currently 27% expended. It is expected to increase in the second part of the fiscal year as invoices are received for contractual professional engineering services related to sewer projects. • Sewer Utility Billing is 45% expended, which is expected for the first half of the fiscal year. • Sewer Administration is proceeding as planned , with 5 2% expended , mainly due to the monthly general and administrative re-payment for the annual indirect cost allocation.

The Police Department budget is 4 9% expended, which is expected for the first half of the fiscal year with the County contract invoices paid through December 2024.

During FY 2018- 19, the City transferred all Hesperia Fire Protection District (Fire District) assets and liabilities to San Bernardino County Fire, except for the former personnel obligations, for which the Fire District will continue to function with dedicated funding. The Fire District is 97% expended due to paying the annual contractual retirement obligations related to the former Fire District employees at the beginning of the fiscal year versus paying monthly . The $58,716 savings will be placed in the District’s Section 115 trust to pay former Fire District personnel obligations.

December Amended
2024-25 2024-25 2024 YTD Percent
D
. S. - Sewer Operating Budget Amended Expenditures Expended 4200 Operations 5,221,733$ 5,221,733$ 2,347,514$ 45% 4240 Engineering 285,424 285,424 78,114 27% 4260 Utility Billing 284,677 284,677 127,644 45% 4270 Administration 1,095,251 1,095,251 572,649 52% Total D.S. Sewer Operating 6,887,085$ 6,887,085$ 3,125,921$ 45% December Amended
2024-25 2024-25 2024 YTD Percent
Budget Amended Ex penditures Expended
Police 22,682,805$ 22,682,805$ 11,059,765$ 49% December Amended
2024-25 2024-25 2024 YTD Percent
Budget Amended Expenditures Expended
Fire District 1,814,535$ 1,814,535$ 1,755,819$ 97%

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2024-25 MID-YEAR BUDGET REVIEW REPORT
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PROPOSED BUDGET AMENDMENTS – SUMMARY

The FY 2024-25 Mid-Year Budget Review includes fifteen (15) budget amendments totaling $29,556,303. The following listing categorizes the proposed budget amendments, with the following pages providing details on each request:

General Other
Fund Funds Totals
Approv
ed by Prior Staff Report

1. Land Management System Implementation (January 2025) $ 388,392 0$ 388,392$

2. Golf Course Equipment (August 2024) 104,000 0 104,000

3. Building Inspection Services (December 2024) 104,000 0 104,000

4. CFD Annexation Services (June 2024) 55,000 0 55,000

5. Purchase of APN 3064-561-07 (January 2025) 0 69,612 69,612

6. Water Rights Purchase (December 2024) 0 526,875 526,875 Subtotal - Approved by Prior Staff Report 651,392 596,487 1,247,879 ARPA Related

1. ARPA Allocation 3,738,739 19,664,948 23,403, 687

2. ARPA Interest Allocation 0 1,645,884 1,645,884

3. Water Fund Balance Projects 0 1,353,034 1,353,034 Subtotal - Approved by Prior Staff Report 3,738,739 22,663,866 26,402, 605 New Budget Amendments

1. CalRecycle and Organic Waste Grant 0 71,714 71,714

2. Vacant Parcel Purchase (City Hall Complex) 296,514 0 296,514

3. Security Camera System/Laptops 116,351 0 116,351

4. Contract Services for Community Development 105,100 0 105,100

5. APEX Judgement 0 1,154,140 1,154,140

6. Drainage Property Purchase 0 162,000 162,000 Subtotal - New Budget Amendments 517,965 1,387,854 1,905, 819 Total Mid-Year Amendment Requests $ 4,908,096 $ 24,648,207 $ 29,556,303 Source of Funds:

General Fund - 100 4,908,096$
Envi
ronmental Programs Grant - 256 15,614
ARPA - 261 1,645,884
SB 1383 Local Assistance Grant - 262 56,100
Public Works Street Maintenance - 263 1,057,711
DIF-Streets - 300 69,612
DIF-Storm Drain - 301 100,000
DIF-2018 Drainage Facilities - 307 62,000
DIF-A-04 Drainage - 313 1,154,140
Water Operating - 700 17,768,184
Sewer Operating - 710 2,718,962
Total Source of Funds 29,556,303$
FY 2024-25 Mid-Year Budget Requests

