Norco City Council
February 4, 2026

AGENDA
City Council

SUCCESSOR AGENCY TO THE

REDEVELOPMENT AGENCY

FOR THE CITY OF NORCO
Wednesday, February 4, 2026
City Council Chamber – Norco City Hall
2820 Clark Avenue, Norco, CA 92860
CALL TO ORDER 7:00 PM
ROLL CALL Robin Grundmeyer, Mayor
Gregory Bowen, Mayor Pro Tem
Kevin Bash, Council Member
Greg Newton, Council Member
Fia Sullivan, Council Member
PLEDGE OF ALLEGIANCE Council Member Greg Newton
INVOCATION Pastor Michelle Ehrenberg
The Redeemer's Community Church
PRESENTATIONS Recognition of Good Samaritan to
Citizens who helped during a traffic
collision that occurred on December
18, 2025
2026 Legislative Update from City
Attorney's Office
2026 Legislative Housing Update from
Community Development Department

1. CITY COUNCIL REPORTS ON REGIONAL BOARDS

2. PUBLIC COMMENTS
This is the time when persons wishing to address the presiding governmental body regarding the Consent Calendar, Legislative Matters or items within the subject matter jurisdiction of the legislative body. Please submit a speaker card to the Meeting Clerk. Please limit comments to three minutes or less. The Ralph M. Brown Act limits the governmental body’s ability to respond to comments on non-agendized matters at the time such comments are made. The governmental body shall not discuss or act relative to any general public comment.

3. CONSENT CALENDAR
City Council Agenda - February 4, 2026
All items listed under the Consent Calendar are considered to be routine and may be enacted by one motion. Prior to the motion to consider any action by the presiding governmental body, any public comments on any of the Consent Items will be heard. There will be no separate action unless members of the governmental body or the audience request specific items be removed from the Consent Calendar. Items removed from the Consent Calendar will be separately considered under Item 3 of the Agenda.

3.A. Waive Reading of all Ordinance Adoptions on this Agenda and Read by Title Only
RECOMMENDATION:

Waive reading, by title only, of all Ordinances and Resolutions. Said Ordinances and Resolutions which appear on the agenda shall be determined to have been read by title and further reading waived.

Staff Report - Pdf

3.B. Approval of City Council Regular Meeting Minutes
RECOMMENDATION:

Approval of City Council Regular Meeting Minutes.

Staff Report - Pdf

3.C. Quarterly Investment Report for Quarter Ended December 31, 2025 RECOMMENDATION:

Receive and file the Quarterly Investment Report for the Quarter Ended December 31, 2025.

Staff Report - Pdf

3.D. Report on Fiscal Year 2024-25 Audited Financial Reports RECOMMENDATION:

Receive and file the Fiscal Year 2024-25 Audited Financial Reports.

Staff Report - Pdf

City Council Agenda - February 4, 2026

3.E. Approval of a Use Restriction in Connection with the Transfer of Real Property (APN 122-080-049) from the Successor Agency to the City of Norco Pursuant to Health and Safety Code Section 34181(a)(1)).

RECOMMENDATION:

1. Adopt a resolution approving and authorizing the City Manager to execute and cause to be recorded a Use Restriction governing the transfer of approximately 0.34 acres of real property (APN 122-080- 049) from the Successor Agency to the City of Norco; and

2. Authorize staff to submit the executed Use Restriction to the Countywide Oversight Board and the California Department of Finance for final approval.

Staff Report - Pdf

3.F. Approval of a Use Restriction in Connection with the Transfer of Real Property (APN 122-080-049) to the City of Norco Pursuant to Health and Safety Code Section 34181(a)(1)
RECOMMENDATION:

1. Adopt a resolution approving and authorizing the City Manager to execute and cause to be recorded a Use Restriction governing the transfer of approximately 0.34 acres of real property (APN 122-080- 049) from the Successor Agency to the City of Norco; and

2. Authorize staff to submit the executed Use Restriction to the Countywide Oversight Board and the California Department of Finance for final approval.

Staff Report - Pdf

3.G. Approval of Parcel Map 39067
RECOMMENDATION:

Approve Parcel Map 39067 and authorize the City Clerk to sign the map and authorize the Final Map be transmitted to the County Recorder.

Staff Report - Pdf

4. ITEM(S) PULLED FROM CONSENT CALENDAR

5. LEGISLATIVE MATTERS
No new evidence will be heard from the public as the public hearing has been closed regarding the items listed. If new substantial amendments are made to the Ordinance at this time, the Ordinance will require a "Third" reading and public comments will be allowed.

City Council Agenda - February 4, 2026

5.A. Second Reading, Ordinance No.1138 adopting Zone Code Amendment 2025-02 (City of Norco): A City initiated amendment to Title 18, Section

18.30.46 – Accessory Dwelling Units and Junior Accessory Dwelling Units, updating/clarifying the provisions for compliance with State law.

RECOMMENDATION:

Adopt Second Reading of Ordinance No. 1138 approving Zone Code Amendment 2025-02
Staff Report - Pdf

6. CITY COUNCIL / STAFF COMMUNICATIONS

7. ADJOURNMENT
In compliance with the Americans with Disabilities Act, any person who requires a modification or accommodation in order to participate in this meeting is encouraged to contact the City Clerk’s Office at (951) 270-5623 or [email protected] at least 48 hours prior to the meeting so that reasonable arrangements can be made to ensure accessibility. Staff reports are on file in the City Clerk’s Office.

Any writings or documents provided to a majority of the presiding governmental body regarding any item on this agenda will be available for public inspection at the City Clerk’s Office during normal business hours at Norco City Hall, located at 2870 Clark Avenue in Norco. The meeting is recorded.

City Council

STAFF REPORT
Date: February 4, 2026 Agenda Item:

3.A.

To: Honorable Mayor and City Council Members
From: Lisette Free, City Manager
Prepared By: Janet Martinez, Interim City Clerk
Department: City Clerk
SUBJECT:

Waive Reading of all Ordinance Adoptions on this Agenda and Read by Title Only RECOMMENDATION:

Waive reading, by title only, of all Ordinances and Resolutions. Said Ordinances and Resolutions which appear on the agenda shall be determined to have been read by title and further reading waived.

REVIEWED AND APPROVED BY:

Certified as to Availability of Funds: Joshua Calhoun, Finance Director Approved by: Lisette Free, City Manager
Approved as to Form: Harper and Burns, LLP, City Attorney

City Council

STAFF REPORT
Date: February 4, 2026 Agenda Item:

3.B.

To: Honorable Mayor and City Council Members
From: Lisette Free, City Manager
Prepared By: Janet Martinez, Interim City Clerk
Department: City Clerk
SUBJECT:

Approval of City Council Regular Meeting Minutes
RECOMMENDATION:

Approval of City Council Regular Meeting Minutes.

REVIEWED AND APPROVED BY:

Approved by: Lisette Free, City Manager
Approved as to Form: Harper and Burns, LLP, City Attorney ATTACHMENT(S):

City Council - Jan 21 2026 - Minutes Draft

MINUTES
City Council
Wednesday, January 21, 2026
City Council Chamber – Norco City Hall
2820 Clark Avenue, Norco, CA 92860
CALL TO ORDER 6:00 PM
ROLL CALL Robin Grundmeyer, Mayor
Gregory Bowen, Mayor Pro Tem
Kevin Bash, Council Member
Greg Newton, Council Member
Fia Sullivan, Council Member

CLOSED SESSION
Mayor adjourned to Closed Session at 6:02 p.m.

CONFERENCE WITH REAL PROPERTY NEGOTIATORS
Property: Silverlakes Sports Park - APNs 152060004; 152060011; 152070001; 152070002; and 152070011
Agency Negotiator: City Manager, Deputy City Manager, Finance Director Negotiating parties: City of Norco and Balboa Management Group Under Negotiation: Price and Terms

CONFERENCE WITH REAL PROPERTY NEGOTIATORS
Property: APNs 123040001; 123-040-008; 123040004 (12 contiguous acres of land at 5th and Hillside)
Agency Negotiator: City Manager, Deputy City Manager
Negotiating parties: City of Norco and Meyer Brenda
Under negotiation: Price and terms of payment

CONFERENCE WITH LEGAL COUNCIL - ANTICIPATED LITIGATION
Initiation of litigation pursuant to paragraph (1) of subdivision (d) of Section 54956.9 (1 potential case)
RECONVENE PUBLIC SESSION 7:04 PM

REPORT OF ACTION(S) TAKEN IN CLOSED SESSION
No reportable actions on items 1-3 that were heard.

PLEDGE OF ALLEGIANCE Council Member Kevin Bash
INVOCATION Pastor Kyle Fegan

City Council Minutes - January 21, 2026
Beacon Hill

1. CITY COUNCIL REPORTS ON REGIONAL BOARDS
The Mayor, Mayor Pro Tem and Council Members provided reports on their recent individual participation in committees, commissions, regional boards, and community organizations.

2. PUBLIC COMMENTS
Phillip West spoke regarding a sewer lateral issue at his property, expressing how the City owned pipes are causing blockages and requiring expensive repairs for which he has previously received partial reimbursement for.

Gabriel Morettini expressed his concerns regarding e-bikes within the city. He discussed the unsafe riding inside grocery stores. He suggested implementing code enforcement and fines similar to other cities to protect Norco’s horse city identity.

Jennifer South expressed her concerns regarding setback requirements for backyard chicken coops, stating that conflicting information from the City and State websites led to significant fines. She requested the Council review the existing ordinance and allow flexibility.

3. CONSENT CALENDAR
All items listed under the Consent Calendar are considered to be routine and may be enacted by one motion. Prior to the motion to consider any action by the presiding governmental body, any public comments on any of the Consent Items will be heard. There will be no separate action unless members of the governmental body or the audience request specific items be removed from the Consent Calendar. Items removed from the Consent Calendar will be separately considered under Item 3 of the Agenda.

M/S BASH/NEWTON to approve the Consent Calendar, with Item 3.C. pulled for discussion. The Motion was carried by the following roll call vote:

AYES: GRUNDMEYER, BOWEN, BASH, NEWTON, AND SULLIVAN
NOES: NONE
ABSENT: NONE
ABSTAIN: NONE

3.A. Waive Reading of all Ordinance Adoptions on this Agenda and Read by Title Only

City Council Minutes - January 21, 2026
Action: Waived reading, by title only, of all Ordinances and Resolutions. Said Ordinances and Resolutions which appear on the agenda shall be determined to have been read by title and further reading waived.

3.B. Approval of City Council Regular Meeting Minutes
Action: Approved the City Council Regular Meeting Minutes of January 7, 2026.

3.D. Delinquent Special Taxes – Community Facilities District No. 2001-1 (Norco Ridge Ranch)
Action: Adopted City Resolution No. 2026-04 ordering judicial foreclosure of delinquent special taxes in City of Norco Community Facilities District No. 2001-1 (Norco Ridge Ranch).

3.E. Approval of Microsoft Enterprise Agreement License Renewal Actions:

1. Approved the purchase of Microsoft Software User Licensing with Insight Public Sector, Inc. utilizing the County of Riverside cooperative purchasing agreement ITARC-00930 in an amount not to exceed $296,946 over a three-year term.

2. Authorized the City Manager to execute appropriate contracts and documentation.

3. Authorized the City Manager to approve contract change orders up to $10,000 per each Fiscal Year to accommodate for additional licenses for potential growth in staff, for a total of $326,946.

3.F. Approval of Barracuda Email Protection Subscription Renewal Action: Approved the renewal of the City’s Barracuda Email Protection subscription through Insight Public Sector, Inc. utilizing ONNIA Partners Contract #23-6692-03, in an amount not to exceed $93,370, paid upfront for a three (3) year term.

3.G. Housing Successor Agency Annual Report for Fiscal Year 2024-25 Action: Received and filed the Housing Successor Agency Annual Report for Fiscal Year 2024-25.

3.H. Approval of the proposal from RKA Consulting Group to provide Professional Engineering Services for Santa Anita Road Rehabilitation Project from Corydon

City Council Minutes - January 21, 2026
Avenue to Kips Korner Road
Action: Accepted the design services proposal and awarded a contract to RKA Consulting Group in the amount of $90,700 and authorized the City Manager to approve contract change orders up to 10 percent of the total proposal amount.

3.I. Quarterly Purchase Orders Listing Between $25,000 to $49,999 Action: Received and filed the Quarterly Purchase Orders Listing for the Quarter Ended December 31, 2025.

4. ITEM(S) PULLED FROM CONSENT CALENDAR

3.C. Recap of Actions Taken by the Planning Commission at its Meeting Held on December 10, 2025
Council Member Newton expressed his concerns regarding the Planning Commission approving Item 4.B. and recommended to appeal the findings that were approved by the Planning Commission under Item 4.B.

Council Member Sullivan questioned the approval of the lighting element for a wireless telecommunication facility under Item 4.C. of the Planning Commission agenda and expressed concerns for the matter of how the recommendation was written. The recommendation to appeal this item was later rescinded.

M/S NEWTON/BASH to receive and file the recap of actions taken by the Planning Commission at its meeting held on January 14, 2025. The Motion was carried by the following roll call vote:

AYES: GRUNDMEYER, BOWEN, BASH, NEWTON, AND SULLIVAN
NOES: NONE
ABSENT: NONE
ABSTAIN: NONE

5. PUBLIC HEARING(S)

5.A. First Reading, Ordinance No.1138 adopting Zone Code Amendment 2025-02 (City of Norco): A City initiated amendment to Title 18, Section 18.30.46 – Accessory Dwelling Units and Junior Accessory Dwelling Units, updating/clarifying the provisions for compliance with State law.

City Council Minutes - January 21, 2026
Interim Community Development Director, Mark Tomich, provided a brief presentation on the first reading of an Ordinance that proposes to amend the City’s existing Zoning Ordinance regarding ADU’s. The changes comply with the State's Department of Housing and Community Development (HCD).

Council Member Newton noted that the square footage requirements listed on the report differed from the square footage listed on the Ordinance.

Interim Director Tomich provided clarification on the square footage and noted that the correct number is listed on the proposed Ordinance.

Discussion ensued amongst Council regarding 1) the increased number of detached ADU’s permitted; 2) potential increase of multi-family lots; and 3) decrease of animal keeping area.

Mayor Grundmeyer inquired about the status of the School District's development impact fees and requested clarification from the City Attorney to find out if there will be another Ordinance that will need to be submitted.

Council Member Newton proposed to add additional requirements for those that want to build an ADU, for example adding footage of 1,000 free standing square footage for animals.

Council Member Bash expressed concerns regarding the lack of information that has been discussed within the community regarding the new ADU requirements for all residents of California.

Mayor Grundmeyer requested to obtain the total amount that the City has received from the outreach done by City staff to legalize ADU’s.

City Attorney read ordinance by title only.

M/S BASH/BOWEN to approve the first reading of Ordinance No. 1138. The Motion was carried by the following roll call vote:

AYES: GRUNDMEYER, BOWEN, BASH, NEWTON, AND SULLIVAN
NOES: NONE
ABSENT: NONE
ABSTAIN: NONE

6. CITY COUNCIL / STAFF COMMUNICATIONS
Mayor Pro Tem Bowen spoke in regards to the lots that are purchased in Norco.

City Council Minutes - January 21, 2026
Council Member Bash requested the status from Public Works Director regarding a wall. Public Works Director provided a status.

M/S NEWTON/BASH to require that residential development site plans for discretionary approvals identify animal-keeping areas, access to animal-keeping areas, and locations for proposed or future ADU's, ensuring future property owners have the right to keep animals and engage in small-plot agriculture. The Motion was carried by the following roll call vote:

AYES: GRUNDMEYER, BOWEN, BASH, NEWTON, AND SULLIVAN
NOES: NONE
ABSENT: NONE
ABSTAIN: NONE

7. ADJOURNMENT
Mayor Grundmeyer adjourned the meeting at 8:21 p.m. in memory of Denise Sutherland.
_________________________________
Janet Martinez, CMC
Interim City Clerk

City Council

STAFF REPORT
Date: February 4, 2026 Agenda Item:

3.C.

To: Honorable Mayor and City Council Members
From: Joshua Calhoun, Finance Director
Prepared By: Joshua Calhoun, Finance Director
Department: Finance
SUBJECT:

Quarterly Investment Report for Quarter Ended December 31, 2025 RECOMMENDATION:

Receive and file the Quarterly Investment Report for the Quarter Ended December 31, 2025.

SUMMARY:

The Quarterly Investment Report for the quarter ending December 31, 2025, has been prepared to meet the requirements of the City’s Investment Policy and applicable sections of the State of California Government Code.

BACKGROUND:

The City’s Investment Policy requires the Treasurer to render a quarterly report to the legislative body. The report is to be prepared in accordance with Government Code Section 53646(b)(1) and should contain detailed information on all securities, investments, and monies of the local agency; a statement of compliance of the portfolio with the Statement of Investment Policy; and a statement of the City’s ability to meet its cash flow requirements for the next six months. This report, which is for the quarter ended December 31, 2025, meets the requirements of the Investment Policy and Government Code. It covers funds of the City and the Successor Agency to the former Norco Redevelopment Agency.

The attached schedules (Attachments A through D) have been prepared to meet the detailed requirements of the Government Code and the City’s Investment Policy as approved by the Council on April 16, 2025. It is to be noted that the Investment Policy excludes certain investments (bond proceeds) from these requirements. This means that bond proceeds are invested in accordance with the provisions of the bond indentures rather than the provisions of the Investment Policy. Consequently, in determining whether the operating portfolio holdings are in compliance with the

Government Code and the approved Investment Policy, investments of bond proceeds have been excluded.

Attachment A provides a summary schedule of the City’s operating portfolio holdings by type as of December 31, 2025. This summary also provides information on whether or not each investment category complies with the limitations imposed by State law and the City’s Investment Policy. Investments that are subject to the Statement of Investment Policy are operating or idle funds invested by the Treasurer within the provisions of the approved Investment Policy. During the quarter ended December 31, 2025, the operating portfolio increased by a net amount of $2.9 million from $93.8 million to $96.7 million.

Traditionally, revenue receipts during second quarter of the fiscal year are not sufficient to cover expenditures due to the lag in the receipt of property tax, vehicle license fees, sales tax in lieu, electric and gas franchise fee revenues. However, this quarter that trend reversed mainly due to Sales Tax and Measure R transactions and use tax revenues received during the period exceeded expenditures.

A summary of investments not subject to the provisions of the Investment Policy (bond proceeds and debt service reserve funds) is also shown on Attachment A. These funds are invested in accordance with applicable bond indenture provisions. During the quarter ended December 31, 2025, bond proceeds and debt service reserve fund portfolio decreased by a net amount of $2.3 million from $9.4 million to $7.1 million due to debt service payments.

Attachment B provides a graphical breakdown of the operating portfolio holdings by investment type as of December 31, 2025. This chart is for investments that are subject to the Investment Policy. The operating portfolio consisted of 28.78% investment in the State of California Local Agency Investment Fund (LAIF), 38.12% in the CA Management Plan pool (CAMP), 27.4% in Agency Securities, and the remaining 5.7% in cash.

Attachment C provides a detailed listing of the City’s portfolio holdings as required by the Government Code. In this listing, “N/A” is used to denote that the information is either not available or applicable. Agency Securities issued by United States Government Sponsored Entities (GSEs) are rated “AA+” by Moody’s rating service and “AAA” by S&P Global rating service.

Attachment D indicates cash balances by Fund as additional information to complement the schedule of investment holdings. For the Operating Funds, the cash balance provides an indication of the financial health of each Fund.

Attachment E: Based on cash balances as of December 31, 2025, and anticipated cash receipts for the next six months, staff estimates that there will be sufficient cash to cover disbursements for the City and Successor Agency for the next six months ending June 30, 2026.

FISCAL IMPACT:

This agenda item will not result in a fiscal impact

RELATIONSHIP TO STRATEGIC PLAN:

This item is consistent with Strategic Direction #3 - Economic Development and Financial Stability: Assure financial stability by expanding development efforts, diversifying revenue sources and continuing prudent financial management.

REVIEWED AND APPROVED BY:

Certified as to Availability of Funds: Joshua Calhoun, Finance Director Approved by: Lisette Free, City Manager
Approved as to Form: Harper and Burns, LLP, City Attorney ATTACHMENT(S):

Portfolio Summary (Attachment A)
Summary Charts (Attachment B)
Portfolio Detail (Attachment C)
Detail by Fund (Attachment D)
Certification (Attachment E)

Attachment A
City of Norco, California
Portfolio Summary
As of December 31, 2025
City Investments Subject to Investment Policy Market Value Percentage Policy Maximum ComplianceCash 5,512,690 $ 5.69% NA In ComplianceLocal Agency Investment Fund 27,841,208 28.78% 100% In ComplianceCAMP 36,876,097 38.12% 100% In ComplianceU.S. Government Agency Securities 26,514,416 27.41% 100% In Compliance Total 96,744,410 $ 100.00%

4.429%
City Investments Not Subject to Investment Policy Market Value PercentageCommunity Facilities Districts 1,864,911 $ 26.12%Sewer and Water System 22,208 0.31%Refunding Tax Allocation Bonds 5,251,454 73.56% Total 7,138,573 $ 100.00%

2.572%
Estimated Portfolio YieldEstimated Portfolio Yield

Attachment B

BEGINNING AND ENDING VALUES BREAKDOWN OF INVESTMENTS
Beg. Market Values Ending Market Values
Breakdown 9/30/2025 12/31/2025 Investments Subject to Investment Policy Portfolio % RatingCash 13,656,453 5,512,690 Local Agency Investment Fund 27,841,208 28.78% Not Rated Local Agency Investment Fund 24,050,227 27,841,208 Federal Home Loan Banks 20,280,603 20.96% AA+ California Asset Management Plan 38,535,776 36,876,097 Federal Farm Credit 6,233,813 6.44% AA+ U.S. Government Agency Securities 17,546,904 26,514,416 CA Asset Management Plan 36,876,097 38.12% AAAm Total Market Value 93,789,359 96,744,410 Wells Fargo Checking Account 5,462,352 5.64% Not Rated US Bank Principal Cash 50,338 0.05% Not RatedTOTAL 96,744,410 100%

SUMMARY OF CITY OF NORCO'S PORTFOLIO

INVESTMENTS SUBJECT TO INVESTMENT POLICY
Not Rated
37%
Rated
63%
By Rating
< 1 year
72%
1-3 years
6%
> 3 years
22%
By Maturity (Years)
Local Agency
Investment
Fund
29%
Federal Home
Loan Banks
21% Federal Farm
Credit
6%
CA Asset
Management
Plan
38%
Cash and Cash
Equivalents
6%
By Type

Attachment C Page 1
City of Norco, California
Portfolio Details
As of December 31, 2025
Investments Subject to Policy
Cash & Cash EquivalentsPurchase Date Maturity Date CUSIP # Description of Security Investment
Policy Account Rating
Coupon
Rate
Yield to
Maturity Face Value Cost Market Value
N/A N/A N/A Checking Accounts N/A Wells Fargo N/A N/A 0.00% N/A 5,462,352 5,462,352 N/A N/A N/A Principal Cash N/A US Bank N/A N/A 0.00% N/A 50,338 50,338 Subtotal 5,512,690 5,512,690
Local Agency Investment Fund
Purchase Date Maturity Date CUSIP # Description of Security Investment
Policy Account Rating
Coupon
Rate
Yield to
Maturity Face Value Cost Market Value
N/A N/A N/A Local Agency Investment Fund XI.15 State of California N/A N/A N/A N/A 27,787,590 27,841,208 Subtotal 27,841,208 27,787,590
California Asset Management Plan
Purchase Date Maturity Date CUSIP # Description of Security Investment
Policy Account Rating
Coupon
Rate
Yield to
Maturity Face Value Cost Market Value
N/A N/A N/A California Asset Management Plan XI.13 CA Joint Powers Au N/A N/A N/A N/A 35,000,000 36,876,097 Subtotal 36,876,097 35,000,000
US Bank Custodial Account
01/26/24 1/26/2028 3130AYPJ9 Federal Home Loan Banks XI.5 US Bank AA+ 4.500% 4.504% 6,000,000 6,000,000 5,995,620 08/20/24 8/10/2029 3130B2FW0 Federal Home Loan Banks XI.5 US Bank AA+ 4.500% 4.244% 3,400,000 3,400,000 3,403,978 01/28/25 1/28/2030 3130B4HU8 Federal Home Loan Banks XI.5 US Bank AA+ 4.500% 4.754% 5,000,000 5,000,000 4,995,900 10/29/25 10/16/2030 3130B8E65 Federal Home Loan Banks XI.5 US Bank AA+ 4.500% 4.011% 5,365,000 5,365,000 5,345,418 04/09/25 4/9/2030 3133ETCF2 Federal Farm Credit XI.5 US Bank AA+ 4.500% 4.514% 3,133,000 3,133,000 3,136,60310/28/25 10/28/2030 3133ETK89 Federal Farm Credit XI.5 US Bank AA+ 4.500% 3.729% 3,100,000 3,100,000 3,097,21012/16/25 12/16/2030 3134HCHM4 FHLMC XI.5 US Bank AA+ 4.500% 3.999% 540,000 540,000 539,687 26,514,416 26,538,000
Total Investments Subject to Policy 96,744,410 94,838,280

Attachment C Page 2
City of Norco, California
Portfolio Details
As of December 31, 2025
Investments Not Subject to Policy (Bond Proceeds)Community Facilities Districts Cash and Cash EquivalentsPurchase Date Maturity Date CUSIP # Description of Security Investment
Policy Account Rating
Coupon
Rate
Yield to
Maturity Face Value Cost Market Value
N/A N/A 9AMMF05B2 US Bank Money Market XI.11 US Bank N/A N/A 0.005% N/A 65,893 65,893 N/A N/A 9AMMF05B2 US Bank Money Market XI.11 US Bank N/A N/A 0.005% N/A 180 180 N/A N/A 9AMMF05B2 US Bank Money Market XI.11 US Bank N/A N/A 0.005% N/A 1,486,826 1,486,826 N/A N/A 9AMMF05B2 US Bank Money Market XI.11 US Bank N/A N/A 0.005% N/A 112 112 N/A N/A 31846V203 First American Government XI.11 US Bank AAA N/A 3.379% N/A 870 870 N/A N/A 31846V203 First American Government XI.11 US Bank AAA N/A 3.379% N/A 27,142 27,142N/A N/A 31846V203 First American Government XI.5 US Bank AAA N/A 3.379% N/A 218,631 218,631 Subtotal 1,799,654 1,799,654
Local Agency Investment Fund
Purchase Date Maturity Date CUSIP # Description of Security Investment
Policy Account Rating
Coupon
Rate
Yield to
Maturity Face Value Cost Market Value
N/A N/A N/A Local Agency Investment Fund (CFD 2002-1) XI.13 State of California N/A N/A N/A N/A 65,257 65,131 Subtotal 65,257 65,131Total Community Facilities Districts 1,864,911 1,864,785 Investments Not Subject to Policy (Bond Proceeds)Sewer and Water System Cash and Cash EquivalentsPurchase Date Maturity Date CUSIP # Description of Security Investment
Policy Account Rating
Coupon
Rate
Yield to
Maturity Face Value Cost Market Value
N/A N/A 31846V203 First American Government XI.11 US Bank AAA N/A 3.379% N/A 302 302 N/A N/A 31846V203 First American Government XI.11 US Bank AAA N/A 3.379% N/A 19,383 19,383 N/A N/A 31846V203 First American Government XI.11 US Bank AAA N/A 3.379% N/A 2,516 2,516 N/A N/A 31846V203 First American Government XI.11 US Bank AAA N/A 3.379% N/A 7 7 Subtotal 22,208 22,208Total Sewer and Water System 22,208 22,208

