Stradling Yocca Carlson & Rauth
Draft of 1/20/2025
4903-4707-1616v6/022283-0620
APPENDIX A
THE CITY OF LANCASTER
4903-4707-1616v6/022283-0620
TABLE OF CONTENTS
Page
INFORMATION REGARDING THE CITY OF LANCASTER .....................................................................A-1 General...........................................................................................................................................................A-1 City Council...................................................................................................................................................A-1 City Management...........................................................................................................................................A-1 Employee and Employee Relations ...............................................................................................................A-2 Risk Management ..........................................................................................................................................A-3 CITY FINANCIAL INFORMATION ..............................................................................................................A-3 Accounting and Financial Reporting .............................................................................................................A-3 City Blended Component Units and Discrete Component Units ..................................................................A-4 Financial Policies...........................................................................................................................................A-4 Budget Procedure...........................................................................................................................................A-5 Budget Information........................................................................................................................................A-7 Capital Improvement Program ......................................................................................................................A-9 Comparative Change in Fund Balance of the City General Fund ...............................................................A-10 Comparative General Fund Balance Sheets of the City ..............................................................................A-11 General Fund Tax Revenues........................................................................................................................A-12 Sales Taxes ..................................................................................................................................................A-13 Property Taxes .............................................................................................................................................A-15 Franchise Taxes ...........................................................................................................................................A-17 Licenses and Permits ...................................................................................................................................A-18 Other Revenues............................................................................................................................................A-18 Appropriations Limit ...................................................................................................................................A-18 Indebtedness ................................................................................................................................................A-18 Retirement System.......................................................................................................................................A-20 Other Post-Employment Benefits ................................................................................................................A-26 ECONOMIC AND DEMOGRAPHIC INFORMATION ...............................................................................A-28 Population ....................................................................................................................................................A-28 Education .....................................................................................................................................................A-28 Building Activity .........................................................................................................................................A-28 Personal Income...........................................................................................................................................A-29 Employment.................................................................................................................................................A-31 Industry ........................................................................................................................................................A-32 4903-4707-1616v6/022283-0620
A-1
4903-4707-1616v6/022283-0620
APPENDIX A
INFORMATION REGARDING THE CITY OF LANCASTER
General
The City is located in the County of Los Angeles (the “County”) approximately 60 miles northeast of the City of Los Angeles in the southwest portion of the Antelope Valley between the City of Palmdale and Edwards Air Force Base. The City was incorporated on November 22, 1977 as a general law city. On April 13, 2010, the qualified electors within the City voted to convert the City to a charter city. The City maintains a council- manager form of government. The mayor and city council are elected at large for staggered four-year terms.
The City is at an elevation of 2,356 feet and experiences a dry climate. The average annual rainfall is
7.36 inches per year and the average temperature is 62 degrees.
The City provides a broad range of services, including highway, street, drainage, sewer, and infrastructure construction and maintenance; planning and zoning; and parks, recreation and cultural activities.
Sheriff’s and animal control services are provided under contract with the County, whereas fire protection, water, sanitation, school, and library are funded by special districts not under City control.
City Council
The City operates under a council-manager form of government. The Mayor and members of the City Council are elected at-large for staggered, four-year terms. As the City’s legislative and policy entity, the Mayor and four members of the City Council are responsible to the residents of the City for all municipal programs and services as well as any legislative matters concerning the City. The City Council approves and adopts ordinances, resolutions and contracts, and enacts regulations and policies. The members of the City Council and the expiration dates of their respective terms are as follows:
CITY OF LANCASTER
City Council
Name Term Expires
R. Rex Parris, Mayor April 2028
Marvin Crist, Vice Mayor April 2026
Ken Mann, Council Member April 2028
Raj Malhi, Council Member April 2026
Lauren Hughes-Leslie, Council Member April 2028
The City Council appoints the City Manager, who heads the executive branch of the government, implements City Council directives and policies and manages the administrative and operational functions through the various departmental heads. The City Council also appoints the City Attorney, as well as members of various commissions and citizen advisory committees that provide broad perspective in the decision-making process.
City Management
A summary of certain City executive staff are described below.
City Manager. Trolis Niebla, P.E., M.S. is the City Manager of the City and the Executive Director of the Authority. Mr. Niebla is a professional civil engineer with more than 20 years of experience in civil engineering related to land development, grading, drainage, hydrology, geotechnical, street design, traffic engineering, project and construction management, and building and safety review. Mr. Niebla has a bachelor’s A-2
4903-4707-1616v6/022283-0620
degree in civil engineering and a master’s degree in geotechnical engineering from the University of California, Los Angeles. Mr. Niebla started his career working for Leroy Crandall and Associates in 2000 and then moved into the public sector in 2001. Since that time, Mr. Niebla has worked for the Los Angeles County Department of Public Works, the City of Santa Clarita, and the City, previously serving as the City Engineer for the City.
Mr. Niebla assumed his current position in July 2024.
Finance Director. George Harris is the Finance Director of the City and the Treasurer of the Authority.
Mr. Harris has served as Finance Director for four local government agencies since 2008, including the City and the cities of Adelanto, Rialto and Victorville. Mr. Harris also previously served for five years as a Finance Analyst at the City of Rialto and with Willdan Financial Services (formally known as Munifinancial). Mr. Harris previously held a Series 7 and 65 securities licenses during his term as a financial advisor with Ameriprise Financial Advisors (formally known as American Express Financial Advisors). Mr. Harris also serves as the Treasurer for the California Class local government investment pool as a statewide appointed member of the California Class Board of Trustees. Mr. Harris holds a bachelor’s degree in business administration from the University of California, Riverside and a master’s degree in public administration from California Baptist University.
Employee and Employee Relations
General. As of June 30, 2025, the City had approximately 302 full-time equivalent employees. In accordance with the provisions of California Government Code Section 3500, the City participates in labor negotiations with its employee associations. The result of the negotiations processes is memorialized in memoranda of understanding reached between the City and the City employee associations. The City currently recognizes one employee organization, the California Teamsters, Public, Professional and Medical Employees Union Local 911. The majority (approximately two-thirds) of City employees are unrepresented in a variety of regular full-time and temporary part-time classifications. In particular, the City employs approximately 435 part-time employees, the majority of which are in the City’s Parks and Recreation Department. The City has not experienced a major work stoppage by City Employees in the last ten years.
The table below lists the City’s employee associations and the approximate membership as of June 30, 2025, as well as the City’s unrepresented employees:
Unit/Affiliation
Contract
Expiration
Date
Number of
Members
Teamsters Local 911 June 30, 2026 69
Unrepresented Employees N/A 233
Part-time/Temporary N/A 435
Total 737
Source: City of Lancaster.
Police Services Within the City. The City contracts with the Los Angeles County Sheriff’s Department (“LASD”) to provide police services. The contract with LASD is composed of personnel costs, pension expenses and a liability insurance component, and the City’s LASD contract costs has increased less than three percent per year on average since fiscal year 2013-14. Separate from the LASD contract, the City has developed a hybrid policing model to utilize sworn and non-sworn City staff to handle lower priority calls and provide support for LASD.
On April 3, 2024 the City filed suit against the County regarding the LASD contract. The suit is pending in Los Angeles Superior Court, Case No. 24STCV08440. The suit is brought as a putative class action on behalf of the City and all cities that contract with the County for law enforcement services (the “Contract Cities”). The City alleges the County has been overcharging Contract Cities for law enforcement services, in breach of contract and in violation of California Government Code section 51350. The suit seeks those alleged overcharges as A-3
4903-4707-1616v6/022283-0620
damages. Since the filing of the lawsuit, the parties have filed various pre-trial motions with the court and no trial date has been set.
Risk Management
The City is exposed to various risks of losses related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The City handles those risks with the purchase of commercial insurance. The City maintains liability insurance coverage up to a limit of $10,000,000 with $250,000 self-insurance retention for its general liabilities. Workers’ compensation insurance is provided by Public Risk Innovation, Solutions, and Management, with statutory limit coverage. The City also maintains property coverage including earthquake and flood.
At June 30, 2025, $ 2,874,000 had been accrued for general liability claims. This amount represents an estimate of amounts to be paid for reported claims and incurred but not yet reported claims based upon past experience, modified for current trends and information. While the ultimate amount of losses incurred through June 30, 2025, is dependent on future developments, the City’s claims administrators, and others involved with the administration of the programs, City management believes the accrual is adequate to cover such losses.
For workers’ compensation insurance, the City has transferred all risk of loss with the purchase of commercial insurance policies and has not reported any estimated loss in the financial statements.
There were no significant reductions in insurance coverage from the previous year. In addition, insurance coverage exceeded the amount of settlements for each of the past three fiscal years. For additional information with respect to the City’s risk management program as the changes in claims liability for fiscal year 2023-24 and 2024-25, see Note 12 to the City’s audited financial statements for fiscal year 2024-25 attached hereto as Appendix C.
CITY FINANCIAL INFORMATION
Accounting and Financial Reporting
The City maintains its accounting records in accordance with Generally Accepted Accounting Principles (“GAAP”) and the standards established by the Governmental Accounting Standards Board (“GASB”).
All governmental funds are accounted for using the modified accrual basis of accounting. The City’s revenues are recognized when they become measurable and available as net current assets. Expenditures are generally recognized under the modified accrual basis of accounting when the related fund liability is incurred.
The exception to this general rule is principal and interest on general long-term debt, which is recognized when due. Some debts and obligations may be payable from self-supporting enterprises or revenue sources other than property taxation. Special assessment bonds are not included in the tabulation; lease revenue obligations payable from the General Fund or equivalent sources are included.
All proprietary funds are accounted for using the accrual basis for accounting. Revenues are recognized when they are earned, and expenses are recognized when they are incurred. Receivables are recorded and determined at the time of consumption, and unbilled receivables are not recorded.
The General Fund is the general operating fund of the City and is used to account for resources and expenditures traditionally associated with general government, such as administration, public safety, library, parks, maintenance and recreation. The City expects to pay Base Rental Payments from amounts in the General Fund. Tables 1 through 4 below set forth certain historical and current fiscal year budget information for the General Fund. Information on the other governmental funds of the City as of June 30, 2024 is set forth in Appendix C.
A-4
4903-4707-1616v6/022283-0620
City Blended Component Units and Discrete Component Units General. Under GASB guidelines, component units of a primary government (i.e. the City) generally include those that are legally separate entities but raise and hold economic resources for the direct benefit of the primary government. Blended component units, although separate legal entities are, in substance, part of the government’s operations. Their funds are treated similarly to funds of the primary government (other than the General Fund). Discrete component units do not meet the definition of a blended component unit as they do not share the same governing body and do not only provide services to the primary government unit.
The City’s Component units include the Authority, the Lancaster Housing Authority, the Lancaster Community Services Foundation and the Lancaster Power Authority, are described below.
Lancaster Financing Authority. The Authority was formed for the purpose of providing, through the issuance of debt, financing necessary for various capital improvements. The City Council serves as the Board of Authority. Separate financial statements are not available for the Authority. See the caption “THE AUTHORITY” in the Official Statement.
Lancaster Housing Authority. The Lancaster Housing Authority was formed for the purpose of providing affordable, decent housing for lower income residents of the City. The Housing Authority assumed responsibilities for the prior low/moderate Housing Fund. Separate financial statements are not available for the Lancaster Housing Authority.
Lancaster Community Services Foundation. The Lancaster Community Services Foundation (was formed to provide certain community services to the residents of the City. Separate financial statements are not available for the Lancaster Community Services Foundation.
Lancaster Power Authority. The Lancaster Power Authority was formed to own and operate a municipal gas and electric utility, for the benefit of the residents of the City and customers, businesses, and property owners in the City. Separate financial statements are not available for the Lancaster Power Authority.
Financial Policies
General. The City has adopted a comprehensive set of financial policies to serve as a guideline for financial matters as further described below.
Reserve Policy. The City has adopted a reserve policy (the “Reserve Policy”) which provides guidance on the establishment and maintenance and reserve levels for operating funds, including the General Fund. With respect to the General Fund, the City’s Reserve Policy provides for the following reserve levels.
