Stanton City Council
February 27, 2024

2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23

1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000

0.04259 0.02211 0.04244 0.03968 0.03971 0.03804 0.03016

0.03116 0.03145 0.03052 0.03100 0.03181 0.03119 0.03102

0.04487 0.07454 0.06848 0.06922 0.06956 0.07408 0.06329

0.02552 0.02849 0.02859 0.02722 0.02714 0.02619 0.02634

0.00350 0.00350 0.00350 0.00350 0.00350 0.00350 0.00350

0.02885 0.02927 0.02829 0.02409 0.03198 0.02877 0.02778

0.05948 0.06115 0.06086 0.06132 0.06481 0.07355 0.04731

1.23597 1.25051 1.26268 1.25603 1.26851 1.27532 1.22940

0.10940 0.13645 0.13645 0.13645 0.13645 0.13645 0.13645

0.00000 0.00000 0.00000 0.00000 0.00000 0.00000 0.00000

0.13698 0.13695 0.13994 0.13991 0.14007 0.14002 0.14013 Fiscal Year
171

ATTACHMENT A

Percentage Percentage
of Total City of Total City
Taxable Taxable Taxable Taxable
Assessed Assessed Assessed Assessed
Taxpayer Value Rank Value Value Rank Value
Stanton Energy Reliability Center LLC 132,900,000 $ 1 3.46% - $ - - Continental Gardens LP 82,641,182 2 2.15% 16,532,803 6 0.77% CR&R, Inc. 58,844,360 3 1.53% 44,328,490 1 2.07%
Briarwood Square LP 46,287,427 4 1.20% 28,472,224 2 1.33% Fernwood Western LLC 32,640,000 5 0.85% - - -
Arrowhead Apartment Investments LLC 31,550,258 6 0..82% 23,933,091 3 1.12% Garden Terrace MHC LLC 21,858,649 7 0.57% - - -
Stanton Capital LP 20,637,101 8 0.54% - - -
Icon Owner Pool 1 LA Business Parks LLC 19,832,870 9 0.52% - - - Kurt Raymer Shuman Trust 19,413,852 10 0.51% - - -
CP Briarwood LLC - - - - - -
Shapell Socal Rental Properties LLC - - - 22,895,203 4 1.07% Walton CWCA Hoover 52 LLC - - - 19,459,562 5 0.91%
Faircrest, Inc. - - - 12,839,527 7 0.60%
Gilbert R Shuman Trust Plaza on the Blvd - - - 12,808,696 8 0.60% Mideb Nominees, Inc. - - - 12,803,674 9 0.60%
G6 Hospitality Property - - - 12,713,078 10 0.59%
Total Top 10 Taxpayers $ 466,605,699 12.15% 206,786,348 $ 9.64% Note:

Source: HdL, Coren & Cone
Excludes government and tax-exempt property owners. Changes in name or ownership of property are not considered for purposes of this schedule.

CITY OF STANTON

PRINCIPAL PROPERTY TAXPAYERS

CURRENT YEAR AND NINE YEARS AGO
Assessed Valuation
2022-23 2013-14
Assessed Valuation
172

ATTACHMENT A

Fiscal Total Collected Percent
Year Tax Levy Amount of Levy (1)
2014 $ 1,014,799 $ 1,014,799 100%
2015 1,028,726 1,028,726 100%
2016 1,039,132 1,039,132 100%
2017 1,040,976 1,040,976 100%
2018 1,061,452 1,061,452 100%
2019 1,070,983 1,070,983 100%
2020 1,075,724 1,075,724 100%
2021 1,079,894 1,079,894 100%
2022 1,079,628 1,079,628 100%
2023 1,092,184 1,092,184 100%
Note:

Source: Orange County Auditor-Controller
(1) Beginning with FY 1994-95, the City of Stanton elected the Teeter Plan for property tax distribution in which the City receives the entire secured levy in the current fiscal year, whether paid or not, and the County retains the penalties and interest on delinquent taxes.

