Lancaster City Council
March 24, 2026

ATTEST: APPROVED:
______________________________ ______________________________ ANDREA ALEXANDER R. REX PARRIS
City Clerk Mayor
City of Lancaster City of Lancaster
STATE OF CALIFORNIA }
COUNTY OF LOS ANGELES }ss
CITY OF LANCASTER }

CERTIFICATION OF RESOLUTION

CITY COUNCIL
I, ________________________________, ___________________________________ City of Lancaster, California, do hereby certify that this is a true and correct copy of the original Resolution No. , for which the original is on file in my office.

WITNESS MY HAND AND THE SEAL OF THE CITY OF LANCASTER, on this _________ day of ________________, ________.
(seal)
___________________________________

STAFF REPORT
City of Lancaster
PH 2
3/24/2026
TN
Date: March 24, 2026
To: Mayor Parris and City Council Members
From: Patti Garibay, Director - Community Development
Nicole Jones, Manager – Community Development
Subject: Introduce Ordinances Amending Title 5 (Business Licenses) of the Lancaster Municipal Code for Amortization Purposes
Recommendation:

1. Conduct a Public Hearing

2. Tobacco Retail Establishments Ordinance
a. Introduce and waive further reading of proposed Ordinance XX amending Section

5.42.130 of the Lancaster Municipal Code to eliminate references to “deemed approved” status for tobacco retailers;
b. Determine that the ordinance is exempt from CEQA pursuant to Section 15061(b)(3); and
c. Direct staff to return for second reading and adoption.

3. Alcoholic Beverage Establishments and Recycling Facilities Ordinance a. Introduce and waive further reading of proposed Ordinance XX amending Section

5.04.050 of the Lancaster Municipal Code to require applicants for alcoholic beverage establishment business licenses to demonstrate compliance with applicable zoning permits under Title 17 and establish additional business license requirements for recycling facilities;
b. Determine that the ordinance is exempt from CEQA pursuant to Section 15061(b)(3); and
c. Direct staff to return for second reading and adoption.

4. Massage Establishments Ordinance
a. Introduce and waive further reading of proposed Ordinance XX amending Section

5.34.150 of the Lancaster Municipal Code to eliminate references to “deemed approved” status for massage establishments;
b. Determine that the ordinance is exempt from CEQA pursuant to Section 15061(b)(3); and
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c. Direct staff to return for second reading and adoption.

G.C. Section 84308: No
Fiscal Impact:

There is no direct fiscal impact associated with adoption of the proposed ordinances. The amendments are regulatory in nature and are intended to improve land use compatibility, strengthen oversight of certain regulated businesses, and clarify enforcement mechanisms.

Indirect administrative efficiencies may result through clearer entitlement and licensing requirements.

Background:

The proposed ordinances amend portions of Title 5 of the Lancaster Municipal Code to strengthen regulatory oversight and improve coordination between the City’s zoning and business licensing requirements for certain regulated businesses, including recycling facilities, tobacco retailers, alcoholic beverage establishments, and massage establishments.

These amendments are the result of ongoing review of land use impacts, enforcement challenges, and administrative processes identified by Community Development staff.

1. Tobacco Retail Establishments
The proposed ordinance amends Section 5.42.130 of the Lancaster Municipal Code to remove references to “deemed approved” status for tobacco retailers.

The time period for tobacco retailers to claim deemed approved status has expired, and all tobacco retailers are now required to comply with the City’s tobacco retailer licensing regulations regardless of when the business was originally established.

The amendment clarifies that the tobacco retailer regulations apply to all existing and future businesses subject to the requirements of Chapter 5.42.

2. Alcoholic Beverage Establishments
The proposed amendments to Section 5.04.050 require applicants for new or renewal business licenses for alcoholic beverage establishments to provide evidence that the applicant has obtained a conditional use permit or minor use permit if required under Title 17.

These amendments strengthen coordination between the City’s zoning regulations and business licensing process by ensuring that regulated businesses obtain required land use approvals prior to issuance or renewal of a business license.

3. Recycling Facilities and Temporary/Mobile Recycling Centers The proposed ordinance amends Section 5.04.050 of the Lancaster Municipal Code to establish additional business license application requirements for recycling facilities.

Under the proposed amendment, applicants for a new or renewal business license for a recycling facility must submit:
Evidence that the applicant has obtained the entitlement required under Title 17; and A signed written acknowledgment that the recycling facility will not occupy, obstruct, or otherwise interfere with required off-street parking spaces, drive aisles, landscaped areas, or pedestrian accessways.
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3 0
These requirements strengthen coordination between the City’s zoning regulations and business licensing process and help ensure that recycling facilities operate in a manner that does not create parking or circulation conflicts.

4. Massage Establishments
The proposed ordinance amends Section 5.34.150 of the Lancaster Municipal Code to remove references to “deemed approved” status for massage establishments.

As with tobacco retailers, the time period for claiming deemed approved status has expired, and all massage establishments are now subject to the City’s massage establishment regulations regardless of when the business was established.

This amendment clarifies the applicability of the City’s massage establishment regulations to all existing and future businesses.

Attachment:

Ordinance XX – Tobacco Retailers
Ordinance XX – Alcoholic Beverage Establishments and Recycling Facilities Ordinance XX – Massage Establishments
1 ORDINANCE NO. ____________

AN ORDINANCE OF CITY COUNCIL OF THE CITY OF
LANCASTER, CALIFORNIA, AMENDING SECTION 5.42.130

OF THE LANCASTER MUNICIPAL CODE CONCERNING

DEEMED APPROVED STATUS OF TOBACCO RETAILERS
WHEREAS, Section 5.42.130 of the Lancaster Municipal Code currently provides, in pertinent part, that “[…] tobacco retailers legally in business prior to the effective date of the ordinance first enacting [the City’s Tobacco Retailers Regulation] shall have sixty (60) days to comply with the regulations for tobacco retailers set forth [therein] […]”; and WHEREAS, the City Council desires to amend Section 5.42.130 of the Lancaster Municipal Code to eliminate reference to “deemed approved” status under the City’s Tobacco Retailers Regulation because the time to claim such status has expired and every tobacco retailer is now subject to the City’s Tobacco Retailers Regulation , regardless of when such tobacco retailer commenced its business.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF LANCASTER DOES HEREBY ORDAIN, AS FOLLOWS:

Section 1. The City Council of the City of Lancaster hereby finds and determines that the above recitals are true and correct.

Section 2. Section 5.42.130 of the Lancaster Municipal Code is hereby amended in its entirety to read as follows:

5.42.130 – Application to existing businesses.

The provisions of this chapter shall be applicable to all persons and businesses described herein whether the herein described activities were established before or after the effective date of this chapter. Please note that the tobacco retailers license is required in addition to a city of Lancaster business license.

Section 3. If any section, subsection, sentence, clause, phrase, or portion of this Ordinance is held for any reason to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council hereby declares that it would have adopted this Ordinance and each section, subsection, sentence, clause, phrase, or portion thereof, irrespective of the fact that any one or more sections, subsectio ns, sentences, clauses, phrases, or portions be declared invalid or unconstitutional.

Section 4. The Mayor shall sign and the City Clerk shall certify to the passage and adoption of this Ordinance , and shall cause the same to be published and posted pursuant to the provisions of law in that regard and this Ordinance shall take effect 30 days after adoption.

I, Andrea Alexander, of the City of Lancaster, do hereby certify that the foregoing ordinance was regularly introduced and placed upon its first reading on the __________ day of ________________, 2026, and placed upon its second reading and adoption at a regular meeting of the City Council on the ____ day of ________________, 2026, by the following vote:

AYES:

NOES:

ABSTAIN:

ABSENT:

ATTEST: APPROVED:

____________________________ ______________________________ ANDREA ALEXANDER R. REX PARRIS
City Clerk Mayor
City of Lancaster City of Lancaster

STATE OF CALIFORNIA }
COUNTY OF LOS ANGELES }ss
CITY OF LANCASTER }

CERTIFICATION OF ORDINANCE

CITY COUNCIL

I, ________________________________, ___________________________________ City of Lancaster, California, do hereby certify that this is a true and correct copy of the original Ordinance No. , for which the original is on file in my office.