Working Capital Reserve. The Reserve Policy provides that the City will maintain a minimum fund balance of at least 10% of annual revenues in the Working Capital Fund Reserve. The Working Capital Reserve is intended to ensure sufficient resources to pay budgeted operating expenses, recognizing the timing differences between payment of expenditures and receipt of revenues. The Working Capital Fund Reserve will provide cash flow for the times of the year where cumulative expenditures exceed cumulative revenues.
Emergency Operational Reserves. The Reserve Policy provides the City will maintain a minimum fund balance of at least 15% of annual operating revenues in any given year. Funds in the Emergency Operation Reserves may be used to fund normal operations related to unforeseen catastrophic events or economic downturns that result in a loss of revenues or a significant increase in expenditures.
Emergency Response Reserves. The Reserve Policy provides the City will maintain a minimum fund balance of at least 5% of annual operating revenues in any given year for emergency response needs that may arise. This amount may be replenished either from surplus revenues that are surplus year-end end or from reimbursement from either Federal, State, or private sources.
A-5
4903-4707-1616v6/022283-0620
Business Opportunity/Pension Resiliency Reserves. The Reserve Policy provides the City will maintain a minimum fund balance of at least 10% of annual operating revenues in any given year to respond to new enterprise opportunities that may arise from time to time. This amount may be replenished either from surplus revenues that are surplus at year end or gains from enterprise opportunities. Additionally, this reserve can be used to fund any significate increases in pension costs caused by poor investment performance of the CalPERS investment pool.
The City met its Reserve Policy targets described above in fiscal year 2024-25. The City currently expects to meet such targets at the end of fiscal year 2025-26, with projected General Fund reserves at approximately $53.7 million or approximately 40% of General Fund operating revenues included in the adopted budget for fiscal year 2025-26.
Debt Management Policy. The City has adopted a debt management policy (the “Debt Management Policy”) in compliance with California Government Code Section 8855. The Debt Management Policy sets forth the purposes for which long-term debt financings may be undertaken (i.e. for projects that will provide benefit to constituents over multiple years). The Debt Management Policy provides that short-term financings may be undertaken for operational cash flow purposes and for short-lived capital projects (i.e. equipment leases).
The City’s Debt Management Policy is implemented in conjunction with annual budgeting and the City’s capital improvement program.
Investment Policy. Funds held by the City are invested in accordance with the City’s Statement of Investment Policy (the “Investment Policy”) prepared by the Treasurer as authorized by Section 53601 of the Government Code of California.
The City believes that its funds are prudently invested and that the investments therein are scheduled to mature at the times and in the amounts that are necessary to meet the City’s expenditures and other scheduled withdrawals.
The City’s statement of Investment Policy rendered to the City Council by the City Treasurer pursuant to Section 53646 of the California Government Code states that the basic premise underlying the City’s investment philosophy is to minimize credit and market risks while maintaining a competitive yield on its portfolio. Hence, safety of principal is the foremost objective of the City, followed by liquidity and yield. Under provisions of the Investment Policy, the City may invest in time deposits, bankers acceptances, money market funds, U.S. Treasury Bills and notes, governmental agency securities, repurchase agreements, reverse repurchase agreements, commercial paper, medium term notes of corporations operating within the United States rated “A” or better by S&P Global Ratings or by Moody’s Investors Services, and State Local Agency Investment Fund (“LAIF”), which is under the oversight of the State Treasurer.
The City Treasurer is required to provide a monthly report to the City Manager and the City Council showing the type of investment, date of maturity, amount invested, current market value, rate of interest, and other such information as may be required by the City Council. As of June 30, 2025, the City had an investment portfolio with a market value of approximately $119 million. As of such date, the City had invested approximately 1.67% of its investment portfolio in LAIF, 37.50% in California CLASS, 15.89% in United States Treasury Securities, 8.01% in United States Government Sponsored Agency Securities, 6.22% in Medium-Term Corporate Notes, 0.94% in Municipal Bonds, 0.13% in Certificates of Deposits, and 29.64% of its investment portfolio in cash and money markets. For additional information with respect to the City’s cash and investments, see Note 3 to the audited financial statements for fiscal year 2023-24 attached to the Official Statement as Appendix C.
Budget Procedure
December - January: The City’s operating budget preparation begins with determination of the base budget for the upcoming year. The base budget establishes the current year adopted budget service levels with updated costs, removes one-time revenue and expenses (including grants), and adds ongoing expenditures as A-6
4903-4707-1616v6/022283-0620
approved by the City Council. The capital budget preparation process begins with a department staff meeting to review and discuss potential modifications to the five-year capital plan.
In January, the Finance Department distributes the Budget Guide to departments. The Budget Guide includes budget preparation calendar, budget priorities, instructions, and sample worksheets to be used in budget development. The Finance Department prepares budget worksheets that include base budget amounts and year to date actuals for current year. Various City departments use these worksheets to submit small dollar budget requests and for submitting the current year-end estimates.
February - March: The City departments develop year-end estimates for the current fiscal year and prepare their revenue and expenditure projections for the coming fiscal year.
Early in March, capital improvement project proposals are submitted to the Finance Department, and a meeting is held to review each requested project in detail. A few weeks later, a second meeting is held to determine the highest priority projects.
The selected projects are then incorporated into the budget model, and fund balances are projected for the capital project funds. Since capital projects tend to span more than one fiscal year, the practice is to appropriate the total amount needed to fund the project (or one “self-contained” phase of the project). This ensures there is sufficient funding to complete the project the following year. Any unexpended funds at the end of the current fiscal year automatically roll over to the next fiscal year.
April: The City’s budget team and various City departments meet to review and discuss their budget submittals. The budget meetings are interactive and informative in making critical policy and funding decisions, as well as strategic and economic decisions for long-term planning.
Subsequent meetings are held to review capital outlay, capital replacement and information technology needs. The purpose of the meetings is to ensure consistency and accuracy for equipment needs, and to develop funding strategies to meet these needs.
By the end of April, rewrites of the department budgets take place as the program expenditures are brought into alignment with the available resources. During periods of abundant resources, additional improvements may be made, or additional reserves created; during periods of economic downturns, this can be a very hard, frustrating time as budget requests may be reduced substantially, depending on how they align with the overall goals, mission, and vision of the City.
May: Budget briefings are held with the City Council. Special meetings are scheduled individually with each Council member to ask questions and/ or make modifications to the budget. Based on the questions and concerns of the City Council, these meetings may be as few as one or as many as necessary.
June: The City Manager and budget team formally present the budget to the City Council at the first Council meeting in June. This is a noticed, formal hearing for the budget that allows for input from the citizens regarding the budget. Modifications may be made to the budget at this time. At the second City Council meeting in June, the City Council formally adopts the budget with a roll call vote by resolution. The budget then becomes effective at the beginning of the fiscal year, which begins July 1. It is the City’s policy to adopt the annual budget prior to the beginning of each fiscal year.
The budget is a flexible document that, once adopted, may be modified to adapt to necessary changes for efficient City operations. The City Manager has the authority to modify line items within each fund as long as the total appropriation for that fund remains the same. An increase to the total budget appropriation requires City Council approval.
A-7
4903-4707-1616v6/022283-0620
Budget Information
Fiscal Year 2025-26 Budget. The City presented the 2025-26 Adopted Budget to the City Council for adoption on June 24, 2025. The 2025-26 Adopted Budget document also includes prior year actuals for Fiscal- Year 2023-24 and estimated actual results for current fiscal year 2024-25. The City currently estimates that revenues for the fiscal year 2025-26 General Fund budget (the “2025-26 Adopted Budget”) will be approximately $139.2 million, excluding transfers in. The 2025-26 Adopted Budget reflects moderate increases in property tax and sales tax revenues. The 2025-26 Adopted Budget includes approximately $129.8 million in General Fund expenditures, which is generally in line with the 2024-25 budget, as updated in the Mid-Year Budget Amendment.
Each year, any unspent capital expenditures or contractually obligated budgeted funds in one year are rolled forward to be spent in the subsequent year. For the fiscal year 2025-26 budget, these adjustments are expected to be made in the September or October 2025 as the City will close out the previous year after receiving final accrued invoicing through June 30, 2025. It is expected at this time, that fiscal year 2025-26 will be closed under budget as there are salary savings in a number of departments, namely in the Public Safety department. [As shown in Table 2 below, adjustments to the fiscal year 2023-24 budget based on capital projects which were budgeted in fiscal year 2022-23 and not completed by June 30, 2023 resulted in an increase of approximately $39.5 million in amounts available for appropriation in fiscal Year 2023-24 and an $44.9 million in total expenditures. Such unspent capital expenditures are largely attributable to the increase in expenditures over fiscal years 2021-22 and 2022-23 due to the City’s receipt of approximately $36.3 million in funds under the American Rescue Plan Act in fiscal years 2020-21 and 2021-22.] Historical and Current Budget Information. Set forth in Table 1 below are the final General Fund budgets for fiscal years 2023-24 and 2024-25, and the actual results for fiscal years 2023-24 and 2024-25 (shown on a budgetary basis). Set forth in Table 2 are the Adopted Budget for fiscal year 2025-26 and the revised budget for fiscal year 2025-2026 through January 20, 2026. The General Fund budgets and actuals shown in Tables 1 and 2 below do not reflect the application of GAAP and therefore differ in certain respects to the audited General Fund Statement of Revenues, Expenditures and Change in Fund Balance shown in Table 3 below.
A-8
4903-4707-1616v6/022283-0620
TABLE 1
CITY OF LANCASTER
BUDGETARY COMPARISON STATEMENT
GENERAL FUND
Fiscal Year 2023-24 Fiscal Year 2024-25
Final Budget Actual Variance Final Budget Actual Variance BUDGETARY FUND BALANCE—BEGINNING
OF YEAR $119,236,452 $ 119,236,452 $113,719,835 $ 113,719,835
RESOURCES (INFLOWS)
Taxes $ 62,760,978 $ 62,760,978 $ 5,352,745 $ 65,155,676 $ 69,170,854 $ 4,015,178 Licenses and Permits 5,370,045 5,370,045 3,928,962 9,374,331 10,945,409 1,571,078 Intergovernmental 28,371,491 28,371,491 (995,580) 33,672,632 34,114,313 441,681 Charges for Services 2,564,807 2,564,807 (312,670) 3,588,524 3,325,305 (263,219) Investment Earnings 1,871,665 1,871,665 2,848,863 3,232,079 2,905,562 (326,517) Fines and Forfeitures 1,176,403 1,176,403 (579,621) 480,878 583,224 102,346 Rental Income 65,004 65,004 164,091 325,568 325,324 (244) Miscellaneous 1,664,819 1,664,819 (518,804) 311,348 2,400,572 2,089,224 Sale of Capital Assets 70,698 70,698 42,679 96,352 131,351 34,999 Lease Proceeds -- -- 43,561 - 127,565 127,565
Transfers In 10,218,835 10,218,835 394,311 11,407,992 6,379,331 (5,028,661) Amounts Available for Appropriations $114,180,245 $ 114,180,245 $10,323,037 $127,650,380 $130,989,555 $ 3,339,175
CHARGES TO APPROPRIATIONS
(OUTFLOWS)
General Government $ 22,124,372 $ 22,124,372 $ 1,253,169 $ 23,822,683 $ 23,916,479 $ (93,796) Public Safety 50,395,563 50,395,563 4,110,418 53,140,420 48,479,284 4,661,136 Community Development 11,692,674 11,692,674 2,582,016 13,319,034 10,382,904 2,936,130 Park, Recreation, and Arts 25,885,096 25,885,096 2,080,846 28,039,889 26,310,089 1,729,800 Development Services 11,807,101 11,807,101 2,480,592 10,358,680 9,468,893 889,787 Capital Outlay 36,308,552 36,308,552 20,358,481 27,395,506 14,315,065 13,080,441 Debt Service
Principal Retirement 1,500,000 1,500,000 13,227 476,155 1,425,420 (949,265) Interest and Fiscal Charges -- -- (141,665) - 468,315 (468,315) Transfers Out 2,784,419 2,784,419 (259,206) 7,923,825 5,876,194 2,047,631 Total Charges to Appropriations $162,497,777 $ 162,497,777 $ 32,477,878 $164,476,192 $ 140,642,643 $23,833,549 BUDGETARY FUND BALANCE –END OF YEAR $ 70,918,920 $ 113,719,835 $ 42,800,915 $76,894,023 $ 104,066,747 $27,172,724 Source: City of Lancaster Annual Comprehensive Financial Reports for fiscal years 2023-24 and 2024-25.
