FISCAL YEAR 2024-25
MI
D-YEAR BUDGET REVIEW
M
arch 4, 2025
Attachment1
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
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 Budget
• Revenue: Based 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% Difference 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
*
2024-25 MID-YEAR BUDGET REVIEW REPORT
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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%
Managem
ent Services 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
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 2024-25 MID-YEAR BUDGET REVIEW REPORT
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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
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
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
2024-25 MID-YEAR BUDGET REVIEW REPORT
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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
2024-25 MID-YEAR BUDGET REVIEW REPORT
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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 $58,865 consists of loan repayments related to the Housing Rehabilitation Loan Program, the 1999 HOME repayment program, and interest-related income.
December Change From
2024-25 2024- 25 Percent 2024-25 Budget To
Budget Actual Received Revised Revised
CDBG Administration Reimbursement 1,779,362$ 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
2024-25 MID-YEAR BUDGET REVIEW REPORT
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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 Percent 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
2024-25 MID-YEAR BUDGET REVIEW REPORT
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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
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, $2.6 million has been received from the California Department of Transportation (Caltrans) for the Ranchero Road Widening Project. Reimbursements from the San Bernardino County Transit Authority (SBCTA) and other related grants are anticipated to be received by the end of FY 2024-25.
Other City Funds Revenue Comments: Many of these funds only receive interest income during the fiscal year.
December Change From
2024-
25 2024-25 Percent 2024-25 Budget To
Budget Actual Received Revised Revised
105 Pension Obligation Trust 50,000$ 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 Development 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
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.
2024-25 MID-YEAR BUDGET REVIEW REPORT
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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
2024-25 MID-YEAR BUDGET REVIEW REPORT
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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 $164,783, or 32% of the budget. This revenue is driven by the completion of development projects in areas served by Sewer. This budget revenue will continue to be monitored in the second half of the Fiscal Year as ongoing development projects progress.
Sewer Grant Reimbursement – This revenue source is associated with grant reimbursements related to sewer construction projects. The budgeted revenue will be anticipated as these projects move forward.
Investment Income – This revenue source reflects the activity of the cash investments of the City for the various funds.
The cash investments are held with the Local Agency Investment Fund (LAIF), which regularly earns interest income based on the LAIF interest rates. The FY 2024-25 Budget estimated an interest rate of 4.09%. The interest income received through December 202 4 reflected a higher interest rate of 4. 48%. Additionally, valuation adjustments are recorded based on the market value of the City’s investments at the end of the Fiscal Year. The investment income revenue of the various City funds is anticipated to meet the FY 202 4-25 Budget once the market valuation adjustments are completed at the end of the Fiscal Year.
2024-25 2024-25 P ercent
Budget December R eceived
General Fund 840,000$ 241,939$ 29%
Community 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
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 $29,556,303, of which the majority is attributed to ARPA allocation, the overall assessment of the City’s expenditures through mid-year of the fiscal year is that expenditures are expected to stay within the FY 2024-25 Amended Budget.
TOTAL EXPENDITURES BY DEPARTMENT AND PROGRAMS
The City Council Department is 71% expended through December 2024. The City Council Division has expended 37% due to budgeted items typically expended later during the fiscal year, such as annual memberships, conferences , seminars, community outreach programs , and events. The City Attorney Division is higher than expected, with 92 % expended due to an unanticipated settlement agreement payment.
The City Manager Department expenditures are on track , staying within the 202 4-25 Budget at 5 4% expended and proceeding as expected.
December Amended
2024-25 2024-25 2024 Y TD Percent
Expenditure Summary Budget Amended Expenditures Expended City Council 1,056,754$ 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 Y TD Percent
City 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 Y TD Percent
Budget Amended Expenditures Expended
City Manager 1,796,947$ 1,796,947$ 967,880$ 54% 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 Y TD Percent
Management 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 Y TD Percent
Economic 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 Hesperia 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 Y TD 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% 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 Y TD 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 Y TD 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 Y TD Percent
Budget 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 Y TD Percent
Budget Amended Expenditures Expended
Other City Related Funds 2,981,361$ 2,981,361$ 1,748,928$ 59% 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% 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 $58,716 savings will be placed in the District’s Section 115 trust to pay former Fire District personnel obligations.
December Amended
2024-25 2024-25 2024 Y TD Percent
D. S. - Sewer Operating Budget Amended Expenditures Expended 4200 Operations 5,221,733$ 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 A mended Expenditures 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% 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 Tot
als
Approved 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$
Environmental 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
2024-25 MID-YEAR BUDGET REVIEW REPORT
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PROPOSED 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 – Community 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 – Community Development Building & Safety $55,000 (100-29-300) – June 18, 2024
During the June 18 , 202 4, City Council meeting, authorization was given to engage NBS to perform CFD annexation 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 emin ent domain action necessary to acquire APN 3064-561-07 property located at the southeast corner of Poplar Court and Highway 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 budget amendment will be requested for this mid-year report.
2024-25 MID-YEAR BUDGET REVIEW 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).
2024-25 MID-YEAR BUDGET REVIEW REPORT
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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.
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.
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
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)