WITNESS MY HAND AND THE SEAL OF THE CITY OF LANCASTER, on this _________ day of ________________, ________.

(seal)

1 ORDINANCE NO. ____________

AN ORDINANCE OF CITY COUNCIL OF THE CITY OF
LANCASTER, CALIFORNIA, AMENDING SECTION 5.34.150

OF THE LANCASTER MUNICIPAL CODE CONCERNING

DEEMED APPROVED STATUS OF MASSAGE

ESTABLISHMENTS
WHEREAS, Section 5.34.150 of the Lancaster Municipal Code currently provides, in pertinent part, that “[…] massage establishments legally in business prior to the effective date of the ordinance first enacting [the City’s Massage Establishments Regulations] for which a business license has been issued shall have to comply with the regulations for massage establishments and massage therapists set forth herein upon expiration of the existing business license ”; and WHEREAS, the City Council desires to amend Section 5.34.150 of the Lancaster Municipal Code to eliminate reference to “deemed approved” status under the City’s Massage Establishments Regulations because the time to claim such status has expired and every massage establishment is now subject to the City’s Massage Establishments Regulations , regardless of when such massage establishment commenced its business.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF LANCASTER DOES HEREBY ORDAIN, AS FOLLOWS:

Section 1. The City Council of the City of Lancaster hereby finds and determines that the above recitals are true and correct.

Section 2. Section 5.34.150 of the Lancaster Municipal Code is hereby amended in its entirety to read as follows:

5.34.150 – Application to existing businesses.

The provisions of this chapter shall be applicable to all persons and businesses described herein whether the herein described activities were established before or after the effective date of this chapter.

Section 3. If any section, subsection, sentence, clause, phrase, or portion of this Ordinance is held for any reason to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council hereby declares that it would have adopted this Ordinance and each section, subsection, sentence, clause, phrase, or portion thereof, irrespective of the fact that any one or more sections, subsectio ns, sentences, clauses, phrases, or portions be declared invalid or unconstitutional.

Section 4. The Mayor shall sign and the City Clerk shall certify to the passage and adoption of this Ordinance , and shall cause the same to be published and posted pursuant to the provisions of law in that regard and this Ordinance shall take effect 30 days after adoption.

I, Andrea Alexander, of the City of Lancaster, do hereby certify that the foregoing ordinance was regularly introduced and placed upon its first reading on the __________ day of ________________, 2026, and placed upon its second reading and adoption at a regular meeting of the City Council on the ____ day of ________________, 2026, by the following vote:

AYES:

NOES:

ABSTAIN:

ABSENT:

ATTEST: APPROVED:

____________________________ ______________________________ ANDREA ALEXANDER R. REX PARRIS
City Clerk Mayor
City of Lancaster City of Lancaster

STATE OF CALIFORNIA }
COUNTY OF LOS ANGELES }ss
CITY OF LANCASTER }

CERTIFICATION OF ORDINANCE

CITY COUNCIL

I, ________________________________, ___________________________________ City of Lancaster, California, do hereby certify that this is a true and correct copy of the original Ordinance No. , for which the original is on file in my office.

WITNESS MY HAND AND THE SEAL OF THE CITY OF LANCASTER, on this _________ day of ________________, ________.

(seal)

1 ORDINANCE NO. ____________

AN ORDINANCE OF CITY COUNCIL OF THE CITY OF
LANCASTER, CALIFORNIA, AMENDING SECTION 5.04.050

OF THE LANCASTER MUNICIPAL CODE CONCERNING

ADDITIONAL APPLICATION REQUIREMENTS OF SPECIFIC

BUSINESSES
WHEREAS, Section 5.04.050 of the Lancaster Municipal Code provides that certain businesses are subject to additional application requirements when applying for a new or renewal business license; and
WHEREAS, the City Council desires to amend Section 5.04.050 of the Lancaster Municipal Code to add the following additional requirements:
(a) an applicant for a new or renewal license for any alcoholic beverage establishment, as defined in Title 17 of the Lancaster Municipal Code, shall submit with its application for a new or renewal business license evidence that the applicant has been granted a conditional use permit or minor use permit if required under Title 17; and (b) an applicant for a new or renewal license for any recycling facility, as defined in Title 17 of the Lancaster Municipal Code, shall submit with its application evidence that the applicant has been granted the required entitlement identified under Title 17 of the Lancaster Municipal Code and a signed written acknowledgment that the applicant’s operation of such recycling facility shall not occupy, obstruct, or otherwise interfere with required off -street parking spaces, drive aisles, landscaped areas, or pedestrian accessways.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF LANCASTER DOES HEREBY ORDAIN, AS FOLLOWS:

Section 1. The City Council of the City of Lancaster hereby finds and determines that the above recitals are true and correct.

Section 2. Section 5.04.050 of the Lancaster Municipal Code is hereby amended in its entirety to read as follows:

5.04.050 - Additional application requirements of specific businesses.

A. Upon submittal of a complete application for a new
or renewal license for one of the following businesses, the city manager shall conduct an investigation and criminal background check on the applicant(s):

1. Massage establishment (owner/operator and any massage therapist who does not have a current and valid state
certificate), as set forth in Chapter 5.34.

2. Towing operation (owner/operator and individual tow
truck drivers), as set forth in Chapter 5.32.

3. Taxicab operation (owner/operator and individual taxicab drivers), as set forth in Chapter 5.28.

4. Liquor store, mini-mart or convenience market, as defined in Title 17, that sells alcoholic beverages.

5. Smoke shop, tobacco shop.

6. Hookah lounge.

7. Internet lounge or internet café.

B. An applicant for any of the licenses identified in
subsection A shall be required to pay for and obtain electronic fingerprint scans, known as live scan, the results of which will be used in conducting the criminal background check.

C. An applicant for a new or renewal license for any
alcoholic beverage establishment, as defined in Title 17, shall ensure that any employee who serves or sells alcoholic beverages undergoes and passes responsible alcoholic beverage server training at least once every three (3) years, and shall maintain and make available for city inspection a list of employees who serve or sell alcoholic beverages and records documenting each employee's compliance with the responsible server training. New employees who will serve or sell alcoholic beverages shall undergo and pass such training within thirty (30) days of commencement of employment.

D. An applicant for a new or renewal license for any
alcoholic beverage establishment, as defined in Title 17, shall develop and implement practices and procedures to prevent the purchase and/or consumption of alcoholic beverages by underage persons.

E. An applicant for a new or renewal license for any
alcoholic beverage establishment, as defined in Title 17, shall submit with its application evidence that the applicant has been granted any conditional use permit or minor use permit required under Title 17.

F. An applicant for a new or renewal license for any
recycling facility , as defined in Title 17, shall submit with its application evidence that the applicant has been granted the required entitlement identified under Title 17 and a signed written acknowledgment that applicant’s operation of such recycling facility shall not occupy, obstruct, or otherwise interfere with required off-street parking spaces, drive aisles, landscaped areas, or pedestrian accessways.

Section 3. If any section, subsection, sentence, clause, phrase, or portion of this Ordinance is held for any reason to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council hereby declares that it would have adopted this Ordinance and each section, subsection, sentence, clause, phrase, or portion thereof, irrespective of the fact that any one or more sections, subsectio ns, sentences, clauses, phrases, or portions be declared invalid or unconstitutional.

Section 4. The Mayor shall sign and the City Clerk shall certify to the passage and adoption of this Ordinance , and shall cause the same to be published and posted pursuant to the provisions of law in that regard and this Ordinance shall take effect 30 days after adoption.

I, Andrea Alexander, of the City of Lancaster, do hereby certify that the foregoing ordinance was regularly introduced and placed upon its first reading on the __________ day of ________________, 2026, and placed upon its second reading and adoption at a regular meeting of the City Council on the ____ day of ________________, 2026, by the following vote:

AYES:

NOES:

ABSTAIN:

ABSENT:

ATTEST: APPROVED:

____________________________ ______________________________ ANDREA ALEXANDER R. REX PARRIS
City Clerk Mayor
City of Lancaster City of Lancaster

STATE OF CALIFORNIA }
COUNTY OF LOS ANGELES }ss
CITY OF LANCASTER }

CERTIFICATION OF ORDINANCE

CITY COUNCIL

I, ________________________________, ___________________________________ City of Lancaster, California, do hereby certify that this is a true and correct copy of the original Ordinance No. , for which the original is on file in my office.