A-9
4903-4707-1616v6/022283-0620
TABLE 2
CITY OF LANCASTER
BUDGETARY COMPARISON STATEMENT
GENERAL FUND BUDGETS
FISCAL YEAR 2025-26
2025-26
Adopted Budget(1)
2025-26
Amended
Budget(2)
BUDGETARY FUND BALANCE, JULY 1 $ 67,994,739 $ 67,994,739
RESOURCES (INFLOWS)
Taxes $ 68,704,518 $ 68,704,518
Intergovernmental 50,027,575 49,999,675
Licenses and permits 8,362,097 8,362,097
Charges for Services 9,066,614 9,042,964
Fines and Forfeitures 926,000 926,000
Investment Earnings 3,400,000 3,400,000
Rental Income 574,734 571,584
Miscellaneous 917,182 908,682
Total Revenues $ 141,978,720 $ 141,915,520
Transfers in -- --
Amounts Available for Appropriations $ 141,978,720 $ 141,915,520
CHARGES TO APPROPRIATIONS (OUTFLOWS)
General Government $ 30,434,427 $ 31,756,681
Public Safety 52,997,193 52,691,811
Community Development 10,992,615 7,417,985
Parks, Recreation and Arts 29,550,637 28,640,790
Development Services 12,897,304 11,902,022
Capital Outlay 2,542,589 2,542,589
Debt Service 1,091,381 1,091,381
Transfers Out 7,070,167 7,070,167
Total $ 147,576,313 $ 143,113,426
Net Available Resources $ 62,397,146 $ 66,796,833
(1) Represents the adopted fiscal year 2025-26 budget approved by the City Council on June 4, 2025. (2) Represents adjustments made to the fiscal year 2025-26 budget through January 20, 2026.
Source: City of Lancaster.
Capital Improvement Program
The City adopts an annual capital improvement program (“CIP”) that covers the current and next succeeding four fiscal years and serves as the City’s short and long-term plan for capital projects. Development of the CIP involves the Public Works department, input from other department heads and the City Manager in connection with the development of the City’s annual budget. The City’s adopted fiscal year 2025-26 Budget includes approximately $3.4 million in new capital projects, approximately $2.3 million of which is expected to be funded from the City’s General Fund. The projects include upgrades and/or new construction of general City facilities, park improvements, storm drain improvements, sanitary sewer projects and street and traffic projects.
A-10
4903-4707-1616v6/022283-0620
Comparative Change in Fund Balance of the City General Fund The table below presents the City’s audited General Fund Statement of Revenues, Expenditures and Change in Fund Balance for fiscal years 2020-21 through 2023-24 and unaudited results for fiscal year 2024-25.
TABLE 3
CITY OF LANCASTER GENERAL FUND STATEMENT OF
REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCE
2020-21 2021-22 2022-23 2023-24 2024-25(11)
REVENUES
Taxes(1) $ 42,460,689 $ 63,086,138 $ 62,519,614 $ 68,113,723 $ 69,170,854 Licenses and Permits 7,332,396 7,472,997 7,876,861 9,299,007 10,945,409 Intergovernmental(2) 40,330,617 55,404,803 29,158,404 27,375,911 34,114,313 Charges for Services 794,723 2,434,116 3,534,972 2,252,137 3,325,305 Investment Earnings 389,212 (1,625,182) 3,059,418 4,720,528 2,905,562 Fines and Forfeitures 535,740 758,010 643,406 596,782 583,224 Rental Income -- 25,613 -- 229,095 580,745
Miscellaneous(3) 6,934,303 9,466,070 5,610,062 1,146,015 2,400,572 Total Revenues $ 98,777,680 $ 137,022,565 $ 112,402,737 $ 113,733,198 $ 124,351,308
EXPENDITURES
Current
General Government $ 28,827,512 $ 32,756,057 $ 35,243,477 $ 20,871,203 $ 23,916,479 Public Safety(4) 32,319,382 35,083,490 38,974,589 46,285,145 48,479,284 Community Development(5) -- -- -- 9,110,658 10,382,904
Parks, Recreation, and Arts(6) 12,801,400 20,747,670 22,550,970 23,804,250 26,310,089 Development Services(7) 7,795,380 19,731,144 16,965,701 9,326,509 9,468,893 Capital Outlay 273,583 1,764,793 9,258,605 15,950,071 14,315,065 Debt Service
Principal Retirement 568,876 504,964 2,579,351 1,486,773 1,425,420 Interest and Fiscal Charges 64,606 49,280 231,434 141,665 468,315 Total Expenditures $ 82,650,739 $ 110,637,398 $ 125,804,127 $ 126,976,274 $ 134,766,449 EXCESS OF REVENUE OVER (UNDER) EXPENDITURES $ 16,126,941 $ 26,385,167 $ (13,401,390) $ (13,243,076) $ (10,415,141)
OTHER FINANCING SOURCES (USES)
Sale of Capital Assets $ 40,457 $ 576,405 $ 256,272 $ 113,377 $ 131,351 Lease Proceeds -- 62,519 888,875 43,561 127,565
Transfers in(8) 8,681,059 9,440,627 11,746,051 10,613,146 6,379,331 Transfers out(9) (1,142,756) (758,771) (5,164,867) (3,043,625) (5,876,194) Total Other Financing Sources (Uses) $ 7,578,760 $ 9,320,780 $ 7,726,331 $ 7,726,459 $ 762,053 NET CHANGE IN FUND BALANCES $ 23,705,701 $ 35,705,947 $ (5,675,059) $ (5,516,617) $ (9,653,088) Fund Balance (Deficit) – Beginning of Year, As Restated(10) $ 62,499,863 $ 86,205,564 $ 124,911,511 $ 119,236,452 $ 113,719,835 FUND BALANCES (DEFICIT) –END OF YEAR $ 86,205,564 $ 121,911,511 $ 119,236,452 $ 113,719,835 $ 104,066,747 (1) Includes receipts from property taxes, Measure LC sales tax, franchise taxes, transient occupancy taxes and other miscellaneous taxes. Fiscal year 2021-22 was the first full year the City collected the Measure LC sales tax, which was approved by the voters in November 2020 and authorized an additional 0.75% sales tax within the City. See the captions “—General Fund Tax Revenues” and “—Sales Taxes.” (2) Includes the City’s share of the sales and use tax distributed by the State and Measure YM sales tax, which was approved by the voters on November 5, 2024 and was first collected beginning April 1, 2025. See the captions “—General Fund Tax Revenues” and “—Sales Taxes.” Increases in fiscal years 2020-21 and 2021-22 due to the receipt of $18,170,280.50 and $18,170,280.50, respectively, in funding under the American Rescue Plan Act.
(3) Includes election fees, city property sales, interest income, funds from Internal Service Funds and insurance reimbursements. Increase in fiscal year 2021-22 due to the addition of Internal Service Funds which consist of allocated costs from other City funds which are reimbursed to the General Fund.
(4) Consists of costs of Sheriff’s and animal control services are provided under contract with the County. (5) Prior to fiscal year 2023-24, amounts for Community Development were included in Development Services. (6) Increases in fiscal years 2021-22 and 2022-23 due to increased programs and community services being budgeted, which costs were generally funded from the proceeds of the Measure LC sales tax.
(7) Increases in fiscal years 2021-22 and 2022-23 due to increased services and programs being budgeted, which costs were generally funded from the proceeds of the Measure LC sales tax
(8) Transfers in represents transfers from other Governmental Funds, Special Revenue Funds and Enterprise Funds for administrative and retiree health benefit costs incurred.
(9) Transfers out represents costs to cover Development Services-Engineering Fund and Recycled Water Fund operating costs and to cover ineligible grant expenditures.
(10) Beginning fund balance in fiscal year 2020-21 restated due to the implementation of GASB Statement No. 84, Fiduciary Activities. Beginning fund balance in fiscal year 2022-23 restated due to the reclassification of a land acquisition in the General Fund rather tan for the Lancaster Housing Authority.
(11) Represents unaudited results for fiscal year 2024-25.
Source: City of Lancaster Annual Comprehensive Financial Reports for fiscal years 2020-21 through 2023-24; City of Lancaster for fiscal year 2024-25.
A-11
4903-4707-1616v6/022283-0620
Comparative General Fund Balance Sheets of the City
The table below presents the City’s audited General Fund Balance Sheets for fiscal years 2020-21 through 2023-24 and unaudited results for fiscal year 2024-25.
TABLE 4
CITY OF LANCASTER
GENERAL FUND BALANCE SHEETS
FIVE YEAR COMPARISON
2020-21 2021-22 2022-23 2023-24 2024-25(8)
ASSETS
Pooled Cash and Investments(1) $ 11,647,352 $ 28,526,918 $ 61,567,028 $ 16,563,224 $ -- Receivables:
Accounts 2,619,540 2,247,598 4,933,467 1,854,112 1,729,471 Taxes 9,680,642 9,438,627 10,401,996 8,910,360 15,248,180 Accrued Interest 190,418 234,140 530,373 422,783 356,057 Leases -- 974,371 700,774 1,059,701 1,064,719
Due from Other Governments 10,688,520 10,717 314,409 1,978,765 22,552 Notes and Loans, Net 820,439 1,039,376 1,048,279 1,080,451 1,048,553 Prepaid Items 1,050 507,965 978,157 4,590,099 2,146,832 Due from Other Funds(2) 35,624,019 66,812,094 43,259,191 71,348,236 82,289,761 Inventories 26,416 58,392 21,915 56,458 43,898
Advances to Successor Agency 43,442,156 44,210,447 44,978,738 45,747,029 46,515,321 Total Assets $114,740,552 $154,060,645 $168,734,327 $153,611,218 $150,465,344
LIABILITIES
Accounts Payable(3) $ 7,666,617 $ 7,658,141 $ 21,416,276 $ 13,906,722 $ 12,662,868 Accrued Liabilities 1,168,155 2,237,190 2,351,961 2,337,868 2,681,561 Unearned Revenues 71,601 95,006 77,909 -- --
Deposits Payable 1,263,926 2,075,910 1,812,495 1,669,044 1,636,747 Retentions Payable -- -- -- 322,453 65,897
Total Liabilities $ 10,170,301 $ 12,066,247 $ 25,658,641 $ 18,236,087 $ 24,166,918
DEFERRED INFLOWS OF RESOURCES
Deferred Inflows – Leases(4) $ -- $ 945,776 $ 664,561 $ 1,021,500 $ 1,013,519 Unavailable Revenues 18,364,687 19,137,111 23,174,673 20,633,796 21,153,399 Total Deferred Inflows of Resources $ 18,364,687 $ 20,082,887 $ 23,839,234 $ 21,655,296 $ 22,166,918
FUND BALANCES
Nonspendable(5) $ 26,457,074 $ 27,214,902 $ 27,657,520 $ 31,336,177 $ 28,848,452 Committed(6) 8,083,847 47,957,898 49,046,805 51,150,088 51,150,088 Assigned(7) 14,132,994 14,132,994 9,418,787 8,520,337 10,855,694 Unassigned 37,531,649 32,605,717 33,113,340 22,713,233 13,212,513 Total Fund Balances (Deficit) $ 86,205,564 $121,911,511 $119,236,452 $113,719,835 $104,066,747 Total Liabilities, Deferred Inflows of Resources,
and Fund Balances $114,740,552 $154,060,645 $168,734,327 $153,611,218 $150,465,344 (1) On June 30, 2025, the City of Lancaster’s General Fund Pooled Cash and Investments balance was $0.00. This resulted from the allocation of pooled cash resources to other governmental funds that had deficit cash balances at fiscal year-end. Accordingly, the City’s total pooled cash and investments balance of $115,880,963 was fully allocated among the Special Revenue Funds, Debt Service Funds, and other Governmental Funds.