Attachment C Page 3
City of Norco, California
Portfolio Details
As of December 31, 2025
Investments Not Subject to Policy (Bond Proceeds)Refunding Tax Allocation Bonds Cash & Cash EquivalentsPurchase Date Maturity Date CUSIP # Description of Security Investment
Policy Account Rating
Coupon
Rate
Yield to
Maturity Face Value Cost Market Value
N/A N/A 31846V401 First American Government Obligation XI.11 US Bank N/A N/A 3.229% N/A 134,191 134,191 N/A N/A 31846V401 First American Government Obligation XI.11 US Bank N/A N/A 3.229% N/A 407 407N/A N/A 31846V401 First American Government Obligation XI.11 US Bank N/A N/A 3.229% N/A 61,961 61,961N/A N/A 31846V401 First American Government Obligation XI.11 US Bank N/A N/A 3.229% N/A 1,362 1,362N/A N/A 31846V401 First American Government Obligation XI.11 US Bank N/A N/A 3.229% N/A 14,200 14,200N/A N/A 9AMMF05B2 US Bank Money Market XI.11 US Bank N/A N/A 0.005% N/A 95 95 N/A N/A 9AMMF05B2 US Bank Money Market XI.11 US Bank N/A N/A 0.005% N/A 40,967 40,967 N/A N/A 9AMMF05B2 US Bank Money Market XI.11 US Bank N/A N/A 0.005% N/A 28 28 N/A N/A 9AMMF05B2 US Bank Money Market XI.11 US Bank N/A N/A 0.005% N/A 3,949 3,949 N/A N/A 9AMMF05B2 US Bank Money Market XI.11 US Bank N/A N/A 0.005% N/A 56,352 56,352 N/A N/A 9AMMF05B2 US Bank Money Market XI.11 US Bank N/A N/A 0.005% N/A 13 13 N/A N/A 9AMMF05B2 US Bank Money Market XI.11 US Bank N/A N/A 0.005% N/A 15 15 N/A N/A 9AMMF05B2 US Bank Money Market XI.11 US Bank N/A N/A 0.005% N/A 49,829 49,829 N/A N/A 9AMMF05B2 US Bank Money Market XI.11 US Bank N/A N/A 0.005% N/A 107,431 107,431 N/A N/A 9AMMF05B2 US Bank Money Market XI.11 US Bank N/A N/A 0.005% N/A 79 79 N/A N/A 9AMMF05B2 US Bank Money Market XI.11 US Bank N/A N/A 0.005% N/A 73 73 N/A N/A 9AMMF05B2 US Bank Money Market XI.11 US Bank N/A N/A 0.005% N/A 1,973,194 1,973,194 Subtotal . 2,444,147 2,444,147
Local Agency Investment Fund
Purchase Date Maturity Date CUSIP # Description of Security Investment
Policy Account Rating
Coupon
Rate
Yield to
Maturity Face Value Cost Market Value
N/A N/A N/A Local Agency Investment Fund (2010 TABs) XI.13 State of California N/A N/A N/A N/A 27,370 27,422 N/A N/A N/A Local Agency Investment Fund (2003 TABs) XI.13 State of California N/A N/A N/A N/A 124,435 124,675 Subtotal 152,098 151,805
U.S. and Agency Securities
Purchase Date Maturity Date CUSIP # Description of Security Investment
Policy Account Rating
Coupon
Rate
Yield to
Maturity Face Value Cost Market Value
05/26/21 05/26/26 3130AMG63 Federal Home Loan Banks XI.5 US Bank AAA 0.500% 0.505% N/A 1,040,000 1,030,380 05/26/21 05/26/26 3130AMG63 Federal Home Loan Banks XI.5 US Bank AAA 0.500% 0.505% N/A 1,055,000 1,045,24105/26/21 05/26/26 3130AMG63 Federal Home Loan Banks XI.5 US Bank AAA 0.500% 0.505% N/A 585,000 579,589 Subtotal 2,655,210 2,680,000
Total Refunding Tax Allocation Bonds 5,251,454 5,275,951 Total Investments Not Subject to Policy 7,138,573 7,162,944

Attachment D
City of Norco, California
Portfolio Details by Fund
As of December 31, 2025
Investments Subject to Policy Qtr ended
12/31/25
Fund Description Balance
012 Successor Agency Project Fund 2,012
016 Cal Home Grant Fund 263,045
017 Successor Agency Fund 2,081,703
018 Housing Fund 8,997,459
121 General Fund 23,086,335
122 Miscellaneous Grants Fund 105,663
124 Water Fund 6,024,924
126 Sewer Fund 1,680,633
127/132 Measure R Fund 12,331,607
128 Equipment Replacement Fund 4,831,962
129 Storm Drain Fund 595,928
131 Nancy Newman Fund 26,170
133 Gas Tax Fund (1,265)
134 Benefits and Insurance Fund 329,505
135 Information Technology Fund 1,606,201
136 SB1 Road Maintenance & Rehab. Fund 1,217,488
137 Measure A Fund 2,810,697
139 NPDES Fund 8,645
140 General Govt Improvement Fund 526,372
141 Park Improvement Fund 3,868,587
142 Fire Improvement Fund 1,066,300
143 Trail Improvement Fund 252,106
144 Water Capital Fund 4,023,879
146 Public Meeting Facilities Fund 1,176,058
147 Sewer Facilities Fund 11,328,767
149 Street Improvement Fund 1,558,540
151 Animal Control Fund 88,329
152 Facility Improvement Fund 137,982
154 Trust Deposit Fund 695,196
156 AQMD Fund 38,111
158 Waste Management Fund (116,647)
166 Recyled Water Fund 1,562,698
181 CFD 97-1 207,470
182 CFD 2001-1 900,693
183 CFD 2002-1 161,817
179 LMD #1 (12,114)
176 LMD #2 (60,757)
177 LMD #3 (25,463)
186 LMD #4 161,138
187 LMD #5 59,935
Subtotal - General Ledger 93,597,708
Various Outstanding Checks/Deposits in Transit 3,146,702 Total Cash and Investments 96,744,410

Attachment E
Quarterly Investment Portfolio
For the Quarter Ended December 31, 2025
As required by the Government Code, the Treasurer certifies that the investments reported in the accompanying schedules (Attachments A through D) comply with the City of Norco Investment Policy and that sufficient liquidity along with anticipated revenues are available to meet the City and Successor Agency budgeted expenditure requirements for the next six months ending June 30, 2026.

January 21, 2026
Joshua Calhoun, Finance Director Date

City Council

STAFF REPORT
Date: February 4, 2026 Agenda Item:

3.D.

To: Honorable Mayor and City Council Members
From: Joshua Calhoun, Finance Director
Prepared By: Joshua Calhoun, Finance Director
Department: Finance
SUBJECT:

Report on Fiscal Year 2024-25 Audited Financial Reports RECOMMENDATION:

Receive and file the Fiscal Year 2024-25 Audited Financial Reports.

SUMMARY:

The City’s Annual Comprehensive Financial Report (ACFR) and other related reports for the fiscal year-ended June 30, 2025 are provided to the City Council for review. The audited reports received an unmodified/clean opinion from the City’s independent auditors.

BACKGROUND:

The City’s independent auditors, CliftonLarsonAllen LLP, have completed the year-end annual independent audit of City funds and accounts for FY 2024-25. The City’s annual financial reports were prepared in accordance with Generally Accepted Accounting Principles (GAAP) and comply with other rules and regulations applicable to government entities. Transmitted herewith are the following financial and related reports (Attachments 1-5) for the fiscal year ended June 30, 2025:

1. Annual Comprehensive Financial Report

2. Auditors’ Audit Committee Letter to the City Council

3. Auditors’ Report on Internal Control over Financial Reporting and on Compliance

4. Auditors’ Report on Appropriations Limit Calculation

5. Measure R Transactions and Use Tax Fund Financial Statements For the Fiscal Year ended June 30, 2025, the City did expend over $750,000 in federal grants and therefore, meet the threshold set by the OMB for a Single Audit. The independent auditors will issue a separate Single Audit Report prior to the March 31, 2026 reporting deadline.

The Measure R Citizens' Oversight Committee reviewed the Fiscal Year ended June 30, 2025 Measure R Financial Statements at their January 28, 2026 meeting.

FISCAL IMPACT:

There is no fiscal impact for this item.

RELATIONSHIP TO STRATEGIC PLAN:

This item is consistent with Strategic Direction #3 - Economic Development and Financial Stability: Assure financial stability by expanding development efforts, diversifying revenue sources and continuing prudent financial management.

REVIEWED AND APPROVED BY:

Certified as to Availability of Funds: Joshua Calhoun, Finance Director Approved by: Lisette Free, City Manager
Approved as to Form: Harper and Burns, LLP, City Attorney ATTACHMENT(S):

Norco FY24-25 ACFR (Attachment #1)
Auditors’ Audit Committee Letter to the City Council (Attachment #2) Auditors’ Report on Internal Control over Financial Reporting and on Compliance (Attachment #3)
Auditors’ Report on Appropriations Limit Calculation (Attachment #4) FY24-25 Measure R Transaction and Use Fund Financial Statement (Attachment #5))

CALIFORNIA

H O R S E T O W N US A

CITY OF
NORCO
fiscal year 2024-2025

ANNUAL COMPREHENSIVE

FINANCIAL REPORT

CITY OF NORCO, CALIFORNIA

ANNUAL COMPREHENSIVE FINANCIAL STATEMENTS

AND SUPPLEMENTARY INFORMATION
YEAR ENDED JUNE 30, 2025

PREPARED BY CITY FINANCE DEPARTMENT

THIS PAGE INTENTIONALLY LEFT BLANK

CITY OF NORCO, CALIFORNIA

TABLE OF CONTENTS
YEAR ENDED JUNE 30, 2025

INTRODUCTORY SECTION
LETTER OF TRANSMITTAL i
ORGANIZATION CHART ix
DIRECTORY OF CITY OFFICIALS x

GFOA CERTIFICATE OF ACHIEVEMENT FOR EXCELLENCE IN FINANCIAL REPORTING xi

FINANCIAL SECTION
INDEPENDENT AUDITORS’ REPORT 1
MANAGEMENTS’ DISCUSSION AND ANALYSIS 7

FINANCIAL STATEMENTS

GOVERNMENT-WIDE FINANCIAL STATEMENTS
STATEMENT OF NET POSITION 23
STATEMENT OF ACTIVITIES 24

FUND FINANCIAL STATEMENTS

GOVERNMENTAL FUNDS
BALANCE SHEET 27

RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL
FUNDS TO THE STATEMENT OF NET POSITION 28

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES 29

RECONCILIATION OF THE STATEMENT OF REVENUES,

EXPENDITURES, AND CHANGES IN FUND BALANCES OF
GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES 30

PROPRIETARY FUNDS
STATEMENT OF NET POSITION 31

STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET
POSITION 33
STATEMENT OF CASH FLOWS 34

CITY OF NORCO, CALIFORNIA

TABLE OF CONTENTS
YEAR ENDED JUNE 30, 2025

FIDUCIARY FUNDS
STATEMENT OF FIDUCIARY NET POSITION 36
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION 37
NOTES TO FINANCIAL STATEMENTS 41

REQUIRED SUPPLEMENTARY INFORMATION

SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION
LIABILITY 89
SCHEDULE OF CONTRIBUTIONS – DEFINED BENEFIT PENSION PLANS 91

SCHEDULE OF CHANGES IN THE NET OPEB LIABILITY AND RELATED RATIOS 93
SCHEDULE OF CONTRIBUTIONS – OPEB PLAN 94
BUDGETARY COMPARISON SCHEDULE – GENERAL FUND 95
NOTE TO REQUIRED SUPPLEMENTARY INFORMATION 96

COMBINING NONMAJOR GOVERNMENTAL FUNDS
NONMAJOR GOVERNMENTAL FUND DESCRIPTIONS 101
COMBINING BALANCE SHEET 104

COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES 109

NONMAJOR SCHEDULES OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE – BUDGET AND ACTUAL 115

SCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE – BUDGET AND ACTUAL
MISCELLANEOUS GRANTS SPECIAL REVENUE FUND 116

COMMUNITY DEVELOPMENT BLOCK GRANT SPECIAL REVENUE
FUND 117
GAS TAX SPECIAL REVENUE FUND 118
SB1 ROAD MAINTENANCE REHABILITATION SPECIAL REVENUE
FUND 119
MEASURE A SPECIAL REVENUE FUND 120

CITY OF NORCO, CALIFORNIA

TABLE OF CONTENTS
YEAR ENDED JUNE 30, 2025
NPDES SPECIAL REVENUE FUND 121
AIR QUALITY IMPROVEMENT TRUST SPECIAL REVENUE FUND 122

SUPPLEMENTAL LAW ENFORCEMENT BLOCK GRANT SPECIAL
REVENUE FUND 123
LANDSCAPE MAINTENANCE DISTRICT #1 SPECIAL REVENUE
FUND 124
LANDSCAPE MAINTENANCE DISTRICT #2 SPECIAL REVENUE
FUND 125
LANDSCAPE MAINTENANCE DISTRICT #3 SPECIAL REVENUE
FUND 126
LANDSCAPE MAINTENANCE DISTRICT #4 SPECIAL REVENUE
FUND 127
LANDSCAPE MAINTENANCE DISTRICT #5 SPECIAL REVENUE
FUND 128
STORM DRAIN CAPITAL PROJECTS FUND 129

GENERAL GOVERNMENT IMPROVEMENT CAPITAL PROJECTS
FUND 130
FIRE IMPROVEMENT CAPITAL PROJECTS FUND 131
TRAILS IMPROVEMENT CAPITAL PROJECTS FUND 132
PARK IMPROVEMENT CAPITAL PROJECTS FUND 133
PUBLIC MEETING CAPITAL PROJECTS FUND 134
STREET IMPROVEMENT CAPITAL PROJECTS FUND 135
ANIMAL CONTROL CAPITAL PROJECTS FUND 136

INTERNAL SERVICE FUNDS
INTERNAL SERVICE FUNDS DESCRIPTIONS 139
COMBINING STATEMENT OF NET POSITION 140

COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES
IN NET POSITION 141
COMBINING STATEMENT OF CASH FLOWS 142

CITY OF NORCO, CALIFORNIA

TABLE OF CONTENTS
YEAR ENDED JUNE 30, 2025

FIDUCIARY FUNDS
CUSTODIAL FUNDS DESCRIPTIONS 146
COMBINING STATEMENT OF FIDUCIARY NET POSITION 147
COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET POSITION 148 STATISTICAL SECTION (NOT COVERED BY INDEPENDENT AUDITORS’

REPORT)
CONTENTS 151
NET POSITION BY COMPONENT 152
CHANGES IN NET POSITION 154
FUND BALANCES GOVERNMENTAL FUNDS 158
CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS 160
ASSESSED VALUE AND ACTUAL VALUE OF TAXABLE PROPERTY 162 DIRECT AND OVERLAPPING PROPERTY TAX RATES 163
PRINCIPAL PROPERTY TAX PAYERS 164
PROPERTY TAX LEVIES AND COLLECTIONS 165
RATIOS OF OUTSTANDING DEBT BY TYPE 166
RATIOS OF GENERAL BONDED DEBT OUTSTANDING 168
DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT 169 LEGAL DEBT MARGIN INFORMATION 170
PLEDGED-REVENUE COVERAGE 172
DEMOGRAPHIC AND ECONOMIC STATISTICS 174
PRINCIPAL EMPLOYERS 175

FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY
FUNCTION/PROGRAM 176
OPERATING INDICATORS BY FUNCTION/PROGRAM 178
CAPITAL ASSETS BY FUNCTION/PROGRAM 180

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(i)
December 30, 2025
To the Honorable Mayor, Members of the City Council, and Citizens of the City of Norco, California:

In accordance with the City’s Municipal Code, we hereby present to you the City of Norco (City) Annual Comprehensive Financial Report (ACFR) for the Fiscal Year ended June 30, 2025 (FY 2025). This report provides a comprehensive view of the results of the City’s financial activities and financial position for FY 2025.

The basic financial statements have been presented in conformity with Generally Accepted Accounting Principles (GAAP) and audited in accordance with Generally Accepted Auditing Standards (GAAS) by a firm of licensed independent Certified Public Accountants.

The ACFR consists of management’s representations concerning the finances of the City. Consequently, management assumes full responsibility for the completeness and reliability of all information presented in this report. To provide a reasonable basis for making these representations, management has implemented a comprehensive internal control framework that is designed to protect the City’s assets from loss, theft, or misuse, and to compile sufficient reliable information for the preparation of the City’s financial statements in conformity with GAAP. The City’s internal control procedures are established and operate on the principle that the cost of internal controls should not outweigh their benefits. As a result, the City’s internal control systems have been designed to provide reasonable rather than absolute assurance that the financial statements will be free of any material misstatements. As management, we assert that, to the best of our knowledge and belief, these financial reports are complete and reliable in all material respects.

Management also recognizes that the internal control environment changes over time due to changes in operation or the personnel performing various duties. As a result, the internal control environment is continuously being reviewed to ensure that adequate controls still exist within the City to achieve the City’s objectives.

CliftonLarsonAllen LLP, a firm of independent licensed Certified Public Accountants, audited the City’s basic financial statements. The goal of an independent audit is to provide reasonable assurance that the financial statements of the City for the Fiscal Year ended June 30, 2025, are free of any material misstatements. The independent audit involved examining on a test basis, evidence supporting the amounts and disclosures on the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall presentation of the financial statements. Based upon their audit, the independent auditors concluded that there was a reasonable basis for rendering an unmodified (clean) opinion that the City’s financial statements for the Fiscal Year ended June 30, 2025, are fairly presented in conformity with GAAP. The independent auditors’ report is presented as the first component of the Financial Section of this ACFR.

The independent audit of the financial statements of the City was part of a broader, federally mandated “Single Audit” designed to meet the special requirements of federal grantor agencies under the Single Audit Act Amendments of 1996 and related Office of Management and Budget (OMB) Circular A-133. Under the Single Audit Act, the independent auditor is required to report not only on fair presentation of financial statements, but also on the City’s internal controls and compliance with legal requirements, with emphasis on internal controls and legal requirements involving the administration of federal awards.

(ii)
GAAP also requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management Discussion and Analysis (MD&A). This transmittal letter, which includes forward looking statements, is designed to complement the MD&A and should be read in conjunction with it. The City’s MD&A can be found immediately following the independent auditors’ report.

Profile of the City of Norco, California
The City of Norco, California was incorporated as a general law City on December 28, 1964, and is located in southwestern Riverside County (part of the Inland Empire), approximately 45 miles east of Los Angeles. The Inland Empire remains one of the top economic and population areas in the state with 2.2 million in civilian labor force and 2 million in civilian employment. According to the latest data from U.S. Labor Department, the unemployment rate of 6.0% in the Inland Empire was slightly higher than the state’s unemployment rate of 5.4% and the national unemployment rate of 4.1%. The unemployment rate for the City of Norco as of June 2025 was

5.3%. The area’s employment is heavily service oriented with key sectors responsible for the region’s employment and economic growth consisting of healthcare, logistics/ transportation, construction, professional services, leisure/hospitality, education, government, and manufacturing.

The region’s population growth slowed but remained positive. The growth rate is currently at 0.6% compared to

0.5% seen in the prior year. The area’s population, which includes Riverside and San Bernardino Counties, is currently estimated to be 4.6 million, which exceeds the population of many states in the country. While the population of the region continues to grow at a rate faster than the state, the population of the City of Norco has slightly decreased, with a slight 1.4% decrease change from January 2024 to January 2025. The city limits cover an area of approximately 15 square miles, with a current permanent population of approximately 25,221 according to the most recent data as of January 2025 from the State of California, Department of Finance. Norco is strategically located with convenient access to the major interstate highways I-15, I-10, and State Routes 60 and 91, as well as Ontario International Airport (ONT).

Norco is proud of its animal-keeping and equestrian-oriented community and has trademarked and branded itself as “Horsetown USA.” Residents enjoy over 168 acres of parkland, over 100 miles of pedestrian and equestrian trails and more than 100 miles of streets. Most residential properties are zoned for animal-keeping with a minimum lot size of one-half acre. Within 30 miles, there are several public colleges and universities providing a wide range of education facilities and opportunities. These include University of California Riverside, University of California Irvine, California State University San Bernardino, California State University Fullerton, California Polytechnic University Pomona, Norco College, and several private universities. The city continues to enjoy a very stable and affluent population base with median household income of $125,117, which is 138% of the County median.

The City operates under the Council-Manager form of government. Under this form of government, policy-making and legislative authority are vested in the City Council, which consists of five members elected at-large. The City Council is responsible for approving ordinances, adopting the budget, appointing committees and commissions, and hiring both the City Manager and City Attorney. The City Manager is responsible for carrying out the policies, resolutions and ordinances of the City Council, overseeing the day-to-day staff supervision and operations of the City, and appointing the heads of the various departments. The City Council is elected at-large on a non-partisan basis and each member serves a four-year term. The City Council selects a Mayor by a majority vote who serves a one-year term.

City Services: The City provides a full range of municipal services, including police and fire protection; construction and maintenance of streets, trails and other infrastructure; recreational/leisure activities and cultural events; sanitation and water services; street lighting; planning and zoning; and animal control services. Police protection is provided through a contract between the City and Riverside County Sheriff’s Department. Fire and emergency medical services are provided through a cooperative contract with CAL FIRE/Riverside County Fire Department.

(iii)
The Community Development Department is responsible for all current and advanced planning projects. Current planning projects include land use entitlement processes, such as site plans, variances, conditional use permits, zone changes and specific plans. Advanced planning consists of updates to the General Plan, annexations and inter-agency cooperation on transportation and habitat conservation issues.

The Community Services Department provides a variety of special community events and recreational classes throughout the year, along with operating sports programs, a gymnasium, a full-service senior center, and a playschool program. As an equestrian community, the Animal Services division establishes standards for the care and health of animals; provides a safe haven animal shelter; sponsors adoption and placement of animals; and enforces laws to protect the well-being of all animals in the community. The Animal Shelter cares for more than 1,400 impounded animals annually.

Through the City Manager’s Office, the City provides economic development assistance to developers, real estate agents, appraisers and property owners; conducts business recruitment and outreach programs; provides business incentives; and collaborates with the Norco Chamber of Commerce to meet the business needs of the community. The primary purpose of the City’s economic development activities is to increase and diversify the City’s tax revenue base.

The Public Works and Engineering Department provides a variety of services to residents and businesses.

Amongst these are production and distribution of potable and recycled water; collection and transmission of wastewater to regional treatment plants; construction and maintenance of pipelines; installation and maintenance of equestrian trails; and construction and maintenance of roadways, streets, storm drains and trails. The Department also provides engineering plan check, permitting and inspection services for public and private construction projects.

The Facilities and Maintenance Department is responsible for the upkeep and maintenance of all public buildings, and facilities. It creates a safe and secure environment for the public to utilize and is responsible for maintenance and operations, capital outlay, and improvements of facilities, as well as scheduling and managing all events at the Ingalls Event Center, which includes all grounds, two covered arenas, a banquet hall, a turf level, the George A. Ingalls Veterans Memorial Plaza and adjacent parking lots. In addition, the Department maintains, improves and develops over 900 acres of passive and active parkland.

Fire prevention, suppression, emergency medical services, hazmat response, emergency preparedness and police protection make up the City’s public safety divisions. Protecting the lives and property of the citizens of Norco is the primary mission of the public safety divisions. The City maintains a significant investment in equipment, facilities and personnel to preserve high quality, rural lifestyle and safe neighborhoods for the community. The Information Technology Division, City Clerk’s Division, Human Resources Division, Communications Division and Finance Department provide customer services to residents, business and other stakeholders; and support and administrative services to other departments.

Operating Budget Preparation and Control Process: The development of the City’s Fiscal Year Annual Operating Budget begins around January each year when staff begins a review of the current fiscal year revenues and expenditures for each Fund in order to determine appropriate mid-year budget adjustments. The results of the mid-year budget review and adjustments generally serve as the starting point for the development of next year’s annual Operating Budget. The City’s annual Operating Budget serves as the foundation for financial planning and expenditure control. Each City division is required to submit budget requests on an annual basis to the City Manager. These budget requests are reviewed by the City Manager and are used as the starting point for the development of a Proposed Budget. The City Manager presents a Proposed Budget to the City Council for review through staff and Council budget study sessions. At the completion of budget study sessions, the budget is required to be adopted by a majority vote of the City Council no later than June 30, the close of the City’s fiscal year. The appropriated budget is prepared by Fund, department and division. Within each department and division, the budget is further detailed by expenditure type and line items (e.g., salaries, benefits, services, supplies).

(iv)
After the budget is approved by the City Council, department heads can make transfers of appropriations within their department and Fund. Transfer of appropriations between departments within the same Fund requires the approval of the City Manager or Finance Director. Transfers of appropriations between funds require City Council authorization. Expenditures may not legally exceed appropriations at the Fund level. Budget-to-actual comparisons are provided in this report for each major individual governmental fund for which the appropriated annual budget was adopted by the City Council. As part of the budgetary control process, quarterly budget-toactual reports are presented to the City Council every quarter beginning with the end of the second quarter of the fiscal year. Access to real-time financial information is also available to all departments.

Factors Affecting Financial Condition
The financial condition of the City is affected by internal and external factors, including the local economy, state government actions, staffing and service levels, long term financial planning and other relevant financial policies.

Local Economy: While the City of Norco is largely zoned as an animal-keeping and equestrian-oriented community, it also has a robust balanced economy with commercial, retail and light industrial activities. The city is included in the Riverside-San Bernardino labor market area. This area is also known as the Inland Empire region, which is considered one of the most significant regional economies in the state. The City’s financial health is heavily dependent on its ability to generate sales tax and other revenues. According to various economic forecasts, Inland Empire's economic forecast for 2025 is relatively positive, with indicators pointing towards moderate growth despite some concerns about retail sales and housing starts; the region is expected to see continued job growth, stable unemployment rates, and a generally positive outlook, though some analysts caution about potential impacts from national economic fluctuations and the recent election year.

Hotel and leisure activities and their related revenues continue to rebound. In addition to increased leisure activities, increased revenues from Transient Occupancy Tax are anticipated due to the opening of the Tru Hotel by Hilton, which opened September 2024. Retail sales and property values are projected to have slower growth over the near term. Sales tax is predicted to be generally flat during 2025, with only modest increase in auto sales and dining categories. Sales tax from new and used cars remains the dominant category in the City’s retail taxable sales. Real property values rose during the fiscal year and are projected to continue to slightly grow in FY 2025; however, as interest rates remain constant, real property sales have slowed in FY 2025. The median sale price of detached single-family homes in Norco from January through August 2025 was $937,000, an increase of

6.47% from 2024's median sale price. The City anticipates that property tax revenue growth should continue to be modest in FY 2026.

Other key general revenues, such as franchise fees, motor vehicle license fees and charges for services, are expected to remain stable during FY 2026. Development impact fees fluctuate significantly with development activity, and therefore cannot be predicted with certainty given that the City is largely built out at this time. When collected, development impact fees are used to mitigate the impacts on additional infrastructure driven by new development, ensuring that new development pays its own way.

Long-Term Financial and Strategic Planning: In early FY 2022, City staff, Council Members and appointed officials developed a Strategic Plan. This plan focuses on economic development and financial resiliency; infrastructure improvements; communication and customer service; human capital; and public safety and wellness. The economic and financial resiliency component seeks to continue diversifying the City’s revenue base and develop and implement policies and procedures that are designed to further enhance and sustain the City’s current strong financial position.

The City continues to focus on its previously-adopted Strategic Priorities. The Strategic Priorities consists of five strategic directions that are dedicated to ensure long-term financial resiliency; improve transparency and citizen engagement; diversify economic development; implement infrastructure projects; and enhance public safety. The following strategic action plans were initiated or completed during the fiscal year:

1. Measure R, the City’s 1% Transactions and Use Tax, is generating nearly $8 million per year for infrastructure and vital city services. Measure R is expected to generate similar amount in FY 2026.

(v)

2. The City’s long-term financial resiliency remained stable, the General Fund’s (including Special Asset Revenue and Measure R Funds) fund balance increased from $48.7 million to $50.8 million. Excluding Measure R, fund balance of the General Fund grew by $1.5 million to $37.7 million. The financial position of the Water, Sewer and Recycled Water Funds’ fund balance slightly increased from $75.6 million to $81.3 million. In fiscal year 2023, the City implemented a new Reserve Policy to use unappropriated fund balances to create various designated reserves to meet the City’s long-term needs for infrastructure, economic development, and other key needs.

3. The City has implemented an Internal Revenue Code Section 115 post-employment benefit trust program to pre-fund Unfunded Accrued Liabilities (UAL) for pensions through Public Agency Retirement Services (PARS). This analysis and recommendation of strategies to pre-fund pension UAL was approved by the City Council in early FY 2022. Contributions of $4.5 million have already been made to date, and additional contributions will be based on the financial performance of the General Fund in future years.

4. The City continued with its Community Outreach and Engagement Program that supports the goal of implementing a public information program that provides all residents and stakeholders with timely and accurate information to strengthen community relations through transparency.

5. During FY 2021, the City Council approved a five-year extension of the contract for fire protection and emergency services with CAL FIRE/Riverside County Fire Department. This contract extension ensures that the current level and quality of fire and medical emergency response services provided to city residents will continue for the next five years. A separate contract was also executed with County of Riverside Emergency Management Department to provide the City with assistance on emergency operations and related programs.

6. To improve the quality of life and safety in the city, homeless services and programs were expanded during the fiscal year. The program provides emergency hotel/motel housing and outreach placement services to residents experiencing homelessness, in partnership with the City of Corona. These services are expected to continue in FY 2025 to serve more homeless residents.

Other Relevant Financial Policies
Budgetary Control Policies: The City has implemented strict expenditure control procedures and policies.

Personnel costs represent a significant portion of the City’s general government operating cost. To reduce personnel related costs, the City generally negotiates short-term labor agreements with employee organizations in order to provide the City with the flexibility to make expenditure reductions in the future to ensure balanced budgets. Strict expenditure control is also achieved through constant monitoring of expenditures. Budget-to-actual expenditure information is available on a real-time basis to all departments. Hard copy monthly reports are also provided to each department, and potential over expenditure indications are discussed with each department.

Additionally, summarized budget-to-actual reports are available to the City Council on a quarterly basis beginning with the second quarter. An extensive mid-year budget review process is also undertaken. The mid-year budget review process offers the City an opportunity to conduct a detailed review of the budget in order to take corrective action by making timely adjustments as necessary.

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Pension, Health and OPEB Funding Policies: Pension, medical insurance and Other Post-Employment Benefits (OPEB) are significant cost items affecting the long-term financial condition of the City. Effective January 1, 2013, the City implemented the provision of the State of California Public Employees’ Pension Reform Act. This reform reduced public employees’ pension benefits and required employees to make a greater contribution toward funding of their pension benefits. All City employees are required to pay the employee’s portion of annual pension costs, which equates to either 6% or 8% of salary for PEPRA and Classic employees, respectively. In terms of OPEB liability, the City’s annual contribution is based on the actuarially determined contribution. The City also continued to maintain the policy that capped the amount of City subsidy toward the cost of most active employee medical insurance costs at $1,550 per month.