WITNESS MY HAND AND THE SEAL OF THE CITY OF LANCASTER, on this _________ day of ________________, ________.

(seal)

STAFF REPORT
City of Lancaster
PH 3
3/24/2026
TN
Date:March 24, 2026
To: Mayor Parris and City Council Members
From: George N. Harris II, Senior Director/Treasurer – Administrative Services Subject: Mitigation Fee Act (AB 1600) Report for Fiscal Year 2025.

Recommendation:

Staff recommend that the City Council receive and file the Mitigation Fee Act (AB1600) Report on Development Impact Fees for the fiscal year ending June 30, 2025.

G.C. Section 84308: No
Fiscal Impact:

The acceptance of this report has no direct fiscal or budgetary impact.

Background:

In 1989, Section 66000 et seq. of the California Government Code became effective. When passed in 1987, this section was known as AB 1600. When the Legislature passed AB 1600, it added a new chapter to the California Government Code on impact fees for development projects. The chapter sets forth several requirements that local agencies must follow if they are to extract impact fees from developers to defray the cost of construction of public facilities or expanded public service obligations related to development projects. Section 66006 mandates the requirement for accounting, spending, and reporting fees and related interest earnings.

Through policies in the General Plan, the City has established the nexus between the developments and the capital improvements necessary to mitigate their effects and approved impact fees to fund the mitigation measures. The Lancaster Municipal Code section related to each fee type further implements the impact fees.

The AB 1600 report consists of a brief description of the type of fee in the account or fund, the amount of the fee, the beginning and ending balance of the account or fund, the amount of fees collected, and the interest earned, if any. If there are funds in the account, then there is also a 2 3
3 6
requirement to make a finding that there is a reasonable relationship between current needs and the purposes for which they were originally collected.

To comply with AB 1600, the City Council must make a finding that there is a reasonable relationship between the current need for the fees and the purposes for which they were charged as demonstrated by programming of fees in the CIP and operational budgets. It is important that these findings be and are made to ensure a continuance of funding resources for these important programs.

As mandated by AB 1600, the City must publicize an annual report of development impact fees. This annual report will disclose the beginning and end balance of each development impact fee account for the fiscal year, as well as any interest allocations and new development impact fee revenues.

Not less than 15 days after the information is made public, the City Council is required to review this information at its next regularly scheduled public meeting. On March 7th, 2026, a public notice was posted on the City’s website outlining that the annual AB 1600 report had been publicized on the City’s website and was also available for review at City Hall.

Attachment:

City of Lancaster AB 1600 Annual Report Development Impact Fees 2024-2025
AB 1600 Annual Report
Development Impact Fees
(Revision1)
Fiscal Year ended June 30, 2025
FINAL
For City Council consideration
March 24, 2026
CITY OF LANCASTER AB 1600 Report

LANCASTER CITY COUNCIL

R. Rex Parris
Mayor

Marvin Crist
Vice Mayor

Lauren Hughes - Leslie
Councilmember

Raj Malhi
Council m ember

Ken Mann
C ouncilmem ber

P r e p a r e d B y:

City of Lancaster – Finance Division
44933 Fern Avenue
Lancaster, California 93534
Finance | City of Lancaster (cityoflancasterca.org)

CITY OF LANCASTER AB 1600 Report
EX

ECUTIVE SUMMARY
Development Impact Fees are fees imposed by local government on new development projects to finance the acquisition, construction, and improvement of public facilities and infrastructure needed to serve those projects. California Government Code Section 6 6006 requires local agencies to submit a report detailing the status of their Development Impact Fee (DIF) program on an annual basis and make additional findings every fifth year. This report meets the legal requirements for Fiscal Year 2024-2025 (July 1, 2024 thru June 30, 2025).

The annual report must be made available to the public within 180 days of the close of the fiscal year and be presented to the public agency (City Council) at a regularly scheduled public meeting no sooner than 15 days after the report is made available to the public.

Section 1 – Requirements of the Mitigation Fee Act (AB 1600) Assembly Bill (AB) 1600, commonly known as the Mitigation Fee Act, was enacted by the state of California in 1987 and created Section 66000 et. seq. of the Government Code and was amended by Assembly Bill (AB) 518 , Senate Bill (SB) 1693 and most recently Assembly Bill (AB) 602. AB 1600 requires the C ity to report fee information annually and make additional findings every fifth year. T his report summarizes the following information for each of the development impact fee programs:
• A
brief description of the fee program
• Amount of the fee
• Beginning and ending fund balances for the fee program • Amount of fees collected and the interest earned during the previous year • Identification of each public improvement for which fees were expended and the amount of expenditures, including the total percentage of the cost of the public improvement that was funded with fees
• Identification of an approximate date by which the construction of the public improvement will commence if the local agency determines that sufficient funds have been collected to complete financing on an incomplete public improvement and the public improvement remains incomplete
• Description of each interfund transfer or loan made from the account, including the public improvement on which the transferred or loaned fees will be expended, and when each loan will be repaid and the rate of interest the account will receive on the loan • Identification of any refunds made once determined that sufficient monies have been collected to fund fee-related projects
F
or the fifth fiscal year following the first deposit into the account or fund, and every five years thereafter, the City must make the following findings with respect to any remaining funds in the fee account, regardless of whether those funds are committed:

1. Identification of the purpose to which the fees are to be allocated

2. Demonstrate a reasonable relationship between the fee and the purpose for which it is charged

3. Identification of all sources and amount of funding anticipated to complete financing in incomplete improvements identified as part of the City’s annual report

4. Identification of the approximate dates on which the funding referred to in Requirement 3 is expected to be deposited into the appropriate account or fund CITY OF LANCASTER AB 1600 Report

The City of Lancaster currently collects the development impact fees listed below. This table also represents the fund that each fee is deposited into.

Fee Fund #
Street Improvement Fee(s) 414
Traffic Impact Fee 414
Traffic Signalization Fee 414
Los Angeles County Traffic Impact Fee
Drainage / Flood Control Fee 411
Urban Structure Program Fees 413
Park Development Fee 413
Administrative Offices Fee - Residential 413
Administrative Offices Fee - Non-Residential 413
Corporate Yard Fee - Residential 413
Corporate Yard Fee - Non-Residential 413
Dwelling Unit Fee (Park in Lieu) 413
Park Development Credits 203
Biological Impact Fee 412
Non- Specific (Impact) Fee 413
Other (Impact) Fee(s) 101

Section 2 – Annual Report

Development Impact Fees

In order to implement the goals, objectives, policies and specific actions of the general plan of the city, the capital improvement program and the city's annually adopted budget; to protect the health, safety and general welfare of the city's population; to mitigate impacts of new development on the level of service capacity in existing facilities; and to ensure that the burdens of financing capital improvements and operational services are borne by the development projects benefited thereby, and except as otherwise expressly set forth elsewhere in the City of Lancaster municipal code, every person constructing any new residential, commercial or industrial development shall pay to the city prior to issuance by the city of a building permit the development i mpact fees set forth and such other development impact fees as the city council may adopt by resolution or ordinance as necessary and appropriate from time to time.

The following section provides information necessary to meet the legal requirements for each impact fee fund. This includes a brief description of the fee, the beginning and ending balances, fee revenues collected, interest earned, and the expenditures on each project including the percentage that was funded with fees. It also includes a table summary of whether sufficient funds have been identified to complete future projects and the approximate date by which the construction of the public improvement will commence if sufficient funds have been identified. Any loans are also identified as well as any refunds from the fund.

CITY OF LANCASTER AB 1600 Report

STREET IMPROVEMENT FEES (Fund 414)
Traffic Impact Fee

Description - To mitigate the additional traffic burdens created by new developments to the city's arterial and collector street system, a street improvements fee will be imposed on all new development in the city to finance the costs of street improvements, including acquisition, widening and reconstruction, street landscaping, intersect ion improvements, and freeway interchange improvements.