(2) Increases in fiscal years 2020-21 through 2022-23 due to $30.4 million receivable from multiple funds for temporary cash balance deficit General Fund as a result of power purchases for which the General Fund is reimbursed. (3) Increase in fiscal year 2022-23 due to advance of $12,455,458 to Waste Management for disposal fees associated with property taxes. (4) Effective July 1, 2021, the City implemented GASB Statement No. 87, Leases. (5) Nonspendable fund balance includes amounts that cannot be spent because they are either (a) not in spendable form or (b) legally or contractually required to be maintained intact. Also includes long-term portion of notes and loans receivable with no constraints on how the eventual proceeds can be spent.
(6) Committed fund balance includes amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the government’s highest authority, the City Council. The formal action required to be taken to establish, modify, or rescind a fund balance commitment is a resolution. Consists of the City’s Contingency Reserve, which was revised beginning in fiscal year 2021-22. See the caption “—Financial Policies.”
(7) Assigned fund balance includes amounts that are constrained by the City’s intent to be used for specific purposes but are neither restricted nor committed. Consists of assigned balances for employee benefits, legal claims, capital projects, and various services. (8) Represents unaudited results for fiscal year 2024-25.
Source: City of Lancaster Annual Comprehensive Financial Reports for fiscal years 2020-21 through 2023-24; City of Lancaster for fiscal year 2024-25.
A-12
4903-4707-1616v6/022283-0620
General Fund Tax Revenues
The City derives its General Fund tax revenues from a variety of sources including ad valorem property taxes, sales taxes, franchise taxes, transient occupancy tax and other miscellaneous taxes. The City’s total General Fund tax revenues for the past five fiscal years are set forth below.
TABLE 5
CITY OF LANCASTER
GENERAL FUND TAX REVENUES BY SOURCE
(AMOUNTS IN THOUSANDS)
2020-21 2021-22 2022-23(1) 2023-24 2024-25(9)
Revenue Category
Property Taxes(2) $ 26,148 $ 27,204 $ 29,762 $ 32,482 $ 35,564 Sales Taxes(3) 26,735 28,326 27,547 26,004 27,316
Measure LC(4) 5,071 22,625 21,682 21,254 21,259
Measure YM(5) -- -- -- -- 5,175
Franchise Taxes(6) 7,732 9,262 7,451 11,491 9,499
Transient Occupancy Tax(7) 2,013 2,709 2,676 2,295 2,197 Other Taxes(8) 2,345 2,242 1,989 2,253 922
Total $ 70,044 $ 92,367 $ 91,109 $ 95,779 $ 101,932
(1) The City’s audited financial statements for fiscal year 2022-23 include approximately $3.2 million in property taxes which represent a GASB Statement No. 34 adjustment for deferred, unavailable revenues. Amounts shown in this Table 5 represent property tax receipts in fiscal year 2022-23.
(2) See “—Property Taxes” below.
(3) The general sales tax collected and distributed by the California Department of Tax and Fee Administration is categorized in the City’s audited financial statements, and in Tables 1 and 3 herein, as an intergovernmental revenue. See also the caption “—Sales Taxes.”
(4) The Measure LC sales tax is categorized in the City’s audited financial statements, and in Tables 1 and 3 herein, as a tax revenue. Measure LC was approved by the voters on November 3, 2020, and took effect on April 1, 2021; therefore, fiscal year 2021-22 was the first full year in which the Measure LC sales tax was collected. See also the caption “—Sales Taxes.” (5) The Measure YM sales tax is categorized in the City’s audited financial statements, and in Tables 1 and 3 herein, as an intergovernmental revenue. Measure YM was approved by the voters on November 5, 2024 and took effect on April 1, 2025; therefore, fiscal year 2025-26 will be the first full year in which the Measure YM sales tax will be collected. See also the caption “—Sales Taxes.”
(6) Decrease in franchise taxes due to a payment from Waste Management for fiscal year 2022-23 which was made after June 30, 2023.
(7) See the caption “—Other Revenues—Transient Occupancy Tax.” (8) Other taxes consist of contract impact fees charged to Waste Management, property transfer tax, vehicle in-lieu fees, business license taxes, and other miscellaneous taxes.
(9) Represents unaudited results for fiscal year 2024-25.
Source: City of Lancaster.
A-13
4903-4707-1616v6/022283-0620
The following table shows the source of General Fund property taxes for the past five fiscal years.
TABLE 6
CITY OF LANCASTER
GENERAL FUND PROPERTY TAX REVENUES BY SOURCE
(AMOUNTS IN THOUSANDS)
2020-21 2021-22 2022-23(2) 2023-24 2024-25(4)
Revenue Category(1)
Ad Valorem(3) $ 9,603 $ 9,711 $ 10,692 $ 12,370 $ 14,342 VLF In-Lieu Property Taxes 16,545 17,492 19,070 20,112 21,222 Total $ 26,148 $ 27,204 $ 29,762 $ 32,482 $ 35,564
(1) See the caption “—Property Taxes” for a description of each of the different sources of General Fund property tax revenues. (2) The City’s audited financial statements for fiscal year 2022-23 attached hereto as Appendix C include approximately $3.2 million in property taxes which represent a GASB Statement No. 34 adjustment for deferred, unavailable revenues.
Amounts shown in Table 6 represent property tax receipts in fiscal year 2022-23. (3) Includes amounts representing previous redevelopment tax increment following the statutory dissolution (effective February 1, 2012) of all redevelopment agencies in the State, including the former Lancaster Redevelopment Agency. See the caption “—Property Taxes.”
(4) Represents unaudited results for fiscal year 2024-25.
Source: City of Lancaster.
Sales Taxes
A sales tax is imposed on retail sales or consumption of personal property. The basic sales tax rate is established by the State Legislature, and local overrides may be approved by voters. Sales tax is collected and distributed by the California Department of Tax and Fee Administration. As of July 2, 1990, the City was authorized to receive an amount equal to one percent (1.00%) of taxable sales within its jurisdiction.
On November 3, 2020, voters in the City approved “Measure LC,” which established a ¾-cent sales tax (increasing the total sales tax rate in the City from 9.5% to 10.25%) within the incorporated territory of the City.
Measure LC is intended to protect the City’s long-term financial stability, maintain essential city services, repair streets/potholes, address homelessness, maintain 911 emergency response, keep public areas safe/clean for all, retain local businesses, protect local water sources, maintain veterans, senior, mental health, community programs. Measure LC does not have a termination date; however, the measure may be terminated by lawful vote of the electorate or as required or authorized by law. The measure took effect on April 1, 2021. While the Measure LC sales tax revenues are available to the General Fund for general City projects and services, the City’s current practice for budgetary purposes is to separate such portion of the sales tax from the General Fund.
On November 5, 2024, voters in the City approved “Measure YM,” which authorized the City to increase its transactions and use tax rate to the maximum level permitted by State law. Assembly Bill 2443 authorizes the City and the Cities of Palmdale and Victorville to impose a transactions and use tax, at a rate of up to one percent, for the support of countywide transportation programs or general services. This authority applies even if the additional tax, when combined with other local transactions and use taxes, exceeds the statewide combined rate limit of 2 percent, provided certain statutory requirements are met. Assembly Bill 2443 further provides that a transactions and use tax imposed pursuant to this authority is not counted toward the two percent combined rate limit. On December 10, 2024, the City Council adopted Resolution No. 24-64 and No. 24-65, approving the implementation of the maximum tax rate authorized by Measure YM. As a result, a total transactions and use tax rate increase of 1.25 percent will be implemented in three phases: 0.75 percent effective April 1, 2025; 0.25 percent effective January 1, 2028; and 0.25 percent effective January 1, 2029. Measure YM does not have a termination date; however, the measure may be terminated by lawful vote of the electorate or as required or authorized by law.
During fiscal year 2023-24, sales tax receipts of approximately $47.7 million (which includes approximately $21.3 million of revenues from the Measure LC Sales Tax) provided the largest General Fund A-14
4903-4707-1616v6/022283-0620
revenue source for the City, contributing approximately 42.0% of total General Fund revenues. The City estimates sales tax receipts of approximately $48.6 million in fiscal year 2024-25, which includes approximately $21.2 million of revenues from Measure LC Sales Tax and $5.1 million of revenues from Measure YM. The City has budgeted for sales tax receipts of approximately $48.7 million in fiscal year 2025-26, which includes approximately $21.8 million of revenues from Measure LC Sales Tax.
The following table shows the General Fund sales tax revenues from the City’s share of the basic sales tax, Measure LC Sales Tax revenues, Measure YM Sales Tax revenues and total sales tax revenues since the
0.75% increase went into effect on April 1, 2021.
TABLE 7
CITY OF LANCASTER
SALES TAX REVENUES
Fiscal Year
General Sales
Tax Revenues
Measure LC
Sales Tax
Revenues
Measure YM
Sales Tax
Revenues
Total Sales Tax
Revenues
2020-21 $26,734,737 $ 5,070,608 $ -- $ 31,805,345
2021-22 28,325,781 22,625,166 -- 50,950,947
2022-23 27,547,477 21,682,349 -- 49,229,826
2023-24 26,222,177 21,254,496 -- 47,746,673
2024-25(1) 27,316,141 21,259,056 5,175,312 53,750,510
2025-26(2) 26,820,650 21,833,000 21,833,000 70,486,650
(1) Represents unaudited results for fiscal year 2024-25. (2) Represents budgeted amounts for fiscal year 2025-26.
Source: City of Lancaster.
The table below provides the top twenty-five sales taxpayers (in alphabetical order) within the City as of October 31, 2025. The top 25 sales tax generators produced approximately 42% of total sales tax revenues for the twelve month period ending on October 31, 2025.
TABLE 8
CITY OF LANCASTER
TOP 25 SALES TAX GENERATORS
(in alphabetical order)
Property Owner
1. 7 Eleven 14. Michaels Distribution Center
2. Antelope Valley Chevrolet 15. Quinn CAT Company
3. Arco 16. Ride Coach & Bus
4. Chevron 17. Ride Mobility
5. Circle K 18. Ross
6. Costco 19. Stater Bros
7. Diamond Ford 20. Subaru Antelope Valley
8. EquipmentShare 21. Target
9. Home Depot 22. Toyota of Lancaster
10. Honda Lancaster 23. United Rental
11. Hunter Dodge Chrysler Jeep 24. Vallarta Supermarket
12. Hughes Water & Sewer 25. Walmart Supercenter
13. Lowes
Source: City of Lancaster.
A-15
4903-4707-1616v6/022283-0620
The table below summarizes the annual volume of taxable transactions within the City for the years 2020 through 2024.
TABLE 9
CITY OF LANCASTER
TOTAL TAXABLE TRANSACTIONS
(Dollars in Thousands)
Year
Number
of Outlets
Total Taxable
Transactions Amount
2020 4,114 $1,862,311
2021 3,982 2,241,539
2022 4,189 2,338,091
2023 3,929 2,207,892
2024 3,971 2,161,947
Source: Taxable Sales in California, California Department of Tax and Fee Administration.
Property Taxes
During fiscal year 2023-24, property tax receipts of approximately $32.5 million provided the second largest tax revenue source of the City, contributing approximately 28.6% of total General Fund revenues. The City estimates property tax receipts of approximately $35.6 million for fiscal year 2024-25 and has budgeted for property tax receipts of approximately $34.4 million for fiscal year 2025-26. The City also received a portion of Department of Motor Vehicles license fees (“VLF”) collected Statewide. Several years ago, the State-wide VLF was reduced by approximately two-thirds. However, the State continued to remit to cities and counties the same amount that those local agencies would have received if the VLF had not been reduced, known as the “VLF backfill.” The State VLF backfill was phased out, and as of Fiscal Year 2011-12, all of the VLF is now received through an in-lieu payment from State property tax revenues.