As part of the implementation of GASB 45, the City established a Trust Account to accumulate funds for the payment of post-retirement healthcare insurance premiums. The City also adopted a funding policy. Under the policy, the City made a significant deposit into the Trust Account to prefund a portion of its unfunded retiree healthcare liabilities. Because of substantial earnings accrued to the Trust Account through June 30, 2025, the City has made significant progress in funding OPEB liabilities through this Trust Account. As of June 30, 2025, the City’s OPEB Trust Account had a balance of $14.7 million.

Other Relevant Financial Policies: The City of Norco has adopted several financial policies to ensure that the fiscal affairs of the City are professionally and prudently managed. With passage of Measure R, a one percent Transactions and Use Tax that the City implemented during Fiscal Year 2020, the City Council passed a resolution creating a Citizens’ Oversight Committee, an advisory body to the City Council charged with the responsibility for reviewing and prioritizing lists of projects and programs to be funded with Measure R tax revenues. The Committee is also responsible for reviewing Measure R revenues, expenditures and related reports to ensure that Measure R revenues are expended efficiently and effectively, and overseeing the required independent audit. Members of the Oversight Committee are subject to bylaws that detail their duties, responsibilities, terms and qualifications. A super majority vote of the City Council is required in order to override recommendations of the Committee.

The City has also adopted a Debt Issuance and Management Policy. The purpose of this policy is to provide written guidance to policymakers regarding the timing and purposes for which debt may be issued, types and amounts of permissible debt, and methods for sale that may be used. Adherence to this policy helps to ensure prudent fiscal management and to maintain sound financial position and optimal credit ratings. The financing plan previously discussed regarding the refinancing of the City’s Enterprise Revenue Bonds was based on this policy.

Major Initiatives
The City of Norco is dedicated to maintaining the motto of “City Living in a Rural Atmosphere” by building and maintaining adequate infrastructure to serve its residents and attract compatible economic development projects.

As previously discussed, the City adopted a multi-year strategic plan with a vision through 2025. The Strategic Plan drives major initiatives, including capital project planning. The key to the City’s capital project planning is the adopted five-year Capital Improvement (CIP) Program Budget. This budget, which is updated annually by staff and adopted by the City Council, ensures that facilities and infrastructure are well maintained and replaced timely for reliable and effective service delivery to residents and businesses. During the fiscal year ended June 30, 2025, the City engaged in the following major initiatives, which are consistent with the Strategic Plan and the Capital Improvement Program Budget:

1. The five-year Capital Improvement Program Budget provides for $39 million in infrastructure improvements and replacement during FY 2025. In particular, the City will make significant investments on streets, water, storm drain, sewer, parks and public facilities as follows:
a. Storm drains $5.5 million
b. Water system improvements $2.9 million
c. Sewer system improvements $4.9 million
d. Recycled water system improvements $3.4 million

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e. Road maintenance and rehabilitation $3.5 million
f. Public facilities $0.9 million
g. Various Measure R funded projects $17.9 million

2. During FY 2025, several capital projects were completed as follows:
a. Completion of various improvements at the Ingalls Event Center, including Moreno Area Bleacher Support Pad Project.
b. Completion of various community facility improvements, including Senior Center Emergency Generator Project.
c. Completion of various storm drain improvement projects, including Valley View, First Street and Fourth Street Storm Drains.
d. Completion of various waterline improvement projects, including Western Ave waterline. e. Completion of equestrian trail fence replacement projects at various locations throughout the city. f. Completion of various street improvements, including Sixth to Seventh Street, and various repavement projects throughout the city.
g. Acquisition of various other equipment.

3. Several economic development projects were also initiated and/or completed during the fiscal year including:
a. Opening of the new Tru by Hilton Hotel, Dutch Bros, and Freddie’s, all on Hamner Avenue, in the prior fiscal year, bringing new hospitality and related businesses to the City’s major corridor. b. The City is investing in the Ingalls Event Center. What was once a park with one neighborhood arena has transformed into a collection of diverse venues that offer character with the opportunity for customization, each one possessing qualities that contribute to memorable events for hundreds to thousands of guests. A new versatile venue (The Barn), upgraded way-finding signage, re-imagined branding, and a new comprehensive website, will make Ingalls Event Center the premier location for all types and sizes of events, from equestrian and agricultural events to weddings, conferences, concerts, and so much more. c. The City began a comprehensive update to its General Plan. With the City’s Sixth Cycle Housing Element approved in late 2022, the City has embarked on the first comprehensive update to the General Plan since the City’s incorporation in 1964. Completion of the 2050 General Plan will define the City’s fiscally-sustainable growth and development over the next 25 years. The new General Plan will include an economic development component with a focus on creating and growing revenues.

Awards and Acknowledgments
The Government Finance Officers Association (GFOA) of the United States and Canada awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Norco for its Annual Comprehensive Financial Report (ACFR) for the fiscal year ended June 30, 2024. This is the twenty-first consecutive year that the City has received this prestigious award. In order to be awarded the annual Certificate of Achievement for Excellence in Financial Reporting, a government unit must publish an easily readable and efficiently organized Annual Comprehensive Financial Report, which conforms to program standards. Such reports must also satisfy Generally Accepted Accounting Principles, applicable rules, regulations and legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current ACFR continues to meet the Certificate of Achievement for Excellence in Financial Reporting Program’s requirements, and we will be submitting it to the GFOA to determine eligibility for another certificate.

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The preparation of this report could not have been accomplished without the efficient and dedicated services of the entire staff of the City, specifically the Finance Department and our independent auditors, CliftonLarsonAllen LLP, Director of Finance Joshua Calhoun, and the entire accounting staff. All deserve special credit for their dedication and contribution in preparing this ACFR and in serving the City of Norco. Our gratitude is also given to every City department for their contributions in providing the data necessary to prepare this report. Finally, we must also commend the Mayor and the entire City Council for their vision, direction and unwavering support of City staff in maintaining the highest level of professionalism in the management of the City and its finances.

Respectfully Submitted,
_________________________ ________________________
Lisette Free, CPA, CFE Joshua Calhoun, CPA
City Manager Director of Finance

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INDEPENDENT AUDITORS’ REPORT
City Council Members
City of Norco
Norco, California
Report on the Audit of the Financial Statements
Opinions
We have audited the accompanying financial statements of the governmental activities, the businesstype activities, each major fund, and the aggregate remaining fund information of the City of Norco (the City), as of and for the year ended June 30, 2025, and the related notes to the financial statements, which collectively comprise the City of Norco’s basic financial statements as listed in the table of contents.

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Norco, as of June 30, 2025, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City of Norco and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City of Norco’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.

City Council Members
City of Norco
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Auditors’ Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with GAAS and Government Auditing Standards, we:
 Exercise professional judgment and maintain professional skepticism throughout the audit.  Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
 Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of City of Norco’s internal control. Accordingly, no such opinion is expressed.
 Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
 Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about City of Norco’s ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.

City Council Members
City of Norco
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Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the managements’ discussion and analysis, schedule of proportionate share of the net pension liability, schedule of contributions – defined benefit pensions plans, schedule of changes in the net OPEB liability and related ratios, schedule of contributions – OPEB plan, and budgetary comparison schedule – general fund be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with GAAS, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Norco’s basic financial statements. The individual fund schedules and combining financial statements are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with GAAS. In our opinion, the individual fund schedules and combining financial statements are fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Other Information
Management is responsible for the other information included in the annual report. The other information comprises the introductory and statistical sections but does not include the basic financial statements and our auditors’ report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon.

In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report.

City Council Members
City of Norco
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Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 30, 2025 on our consideration of the City of Norco’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City of Norco’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering City of Norco’s internal control over financial reporting and compliance.

CliftonLarsonAllen LLP
Irvine, California
December 30, 2025

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MANAGEMENT’S DISCUSSION AND ANALYSIS

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CITY OF NORCO
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2025
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The following Management Discussion and Analysis (MD&A) of the City of Norco’s (City) financial condition and performance provides an introduction and overview of the financial activities of the City for the fiscal year ended June 30, 2025. Management’s Discussion and Analysis (MD&A) is designed to be condensed, so we encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal and the basic financial statement including the accompanying notes to basic financial statements.

Financial Highlights
 The City’s total assets of $453.6 million and deferred outflow of resources of $12.0 million exceeded its total liabilities of $89.1 million and deferred inflows of resources of $12.7 million at the close of fiscal year 2025 by $363.8 million (net position). Of this amount, $71.0 million (unrestricted net position) may be used to meet the City’s obligations to citizens and creditors.  The City’s total net position increased by $20.2 million during the year. The increase was a result of revenues exceeding expenses in the governmental activities by $14.4 million and business type activities by $5.8 million.
 As of June 30, 2025, the City’s governmental funds reported a combined fund balance of $81.1 million, a net increase of $7.9 million from the prior fiscal year. A total of $2.7 million is nonspendable, $47.5 million is committed or restricted and $30.9 million is unassigned.  At the end of fiscal year 2025, the committed fund balance for the general fund was $13.1 million; unassigned fund balance was $30.9 million. The total spendable fund balance of $44.0 million, which includes $1.2 million in donation revenue and deposit for special projects and programs, represents 112% of total fiscal year 2024-25 general fund expenditures.  The City’s total long-term debt decreased by a net $1.8 million during fiscal year 2024-25 primarily due to decrease in revenue bonds due to bi-annual debt payments made in fiscal year 2024-25.

Overview of the Financial Statements
This discussion and analysis is intended to serve as an introduction to the City’s financial statements, which include all of the activities of the City of Norco and its component units as well as the Successor Agency to the former Norco Community Redevelopment Agency. The City’s basic financial statements comprise of the following three components: 1) government-wide financial statements; 2) fund financial statements; and 3) notes to basic financial statements. The City’s Annual Comprehensive Financial Report (ACFR) also contains other supplementary information in addition to the basic financial statements.

Government-wide financial statements: The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances in a manner that is similar to a private-sector business. Government-wide financial statements include a statement of net position and a statement of activities.

The Statement of Net Position presents information on all the City’s assets, deferred outflows of resources, liabilities and deferred inflows of resources, with the difference between reported as net position. This is one way to measure the City’s financial health. Over time, increases or decreases in net position may provide a useful indicator on whether the financial position of the City is improving or deteriorating.

The Statement of Activities provides information that shows how the City’s net position changed during the current fiscal year. These changes are reported using the full accrual basis of accounting. Under this method, transactions are reported when the economic event occurs, rather than when cash is received or paid. Consequently, revenues and expenses are also reported in the statement for some items that will only result in future cash inflows or outflows such as vacation earned but not paid and uncollected taxes.

CITY OF NORCO
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2025
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In both the Statement of Net Position and Statement of Activities, financial reporting is divided into two kinds of activities:

Governmental Activities - Financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, public safety, streets and highways, community/economic development, culture and leisure and housing.

Business-Type Activities - The City charges a fee to customers to recover all or most of the cost of certain services it provides. The City’s water, sewer and recycled water operations are reported as business-type activities.

The government-wide financial statements include not only the City, known as the primary government, but also its component units that are legally separate but whose activities the City is financially accountable. For the fiscal year ended June 30, 2025, the Norco Financing Authority is the only entity included as a component unit of the City. Due to the dissolution of the former Norco Community Redevelopment Agency in FY 2012, the activities of the Successor Agency are reported in a fiduciary fund (private-purpose trust fund) and have not been included in the consolidated financial statements of the primary government, the City of Norco. On September 29, 2014, the Oversight Board of the Successor Agency to the Norco Community Redevelopment Agency elected to serve as the Housing Successor for the operations of the former Redevelopment Agency’s Housing Agency. Consequently, the assets of the Housing Agency were transferred to the low- and moderate- income housing special revenue fund of the City of Norco in fiscal year 2014-15.

Fund Financial Statements: Fund financial statements are designed to report information about groupings of related accounts used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The funds of the City can be divided into three broad categories: governmental funds, proprietary funds, and fiduciary funds.

Governmental Funds: Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike government-wide financial statements, governmental fund financial statements are prepared using the modified accrual basis of accounting which focuses on short-term receipts and disbursements of financial resources, as well as balance of financial resources available at the end of the fiscal year. Such information may be useful in evaluating the City’s near-term financing requirements.

The focus of governmental funds in the fund financial statements is narrower than that of the governmentwide financial statements. Therefore, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the City’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and government-wide activities.

The City maintains several individual governmental funds organized by their type (general, special revenue and capital project funds). Information is presented separately in the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances for the general fund and the low- and moderate- income housing fund, which are considered to be major funds. Data from the remaining governmental funds are combined into a single, aggregated presentation called non-major governmental funds. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements elsewhere in this report.

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MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2025
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The City adopts an annual appropriated budget for its general, special revenue and capital project funds.

Budgetary comparison statements have been provided for these funds to demonstrate compliance with the budget.

The basic governmental fund financial statements can be found on pages 27-30 of this report.

Proprietary Funds: The City maintains different types of proprietary funds, enterprise and internal service funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for its water, sewer and recycled water services. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City’s various functions and departments. The City uses internal service funds to account for the acquisition and maintenance of its fleet of vehicles, risk financing activities and computer and related information systems operations. Because these funds predominantly benefit governmental activities rather than business-type functions, they have been allocated most of their activities within governmental activities in the government-wide financial statements.

Proprietary funds provide the same type of information as government-wide financial statements, only in a more detailed format. The proprietary fund financial statements provide separate information for the water, sewer and recycled water operations, which are all considered to be major funds of the City.

Internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for the internal service funds is also provided in the form of combining statements elsewhere in this report.

The basic proprietary fund financial statements can be found on pages 31-35 of this report.

Fiduciary Funds: Fiduciary funds are used to account for resources held for the benefit of parties outside the City. In these cases, the City has a fiduciary responsibility and is acting as a trustee. The Statement of Fiduciary Net Position reports all of the City’s fiduciary activities. Fiduciary funds are not included in the government-wide financial statements because the resources of those funds are not available to support the City’s own programs. The resources of the Successor Agency to the former Redevelopment Agency are accounted for in fiduciary funds as a private purpose trust fund.

The basic fiduciary fund financial statement can be found on pages 36-37 of this report.

Notes to the basic financial statements: The notes to the basic financial statements, which are an integral part of the financial statements, provide additional information that is essential to a full understanding of the data in the government-wide and fund financial statements. The notes to the basic financial statements can be found on pages 39-86 of this report.

Other information: In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information regarding the City’s proportionate share of net pension liability, contribution to defined benefit plans, progress in funding of the Other Post-Employment Benefits (OPEB) obligation to provide health benefits to its employees, as well as the budgetary comparison for the general fund. Required supplementary information can be found on pages 87-96 of this report.

Combining statements for non-major governmental funds, internal service funds and agency funds are presented immediately following the required supplementary information. Combining financial statements and schedules are also presented elsewhere in this report.

CITY OF NORCO
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2025
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Government-Wide Financial Analysis
This analysis focuses on the City’s net position and changes in net position in the governmental and business-type activities. As noted earlier, net position may serve over time as a useful indicator of the City’s financial position. For the fiscal year ending June 30, 2025, total City assets of $453.6 million, deferred loss on debt refunding of $0.7 million, and deferred outflow of resources amounts related to OPEB plan of $4.3 million and pension plans of $7.0 million, exceeded total liabilities of $89.1 million and deferred inflow of resources amounts related to lease receivable of $11.0 million, OPEB of $0.2 million and pension plans of $1.4 million by $363.8 million. For comparative purposes, management has included data from the fiscal year ended June 30, 2025 as summarized below:

The net position for the fiscal year ended June 30, 2025, increased by 6% and includes investments in capital assets such as roads, streets, drainage systems, large roadway signs, park improvements, property plant and equipment.

Including the value of infrastructure assets, net investment in capital assets total is $257.1 million as of June 30, 2025. The City uses capital assets to provide services to citizens and these assets are not available for future spending. An additional portion of the City’s net position, $35.7 million for fiscal year 2025 and $29.1 million for fiscal year 2024, represent resources that are subject to restrictions on how they can be used. The remaining balance, unrestricted net position, is $71.0 million and $66.9 million for fiscal years 2025 and 2024, respectively.

CITY OF NORCO
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2025
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The deferred loss on debt refunding is reported in the statement of net position for the business-type activities beginning in fiscal year 2014 as required by Statement No. 65 of the Governmental Accounting Standards Board (GASB). This amount had been previously reported in the long-term liability line item. It is the difference between the amount required to repay the previously issued debt at the time it was refinanced in 2009 for the business-type activities and the amount due at maturity. In fiscal year 2019-20, the City advance refunded the outstanding 2009 Enterprise Revenue Refunding Bonds. The City has been amortizing this amount since the fiscal year ended June 30, 2009 and will continue to amortize it for the life of the refunding bond.

During the 2024-2025 fiscal year, the City implemented Governmental Accounting Standards Board (GASB) Statement No. 101, Compensated Absences. GASB 101 provides updated guidance on the recognition and measurement of liabilities for compensated absences, including clarifying when leave benefits should be accrued based on whether they are attributable to past services and are expected to be paid or settled through paid time off. This standard enhances the consistency and comparability of the City’s reporting of compensated absences in accordance with generally accepted accounting principles.

On July 1, 2022, the City adopted the GASB issued GASB Statement No. 96, Subscription-Based Information Technology Arrangements. This Standard defines a subscription-based information technology arrangement (SBITA); establishes that a SBITA results in a right-to-use subscription asset (an intangible asset) and a corresponding subscription liability; provides the capitalization criteria for outlays other than subscription payments, including implementation costs of a SBITA. The City adopted the requirements of the guidance and has applied the provision of this standard to the beginning of the period of adoption.

On July 1, 2021, the City adopted the GASB issued GASB Statement No. 87, Leases. This Standard requires the recognition of certain lease assets and liabilities for leases that previously were classified as operating leases as inflows of resources or outflows of resources based on the payment provision of the contract. GASB Statement No. 87 establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Under this standard, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources.

The amounts related to other post-employment benefits (OPEB) have been recorded starting in fiscal year 2018 as required by Statement No. 75 of the Governmental Accounting Standards Board (GASB).

The deferred inflows are to record the actuarial accruals for differences between actual and expected experience and change in assumptions. The deferred outflow represents the amounts contributed by the City to CalPERS subsequent to measurement date, and the differences between projected and actual earnings on Plan investments.

The amounts related to pension plans have been recorded starting in fiscal year 2016 as required by Statement No. 68 of the Governmental Accounting Standards Board (GASB). The deferred inflows are to record the actuarial accruals for changes in proportionate share of net pension liability and change in assumptions. The deferred outflow represents the amounts contributed by the City to CalPERS subsequent to measurement date, the differences between projected and actual earnings on Plan investments, and differences between expected and actual experience.

Statement of Activities: The statement of activities shows how the City’s net position changed during the year. Provided below is the summary of changes in net position.

For comparative purposes, management has included data from the fiscal year ended June 30, 2025 as summarized below:

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MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2025
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During the year, total net position increased by $20.3 million primarily due to operating and capital contributions and grants derived from reimbursements from Riverside County Flood Control projects and general revenues derived from the property and other taxes and investment earnings due to an increase in interest rates. Further analysis is provided below.

Governmental activities: Total net position from governmental activities increased by $14.5 million during the year primarily due to the increase in operating and capital contributions and grants derived from reimbursements from Riverside County Flood Control projects and general revenues derived from property tax and investment earnings. In terms of the general fund, the revenues were greater than the expenditures by $2.5 million primarily due to higher than expected tax and investment earnings and lower expenditures from departmental cost savings.

The following chart provides a graphic representation of the City’s expenses compared to program revenues for governmental activities. This information is by function.

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MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2025
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The following chart provides a graphic representation of governmental activities revenues by source.

The governmental activity’s expense and program revenue chart is designed to reflect expenses associated with each City function and the revenues that are directly attributable to that function. It is important to note that general revenues such as property, sales and other taxes are not directly attributable to specific functions and are used to support program activities citywide. Investment earnings are also not associated directly with any particular function.

Capital grants and contributions represent revenues and contributions of capital assets received from developers and other third-party entities including local, state and federal governments. Capital grants and contributions are restricted to the acquisition and construction of capital assets.

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MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2025
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Sales taxes are derived from taxable transactions originating from the City. During the fiscal year ended June 30, 2025, sales tax revenue included Measure R transactions and use tax revenue. The other taxes categories include property taxes and taxes derived from business license, franchises, motor vehicle licenses and transient occupancy taxes.

Business-type activities: Including non-operating income, net position of the business type activities increased $5.8 million during the fiscal year as charges for services revenue for sewer operations and capital contributions and grants for water operations are increased. The chart below provides a graphic representation of the City’s revenues by source for business-type activities. A five-year water and sewer rate increase was approved by City Council with a rate study and Prop. 218 processes completed resulting in increased rates effective January 1, 2017 of each fiscal year through 2021. There were no rate increases from FY 2021-22 through FY 2024-25. The net position of the water fund increased by $2.2 million as total revenues exceeded total expenses. The water fund had an operating loss of $0.03 million before investment earnings, interest expense and fiscal changes and amortization of bond premiums of $1.5 million, transfers out of $0.1 million and capital contribution of $0.8 million. The net position of the sewer fund increased by $3.5 million as total revenues exceeded total expenses. The sewer fund had an operating income of $1.3 million before investment earnings, interest expense and fiscal changes and amortization of bond premiums of $0.5 million and transfers out of $0.1 million.

On June 7, 2023, the City Council approved the creation of a recycled water fund. In fiscal year 2023-24, the sewer fund provided a $3.2 million loan to the recycled water fund. The net position of the recycled water fund is ($45,128) as total expenses exceeded total revenues. The recycled water fund had operating expenses of $25,858 that relates to contractual services for assisting the City with grant applications.

Water fund expenses make up 66.5 percent of total business-type activities expenses, sewer fund expenses make up 33.4 percent of total expenses and recycled water fund make up 0.1 percent of the total expenses. Total charges for services from business-type activities consist of 63.3 percent derived from water fund, 36.7 percent from the sewer fund, and Recycled water consist of 0.0% as there is no current activity from recycled water facilities at this time.

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MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2025
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Financial Analysis of City Funds
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with financerelated legal requirements.

Governmental Funds: The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s ability to meet financial obligations in the short term. As example, assigned and unassigned fund balance could serve as a useful measure of the City’s net resources available for spending at the end of the fiscal year.

As of June 30, 2025, the City’s governmental funds reported combined ending fund balances of $81.1 million, an increase of $7.9 million. Of the $81.1 million, $2.7 million is non-spendable representing the long-term amount of a note receivable from the City of Corona for the sale of donated assets; $34.4 million, or 42.4 percent, constitutes restricted fund balance which can only be used for specific purposes due to external restrictions or enabling legislation. Committed fund balances include balances that have been constrained by the City Council through a resolution or ordinance for specific future use. Total committed fund balance as of June 30, 2025, was $13.1 million. The unassigned fund balance of $30.9 million represents the amount that is available for future appropriation.

In the general fund, the revenues exceeded expenditures by $2.5 million. This excess of revenues over expenditures was primarily due higher than expected tax revenues and investment earnings received.

The Housing Successor Agency’s Low Moderate- Income Housing Special Revenue Fund’s fund balance increased by $27.4 thousand. In FY 2014-15, the Oversight Board of the Successor Agency to the Norco Community Redevelopment Agency elected to serve as the Housing Successor and has implemented program related to housing rehabilitation grants and loans, first-time homebuyer programs.

Proprietary Funds: Proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. The City’s proprietary funds consist of three major enterprise funds and three internal service funds. The internal service funds are presented as Governmental Activities in the Proprietary Funds financial statements. Individual fund data are presented in the form of combining statements. Operating revenues for Enterprise Funds consist primarily of charges for services.

Unrestricted net position in the water fund at the end of the year was $12.6 million, the sewer fund had an unrestricted net position balance of $23.0 million, and the recycled water fund is unrestricted net position balance is ($0.8 million). During the fiscal year, the net position of the water fund increased by $2.2 million and was mainly due to increase in charges for services, the increase in water operating expenses, and primarily from settlement revenues received from PFAS that are expected to be received over the next several years. The net position of the sewer fund increased by $3.5 million and was largely due to operating revenues that surpassed operating expenses and the increase in investment earnings. The net position of the recycled water fund is ($45,128) mainly due to the recycled water infrastructure currently under the construction phase, and no operating revenues were generated in fiscal year 2024-25. Only general and administrative expenses have occurred for this fund.

The City also has three internal service funds used to allocate the cost of the City’s information systems, equipment services/replacement and risk management activities. The $0.8 million increase in the net position of the internal service funds was due to charges for services less than expenses in fleet management fund and information management funds.

Fiduciary Funds: The City uses Fiduciary funds to account for resources held for the benefit of other parties outside the City, in which the City is acting as a trustee. The resources of the various community facilities districts are accounted for in fiduciary funds. The Private Purpose Trust Fund is used to report the additions and deductions to the net assets of the Successor Agency’s Redevelopment Property Tax Trust Fund (RPTTF) created as a result of the dissolution of the former Norco Redevelopment Agency. In

CITY OF NORCO
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2025
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addition, Custodial funds are used to report the additions and deductions to account for various deposits, collections from citizens for solid waste by the City on behalf of Waste Management and for various receipts of assessments and for the payment of debt service and administrative costs for the various community facilities districts.

General Fund Financial and Budgetary Highlights
The general fund is the chief operating fund of the City. On June 30, 2025, total fund balance was $50.8 million which consists of $13.1 million committed by a resolution of the City Council to fund future operations; $2.7 million that is not available for spending due to the long-term nature of associated receivable; $4.1 million restricted related to pension trust contribution and $30.9 million unassigned. As a measure of general fund’s financial condition, it may be useful to compare this fund balance to total expenditures. The total unassigned general fund balance of $30.9 million represents 78.6 percent of total general fund recurring expenditures for the fiscal year. The general fund’s total fund balance increased by $2.1 million during the fiscal year due to total revenues exceeding total expenditures by $2.5 million and a decrease of $0.4 million from other financing sources.

In comparing the general fund’s actual revenues and expenditures to final budget, total revenue exceeded budget by $2.9 million while total expenditures were under budget by $13.7 million. The favorable revenue variance was due to more than anticipated receipts from charges for services and investment earnings. The favorable increase in charges for services is related to emergency medical service revenues.

On the expenditure side, there were cost savings between the final budget and actual expenditures.

There were less capital related projects expenditure than expected. Additional cost savings were also realized in general government salaries, public safety, and contractual and professional expenditure categories under community and economic development.

Capital Assets and Debt Administration
Capital Assets: City investment in capital assets for its governmental and business-type activities as of June 30, 2025, amounted to $301.6 million (net of accumulated depreciation). Investment in capital assets includes infrastructure assets as well as land, buildings, improvements and equipment. During the year, capital assets net of depreciation increased by $7.2 million for governmental activities and increased $1.5 million for business-type activities.

During FY 2024-25, several capital projects were completed as follows:
 Completion of various improvements at the Ingalls Event Center, including Moreno Area Bleacher Support Pad Project.
 Completion of various community facility improvements, including Senior Center Emergency Generator Project.
 Completion of various storm drain improvement projects, including Valley View, First Street and Fourth Street Storm Drains.
 Completion of various waterline improvement projects, including Western Ave waterline.  Completion of equestrian trail fence replacement projects at various locations throughout the city.  Completion of various street improvements, including Sixth to Seventh Street, and various pavement projects throughout the city.
 Acquisition of various other equipment.

CITY OF NORCO
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2025
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In addition to the capital projects that were completed during the fiscal year, substantial investment in the amount of $12.9 million was made on water, sewer, storm drain, public facilities, street, and trail projects that were still in progress at the end of the fiscal year.

The five-year Capital Improvement Program Budget provides for $39 million in infrastructure improvements and replacement during fiscal year 2025-26. In particular, the City will make significant investments on streets, water, storm drain, sewer, parks and public facilities as follows:
 Storm drains $5.5 million
 Water system improvements $2.9 million
 Sewer system improvements $4.9 million
 Recycled water system improvements $3.4 million
 Road maintenance and rehabilitation $3.5 million
 Public facilities $0.9 million
 Various Measure R funded projects $17.9 million
Additional information on the City’s capital assets can be found in Note 4 of the basic financial statements and a summary is provided below.

City of Norco
Capital Assets (net of depreciation)
June 30, 2025

CITY OF NORCO
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2025
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Long-term debt: At the end of fiscal year 2025, the City’s total long debt outstanding was $44.1 million.

Of this amount, $41.9 million is debt of the sewer and water enterprise funds while $2.2 million represents debt of governmental activities representing leases payable, claims, judgment, and compensated absences. Outstanding long-term debt of the City is summarized below, and additional information can be found in the Note 6 of basic financial statements.

City of Norco
Outstanding Long-Term Debt
June 30, 2025
Economic Factors and Next Year’s Budgets and Rates
 Measure R transactions and use tax, a one-cent sales tax that was estimated to generate approximately $5.8 million a year for investment in infrastructure and vital services, was approved by voters on the November 6, 2018 ballot, with over 70% of registered voters participating.