Fee Schedule:

TRAFFIC IMPACT FEES
Single Family Dwellings $2,158.00 per dwelling unit
Multi-Family Dwellings/Mobile Homes $1,920.00 per dwelling unit Commercial $1.99 per gross bldg. SF
Industrial $0.71 per gross bldg. SF

Traffic Signalization Fee

Description - To mitigate additional burdens created by new development to the city's traffic problems beyond the financial ability of the city to control, a traffic signalization fee will be imposed on all new development in the city to finance the costs of traffic sig nalization improvements.

Fee Schedule:

Residential Zones/Residential Specific Plans & Multiple Family Residential Zones $1,356.00 per dwelling unit $31.99 per ADTE*
Commercial Zones $0.16 per gross bldg. SF
$31.99 per ADTE*
Industrial/Manufacturing/Industrial Specific Plans $0.11 per gross bldg. SF $31.99 per ADTE*
* Average Daily Trip End

Fund 414 Balance (includes Traffic Impact & Traffic Signalization Fees) :

Fund 414 / Street Improvement Fee

Beginning Fund Balance as of July 1, 2024 $ 2,111,143.29

Revenues
Fees Collected $ 590,490.23
Interest Earned $ 110,004.97
Other Revenue(s) $ -
Total Revenues $ 700,495.20

Expenses
Project Expenses $ (48,428.34)
Total Expenses $ (48,428.34)

Transfers In $ -
Transfers Out $ -

Ending Balance as of June 30, 2025 $ 2,763,210.15

CITY OF LANCASTER AB 1600 Report

Los Angeles County Traffic Impact Fee

Applies to all projects within the area bounded by Avenue J-8, 40th Street West, Avenue L-8 and 100th Street West $1,812.00 per mile

CITY OF LANCASTER AB 1600 Report

Drainage / Flood Control Fee (Fund 411)
Drainage Impact Fee

Description - In order to implement the goals, objectives, policies and specific actions of the Lancaster general plan and the city's master plan of drainage, and to mitigate the stormwater runoff impacts caused by new development, a drainage/flood control improvements fee will be imposed on all new development in the city pursuant to Article II of Chapter 13.04.

Fund 411 Balance:

Fund 411 Drainage / Flood Control Fee

Beginning Fund Balance as of July 1, 2024 $ 10,987,472.52

Revenues
Fees Collected $ 793,199.85
Interest Earned $ 448,845.22
Other Revenue(s) $ -
Total Revenues $ 1,242,045.07

Expenses
Project Expenses $ (1,431,544.37)
Other Charges $ -
Total Expenses $ (1,431,544.37)

Transfers In $ -
Transfers Out $ -

Ending Balance as of June 30, 2025 $ 10,797,973.22

Fee Schedule:

PLANNED LOCAL DRAINAGE FACILITIES FEES
Residential Zones/Residential Specific Plans and Multiple Family Residential Zones (including mobile home on private property) or Multi Family Zoning $0.47 per SF of the lot or parcel Multi-Family Dwelling in Multiple-Family Residential or Commercial Zone (includes mobile homes in parks) $0.47 per SF of the lot or parcel Residential Zones/Residential Specific Plans and Multiple Family Residential Zones (including mobile home on private property) or Multi Family Zoning $21,106.00 per acre
Any other development in Commercial Zone
$0.47 per SF of new impervious
area
Any other development in Industrial Zone
$0.47 per SF of new impervious
area
Any other development in zone not indicated above
$0.47 per SF of new impervious
area

CITY OF LANCASTER AB 1600 Report

URBAN STRUCTURE PROGRAM FEE(s) (Fund 413)
Park Development Fee

Description - To mitigate the impacts of new residential development on the availability of open space land and park and recreational facilities, a park development fee will be imposed on all new residential development in the city. The park development fee shall provid e funds for the development of park, recreation and arts facilities.

Dwelling Unit - Park in Lieu Fee

Description - Each person who constructs any dwelling unit or units as defined, containing bedrooms in the city shall pay a fee or dedicate land in lieu of the payment of the fee and/or dedication of land as provided for in Resolution No. 85 -56, as it may be amended, ad opted in conjunction herewith. All fees and/or dedications pursuant to a said resolution shall be deposited or dedicated to the city.

Fee Schedule:

DWELLING UNIT FEES (PARK IN LIEU)
1 Bedroom or Studio $573.00 per dwelling unit
2 Bedroom or Mobile Home $860.00 per dwelling unit
3 Bedroom or More $1,148.00 per dwelling unit

Administrative Offices Fee

Description - To mitigate the burdens and increased demand for providing administrative facilities needed to serve new development and to support the well-being and general welfare of the city's residents and businesses, an administrative offices fee will be imposed on all new development in the city. The administrative offices' fee shall be used to finance land acquisition, design, construction, equipping and related capital costs for administrative facilities.

Corporate Yard Facilities Fee

Description - To mitigate the burdens and increased demand for governmental services created by new development and to provide adequate public services and support to the city's growing population. A corporate yard facilities fee will be imposed on all new development in the city. The corporate yard facilities fee shall be used to finance land acquisition, design. construction, equipping and related capital costs for municipal storage and equipment repair facilities .

CITY OF LANCASTER AB 1600 Report

Fund 413 Balance:

Fund 413 Urban Structure Program Fee(s)

Beginning Fund Balance as of July 1, 2024 $ 1,664,854.38

Revenues
Fees Collected $ 589,028.44
Interest Earned $ 58,028.44
Other Revenue(s) $ -
Total Revenues $ 647,506.20

Expenses
Project Expenses $ (857,308.73)
Other Charges $ -
Total Expenses $ (857,308.73)

Transfers In $ -
Transfers Out $ (84,895.42)

Ending Balance as of June 30, 2025 $ 1,370,156.43

Fee Schedule:

URBAN STRUCTURE PROGRAM FEES
Park Development Fee $3,056.00 per dwelling unit
Administrative Offices Fee: Residential $73.00 per dwelling unit Administrative Offices Fee: Non-Residential $0.03 per SF Corporate Yard Fee: Residential $69.68 per dwelling unit Corporate Yard Fee: Non-Residential $0.02 per SF

CITY OF LANCASTER AB 1600 Report

Biological Impact Fee (Fund 412)
Description - The city council finds that new development of land within the city results in an incremental effect on biological resources, including loss of habitat and reduction in total numbers of flora and fauna on a regional basis. This chapter establishes the adoption, collection, administration, and use of a biological impact fee to mitigate the long -term incremental impact of adding new development. Further, in recognizing the regional nature of such impacts and the need for regional mitigation for them, as well as the statutory authority over biological resources granted to various federal and state agencies by law, this establishes the basis for such impact fees, conditions under which they are reduced or waived, and the situations under which such fees shall terminate.

The city council expressly finds that the biological impact fee is expressly adopted for the purpose of mitigating biological impacts on a regional basis. Therefore, the establishment of such fee shall be based on expected regional effects from new develop ment and fees necessary to contribute to the city's "fair share" to mitigate such impacts on a regional basis. In establishing the criteria listed in Section 15.66.070 of the City’s municipal code, it is the intent of the city council that such fees may be expended either within or outside the city limits in order to achieve the goal of regional mitigation.

All biological impact fees shall be held in a separate account and shall only be expended upon an affirmative vote of a majority of the city council specifying the amount and use of such fees. Such fees shall only be expended for the following purposes:
• Acquisition of Mitigation Land . Fees may be expended for the purpose of acquiring or paying a third party for the acquisition of land for the permanent conservation of habitat or species. Such acquisition may include land outside of the city of Lancaster; however, any such lands that contains habitat or species that will compensate for the incremental loss of same within the city limits. In identifying such acquisition sites, the city may consult with the USFWS or CDFG for assistance.
• Restoration of Habitat . Fees may be expended for the purpose of restoring habitat within identified permanent conservation areas.
• Environmental Education . Fees may be expended for the purpose of funding environmental education, provided that the city council finds that such efforts will contribute to a long -term improvement in the regional environment by increasing public awareness of the biological resources of the region.
• Other Uses. Fees may be expended for other uses provided that the city council finds that such use will meet the intent of this chapter. The city council expressly finds that assignment of such fees to a group with the authority to administer a regional conservation plan.