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2024-25 MID-YEAR BUDGET REVIEW REPORT
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PRO
POSED BUDGET AMENDMENTS – NARRATIVE
The following requests were previously presented to the City Council and gained approval. The staff report noted that these items would require a quarterly budget amendment.  Land Management System Implementation – Information Technology $388,392 (100 -19-228) – January 21, 2025
Due to the need for a replacement planning, licensing, and land management system (PLL), in January 2023, the City contracted with a consultant to identify new software. A consultant was selected after a vigorous Request for Proposal (RFP) process. During the January 21, 2025, City Council meeting, approval was given to agree on PLL system implementation. As the staff report identifies, the mid-year report will present the appropriation request.  Golf Course Equipment – Non-Departmental $104,000 (100-19-229) – August 20, 2024 At the August 20, 2024 City Council meeting, the Council approved a contract amendment with Donovan Bros , that identified the replacement of aging golf course maintenance equipment. An amendment for the purchase of replacement equipment is being requested. This amendment was not included in the First Quarter report as the contract was renewed in October 2024.
 Building Inspection Services – C ommunity Development Building & Safety $104,000 (100 -29-300) – December 17, 2024
During the December 17, 2024 City Council meeting, the City Council approved a contract amendment for building inspection services but did not amend the budget. This amendment request is for authorization to amend the budget for inspection services.
 Community Facilities District (CFD) Annexation Services – C ommunity Development Building & Safety $55,000 (100-29-300) – June 18, 2024
During the June 18, 2024, City Council meeting, authorization was given to engage NBS to perform CF D
a
nnexation services . NBS will assist in annexing future residential and non -residential development into CFDs 2021-1 (new residential development) and 2022-1 (new non-residential development). As stated in the staff report, the cost for these services was not included in the proposed FY 2024-25 Budget; thus, an amendment is requested.  Purchase of APN 3064- 561-07 – Developer Impact Fee (DIF) – Streets $69,612 (300-29-700) – January 21, 2025
On January 21, 2025, the City Council approved $69,612 authorizing the commencement of an eminent domain action necessary to acquire APN 3064-561-07 property located at the southeast corner of Poplar Court and H
ighway 395 . The purchase is required to improve Poplar Court and support future development . A budget amendment is requested for the property purchase.
 Permanent Water Rights Purchase – Source of Supply $526,875 (700-4010) – December 03, 2024 During the December 3, 2024, City Council meeting, the Board of Directors for the Hesperia Water Board approved the purchase of 75 acre-feet of permanent water rights for $7,025 per acre-foot (AF). As the staff report indicates, a b
udget amendment will be requested for this mid-year report.

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PROPOSED BUDGET AMENDMENTS – Narrative (Continued)

The following amendments represent the majority values of all amendments: the American Rescue Plan Act (ARPA) allocation. As mentioned, ARPA mandated that all funds be obligated by December 31, 2024, and all proceeds spent by December 31, 2026.
 American Rescue Plan Act (from 261 to Operating Funds) $23,403,687 During FY 2021 -22, the City received the first half ($11.7 million) of ARPA Grant funds and then the second half ($11.7 million) in FY 2022 -23, totaling $23.4 million. This funding must be obligated on eligible costs incurred from March 3, 2021 , through December 31, 2024. ARPA mandates that all expenditures must be completed by December 2026. This amendment request is for various expenses approved via staff reports at City Council and Hesperia Water District Board meetings since September 2024. Appendix A is a detailed listing of all items obligated from ARPA and the status of expenditures. It should be noted that this amendment will transfer funds from the ARPA Fund (Fund 261) to the operating funds; additionally, it will increase the expenditure budget for each operating fund. The following details the necessary amendments to transfer the ARPA funds:

General Fund (100) $ 3,738,739
Street Maintenance (263) 1,057,711
Water Operating (700) 15,888,275
Sewer Operating (710) 2,718,962
Total ARPA Expenditures $23,403,687
 American Rescue Plan Act – ARPA Interest Allocation (261 to 100) $1,645,884 The ARPA fund was allocated interest since the first receipt of funds during FY 2021 -22. This interest amount is being transferred to the General Fund. The ARPA rules allow the government to receive up to $10 million to reimburse General government services. With the $3.7 million and the interest allocation of $1, 645,884, the General Fund will receive $5.4 million for general government expenses. For substantiation, this reimbursement is applied to six months of law enforcement services from July through December 2024.  Water Fund Balance Projects – Water Operating Production/Administration (700-29-400) $1,353,034 This amendment request concerns various expenses approved previously via staff reports at various Hesperia Water District Board meetings since August 2023. These expenses were to be funded by the ARPA grant . Still, additional guidance presented an opportunity to change the funding source to allow funds to be received by the General Fund.