Measure R was approved by over 56% of the voters that voted. Measure R allows Norco to preserve its quality of life, and restore deteriorating streets, trails, parks, facilities and equestrian amenities. Measure R will also prevent future cuts to Norco’s public safety services to maintain safe levels of sheriff and fire protection without risking emergency response times. With the approval of Measure R, the sales tax rate in Norco increased by 1%, from 7.75% to 8.75% effective April 1, 2019. Measure R Fund provided a total revenue of $8.7 million in the fiscal year 2024-25.
 During FY 2024-25, the City experienced a 2.5 percent increase in sales tax receipts over FY 2023-24 actual receipts, excluding Measure R Transactions Use Tax. The biggest factor for this decrease was an increase in used car sales, driven by favorable financing rates, relatively level vehicle prices Building material sales also rebounded. It is anticipated that sales tax revenue, which makes up a significant portion of General Fund revenues, will stay at the current level in FY 2025-26.
 In September 2015, the long awaited 130-acre Silverlakes Equestrian and Sports Complex opened for operations in Norco. This complex with over 22 soccer fields, equestrian facilities, concert/event venue and full-service restaurant and bar, operates 48 weeks each year. This facility continues to attract over 1 million visitors annually to the City. In recent years, this has resulted in increase to Transient Occupancy Tax (TOT) revenues as new hotels were built to serve the increased visits to Silverlakes. With the opening of a new hotel in September 2024, an uptrend in TOT is expected that staff believes will continue in subsequent fiscal years.

CITY OF NORCO
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2025
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 Property tax revenues are based on the assessed value of real property located within the City’s boundary. The assessed value of real property in the City grew by $440.9 million or 9.7 percent during the fiscal year. The growth was mainly from property sales and the application of the 2 percent Proposition 13 inflation adjustment factor. Growth in the City was lower than County-wide growth which historically has been the trend due to the City being built-out. This growth in the assessed value is expected to result in an increase in the City’s property tax revenues in the coming year.
 A five-year water and sewer rate analysis was completed in early FY 2016-17 resulting in Prop. 218 approved multi-year rate increase which was anticipated to remedy the continued decrease in working capital and restructure the rates to reduce revenue volatility as consumption changes.

In FY 2019-20, the status of the water fund improved due to the implementation of new rates. The resulting increase in revenues allowed for the establishment of operating and rate stabilization reserves for the water fund. Minimum operating reserve balance was also established for the sewer fund. The sewer fund’s operating reserve was funded in FY 2017-18 prior to the planned increase in rates for FY 2019-20. Consequently, none of the approved sewer rate increases were implemented. It is anticipated that the current sewer rates will generate sufficient revenues to fund capital projects and operations. While the financial position of the Sewer Fund is expected to remain strong in the coming years even without any rate increases, Water Fund’s financial position will depend on future rate increases and the ability to generate operating savings by purchasing less expensive imported water. The City plans to produce more water domestically as a result of the recent completion of water production and storage facilities. There was no increase in water and sewer rates during FY 2024-25. Currently, the City is in the process of rate study to determine whether water, sewer and recycled water rates increase is needed for future years.  Over the last several years, the City’s employer pension contribution requirements have been rising due to lower payroll base and actuarial revisions by California Public Employees Retirement System (CalPERS). It is anticipated that employer pension contribution rates will continue to rise in the near future. Furthermore, when the City contracted out for fire and emergency medical services, the City’s safety pension plan was placed into inactive status by CalPERS and as a result of the lag in actuarial valuation, the City did not make any pension contribution to the safety plan over the initial two years. Even though the plan was fully funded when it was placed into inactive status, due to revisions to actuarial assumptions, differences between projected and actual earnings on the plan and changing demographics, the City began contributing to the plan in fiscal year 2016. In FY 2024-25, the City’s pension contribution for the safety plan increased to $960,294 from $530,106 in FY 2023-24. However, with the anticipation of future contributions for all pension plans to increase. In FY 2021-22, the City Council approved additional pension contributions through Internal Revenue Code Section 115 Post-Employment Benefits Trust Program to be administered by Public Agency Retirement Services (PARS) and U.S Bank, as Trustee. Ongoing contributions will continue based on contributions previously made to pre-fund the OPEB Trust.
 During FY 2024-25, hotel and leisure activities and their related revenues continue to rebound with the opening in the prior year of Dutch Bros, and Freddie’s, all on Hamner Avenue, bringing new hospitality and related businesses to the City’s major corridor. In addition to increased leisure activities, increased revenues from Transient Occupancy Tax are anticipated due to the opening of the Tru Hotel by Hilton, which opened September 2024.

CITY OF NORCO
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2025
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 During FY 2024-25, construction began for Norco Valley Square, a mixed-use community that aims to respect Norco’s rich agrarian heritage while introducing new amenities to benefit all residents. Norco Valley Square includes crafted spaces for dining, community gatherings, recreation and residential living. The new community incorporates an agrarian-inspired architectural style, honoring Norco’s unique equestrian and rural legacy. When completed, it will feature an 11,325-square-foot, two-story clubhouse designed as a hub for social and recreational activities, complete with fitness facilities, office spaces, a community living room, and an outdoor area with a pool and spa, ideal for connecting with friends and neighbors. The residential component comprises 320 one-, two-, and three- bedroom units with garages spread across 19 three-story buildings, maintaining a low-density feel while offering modern comforts. The five acres of food-oriented commercial space will serve as a gathering place for residents and visitors alike, hosting cafes and restaurants, centered around outdoor spaces that encourage dining, relaxation and social interaction.
 The City of Norco has partnered with the City of Corona and continues to find grant opportunities for homeless services that provide outreach, clean tons of trash out of the Santa Ana Riverbed, and assist with permanent and transitional housing placement.  The City has initiated a community-wide effort to develop its 2050 General Plan, which will create a shared vision for Norco’s future that reflects the community’s values and needs to help envision the future of Norco’s neighborhoods, parks, business corridors, streets, trails, open space and community character.

Requests for Information
This financial report is designed to provide our citizens, taxpayers, customers, investors, creditors and all those with interest in the City’s finances with an overview of the City’s finances and to demonstrate accountability over the City’s financial assets. Questions concerning any of the information provided in this report or request for additional information should be addressed to the Finance Director, City of Norco, 2870 Clark Avenue, Norco, California 92860, or call (951) 270-5650.

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GOVERNMENT-WIDE FINANCIAL STATEMENTS

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CITY OF NORCO

STATEMENT OF NET POSITION
JUNE 30, 2025
See accompanying Notes to Financial Statements.
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Governmental Business-Type
Activities Activities Total
ASSETS
Cash and Investments 74,595,545 $ 27,429,153 $ 102,024,698 $ Cash and Investments With Fiscal Agents 131,746 20,808 152,554 Receivables, Net:

Accounts 2,304,198 4,580,299 6,884,497
Interest 537,743 256,488 794,231 Notes 9,050,753 9,804,575 18,855,328 Settlement - 1,450,031 1,450,031
Due from Other Governments 4,593,820 - 4,593,820
Internal Balances (848,104) 848,104 -
Inventories - 139,177 139,177 Prepaids 37,992 4,768 42,760 Property Held for Resale 5,782,117 - 5,782,117 Lease Receivable 11,218,309 - 11,218,309 Capital Assets not Being Depreciated/Amortized:

Land and Construction in Progress 109,451,971 8,482,887 117,934,858 Capital Assets, Net of Accumulated Depreciation/Amortization 104,601,480 79,087,418 183,688,898 Total Assets 321,457,570 132,103,708 453,561,278

DEFERRED OUTFLOWS OF RESOURCES
Deferred Loss on Debt Refunding - 684,937 684,937
Amounts Related to Other Postemployment Benefits 3,120,969 1,222,155 4,343,124 Amounts Related to Pension Plans 5,501,709 1,492,751 6,994,460 Total Deferred Outflow of Resources 8,622,678 3,399,843 12,022,521

LIABILITIES
Accounts Payable and Accrued Liabilities 6,996,794 2,301,835 9,298,629 Accrued Interest Payable - 397,245 397,245 Retentions Payable 419,132 99,481 518,613
Unearned Revenues 648,090 480,674 1,128,764
Deposits Payable - 496,795 496,795 Noncurrent Liabilities:

Due Within One Year 821,003 1,569,357 2,390,360 Due in More Than One Year 1,406,058 40,293,111 41,699,169 Net OPEB Liability 6,778,000 2,654,229 9,432,229 Net Pension Liability 18,946,812 4,809,428 23,756,240 Total Liabilities 36,015,889 53,102,155 89,118,044

DEFERRED INFLOWS OF RESOURCES
Amounts Related to Leases Receivable 11,040,154 - 11,040,154 Amounts Related to Other Postemployment Benefits 158,668 62,133 220,801 Amounts Related to Pension Plans 1,196,489 242,071 1,438,560 Total Deferred Inflow of Resources 12,395,311 304,204 12,699,515

NET POSITION
Net Investment in Capital Assets 211,546,730 45,542,559 257,089,289 Restricted for:

Capital Projects 12,200,995 - 12,200,995 Community Development 531,110 - 531,110 Low and Moderate Income Housing 16,805,149 - 16,805,149 Public Safety 1,055,279 - 1,055,279
Debt Service - 20,808 20,808 Pensions 4,079,607 965,548 5,045,155 Unrestricted 35,450,178 35,568,277 71,018,455 Total Net Position $ 281,669,048 $ 82,097,192 $ 363,766,240

CITY OF NORCO

STATEMENT OF ACTIVITIES
YEAR ENDED JUNE 30, 2025
See accompanying Notes to Financial Statements.
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Net Revenue (Expense) and
Program Revenues Changes in Net Position
Operating Capital
Charges for Contributions Contributions Governmental Business-Type Functions/Programs Expenses Services and Grants and Grants Activities Activities Total Primary Government
Governmental Activities:

General Government 11,199,457 $ 2,197,511 $ 696,900 $ - $ (8,305,046) $ - $ (8,305,046) $ Public Safety 14,990,768 1,323,936 734,838 413,198 (12,518,796) - (12,518,796) Streets and Highways 6,986,114 1,703,582 2,399,910 3,374,159 491,537 - 491,537 Community and Economic Development 2,358,248 1,978,522 42,763 290,351 (46,612) - (46,612) Culture and Leisure 6,058,431 2,421,627 113,589 4,078,324 555,109 - 555,109 Total Governmental Activities 41,593,018 9,625,178 3,988,000 8,156,032 (19,823,808) - (19,823,808) Business-Type Activities:

Water 14,029,653 13,395,548 1,450,031 801,162 - 1,617,088 1,617,088 Sewer 7,033,114 7,783,074 - - - 749,960 749,960 Recycled Water 25,858 - - 1,897,330 - 1,871,472 1,871,472 Total Business-Type Activities 21,088,625 21,178,622 1,450,031 2,698,492 - 4,238,520 4,238,520 Total Primary Government 62,681,643 $ 30,803,800 $ 5,438,031 $ 10,854,524 $ (19,823,808) 4,238,520 (15,585,288) General Revenues:

Taxes:

Property Tax, Levied for General
Purpose 7,112,823 - 7,112,823 Transient Occupancy Tax 1,316,238 - 1,316,238 Franchise Tax 2,673,933 - 2,673,933
Public Service Taxes 432,958 - 432,958
Intergovernmental - Sales Tax 19,312,667 - 19,312,667 Motor Vehicle in Lieu Tax - Unrestricted 41,984 - 41,984 Unrestricted Investment Earnings 3,110,046 1,827,515 4,937,561 Unrestricted Intergovernmental 29,449 - 29,449 Transfers (258,200) 258,200 - Total General Revenues and Transfers 34,288,298 1,569,315 35,857,613 CHANGES IN NET POSITION 5,807,835 14,464,490 20,272,325 Net Position - Beginning of Year 267,204,558 76,289,357 343,493,915 NET POSITION - END OF YEAR $ 82,097,192 281,669,048 $ 363,766,240 $

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FUND FINANCIAL STATEMENTS

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CITY OF NORCO

BALANCE SHEET

GOVERNMENTAL FUNDS
JUNE 30, 2025
See accompanying Notes to Financial Statements.
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Housing
Successor Agency Formerly
Low and Moderate Major Fund Total
Income Housing Storm Drain Nonmajor Total
Special Capital Governmental Governmental
General Revenue Fund Projects Fund Funds Funds
ASSETS
Cash and Investments 47,394,121 $ 4,961,331 $ - $ 14,582,965 $ 66,938,417 $ Cash and Investments With Fiscal Agents - 131,746 - - 131,746 Receivables, Net:

Accounts 2,257,709 - - 26,500 2,284,209
Interest 385,052 38,001 - 73,784 496,837 Notes 2,686,186 6,069,117 - 295,450 9,050,753 Due from Other Governments 3,791,549 - - 802,271 4,593,820 Prepaids 4,654 - - - 4,654 Property Held for Resale - 5,782,117 - - 5,782,117 Leases Receivable 11,218,309 - - - 11,218,309 Due from Other Funds 282,309 - - - 282,309 Total Assets 68,019,889 $ 16,982,312 $ - $ 15,780,970 $ 100,783,171 $

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES

LIABILITIES
Accounts Payable and Accrued
Liabilities 5,226,516 $ 177,163 $ - $ 1,499,562 $ 6,903,241 $ Retentions Payable 231,166 - - 187,966 419,132 Due to Other Funds 39,344 - - 306,058 345,402 Unearned Revenues 648,090 - - - 648,090 Total Liabilities 6,145,116 177,163 - 1,993,586 8,315,865 DEFERRED INFLOWS OF RESOURCES Unavailable Revenues 11,067,734 - - 295,450 11,363,184 FUND BALANCES Nonspendable 2,690,840 - - - 2,690,840 Restricted 4,079,607 16,805,149 - 13,499,145 34,383,901 Committed 13,106,474 - - - 13,106,474 Unassigned 30,930,118 - - (7,211) 30,922,907 Total Fund Balances 50,807,039 16,805,149 - 13,491,934 81,104,122 Total Liabilities, Deferred Inflows of Resources, and
Fund Balances 68,019,889 $ 16,982,312 $ - $ 15,780,970 $ 100,783,171 $

CITY OF NORCO

RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL

FUNDS TO THE STATEMENT OF NET POSITION
JUNE 30, 2025
See accompanying Notes to Financial Statements.
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Fund Balances of Governmental Funds $ 81,104,122
Amounts reported for governmental activities in the statement of net position are different because:

Capital assets used in governmental activities are not current financial resources and, therefore, are not reported in the funds. 211,886,957 Internal service funds are used by management to charge the costs of equipment usage, and certain employee benefits and City-wide insurance coverage. The assets and liabilities of the internal service funds are included in the governmental activities in the statement of net position, excluding $785,011 allocated to business-type activities 6,969,000 Interest receivable on certain long-term loans and certain grants and loans to pay for current-period expenditures and, therefore, are deferred in the governmental funds. In the statement of net position, these receivables are recognized as earned revenues. 323,030 Long-term liabilities are not due and payable in the current period. Therefore, they are not reported in the governmental funds' balance sheet Lease Payable (145,501) Subscription Payable (11,269) Pension and OPEB related debt applicable to the City governmental activities are not due and payable in the current period and accordingly are not reported as fund liabilities. Deferred outflows of resources and deferred inflows of resources related to pensions and OPEB are only reported in the statement of net position as the changes in these amounts affect only the government-wide statements for governmental activities:

Deferred Outflows of Resources Related to OPEB 3,120,969 Deferred Inflows of Resources Related to OPEB (158,668) Net OPEB Liability (6,778,000) Deferred Outflows of Resources Related to Pensions 5,501,709 Deferred Inflows of Resources Related to Pensions (1,196,489) Net Pension Liability (18,946,812) Net Position of Governmental Activities 281,669,048 $

CITY OF NORCO

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES

GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30, 2025
See accompanying Notes to Financial Statements.
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Housing
Successor Agency Formerly
Low and Moderate Major Fund Total
Income Housing Storm Drain Nonmajor Total
Special Capital Governmental Governmental
General Revenue Fund Projects Fund Funds Funds

REVENUES
Taxes 30,848,619 $ - $ - $ 1,036,054 $ 31,884,673 $
Assessments - - - 912,397 912,397 Licenses and Permits 1,692,391 - - - 1,692,391 Fines and Forfeitures 531,246 - - - 531,246 Development Fees 210,000 - - 7,884,121 8,094,121 Intergovernmental 86,541 - - 3,144,723 3,231,264 Charges for Services 4,421,547 - - 26,062 4,447,609 Investment Earnings 2,771,872 231,938 - 465,150 3,468,960 Lease Income 1,144,819 - - - 1,144,819 Reimbursements 4,082 - - - 4,082 Other 111,861 42,462 - 25,000 179,323 Total Revenues 41,822,978 274,400 - 13,493,507 55,590,885 EXPENDITURES Current:

General Government 10,579,753 - - - 10,579,753 Public Safety 14,019,326 - - 204,175 14,223,501 Streets and Highways 1,063,480 - - 2,167,280 3,230,760 Community and Economic Development 2,003,668 247,048 - 31,485 2,282,201 Culture and Leisure 3,801,388 - - 992,710 4,794,098 Debt Service:

Principal 93,183 - - - 93,183
Interest 611 - - - 611 Capital Outlay:

Special Assessment 7,540,739 - - - 7,540,739 Other 213,397 - - 4,969,900 5,183,297 Total Expenditures 39,315,545 247,048 - 8,365,550 47,928,143 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 27,352 2,507,433 - 5,127,957 7,662,742 OTHER FINANCING SOURCES (USES) Transfers In 259,700 - - 660,254 919,954 Transfers Out (660,254) - - (34,124) (694,378) Total Other Financing Sources (Uses) (400,554) - - 626,130 225,576 NET CHANGE IN FUND BALANCES 27,352 2,106,879 - 5,754,087 7,888,318 Fund Balances - Beginning of Year, as Previously Presented 48,700,160 16,777,797 1,590,443 6,147,404 73,215,804 Change Within Financial Reporting Entity (Major to Nonmajor Fund) - - (1,590,443) 1,590,443 - Fund Balances - Beginning of Year, as Adjusted 48,700,160 16,777,797 - 7,737,847 73,215,804 FUND BALANCES - END OF YEAR $ 16,805,149 50,807,039 $ - $ 13,491,934 $ 81,104,122 $

CITY OF NORCO

RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES,

AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE

STATEMENT OF ACTIVITIES
YEAR ENDED JUNE 30, 2025
See accompanying Notes to Financial Statements.
(30)
Net Change in Fund Balance - Total Governmental Funds 7,888,318 $ Amounts reported for governmental activities in the statement of activities are different because:

Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. Asset deletions also affect the amounts reported in the statement of activities.

Capital Outlays 12,394,556 Depreciation (4,912,449) Loss on Disposal of Capital Assets - Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the governmental funds:

Grant Revenue Not Available to Pay for Current-Period Expenditures (111,314) Proceeds from debt issued provided current financial resources to governmental funds, but issuing debt increased long-term liabilities in the government-wide statement of net position. Principal payments are expenditures in the governmental funds, but reduces the long-term liabilities in the government-wide statement of net position.

Lease and subscription issuances - Principal Payments 93,183 OPEB expense reported in the governmental funds includes the insurance premiums paid. In the statement of activities, OPEB expense includes the change in the OPEB liability, and related change in OPEB amounts for deferred outflows of resources and deferred inflows of resources. (744,417)
Internal service funds are used by management to charge the costs of equipment usage, and certain employee benefits and City-wide insurance coverage to individual funds. The change in net position of the internal service funds reported within the governmental activities, excluding income of $118,999 reported in business-type activities. 673,035 Pension expense reported in the governmental funds includes the annual required contributions. In the statement of activities, pension expense includes the change in the net pension liability, and related change in pension amounts for deferred outflows of resources and deferred inflows of resources (816,422) Change in Net Position of Governmental Activities 14,464,490 $

CITY OF NORCO

STATEMENT OF NET POSITION

PROPRIETARY FUNDS
JUNE 30, 2025
See accompanying Notes to Financial Statements.
(31)
Governmental
Activities
Recycled Internal Service
Water Sewer Water Total Funds
ASSETS

CURRENT ASSETS
Cash and Investments 10,066,466 $ 14,998,824 $ 2,363,863 $ 27,429,153 $ 7,657,128 $ Cash and Investments With Fiscal Agents 11,666 9,142 - 20,808 - Receivables, Net:

Accounts 2,886,182 1,694,117 - 4,580,299 19,989
Interest 110,663 145,825 - 256,488 40,906 Notes 241,184 527,399 - 768,583 - Settlement 1,068,080 - - 1,068,080 - Prepaids 2,384 2,384 - 4,768 33,338 Due from Other Funds 63,093 - - 63,093 - Inventories 139,177 - - 139,177 - Total Current Assets 14,588,895 17,377,691 2,363,863 34,330,449 7,751,361 NONCURRENT ASSETS Notes Receivable 2,976,639 6,059,353 - 9,035,992 - Settlement Receivable 381,951 - - 381,951 - Advance to Other Funds - 3,200,000 - 3,200,000 - Capital Assets Not Being Depreciated/ Amortized:

Land 1,863,896 - - 1,863,896 - Construction in Progress 579,216 5,248,766 791,009 6,618,991 - Capital Assets Being Depreciated/Amortized:

Buildings and Improvements 1,253,038 669,306 - 1,922,344 - Land Improvements 329,885 - - 329,885 - Utility Plant 24,480,172 10,182,888 - 34,663,060 - Wastewater Capacity Rights - 25,605,543 - 25,605,543 - Pipelines 53,517,697 32,743,431 - 86,261,128 - Fire Hydrants 2,202,973 - - 2,202,973 - Meters 1,827,287 1,741,393 - 3,568,680 - Vehicles and Equipment 174,026 432,876 - 606,902 5,040,969 Right-to-Use Lease Assets 26,451 26,451 - 52,902 301,790 Right-to-Use Subscription Assets 78,266 78,266 - 156,532 645,214 Intangible Assets - - - - 436,609 Less: Accumulated Depreciation/ Amortization (39,272,757) (37,009,774) - (76,282,531) (4,258,088) Total Noncurrent Assets 50,418,740 48,978,499 791,009 100,188,248 2,166,494 Total Assets 65,007,635 66,356,190 3,154,872 134,518,697 9,917,855 DEFERRED OUTFLOWS OF RESOURCES Deferred Loss on Debt Refunding 416,083 268,854 - 684,937 - Amounts from Other Postemployment Benefits 863,413 358,742 - 1,222,155 - Amounts from Pension Plans 796,173 696,578 - 1,492,751 - Total Deferred Outflows of Resources 2,075,669 1,324,174 - 3,399,843 -
Business-Type Activities - Enterprise Funds

CITY OF NORCO

STATEMENT OF NET POSITION (CONTINUED)

PROPRIETARY FUNDS
JUNE 30, 2025
See accompanying Notes to Financial Statements.
(32)
Governmental
Activities
Recycled Internal Service
Water Sewer Water Total Funds

LIABILITIES

CURRENT LIABILITIES
Accounts Payable and Accrued Liabilities 1,369,634 $ 932,201 $ - $ 2,301,835 $ 93,553 $ Accrued Interest Payable 203,393 193,852 - 397,245 - Retentions Payable - 99,481 - 99,481 - Deposits Payable 275,138 221,657 - 496,795 - Unearned Revenues 237,985 242,689 - 480,674 - Lease Payable 2,995 2,995 - 5,990 42,969 Subscription Liability 9,353 9,353 - 18,706 6,565 Compensated Absences - - - - 253,174 Loan Obligation - 319,661 - 319,661 - Claims and Judgements - - - - 409,591 Bonds Payable 601,916 623,084 - 1,225,000 - Total Current Liabilities 2,700,414 2,644,973 - 5,345,387 805,852 NONCURRENT LIABILITIES Compensated Absences - - - - 759,517 Lease payable 10,320 10,320 - 20,640 102,021 Subscription Liability 9,734 9,734 - 19,468 36,347 Loan Obligation - 4,344,281 - 4,344,281 - Advance from Other Funds - - 3,200,000 3,200,000 - Claims and Judgements - - - - 460,107 Bonds Payable 20,947,254 14,961,468 - 35,908,722 - Net OPEB Obligation 1,875,127 779,102 - 2,654,229 - Net Pension Liability 2,619,857 2,189,571 - 4,809,428 - Total Noncurrent Liabilities 25,462,292 22,294,476 3,200,000 50,956,768 1,357,992 Total Liabilities 28,162,706 24,939,449 3,200,000 56,302,155 2,163,844 DEFERRED INFLOWS OF RESOURCES Amounts from Other Postemployment
Benefits 43,895 18,238 - 62,133 - Amounts from Pension Plans 10,813 231,258 - 242,071 - Total Deferred Outflows of Resources 54,708 249,496 - 304,204 - NET POSITION
Net Investment in Capital Assets 25,784,481 18,967,069 791,009 45,542,559 1,978,592 Restricted for Pension Benefits 487,376 478,172 - 965,548 - Restricted for Debt Service 11,666 9,142 - 20,808 - Unrestricted 12,582,367 23,037,036 (836,137) 34,783,266 5,775,419 Total Net Position 38,865,890 $ 42,491,419 $ (45,128) $ 81,312,181 7,754,011 $ Adjustment to Reflect the Consolidation of Internal
Service Fund Activities to Enterprise Funds. 785,011 Net Position of Business-Type Activities 82,097,192 $ Business-Type Activities - Enterprise Funds

CITY OF NORCO

STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION

PROPRIETARY FUNDS
YEAR ENDED JUNE 30, 2025
See accompanying Notes to Financial Statements.
(33)
Governmental
Activities
Recycled Internal Service
Water Sewer Water Total Funds

OPERATING REVENUES
Sales and Charges for Services 13,323,111 $ 7,608,511 $ - $ 20,931,622 $ 3,815,898 $ Connection Fees 63,469 - - 63,469 - Miscellaneous 8,968 174,563 - 183,531 - Total Operating Revenues 13,395,548 7,783,074 - 21,178,622 3,815,898 OPERATING EXPENSES General and Administrative 916,010 734,582 25,858 1,676,450 2,704,910 Operations 10,697,960 4,097,695 - 14,795,655 - Depreciation and Amortization 1,811,620 1,695,787 - 3,507,407 618,066 Total Operating Expenses 13,425,590 6,528,064 25,858 19,979,512 3,322,976 OPERATING INCOME (LOSS) 1,255,010 (30,042) (25,858) 1,199,110 492,922 NONOPERATING REVENUES (EXPENSES) Investment Earnings 804,580 1,022,935 - 1,827,515 319,742 Interest Expense and Fiscal Charges (840,046) (716,197) - (1,556,243) (9,762) Amortization of Premium 162,579 165,552 - 328,131 - Settlement revenue 1,450,031 - - 1,450,031 - Loss on Disposal of Assets - - - - (43,492) Total Nonoperating Revenues (Expenses) 1,577,144 472,290 - 2,049,434 266,488

INCOME (LOSS) BEFORE CONTRIBUTIONS
AND TRANSFERS 1,727,300 1,547,102 (25,858) 3,248,544 759,410 CAPITAL CONTRIBUTIONS 1,897,330 801,162 - 2,698,492 - TRANSFERS IN - - - - 32,624 TRANSFERS OUT (129,100) (129,100) - (258,200) - CHANGE IN NET POSITION 3,495,530 2,219,164 (25,858) 5,688,836 792,034 Net Position - Beginning of Year 36,646,726 38,995,889 (19,270) 75,623,345 6,961,977 NET POSITION - END OF YEAR $ 42,491,419 38,865,890 $ (45,128) $ 81,312,181 $ 7,754,011 $ Adjustment to Reflect the Consolidation of Internal
Service Fund Activities to Enterprise Funds. 118,999 Net Position of Business-Type Activities 5,807,835 $ Business-Type Activities - Enterprise Funds

CITY OF NORCO

STATEMENT OF CASH FLOWS

PROPRIETARY FUNDS
YEAR ENDED JUNE 30, 2025
See accompanying Notes to Financial Statements.
(34)
Governmental
Activities
Recycled Internal Service
Water Sewer Water Total Funds

CASH FLOWS FROM OPERATING ACTIVITIES
Cash Received from Customers 12,839,321 $ 7,427,038 $ - $ 20,266,359 $ - $ Cash Received from Interfund Services
Provided - - - - 3,815,898 Cash Payments to Suppliers (9,570,076) (3,685,948) (44,252) (13,300,276) (2,325,333) Cash Payments to Employees for Services (1,792,632) (778,900) - (2,571,532) (250,316) Net Cash Provided (Used) by Operating Activities 1,476,613 2,962,190 (44,252) 4,394,551 1,240,249 CASH FLOWS FROM NONCAPITAL

FINANCING ACTIVITIES
Cash Received from Other Funds - - - - 32,624 Cash Paid to Other Funds (144,329) (129,100) - (273,429) - Net Cash Provided (Used) by Noncapital Financing Activities (144,329) (129,100) - (273,429) 32,624 CASH FLOWS FROM CAPITAL AND RELATED

FINANCING ACTIVITIES
Acquisition and Construction of
Capital Assets (1,826,277) (2,363,687) (599,013) (4,788,977) (227,956) Capital Contributions 801,162 1,897,330 - 2,698,492 - Principal Payments - Subscription Liability (8,986) (8,986) - (17,972) (148,562) Principal Payments - Lease (3,053) (3,053) - (6,106) (37,036) Principal Payments - Financed Purchase - (313,700) - (313,700) - Principal Payments - Bonds (579,169) (600,830) - (1,179,999) - Interest and Fiscal Charges (824,569) (706,853) - (1,531,422) (9,762) Net Cash Used by Capital and Related Financing Activities (2,440,892) (2,099,779) (599,013) (5,139,684) (423,316) CASH FLOWS FROM INVESTING ACTIVITIES Interest Income 728,626 989,044 - 1,717,670 301,181 Repayment of Notes Receivable - 281,448 - 281,448 - Net Cash Provided (Used) by Investing Activities 728,626 1,270,492 - 1,999,118 301,181 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,003,803 (379,982) (643,265) 980,556 1,150,738 Cash and Cash Equivalents - Beginning of Year 10,458,114 13,004,163 3,007,128 26,469,405 6,506,390 CASH AND CASH EQUIVALENTS - END OF YEAR $ 15,007,966 10,078,132 $ 2,363,863 $ 27,449,961 $ 7,657,128 $