CITY OF LANCASTER AB 1600 Report

Fund 412 Balance:

Fund 412 Biological Impact Fee

Beginning Fund Balance as of July 1, 2024 $ 1,047,770.88

Revenues
Fees Collected $ 65,628.90
Interest Earned $ 2,708.31

Other
Revenue(s) $ -
Total Revenues $ 68,337.21

Expenses
Project Expenses $ (1,047,008.93)
Other Charges $ -
Total Expenses $ (1,047,008.93)

Transfers In $ -
Transfers Out $ -

Ending Balance as of June 30, 2025 $ 69,099.16
Fee Schedule:

BIOLOGICAL IMPACT FEE $770.00 per gross acre

OPEN SPACE FEE
Single Family Dwellings $361.00 per dwelling unit
Multi-Family Dwellings/Mobile Homes $244.00 per dwelling unit Commercial $0.07 per gross bldg. 1,000 SF
Office $0.08 per gross bldg. 1,000 SF
Industrial $0.04 per gross bldg. 1,000 SF

CITY OF LANCASTER AB 1600 Report

Other (Impact) Fee (Fund 101):

Fund 101Other (Impact) Fee

Beginning Fund Balance as of July 1, 2024 $ -

Revenues
Fees Collected $ 1,234,140.00
Interest Earned $ -

Other
Revenue(s) $ -
Total Revenues $ 1,234,140.00

Expenses
Project Expenses $ (1,200,000.00)
Other Charges $ -
Total Expenses $ (1,200,000.00)

Transfers In $ -
Transfers Out $ -

Ending Balance as of June 30, 2025 $ -

Park Development Credits (Fund 203):

Fund 203 Park Development Credits

Beginning Fund Balance as of July 1, 2024 $ 466,357.38

Revenues
Fees Collected $ 279,504.92
Interest Earned $ 24,655.61

Other
Revenue(s) $ -
Total Revenues $ 304,160.53

Expenses
Project Expenses $ (199,346.19)
Other Charges $ -
Total Expenses $ (199,346.19)

Transfers In $ -
Transfers Out $ -

Ending Balance as of June 30, 2025 $ 571,171.72

CITY OF LANCASTER AB 1600 Report

Development Impact Fee Summary

Beginning
Balance - 466,357 10,987,473 1,047,771 1,664,854 2,111,143 Revenues 1,234,140 304,161 1,242,045 68,337 647,506 700,495 Expenses (1,200,000) (199,346) (1,431,544) (1,047,009) (857,309) (48,428) Transfer In - - - - - - Transfer Out - - - - (84,895) - Ending Balance 34,140 571,172 10,797,973 69,099 1,370,156 2,763,210

CITY OF LANCASTER AB 1600 Report

APPENDIX A
Public Notice

2024-2025
AB 1600 ANNUAL REPORT

DEVELOPMENT IMPACT FEES

CITY OF LANCASTER AB 1600 Report

LEGAL NOTICE

CITY OF LANCASTER

NOTICE OF PUBLIC COMMENT PERIOD
AB1600 DEVELOPMENT IMPACT ANNUAL REPORT
2024-2025 FISCAL YEAR

Notice is hereby given that the City of Lancaster will hold a fifteen -day public comment period on the AB 1600 Development Impact Fee Report for the 2025 Fiscal Year, in compliance with recent changes to the Mitigation Fee Act, pursuant to California Assembly Bill 602 requirements.

PUBLIC COMMENT PERIOD: March 7th, 2026 to
March 22nd, 2026

PLACE OF REVIEW: Lancaster City Hall
44933 Fern Avenue
Lancaster, CA 93534

All interested persons are invited to review and comment on the AB 1600 Development Impact Annual Report for the Fiscal Year 2024- 2025 during the 15 -day public review and comment period from March 7th, 2026 to March 22nd, 2026. Citizens wishing to submit written comments during the public review and comment period may mail them, postmarked no later than March 22nd, 2026, to the following:

City of Lancaster
Attention: City Clerk
44933 Fern Avenue
Lancaster, California 93534

In compliance with the Americans with Disabilities Act, this meeting will be held at a location accessible to persons with disabilities; if you need special assistance to participate in this public meeting, please contact the City Clerk at (661)723-6020. TDD users may call the California TDD Relay Service at 1-800-735-2922. Services such as American Sign Language interpreters, a reader during the meeting, auxiliary aids, large print copies of the agenda and/or translation assistance for non -English speaker s are available upon reasonable and timely request. To ensure availability, you are advised to make your request at least 72 hours prior to the meeting/event you wish to attend. Due to difficulties in securing sign language interpreters, five or more noisiness days’ notice is strongly recommended. For additional information, please contact the City Clerk at (661)723-6020.

______________________________ DATED: March 7
th, 2026

ANDREA ALEXANDER
City Clerk
City of Lancaster
------------------------------------------------------------------------------------------------------------------------------ Published: March 7th, 2026 - Antelope Valley Press (Public Notices) - City of Lancaster website

CITY OF LANCASTER AB 1600 Report

APPENDIX B
Summary of Citizen Participation Comments
(To be inserted after the conclusion of the
public review and comment period on March 7, 2026)

2024-2025
AB 1600 ANNUAL REPORT

DEVELOPMENT IMPACT FEES

STAFF REPORT
City of Lancaster
NB 1
3/24/2026
TN
Date:March 24, 2026
To: Mayor Parris and City Council Members
From: George N. Harris II, Senior Director/Treasurer – Administrative Services Subject: Adopt Resolution updating a Policy for the Investment of Public Funds Recommendation:

Adopt Resolution No. _____, rescinding Resolution No. 18-06 in its entirety, and establishing a policy for the investment of public funds for the City of Lancaster.

G.C. Section 84308: No
Fiscal Impact:

None
Background:

Investing funds is a crucial component of a sound financial and cash management program. A formal investment policy is necessary to identify investment objectives, define risk tolerance, assign responsibility, and establish control over the investment process. The Investment Policy of the City of Lancaster (the City), in conformance with State laws, is intended to provide guidelines to the City Treasurer for the prudent investment of the City's temporary idle cash not governed by bond indentures or bond resolutions, and to outline policies for maximizing the efficiency of the City's cash management system. All City funds will be invested in accordance with this Investment Policy and with applicable sections of the California Government Code. Staff have recently undertaken a thorough review of the City’s current Investment Policy with the assistance of the City’s investment advisory firm, Cutwater Asset Management, dba Insight Investments. Although language throughout the policy has been updated to reflect current definitions, only one adjustment to our existing investment policy is recommended.
2 3
3 7
The City is legally authorized to invest in medium-term notes issued by corporations and operating within the United States or by depository institutions licensed by the United States or any state and operating with the United States, with a final maturity not exceeding five years, and rated at least AA. No more than 5% of the City’s total portfolio shall be invested in any one issuer, and the aggregate investment shall not exceed 30% of the City’s total portfolio.

This change represents a 10% increase over the previous 20% aggregate investment of the City’s total portfolio, thus allowing the City to realize greater investment earnings.

No other changes have been made and the guiding principles previously adopted by the City Council remain a controlling focal point of the policy. These principles include the “prudent person rule”, which states that investments should be made with the same judgment and care that persons of prudence, discretion and intelligence would exercise for their own affairs. The objectives of the City’s investment program have been expanded beyond the previous objectives of safety, liquidity and yield to include diversification and regulatory and legal compliance.

Attachment:

Resolution No. _____
Final Draft Proposed Investment Policy
2 3
3 7
No other changes have been made and the guiding principles previously adopted by the City Council remain a controlling focal point of the policy. These principles include the “prudent person rule”, which states that investments should be made with the same judgment and care that persons of prudence, discretion and intelligence would exercise for their own affairs. The objectives of the City’s investment program have been expanded beyond the previous objectives of safety, liquidity and yield to include diversification and regulatory and legal compliance.

RESOLUTION NO. XX-XX

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
LANCASTER, CALIFORNIA, RESCINDING RESOLUTION NO.
18-06 IN ITS ENTIRETY, AND ESTABLISHING A POLICY FOR

THE INVESTMENT OF PUBLIC FUNDS FOR THE CITY OF
LANCASTER.