Under current State law, a portion of property tax revenues in each county are transferred to a county account known as the Educational Revenue Augmentation Fund (“ERAF”) to offset a portion of the State’s obligation to fund local K-14 school districts and community college districts. In certain counties, including the County, amounts in the ERAF in each fiscal year have historically exceeded the amount of the State’s obligation to fund such local educational agencies. Such excess amounts are commonly referred to as “excess ERAF.” Under current State law, a portion of the excess ERAF are returned to local agencies, such as the City.
In California, property which is subject to ad valorem taxes is classified as “secured” or “unsecured.” The secured classification includes property on which any property tax levied by a county becomes a lien on that property. A tax levied on unsecured property does not become a lien against the taxed unsecured property, but may become a lien on certain other property owned by the taxpayer. Every tax which becomes a lien on secured property has priority over all other liens, arising pursuant to State Law, on the secured property, regardless of the time of the creation of other liens. The valuation of property is determined as of January 1 each year, and installments of taxes levied upon secured property are due November 1 and February 1 and become delinquent on the following December 10 and April 10, respectively. Taxes on unsecured property are due July 1, and become delinquent August 31.
Secured and unsecured properties are entered separately on the assessment roll maintained by the county assessor. The method of collecting delinquent taxes is substantially different for the two classifications of property. The exclusive means of enforcing the payment of delinquent taxes with respect to property on the secured roll is the sale of the property securing the taxes of the State for the amount of taxes that are delinquent.
The taxing authority has four methods of collecting unsecured personal property taxes: (1) a civil action against the taxpayer; (2) filing a certificate in the office of the county clerk specifying certain facts in order to obtain a judgment lien on certain property of the taxpayer; (3) filing a certificate of delinquency for record in the County A-16
4903-4707-1616v6/022283-0620
Recorder’s Office in order to obtain a lien on certain property of the taxpayer, and (4) seizure and sale of personal property, improvement or possessory interest belonging or taxable to the assessee.
A ten percent penalty is added to delinquent taxes which have been levied with respect to property on the secured roll. In addition, beginning on the July 1 following a delinquency, interest begins accruing at the rate of 1 1/2% per month on the amount delinquent. Such property may thereafter be redeemed by the payment of the delinquent taxes and the ten percent penalty, plus interest at the rate of 1 1/2% per month to the time of redemption. If taxes are unpaid for a period of five years or more, the property is deeded to the State and then is subject to sale by the county tax collector. A ten percent penalty also applies to the delinquent taxes or property on the unsecured roll, and further, an additional penalty of 1 1/2% per month accrues with respect to such taxes beginning on the varying dates related to the tax billing date.
Legislation enacted in 1984 (Section 75 et seq. of the Revenue and Taxation Code of the State of California), provides for the supplemental assignment and taxation of property as of the occurrence of a change in ownership or completion of new construction. Previously, statutes enabled the assessment of such changes only as of the next tax lien date following the change and thus delayed the realization of increased property taxes from the new assessment for up to 14 months. Collection of taxes based on supplemental assessments occurs throughout the year. Taxes due are prorated according to the amount of time remaining in the tax year, with the exception of tax bills dated January 1 through May 31, which are calculated on the basis of the remainder of the current fiscal year and the full 12 months of the next fiscal year.
The City also receives certain property tax amounts representing previous redevelopment tax increment following the statutory dissolution (effective February 1, 2012) of all redevelopment agencies in the State, including the former Lancaster Redevelopment Agency. Residual amounts of incremental redevelopment project area property taxes, after allocations for tax sharing and enforceable obligation of the former Lancaster Redevelopment Agency and the Successor Agency to the Lancaster Redevelopment Agency and administrative costs of the County and the Successor Agency are distributed to the City in proportion to the City’s share of property tax revenues in the tax rate are for the applicable fiscal year. As enforceable obligations of the former Lancaster Redevelopment Agency and the Successor Agency are paid and retired, this residual amount distributed to the City is expected to increase over time.
The table below sets forth the secured and unsecured assessed valuations for property in the City for the fiscal years 2016-17 through 2025-26.
TABLE 10
CITY OF LANCASTER
ASSESSED VALUATION
FISCAL YEARS 2016-17 THROUGH 2025-26
Fiscal Year Local Secured Utility Unsecured Total
2016-17 $10,369,851,928 $2,485,723 $308,531,016 $10,680,868,667 2017-18 10,879,417,629 2,115,850 281,909,209 11,163,442,688 2018-19 11,518,606,212 1,440,455 279,144,753 11,799,191,420 2019-20 12,356,881,324 1,440,659 358,418,903 12,716,740,886 2020-21 12,914,281,003 1,438,981 407,473,164 13,323,193,148 2021-22 13,708,230,996 1,233,892 376,652,237 14,086,117,125 2022-23 14,926,260,276 1,229,595 429,505,413 15,356,995,284 2023-24 15,729,624,396 1,226,867 464,649,571 16,195,500,834 2024-25 16,604,264,691 1,223,997 484,389,663 17,089,878,351 2025-26 17,417,562,869 1,525,576 495,262,815 17,914,351,260 Source: California Municipal Statistics, Inc.
A-17
4903-4707-1616v6/022283-0620
The twenty largest local secured property taxpayers in the City for fiscal year 2025-26 based on total assessed valuation, the land use and the percentage of the City’s total assessed value attributable to each are shown in the below table. The information in Table 11 has been obtained from third-party sources and is included for general information purposes only. The City has not verified the information in Table 11 and does not guarantee the accuracy of such information.
TABLE 11
CITY OF LANCASTER
LARGEST 2025-26 LOCAL SECURED TAXPAYERS
Property
Owner
Primary
Land Use
2025-26
Assessed Valuation
Percentage
of Total(1)
1. Westcore Bravo Lancaster LLC Industrial $ 104,000,080 0.60%
2. AG Cordova Park Owner LP Apartments 91,332,246 0.52
3. Rami Darghalli Commercial and Residential 79,592,548 0.46
4. Granada Villas REI LLC Apartments 71,583,625 0.41
5. AG Sienna Heights Owner LP Apartments 66,498,764 0.38
6. B33 Valley Central II LLC Shopping Center 64,763,856 0.37
7. Wal Mart Real Estate Business Trust Shopping Center 64,228,221 0.37
8. Vereit Real Estate LP Industrial 51,372,983 0.29
9. Maisons at 40th LP Residential Properties 50,232,611 0.29
10. RIII 1SC LA II LLC Residential Properties 45,847,182 0.26
11. Grandis Land Holding LLC Undeveloped 43,785,580 0.25
12. BYD Coach and Bus LLC Industrial 43,427,266 0.25
13. AG Sunset Ridge Owner LP Apartments 36,090,318 0.21
14. CP Antelope Shops LLC Shopping Center 31,926,638 0.18
15. Woodlands West REI LLC Apartments 31,539,126 0.18
16. Eretz Lancaster Properties LLC Skilled Nursing Center 29,426,940 0.17
17. Lancaster Realty Holdings LLC Apartments 29,047,815 0.17
18. Sygma Network Inc. Industrial 26,991,814 0.15
19. Amazon.com Services LLC Industrial 26,741,400 0.15
20. Charter Communications Communications 26,724,227 0.15 Total $ 1,015,153,240 5.83%
(1) 2025-26 Local Secured Assessed Valuation: $17,417,562,869.
Source: California Municipal Statistics, Inc.
Set forth in the table below are property tax collections (including amounts that do not constitute General Fund moneys) and delinquencies in the City as of June 30 for the last five Fiscal Years.
TABLE 12
CITY OF LANCASTER
PROPERTY TAX LEVIES AND COLLECTIONS
Fiscal
Year
Secured
Tax Charge
Amount
Delinquent June 30
Percent
Delinquent June 30
2020-21 $ 9,492,363.27 $ 162,964.16 1.72%
2021-22 9,970,257.24 156,693.33 1.57
2022-23 10,738,764.92 168,981.13 1.57
2023-24 11,311,622.21 200,164.62 1.77
2024-25 11,901,473.29 300,418.86 2.52
Source: California Municipal Statistics, Inc.
Franchise Taxes
The City imposes franchise taxes on businesses for the privilege of operating in public rights-of- way within the City, including franchise taxes for natural gas, electricity, cable television and solid waste A-18
4903-4707-1616v6/022283-0620
franchisees. Franchise taxes range from 2% to 17% and the businesses include Southern California Edison, The Gas Company, Time Warner (cable), AT&T U-Verse, Verizon and Waste Management. In fiscal year 2023-24, the City collected approximately $11.5 million in franchise taxes, providing approximately 10.1% of total General Fund revenues. Franchise taxes of approximately $9.5 million are currently estimated to be received during fiscal year 2024-25 and the City has budgeted for approximately $9.3 million for fiscal year 2025-26.
Licenses and Permits
The City collects fees for licenses and permits provided by the City, including, but not limited to, regulatory permits, conditional use permits, development permits, plan check and permitting, building permits and inspections and other development fees. In fiscal year 2023-24, the City collected approximately $9.3 million, providing approximately 8.2% of total General Fund revenues. License and permit fees of approximately $10.9 million are currently estimated to be received during fiscal year 2024-25 and the City has budgeted for approximately $8.4 million of license and permit fees for fiscal year 2025-26.
Other Revenues
Charges for Services. In fiscal year 2023-24, charges of approximately $2.5 million (approximately
2.0% of total General Fund revenues) were collected for services including paramedic and basic life support service fees, certain police service fees, charges for recreational classes, day care, and library programs, as well as the General Fund administration fee charged to other funds. Charges for services are currently estimated at approximately $3.3 million in fiscal year 2024-25 and the City has budgeted for approximately $2.3 million in charges for services for fiscal year 2025-26.
Transient Occupancy Tax. A transient occupancy tax of 7.00% is imposed on persons staying 30 days or less in a hotel within the City. In fiscal year 2023-24, transient occupancy tax receipts were approximately $2.3 million, providing approximately 2.0% of total General Fund revenues. Transient occupancy tax receipts are currently estimated at approximately $2.2 million in fiscal year 2024-25 and the City has budgeted for approximately $2.54 million in transient occupancy tax receipts for fiscal year 2025-26.
Miscellaneous Other Revenues. Other sources of revenue for the City include investment earnings, fines and forfeitures, grants and other miscellaneous revenue sources.
Appropriations Limit
Section 7910 of the Government Code of the State of California requires the City to adopt a formal appropriations limit for each fiscal year. The City’s appropriations limit for Fiscal Year 2025-26 is $280,780,481. Based on this, the appropriations limit is not expected to have any impact on the ability of the City to continue to budget and appropriate the Base Rental Payments as required by the Lease Agreement.
Indebtedness
Long-Term General Fund Debt.
Lancaster Financing Authority 2018 Lease Revenue Bonds. The Lancaster Financing Authority Lease Revenue Bonds, Series 2018 (Public Improvements Project) (the “2018 Bonds”) were issued on December 1, 2018 in the initial aggregate principal amount of $14,955,000 for the purpose of financing improvements to City facilities. The 2018 Bonds bear interest at rates from 3% to 4% and mature on May 1, 2048. The 2018 Bonds are payable from rental payments made by the City to the Authority. As of June 30, 2025, the 2018 Bonds were outstanding in the aggregate principal amount of $12,630,000.
Lancaster Power Authority 2021 Bonds. The Lancaster Power Authority Taxable Revenue Refunding Bonds, Series 2021 (Solar Renewable Energy Program) (the “2021 Bonds”) were issued on October 12, 2021 in A-19
4903-4707-1616v6/022283-0620
the initial aggregate principal amount of $19,305,000 for the purpose of refinancing the cost of prepaying a specified supply of electricity. The 2021 Bonds bear interest at rates from 0.417% to 2.908% and mature on November 1, 2036. The 2021 Bonds are payable from certain solar revenues and, to the extent such solar revenues are insufficient to pay debt service on the 2021 Bonds, from rental payments made by the City to the Lancaster Power Authority. As of June 30, 2025, the 2021 Bonds were outstanding in the aggregate principal amount of $16,325,000.