CASH AND CASH EQUIVALENTS ARE

REPORTED ON THE STATEMENT OF

NET POSITION AS FOLLOWS
Cash and Investments 10,066,466 $ 14,998,824 $ 2,363,863 $ 27,429,153 $ 7,657,128 $ Cash and Investments With Fiscal Agents 11,666 9,142 - 20,808 - Total Cash and Cash Equivalents 10,078,132 $ 15,007,966 $ 2,363,863 $ 27,449,961 $ 7,657,128 $ Business-Type Activities - Enterprise Funds

CITY OF NORCO

STATEMENT OF CASH FLOWS (CONTINUED)

PROPRIETARY FUNDS
YEAR ENDED JUNE 30, 2025
See accompanying Notes to Financial Statements.
(35)
Governmental
Activities
Recycled Internal Service
Water Sewer Water Total Funds

RECONCILIATION OF OPERATING INCOME
(LOSS) TO NET CASH PROVIDED (USED) BY

OPERATING ACTIVITIES
Operating Income (Loss) (30,042) $ 1,255,010 $ (25,858) $ 1,199,110 $ 492,922 $ Adjustments to Reconcile Operating Income
(Loss) to Net Cash Provided (Used) by
Operating Activities:

Depreciation and Amortization 1,811,620 1,695,787 - 3,507,407 618,066 (Increase) Decrease in Assets and Deferred Outflows:

Accounts Receivable (551,391) (349,141) - (900,532) - Prepaids 10,220 10,220 - 20,440 11,538 Inventories 2,619 - - 2,619 - Deferred Outflows:

Amount from Pension Plans 320,483 136,440 - 456,923 - Amount from Other Postemployment Benefits 282,462 128,035 - 410,497 -
Increase (Decrease) in Liabilities and
Deferred Inflows:

Accounts Payable and Accrued
Liabilities (21,475) 170,664 (18,394) 130,795 (52,000) Deposits Payable 17,640 16,026 - 33,666 - Unearned Revenues (22,476) (22,921) - (45,397) - Retentions Payable - 87,067 - 87,067 - Compensated Absences - - - - 129,328 Net Pension Obligation (112,692) (50,111) - (162,803) - Net OPEB Obligation (72,085) (48,090) - (120,175) - Claims and Judgements - - - - 40,395 Deferred Inflows:

Amount from Pension Plans (90,643) (37,658) - (128,301) - Amount from Other Postemployment Benefits (67,627) (29,138) - (96,765) - Net Cash Provided (Used) by Operating Activities 1,476,613 $ 2,962,190 $ (44,252) $ 4,394,551 $ 1,240,249 $

SUPPLEMENTAL DISCLOSURE OF NONCASH

INVESTING, CAPITAL, AND FINANCING

ACTIVITIES
Loss on Disposal of Capital Assets - $ - $ - $ - $ 43,492 $ Acquisition of Leased & Subscription
Assets $ - $ - $ - $ - $ 133,685
Business-Type Activities - Enterprise Funds

CITY OF NORCO

STATEMENT OF FIDUCIARY NET POSITION
JUNE 30, 2025
See accompanying Notes to Financial Statements.
(36)
Successor
Agency
Private-Purpose Custodial
Trust Fund Funds
ASSETS
Cash and Investments 3,300,165 $ 4,544,322 $
Cash and Investments With Fiscal Agents 4,908,314 1,781,604 Receivables, Net:

Interest 7,245 17,723 Due from Other Governments - 53,398 Prepaids 66,836 - Total Assets 8,282,560 6,397,047 DEFERRED OUTFLOWS OF RESOURCES Loss on Debt Refunding 1,943,866 - LIABILITIES
Accounts Payable - 41,461 Deposits Payable - 877,586 Accrued Interest on Debt 745,388 - Long-Term Liabilities:

Due Within One Year 3,825,000 - Due in More Than One Year 47,752,278 - Total Liabilities 52,322,666 919,047 NET POSITION Held in Trust for the Successor Agency and
Other Purposes (42,096,240) - Restricted for:

Debt Service for Special Assessment Debt - 5,478,000
Total Net Position (42,096,240) $ 5,478,000 $

CITY OF NORCO

STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
YEAR ENDED JUNE 30, 2025
See accompanying Notes to Financial Statements.
(37)
Successor
Agency
Private-Purpose Custodial
Trust Fund Funds

ADDITIONS
RPTTF Property Tax Distribution 6,306,847 $ - $
Collections for Others - 3,800,951
Investment Earnings 249,780 200,969 Total Additions 6,556,627 4,001,920 DEDUCTIONS Administrative Allowance 250,000 - Payment for Collections to Waste Management - 747,811 Administrative Expenses - 149,813 Payment of Principal on Special Assessment Debt - 1,804,092 Interest Expense 2,271,233 1,070,340
Total Deductions 2,668,133 3,772,056
CHANGE IN NET POSITION 229,864 3,888,494 Net Position - Beginning of the Year (45,984,734) 5,248,136 NET POSITION - END OF THE YEAR $ 5,478,000 (42,096,240) $

(38)

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(39)

NOTES TO FINANCIAL STATEMENTS

(40)

THIS PAGE INTENTIONALLY LEFT BLANK

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(41)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Description of the Reporting Entity
The City of Norco (the City) was incorporated on December 28, 1964 as a general law city and operates under a Council/City Manager form of government. It is governed by an elected five-member council.

As required by generally accepted accounting principles, these financial statements present the City (the primary government) and its component units. The component units discussed below are included in the City’s reporting entity because of the significance of their operational or financial relationship with the City. These entities are legally separate from each other. However, the City’s elected officials have a continuing full or partial accountability for fiscal matters of the other entities. The financial reporting entity consists of: (1) the City, (2) organizations for which the City is financially accountable, and (3) organizations for which the nature and significance of their relationship with the City are such that exclusions would cause the City’s financial statements to be misleading or incomplete.

An organization is fiscally dependent on the primary government if it is unable to adopt its budget, levy taxes, set rates or charges, or issue bonded debt without approval by the primary government. In a blended presentation, component unit balances and transactions are reported in a manner similar to the balances and transactions of the City. Component units are presented on a blended basis when the component unit’s governing body is substantially the same as the City’s or the component unit provides services almost entirely to the City. The following component unit of the City has been included in the financial reporting entity as a blended component unit. A description of the component unit and the method of incorporating its financial information in the accompanying financial statements is summarized as follows:

Norco Public Financing Authority
The Norco Public Financing Authority (the Authority) is a Joint Exercise of Powers Authority under the Laws of the state of California. The Authority is authorized to issue bonds under the Marks-Roos Local Bond Pooling Act of 1985 (Article 1 through 4, section 6500). The City and the former Norco Community Redevelopment Agency (the former Agency) formed the Authority by execution of the Joint Exercise of Powers Agreement. The purpose of the Authority is to provide financing to the former Agency and the City for various project purposes. The Authority activity is reported in the water and sewer enterprise funds and is presented as a blended component unit since its governing board is substantially the same as the City’s. Separate financial statements were not prepared for the Authority.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(42)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. Government-wide and Fund Financial Statements
The government-wide financial statements include a statement of net position and a statement of activities. These statements present summaries of governmental and business-type activities for the City accompanied by a total column. Fiduciary activities of the City are not included in these statements. Certain eliminations have been made as prescribed by Governmental Accounting Standards Board (GASB) Statement No. 34 in regard to interfund activities, payables, and receivables. All internal balances in the statement of net position have been eliminated except those representing balances between the governmental activities and the business-type activities, which are presented as internal balances and eliminated in the total primary government column.

Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support.

The statement of activities demonstrates the degree to which the direct and indirect expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment.

Program revenues include (1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment, and (2) grants and contributions, including special assessment, that are restricted to meet the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenue are reported instead as general revenues. In the statement of activities, internal service fund transactions have been eliminated; however, those transactions between the governmental and business-type activities have not been eliminated.

Separate financial statements are provided for governmental, proprietary, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements.

C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary funds and fiduciary funds. Under the economic resources measurement focus, all (both current and long-term) economic resources and obligations of the reporting government are reported in the government-wide financial statements. Accrual basis of accounting refers to when revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of the cash flows. Accordingly, all of the City’s assets, deferred outflows of resources, liabilities, and deferred inflows of resources, including capital assets, as well as infrastructure assets, and long-term liabilities, are included in the accompanying statement of net position. The statement of activities presents changes in net position. The types of transactions reported as program revenues for the City are reported in three categories (1) charges for services, (2) operating grants and contributions, and (3) capital grants and contributions.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(43)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued)
Governmental fund financial statements are reported using the current financial resources measurement focus and the modified-accrual basis of accounting. The current financial resources measurement focus means that only current assets, deferred outflows of resources, current liabilities and deferred inflows of resources are generally included on their balance sheets. Under the modified accrual basis of accounting, revenues are recognized in these funds when susceptible to accrual (i.e. when they are both measurable and available). “Measurable” means the amount of the transaction can be determined and “available” means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. For this purpose, the City considers property taxes collected after year-end, as available if they are collected within 60 days of the end of the current fiscal period. Other revenues susceptible to accrual include sales tax, state gasoline tax, utility users’ tax, investment income, and certain other intergovernmental revenues. Reimbursable grant revenues are considered to be available if they are collected within six months of the end of the current fiscal period. Grant funds earned but not received are recorded as a receivable, and grant funds received before the revenue recognition criteria have been met are reported as unearned revenues. Expenditures in the governmental funds are generally recognized in the accounting period in which the related fund liability is incurred, if measurable, except for unmatured principal and interest on general long-term debt, as well as lease liabilities, SBITA liabilities, compensated absences and claims and judgments, which are recognized when due.

The City reports the following major Governmental Funds:

The General Fund is the City’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund.

The General Fund includes Measure R funds, a one-cent sales tax, for investment in infrastructure and vital services that was approved by voters on the November 6, 2018 ballot. Measure R allows the City to preserve its quality of life, and restore deteriorating streets, trails, parks, facilities, and equestrian amenities. Measure R will also prevent additional cuts to the City’s public safety services in order to maintain safe levels of sheriff and fire protection without risking emergency response times.

With the approval of Measure R, the sales tax rate in the City increased by 1%, from

7.75% to 8.75% effective April 1, 2019.

The Housing Successor Agency Low- and Moderate-Income Housing (LMIH) Special Revenue Fund. This fund accounts for assets received from dissolution of the former Norco Community Redevelopment Agency dedicated to low- and moderate-income housing activities pursuant to the California Health and Safety Code.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(44)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued)
The City reports the following major Proprietary Funds:

The Water Fund is used to account for the provision of water services to the residences and businesses of the City.

The Sewer Fund is used to account for the revenues and expenses in connection with the operation and improvement of the City’s sewer system.

The Recycled Water Fund is used to account for the provision of recycled water services to the residences and businesses of the City.

Additionally, the City reports the following fund types:

The Special Revenue Funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes.

The Capital Project Funds are used to account for major capital acquisition and construction separately from their ongoing operating activities, including those financed by special assessments.

The Internal Service Funds are used by the City to account for data processing, fleet management, and benefits and insurance services provided to other City departments or agencies on a cost reimbursement basis and to allocate costs of compensated absences and claims and judgments charges to the funds on a pro rata basis.

The Fiduciary Funds are used to account for the receipt of assets, liabilities, special assessments and deposits received from individuals, private organizations, or other governments. These resources are held by the City in a fiduciary capacity and remittances are made as distributions to other government, others, and for payments for debt for which the City is not obligated. Fiduciary fund balances are not property of the City of Norco.

The City utilizes the following Fiduciary Funds:

The Private-Purpose Trust Fund is the Successor Agency to the former Agency.

The private-purpose trust fund is reported using the “economic resources measurement focus” and the “accrual basis of accounting.” The Custodial Funds account for assets held by the City as a custodian for bonded assessment districts, collections for on behalf of individuals, private organizations, or other governments. The custodial funds use the accrual basis of accounting.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(45)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued)
As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are payments-inlieu of taxes and other charges between the City’s water, sewer, and recycled water functions and various other functions of the City. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned.

Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues for the water, sewer, and recycled water enterprise funds and of the City’s internal service funds are charges to customers for sales and services. Operating expenses for these same enterprise funds include the cost of sales and services, administration expenses, and depreciation on capital assets.

All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.

D. Interfund Receivables and Payables
Activity between funds in the fund financial statements that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the noncurrent portion of interfund loans). Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances.”
E. Property Taxes
The County of Riverside collects property taxes for the City. Tax liens attach annually as of 12:01 A.M. on the first day in March preceding the fiscal year for which the taxes are levied. The tax levy covers the fiscal period July 1 to June 30. All secured personal property taxes and one-half of the taxes on real property are due November 1, the second installment is due February 1. All taxes are delinquent, if unpaid, on December 10 and April 10, respectively. Unsecured personal property taxes become due on the first of March each year and are delinquent, if unpaid, on August 31.

F. Cash and Cash Equivalents
For purpose of the statement of cash flows, the City considered cash and cash equivalents as short-term, highly liquid investments that are both readily convertible to known amounts of cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. The City follows the practice of pooling cash and investments of all funds.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(46)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) G. Investments
The City reports its investments at fair value in the financial statements. All investment income, including changes in the fair value of investments, is recognized as revenue in the operating statement.

H. Inventories and Prepaids
Inventories of materials and supplies are carried at cost on a first-in, first-out basis. The City uses the consumption method of accounting for inventories. Special reporting treatments are also applied to governmental fund inventories to indicate that they do not represent “available spendable resources,” even though they are a component of net current assets. Such amounts are designated as an unspendable component of fund balance.

Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements.

The City uses the consumption method of accounting for prepaids.

I. Land Held for Resale
Land held for resale is recorded at the lower of cost or net realizable value.

J. Compensated Absences
Vacation pay is payable to employees at the time a vacation is taken or upon termination of employment. Vacation accruals and the maximum number of hours an employee can accrue are based on the employee’s length of service with the City as outlined in the various Memorandum of Understanding and Salary Resolutions.

Sick leave is payable when an employee is unable to work because of illness. Upon termination, regular employees with 10 years continuous service will be paid 50% for any unused sick leave. Managers, mid-managers, and confidential employees with five years continuous service are also paid 50% for any unused sick leave.

The total amount of liability for compensated absences is segregated between shortterm and long-term with both portions reflected in the government-wide statements. The short-term portion is determined to be the amount due to employees for future absences which is attributable to services already rendered and which is expected to be paid during the next fiscal year.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(47)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) K. Capital Assets
Capital assets, which include property, plant and equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items) are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the government as assets with an initial, individual cost of more than or equal to $5,000 ($50,000 for infrastructure assets) and an estimated useful life of at least two years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at acquisition value.

The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized.

Property, plant and equipment, and infrastructure assets of the primary government, as well as the component units, are depreciated using the straight-line method over the following estimated useful lives.

Buildings 50 Years
Building Improvements 5 to 50 Years
Public Domain Infrastructure 20 to 50 Years
System Infrastructure 10 to 60 Years
Land Improvements 5 to 50 Years
Wastewater Capacity Rights 40 to 50 Years
Vehicles and Equipment 5 to 20 Years
Office and Computer Equipment 5 to 10 Years
Fire Hydrants/Meters 10 to 50 Years
Intangible Assets 5 to 10 Years
Right-to-use lease assets are initially measured at the present value of payments expected to be made during the lease term, adjusted for lease payments made at or before the lease commencement date, plus certain initial direct costs. Subsequently, the lease asset is amortized in a systematic and rational manner over the shorter of the lease term or the useful life of the underlying asset.

Subscription-Based Information Technology Arrangements (SBITA) assets are initially measured as the sum of the present value of payments expected to be made during the subscription term, payments associated with the SBITA contract made to the SBITA vendor at the commencement of the subscription term, when applicable, and capitalizable implementation costs, less any SBITA vendor incentives received from the SBITA vendor at the commencement of the SBITA term. SBITA assets are amortized in a systematic and rational manner over the shorter of the subscription term or the useful life of the underlying IT assets.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(48)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) L. Deferred Outflows/Inflows of Resources
In addition to assets, the statement of net position includes a separate section for deferred outflows of resources. Deferred outflows of resources represent a consumption of net assets that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The category of deferred outflows of resources reported in the statement of net position is related to debt refunding, pensions, and other postemployment benefits. The deferred charge on refunding resulted from the difference between the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. Deferred outflows on pension and other postemployment benefits are more fully discussed in Notes 5 and 13, respectively.

In addition to liabilities, the statement of net position and the governmental funds balance sheet includes a separate section for deferred inflows of resources. Deferred inflows of resources represent an acquisition of net assets or fund balance that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. In the government-wide financial statements, the City’s deferred inflows of resources reported on the statement of net position relate to pension and other postemployment benefits, which are more fully discussed in Notes 5 and 13. The statement of net position and the governmental funds balance sheet also report a deferred inflows of resources related to leases. The lease related deferred inflow of resources is recorded in an amount equal to the corresponding lease receivable plus any payments received at or before the start of the lease term that relates to future periods, less any lease incentives paid to, or on behalf of the lessee at or before the commencement of the lease term. The inflow of resources is recognized in a systematic and rational manner over the term of the lease.

Under the modified accrual basis of accounting, deferred inflows of resources also include revenues not collected within the availability period after the fiscal year-end. The City has reported deferred inflows of resources related to unavailable revenues for property taxes and grants. These amounts are deferred and will be recognized as an inflow of resources in the period that amounts become available.

M. Use of Estimates
The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, deferred outflows of resources, liabilities, and deferred inflows of resources and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(49)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) N. Long-Term Liabilities
In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the straight-line method. Bonds payable are reported net of the applicable bond premium or discount.

In the fund financial statements, governmental fund types recognize bond premiums and discounts during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses.

O. Unearned Revenues
In the government-wide financial statements and the fund financial statements, unearned revenues represent cash advances by various grantors that have not been spent; therefore, no revenue has been recognized.

P. Pensions
For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the City’s California Public Employees’ Retirement System (CalPERS) plans (Plans) and additions to/deductions from the Plans’ fiduciary net position have been determined on the same basis as they are reported by CalPERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.

Q. Postemployment Benefits Other Than Pensions (OPEB)
For purposes of measuring the net OPEB liability and deferred outflows/inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the City’s OPEB Plan and additions to/deductions from the OPEB Plans’ fiduciary net position have been determined on the same basis as they are reported by the Plan. For this purpose, the City’s OPEB Plan recognizes benefit payments when due and payable in accordance with the benefit terms. Investments are reported at fair value.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(50)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) R. Net Position
The government wide financial statements, proprietary fund statements and fiduciary fund statements utilize a net position presentation. Net position is classified in the following categories:

Net Investment in Capital Assets – This amount consists of capital assets net of accumulated depreciation and reduced by outstanding debt and capital related payable that is attributed to the acquisition, construction, or improvement of the assets.

Restricted Net Position – This amount is restricted by enabling legislation, such as external creditors, grantors, contributors, or laws or regulations of other governments.

Unrestricted Net Position – This amount is all net position that does not meet the definition of “net investment in capital assets” or “restricted net position.” Sometimes the City will fund outlays for a particular purpose from both restricted and unrestricted resources. In order to calculate the amounts to report as restricted net position and unrestricted net position in the government wide and proprietary fund financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the City’s policy to consider restricted net position to have been depleted before unrestricted net position is applied.

S. Fund Balances
The following fund balance classifications describe the relative strength of the spending constraints placed on the purposes for which resources can be used:

Nonspendable – This category represents amounts that cannot be spent because they are either (a) not in a spendable form (such as inventory) or (b) legally or contractually required to be maintained intact.

Restricted – This category represents amounts constrained to specific purposes by their providers (such as grantors, bondholders, and higher levels of government), through constitutional provisions or by enabling legislation.

Committed – This category represents amounts constrained to specific purposes by a government itself, using the highest level of decision-making authority. Committed fund balances encompass the portion of net fund resources, the use of which is constrained by limitations that the government imposes upon itself at its highest level of decision-making, normally through the adoption of a resolution by the governing body, and that remain binding unless removed in the same manner. The City Council is considered the highest authority for the City.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(51)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) S. Fund Balances
The following fund balance classifications describe the relative strength of the spending constraints placed on the purposes for which resources can be used (continued):

Assigned – This category represents amounts a government intends to use for a specific purpose; intent can be expressed by the governing body or by an official or body to which the governing body delegates the authority. Assignment of resources can be done by the highest level of decision making or by a committee or official designated for that purpose. The City Council has established a resolution that authorized the City Manager for that purpose.

Unassigned – Consists of the residual amount for the general fund that is not contained in the other classifications. The general fund is the only fund that reports a positive unassigned fund balance. Any deficit fund balance within the other governmental fund types is reported as unassigned.

The City Council establishes, modifies, and/or rescinds fund balance commitments by passage of a resolution.

The City considers that both, restricted and unrestricted amounts to have been spent when an expenditure is incurred for which both types of fund balances is available; the City also considers committed, assigned, and or unassigned amounts to have been used in that order when an expenditure is incurred and any of those classifications apply to the expenditure.

T. Encumbrances
Encumbrances are estimations of costs related to unperformed contracts for goods and services. These commitments are recorded for budgetary control purposes in the general, special revenue, and similar governmental funds. Encumbrances outstanding at year-end represent the estimated amount of the expenditure ultimately to result if unperformed contracts at year-end are completed. They do not constitute expenditures or estimated liabilities. As of June 30, 2025, there were no outstanding encumbrances for governmental funds.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(52)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) U. Deficit Net Position and Fund Balances
As of June 30, 2025, the following funds had deficit net position or fund balances:

Recycled Water Enterprise Fund $ (45,128)
Nonmajor Special Revenue Funds:

Landscape Maintenance District #1 (7,211)
Internal Service Fund:

Benefits and Insurance (767,263)
Deficit net position or fund balances are expected to be funded through collection of future revenues or transfers from the general fund.

V. Adoption of New Accounting Standards
During the year ended June 30, 2025, the City implemented the following new accounting standard issued by the Governmental Accounting Standards Board (GASB):

GASB Statement No. 101 Compensated Absences. The objective of this Statement is to better meet the information needs of financial statement users by updating the recognition and measurement guidance for compensated absences. That objective is achieved by aligning the recognition and measurement guidance under a unified model and by amending certain previously required disclosures. Implementation of GASB Statement No. 101 did not have a significant impact on the City’s financial reporting process.

GASB Statement No. 102 Certain Risk Disclosures. The objective of this Statement is to provide users of government financial statements with essential information about risks related to a government’s vulnerabilities due to certain concentrations or constraints. Implementation of GASB Statement No. 102 did not impact the City’s financial reporting process.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(53)
NOTE 2 CASH AND INVESTMENTS
Cash and Investments
Cash and investments are reported in the accompanying statement of net position and statement of fiduciary net position as follows:

Statement of Net Position:

Cash and Investments $102,024,698
Cash and Investments With Fiscal Agents 152,554 Statement of Fiduciary Net Position:

Cash and Investments 7,844,487 Cash and Investments With Fiscal Agents 6,689,918 Total Cash and Investments 116,711,657 $
Cash and investments as of June 30, 2025, consist of the following:

Cash on Hand 2,050 $
Deposits with Financial Institutions 14,306,015
Investments in Section 115 Trust - PARS 5,045,155
Investments 97,358,437
Total Cash and Investments 116,711,657 $
Investments Authorized by the California Government Code and the City’s Investment Policy
The table below identifies the investment types that are authorized by the City’s investment policy. The table also identifies certain provisions of the City’s investment policy that address interest rate risk, credit risk and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustee that are governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code or the City’s investment policy.

Maximum Maximum
Maximum Percentage of Investment in
Authorized Investment Type Maturity Portfolio * One Issuer City Issued Debt 5 Years None None
United States (U.S.) Treasury Securities 5 Years None None State of California Obligations 5 Years None None
California Local Agency Obligations 5 Years None None
U.S. Government Sponsored Agency Securities 5 Years None None Banker's Acceptances 180 Days 40% None
Commercial Paper 270 Days 25% None
Negotiable Certificates of Deposit 5 Years 30% None
Non-Negotiable Certificates of Deposit 2 Years 25% None Medium-Term Notes 5 Years 30% None
Money Market Mutual Funds N/A 20% 10%
Mortgage Pass-Through securities 5 Years 20% None
Local Government Investment Pools N/A None None
Supranational Obligations 5 Years 30% None
Local Agency Investment Fund N/A None None
Riverside County Investment Fund N/A None None
* Excluding amounts held by bond trustee that are not subject to California Government Code restrictions.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(54)
NOTE 2 CASH AND INVESTMENTS (CONTINUED)
Investments Authorized by Debt Agreements
Investment of debt proceeds held by bond trustee are governed by provisions of the debt agreements, rather than the general provisions of the California Government Code or the City’s investment policy. The table below identifies the investment types that are authorized for investments held by bond trustee. The table also identifies certain provisions of these debt agreements that address interest rate risk, credit risk, and concentration of credit risk.

Maximum Maximum
Maximum Percentage Investment in
Authorized Investment Type Maturity Allowed One Issuer
U.S. Treasury Obligations None None None
U.S. Government Sponsored Agency Securities None None None Banker’s Acceptances 180 Days None None
Commercial Paper 270 Days None None
Money Market Mutual Funds N/A None None
Investment Contracts 30 Years None None
Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the City manages its exposure to interest rate risk is by purchasing a combination of shorter-term and longer-term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations.

Information about the sensitivity of the fair values of the City’s investments (including investments held by bond trustee) to market interest rate fluctuations is provided by the following table that shows the distribution of the City’s investments by maturity:

Remaining Maturity (in Months)
12 Months 13 to 24 25 to 60
Investment Type Total or Less Months Months
State Investment Pool 26,957,218 $ 26,957,218 $ - $ - $ CAMP 38,394,016 38,394,016 - - U.S. Government Sponsored Agency Securities 25,164,731 25,164,731 Held by Trustee:

Money Market Mutual Funds 2,792,792 2,792,792 - - U.S. Government Sponsored Agency Securities 4,049,680 4,049,680 - Total Investments 97,358,437 $ 72,193,706 $ - $ 25,164,731 $

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(55)
NOTE 2 CASH AND INVESTMENTS (CONTINUED)
Disclosures Relating to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by Standard and Poor’s or by Moody’s Corporation, nationally recognized statistical rating organizations.

Presented below is the minimum rating required by (where applicable) the City’s investment policy or debt agreements, and the actual rating as of year-end for each investment type.

The state investment pool does not have a rating provided by a nationally organized statistical rating organization.

Minimum Ratings as
Investment Type Total Legal Rating of Year-End
State Investment Pool 26,957,218 $ N/A Not Rated
CAMP N/A Not Rated 38,394,016
U.S. Government Sponsored Agency
Securities 25,164,731 N/A AA+
Held by Trustee:

Money Market Mutual Funds 2,792,792 A/A1 AAA
U.S. Government Sponsored Agency
Securities 4,049,680 N/A AA+
Total Investments 97,358,437 $
N/A - Not Applicable
Concentration of Credit Risk
The investment policy of the City contains certain limitations on the amount that can be invested in any one issuer. Investments in any one issuer (other than U.S. Treasury securities, mutual funds, and external investment pools) that represent 5% or more of total City investments are as follows:

Reported
Issuer Investment Type Amount
Federal Home Loan Bank U.S. Government Sponsored Agency Security 25,164,731 $ Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(56)
NOTE 2 CASH AND INVESTMENTS (CONTINUED)
Concentration of Credit Risk (Continued)
The California Government Code and the City’s investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits: The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The fair value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits.

As of June 30, 2025, the City’s deposits with financial institutions in excess of Federal Depository Insurance Corporation (FDIC) limit of $250,000 was held in collateralized accounts as required by the California Government Code.

Investment in State Investment Pool
The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by the California Government Code under the oversight of the Treasurer of the state of California. The fair value of the City’s investment in this pool is reported in the accompanying financial statements at amounts based upon the City’s pro rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis.

Investment in CAMP Investment Pool
The City is a voluntary participant in the California Asset Management Program (CAMP) that is regulated by California Government Code. The fair value of the City’s investment in CAMP is reported in the accompanying financial statements at an amount based upon the City’s pro-rata share of the fair value provided by CAMP for the entire CAMP portfolio (in relation to the amortized cost of that portfolio, respectively.) The balance available for withdrawal is based on the accounting records maintained by and CAMP, which are recorded on an amortized cost basis.

Investment in Section 115 Trust - PARS
The City established a trust account with Public Agency Retirement Services (PARS) to hold assets that are legally restricted for use in administering the City’s CalPERS pension plans.

The Section 115 Pension trust’s investments are managed by a third-party portfolio manager under guidelines approved by the City.

Fair Value Measurements
The City categorizes its fair value measurement within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the assets. Level 1 inputs are quoted prices in active markets for identical assets, Level 2 inputs are quoted prices for similar assets in active markets, and Level 3 inputs are significant unobservable inputs.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(57)
NOTE 2 CASH AND INVESTMENTS (CONTINUED)
Fair Value Measurements (Continued)
Investments in commercial paper and U.S. government sponsored agency securities are valued using quoted prices in an active market for similar assets (Level 2 measurement).