The following amendments are new amendments that were unforeseen or unplanned during the development of the FY 2024-25 Budget.
 CalRecycle Grant Funds – City Manager $71,714 (256-07-200/262-07-200) In FY 2021-22, the City was awarded $24,017 in grant funds for recycling and clean-up programs. The Department of Resources Recycling and Recovery (CalRecycle) grant program allows the recipient (City) up to two years to spend the grant proceeds. During the grant term, the City expended $8,403, and in July 2024, CalRecycle requested repayment of unspent funds ($15,614).

Additionally, CalRecycle approved additional award funding for the SB 1383 Local Assistance Grant Program for FY 2022-23. Due to the timing of the grant funding received and budget adoption, the grant funding was not included in the budget; therefore, the staff is requesting an amendment for $56,100.  Purchase of Vacant Parcel (City Hall Complex) – Non-Departmental $296,514 (100-19-229) The City acquired a vacant parcel of land directly south of the City Hall and Library (corner of 8th Avenue and Juniper Street).

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PROPOSED BUDGET AMENDMENTS – Narrative (Continued)

 Contract Services – Community Development Planning/Building & Safety $105,100 (100-29-300) The Planning and Building & Safety Division s need contract staffing. Planning seeks contract planning services to augment current staffing levels and keep pace with development in the City. The contract would provide the flexibility to increase or decrease the volume and frequency of services depending on project workloads. Building & Safety seek s additional staff to keep up with the increase in permits from develop ing single-family residences (SFRs). Additional contract services would ensure that the City could maintain an acceptable schedule fo r development project approval, construction finalization, certificate of occupancy (C of O), and more. As the development volume continues in the City, an amendment of $105,100 from Planning and B&S is requested.  Camera System Upgrade and Laptops – Police $116,351 (100-51-510) This request is to upgrade the current data camera system and purchase laptops. City equipment needs to stay up to date with technology. The current data camera system needs an upgrade as it continuously has delays. New laptops are necessary for accessing federal and state databases, as current ones invariably lag.  Drainage Property Purchase – DIF Storm Drain/2018 Drainage Facilities $162,000 (301-29-700/307-29-700) This amendment request is for purchasing APN 0414-202-07-0000 property, located along Third Avenue and south of the H-01 Storm Drain Inlet Basin. The purchase is necessary to construct a catch basin in front or south of the inlet. A budget amendment of $162,000 for the property and estimated closing costs are requested.  APEX Drainage Fees Settlement – DIF A-04 Drainage $1,154,140 (313-29-310) On October 11, 2024, the Superior Court ordered the City to refund the A-04 drainage fees paid by APEX HM, LLC.

These expenses could not be estimated when the FY 20 24-25 Budget was prepared and were omitted . A budget amendment of $1,154,140 is requested.

Summary of Position Changes:

The adopted FY 2024 -25 Budget included 203.49 full -time equivalents (FTE). It should be noted that all full -time and part-time positions are expressed as an FTE to reflect the hours budgeted. A full-time position (1.00 FTE) reflects 2,080 hours of paid time for one year, while a part -time position is either budgeted for 960 hours, equating to 0.46 FTE (not CalPERS eligible) or 1,500 hours, equating to 0.73 FTE (retirement eligible). During the First Quarter review, the City Council approved the addition of 1.92 FTE for a total staffing of 205.41 FTE.

The Mid-Year report recommends adding one full-time and one part-time position totaling 1.73 FTE, for an adjusted total FTE of 207.14 FTE.
• Add one part -time registered veterinary technician position (0.73 FTE), a non -represented classification in a part-time range of 14. This position will provide enhanced animal care. • Add one full -time administrative aide position ( 1.0 FTE), a non -represented classification in a general classification range 27. This position will focus on community outreach events.

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2024-25 MID-YEAR BUDGET REVIEW REPORT
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2025-26 Tentative Budget Calendar

While the Mid-Year report gauges the current year’s activity, it does serve as the official start for planning the next year’s budget. Below is the tentative calendar for the FY 2025-26 Budget.