CITY OF STANTON

PROPERTY TAX LEVIES AND COLLECTIONS

LAST TEN FISCAL YEARS
173

ATTACHMENT A

Tax Total % of
Fiscal Allocation Primary Personal Per
Year Bonds (1) Leases Government Income (2) Capita (2)
2013-14 -$ -$ -$ 0.00% -$
2014-15 - - - 0.00% -
2015-16 - - - 0.00% -
2016-17 - - - 0.00% -
2017-18 - - - 0.00% -
2018-19 - - - 0.00% -
2019-20 - 1,069,246 1,069,246 0.00% -
2020-21 - - - 0.00% -
2021-22 - - - 0.00% -
2022-23 - - - 0.00% -
Notes:

Source: City Finance Department
(1) The Stanton Redevelopment Agency was dissolved on February 1, 2012. As a result, the tax allocation bonds are not debt of the primary government. (2) Refer to the Schedule of Demographic and Economic Statistics for personal income and population data.

LAST TEN FISCAL YEARS

RATIOS OF OUTSTANDING DEBT BY TYPE

CITY OF STANTON
174

ATTACHMENT A

2022-23 Assessed Valuation $3,847,720,685
Total Debt City's Share of
6/30/23 % Applicable (1) Debt 6/30/23
OVERLAPPING TAX AND ASSESSMENT DEBT:

Metropolitan Water District $ 19,215,000 0.105% $ 20,176 Coast Community College District 920,781,084 0.528% 4,861,724 North Orange County Joint Community College District 324,914,503 1.827% 5,936,188 Anaheim Union High School District 245,578,955 3.477% 8,538,780 Garden Grove Unified School District 524,835,000 5.846% 30,681,854 Magnolia School District 18,728,305 17.696% 3,314,161
Savanna School District 38,250,262 33.530% 12,825,313
TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT $ 66,178,196
DIRECT AND OVERLAPPING GENERAL FUND DEBT:

Orange County General Fund Obligations $451,165,000 0.531% $ 2,395,686 Orange County Board of Education General Fund Obligations 10,860,000 0.531% 57,667 Coast Community College District General Fund Obligations 1,480,000 0.528% 7,814 Coast Community College District Pension Obligation Bonds 1,380,000 0.528% 7,286 Anaheim Union High School District Certificates of Participation 29,580,000 3.477% 1,028,497 Magnolia School District General Fund Obligations 12,501,268 17.696% 2,212,224 North Orange County Regional Occupation Program
Certificates of Participation 7,790,000 1.243% 96,830
City of Stanton - 100% -
TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT $ 5,806,004 OVERLAPPING TAX INCREMENT DEBT (Successor Agency) $50,765,000 100.000% 50,765,000 TOTAL DIRECT DEBT $ -
TOTAL OVERLAPPING DEBT 122,749,200
COMBINED TOTAL DEBT $ 122,749,200 (2)
Notes:

Ratios to 2022-23 Assessed Valuation:

Total Overlapping Tax and Assessment Debt 1.72%
Total Direct Debt 0.00%
Total Combined Debt 3.19%
Ratios to Redevelopment Successor Agency Incremental Valuation ($2,832,162,461):

Total Overlapping Tax Increment Debt 1.79%
Source: California Municipal Statistics, Inc.
(1) The percentage of overlapping debt applicable to the City is estimated using taxable assessed property value. Applicable percentages were estimated by determining the portion of the overlapping district's assessed value that is within the boundaries of the City divided by the district's total taxable assessed value. (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue, and non-bonded lease obligations.

Qualified Zone Academy Bonds are included based on principal due at maturity.