WHEREAS, investment income is an important source of revenue to the City of Lancaster and one which requires protection from loss while maximizing yield; and WHEREAS, for several years the City has produced monthly investment reports; and WHEREAS, the City of Lancaster is required by State law to adopt an investment policy; and
WHEREAS, from time to time it becomes necessary to update the City of Lancaster Investment Policy.

NOW, THEREFORE, BE IT RESOLVED AS FOLLOWS:

Section 1.

Section 2.
hereby adopted.

Resolution No. 18-06 is hereby rescinded in its entirety.

The City of Lancaster's Investment Policy, as specified in Exhibit A, is PASSED, APPROVED, and ADOPTED this 24th day of March, 2026, by the following vote:

AYES:

NOES:

ABSTAIN:

ABSENT:

ATTEST: APPROVED:

ANDREA ALEXANDER
City Clerk, City of Lancaster
R. REX PARRIS
Mayor, City of Lancaster
Resolution No. XX-XX

STATE OF CALIFORNIA }
COUNTY OF LOS ANGELES }
CITY OF LANCASTER }

CERTIFICATION OF RESOLUTION

CITY COUNCIL
I, _, City of
Lancaster, CA do hereby certify that this is a true and correct copy of the original Resolution No.

XX-XX, for which the original is on file in my office.

WITNESS MY HAND AND THE SEAL OF THE CITY OF LANCASTER, on this _ day of -J
(seal)
Resolution No. XX-XX

Resolution No. XX-XX

Exhibit A
City of Lancaster
Investment Policy
The Investment Policy of the City of Lancaster (the City), in conformance with State laws, is intended to provide guidelines to the City Treasurer for the prudent investment of the City's temporary idle cash not governed by bond indentures or bond resolutions and to outline policies for maximizing the efficiency of the City's cash management system. All City funds will be invested in accordance with this Investment Policy and with applicable sections of the California Government Code.

This Investment Policy was adopted by the City Council of the City of Lancaster on March 24, 2016 and replaces any previous investment policy or investment procedures of the City.

SCOPE
This Investment Policy (the Policy) applies to the investment of all cash and various funds of the City as identified in the City's Comprehensive Annual Financial Report, with the exception of those cash assets governed by bond indentures, bond resolutions, employees' retirement and deferred compensation funds.

All cash shall be pooled for investment purposes. Per Section 53647 of California Government Code, interest on all deposits may be allocated to the General Fund unless otherwise required by Federal or State regulation or local ordinance.

OBJECTIVES
The City's cash management system is designed to accurately monitor and forecast expenditures and revenues, thus enabling the City to invest funds to the fullest extent possible within the guidelines of this Policy. The City's funds shall be invested in accordance with all applicable City codes and resolutions, California statutes, and Federal regulations, and in a manner designed to achieve a diversified portfolio after meeting the criteria established below, which are listed in priority order:

1. Preservation of capital and protection of investment principal.

2. Maintenance of sufficient liquidity to meet anticipated cash flows.

3. Attainment of a market rate of return.

4. Diversification to avoid incurring unreasonable market risks.

Resolution No. XX-XX

Resolution No. XX-XX

DELEGATION OF AUTHORITY
The management responsibility for the City's investment program is delegated annually by the City Council to the City Treasurer (the Treasurer) in accordance with California Government Code Section 53607. The City's Finance Director serves as the Treasurer. The Treasurer may delegate the authority to conduct investment transactions and to manage the operation of the investment portfolio to the Deputy City Treasurer and to other specifically authorized employees. The Treasurer shall maintain a list of persons authorized to transact securities business for the City.

No person may engage in an investment transaction except as expressly provided under the terms of this Policy.

The Treasurer shall develop administrative procedures and internal controls, consistent with this Policy, for the operation of the City's investment program. Such procedures shall be designed to prevent losses of public funds arising from fraud, employee error, misrepresentation by third parties, or imprudent actions by employees of the City.

The City may engage the support services of outside investment advisors in regard to its investment program, so long as it can be clearly demonstrated that these services produce a net financial advantage or necessary financial protection of the City's financial resources.

PRUDENCE
The standard of prudence to be used for managing the City's investments shall be California Government Code Section 53600.3, the prudent investor standard, which states that "When investing, reinvesting, purchasing, acquiring, exchanging, selling, or managing public funds, a trustee shall act with care, skill, prudence, and diligence under the circumstances then prevailing, including, but not limited to, the general economic conditions and the anticipated needs of the agency, that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain the liquidity needs of the agency."
The City's overall investment program shall be designed and managed with a degree of professionalism that is worthy of the public trust. The City recognizes that no investment is totally without risk and that the investment activities of the City are a matter of public record. Accordingly, the City recognizes that occasional measured losses may occur in a diversified portfolio and shall be considered within the context of the overall portfolio's return, provided that adequate diversification has been implemented and that the sale of a security is in the best long-term interest of the City.

The Treasurer and authorized employees acting in accordance with written procedures and exercising due diligence shall be relieved of personal responsibility for an individual security's credit risk or market price changes, provided that the deviations from expectations are reported in a timely fashion to the City Council and appropriate action is taken to control adverse developments.

Resolution No. XX-XX

Resolution No. XX-XX

ETHICS AND CONFLICTS OF INTEREST
Elected officials and employees involved in the investment process shall refrain from personal business activity that could conflict with proper execution of the investment program or that could impair or create the appearance of an impairment of their ability to make impartial investment decisions. Employees involved in the investment process shall disclose to the Treasurer any business interests they have in financial institutions that conduct business with the City and they shall subordinate their personal investment transactions to those of the City. In addition, the Treasurer and other Designated Employees shall comply with the reporting requirement of the City's Conflict of Interest Code and shall file a Statement of Economic Interests each year in accordance with California Government Code Section 87203 and regulations of the Fair Political Practices Commission.

AUTHORIZED SECURITIES AND TRANSACTIONS
All investments and deposits of the City shall be made in accordance with California Government Code Sections 16429.1, 53600-53609 and 53630-53686, except that, in accordance with California Government Code Section 5903(e), proceeds of bonds and any money set aside or pledged to secure payment of the bonds may be invested in securities or obligations described in the ordinance, resolution, indenture, agreement, or other instrument providing for the issuance of the bonds. Any amendments to these code sections will be assumed to be part of this Policy immediately upon being enacted. However, in the event that such amendments conflict with this Policy and past City investment practices, the City may delay adherence to the new requirements when it is deemed in the best interest of the City to do so. In such instances, after consultation with the City's attorney, the Treasurer will present a recommended course of action to the City Council for approval.

The City has further restricted the eligible types of securities and transactions as follows:

1. United States Treasury bills, notes, bonds, or strips with a final maturity not exceeding five years from the date of trade settlement.

2. Federal Instrumentality (government sponsored enterprise) debentures, discount notes, callable and step-up securities, with a final maturity not exceeding five years from the date of trade settlement. Subordinated debt may not be purchased.

3. Non-negotiable Certificates of Deposit with maturities not exceeding five years, in FDIC insured state or nationally chartered banks or savings banks with a California branch office and that qualify as a depository of public funds in the State of California as defined in California Government Code Section 53630.5. Certificates of Deposit in amounts exceeding Federal Deposit Insurance Corporation (FDIC) insurance coverage shall be secured in accordance with California Government Code Section 53652. The aggregate amount invested in Certificates of Deposit shall not exceed 25% of the City's total portfolio.

4. Placement Service Deposits: Deposits may be placed using a private sector entity that assists in the placement of deposits per section 53601.8 and 53635.8 in the Government Code. No more than 5% of the portfolio may be invested through any one private sector entity that assists in the placement of such deposits and the aggregate investment in Certificates of Deposit shall not exceed 25% of the portfolio.

Resolution No. XX-XX

Resolution No. XX-XX

5. Medium-Term Notes issued by corporations organized and operating within the United States or by depository institutions licensed by the United States or any state and operating within the United States, with a final maturity not exceeding five years from the date of trade settlement, and rated at least AA- or the equivalent by a nationally recognized statistical ratings organization (NRSRO). No more than 5% of the City's total portfolio shall be invested in any one issuer, and the aggregate investment in medium-term notes shall not exceed 30% of the City's total portfolio.