Equipment Purchase Agreement. On March 1, 2011, the City entered into an equipment purchase agreement for various capital improvements including lighting upgrades, athletic field lighting upgrades, HVAC system replacement, plumbing fixture upgrades, irrigation weather stations, and solar hot water heating. The total cost of the equipment acquired under the agreement was $1,600,000. The financing was obtained from Municipal Finance Corporation on March 1, 2011, for $1,600,000 with an interest rate of 4.35% per annum and annual payments of $146,341 through the end of the lease (March 2026). The outstanding balance at June 30, 2025, is $141,701.
Promissory Note. In December 2021, the City entered into a promissory note in the amount of $5,870,000 for the purchase of land. The note bears interest at 5.9% per annum, with interest due and payable beginning December 2022. The entire principal balance of the note matures on December 27, 2026. The outstanding balance at June 30, 2025 is $5,870,000.
Lancaster Financing Authority 2024 Lease Revenue Bonds. The Lancaster Financing Authority Lease Revenue Bonds, Series 2024 (Tax-Exempt) (the “2024A Bonds”) and Series 2024B (Federally Taxable) (the “2024B Bonds” and, together with the 2024A Bonds, the “2024 Bonds”) were issued on July 17, 2024 in the initial aggregate principal amounts of $55,840,000 and $7,030,000, respectively, for the purpose of paying the costs of certain capital improvements, facilities and equipment of the City. The 2024A Bonds bear interest at rates from 4% to 5% and mature on May 1, 2054. The 2024B Bonds bear interest at rates from 5.254% to
5.620% and mature on May 1, 2032. The 2024 Bonds are payable from rental payments made by the City to the Authority. As of June 30, 2025, the 2024A Bonds were outstanding in the aggregate principal amount of $55,480,000 and the 2024B Bonds were outstanding in the aggregate principal amount of $6,600,000.
As of the June 30, 2025, the City also had various other equipment purchase agreements and loans payable from the City’s General Fund in the outstanding aggregate principal amount of $245,123. See Note 8 to the City’s audited financial statements for fiscal year 2023-24 attached hereto as Appendix C for a description of the City’s outstanding indebtedness payable from the City’s General Fund.
Other Long-Term Debt. The City also has outstanding obligations payable from sources other than the City’s General Fund, including the Authority’s 2016 Assessment Revenue Bonds (Streetlights Acquisition) payable form certain assessments levied by a street lighting maintenance assessment district formed by the City and the Authority’s Revenue Bonds, Series 2019 (Measure M & R Street Improvements Project), which are payable from sales tax revenues received by the City pursuant to the Countywide sales tax imposed pursuant to Measures M and R.
See Note 8 to the City’s audited financial statements for fiscal year 2023-24 attached hereto as Appendix C for a description of the City’s outstanding indebtedness payable from sources other than the City’s General Fund.
Short-Term Debt. The City currently has no short-term debt outstanding.
Estimated Direct and Overlapping Bonded Debt. The estimated direct and overlapping bonded debt of the City as of January 1, 2026 is set forth in Table 13. The information in Table 13 has been derived from data assembled and reported to the City by California Municipal Statistics, Inc. None of the City, the Authority or the Underwriter has independently verified the information in Table 13 and the City, the Authority and the Underwriter do not guarantee its accuracy.
A-20
4903-4707-1616v6/022283-0620
TABLE 13
CITY OF LANCASTER
ESTIMATED DIRECT AND OVERLAPPING BONDED DEBT
2025-26 Assessed Valuation: $17,914,351,260
OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 1/1/26 Antelope Valley Joint Community College District 34.435% $ 155,727,846 Antelope Valley Union High School District 39.146 31,889,667 Eastside Union School District 61.439 8,417,143
Lancaster School District 97.185 103,900,722
Westside Union School District 29.684 8,008,237
Westside Union School District Community Facilities Districts 100. 19,553,256 City of Lancaster School District Community Facilities District No. 2004-1 100. 9,505,000 City of Lancaster Lighting Maintenance District 100. 8,950,000 California Statewide Community Development Authority Assessment Districts 100. 5,905,000 TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT $ 351,856,871 DIRECT AND OVERLAPPING GENERAL FUND DEBT:
Los Angeles County General Fund Obligations 0.820% $ 30,857,002 Los Angeles County Superintendent of Schools Certificates of Participation 0.820 14,958 Antelope Valley Joint Community College District General Fund Obligations 34.435 3,295,430 Antelope Valley Union High School District General Fund Obligations 39.146 1,409,256 Lancaster School District Certificates of Participation 97.185 5,126,509 City of Lancaster Power Authority Revenue Bonds 100. 90,450,000(1) TOTAL GROSS DIRECT AND OVERLAPPING GENERAL FUND DEBT $ 131,153,155 Less: Lancaster Power Authority Revenue Bonds supported by solar utility revenues 15,380,000 TOTAL NET DIRECT AND OVERLAPPING GENERAL FUND DEBT $ 115,773,155 OVERLAPPING TAX INCREMENT DEBT (Successor Agency): 100.% $ 105,198,000 GROSS COMBINED TOTAL DEBT $ 588,208,026 (2)
NET COMBINED TOTAL DEBT $ 572,828,026
Ratios to 2025-26 Assessed Valuation:
Total Overlapping Tax and Assessment Debt................................................1.96% Total Net Direct Debt ($75,070,000) .........................................................0.42% Gross Combined Total Debt ..........................................................................3.28% Net Combined Total Debt ..............................................................................3.20% Ratios to Redevelopment Successor Agency Incremental Valuation ($12,026,057,542):
Total Overlapping Tax Increment Debt .........................................................0.87% (1) Excludes issue to be sold.
(2) Excludes tax and revenue anticipation notes, revenue, mortgage revenue and non-bonded capital lease obligations.
Source: California Municipal Statistics, Inc.
Retirement System
This caption contains certain information relating to the California Public Employees Retirement System (“CalPERS”). The information is primarily derived from information produced by CalPERS, its independent accountants and actuaries. The City has not independently verified the information provided by CalPERS and makes no representations nor expresses any opinion as to the accuracy of the information provided by CalPERS.
The comprehensive annual financial reports of CalPERS are available on its Internet website at www.calpers.ca.gov. The CalPERS website also contains CalPERS’ most recent actuarial valuation reports and other information concerning benefits and other matters. Such information is not incorporated by reference herein. The City cannot guarantee the accuracy of such information. Actuarial assessments are “forward- looking” statements that reflect the judgment of the fiduciaries of the pension plans, and are based upon a variety of assumptions, one or more of which may not materialize or be changed in the future. Actuarial assessments will change with the future experience of the pension plans.
A-21
4903-4707-1616v6/022283-0620
Plan Description. The City contributes to the California Public Employees Retirement System (“CalPERS”), an agent multiple-employer public employee defined benefit pension plan. CalPERS provides retirement and disability benefits, annual cost-of-living adjustments and death benefits to plan members and beneficiaries. CalPERS acts as a common investment and administrative agent for participating public entities within the State of California. Benefit provisions and all other requirements are established by state statute.
Copies of CalPERS’ annual financial report may be obtained from their executive office: 400 P Street, Sacramento, California 95814.
All qualified regular and probationary employees are eligible to participate in the City’s Miscellaneous Plan, an agent multiemployer defined benefit pension plan administered by CalPERS. Benefit provisions under the Miscellaneous Plan are established by state statute and City resolution. CalPERS issues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumptions, and membership information that can be found on the CalPERS website.
CalPERS provides service retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full-time employment. Members with five years of total service are eligible to retire at age 50 to 62 with statutorily reduced benefits. All members are eligible for nonindustrial disability benefits after five years of service. The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost-of-living adjustments for each plan are applied as specified by the Public Employees’ Retirement Law.
As described under the caption “INFORMATION REGARDING THE CITY OF LANCASTER— Employee and Employee Relations,” the City has developed a hybrid policing model to utilize sworn and non- sworn City staff to handle lower priority calls and provide support for LASD. The City currently expects to establish a Safety Plan with CalPERS for employees of the City’s police department once eligible employees are hired by the City.
AB 340, Public Employee Pension Reform Act of 2013 (PEPRA). On September 12, 2012, the California Governor signed Assembly Bill 340 (“AB 340”), which implements pension reform in California.
Effective January 1, 2013, AB 340: (i) requires public retirement systems and their participating employers to share equally with employees the normal cost rate for such retirement systems; (ii) prohibits employers from paying employer-paid member contributions to such retirement systems for employees hired after January 1, 2013; (iii) establishes a compulsory maximum non-safety benefit formula of 2.5% at age 67; (iv) defines final compensation as the highest average annual pensionable compensation earned during a 36-month period; and (v) caps pensionable income at $110,100 ($132,120 for employees not enrolled in Social Security) subject to Consumer Price Index increases. Other provisions reduce the risk of the City incurring additional unfunded liabilities, including prohibiting retroactive benefits increases, generally prohibiting contribution holidays, and prohibiting purchases of additional non-qualified service credit.
Pursuant to AB 340, the City established new pension tiers: 2.0% at 62 for Miscellaneous and 2.7% at 62 for employees hired on or after January 1, 2013 who were not previously CalPERS members.
A-22
4903-4707-1616v6/022283-0620
The Miscellaneous Plan’s provisions and benefits in effect at year ended June 30, 2025, are summarized as follows:
Miscellaneous
Hire Date
Classic Members
Hired Prior to
January 1, 2013
Classic Members
Hired On or After
January 1, 2013
New Members
Hired On or After
January 1, 2013
Benefit Formula 2.7% @ 55 2.0% @ 60 2% @ 62
Benefit Vesting Schedule 5 Years of Service 5 Years of Service 5 Years of Service Benefit Payments Monthly for Life Monthly for Life Monthly for Life Retirement Age 50-55 50-63+ 52-67+
Monthly Benefits, as a % of Eligible
Compensation 2.0% to 2.7% 1.092% - 2.418% 1.0% - 2.5%
Required Employee Contribution Rates 7.58% 7.25% 7.25%
Required Employer Contribution Rates:
Normal Cost Rate 12.15% 12.15% 12.15%
Payment of Unfunded Liability $6,590,314 -- --
As of the June 30, 2024 measurement date, the following employees were covered by the benefit terms for the Miscellaneous Plan:
Description Miscellaneous Plan
Inactive Employees or Beneficiaries Currently Receiving Benefits 359 Inactive Employees Entitled to But Not Yet Receiving Benefits 530 Active employees 320
Total 1,209
Contributions. Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers are determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through CalPERS’ annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. City contribution rates may change if plan contracts are amended. Payments made by the employer to satisfy contribution requirements that are identified by the pension plan terms as plan member contributions requirements are classified as plan member contributions. The City made contributions to the Miscellaneous Plan during fiscal year ended June 30, 2025, of $10,469,815.
Beginning in Fiscal Year 2017-18, CalPERS began collecting employer contributions toward a pension plan’s unfunded liability as dollar amounts instead of the prior method of a percentage of payroll. According to CalPERS, this change was intended to address potential funding issues that could arise from a declining payroll or a reduction in the number of active members in the plan. Funding the unfunded liability as a percentage of payroll could lead to underfunding of pension plans. Due to stakeholder feedback regarding internal needs for total contributions expressed as an estimated percentage of payroll, the CalPERS reports include such results in the contribution projection for informational purposes only. Contributions toward a pension plan’s unfunded liability will continue to be collected as set dollar amounts.