CITY OF STANTON

COMPUTATION OF DIRECT AND OVERLAPPING BONDED DEBT
YEAR ENDED JUNE 30, 2023
175

ATTACHMENT A

2013-14 2014-15 2015-16 2016-17
Assessed valuation $ 2,146,057,305 $ 2,299,000,205 $ 2,433,204,888 $ 2,566,311,820 Conversion percentage 25% 25% 25% 25%
Adjusted assessed valuation 536,514,326 574,750,051 608,301,222 641,577,955 Debt limit percentage 15% 15% 15% 15%
Debt limit 80,477,149 86,212,508 91,245,183 96,236,693
Total net debt applicable to limit - - - -
Legal debt margin $ 80,477,149 $ 86,212,508 $ 91,245,183 $ 96,236,693 Total net debt applicable to
limit as percentage of debt limit 0% 0% 0% 0%
Sources: City Finance Department
HdL Coren & Cone
The Government Code of the State of California provides for a legal debt limit of 15% of gross assessed valuation. However, this provision was enacted when assessed valuation was based upon 25% of market value.

Effective with the 1981-82 fiscal year, each parcel is now assessed at 100% of market value (as of the most recent change in ownership for that parcel). The computations above reflect a conversion of assessed valuation data for each fiscal year from the current full valuation perspective to the 25% level that was in effect at the time that the legal debt margin was enacted by the State of California for local governments.

CITY OF STANTON

LEGAL DEBT MARGIN INFORMATION

LAST TEN FISCAL YEARS
Fiscal Year
176

ATTACHMENT A

2017-18 2018-19 2019-20 2020-21 2021-22 2022-23
$ 2,678,905,775 $ 2,834,604,233 $ 3,014,836,696 $ 3,294,354,368 $ 3,627,670,751 $ 3,841,815,515 25% 25% 25% 25% 25% 25%
669,726,444 708,651,058 753,709,174 823,588,592 906,917,688 960,453,879 15% 15% 15% 15% 15% 15%
100,458,967 106,297,659 113,056,376 123,538,289 136,037,653 144,068,082 - - - - - -
$ 100,458,967 $ 106,297,659 $ 113,056,376 $ 123,538,289 $ 136,037,653 $ 144,068,082 0% 0% 0% 0% 0% 0%
Fiscal Year
177

ATTACHMENT A

Fiscal Tax
Year Increment Principal Interest Principal Interest Principal Interest Principal Interest 2013-14 -$ -$ -$ -$ -$ -$ -$ -$ -$
2014-15 - - - - - - - - -
2015-16 - - - - - - - - -
2016-17 - - - - - - - - -
2017-18 - - - - - - - - -
2018-19 - - - - - - - - -
2019-20 - - - - - - - - -
2020-21 - - - - - - - - -
2021-22 - - - - - - - - -
2022-23 - - - - - - - - -
Note:

Source: City Finance Department

CITY OF STANTON

PLEDGED REVENUE COVERAGE

LAST TEN FISCAL YEARS
(1) The liabilities for these outstanding bonds were transferred to the Successor Agency to the Stanton Redevelopment Agency on February 1, 2012, and are no longer debt of the primary government.

Tax Allocation Bonds,
2011 Series A
Debt Service (1)
Tax Allocation Bonds, Tax Allocation Bonds, Tax Allocation Bonds, Debt Service (1) Debt Service (1)
2005 Series B
Debt Service (1)
2005 Series A 2010 Series A
178

ATTACHMENT A

Principal Interest Principal Interest Principal Interest Principal Interest Coverage -$ -$ -$ -$ -$ -$ -$ -$ 0%
- - - - - - - - 0%
- - - - - - - - 0%
- - - - - - - - 0%
- - - - - - - - 0%
- - - - - - - - 0%
- - - - - - - - 0%
- - - - - - - - 0%
- - - - - - - - 0%
- - - - - - - - 0%
Tax Allocation Bonds, Tax Allocation Bonds,
2016 Series A
Debt Service (1) Debt Service (1)
Tax Allocation Bonds,
2011 Series B
Tax Allocation Bonds,
2016 Series B 2020 Series A
Debt Service (1) Debt Service (1)
179