6. Prime Commercial Paper with a maturity not exceeding 270 days from the date of trade settlement with the highest ranking or of the highest letter and number rating as provided for by a NRSRO. The entity that issues the commercial paper shall meet all of the following conditions in either sub-paragraph A. or sub-paragraph B. below:

A. The entity shall (1) be organized and operating in the United States as a general corporation, (2) have total assets in excess of $500 million and (3) have debt other than commercial paper, if any, that is rated at least A or the equivalent by a NRSRO.

B. The entity shall (1) be organized within the United States as a special purpose corporation, trust, or limited liability company, (2) have program-wide credit enhancements, including, but not limited to, over-collateralization, letters of credit or surety bond and (3) have commercial paper that is rated at least A-1 or the equivalent by a NRSRO.

No more than 5% of the City's total portfolio shall be invested in the commercial paper of any one issuer, and the aggregate investment in commercial paper shall not exceed 25% of the City's total portfolio.

7. Eligible Banker's Acceptances with a maturity not exceeding 180 days from the date of trade settlement, issued by a FDIC insured commercial bank with combined capital and surplus of at least $250 million, whose senior long-term debt is rated at least A or the equivalent by a NRSRO at the time of purchase. No more than 2% of the City's total portfolio shall be invested in banker's acceptances of any one issuer, except that a banker's acceptance issued by a bank authorized to handle the City's daily primary banking needs may, when aggregated with the funds in demand deposits in all such authorized banks, be in an amount up to 10% of the City's total portfolio. The aggregate investment in banker's acceptances shall not exceed 15% of the City's total portfolio.

8. Repurchase Agreements with a final termination date not exceeding 30 days collateralized by U.S. Treasury obligations or Federal Instrumentality securities listed in items 1 and 2 above with the maturity of the collateral not exceeding ten years. For the purpose of this section, the term collateral shall mean purchased securities under the terms of the City's approved Master Repurchase Agreement. The purchased securities shall have a minimum market value including accrued interest of 102% of the dollar value of the funds borrowed. Collateral shall be held in the City's custodian bank and the market value of the collateral securities shall be marked-to-the-market daily.

Resolution No. XX-XX

Resolution No. XX-XX

Repurchase Agreements shall be entered into only with broker/dealers and who are recognized as Primary Dealers with the Federal Reserve Bank of New York or have a Primary Dealer within their holding company structure. Repurchase agreement counterparties shall execute a City approved Master Repurchase Agreement. The Treasurer shall maintain a copy of the City's approved Master Repurchase Agreement along with a list of broker/dealers who have executed same.

9. State Obligations and Local Agency Issues: Municipal Bonds, registered treasury notes or bonds of any of the 50 states including bonds payable solely out of the revenues from a revenue producing property owned, controlled, or operated by a state or by a department, board, agency, or authority of any of the 50 states.

Bonds, notes, warrants, or other evidences of indebtedness of any local agency within California, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the local agency, or by a department, board, agency, or authority of the local agency.

In addition, these securities must be rated at least AA- or the equivalent by a NRSRO with maturities not exceeding five years from the date of trade settlement. No more than 5% of the City's total portfolio shall be invested in any one municipal issuer. In addition, the aggregate investment in municipal bonds may not exceed 20% of the portfolio.

10. State of California's Local Agency Investment Fund (LAIF), in accordance with California Government Code Section 16429.1.

11. Money Market Mutual Funds registered under the Investment Company Act of 1940 that are "no-load" (meaning no commission or fee shall be charged on purchases or sales of shares); have a constant net asset value per share of $1.00; invest only in the securities and obligations authorized in the applicable California statutes. The fund must be rated in the highest category by at least two NRSROs or retain an investment advisor registered with the SEC or exempt from registration and which has not less than five years of experience investing in money market instruments with assets under management in excess of $500 million. No more than 10% of the City's total portfolio shall be invested in money market funds of any one issuer, and the aggregate investment in money market funds shall not exceed 20% of the City's total portfolio.

Securities that have been downgraded to a level that is below the minimum ratings described herein may be sold or held at the City's discretion. The portfolio will be brought back into compliance with Investment Policy guidelines as soon as is practicable.

The foregoing list of authorized securities and transactions shall be strictly interpreted. Any deviation from this list must be preapproved by resolution of the City Council.

PORTFOLIO MATURITIES AND LIQUIDITY
To the extent possible, investments shall be matched with anticipated cash flow requirements and known future liabilities. The City will not invest in securities maturing more than five years from the date of trade settlement, unless the City Council has by resolution granted authority to make Resolution No. XX-XX

such an investment at least three months prior to the date of investment.

Notwithstanding the above, reserve funds relating to bond issues may be invested in securities for more than five years if the maturity of such investments is made to coincide as nearly as practicable with the expected use of the funds.

DIVERSIFICATION
The City will diversify investment instruments to avoid incurring unreasonable risks in over investing in specific instruments, individual financial institutions or maturities. The following portfolio maximums shall apply:

Authorized Investment
Portfolio
Maximum
Maximum
Maturity
U.S. Treasury Securities No limit 5 Years
Federal Instrumentality Securities No limit 5 Years
Repurchase Agreements No limit 30 Days
Prime Commercial Paper 40%, 5% any one issuer 270 Days
Banker’s Acceptances 2%* 180 Days
Medium-Term Notes 30%, 5% any one issuer 5 Years
Certificates of Deposit 30% 5 Years
Municipal Bonds No limit, 5% any one issuer 5 Years
LAIF No limit N/A
Cal Class No limit N/A
Money Market Mutual Funds 20%, 10% any one issuer N/A
* Banker's acceptances issued by a bank authorized to handle the City's daily primary banking needs may, when aggregated with the funds in demand deposits in all such authorized banks, be in an aggregate amount up to 10% of the City's total portfolio. The aggregate investment in banker's acceptances shall not exceed 15% of the City's total portfolio.

SELECTION OF BROKER/DEALERS
The Treasurer shall maintain a list of broker/dealers approved for investment purposes, and it shall be the policy of the City to conduct transactions only with those brokers and the firms they represent. Each approved broker/dealer must possess an authorizing certificate from the California Commissioner of Corporations as required by Section 25210 of the California Corporations Code. The firms they represent must:

1. be recognized as Primary Dealers by the Federal Reserve Bank of New York or have a Primary Dealer within their holding company structure, or

2. report voluntarily to the Federal Reserve Bank of New York, or Resolution No. XX-XX

Resolution No. XX-XX

3. qualify under Securities and Exchange Commission (SEC) Rule 15c3-1 (Uniform Net Capital Rule).

In the event that an external advisor is not used in the process of recommending a particular transaction for the City's portfolio, each authorized broker/dealer shall be required to submit and annually update a City approved Broker/Dealer Information Request form which includes the firm's most recent audited financial statements. The Treasurer shall maintain a list of the broker/dealers that have been approved by the City, along with each firm's most recent broker/dealer Information Request form.

The City may purchase commercial paper from direct issuers even though they are not on the approved broker/dealer list as long as they meet the criteria outlined in Item 6 of the Authorized Securities and Transactions section of this Policy.

COMPETITIVE TRANSACTIONS
Each investment transaction shall be competitively transacted with authorized broker/dealers. At least three broker/dealers shall be contacted for each transaction and their bid and offering prices shall be recorded. If the City is offered a security for which there is no other readily available competitive offering, then the Treasurer will document quotations for comparable or alternative securities.

SELECTION OF BANKS
The Treasurer shall maintain a list of banks approved to provide depository and other banking services for the City. To be eligible for authorization, a bank shall qualify as a depository of public funds in the State of California as defined in California Government Code Section 53630.5, shall be a member of the FDIC and shall secure all deposits exceeding FDIC insurance coverage in accordance with California Government Code Section 53652.

SAFEKEEPING AND CUSTODY
The Treasurer shall select a bank to provide safekeeping and custodial services for the City, in accordance with the provisions of Section 53608 of the California Government Code. A City approved Safekeeping Agreement shall be executed with the custodian bank prior to utilizing that bank's safekeeping services. The custodian bank will be selected on the basis of its ability to provide satisfactory safekeeping services and the competitive pricing of them.