The City has the following recurring fair value measurements as of June 30, 2025:

Level 1 Level 2 Level 3 Total
U.S. Government Sponsored
Agency Securities - $ 25,164,731 $ - $ 25,164,731 $
Held by Trustee:

U.S. Government Sponsored
Agency Securities 4,049,680 - 4,049,680 Total Investments - $ 29,214,411 $ - $ 29,214,411 Investments Not Subject to Fair
Value Hierarchy:

State Investment Pool 26,957,218 CAMP 38,394,016
Held by Trustee:

Money Market Mutual Funds 2,792,792 Total Investment Portfolio 97,358,437 $ NOTE 3 RECEIVABLES
Due from Other Governments
Due from other governments, as of year-end, for the government’s individual major funds, and nonmajor funds in the aggregate are as follows:

Nonmajor
Type of Revenue General Funds Total
Assessments - $ 16,399 16,399 $
Gas Tax - 64,160 64,160 RMRA - SB1 - 128,051 128,051 Property Taxes 64,875 - 64,875 Sales Tax 2,057,453 - 2,057,453 Measure A - 166,709 166,709 Measure R 1,563,981 1,563,981 - Grants and Contributions - 418,226 418,226 Other 105,240 8,726 113,966 Total 3,791,549 $ 802,271 $ 4,593,820 $

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(58)
NOTE 4 CAPITAL ASSETS
Capital assets activity for the year ended June 30, 2025 was as follows:

Beginning Ending
Balance Additions Deletions Balance
Governmental Activities:

Capital Assets, Not Being Depreciated:

Land 103,204,667 $ - $ - $ 103,204,667 $
Construction in Progress 5,012,958 12,200,077 6,247,304 (10,965,731) Total Capital Assets, Not Being
Depreciated 108,217,625 12,200,077 109,451,971 (10,965,731) Capital Assets, Being Depreciated/
Amortized:

Buildings and Improvements 19,917,342 331,916 - 20,249,258 Improvements Other Than Buildings 8,301,520 1,571,469 - 9,872,989 Vehicles and Equipment 6,175,972 266,456 6,381,697 (60,731) Infrastructure 161,992,629 9,218,321 - 171,210,950
Intangible Assets:

Lease Assets - Equipment 550,425 94,337 644,762
Subscription Assets 653,607 39,347 692,954
Other 436,609 - - 436,609
Total Capital Assets, Being
Depreciated/Amortized 198,028,104 11,521,846 209,489,219 (60,731) Less: Accumulated Depreciation/
Amortization for:

Buildings and Improvements (10,106,391) - (531,253) (10,637,644) Improvements Other Than Buildings (3,653,976) - (397,670) (4,051,646) Vehicles and Equipment (3,574,535) 17,243 (467,036) (4,024,328) Infrastructure (81,161,559) (3,798,901) (84,960,460)
Intangible Assets:

Lease Assets - Equipment (203,943) (124,800) (328,743)
Subscription Assets (237,454) (210,855) (448,309)
Other - (436,609) (436,609)
Total Accumulated Depreciation/
Amortization (99,374,467) 17,243 (5,530,515) (104,887,739) Total Capital Assets, Being
Depreciated/Amortized, Net 98,653,637 5,991,331 104,601,480 (43,488) Total Governmental Activities
Capital Assets, Net 206,871,262 $ 18,191,408 $ (11,009,219) $ 214,053,451 $

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(59)
NOTE 4 CAPITAL ASSETS (CONTINUED)
Beginning Ending
Balance Additions Deletions Balance
Business-Type Activities:

Capital Assets, Not Being Depreciated:

Land 1,863,896 $ - $ - $ 1,863,896 $
Construction in Progress 4,575,406 5,039,142 (2,995,557) 6,618,991 Total Capital Assets, Not Being Depreciated 6,439,302 5,039,142 (2,995,557) 8,482,887 Capital Assets, Being Depreciated/Amortized:

Buildings and Improvements 1,922,344 - - 1,922,344 Land Improvements 329,885 - - 329,885 Utility Plant 34,253,123 409,937 - 34,663,060 Wastewater Capacity Rights 25,605,543 - - 25,605,543 Pipelines 83,675,508 2,585,620 - 86,261,128
Fire Hydrants 2,202,973 - - 2,202,973 Meters 3,568,680 - - 3,568,680 Vehicles and Equipment 606,902 - - 606,902
Intangible Assets:

Lease Assets - Equipment 34,932 17,970 52,902 Subscription Assets 156,532 156,532 Total Capital Assets, Being Depreciated/Amortized 152,356,422 3,013,527 - 155,369,949 Less: Accumulated Depreciation/Amortization for:

Buildings and Improvements (982,530) (55,826) - (1,038,356) Land Improvements (16,494) (16,494) - (32,988) Utility Plant (9,155,892) (771,929) - (9,927,821) Wastewater Capacity Rights (12,589,731) (723,101) - (13,312,832) Pipelines (44,473,020) (1,728,376) - (46,201,396) Vehicles and Equipment (436,591) (66,031) - (502,622) Fire Hydrants (1,686,092) (16,289) - (1,702,381) Meters (3,337,503) (88,337) - (3,425,840) Intangible Assets:

Lease Assets - Equipment (20,958) (6,294) (27,252) Subscription Assets (76,313) (34,730) (111,043) Total Accumulated Depreciation/ Amortization (72,775,124) (3,507,407) - (76,282,531) Total Capital Assets, Being Depreciated, Net 79,581,298 (493,880) - 79,087,418 Total Business-Type Activities Capital Assets, Net 86,020,600 $ 4,545,262 $ (2,995,557) $ 87,570,305 $

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(60)
NOTE 4 CAPITAL ASSETS (CONTINUED)
Depreciation and amortization expense was charged to functions of the primary government as follows:

Governmental Activities:

General Government 361,785 $
Public Safety 275,576 Streets and Highways 3,122,436
Culture and Leisure 1,152,652 Capital Assets Held by the Government's Internal Service Funds are Charged to the Various
Functions Based on Their Usage of the Assets:

Depreciation and Amortization 618,066 Total Depreciation and Amortization Expense- Governmental Activities 5,530,515 $
Business-Type Activities:

Water - Depreciation and Amortization Expense 1,811,620 $ Sewer - Depreciation and Amortization Expense 1,695,787 Total Depreciation and Amortization Expense Business- Type Activities 3,507,407 $
NOTE 5 RETIREMENT PLANS
A. General Information about the Pension Plans
Plan Descriptions
All qualified permanent and probationary employees are eligible to participate in the City’s separate Safety (fire) and Miscellaneous (all other) Employee Pension Plans, costsharing, multiemployer defined benefit pension plans administered by the California Public Employees’ Retirement System (CalPERS) in the PERF C Risk Pool. Benefit provisions under the Plans 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 at www.calpers.ca.gov.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(61)
NOTE 5 RETIREMENT PLANS (CONTINUED)
A. General Information about the Pension Plans (Continued) Benefits Provided
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 an average three years of full-time employment. Members with five years of total service are eligible to retire at age 50 to 62 with statutorily reduced benefits. For employees hired into a plan with the 2.7% at 55 formula, eligibility for retirement is age 55 with at least five years of service. PEPRA miscellaneous members become eligible for retirement upon attainment of age 62 with at least five years of service. All members are eligible for nonduty 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.

The Plans’ provisions and benefits in effect at the measurement date of June 30, 2024, and the contribution requirements for the fiscal year ended June 30, 2025, are summarized as follows:

Miscellaneous
Prior to On or After
Hire Date January 1, 2013 January 1, 2013
Benefit Formula 2.7%@55 2%@62
Benefit Vesting Schedule 5 Years of Service 5 Years of Service Benefit Payments Monthly for Life Monthly for Life
Retirement Age 50 - 55 50 - 62
Monthly Benefits, as a % of Eligible Compensation 2.0% to 2.7% 1.0% to 2.5% Required Employee Contribution Rates 8% 7.75%
Required Employer Contribution Rates:

Normal Cost Rate 15.240% 7.870%
Employer Payment of Unfunded Liability $ 1,170,871 $ 8,302 Safety
Prior to
Hire Date January 1, 2013
Benefit Formula 2%@50
Benefit Vesting Schedule 5 Years of Service
Benefit Payments Monthly for Life
Retirement Age 50
Monthly Benefits, as a % of Eligible Compensation 2.00% Required Employee Contribution Rates (1) 0.00%
Required Employer Contribution Rates:

Normal Cost Rate (1) 0.00%
Employer Portion of Unfunded Liability $ 929,220
(1) The City has no active safety members and, therefore, the only required contribution for fiscal year ended June 30, 2025 was the employer portion of the unfunded liability.

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NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
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NOTE 5 RETIREMENT PLANS (CONTINUED)
A. General Information about the Pension Plans (Continued) 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 currently does not pay for plan member contributions. Employer contributions for the miscellaneous plan and safety plans for fiscal year 2025 were $1,815,916, and $929,220, respectively.

B. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions
As of June 30, 2025, the City reported net pension liabilities for its proportionate share of the net pension liability of the PERF C Risk Pool as follows:

Proportionate
Share of
Net Pension
Liability
Miscellaneous 14,899,722 $
Safety 8,856,518 Total Net Pension Liability 23,756,240 $ The City’s net pension liability for each Plan is measured as the proportionate share of the net pension liability. The net pension liability of each of the Plans is measured as of June 30, 2024, and the total pension liability for each Plan used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2023 rolled forward to June 30, 2024 using standard update procedures. The City’s proportionate share of the net pension liability was based on a projection of the City’s long-term share of contributions to the pension plans relative to the projected contributions of all participating employers, actuarially determined.

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JUNE 30, 2025
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NOTE 5 RETIREMENT PLANS (CONTINUED)
B. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions (Continued)
The City’s change in proportionate share of the net pension liability for the PERF C Risk Pool, in terms of percentages, as of the measurement dates of June 30, 2023 and 2024 was as follows:

Miscellaneous Safety
Proportion - June 30, 2023 0.30765% 0.12261%
Proportion - June 30, 2024 0.30806% 0.12147%
Change - Increase (Decrease) 0.00041% -0.00114%
For the year ended June 30, 2025, the City recognized pension expense (income) of $3,727,377 ($2,405,146 for miscellaneous and $1,322,231 for safety). At June 30, 2025, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Miscellaneous Safety Total Deferred Deferred Deferred Deferred Deferred Deferred Outflows of Inflows of Outflows of Inflows of Outflows of Inflows of Resources Resources Resources Resources Resources Resources Pension Contributions Subsequent to Measurement Date 1,815,916 $ - $ 929,220 $ - $ 2,745,136 $ - $ Differences Between Expected
and Actual Experience 1,288,217 (50,264) 722,771 (23,500) 2,010,988 (73,764) Change in Assumptions 382,954 - 218,206 - 601,160 - Change in Employer's Proportion - (809,815) 2,504 (268,896) 2,504 (1,078,711) Differences Between the Employer's Contributions and the Employer's
Proportionate Share of Contribution 348,829 (1,616) - (284,469) 348,829 (286,085) Net Differences Between Projected and Actual Earnings on Plan
Investments 857,759 - 428,084 - 1,285,843 - Total 4,693,675 $ (861,695) $ 2,300,785 $ (576,865) $ 6,994,460 $ (1,438,560) $ $1,815,916 and $929,220 reported as deferred outflows of resources 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 for the miscellaneous and safety pension plans, respectively. 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, Miscellaneous Safety Total
2026 471,639 $ 236,608 $ 708,247 $
2027 1,877,953 814,492 2,692,445 2028 (39,585) (109,930) (149,515) 2029 (293,943) (146,470) (440,413) 2030 - - - Thereafter - - -

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JUNE 30, 2025
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NOTE 5 RETIREMENT PLANS (CONTINUED)
B. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions (Continued)
Actuarial Assumptions
The total pension liability for the June 30, 2024 the measurement period was determined by an actuarial valuation as of June 30, 2023, with update procedures used to roll forward the total pension liability to June 30, 2024. The total pension liability was based on the following assumptions:

Miscellaneous Safety
Valuation Date June 30, 2023 June 30, 2023
Measurement Date June 30, 2024 June 30, 2024
Actuarial Cost Method Entry-Age Normal Entry-Age Normal Cost Method Cost Method
Actuarial Assumptions:

Discount Rate 6.90% 6.90%
Inflation 2.30% 2.30%
Salary Increases (1) (1)
Mortality Rate Table (2) (2)
Postretirement Benefit Increase (3) (3)
(1) Varies by entry-age and service.
(2) The mortality table was developed based on CalPERS-specific data. The probabilities of mortality are based on the 2021 CalPERS Experience Study and Review of Actuarial Assumptions. Mortality rates incorporate full 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 2021 experience study report from November 2021 that can be found on the CalPERS website.
(3) The lesser of contract COLA or 2.30% until Purchasing Power Protection Allowance floor on purchasing power applies, 2.30% thereafter.

Long-Term Expected Rate of Return
The long-term expected rate of return on pension plan investments was determined using a building-block method in which expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class.

In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations. Using historical returns all of the funds’ asset classes, expected compound (geometric) returns were calculated over the next 20 years using a building-block approach. The expected rate of return was then adjusted to account for assumed administrative expenses of 10 Basis points.

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NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
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NOTE 5 RETIREMENT PLANS (CONTINUED)
B. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions (Continued)
The expected real rates of return by asset class are as follows:

Assumed
Asset Real Return
Asset Class (a) Allocation (a) (b)
Global Equity - Cap-Weighted 30.00 % 4.54 %
Global Equity - Non-Cap-Weighted 12.00 3.84
Private Equity 13.00 7.28
Treasury 5.00 0.27
Mortgage-Backed Securities 5.00 0.50
Investment Grade Corporates 10.00 1.56
High Yield 5.00 2.27
Emegring Market Debt 5.00 2.48
Private Debt 5.00 3.57
Real Assets 15.00 3.21
Leverage (5.00) (0.59)
Total 100.00 %
(a) An expected inflation of 2.3% used for this period. (b) Figures are based on the 2021-22 Asset Liability Management study.

Discount Rate
The discount rate used to measure the total pension liability was 6.90%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

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JUNE 30, 2025
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NOTE 5 RETIREMENT PLANS (CONTINUED)
B. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions (Continued)
Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate
The following presents the City’s proportionate share of the net pension liability of the PERF C Risk Pool, calculated using the discount rate, as well as what the City’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower or 1-percentage-point higher than the current rate:

Miscellaneous Safety Total
1% Decrease 5.90% 5.90% 5.90%
Net Pension Liability 22,123,399 $ 12,858,836 $ 34,982,235 $ Current Discount Rate 6.90% 6.90% 6.90%
Net Pension Liability 14,899,722 $ 8,856,518 $ 23,756,240 $ 1% Increase 7.90% 7.90% 7.90%
Net Pension Liability 8,953,572 $ 5,583,185 $ 14,536,757 $ Pension Plans Fiduciary Net Position
Detailed information about each pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports.

Liquidation of Pension Liabilities
The pension liability for governmental activities is primarily liquidated from the general fund, while the pension liability for business-type activities is liquidated from the enterprise funds.

C. Payable to the Pension Plans
At June 30, 2025, the City had no outstanding amount of contributions to the pension plans required for the year ended June 30, 2025.

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NOTE 6 LONG-TERM LIABILITIES
Change in Long-Term Liabilities
The following is a schedule of changes in long-term debt of the City for the fiscal year ended June 30, 2025:

Beginning Ending Due Within
Balance Additions Deletions Modifications Balance One Year Governmental Activities:

Direct Borrowings:

Leases Payable $ 315,917 $ 94,337 $ (119,762) $ - $ 290,492 $ 122,738 Subscription Liability 173,853 39,348 (159,021) - 54,180 35,502 Other Long-Term Liabilities:

Claims and Judgments 829,303 412,225 (371,830) - 869,698 409,591 Compensated Absences 883,362 812,679 (683,350) - 1,012,691 253,172 Governmental Activities
Long-Term Liabilities 2,202,435 $ 1,358,589 $ (1,333,963) $ - 2,227,061 $ 821,003 $ Business-Type Activities:

Direct Borrowings:

Leases payable $ 14,766 $ 17,969 $ (6,105) $ - $ 26,630 $ 5,990 Subscription Liability 56,146 - (17,972) - 38,174 18,706 Loan Obligation (WRCRWA) 4,977,642 - (313,700) - 4,663,942 319,661 Total Direct Borrowings 5,048,554 17,969 (337,777) - 4,728,746 344,357 Other Debt:
2019 Revenue Refunding Bonds 32,845,000 - (1,180,000) - 31,665,000 1,225,000 Add Premium on Issuance of
Bonds 5,796,852 - (328,130) - 5,468,722
Total Other Debt, Net 38,641,852 - (1,508,130) - 37,133,722 1,225,000 Business-Type Activities
Long-Term Liabilities 43,690,406 $ 17,969 $ (1,845,907) $ - 41,862,468 $ 1,569,357 $ For governmental activities, claims and judgments and compensated absences are generally liquidated by the Internal Service Funds.

A. Accrued Employee Benefits and Claims and Judgments Payable The City’s policy relating to compensated absences is described in Note 1.J. Claims and judgments are described in Note 12.

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JUNE 30, 2025
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NOTE 6 LONG-TERM LIABILITIES (CONTINUED)
B. Direct Borrowings
Loan Obligation - WRCRWA
During 2014, the Western Riverside County Regional Wastewater Authority (WRCRWA) obtained a financing agreement from the State Water Resources Control Board with ultimate drawdowns on this financing of $71,570,889 accruing interest at a rate of 1.9% per annum to finance the expansion of a Wastewater Treatment Plant. The City, as a member of the WRCRWA, agreed to purchase additional wastewater capacity rights for

9.10% of the annual debt service requirement for a period of 20 years beginning in fiscal year 2018-19. As of June 30, 2025, the debt payments to be made by the City for the revolving loan will be as follows:

Loan Obligation - WRCRWA
Year Ending June 30, Principal Interest Total
2026 319,661 $ 88,614 $ 408,275 $
2027 325,734 82,541 408,275 2028 331,922 76,353 408,275 2029 338,229 70,046 408,275
2030 344,655 63,620 408,275
2031-2035 1,824,027 217,347 2,041,374 2036-2038 1,179,714 45,110 1,224,824 Total 4,663,942 $ 643,631 $ 5,307,573 $
The assets acquired are as follows:

Wastewater Capacity Rights (Expansion) 7,812,297 $
Less: Accumulated Amortization (2,394,246)
Total 5,418,051 $
C. Leases Payable
The City leases equipment as well as certain operating and office facilities for various terms under long-term, noncancelable lease agreements. The leases expire at various dates through 2027 and with no renewal option. At June 30, 2025, lease assets and accumulated amortization totaled $697,664 and $355,995 respectively.

Total future minimum lease payments under lease agreements are as follows:

Year Ending June 30, Principal Interest Total
2026 $ 128,736 $ 9,991 $ 138,727
2027 98,387 5,046 103,433 2028 40,571 2,862 43,433 2029 42,224 1,208 43,432 2030 7,204 36 7,240
Total 317,122 $ 19,143 $ 336,265 $

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JUNE 30, 2025
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NOTE 6 LONG-TERM LIABILITIES (CONTINUED)
D. Subscriptions Payable
The City has entered into subscription-based information technology arrangements (SBITA) for the use of software for terms for a period of 24-60 months. The SBITA arrangements expire at various dates through 2027.

As of June 30, 2025, SBITA assets and the related accumulated amortization totaled $849,486 and $559,352, respectively.

The future subscription payments under the SBITA arrangements are as follows:

Year Ending June 30, Principal Interest Total
2026 $ 54,208 $ 2,450 $ 56,658
2027 38,146 587 38,733
Total 92,354 $ 3,037 $ 95,391 $
E. Revenue Bonds
During December 2019, the City issued $37,130,000 Enterprise Revenue Refunding Bonds, Series 2019A, to advance refund the outstanding Enterprise Revenue Refunding Bonds, Issue 2009 and to finance the acquisition and construction of certain improvements to the City’s water system and sewer system. The bonds are dated December 1, 2019 with interest paid at a rate from 3.00% to 5.00% payable semiannually on April 1 and October 1, commencing on April 1, 2020. The balance outstanding on these bonds at June 30, 2025 was $31,665,000.

The bonds are shown in the Water and Sewer Funds and the debt service requirements are as follows:
2019A Revenue Refunding Bonds
Year Ending June 30, Principal Interest Total
2026 1,225,000 $ 1,387,250 $ 2,612,250 $
2027 1,275,000 1,330,875 2,605,875 2028 1,340,000 1,265,500 2,605,500 2029 1,405,000 1,196,875 2,601,875 2030 1,475,000 1,124,875 2,599,875 2031-2035 8,545,000 4,448,650 12,993,650 2036-2040 10,620,000 2,339,500 12,959,500 2041-2045 2,605,000 903,900 3,508,900 2046-2050 3,175,000 327,500 3,502,500 Total 31,665,000 $ 14,324,925 $ 45,989,925 $

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JUNE 30, 2025
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NOTE 7 INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS
The composition of interfund balances at June 30, 2025 is as follows:

Advances To/From Other Funds
Receivable Fund Payable Fund Amount
Sewer Enterprise Fund Recycled Water Enterprise Fund 3,200,000 $ The amounts loaned from the Sewer Enterprise Fund to the newly established Recycled Water Enterprise Fund in fiscal year ended June 30, 2024, was for the purpose of constructing the infrastructure for a recycled water system. The loan is to be repaid over a 25-year period at 2% interest commencing on the January 2, two years after the date of first delivery of recycled water to customers.

Due To/From Other Funds
Receivable Fund Payable Fund Amount
General Fund Other Governmental Funds $ 282,309
Water Enterprise Fund General Fund 39,344
Water Enterprise Fund Other Governmental Funds 23,749
Total 345,402 $
The amounts loaned from the General Fund to the other governmental funds are short-term loans to fund operations of the various funds. The receivable of the Water Enterprise Fund is amounts due from the General Fund and other governmental funds for accrued water charges.

Interfund Transfers
Transfers In Transfer Out Amount
General Fund Water Enterprise Fund (1) 129,100 $
Sewer Enterprise Fund (1) 129,100 Other Governmental Funds(2) 1,500 Other Governmental Funds General Fund (3) 660,254 Internal Service Fund Other Governmental Funds(3) 32,624 Total 952,578 $ (1) To allocate estimated annual costs related to future street repairs. (2) To allocate administrative overhead costs.
(3) To fund equipment, street maintenance, and NPDES costs.

NOTE 8 LEASES RECEIVABLE
On or about July 6, 2011, the City (Landlord) and Balboa Management Group, LLC (Tenant), entered into a Ground Lease, Development, and Shared Use Agreement with the purpose of the development, management, and operation of the property known as Silverlakes into an Equestrian and Sports Park. This agreement has an original term of 30 years, with options to extend the lease to maximum lease duration of 99 years.

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JUNE 30, 2025
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NOTE 8 LEASES RECEIVABLE (CONTINUED)
The “Annual Minimum Rent” payable for the first five years from and after the Term Commencement Date shall be $396,480. The Annual Minimum Rent shall be paid in 12 equal monthly installments payable in advance on or before the first day of each calendar month.

On August 19, 2015, the City entered into an additional Ground Lease Agreement with Balboa Management Group, LLC to lease the eight-acre property adjacent to the Silverlakes Equestrian and Sports Park to be used as a parking lot for the facility. This agreement has an original term of 30 years with options to extend the lease to maximum lease duration of 99 years. The lease agreement allows for annual rent of $26,000 per year on the commencement date.

In April 2020, the lease agreement was amended to defer the monthly rent payments for six months for the period from April 1, 2020 to September 1, 2020. In February 2021, payments were deferred until September 1, 2021. Due to the ongoing impacts of the Coronavirus pandemic, additional amendments were made, and the total amount of the unpaid rent will be paid in 24 monthly installments commencing on September 1, 2023. As of June 30, 2025, the outstanding lease receivable balance net of the lease receivable allowance of $332,486 was $7,862,896
The carrying value of the land leased to the Tenant is $5,500,000, which is not subject to depreciation.

In addition to the Silverlakes ground leases, the City acting as lessor, leases communication tower spaces to various telecommunication companies under long-term, noncancelable lease agreements. The leases expire at various dates and provide for renewal options ranging from 1 year to 25 years.

During the year ended June 30, 2025, the City recognized $1,060,996 and $181,557 in lease revenue and interest revenue, respectively, pursuant to these contracts. Certain leases provide for increases in future minimum annual rental payments based on defined increases in the Consumer Price Index, subject to certain minimum increases.

Total future minimum lease payments to be received under lease agreements are as follows:

Year Ending June 30, Principal Interest Total
2026 680,795 $ 175,395 $ 856,190 $
2027 638,308 160,930 799,238 2028 647,180 150,376 797,556 2029 646,728 140,061 786,789
2030 666,951 129,375 796,326 2031-2035 3,494,144 474,227 3,968,371 2036-2040 3,203,063 199,456 3,402,519 2041-2045 1,235,687 26,237 1,261,924 2046-2050 5,453 6 5,459 Total 11,218,309 $ 1,456,063 $ 12,674,372 $

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JUNE 30, 2025
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NOTE 9 NOTES RECEIVABLE
Wastewater Treatment Capacity
During 2014, the City entered into an Agreement for the Assignment of California Department of Corrections and Rehabilitation (CDCR) Wastewater Discharge Rights. The purpose of this agreement was to transfer the Santa Ana Regional Interceptor (SARI) right of 750,000 gallons per day of the Inland Brine Line treatment and pipeline conveyance to the City. The City then sold this excess wastewater treatment capacity to the City of Corona.

The sale is evidenced by a note receivable in the amount of $9,864,651 plus estimated interest accruing at 3% per annum over 20 years. The outstanding balance on this note receivable at June 30, 2025 was $5,035,022, of which $1,729,704 is recorded in the General Fund and $3,305,318 is recorded in the Sewer Enterprise Fund.

Silverlakes Property Construction
During 2011, the City entered into a Funding, Construction, and Acquisition Agreement with Balboa Management Group, LLC for the construction and acquisition of the Silverlakes Property. Under this agreement the City agreed to finance the actual construction costs of the facilities up to a maximum of $6,000,000. The note bears interest at a rate of 5.9% per annum, or such lower rate which is equal to the actual effective rate of the Norco Financing Authority Enterprise Revenue Funding Bonds issue of 2009, until paid in full and shall be due in full no later than August 1, 2039. On April 1, 2020, City Council approved deferral of monthly deferral with re-amortization through August 2021 as a result of the worldwide Coronovarius (COVID-19) outbreak. The Funding, Construction and Acquisition Agreement stipulated that the reimbursable amount would bear interest at 5.9% per annum, or such lower rate which is equal to the actual effective interest rate of the Norco Financing Authority Enterprise Revenue Funding Bonds issue of 2009. Therefore, the note was re-amortized with interest at 2.63% per annum. The outstanding balance on this note receivable at June 30, 2025 was $6,499,257, of which $3,217,823 is recorded in the Water Enterprise Fund and $3,281,434 is recorded in the Sewer Enterprise Fund.

First Time Home Buyer Loans
First time home buyer loans are available to qualifying low- to moderate-income residents with a maximum loan amount of $80,000. Loans are due in 30 years or upon sale of property. Deferred loans are available to qualifying residents with a maximum loan amount of $40,000, up to $60,000 with executive approval. A 0% loan is available for seniors and the disabled and is not payable until sale or refinancing of the property. The 3% loan is available to qualified households without an age restriction and is due in 15 years or upon sale or refinancing of the property. At June 30, 2025 the outstanding balance on these loans receivable was $2,074,225.

Developer Loan
On May 22, 2008, the former Agency entered into a Loan Agreement with a Developer to provide a loan of $5,100,000 to provide a portion of the funds to finance the rehabilitation and conversion of 86 units of low- and very-low-income housing units in Heritage Park Senior Citizen Apartment Complex. The financial assistance is in the form of a residual receipts loan which is to be repaid over a 57-year affordability covenant period. The Loan is secured by a Second Deed of Trust against the property.

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NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(73)
NOTE 9 NOTES RECEIVABLE (CONTINUED)
Developer Loan (Continued)
The loan payments are 50% of the residual receipts with simple interest at 1%. The complex will remain as a low/moderate-income senior housing complex over the entire term of the loan. At June 30, 2025 the outstanding balance on this loan receivable was $4,076,822.

Sewer Connection Fee Program Loans Receivable
The former Agency administered several loan programs to its low- to moderate-income residents. Balances under the Sewer Connection Fee Program are forgiven after 15 years with the loan amount equal to the actual cost. Due to the nature of this program and the probability of forgiveness of these loans, they are not reflected on the statements as receivables.

Cal Homes Program
Loans were available to qualifying low- and very-low-income residents through the Cal Homes program to assist with the cost of rehabilitating owner-occupied residences. Loans carried interest rates of either 0% (for eligible senior citizens) or 3% (for nonsenior citizens).

Loans are due up to 30 years after origination or in the event the property is sold or refinanced. The balance outstanding at June 30, 2025 was $295,450.