ATTACHMENT A

Total
Median Personal Per Capital
Calendar Median Housing Income Personal Unemployment
Year Population Age Price (in thousands) Income Rate
2013 38,963 33.6 345,000 $ $ 779,377 $ 20,003 8.2%
2014 38,954 33.7 383,000 757,616 19,449 7.2%
2015 39,751 34.3 430,000 725,662 18,255 5.9%
2016 39,611 33.5 412,500 729,707 18,422 5.3%
2017 39,470 34.4 450,000 747,172 18,930 4.1%
2018 39,307 34.5 432,000 781,143 19,873 3.2%
2019 39,077 34.5 445,000 825,807 21,133 3.1%
2020 39,573 34.9 470,000 900,452 22,754 10.7%
2021 39,275 35.7 550,000 1,017,211 25,899 7.1%
2022 39,084 36.0 665,000 1,143,896 29,267 3.2%
Source: HdL Coren & Coren

CITY OF STANTON

DEMOGRAPHIC AND ECONOMIC STATISTICS

LAST TEN CALENDAR YEARS
180

ATTACHMENT A

% of Total % of Total
City City
Employer Employees Rank Employment Employees Rank Employment Rowntree Gardens (formerly Quaker Gardens) 314 1 1.71% 312 1 1.67% Home Depot 161 2 0.88% 144 5 0.77%
Super King Market 150 3 0.82% - - -
CR&R, Inc. 122 4 0.66% 190 4 1.02%
Walmart Market #4134 119 5 0.65% - - -
Custom Pipe & Fabrication Inc. 119 6 0.65% 75 8 0.40%
Adventure City 112 7 0.61% 100 7 0.53%
Raising Cane's Chicken Fingers Restaurant 111 8 0.60% - - - All Metals Processing of Orange County, LLC 102 9 0.55% 127 6 0.68% Food 4 Less 71 10 0.39% 68 9 0.36%
Sam's Club - - - 200 2 1.07%
USS Cal Builders - - - 200 3 1.07%
Cameron Welding Supply - - - 52 10 0.28%
Total Top 10 Employers 1,381 7.51% 1,468 7.85%
Total City Labor Force 18,400 18,700
Notes:

Excludes employers not required to obtain a City business license (i.e. government agencies).

Sources: City business license database
Fiscal Year 2013-14 Annual Comprehensive Financial Report Employment Development Department (for City Labor Force data) 2022-23 2013-14

CITY OF STANTON

PRINCIPAL EMPLOYERS

CURRENT YEAR AND NINE YEARS AGO
181

ATTACHMENT A

Department 2013-14 2014-15 2015-16 2016-17
Administration 4.00 4.00 4.00 4.50
Community Development (1) 7.50 7.50 8.50 8.50
Community Services 3.00 3.00 6.00 6.00
Finance 4.00 4.00 5.00 5.13
Public Safety (1) 0.00 0.00 0.00 0.00
Public Works 6.50 6.50 6.00 6.38
Total 25.00 25.00 29.50 30.51
Note:

Source: City Finance Department
(1) Code Enforcement and Parking Control were transferred to the Public Safety Department in Fiscal Year 2018-19.