The City’s required contributions to CalPERS fluctuate each year and, as noted, include a normal cost component and a component equal to an amortized amount of the unfunded liability. Many assumptions are used to estimate the ultimate liability of pensions and the contributions that will be required to meet those obligations. The CalPERS Board of Administration has adjusted and may in the future further adjust certain assumptions used in the CalPERS actuarial valuations, which adjustments may increase the City’s required contributions to CalPERS in future years. Accordingly, the City cannot provide any assurances that the City’s required contributions to CalPERS in future years will not significantly increase (or otherwise vary) from any past or current projected levels of contributions. CalPERS earnings reports for Fiscal Years 2012-13 through A-23
4903-4707-1616v6/022283-0620
2023-24 report investment gains (and losses) of approximately 13.2%, 18.4%, 2.4%, 0.6%, 11.2%, 8.6%, 6.7%,
4.7%, 21.3%, (6.1%), 6.1% and 9.3% respectively. CalPERS has also preliminarily reported investment gains of approximately 11.6% for fiscal year 2024-25. Future earnings performance may increase or decrease future contribution rates for plan participants, including the City CalPERS’ discount rate was lowered from 7.00% to 6.80% in Fall 2021. Lowering the discount rate means that employers that contract with CalPERS to administer their pension plans will see increases in their normal costs and unfunded actuarial liabilities. Active members hired after January 1, 2013 who were not previously CalPERS members will also see their contribution rates rise under AB 340.
The tables below are derived from the City of Lancaster Annual Valuation Report with valuation dates as of June 30, 2024 and delivered in July 2025 for the Miscellaneous Plan (the “2024 Report”) and show the required and projected employer contributions (before cost sharing) for the next six fiscal years. Projected results reflect the adopted changes to the discount rate described in the 2024 Report. Such projections also assume that all actuarial assumptions will be realized and that no further changes to assumptions, contributions, benefits, or funding will occur during the projection period. The projected normal cost percentages in the projections below does not reflect that the normal cost will decline over the time as new employees are hired into AB 340 or other lower cost benefit tiers.
The foregoing projections assumed the investment return for fiscal year 2024-25 would be 6.8%. As described above, CalPERS has preliminary announced investment returns of 11.6% for fiscal year 2024-25. As a result, the actual contribution requirements for the fiscal years 2027-28 and the following years shown below can be expected to differ from such projections. No assurance can be provided that the City’s CalPERS plan expenses will not increase significantly in the future.
Required
Contribution
Projected Future Employer Contributions
(Assumes 6.80% Return for Fiscal Year 2024-25 and Beyond) Fiscal Year 2026-27 2027-28 2028-29 2029-30 2030-31 2031-32 Normal Cost % 11.13% 10.9% 10.7% 10.5% 10.4% 10.2%
UAL Payment $ 8,246,634 $ 8,539,000 $ 9,220,000 $ 9,326,000 $ 9,409,000 $ 9,408,000 Total as a % of Payroll* 35.48% 35.5% 36.5% 35.9% 35.2% 34.4% Projected Payroll $33,870,824 $34,819,206 $35,794,144 $36,796,381 $37,826,680 $38,885,827 * Illustrative only and based on the projected payroll shown.
Source: CalPERS’ 2024 Report.
Portions of the above disclosures are primarily derived from information that has been produced by CalPERS, its independent accountants and its actuaries. The City has not independently verified such information and neither makes any representations nor expresses any opinion as to the accuracy of the information that has been provided by CalPERS.
The comprehensive annual financial reports of CalPERS are available on CalPERS’ Internet website at www.calpers.ca.gov. The CalPERS website also contains CalPERS’ most recent actuarial valuation reports and other information that concerns benefits and other matters. The textual reference to such Internet website is provided for convenience only. None of the information on such Internet website is incorporated by reference herein. The City cannot guarantee the accuracy of such information. Actuarial assessments are “forward-looking” statements that reflect the judgment of the fiduciaries of the pension plans, and are based upon a variety of assumptions, one or more of which may not materialize or be changed in the future.
Net Pension Liability. The City’s net pension liability for the Miscellaneous Plan is measured as the total pension liability, less the pension plan’s fiduciary net position. The net pension liability of the Miscellaneous Plan is measured as of June 30, 2023, using an annual actuarial valuation as of June 30, 2022, rolled forward to June 30, 2023, using standard update procedures. A summary of principal assumptions and methods used to determine the net pension liability is shown below.
A-24
4903-4707-1616v6/022283-0620
Valuation Date June 30, 2023
Measurement Date June 30, 2024
Actuarial Cost Method Entry Age Normal Cost Method
Actuarial Assumptions
Discount Rate 6.90%
Inflation 2.30%
Projected Salary Increase Varies by Entry Age and Service Mortality Rate Table(1) The mortality table used was developed based on CalPERS-specific data. The probabilities of mortality are based on the 2021 CalPERS Experience Study for the period from 2001 to 2019. Pre-retirement and Post-retirement mortality rates include generational mortality improvement using 80% of Scale MP-2020 published by the Society of Actuaries. For more details on this table, please refer to the CalPERS Experience Study and Review of Actuarial Assumptions report from November 2021 that can be found on the CalPERS website.
Post Retirement Benefit Increase The less of contract COLA or 2.30% until Purchasing Power Protection Allowance Floor on purchasing power applies, 2.30% thereafter.
(1) The mortality table used was developed based on CalPERS’ specific data. The table includes 15 years of mortality improvements using Society of Actuaries Scale 90% of MP 2016.
The following table shows the changes in net pension liability recognized over the measurement period.
Total Pension
Liability
Plan Fiduciary
Net Position
Net Pension
Liability (Asset)
Balance at June 30, 2023 (Measurement Date) $ 236,838,314 $ 158,872,666 $ 77,965,648 Changes in the Year
Service Cost 5,339,336 - 5,339,336
Interest on Total Pension Liability 16,528,945 - 16,528,945 Changes of Assumptions - - -
Differences Between Expected and Actual Experience 5,628,971 - 5,628,971 Contributions – Employer - 9,185,768 (9,185,768)
Contributions – Employee - 2,363,495 (2,363,495)
Net Investment Income - 15,393,132 (15,393,132)
Administrative Expense - - -
Benefit Payments, Including Refunds Of Employee Contributions (11,174,046) (11,174,046) - Other Miscellaneous Income/(Expense) - (129,275) 129,275 Net Changes 16,323,206 15,639,074 684,132
Balance at: June 30, 2024 (Measurement Date)(1) $ 253,161,520 $ 174,511,740 $ 78,649,780 On June 25, 2012, the Governmental Accounting Standards Board approved GASB Statement No. 68 (“GASB 68”) with respect to pension accounting and financial reporting standards for state and local governments and pension plans. GASB 68 states that, for pensions within the scope of the statement, a cost- sharing employer that does not have a special funding situation is required to recognize a net pension liability, deferred outflows of resources, deferred inflows of resources related to pensions, and pension expense based on its proportionate share of the net pension liability for benefits provided through the pension plan. While the new accounting standards change financial statement reporting requirements, they do not impact funding policies of the pension systems. The audited financial statements of the City for fiscal years 2018-19 and thereafter reflect the application of the GASB 68. GASB 68 is a change in accounting reporting standards but it does not change the City’s CalPERS plan funding obligations.
A-25
4903-4707-1616v6/022283-0620
The following presents the net pension liability of the City for the Miscellaneous Plan, calculated using the discount rate of the Miscellaneous Plan, as well as what the City’s net pension liability would be if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate:
Discount Rate – 1%
(5.90%)
Current Discount Rate
(6.90%)
Discount Rate + 1%
(7.90%)
Net Pension Liability $113,815,936 $78,649,780 $49,744,227 For the year ended June 30, 2025, the City recognized pension expense of $14,715,433. At June 30, 2025, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:
Deferred
Outflows of
Resources
Deferred Inflows
of Resources
Pension Contributions Made Subsequent to Measurement Date $ 10,469,815 $ -- Differences Between Expected and Actual Experience __-- -- Change in assumptions 6,134,801 --
Net Differences Between Projected and Actual Earnings on Plan Investments $ 2,270,354 $ --
Total $ 18,874,970 $ --
Deferred outflows of resources of $10,469,815 that are related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ending June 30, 2026.
Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:
Year Ending June 30, Amount
2026 $ 4,099,830
2027 5,889,635
2028 (698,379)
2029 (885,931)
2030 --
Thereafter --
Total $ 8,405,155
At June 30, 2025, the City had no outstanding contributions to the CalPERS pension plan required for the year ended June 30, 2025.
Funded Status. The tables below are derived from the 2024 Report and show the funded status of the Miscellaneous Plan as of the valuation dates shown.
Valuation
Date
Accrued
Liability
Market Value of
Assets
Unfunded
Liability Funded Ratio
Annual
Covered
Payroll
6/30/2020 $201,419,561 $132,713,326 $68,706,235 65.9% $20,317,694 6/30/2021 212,660,037 162,474,716 50,185,321 76.4 20,569,696 6/30/2022 230,435,149 149,869,741 80,565,408 65.0 23,309,388 6/30/2023 245,541,864 158,831,325 86,710,539 64.7 27,774,901 6/30/2024 257,934,536 174,430,990 83,503,546 67.6 31,177,868 Source: CalPERS’ 2024 Report.
A-26
4903-4707-1616v6/022283-0620
Public Agency Retirement System. Until December 29, 2012, the City, pursuant to sections 401(a) and 501(a) of the Internal Revenue Code, the City adopted a tax-qualified single-employer governmental defined benefit plan that is to be administered for the City by Public Agency Retirement Service (“PARS”), a third-party administrator. The PARS plan was established to provide eligible employees supplemental retirement benefits in addition to the benefits employees will receive from CalPERS. The PARS plan has been closed to employees hired on or after January 1, 2013. In 2023, the City discontinued the PARS plan and replaced the PARS plan with a new defined benefit platform managed by Shuster Advisory Group. For more information regarding the City’s defined benefit pension plan, see Note 9 to the City’s audited financial statements for fiscal year 2023-24 attached hereto as Appendix C.
Other Post-Employment Benefits
Plan Description. The City provides other postemployment benefits (“OPEB”) through an agent- employer defined benefit health care plan by contributing a portion of premiums charged under the health benefit plan for all eligible employees. These medical, dental, vision, and long-term care benefits are provided per contract between the City and union employee associations and unrepresented employees. The OPEB Plan has been closed to new employees and the future benefit levels were frozen as of January 1, 2016.
The City established a Section 115 Trust administered by Shuster Advisory Group in 2023 to partially pre-fund the City’s OPEB liability. The City has made annual contributions to the Section 115 OPEB Trust since it was established, and the balance in the Section 115 OPEB Trust as of June 30, 2024 was approximately $18.9 million.
As of the June 30, 2023 measurement date, the following current and former employees were covered by the benefit terms under the OPEB Plan:
Inactive Employees, Spouses or Beneficiaries Currently Receiving Benefit Payments 144 Active Employees 287
Total 431
Source: City Annual Comprehensive Financial Report for fiscal year 2023-24.
Contributions. Contribution requirements are established by City policy and may be amended by the City Council. The annual contribution is based on the actuarially determined contribution. For the year ended June 30, 2025, the City’s cash contributions were $2,096,798 in payments to the trust and the estimated implicit subsidy was $380,568, resulting in total contributions of $2,477,366.
Net OPEB Liability. The City’s net OPEB liability was measured as of June 30, 2024, and the total OPEB liability used to calculate the net OPEB liability was determined by using an actuarial valuation as of June 30, 2023, rolled forward to June 30, 2024, using standard update procedures. For the actuarial assumptions used to determine the City’s total OPEB liability as of June 30, 2025, see Note 10 to the audited financial statements for fiscal year 2023-24 attached hereto as Appendix C.
In June 2015, GASB issued Statement No. 75, which became effective for fiscal years beginning after June 15, 2017. The primary objective of Statement No. 75 is to improve accounting and financial reporting by state and local governments for postemployment benefits other than pensions (i.e. OPEB). Statement No. 75 is also intended to improve information provided by state and local governmental employers about financial support for OPEB that is provided by other entities. Statement No. 75 results from a comprehensive review of the effectiveness of existing standards of accounting and financial reporting for all postemployment benefits (pensions and OPEB) with regard to providing decision-useful information, supporting assessments of accountability and inter-period equity, and creating additional transparency.
More specifically, Statement No. 75 requires the liability of employers to be measured as the portion of the present value of projected benefit payments to be provided to current active and inactive employees that is attributed to those employees’ past periods of service (total OPEB liability), less the amount of the OPEB plan’s A-27
4903-4707-1616v6/022283-0620
fiduciary net position. Statement No. 75 requires the recognition of the total OPEB liability in the Statement of Net Position.