NOTE 10 FUND BALANCE
The City has established fund balance accounts to report the amounts in the following funds which represent nonspendable and spendable resources:

Housing
Successor
Agency
LMIH Nonmajor Total
General Special Governmental Governmental
Fund Revenue Fund Funds Funds
Nonspendable:

Long-Term Receivables 2,686,186 $ - $ - $ 2,686,186 $
Prepaids 4,654 - - 4,654 Restricted by:

Capital Projects - - 654,405 654,405 Granting Agencies, Developers, and
Assessment Districts - - 12,844,740 12,844,740 Low- and Moderate- Income Housing - 16,805,149 - 16,805,149 Pension Benefits 4,079,607 - - 4,079,607 Committed for:

Measure R Projects 13,106,474 - - 13,106,474 Unassigned 30,930,118 - (7,211) 30,922,907 Total Fund Balances 50,807,039 $ 16,805,149 $ 13,491,934 $ 81,104,122 $

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NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(74)
NOTE 10 FUND BALANCE (CONTINUED)
The general fund balance includes the balances related to the special asset fund which was committed by the adoption of a resolution by City Council. The components of fund balance related to nonspendable fund balance of $2,690,840 are long-term notes receivable and prepaids. The general fund balance also includes balances related to the Measure R, which includes committed fund balance of $13,106,474 and unassigned fund balance of $30,930,118.

On June 21, 2023, the City established a formalized Reserve Policy that serves as the framework to enable the City to meet its financial commitments, address unexpected future events in a fiscally prudent manner and ensure the long-term financial health of the City. In addition to the existing operating reserves, the City had set up other reserve categories like local emergencies and natural disasters reserves, infrastructure reserves, economic development reserves. These reserves can by utilized by the City at the discretion of the City Council. On June 30, 2025, the total fund balance reserved for these reserves is $13,263,300.

NOTE 11 ASSESSMENT BONDS
Included within the City are certain community facilities districts which were financed by bonds issued pursuant to the Improvement Bond Act of 1915 under proceedings conducted under the provisions of the Municipal Improvement Act of 1913.

As of June 30, 2025, the future assessments liability of property owners for amounts payable to bondholders for these Districts are as follows:

Principal Interest Total
Community Facilities District 97-1
2018 Special Tax Refunding Bond 2,310,000 $ 225,308 $ 2,535,308 $ Community Facilities District 2001-1
2017 Special Tax Refunding Bond 18,595,000 4,637,125 23,232,125 Community Facilities District
2002-1 2013 Refinanced Norco 50 658,050 107,205 765,255 Total 21,563,050 $ 4,969,638 $ 26,532,688 $ Since the City is not liable for special assessment district act or community facility district defaults, no liability has been recognized on the City’s books and accordingly, none of the outstanding principal on the bonds is presented in the financial statements. For all completed projects, the City collects the assessments and remits the collections to pay the bondholders. Therefore, subsequent assessment collections and remittances are accounted for in a custodial fund.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(75)
NOTE 12 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 is a member of the Public Entity Risk Management Authority (PERMA), a public entity risk pool currently operating as a common risk management and insurance program for 22 California Cities, 7 special districts, and 3 transit agencies. The City pays an annual premium to the pool for its general liability and workers’ compensation insurance coverage.

For its general liability insurance, the City, through PERMA, has a self-insured retention amount of $125,000 per occurrence. Claims above $125,000 up to $1,000,000 are shared by the pool. Claims above $1,000,000 up to $50,000,000 are covered by excess insurance purchased through the pool.

For workers’ compensation, the self-insurance retention is $250,000 per claim, with a maximum limit of $5,000,000. The City retains a risk of loss due to the fact that actual losses may exceed estimated claims or overage amounts.

Claims, expenditures, and liabilities are reported when it is probable that a loss has occurred and the amount of that loss can be reasonably estimated. These losses include an estimate of claims that have been incurred but not reported. At June 30, 2025 the amount of these liabilities was $869,698. The amount represents an estimate of $828,284 for reported claims through June 30, 2025 and $41,414 estimate of incurred but not reported claims. This liability is the City’s best estimate based on available information.

Changes in the reported liability since July 1, 2023 resulted from the following:

Current
Year Claims
Beginning and Changes Claim Ending
Fiscal Year Liability in Estimates Payments Liability
2024 988,454 $ 350,000 $ 509,151 $ 829,303 $
2025 829,303 412,225 371,830 869,698
There was no significant reduction in insurance coverage by major categories of risk and no settlements which exceeded the insurance coverage for the past three fiscal years.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(76)
NOTE 13 OTHER POSTEMPLOYMENT BENEFITS
A. General Information about the OPEB Plan
Plan Description
The City provides postemployment health care benefits for eligible City retirees and their beneficiaries through CalPERS, an agent multiemployer postemployment health care plan. Retirees from the City enrolled in the Public Employees Medical Insurance Program through CalPERS are eligible for these benefits. The plan does not issue a publicly available financial report. These health insurance benefits are authorized through City resolutions/Memorandums of Understanding defining health care benefits and contribution levels and through the contractual agreement between the City and CalPERS. The City contributed up to $1,250 of the current monthly required premium costs of active and nonvested retired employees hired prior to 2004 for fiscal year 2022.

Effective July 1, 2023 the contribution was increased to $1,550 from $1,500. Additional contributions are made into a prefunded trust account as funds become available.

Employees Covered
As of the June 30, 2024 measurement date, the following current and former employees were covered by the benefit terms under the plan:

Inactive Employees or Beneficiaries Currently
Receiving Benefits 90
Inactive Employees or Beneficiaries Entitled to
But Not Yet Receiving Benefits 12 Active Employees 88
Total 190
Contributions
Benefit provisions and contribution requirements are established and may be amended through agreements and memorandums of understanding between the City, its management employees, and unions representing the City’s employees. The plan does not require employee contributions. Administrative costs of this plan are financed by the general fund.

The annual contribution is based on the actuarially determined contribution. For the measurement period ended June 30, 2024, the City contributed $1,266,239 which included $1,115,380 in cash benefit payments, a $147,000 estimated implied subsidy and $3,859 in non-trust admin expenses. For fiscal year 2025, the City contributed $1,350,609 which included $1,168,600 in cash benefit payments, a $179,000 estimated implied subsidy and $3,009 in non-trust admin expenses.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(77)
NOTE 13 OTHER POSTEMPLOYMENT BENEFITS (CONTINUED)
B. 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 an actuarial valuation dated June 30, 2024. A summary of the principal assumptions and methods used to determine the total OPEB liability is shown below.

Actuarial Assumptions
The total OPEB liability in the June 30, 2023 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified:

Valuation Date June 30, 2023
Measurement Date June 30, 2024
Actuarial Cost Method Entry-Age Normal Cost Method
Contribution Policy City is effectively contributing full ADC Actuarial Assumptions:

Discount Rate 5.25%
Inflation 2.50%
Projected Salary Increase 2.75% per annum, in aggregate Expected Long-Term Investment Rate
of Return 5.25%
Medical Trend Non-Medicare - 8.50% for 2025, decreasing to an ultimate rate of 3.45% in 2076
Medicare (Non-Kaiser) - 7.50% for 2025,
decreasing to an ultimate rate of 3.45% in 2076
Medicare (Kaiser) - 6.25% for 2025,
decreasing to an ultimate rate of 3.45% in 2076
Cap Increases Premium caps - medical trend
Dollar caps - 0%
Mortality, Retirement, Disability, Termination CalPERS 2000-2019 Experience Study Mortality Improvement Mortality projected fully generational with Scale MP-2021
Healthcare Participation for Future Retirees No state vesting schedule - 100% if currently covered, 90% if currently waived State vesting
schedule - 80% with 10 years of service, 95%
with 15 years of service, 100% with 20 years
of service
The actuarial assumptions used in the June 30, 2023 valuation were based on a standard set of assumptions the actuary has used for similar valuations, modified as appropriate for the City.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(78)
NOTE 13 OTHER POSTEMPLOYMENT BENEFITS (CONTINUED)
B. Net OPEB Liability (Continued)
Long-Term Expected Rate of Return
The long-term expected rate of return was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of OPEB plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighing the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the OPEB plan’s target asset allocation as of June 30, 2024 are summarized in the following table:

New Long-Term
Strategic Expected Real
Asset Class Allocation Rate of Return
CERBT-Strategy 3:

Global Equity 23.00 % 4.56 %
Fixed Income 51.00 1.56
TIPS 9.00 (0.80)
Commodities 3.00 1.22
REITs 14.00 4.06
Total 100.00 %
Discount Rate
The discount rate used to measure the total OPEB liability was 5.25%. The projection of cash flows used to determine the discount rate assumed that City’s contributions will be made at rates equal to the actuarially determined contribution rates. Based on those assumptions, the fiduciary net position was projected to be available to make all projected OPEB payments for current active and inactive employees and beneficiaries.

Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total OPEB liability.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(79)
NOTE 13 OTHER POSTEMPLOYMENT BENEFITS (CONTINUED)
C. Changes in the Net OPEB Liability
The changes in the net OPEB liability are as follows:

Increase (Decrease)
Total Plan Net
OPEB Fiduciary OPEB
Liability Net Position Liability (Asset)
Balance at June 30, 2024
(June 30, 2023 Measurement Date) 22,045,194 $ 12,719,466 $ 9,325,728 $ Changes in the Year:

Service Cost 985,859 - 985,859
Interest on the Total OPEB Liability 1,175,994 - 1,175,994 Differences Between Actual and Expected Experience - - - Changes in Assumptions - - - Contribution - Employer - 1,266,239 (1,266,239) Net Investment Income - 797,032 (797,032) Benefit Payments (1,262,380) (1,262,380) - Administrative Expenses - (7,919) 7,919 Net Changes 899,473 792,972 106,501 Balance at June 30, 2025 (June 30, 2024 Measurement Date) 22,944,667 $ 13,512,438 $ 9,432,229 $ Change of Assumptions
Medical Trend was updated.

Change of Benefit Terms
There were no changes of benefit terms.

The liability for governmental activities is primarily liquidated from the general fund while the liability for business-type activities is liquidated from the enterprise funds.

Sensitivity of the Net OPEB Liability to Changes in the Discount Rate 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 a discount rate that is 1-percentagepoint lower (4.25%) or 1-percentage-point higher (5.25%) than the current discount rate:
1% Decrease Discount Rate 1% Increase
(4.25%) (5.25%) (6.25%)
Net OPEB Liability 12,414,680 $ 9,432,229 $ 6,977,748 $

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(80)
NOTE 13 OTHER POSTEMPLOYMENT BENEFITS (CONTINUED)
C. Changes in the Net OPEB Liability (Continued)
Sensitivity of the Net OPEB Liability to Changes in Health-Care 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 healthcare cost trend rates that are 1-percentage-point lower or 1-percentage-point higher than the current healthcare cost trend rates:

Current
Healthcare Cost
1% Decrease Trend Rates 1% Increase
Net OPEB Liability 6,897,574 $ 9,432,229 $ 12,759,736 $ D. OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB For the year ended June 30, 2025, the City recognized OPEB expense of $2,288,585. At June 30, 2025, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

Deferred Deferred
Outflows of Inflows of
Resources Resources
Employer OPEB Contributions Subsequent to
Measurement Date $ 1,350,609 $ - Differences Between Actual and Expected Experience 463,774 (220,801) Change in Assumptions 1,824,655 - Net Differences Between Projected and Actual Earnings 704,086 - Total 4,343,124 $ (220,801) $

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(81)
NOTE 13 OTHER POSTEMPLOYMENT BENEFITS (CONTINUED)
D. OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB (Continued)
$1,350,609 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net OPEB liability in the year ended June 30, 2026. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized as OPEB expense as follows:

Year Ending June 30, Amount
2026 $ 786,988
2027 1,331,426 2028 488,149 2029 165,151
2030 - Thereafter -
E. Payable to the OPEB Plan
At June 30, 2025, the City had no outstanding amount of contributions to the OPEB plan required for the year ended June 30, 2025.

NOTE 14 SUCCESSOR AGENCY – PRIVATE-PURPOSE TRUST FUND
On December 29, 2011, the California Supreme Court upheld Assembly Bill X1 26, (the Bill) that provides for the dissolution of all redevelopment agencies in the state of California. On September 22, 2013, as part of the fiscal year 2015-2016 state budget package, the legislature passed and the Governor signed SB 107, which made technical and substantive amendments to the existing Bill.

On January 11, 2012, the City Council met and created the Successor Agency to the former Norco Community Redevelopment Agency in accordance with the Bill as part of the City of Norco Resolution Number 2012-01. Subject to the control of a newly established oversight board, remaining assets can only be used to pay enforceable obligations in existence at the date of dissolution (including the completion of any unfinished projects that were subject to legally enforceable, contractual commitments).

In accordance with the timeline set forth in the Bill (as modified by the California Supreme Court on December 29, 2011) all redevelopment agencies in the state of California were dissolved and ceased to operate as a legal entity on February 1, 2012. After the date of dissolution, January 31, 2012, the assets, liabilities, and activities of the dissolved redevelopment agency are reported in a fiduciary fund (private-purpose trust fund) in the financial statements of the City of Norco.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(82)
NOTE 14 SUCCESSOR AGENCY – PRIVATE-PURPOSE TRUST FUND (CONTINUED) Successor Agency Capital Assets
The Successor agency capital assets at June 30, 2025, consist of:

Buildings and Improvements $ 60,862
Improvements Other Than Buildings 507,000
Capital Assets Being Depreciated, Gross 567,862 Accumulated Depreciation (567,862) Capital Assets Being Depreciated, Net - $
Successor Agency Long-Term Debt
Beginning Ending Due Within
Balance Additions Deletions Balance One Year
Other Debt:

Bonds Payable:
2009 TARB (School
District Pass-Through) 8,015,000 $ - $ (425,000) $ 7,590,000 $ 450,000 $ 2017A RDA Bond
(2005 and 2010 Refunds) 7,720,000 - (2,255,000) 5,465,000 2,345,000 2017B RDA Bond 20,435,000 - (345,000) 20,090,000 360,000 (2005 and 2010 Refunds)
2014 Refunding TAB 12,135,000 - - 12,135,000 - 2014 TARB (School District Pass-Through) 6,070,000 - (630,000) 5,440,000 670,000 Total Bonds Payable 54,375,000 - (3,655,000) 50,720,000 3,825,000 Plus (Less) Deferred Amounts:

Premium 1,274,777 - (358,076) 916,701 - Discounts (66,025) - 6,603 (59,422) - Total Long-Term Debt 55,583,752 $ - $ (4,006,473) $ 51,577,279 $ 3,825,000 $ The following amount is classified as a deferred outflow of resources.

Beginning Ending
Balance Additions Deletions Balance
Deferred Losses on Refundings 2,208,509 $ - $ (264,643) $ 1,943,866 $ Future debt service requirements are as follows:

Year Ending June 30, Principal Interest Total
2026 3,825,000 $ 2,236,165 $ 6,061,165 $
2027 4,425,000 2,066,677 6,491,677 2028 4,600,000 1,893,416 6,493,416 2029 4,780,000 1,712,276 6,492,276 2030 5,025,000 1,469,459 6,494,459 2031-2035 25,990,000 3,528,505 29,518,505 2036-2037 2,075,000 76,130 2,151,130 Total 50,720,000 $ 12,982,628 $ 63,702,628 $

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(83)
NOTE 14 SUCCESSOR AGENCY – PRIVATE-PURPOSE TRUST FUND (CONTINUED) Successor Agency Long-Term Debt (Continued)
In April 2009, the former Agency issued Norco Redevelopment Project Area No. 1 Tax Allocation Bonds (School District Pass-Through), Issue of 2009 in an aggregate principal amount of $12,200,000. The bonds are dated April 30, 2009 with interest paid at a rate from

3.25% to 7.00% payable semiannually on March 1 and September 1, commencing on September 1, 2009. The bonds are limited obligations of the former Agency’s payable solely from Pledged Tax Revenues otherwise required by the Pass-Through Agreement to be passed through to the Corona Norco Unified School District.

In August 2014, the Successor Agency issued Norco Redevelopment Project Area No. 1 Tax Allocation Refunding Bonds, Issue of 2014, in the aggregate principal of $20,525,000.

The bonds pay interest at a rate from 2.0% to 5.0% payable semiannually on March 1 and September 1, commencing on March 1, 2015. The bonds were issued to refinance the former Agency’s previously issued Norco Redevelopment Project Area No. One, 2001 Tax Allocation Refunding Bonds with an outstanding principal balance of $22,465,000.

In August 2014, the Successor Agency issued Norco Redevelopment Project Area No. 1 Tax Allocation Refunding Bonds (School District Pass-Through), Issue of 2014, in the aggregate principal of $10,970,000. The bonds pay interest at a rate from 2.0% to 5.0% payable semiannually on March 1 and September 1, commencing on March 1, 2015. The bonds were issued to refinance the former Agency’s previously issued Norco Redevelopment Project Area No. One, 2001 Tax Allocation Refunding Bonds (School District Pass-Through) with an outstanding principal balance of $3,605,000 and the Norco Redevelopment Area Project No. One, Tax Allocation Refunding Bonds (School District Pass-Through), Issue of 2004 with an outstanding principal balance of $8,870,000.

In December 2017, the Successor Agency issued Norco Redevelopment Project Area No. 1 Tax Allocation Refunding Bonds, Issue of 2017A, in the aggregate principal amount of $17,880,000. These bonds were issued to advance refund the Norco Redevelopment Project Area No. 1 Refunding Tax Allocation Bonds, Issue of 2005 and a portion of the Norco Redevelopment Project Area No. 1 Refunding Tax Allocation Bonds, Issue of 2010.

Additionally, in December 2017, the Successor Agency issued Norco Redevelopment Project Area No. 1 Tax Allocation Refunding Bonds, Issue of 2017B, in the aggregate principal amount of $22,665,000. These bonds were used to advance refund the remaining portion of the Norco Redevelopment Project Area No. 1 Refunding Tax Allocation Bonds, Issue of 2010. The bonds pay interest at rates from 1.90% to 4.0% payable semiannually on March 1 and September 1.

Successor Agency Deficit Net Position
At June 30, 2025, deficit net position was reported for the Successor Agency PrivatePurpose Trust Fund in the amount of $(42,096,240). The deficit is expected to be eliminated with future payments from the County of Riverside Redevelopment Property Tax Fund to the Successor Agency for its long-term debt.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(84)
NOTE 15 RISKS AND UNCERTAINTIES
Grants
Amounts received or receivable from granting agencies are subject to audits and adjustments by those granting agencies. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount of expenditures that may be disallowed by the grantor cannot be determined at this time, although the management of the City expects such-amounts, if any, to be immaterial to the financial statements taken as a whole.

Successor Agency
Deductions (expenses) incurred by the Successor Agency for the year ended June 30, 2025 (and subsequent years in which the Successor Agency is in operation), are subject to review by various state agencies and the County in which the Successor Agency resides. If any expenses incurred by the Successor Agency are disallowed by the state agencies or County, the City, acting as the Successor Agency, could be liable for the repayment of the disallowed costs from either its own funds or by the state withholding remittances normally paid to the City.

NOTE 16 JOINT VENTURES
Western Riverside County Regional Wastewater Authority
The City serves as a voting member of Western Riverside County Regional Wastewater Authority (WRCRWA). WRCRWA was formed in 1992 pursuant to the provisions of Article 1, Chapter 5, Division 7, Title 1 of the Government Code of the state of California relating to the joint exercise of powers common to public agencies, for the purpose of constructing, maintaining, operating, and managing facilities for the collection, transmission, treatment and disposal of wastewater, the reclamation of wastewater, and the use of reclaimed wastewater for any beneficial purpose.

WRCRWA is composed of five member agencies: City of Norco, Jurupa Community Services District, Western Municipal Water District, Home Gardens Sanitary District, and the City of Corona. The member agencies support the operating costs and capital costs through fixed and variable rates established by WRCRWA’s Board of Directors. The governing body of WRCRWA is a Board of Directors, which consists of 10 individuals, two appointed by each member. Members are deemed to have an ownership interest in the WRCRWA and new members may only be admitted upon unanimous consent of the existing members.

Upon withdrawal from the WRCRWA, any member is entitled to receive its proportionate share of the WRCRWA assets or the equivalent value thereof and is responsible for discharge of its proportionate share of the WRCRWA’s liabilities. Assets purchased from WRCRWA as wastewater capacity rights which is further disclosed in Note 4. The District’s participation in WRCRWA is accounted for as a joint venture without equity interest.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(85)
NOTE 16 JOINT VENTURES (CONTINUED)
Western Riverside County Regional Wastewater Authority (Continued) WRCRWA owns and operates a 14.0 Million Gallons per Day (MGD) tertiary wastewater treatment plant. The plant’s existing capacity owned by its member agencies are shown as follows:

Current
Member Agencies MGD
City of Norco 2.70 Jurupa Community Services District 6.00 City of Corona 2.37
Western Municipal Water District 1.93
Home Gardens Sanitary District 1.00 Total 14.00
Audited financial information for WRCRWA can be obtained at Western Riverside County Regional Wastewater Authority, 14634 River Road, Eastvale, CA 92880.

Chino Basin Desalter Authority
The Chino Basin Desalter Authority (the CDA) was formed in September 2001, as a Joint Powers Authority to acquire all assets and liabilities from Santa Ana Watershed Project Authority Project #14. The purchase was consummated in February 2002. The CDA is comprised of the cities of Chino, Chino Hills, Ontario, Norco, the Jurupa Community Services District, the Santa Ana River Water Company, and Inland Empire Utilities Agency.

In August of 2008, Western Municipal Water District was added as an additional member of the CDA. The City serves as a voting member without an equity interest.

Financial data is available at the CDA’s main office located at 3350 E Philadelphia St, Suite 170 , Ontario, CA 91761.

Chino Basin Watermaster
Pursuant to the City’s membership with the Chino Basin Watermaster, the City has been allocated a portion of water in storage. At June 30, 2025, the City is entitled to approximately 3,007-acre feet of water in storage with the Chino Basin Watermaster. The City accounts for the rights to use this water in storage on the lower of cost or net realizable value. Since there has been no explicit cost to this right of use, there is no asset recorded in the accompanying financial statements.

CITY OF NORCO

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(86)
NOTE 17 CHANGE IN FUND PRESENTATION FROM MAJOR TO NONMAJOR For the year ended June 30, 2025, the Storm Drain Capital Projects Fund did not meet the criteria to be reported as a major governmental fund. For the prior year ended June 30, 2024, this fund was reported as a major governmental fund. The effects of this change within the financial reporting entity are shown in the table below.

June 30, 2024 Changes Within
As Previously the Financial June 30, 2024
Presented Reporting Entity As Restated
Governmental Funds:

Major Funds:

General Fund 48,700,160 $ - $ 48,700,160 $
Housing Successor Agency Low and Moderate
Income Housing Special Revenue Fund 16,777,797 - 16,777,797 Storm Drain Capital Projects Fund 1,590,443 (1,590,443) - Nonmajor Governmental Funds: 6,147,404 1,590,443 7,737,847 Total Governmental Funds 73,215,804 $ - $ 73,215,804 $ NOTE 18 PUBLIC WATER SYSTEM SETTLEMENT
The City is a party to a settlement agreement in which it is anticipated to receive settlement funds periodically over the next 9 years. The City has recognized an estimated settlement receivable of $1,586,224 and accrued interest of $59,727 using the effective interest method for the series of estimated settlement payments to be received and an interest rate of

4.12%. No settlement payments were received during the current year. Subsequent to year end, the District received settlement payments of $344,781 on August 12, 2025, and $701,689 on November 10, 2025.

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REQUIRED SUPPLEMENTARY INFORMATION

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CITY OF NORCO

SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY CalPERS MISCELLANEOUS PENSION PLAN

LAST TEN FISCAL YEARS
See accompanying Note to Required Supplementary Information. (89)
Fiscal Year Ended 2025 2024 2023 2022 2021 2020 2019 2018 2017 2016 Measurement Period June 30, 2024 June 30, 2023 June 30, 2022 June 30, 2021 June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 Plan's Proportion of the Net Pension
Liability 0.122860% 0.123313% 0.127347% 0.161840% 0.122557% 0.124400% 0.125637% 0.125779% 0.128940% 0.136334% Plan's Proportionate Share of the Net
Pension Liability $ 14,899,722 $ 15,383,764 $ 14,709,549 $ 8,752,780 $ 13,334,676 $ 12,746,874 $ 12,106,728 $ 12,473,869 $ 11,157,305 $ 9,357,835 Plan's Covered Payroll $ 6,249,287 $ 5,423,648 $ 4,611,224 $ 4,313,788 $ 3,956,651 $ 3,747,924 $ 3,568,437 $ 3,448,615 $ 3,019,524 $ 2,785,104 Plan's Proportionate Share of the Net
Pension Liability as a Percentage of
Covered Payroll 238.42% 283.64% 318.99% 202.90% 337.02% 340.10% 339.27% 361.71% 369.51% 336.00% Plan's Proportionate Share of the Fiduciary
Net Position as a Percentage of the Plan's
Total Pension Liability 72.17% 69.68% 69.39% 80.61% 69.47% 75.26% 75.26% 73.31% 74.06% 78.40% Plan's Proportionate Share of Aggregate
Employer Contributions $ 1,474,610 $ 1,469,725 $ 1,729,725 $ 1,431,557 $ 1,355,637 $ 1,219,000 $ 1,063,573 $ 1,009,239 $ 914,689 $ 866,330 Notes to Schedule:

Benefit Changes:

There were no changes in benefits.

Changes in Assumptions:

From fiscal year June 30, 2015 to June 30, 2016:

GASB 68, paragraph 68 states that the long-term expected rate of return should be determined net of pension plan investment expense but without reduction for pension plan administrative expense. The discount rate of 7.50% used for the June 30, 2014 measurement date was net of administrative expenses. The discount rate of 7.65% used for the June 30, 2015 measurement date is without reduction of pension plan administrative expense.

From fiscal year June 30, 2016 to June 30, 2017:

There were no changes in assumptions.

From fiscal year June 30, 2017 to June 30, 2018:

In fiscal year 2017-2018, the financial reporting discount rate was reduced from 7.65% to 7.15%.

From fiscal year June 30, 2018 to June 30, 2022:

There were no changes in assumptions.

From fiscal year June 30, 2022 to June 30, 2023:

The discount rate and long-term rate of return decreased from 7.15% to 6.9% and the inflation rate decreased from 2.50% to 2.30% From fiscal year June 30, 2023 to June 30, 2025:

There were no changes in assumptions.

CITY OF NORCO

SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY CalPERS SAFETY PENSION PLAN

LAST TEN FISCAL YEARS
See accompanying Note to Required Supplementary Information. (90)
Fiscal Year Ended 2025 2024 2023 2022 2021 2020 2019 2018 2017 2016 Measurement Period June 30, 2024 June 30, 2023 June 30, 2022 June 30, 2021 June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 Plan's Proportion of the Net Pension
Liability 0.073029% 0.073465% 0.075766% 0.096450% 0.073840% 0.073210% 0.073212% 0.070751% 0.069627% 0.065974% Plan's Proportionate Share of the Net
Pension Liability $ 8,856,518 $ 9,165,064 $ 8,751,535 $ 5,216,274 $ 8,034,135 $ 7,501,999 $ 7,054,917 $ 7,016,572 $ 6,024,914 $ 4,528,386 Plan's Covered Payroll $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Plan's Proportionate Share of the Net Pension Liability as a Percentage of
Covered Payroll N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Plan's Proportionate Share of the
Fiduciary Net Position as a Percentage
of the Plan's Total Pension Liability 69.77% 68.45% 68.63% 80.34% 69.54% 75.26% 75.26% 73.31% 74.06% 78.40% Plan's Proportionate Share of Aggregate
Employer Contributions $ 755,034 $ 792,277 $ 1,277,448 $ 1,138,700 $ 949,263 $ 796,010 $ 750,439 $ 586,952 $ 570,356 $ 568,237 Notes to Schedule:

Benefit Changes:

There were no changes in benefits.

Changes in Assumptions:

From fiscal year June 30, 2015 to June 30, 2016:

GASB 68, paragraph 68 states that the long-term expected rate of return should be determined net of pension plan investment expense but without reduction for pension plan administrative expense. The discount rate of 7.50% used for the June 30, 2014 measurement date was net of administrative expenses. The discount rate of 7.65% used for the June 30, 2015 measurement date is without reduction of pension plan administrative expense.

From fiscal year June 30, 2016 to June 30, 2017:

There were no changes in assumptions.

From fiscal year June 30, 2017 to June 30, 2018:

In fiscal year 2017-2018, the financial reporting discount rate was reduced from 7.65% to 7.15%.

From fiscal year June 30, 2018 to June 30, 2022:

There were no significant changes in assumptions.

From fiscal year June 30, 2022 to June 30, 2023:

The discount rate and long-term rate of return decreased from 7.15% to 6.9% and the inflation rate decreased from 2.50% to 2.30% From fiscal year June 30, 2023 to June 30, 2025:

There were no significant changes in assumptions.