CITY OF STANTON

FULL-TIME EQUIVALENT CITY EMPLOYEES BY DEPARTMENT

LAST TEN FISCAL YEARS
Fiscal Year
182

ATTACHMENT A

2017-18 2018-19 2019-20 2020-21 2021-22 2022-23

4.50 4.50 4.50 5.50 6.50 6.50

9.00 6.00 6.00 6.50 8.50 10.00

6.00 16.00 16.00 17.00 17.00 17.00

5.25 6.75 6.75 6.00 7.00 7.50

0.50 8.00 9.00 9.50 11.00 11.50

6.75 8.75 8.75 9.50 10.50 10.50

32.00 50.00 51.00 54.00 60.50 63.00
Fiscal Year
183

ATTACHMENT A

2013-14 2014-15 2015-16 2016-17
City Council
Public Meetings held 31 39 35 37
Ordinances adopted 10 7 13 14
Resolutions adopted 51 47 46 41
City Attorney
Ordinances prepared 10 7 13 15
Resolutions prepared 51 47 46 41
Contracts prepared 50 75 86 88
City Clerk
Public Meetings held 36 39 35 37
Ordinances processed
and published 10 7 13 14
Resolutions processed
and published 51 47 46 41
Public Records Requests processed 217 301 300 278
Contracts Processed 50 75 86 88
City Manager
City Council meetings attended 31 39 35 36
Finance
Cash Receipts processed 7,001 7,572 8,961 10,260
Warrants processed 2,219 2,333 2,490 2,559
Payroll checks processed 1,365 1,141 1,613 1,769
Journal entries processed 252 296 247 281
Business licenses processed 1,788 1,974 2,197 2,946
Police Services
Cases assigned to
general crime investigators 1,283 1,421 835 1,582
Directed enforcement
shifts deployed each week 1.5 3 5 5
Average response time
in minutes to emergency
life threatening calls 3:53 4:03 3:50 4:03
Shifts of traffic enforcement
in high accident and
residential areas per week 0.17 1 4 4
Schools receiving school
programs 2 2 1 n/a
Note:
n/a - Information not available
Department

CITY OF STANTON

OPERATING INDICATORS BY FUNCTION

LAST TEN FISCAL YEARS
Fiscal Year
184

ATTACHMENT A

2017-18 2018-19 2019-20 2020-21 2021-22 2022-23
36 34 37 55 38 25
12 8 14 8 10 9
48 39 60 45 54 30
12 8 14 8 10 9
48 39 60 45 54 30
90 84 90 94 98 115
36 34 37 55 38 25
12 8 14 8 10 9
48 39 60 45 54 30
280 159 170 180 182 195
90 84 90 94 98 115
35 34 37 55 37 24
6,854 5,512 5,690 4,109 4,102 3,940
2,462 2,405 2,182 2,057 1,809 2,076
1,819 1,800 1,804 1,806 1,001 1,966
234 287 344 1,493 694 662
3,304 3,126 2,649 2,577 2,481 2,388
964 737 856 1,068 1,138 1,127
555555
4:05 4:21 3:50 4:17 4:14 4:17
444444
n/a n/a n/a n/a 2 2
Fiscal Year
185

ATTACHMENT A

2013-14 2014-15 2015-16 2016-17
Fire Protection
Paramedic calls responded to 2,283 2,540 2,659 2,192
Fire calls responded to 38 41 54 37
Other calls responded to 558 532 699 1042
Fire inspections made 485 505 602 524
Students receiving fire
safety education programs 145 175 490 370
Adults receiving fire
safety education programs 60 75 220 240
Plan checks completed 57 48 51 72
Planning
Administrative permits 5574
Preliminary plan review 0332
Entitlements 11 13 29 29
Environmental 16 13 26 29
Home Occupation permits 27 17 50 21
Land divisions 3154
Landscape plan checks 2 0 4 -
Sign permits 42 48 23 26
Plan Checks (Over-the-Counter) 31 74 68 70
Building
Building plan reviews 148 108 101 101
Building permits 283 314 264 254
Electrical permits 197 229 233 214
Mechanical permits 119 132 120 112
Plumbing permits 139 134 150 124
Inspections for compliance 0000
Parking Control
Citations 6,335 6,361 6,843 8,039
Vehicles towed 242 220 299 440
Engineering
Value of capital projects initiated $0.9M $11M $1M $1M
Engineering plan checks 15 17 7 7
Permits issued 111 95 132 132
Value of competitive grants obtained $0.4M $0.1M $0.3M $0.3M Capital projects administered 4 7 3 3
Public Facilities
Service requests 199 232 87 277
Unscheduled repairs 60 171 68 92
Department

CITY OF STANTON

OPERATING INDICATORS BY FUNCTION (CONTINUED)