OpenGov Training – FY 2025-26 Proposed Budget and FY 2024-25 Revised Budget February 17-28, 2025 2025-26 Budget Instructions (SharePoint) February 28, 2025 Council FY 2024-25 Mid-Year Budget Review March 4, 2025 2025-26 Draft Division and/or Program Narratives March 6, 2025 FY 2024-25 Revised Revenue and 2025-26 Proposed Budget Revenue Estimates to Departments for Review (07/01/2024 thru 02/29/2025)
March 13, 2025 (Review)
March 24, 2025 (Due)
FY 2024-25 Revised Expenditure Estimates, 2025-26 Current Level Proposed Budget Expenditures
March 27, 2025
2025-26 Budget Increments-“Requested Expenditures Above Current Level” April 1, 2025 Budget Review with Departments/Divisions (Finance) Mid-April 2025-26 Final Proposed Budget Division and/or Program Narratives completed End of April Capital Improvement Program (CIP) Due from Department to Finance April 11, 2025 Workshop #1 – Current Level Budget to Council (Operating) May 6, 2025 City Positions – Department Directors notify staff May 9, 2025 Workshop #2 – Above Current Levels to Council and AB 2561 – Vacancy Presentation May 20, 2025 Internal Review May 13, 2025
2025-26 Proposed Budget completed (To Council) May 22, 2025 Council Budget Workshop June 3, 2025
Council Adopts Operating Budget June 3, 2025
Council Adopts CIP Budget June 17, 2025

With this calendar, there are two planned budget workshops before requesting the City Council to adopt the Operating Budget on June 3, 2025, and the CIP Budget on June 17, 2025. • Budget Workshop #1 will highlight the current-level operating budget. • Budget Workshop #2 will highlight using reserves for significant purchases and the capital improvement program budget. Additionally, Workshop #2 will require a public hearing to ensure compliance with AB 2561, which requires a vacancy position presentation.

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2024-25 MID-YEAR BUDGET REVIEW REPORT
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Appendix A

General Government Services 3,396,154$
Loss Revenue 342,585
3,738,739
Flashing Flood Signs 43,276
Repair 40 Sidewalk Locations 302,170
Tamarisk Basin Rehabilitation 662,915
Rip Rap Storm Crossing/Materials 49,350
1,057,711
Water Operating Projects
Backhoe 184,537
Pressure Monitoring Units 127,037
Reservoir Mixers 161,893
Dump Truck 191,289
Crew Trucks with Crane and Equipment 263,163
Rehabilitate Five Wells 1,500,000
Replace Water Service Lines 9,513,407
Satellite Scans of District Areas 350,000
Well Roof Repair 287,243
Paint and Coat Tanks 3,091,726
Payment Processing Software 217,980
Subtotal Water Operating Projects 15,888,275
Sewer Operating Projects
Gas Monitoring System 21,717
Upgraded Laptops for Field Personnel 5,877
Vactor Sewer Combination Truck 711,716
Sewer Camera & Inspection Vehicle 481,007
Manhole Repair/Replacement 1,444,150
Payment Processing Software 54,495
Subtotal Sewer Operating Projects 2,718,962
Total ARPA Allocation 23,403,687$
Subtotal Streets & Drainage Projects
Streets & Drainage Projects
General Fund
Subtotal - General Fund
ARPA Listing of Projects by Fund

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2024-25 MID-YEAR BUDGET REVIEW REPORT
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Appendix A

ARPA Interest Allocation to General Fund 1,645,884$
Projects Reallocated From ARPA to Water Fund Balance
SCADA Maintenance 464,600$
Flatbed Truck 87,286
Skid Mounted Exerciser 91,582
Ford Ranger 4x4 40,620
Vacuum Excavator 84,305
Hydraulic Pump 20,215
Upgraded Laptops for Field Personnel 36,664
Advertisements for Bidding of ARPA Projects 1,800
Case 621G Wheel Loader 201,360
Chlorination Units 260,938
Chlorine Analyzers 63,664
Total Reallocated Projects 1,353,034$
Summary
ARPA Alloc ation 23,403,687$
ARPA Interest 1,645,884
Reallocated Projects 1,353,034
Total 26,402,605$
ARPA Listing of Projects by Fund (Continued)

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RESOLUTION NO. 2025-05

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HESPERIA, CALIFORNIA, APPROVING THE 2024-25 MID-YEAR BUDGET REVIEW AND AMENDING THE 2024-25 CITY OF HESPERIA BUDGET TO FUND CERTAIN

RELATED EXPENDITURES
WHEREAS, the City Council of t he City of Hesperia adopted the Fiscal Year (FY) 2024-25 Budget on June 4, 2024; and
WHEREAS, the City Council of the City of Hesperia was presented the 2024-25 Mid-Year Budget Review by staff; and
WHEREAS, the City Council of the City of Hesperia has reviewed the 2024-25 Mid-Year Budget Review information and analysis and has found it acceptable; and WHEREAS, the City Council of the City of Hesperia has reviewed and approves the budget amendments included in the 2024-25 Mid-Year Budget Review.

NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF HESPERIA AS FOLLOWS:

Section 1. That the recitals above are true and correct and adopted as findings.

Section 2. That the City Council of the City of Hesperia receives the 2024-25 Mid-Year Budget Review.

Section 3. That the City Council approves the 2024-25 Mid-Year Budget Review expenditure amendments by making appropriations for:
 Land Management System Implementation (100-19-228) $388,392  Golf Course Equipment (100-19-229) 104,000
 Purchase of Vacant Parcel (City Hall Complex) (100-19-229) 296,514  Building Inspection Services (100-29-300) 104,000
 Contract Services for Community Development (100-29-300) 105,100  CFD Annexation Services (100-29-300) 55,000
 Security Cameras/Laptops (100-51-510) 116,351
 CalRecycle and Organic Waste Grant (256-07-200/
262-07-200) 71,714
 Purchase of APN 3064-561-07 (300-29-700) 69,612
 Drainage Property Purchase (301-29-700/307-29-700) 162,000  APEX Drainage Fees Settlement (313-29-310) 1,154,140 Total (Non-ARPA Related) $2,626,823

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Resolution No. 2025-05

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 American Rescue Plan Act (ARPA) (261-19-220) $23,403,687  Interest Allocation (ARPA) (261-19-220) 1,645,884
 American Rescue Plan Act (ARPA) (100-19-228/
100-51-510) 3,738,739
 American Rescue Plan Act (ARPA) (263-29-310) 1,057,711 Total (ARPA Related) $29,846,021

Total (Non-ARPA and ARPA Related) $32,472,844

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 4th day of March 2025.

_________________________________________
Allison Lee, Mayor
ATTEST:

___________________________________
Erin Baum, Assistant City Clerk

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RESOLUTION NO. HWD 2025-01

A RESOLUTION OF THE HESPERIA WATER DISTRICT OF THE CITY OF HESPERIA, CALIFORNIA, APPROVING THE 2024-25 MID-YEAR BUDGET REVIEW AND AMENDING THE 2024-25 HESPERIA WATER DISTRICT

BUDGET TO FUND CERTAIN RELATED EXPENDITURES

WHEREAS, the Board of Directors of the Hesperia Water District adopted the Fiscal Year (FY) 2024-25 Budget on June 4, 2024; and

WHEREAS, the Board of Directors of the Hesperia Water District was presented the 2024-25 Mid-Year Budget Review by staff; and

WHEREAS, the Board of Directors of the Hesperia Water District has reviewed the 2024-25 Mid-Year Budget Review information and analysis and has found it acceptable; and

WHEREAS, the Board of Directors of the Hesperia Water District has reviewed and approves budget amendments included in the 2024-25 Mid-Year Budget Review.

NOW THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS O F THE HESPERIA WATER DISTRICT AS FOLLOWS:

Section 1. That the recitals above are true and correct and adopted as findings.

Section 2. That the Board of Directors of the Hesperia Water District receives the 2024-25 Mid-Year Budget Review.

Section 3. That the Board of Directors of the Hesperia Water District approves the 2024-25 Mid-Year Review expenditure amendments by making appropriations for:
 Permanent Water Rights Purchase (700-29-400) $526,875  Water Fund Balance Projects (700-29-400) 1,353,034 Total (Non-ARPA Related) $1,879,909
 American Rescue Plan Act (ARPA) (700-29-400) $15,888,275  American Rescue Plan Act (ARPA) (710-29-420) 2,718,962 Total (ARPA Related) $18,607,237

Total (Non-ARPA and ARPA Related) $20,487,146

Section 4. That the Board Secretary shall certify to the passage and adoption of this resolution and enter it into the book of original resolutions.

ADOPTED AND APPROVED this 4th day of March 2025.

_________________________________________
Allison Lee, Chair
ATTEST:

_______________________________
Erin Baum, Secretary to the Board

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Hesperia City CouncilMarch 4, 2025

Hesperia City Council
March 4, 2025