CITY OF NORCO

SCHEDULE OF CONTRIBUTIONS
CalPERS MISCELLANEOUS PENSION PLAN

LAST TEN FISCAL YEARS
See accompanying Note to Required Supplementary Information. (91)
Fiscal Year Ended 2025 2024 2023 2022 2021 2020 2019 2018 2017 2016 Contractually Required Contribution
(Actuarially Determined) $ 1,815,916 $ 1,654,164 $ 1,926,838 $ 1,721,181 $ 1,571,215 $ 1,414,690 $ 1,259,910 $ 1,113,674 $ 1,024,502 $ 909,938 Contributions in Relation to the Actuarially
Determined Contributions (1,815,916) (1,654,164) (1,926,838) (1,721,181) (1,571,215) (1,414,690) (1,259,910) (1,113,674) (1,024,502) (909,938) Contribution Deficiency (Excess) $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Covered Payroll $ 6,123,657 $ 6,249,287 $ 5,423,648 $ 4,611,224 $ 4,313,788 $ 3,956,651 $ 3,747,924 $ 3,568,437 $ 3,448,615 $ 3,019,524 Contributions as a Percentage of Covered
Payroll 29.65% 26.47% 35.53% 37.33% 36.42% 35.75% 33.62% 31.21% 29.71% 30.14% Notes to Schedule:

Valuation Date 6/30/2022 6/30/2021 6/30/2020 6/30/2019 6/30/2018 6/30/2017 6/30/2016 6/30/2015 6/30/2014 6/30/2013 Methods and Assumptions Used to
Determine Contribution Rates:

Actuarial Cost Method Entry Age Entry Age Entry Age Entry Age Entry Age Entry Age Entry Age Entry Age Entry Age Entry Age Amortization Method (1) (1) (1) (1) (1) (1) (1) (1) (1) (1) Asset Valuation Method Fair Value Fair Value Fair Value Fair Value Fair Value Fair Value Fair Value Fair Value Fair Value Fair Value Inflation 2.300% 2.300% 2.300% 2.500% 2.500% 2.625% 2.75% 2.75% 2.75% 2.75% Salary Increases (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) Investment Rate of Return 6.90%(3) 6.90%(3) 6.90%(3) 7.15% (3) 7.15% (3) 7.25% (3) 7.375% (3) 7.50% (3) 7.50% (3) 7.50% (3) Retirement Age (4) (4) (4) (4) (4) (4) (4) (4) (4) (4)
Mortality (5) (5) (5) (5) (5) (5) (5) (5) (5) (5)
(1) Level percentage of payroll, direct rate smoothing
(2) Depending on age, service, and type of employment
(3) Net of administrative expenses
(4) 50 for all plans with the exception of 52 for Miscellaneous PEPRA 2%@62** (5) Mortality assumptions are based on mortality rates resulting from the most recent CalPERS Experience Study adopted by the CalPERS Board.

CITY OF NORCO

SCHEDULE OF CONTRIBUTIONS
CalPERS SAFETY PENSION PLAN

LAST TEN FISCAL YEARS
See accompanying Note to Required Supplementary Information. (92)
Fiscal Year Ended 2025 2024 2023 2022 2021 2020 2019 2018 2017 2016 Contractually Required Contribution
(Actuarially Determined) $ 929,220 $ 530,106 $ 767,103 $ 712,881 $ 691,954 $ 626,617 $ 442,868 $ 352,670 $ 286,893 $ 50,202 Contributions in Relation to the Actuarially
Determined Contributions (929,220) (530,106) (767,103) (712,881) (691,954) (626,617) (442,868) (352,670) (286,893) (50,202) Contribution Deficiency (Excess) $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Covered Payroll $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Contributions as a Percentage of Covered
Payroll N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Notes to Schedule:

Valuation Date 6/30/2022 6/30/2021 6/30/2020 6/30/2019 6/30/2018 6/30/2017 6/30/2016 6/30/2015 6/30/2014 6/30/2013 Methods and Assumptions Used to
Determine Contribution Rates:

Actuarial Cost Method Entry Age Entry Age Entry Age Entry Age Entry Age Entry Age Entry Age Entry Age Entry Age Entry Age Amortization Method (1) (1) (1) (1) (1) (1) (1) (1) (1) (1) Asset Valuation Method Fair Value Fair Value Fair Value Fair Value Fair Value Fair Value Fair Value Fair Value Fair Value Fair Value Inflation 2.300% 2.300% 2.300% 2.500% 2.500% 2.625% 2.75% 2.75% 2.75% 2.75% Salary Increases (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) Investment Rate of Return 6.90%(3) 6.90%(3) 6.90%(3) 7.15% (3) 7.15% (3) 7.25% (3) 7.375% (3) 7.50% (3) 7.50% (3) 7.50% (3) Retirement Age (4) (4) (4) (4) (4) (4) (4) (4) (4) (4)
Mortality (5) (5) (5) (5) (5) (5) (5) (5) (5) (5)
(1) Level percentage of payroll, direct rate smoothing
(2) Depending on age, service, and type of employment
(3) Net of administrative expenses
(4) 50 for all plans with the exception of 52 for Miscellaneous PEPRA 2%@62** (5) Mortality assumptions are based on mortality rates resulting from the most recent CalPERS Experience Study adopted by the CalPERS Board.

CITY OF NORCO

SCHEDULE OF CHANGES IN THE NET OPEB LIABILITY AND RELATED RATIOS LAST TEN FISCAL YEARS *
See accompanying Note to Required Supplementary Information. (93)
Fiscal Year Ended 2025 2024 2023 2022 2021 2020 2019 2018 Measurement Date June 30, 2024 June 30, 2023 June 30, 2022 June 30, 2021 June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017 Total OPEB Liability:

Service Cost $ 985,859 $ 569,634 $ 452,469 $ 391,160 $ 386,463 $ 370,509 $ 359,717 $ 349,240 Interest on Total OPEB Liability 1,175,994 1,023,167 1,058,399 1,151,089 1,142,355 1,232,375 1,194,701 1,160,164 Actual Versus Expected Experience - 728,787 - (1,324,810) - (1,820,659) - - Assumption Changes - 1,372,524 2,036,770 675,366 (335,762) (93,065) - - Benefit Payments (1,262,380) (1,136,374) (1,084,205) (1,061,595) (1,075,132) (1,002,349) (1,011,788) (1,004,657) Net Change in Total OPEB Liability 899,473 2,557,738 2,463,433 (168,790) 117,924 (1,313,189) 542,630 504,747 Total OPEB Liability - Beginning of Year 22,045,194 19,487,456 17,024,023 17,192,813 17,074,889 18,388,078 17,845,448 17,340,701 Total OPEB Liability - End of Year (a) 22,944,667 22,045,194 19,487,456 17,024,023 17,192,813 17,074,889 18,388,078 17,845,448 Plan Fiduciary Net Position:

Contributions - Employer 1,266,239 1,139,727 1,486,702 1,364,011 1,377,588 1,304,406 1,411,788 1,404,657 Net Investment Income (loss) 797,032 197,355 (1,563,069) 2,890,404 346,958 564,067 632,351 723,361 Benefit Payments (1,262,380) (1,136,374) (1,084,205) (1,061,595) (1,075,132) (1,002,349) (1,011,788) (1,004,657) Administrative Expenses (7,919) (6,909) (5,954) (6,395) (7,278) (3,990) (14,830) (3,693) Net Change in Plan Fiduciary Net Position 792,972 193,799 (1,166,526) 3,186,425 642,136 862,134 1,017,521 1,119,668 Plan Fiduciary Net Position - Beginning of Year 12,719,466 12,525,667 13,692,193 10,505,768 9,863,632 9,001,498 7,983,977 6,864,309 Plan Fiduciary Net Position - End of Year (b) 13,512,438 12,719,466 12,525,667 13,692,193 10,505,768 9,863,632 9,001,498 7,983,977 Net OPEB Liability - Ending (a)-(b) 9,432,229 $ 9,325,728 $ 6,961,789 $ 3,331,830 $ 6,687,045 $ 7,211,257 $ 9,386,580 $ 9,861,471 $ Plan Fiduciary Net Position as a Percentage of the
Total OPEB Liability 58.89% 57.70% 64.28% 80.43% 61.11% 57.77% 48.95% 44.74% Covered Payroll $ 6,583,913 $ 6,036,456 $ 4,419,396 $ 4,101,592 $ 4,242,679 $ 4,035,704 $ 3,836,205 $ 3,610,147 Net OPEB Liability as Percentage of Covered Payroll 143.3% 154.5% 157.5% 81.2% 157.6% 178.7% 244.7% 273.2% Notes to Schedule:

Benefit Changes:

There were no changes in benefits.

Changes in Assumptions:

There were no changes in assumptions for the measurement periods ended June 30, 2017, 2018 and 2020.

For the measurement period ended June 30, 2019, the mortality improvement scale was updated to Scale MP-2019.

For the measurement period ended June 30, 2020 and 2021, the mortality improvement scale was updated to Scale MP-2021.

For the measurement period ended June 30, 2022, discount rate was updated based on City moving assets from CERBT Asset Strategy 1 to Asset Strategy 3.

For the measurement period ended June 30, 2023, the Medical Trend was updated. * Fiscal year 2018 was the first year of implementation and, therefore, only eight years are shown.

CITY OF NORCO

SCHEDULE OF CONTRIBUTIONS

OPEB PLAN
LAST TEN FISCAL YEARS *
See accompanying Note to Required Supplementary Information. (94)
Fiscal Year Ended 2025 2024 2023 2022 2021 2020 2019 2018 Actuarially Determined Contribution $ 1,636,000 $ 963,000 $ 937,000 $ 827,000 $ 803,000 $ 1,050,000 $ 1,019,000 $ 1,201,000 Contributions In Relation to the Actuarially
Determined Contributions (1,350,609) (1,266,239) (1,139,727) (1,486,702) (1,364,011) (1,377,588) (1,304,406) (1,411,788) Contribution Deficiency (Excess) $ 285,391 $ (303,239) $ (202,727) $ (659,702) $ (561,011) $ (327,588) $ (285,406) $ (210,788) Covered Payroll $ 6,123,657 $ 6,583,913 $ 6,036,456 $ 4,419,396 $ 4,101,592 $ 4,242,679 $ 4,035,704 $ 3,836,205 Contributions as a Percentage of Covered Payroll 22.06% 19.23% 18.88% 33.64% 33.26% 32.47% 32.32% 36.80% Notes to Schedule:

Valuation Date 6/30/2023 6/30/2023 6/30/2022 6/30/2021 6/30/2020 6/30/2019 6/30/2018 6/30/2017 Methods and Assumptions Used to Determine
Contribution Rates:

Actuarial Cost Method Entry Age (1) Entry Age (1) Entry Age (1) Entry Age (1) Entry Age (1) Entry Age (1) Entry Age (1) Entry Age (1) Amortization Method (1) (1) (1) (1) (1) (1) (1) (1)
Amortization Period (2) (2) (2) (2) (2) (3) (4) (5)
Asset Valuation Method (6) (6) (6) (6) (6) (6) (6) (6)
Discount Rate 5.25% 5.25% 5.25% 6.25% 6.75% 6.75% 6.75% 6.75% Inflation 2.50% 2.50% 2.50% 2.50% 2.75% 2.75% 2.75% 3.00% Salary Increases 2.75% 2.75% 2.75% 2.75% 3.00% 3.00% 3.00% 3.00% Medical Trend (10) (10) (4) (4) (3) (3) (2) (2)
Mortality (6) (6) (6) (6) (5) (5) (5) (5)
Mortality Improvement (9) (9) (9) (9) (8) (8) (7) (7)
(1) Level percentage of pay
(2) 29-year and 28 year average fixed period for 2020/21 and 2021/2022 (3) 23-year average fixed period for 2019/20
(4) 24-year fixed average period on average for 2018/19 (5) 22-year fixed period on average for 2017/18
(2) Medicare - 7.5% and Non-Medicare - 6.5% for 2019, each decreasing to an ultimate rate of 4.0% in 2076 (3) Medicare - 6.3% and Non-Medicare - 7.25% for 2021, each decreasing to an ultimate rate of 4.0% in 2076 (3) Medicare - 6.3% and Non-Medicare - 7.25% for 2021, each decreasing to an ultimate rate of 4.0% in 2076 (4) Medicare (Non-Kaiser) - 5.65%, Medicare (Kaiser) - 4.6%, and Non-Medicare 6.5% for 2023, each decreasing to an ultimate rate of 3.75% in 2076 (5) CalPERS 1997-2015 experience study
(6) CalPERS 2000-2019 experience study
(7) Postretirement mortality projected fully generational with Scale MP-17 (8) Mortality projected fully generational with Scale MP-2019 (9) Mortality projected fully generational with Scale MP-2021 (10) Medicare (Non-Kaiser) - 7.5%, Medicare (Kaiser) - 6.25%, and Non-Medicare 8.5% for 2023, each decreasing to an ultimate rate of 3.45% in 2076 * Fiscal year 2018 was the first year of implementation and, therefore, only eight years are shown.

CITY OF NORCO
BUDGETARY COMPARISON SCHEDULE – GENERAL FUND
YEAR ENDED JUNE 30, 2025
See accompanying Note to Required Supplementary Information. (95)
Budgeted Amounts Actual Variance with
Original Final Amounts Final Budget

REVENUES
Taxes 31,312,200 $ 30,469,368 $ 30,848,619 $ 379,251 $
Licenses and Permits 1,388,900 1,259,140 1,692,391 433,251 Fines and Forfeitures 454,000 515,347 531,246 15,899 Development Fees - 210,000 210,000 - Intergovernmental 105,000 116,984 86,541 (30,443) Charges for Services 3,629,680 3,700,322 4,421,547 721,225 Investment Earnings 1,752,000 1,809,661 2,771,872 962,211 Lease Income 1,054,700 282,620 1,144,819 862,199
Reimbursements 9,000 9,000 4,082 (4,918) Other 60,500 66,740 111,861 45,121 Total Revenues 40,219,980 38,954,529 41,822,978 2,868,449 EXPENDITURES Current:

General Government 9,595,765 10,410,825 10,579,753 (168,928) Public Safety 14,901,212 14,441,377 14,019,326 422,051 Streets and Highways 1,240,200 1,229,200 1,063,480 165,720 Community and Economic
Development 1,823,900 2,379,965 2,003,668 376,297 Culture and Leisure 4,104,180 3,954,437 3,801,388 153,049 Debt Service:

Principal - - 93,183 (93,183)
Interest - - 611 (611) Capital Outlay 17,746,000 20,580,118 7,754,136 12,825,982 Total Expenditures 49,411,257 52,995,922 39,315,545 13,680,377

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (14,041,393) (9,191,277) 2,507,433 16,548,826 OTHER FINANCING SOURCES (USES) Transfers In 259,700 259,700 259,700 - Transfers Out (300,000) (662,000) (660,254) 1,746 Total Other Financing Sources (Uses) (40,300) (402,300) (400,554) 1,746 NET CHANGE IN FUND BALANCE (14,443,693) (9,231,577) 2,106,879 16,550,572 Fund Balance - Beginning of Year 48,700,160 48,700,160 48,700,160 - FUND BALANCE - END OF YEAR $ 34,256,467 39,468,583 $ 50,807,039 $ 16,550,572 $

CITY OF NORCO

NOTE TO REQUIRED SUPPLEMENTARY INFORMATION
JUNE 30, 2025
(96)
NOTE 1 GENERAL BUDGET POLICIES
Annual budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America for all governmental funds except for the Major Housing Successor Agency Low- and Moderate-Income Housing Special Revenue Fund, the Nonmajor CalHome Grant Special Revenue Fund and the Nonmajor Facility Improvement Capital Projects Fund. The legal level of budgetary control is the fund level.

Each City department is required to submit requests for annual appropriation to the City manager that are used as the starting point for developing a proposed budget. The City manager presents a proposed budget to Council for review through staff and council budget workshops. At the completion of the budget workshops, the City council is required to have one public hearing to further review the proposed budget. At the conclusion of the public hearings, the budget is required to be adopted by a majority vote of the City council no later than June 30, which is the close of the City’s fiscal year. The Council made several supplemental budgetary appropriations throughout the year, these supplemental appropriations were immaterial. The appropriated budget is prepared by fund and department. Within each department, the budget is further detailed by expenditure type (e.g., salaries and benefits). At fiscal year-end, all operating budget appropriations lapsed.

(97)

INDIVIDUAL FUND SCHEDULES AND COMBINING FINANCIAL STATEMENTS

(98)

THIS PAGE INTENTIONALLY LEFT BLANK

(99)

COMBINING NONMAJOR GOVERNMENTAL FUNDS

(100)

THIS PAGE INTENTIONALLY LEFT BLANK

CITY OF NORCO

NONMAJOR GOVERNMENTAL FUNDS

FUND DESCRIPTIONS
JUNE 30, 2025
(101)
Special Revenue Funds
Special Revenue Funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes.

Miscellaneous Grants – To account for the receipt and expenditure of miscellaneous grants not accounted for in a separate fund.

Community Development Block Grant – To account for federal grants under the Department of Housing and Urban Development (HUD) Community Development Block Grant (CDBG) Program.

Gas Tax – To account for the repair and maintenance of streets and traffic signals of the City.

Financing is through the State Highway Users Tax Sections 2105, 2106, 2107, and 2107.5 of the Streets and Highways Code.

SB1 Road Maintenance Rehabilitation – To account for road maintenance and rehabilitation of local street and road systems. Financing is through transportation taxes allocated under the Road Repair and Accountability Act of 2017.

Measure A – To account for the construction, reconstruction, alteration, and maintenance of the streets of the City. Financing is through the Riverside County Transportation Commission half-cent sales tax.

National Pollutant Discharge Elimination System (NPDES) – To account for the proceeds of the charge used to maintain and operate the City’s storm drains and flood control channels into the Santa Ana River. This service area assessment is exempt from the requirements of Proposition 218.

Air Quality Improvement Trust – To account for the receipt of AB 2766 funds to implement programs that reduce air pollution from motor vehicles. Local Governments receive forty percent of the motor vehicle registration fee surcharge of $4 per vehicle collected by the Department of Motor Vehicles.

Supplemental Law Enforcement Block Grant – To account for grant funds used for front line law enforcement services.

Landscape Maintenance District #1 – To account for the cost of operation, maintenance, and servicing of the improvements for the Beazer Homes in Norco. Funding is provided by assessments charged to the homeowners/developers in the area.

Landscape Maintenance District #2 – To account for the cost of operation, maintenance, and servicing of the improvements for the Norco Estates/Western Pacific Homes in Norco. Funding is provided by assessments charged to the homeowners/developers in the area.

Landscape Maintenance District #3 – To account for the cost of operation, maintenance, and servicing of the improvements for the Centex Homes in Norco. Funding is provided by assessments charged to the homeowners/developers in the area.

CITY OF NORCO

NONMAJOR GOVERNMENTAL FUNDS

FUND DESCRIPTIONS (CONTINUED)
JUNE 30, 2025
(102)
Landscape Maintenance District #4 – To account for the cost of operation, maintenance, and servicing of the improvements for the Norco Ridge Ranch Homes in Norco. Funding is provided by assessments charged to the homeowners/developers in the area.

Landscape Maintenance District #5 – To account for the cost of operation, maintenance, and servicing of the improvements for the K. B. Homes in Norco. Funding is provided by assessments charged to the homeowners/developers in the area.

CalHome Grant – To account for the receipt and expenditure of the CalHome grant program.

CITY OF NORCO

NONMAJOR GOVERNMENTAL FUNDS

FUND DESCRIPTIONS (CONTINUED)
JUNE 30, 2025
(103)
Capital Projects Funds
Capital Project Funds are used to account for major capital acquisition and construction separately from their ongoing operating activities, including those financed by special assessments.

Storm Drain – To account for the construction of channels and storm drains to mitigate the storm water run-off impacts caused by new development. Financing is through an impact fee imposed on all new development in the City.

General Government Improvement – To account for the construction of general government facilities such as a new government center, additional library facilities, and other general capital needs.

Financing is through an impact fee imposed on all new development in the City.

Fire Improvement – To account for the construction of fire stations and the purchase of fire equipment.

Financing is through an impact fee imposed on all new development in the City.

Trails Improvement – To account for the acquisition, improvement, and development of equestrian pedestrian trails. Financing is through an impact fee imposed on all new development in the City.

Park Improvement – To account for the acquisition, improvement, and development of park and open space land and recreational facilities. Financing is through an impact fee imposed on all new development in the City.

Public Meeting – To account for the construction of additional community center space.

Street Improvement – To account for the cost of street improvements including widening and reconstruction, traffic signals, street landscaping, intersection improvements, and freeway interchange improvements. Financing is through an impact fee imposed on all new development in the City.

Animal Control – To account for the expansion of the animal control facilities and will increase the number of response and investigator vehicles.

Facility Improvement – To account for resources that are to be used for the replacement or major capital improvements of City facilities such as libraries and community centers.

CITY OF NORCO

COMBINING BALANCE SHEET

NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2025
(104)
ASSETS
Cash and Investments
Receivables, Net:

Accounts
Interest
Notes
Due from Other Governments
Total Assets

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES

LIABILITIES
Accounts Payable and Accrued Liabilities
Retentions Payable
Due to Other Funds
Total Liabilities

DEFERRED INFLOWS OF RESOURCES
Unavailable Revenues

FUND BALANCES (DEFICITS)
Restricted
Unassigned
Total Fund Balances (Deficits)
Total Liabilities, Deferred Inflows
of Resources, and Fund Balances
Special Revenue Funds
Community SB1 Road
Miscellaneous Development Maintenance
Grants Block Grant Gas Tax Rehabilitation Measure A
$ 497,622 $ - $ 48,897 $ 922,155 $ 2,348,024
- - 378 - -
615 - - 4,850 12,706
- - - - -
140,925 277,301 64,160 128,051 166,709
$ 277,301 639,162 $ 113,435 $ 1,055,056 $ 2,527,439 $
$ 639,162 $ - $ 113,435 $ - $ 30,349
- - - - -
- 277,301 - - -
639,162 277,301 113,435 - 30,349
- - - - -
- - - 1,055,056 2,497,090
- - - - -
- - - 1,055,056 2,497,090
$ 277,301 639,162 $ 113,435 $ 1,055,056 $ 2,527,439 $

CITY OF NORCO

COMBINING BALANCE SHEET (CONTINUED)

NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2025
(105)
ASSETS
Cash and Investments
Receivables, Net:

Accounts
Interest
Notes
Due from Other Governments
Total Assets

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES

LIABILITIES
Accounts Payable and Accrued Liabilities
Retentions Payable
Due to Other Funds
Total Liabilities

DEFERRED INFLOWS OF RESOURCES
Unavailable Revenues

FUND BALANCES (DEFICITS)
Restricted
Unassigned
Total Fund Balances (Deficits)
Total Liabilities, Deferred Inflows
of Resources, and Fund Balances
Special Revenue Funds
Supplemental
Air Quality Law Landscape Landscape
Improvement Enforcement Maintenance Maintenance
NPDES Trust Block Grant District #1 District #2
$ 2,093 $ 24,892 $ - $ - $ 32,066
- - - - 1,065
- 112 - - 56
- - - - -
- 8,726 - 374 3,909
$ 33,730 2,093 $ - $ 374 $ 37,096 $
$ 2,093 $ - $ - $ 2,179 $ 29,924
- - - - -
- - - 5,406 3,712
2,093 - - 7,585 33,636
- - - - -
- 33,730 - - 3,460
- - - (7,211)
- 33,730 - (7,211) 3,460
$ 33,730 2,093 $ - $ 374 $ 37,096 $

CITY OF NORCO

COMBINING BALANCE SHEET (CONTINUED)

NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2025
(106)
ASSETS
Cash and Investments
Receivables, Net:

Accounts
Interest
Notes
Due from Other Governments
Total Assets

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES

LIABILITIES
Accounts Payable and Accrued Liabilities
Retentions Payable
Due to Other Funds
Total Liabilities

DEFERRED INFLOWS OF RESOURCES
Unavailable Revenues

FUND BALANCES (DEFICITS)
Restricted
Unassigned
Total Fund Balances (Deficits)
Total Liabilities, Deferred Inflows
of Resources, and Fund Balances
Landscape Landscape Landscape
Maintenance Maintenance Maintenance CalHome Total Special District #3 District #4 District #5 Grant Revenue Funds $ 28,314 $ 442,075 $ 114,819 $ 200,816 $ 4,661,773
- 57 - - 1,500
112 2,174 613 1,114 22,352
- - - 295,450 295,450
2,601 8,104 1,411 - 802,271
$ 452,410 31,027 $ 116,843 $ 497,380 $ 5,783,346 $
$ 12,185 $ 59,318 $ 35,816 $ - $ 924,461
- - - - -
3,288 14,502 1,849 - 306,058
15,473 73,820 37,665 - 1,230,519
- - - 295,450 295,450
15,554 378,590 79,178 201,930 4,264,588
- - - - (7,211)
15,554 378,590 79,178 201,930 4,257,377
$ 452,410 31,027 $ 116,843 $ 497,380 $ 5,783,346 $
Special Revenue Funds

CITY OF NORCO

COMBINING BALANCE SHEET (CONTINUED)

NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2025
(107)
ASSETS
Cash and Investments
Receivables, Net:

Accounts
Interest
Notes
Due from Other Governments
Total Assets

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES

LIABILITIES
Accounts Payable and Accrued Liabilities
Retentions Payable
Due to Other Funds
Total Liabilities

DEFERRED INFLOWS OF RESOURCES
Unavailable Revenues

FUND BALANCES (DEFICITS)
Restricted
Unassigned
Total Fund Balances (Deficits)
Total Liabilities, Deferred Inflows
of Resources, and Fund Balances
General
Government Fire Trails Park
Storm Drain Improvement Improvement Improvement Improvement $ 867,030 $ 515,427 $ 1,049,652 $ 249,760 $ 4,205,521
- - - - -
2,675 2,897 5,627 1,393 24,352
- - - - -
- - - - - $ 518,324 869,705 $ 1,055,279 $ 251,153 $ 4,229,873 $ $ 69,304 $ - $ - $ 1,850 $ 399,101
145,996 - - - -
- - - - -
215,300 - - 1,850 399,101
- - - - -
654,405 518,324 1,055,279 249,303 3,830,772
- - - - -
654,405 518,324 1,055,279 249,303 3,830,772
$ 518,324 869,705 $ 1,055,279 $ 251,153 $ 4,229,873 $
Capital Projects Funds

CITY OF NORCO

COMBINING BALANCE SHEET (CONTINUED)

NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2025
(108)
ASSETS
Cash and Investments
Receivables, Net:

Accounts
Interest
Notes
Due from Other Governments
Total Assets

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES

LIABILITIES
Accounts Payable and Accrued Liabilities
Retentions Payable
Due to Other Funds
Total Liabilities

DEFERRED INFLOWS OF RESOURCES
Unavailable Revenues

FUND BALANCES (DEFICITS)
Restricted
Unassigned
Total Fund Balances (Deficits)
Total Liabilities, Deferred Inflows
of Resources, and Fund Balances
Total
Nonmajor
Public Street Animal Facility Total Capital Governmental Meeting Improvement Control Improvement Projects Funds Funds $ 1,149,644 $ 1,661,708 $ 86,123 $ 136,327 $ 9,921,192 $ 14,582,965 - 25,000 - - 25,000 26,500
5,739 7,579 390 780 51,432 73,784
- - - - - 295,450
- - - - - 802,271
$ 1,694,287 1,155,383 $ 86,513 $ 137,107 $ 9,997,624 $ 15,780,970 $ $ - $ 104,846 $ - $ - $ 575,101 $ 1,499,562
- 41,970 - - 187,966 187,966
- - - - - 306,058
- 146,816 - - 763,067 1,993,586
- - - - - 295,450
1,155,383 1,547,471 86,513 137,107 9,234,557 13,499,145 - - - - - (7,211)
1,155,383 1,547,471 86,513 137,107 9,234,557 13,491,934 $ 1,694,287 1,155,383 $ 86,513 $ 137,107 $ 9,997,624 $ 15,780,970 $ Capital Projects Funds

CITY OF NORCO

COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND

CHANGES IN FUND BALANCES

NONMAJOR GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30, 2025
(109)

REVENUES
Taxes
Assessments
Development Fees
Intergovernmental
Charges for Services
Investment Earnings (Loss)
Other
Total Revenues

EXPENDITURES
Current:

General Government
Public Safety
Streets and Highways
Community and Economic Development
Culture and Leisure
Capital Outlay:

Other
Total Expenditures

EXCESS (DEFICIENCY) OF REVENUES

OVER (UNDER) EXPENDITURES

OTHER FINANCING SOURCES (USES)
Transfers In
Transfers Out
Total Other Financing Sources (Uses)

NET CHANGE IN FUND BALANCES
Fund Balances (Deficits) - Beginning of Year,
as Previously Presented
Change within financial reporting entity
(Major to Nonmajor Fund)
Fund Balances (Deficits) - Beginning of Year,
as Adjusted

FUND BALANCES (DEFICITS) - END

OF YEAR
Special Revenue Funds
Community SB1 Road
Miscellaneous Development Maintenance
Grant Block Grant Gas Tax Rehabilitation Measure A
$ - - $ - $ - $ 962,235 $
- - - - -
- - - - -
290,351 1,127,221 682,312 726,654 -
- 2,132 - - -
- - 349 28,708 89,647
- - - - -
290,351 1,129,353 682,661 755,362 1,051,882
- - - - -
- 9,512 - - -
- - 758,965 10,202 -
- 31,485 - - -
13,050 979,660 - - -
277,301 - - - 30,349
290,351 1,020,657 758,965 10,202 30,349
- 108,696 (76,304) 745,160 1,021,533
- - 27,836 - -
- - - - -
- - 27,836 - -
- 108,696 (48,468) 745,160 1,021,533
- (108,696) 48,468 309,896 1,475,557
- - - - -
- (108,696) 48,468 309,896 1,475,557 $ - - $ - $ 1,055,056 $ 2,497,090 $