The purchase and sale of securities and repurchase agreement transactions shall be settled on a delivery versus payment basis. All securities shall be perfected in the name of the City. Sufficient evidence to title shall be consistent with modern investment, banking and commercial practices.

All investment securities purchased by the City will be delivered by book entry and will be held by the City's custodian bank or its Depository Trust Company (OTC) participant account.

The City's custodian shall be required to furnish the City a list of holdings on at least a monthly basis and safekeeping receipts or customer confirmations shall be issued for each transaction.

Resolution No. XX-XX

Resolution No. XX-XX

INTERNAL CONTROL
The Treasurer shall provide for interim and annual review of the City's investment activities by an external independent auditor. This review will provide internal control by assuring compliance with the City's investment policies and procedures.

PORTFOLIO PERFORMANCE
The investment portfolio shall be designed to attain a market rate of return throughout budgetary and economic cycles, taking into account prevailing market conditions, risk constraints for eligible securities, and cash flow requirements. The performance of the City's investments shall be compared to the average yield on the U.S. Treasury security that most closely corresponds to the portfolio's actual weighted average effective maturity. When comparing the performance of the City's portfolio, its rate of return will be computed net of all fees and expenses.

REPORTING
Monthly, the Treasurer shall submit to the City Council a report of the City's investment portfolio.

Per California Government Code Section 53646(b), the report shall include the following information:

1. Investment type, issuer, date of maturity, par value and dollar amount invested in all securities, and investments and monies held by the City;

2. A description of the funds, investments and programs;

3. A market value as of the date of the report (or the most recent valuation as to assets not valued monthly) and the source of the valuation;

4. A statement of compliance with the investment policy or an explanation for non-compliance; and

5. A statement of the City's ability to meet expenditure requirements for six months, and an explanation of why money will not be available if that is the case.

POLICY REVIEW
The Treasurer shall review this Investment Policy annually. Any modifications thereto shall be approved by resolution of the City Council.

Resolution No. XX-XX

Resolution No. XX-XX

GLOSSARY OF SELECTED TERMS
Cash Flow
A comparison of cash receipts (revenues) to required payments (debt service, operating expenses, etc.).

Credit Ratings
Various alphabetical and numerical designations used by credit rating or nationally recognized statistical rating organizations (NRSROs), institutional investors, Wall Street underwriters, and commercial rating companies to give relative indications of bond and note creditworthiness.

Long-term Ratings
The three most commonly used NRSROs are Standard & Peer's, Fitch Ratings, and Moody's. Standard & Peer's and Fitch Ratings use the same system, starting with their highest rating of AAA, AA, A, BBB, BB, B, CCC, CC, C and D for default. Moody's Investors Service uses Aaa, Aa, A, Baa, Ba, B, Caa, and Ca. Each of the services uses pluses (+), and minuses(-), or numerical modifiers to indicate steps within each category. The S&P ratings from AA to CCC may be modified by the addition of a plus (+) or (-) sign to show relative standing within the major rating categories. Moody's appends numerical modifiers 1, 2, and 3 to each generic rating classification from Aa through Caa. The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category. The top four letter categories are considered investment grade ratings.

Short-term Ratings
Standard & Poor's short-term ratings system is A-1+, A-3, B, C and/ for default. Fitch Ratings use F1+, F3, B, C and/ for default. Finally, Moody's uses P1 and P3, anything below P3 is considered not prime.

Credit Risk
The chance that an issuer will be unable to make scheduled payments of interest and principal on an outstanding obligation. Another concern for investors is that the market's perception of an issuer/borrower's credit will cause the market value of a security to fall, even if default is not expected.

Liquidity
The measure of the ability to convert an instrument to cash on a given date at full face or par value.

Liquidity Risk
The risk that a security, sold prior to maturity, will be sold at a loss of value. For a local agency, the liquidity risk of an individual investment may not be as critical as how the overall liquidity of the portfolio allows the agency to meet its cash needs.

Maturity
The date on which the principal or stated value of an investment becomes due and payable.

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Resolution No. XX-XX

Par Amount or Par Value
The principal amount of a note or bond which must be paid at maturity. Par, also referred to as the "face amount" of a security, is the principal value stated on the face of the security. A par bond is one sold at a price of 100 percent of its principal amount.

Portfolio
Combined holdings of more than one stock, bond, commodity, real estate investment, cash equivalent, or other asset. The purpose of a portfolio is to reduce risk by diversification.

Principal
The face amount or par value of a debt instrument, or the amount of capital invested in a given maturity.

Risk
The uncertainty of maintaining the principal or interest associated with an investment due to a variety of factors.

Yield
The current rate of return on an investment security generally expressed as a percentage of the security's current price.

Glossary excerpts from Local Agency Investment Guidelines published by the California Debt and Investment Advisory Commission, Update for 2026.

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GLOSSARY OF INVESTMENT INSTRUMENTS
Banker's Acceptance
A draft or bill or exchange accepted by a bank or trust company. The accepting institution, as well as the issuer, guarantees payment of the bill.

Bonds
A debt obligation of a firm or public entity. A bond represents the agreement to repay the debt in principal and, typically, in interest on the principal.

Callable Securities
An investment security that contains an option allowing the issuer to retire the security prior to its final maturity date.

Certificate of Deposit
A short-term, secured deposit in a financial institution that usually returns principal and interest to the lender at the end of the loan period. Certificates of Deposit (CDs) differ in terms of collateralization and marketability. Those appropriate to public agency investing include:

Negotiable Certificates of Deposit
Generally, short term debt instrument that usually pays interest and is issued by a bank, savings or federal association, state or federal credit union, or state-licensed branch of a foreign bank. The majority of negotiable CDs mature within six months while the average maturity is two weeks. Negotiable CDs are traded in a secondary market and are payable upon order to the bearer or initial depositor (investor). Negotiable CDs are insured by FDIC up to $250,000, but they are not collateralized beyond that amount.

Non-Negotiable Certificates of Deposit
CDs that carry a penalty if redeemed prior to maturity. A secondary market does exist for non-negotiable CDs, but redemption includes a transaction cost that reduces returns to the investor. Non-negotiable CDs issued by banks and savings and loans are insured by the Federal Deposit Insurance Corporation up to the amount of $250,000, including principal and interest. Amounts deposited above this amount may be secured with other forms of collateral through an agreement between the investor and the issuer. Collateral may include other securities including Treasuries or agency securities such as those issued by the Federal National Mortgage Association.

Commercial Paper
An unsecured short-term promissory note issued by corporations or municipalities, with maturities ranging from 2 to 270 days.

Corporate Notes and Bonds
Debt instruments, typically unsecured, issued by corporations, with original maturities in most cases greater than one year and less than ten years.

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Government Sponsored Enterprises (GSE)
Privately held corporations with public purposes created by the U.S. Congress to reduce the cost of capital for certain borrowing sectors of the economy. Securities issued by GSEs carry the implicit backing of the U.S. Government, but they are not direct obligations of the U.S.

Government. For this reason, these securities will offer a yield premium over Treasuries.

Local Government Investment Pool (LGIP)
Investment pools that range from the State Treasurer's Office Local Agency Investment Fund (LAIF) to county pools, to Joint Powers Authorities (JPAs). These funds are not subject to the same SEC rules applicable to money market mutual funds.

Medium Term Note
Corporate or depository institution debt securities meeting certain minimum quality standards (as specified in the California Government Code) with a remaining maturity of five years or less.

Municipal Notes, Bonds, and Other Obligations
Obligations issued by state and local governments to finance capital and operating expenses.

Note
A written promise to pay a specified amount to a certain entity on demand or on a specified date.

Usually bearing a short-term maturity of a year or less (though longer maturities are issued - see "Medium-Term Note").

Repurchase Agreements
An agreement of one party (for example, a financial institution) to sell securities to a second party (such as a local agency) and simultaneous agreement by the first party to repurchase the securities at a specified price from the second party on demand or at a specified date.

Glossary excerpts from Local Agency Investment Guidelines published by the California Debt and Investment Advisory Commission, Update for 2026.