The changes in the net OPEB liability are as follows.
Increase (Decrease)
Total OPEB
Liability
Plan
Fiduciary Net
Position
Net OPEB
Liability
Balance at June 30, 2023 (Measurement Date) $ 21,889,353 $ 16,583,615 $ 5,305,738 Changes in the Year:
Service Cost 392,454 -- 392,454
Interest on the Total OPEB Liability 1,192,212 -- 1,192,212 Difference Between Actual and Expected Experience (437,505) -- (437,505) Changes in Assumptions 522,443 -- 522,443
Changes in Benefit Terms -- -- --
Changes of Assumptions -- -- --
Contributions—Employer -- 2,307,440 (2,307,440)
Net Investment Income -- 1,332,356 (1,332,356)
Administrative Expenses -- (3,120) 3,120
Benefit Payments (1,226,860) (1,226,860) --
Net Changes 442,744 2,409,816 (1,967,072)
Balance at June 30, 2024 (Measurement Date) $ 22,332,097 $ 18,993,431 $ 3,338,666 Sensitivity of the Net OPEB Liability to Changes in Discount Rate. The following presents the net OPEB liability of the City, calculated using the discount rate for the OPEB Plan, as well as what the City’s net OPEB liability would be if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate:
1% Decrease
(4.58%)
Discount Rate
(5.58%)
1% Increase
(6.58%)
$5,841,308 $3,338,666 $1,214,963
Sensitivity of the Net OPEB Liability to Changes in Healthcare Cost Trend Rates. The following presents the net OPEB liability of the City, as well as what the City’s net OPEB liability would be if it were calculated using health-care cost trend rates that are one percentage point lower (7.00% decreasing to 3.50%) or one percentage point higher (9.00% decreasing to 5.50%) than current health-care cost trend rates.
Plan’s Total OPEB Liability/(Asset)
1% Decrease
Current Healthcare
Cost Trend Rates 1% Increase
$829,553 $3,338,666 $6,343,337
For additional information with respect to the City’s OPEB plan, see Note 10 to the audited financial statements for fiscal year 2023-24 attached hereto as Appendix C.
A-28
4903-4707-1616v6/022283-0620
ECONOMIC AND DEMOGRAPHIC INFORMATION
Population
The City’s population as of January 1, 2025 was approximately 177,768. The following table shows the population for the City, the County and the State of California from 2021 through 2025.
POPULATION
For Years 2021 through 2025
Year
(January 1)
City of
Lancaster
County of
Los Angeles
State of
California
2021 175,962 9,942,011 39,286,510
2022 174,590 9,834,503 39,078,674
2023 173,376 9,761,210 38,940,231
2024 174,629 9,848,643 39,420,663
2025 177,768 9,876,811 39,529,101
Source: State of California, Department of Finance, E-4 Population Estimates for Cities, Counties, and the State, 2021-2025, with 2020 Census Benchmark.
Education
K-12 public instruction in the City is provided by the Antelope Valley Union High School District, the Eastside Union School District, Lancaster School District and Westside Union School District.
Building Activity
Residential and nonresidential building activity for 2020 through 2024 for the City is shown in the following tables.
NEW HOUSING UNITS BUILDING PERMITS
City of Lancaster
For Years 2020 through 2024
2020 2021 2022 2023 2024
Single Family Units 438 490 345 363 762
Multifamily Units 0 414 72 171 685
Total Units 438 904 417 534 1,447
Source: Construction Industry Research Board and California Homebuilding Foundation.
A-29
4903-4707-1616v6/022283-0620
BUILDING PERMIT VALUATIONS
City of Lancaster
(Dollars in Thousands)
2020 2021 2022 2023 2024
Residential
New Single Family $ 105,638 $ 104,921 $ 75,138 $ 102,723 $ 183,686 New Multifamily 0 43,545 8,177 18,143 54,104
Res. Alt. & Adds 730 3,126 3,183 4,255 5,544
Total Residential $ 106,368 $ 151,592 $ 86,498 $ 125,121 $ 243,334 Nonresidential
New Commercial $ 30,472 $ 13,032 $ 9,589 $ 6,391 $ 8,388 New Industrial 8,763 35,104 8,212 6,440 2,103
New Other(1) 8,714 19,345 14,513 3,026 12,093
Alters. & Adds. 5,516 16,077 10,687 6,843 8,556
Total Non-Residential $ 53,465 $ 83,558 $ 43,001 $ 22,700 $ 31,140 Total All Building $ 159,833 $ 235,150 $ 129,499 $ 147,821 $ 274,474 (1) Includes churches and religious buildings, hospitals and institutional buildings, schools and educational buildings, residential garages, public works and utilities buildings.
Note: “Total All Building” is the sum of Residential and Nonresidential Building Permit Valuations. Totals may not add to sum because of independent rounding.
Source: Construction Industry Research Board and California Homebuilding Foundation.
Personal Income
Personal Income is the income that is received by all persons from all sources. It is calculated as the sum of wage and salary disbursements, supplements to wages and salaries, proprietors’ income with inventory valuation and capital consumption adjustments, rental income of persons with capital consumption adjustment, personal dividend income, personal interest income, and personal current transfer receipts, less contributions for government social insurance.
The personal income of an area is the income that is received by, or on behalf of, all the individuals who live in the area; therefore, the estimates of personal income are presented by the place of residence of the income recipients.
The following table summarizes per capita personal income for the County, the State of California and the United States for the years 2013 through 2022. This measure of income is calculated as the personal income of the residents of the area divided by the resident population of the area.
A-30
4903-4707-1616v6/022283-0620
PER CAPITA PERSONAL INCOME(1)
County of Los Angeles, State of California, and United States 2013-2023
Year
County of
Los Angeles California United States
2013 $47,541 $48,549 $44,894
2014 50,052 51,332 47,017
2015 53,067 54,632 48,891
2016 54,750 56,667 49,812
2017 56,635 58,942 51,811
2018 59,004 61,663 54,098
2019 62,573 64,513 56,047
2020 67,383 70,192 59,510
2021 73,385 76,991 64,143
2022 74,142 77,036 65,470
2023 78,302 81,255 69,810
(1) Per capita personal income is the total personal income divided by the total mid-year population estimates of the U.S. Bureau of the Census. All dollar estimates are in current dollars (not adjusted for inflation).
Source: U.S. Department of Commerce, Bureau of Economic Analysis.
A-31
4903-4707-1616v6/022283-0620
Employment
The following table summarizes the annual average labor force, employment and unemployment figures from 2020 to 2024 for the City, the County, the State of California and the nation as a whole.
LABOR FORCE, EMPLOYMENT AND UNEMPLOYMENT
Yearly Average for Years 2019 through 2023
Year and Area Labor Force Employment(1) Unemployment(2) Unemployment
Rate (%)(3)
2020
City of Lancaster 63,400 54,200 9,100 14.4%
Los Angeles County 4,974,700 4,363,300 611,300 12.3
State of California 18,931,100 16,996,700 1,934,500 10.2 United States(4) 160,742,000 147,798,000 12,947,000 8.1 2021
City of Lancaster 64,700 56,600 8,100 12.4%
Los Angeles County 5,007,600 4,558,900 448,700 9.0
State of California 18,923,200 17,541,900 1,381,200 7.3 United States(4) 161,204,000 152,581,000 8,623,000 5.3
2022
City of Lancaster 63,900 59,200 4,700 7.3%
Los Angeles County 5,013,400 4,764,500 248,800 5.0
State of California 19,169,300 18,348,900 820,400 4.3
United States(4) 164,287,000 158,291,000 5,996,000 3.6
2023
City of Lancaster 63,400 59,200 4,200 6.7%
Los Angeles County 5,015,600 4,763,600 252,000 5.0
State of California 19,308,300 18,388,300 920,000 4.8
United States(4) 167,116,000 161,037,000 6,080,000 3.6
2024
City of Lancaster N/A N/A N/A N/A
Los Angeles County 5,109,800 4,812,600 297,200 5.8%
State of California 19,644,100 18,600,900 1,043,100 5.3 United States(4) 168,106,000 161,346 6,761,000 4.0
(1) Includes persons involved in labor-management trade disputes. (2) Includes all persons without jobs who are actively seeking work. (3) The unemployment rate is computed from unrounded data; therefore, it may differ from rates computed from rounded figures in this table.
(4) Not strictly comparable with data for prior years.
Note: Data is not seasonally adjusted.
Source: California Employment Development Department, based on March 2024 benchmark and U.S. Department of Labor, Bureau of Labor Statistics.
The table below summarizes employment by industry in the Los Angeles Long Beach Glendale Metropolitan Division from 2019 to 2023.
A-32
4903-4707-1616v6/022283-0620
AVERAGE ANNUAL INDUSTRY EMPLOYMENT 2019-2023
Los Angeles Long Beach Glendale Metropolitan Division
(Los Angeles County)
2020 2021 2022 2023 2024
Total Farm 4,400 4,600 4,800 4,700 4,800
Total Nonfarm 4,168,100 4,305,100 4,533,000 4,543,500 4,589,900 Total, All Industries 4,172,500 4,309,700 4,537,900 4,548,200 4,594,700 Goods Producing 463,700 463,800 474,700 471,900 463,300 Natural Resources, Mining and
Construction 148,300 150,700 153,000 152,700 152,500
Manufacturing 315,400 313,100 321,700 319,200 310,800
Service Providing 3,704,400 3,841,300 4,058,300 4,071,600 4,126,600 Trade, Transportation and Utilities 784,600 814,000 834,500 826,400 814,000 Wholesale Trade 201,100 202,600 204,400 200,400 195,300 Retail Trade 375,700 396,100 406,500 407,200 400,100
Transportation, Warehousing and
Utilities 207,900 215,200 223,600 218,800 814,000
Information 191,100 208,800 234,900 193,000 189,800
Financial Activities 213,200 213,200 215,700 211,000 208,700 Professional and Business Services 601,000 630,800 666,900 652,500 657,800 Educational and Health Services 821,700 844,400 871,100 914,500 969,400 Leisure and Hospitality 393,700 434,200 512,400 534,100 537,400 Other Services 128,800 135,700 153,000 157,800 158,400
Government 570,200 560,200 570,000 582,300 591,100
Note: The “Total, All Industries” data is not directly comparable to the employment data found herein.
Source: State of California, Employment Development Department, Labor Market Information Division, Los Angeles Long Beach Glendale Metropolitan Division (Los Angeles County) Annual Average Labor Force and Industry Employment, March 2024 Benchmark.
Industry
The City serves as a primary commercial center of the Greater Antelope Valley, which covers 3,514.2 square miles of area and includes the City, Edwards Air Force Base, certain unincorporated areas of the County and the cities of Palmdale, Tehachapi, Mojave and Ridgecrest. The table below lists the ten largest employers in the Greater Antelope Valley area for 2020. Major private employers in the area include those in the military, health care and retail industries. Major public sector employers include the County and several local school districts.
A-33
4903-4707-1616v6/022283-0620
MAJOR EMPLOYERS
City of Lancaster
2024
Rank Name of Business Employees
Percentage
of Total
Valley
Employment(1)
1. Edwards Air Force Base 11,500 17.22%
2. Northrop Grumman 8,300 12.43
3. China Lake NWD 6,520 4.49
4. Palmdale School District 3,000 4.04
5. Antelope Valley Hospital Medical Center 2,700 9.76
6. Antelope Valley Union Highschool District 2,300 1.70
7. Lancaster School District 1,136 3.44
8. Antelope Valley College 850 1.27
9. Trader Joe’s Distribution Center 800 1.20
10. Ride.Co (formerly BYD) 750 1.12
Total Employment 66,800 56.67%
(1) Total employment as used above may represent figures from total employment located within the Greater Antelope Valley region. The Greater Antelope Valley is considered to be the City’s economic region and covers 3,514.2 square miles of area and includes Lancaster, Palmdale, Tehachapi, Mojave, Edwards AFB, and Ridgecrest.
Source: City of Lancaster Annual Comprehensive Financial Report for the Fiscal Year Ending June 30, 2024.