LAST TEN FISCAL YEARS
Fiscal Year
186

ATTACHMENT A

2017-18 2018-19 2019-20 2020-21 2021-22 2022-23
2,627 2,794 6,307 3,323 3,724 3,887
42 55 222 182 196 194
611 494 647 205 206 255
612 674 15 0 514 581
200 250 4 61 3 3
456 250 4 132 10 0
83 87 n/a 224 187 219
7 6 5 3 4 13
615361
32 18 35 17 13 18
21 12 1 1 0 0
117 11 26 27 10 31
636511
363339
32 25 27 8 19 17
147 93 103 112 109 0
138 94 82 121 672 875
368 358 450 535 495 477
242 239 307 398 151 45
145 156 219 223 50 41
194 174 275 253 52 46
000000
8,049 7,937 5,765 9,073 8,269 7,649
574 451 347 179 236 173
$2.6M $3.0M $3.2M $1.47M $9.38M $3.55M
10 8 15 4 10 4
135 204 102 100 165 234
$0.2M $0 $0 $0 $8.13M $576K
7 7 8 7 10 15
504 475 682 1,134 1,586 1,353
73 64 173 146 78 67
Fiscal Year
187

ATTACHMENT A

2013-14 2014-15 2015-16 2016-17
Buildings/Grounds Maintenance
No. of service requests 70 112 57 64
HVAC service calls 14 7 4 3
Parks Maintenance
Service requests 65 112 61 72
Unscheduled repairs 10 8 25 17
Street Maintenance
Potholes repaired 17 15 10 43
Service requests 799 815 201 227
Tonnage of asphalt placed 6 8 6 6
Storm drain inlets cleaned 183 183 183 183
Service calls for drainage issues 6 2 1 3
Community Services
Senior clients served 2,800 2,425 2,450 2,600
Commission meetings 0 11 10 9
After school program participation 312 210 220 250
Info & referral inquires answered 2,250 2,210 2,230 2,500 Sports facility usage (revenue) $7,000 $1,500 $3,120 $13,760 Department

CITY OF STANTON

OPERATING INDICATORS BY FUNCTION (CONTINUED)

LAST TEN FISCAL YEARS
Fiscal Year
188

ATTACHMENT A

2017-18 2018-19 2019-20 2020-21 2021-22 2022-23
64 120 189 1,134 1,586 1,336
3 13 17 8 11 15

226 229 478 2,298 1,723 1,568
32 68 83 103 67 57
14 35 66 87 79 130
702 698 872 2,830 1,720 1,460
6 3 2.5 3 3 3
183 183 183 183 183 183
3 5 16 8 4 8
3,600 4,000 8,271 15,613 15,882 12,887
997788
133 115 318 134 154 543
2,051 2,216 1,945 1,097 1,156 1,330
$15,080 $12,600 $12,417 $23,141 $21,540 $26,910
Fiscal Year
189

ATTACHMENT A

2013-14 2014-15 2015-16 2016-17
Public Works
Streets (miles) 44 44 44 44
Alleys (square feet) 326,000 326,000 326,000 326,000
Curbs and gutters
(linear feet) 439,736 439,736 441,200 441,200
Sidewalks (square feet) 2,339,372 2,339,372 2,341,000 2,341,000 Streetlights 1,295 1,295 1,295 1,295
Traffic signals 15 15 16 16
Storm drain system
(linear feet) 26,889 26,889 26,889 26,889
Parks and Recreation
Parks 8899
Community Center 2233
Sewer
Sewer lines (miles) 40 40 40.5 40.5
Source: City Finance Department
Function

CITY OF STANTON

CAPITAL ASSET STATISTICS BY FUNCTION

LAST TEN FISCAL YEARS
Fiscal Year
190

ATTACHMENT A

2017-18 2018-19 2019-20 2020-21 2021-22 2022-23
44 44 44 44.1 44.1 44.1
326,000 324,185 324,185 324,185 324,185 324,185
441,200 441,200 441,445 441,445 441,445 441,445
2,341,000 2,341,000 2,343,100 2,343,100 2,343,100 2,343,100 1,295 1,295 1,295 1,295 1,295 1,295
16 16 16 16 16 16
26,889 26,889 26,889 26,889 26,889 26,889
999999
333333

40.5 40.5 40.5 40.5 40.5 40.5
Fiscal Year
191

ATTACHMENT A

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192

ATTACHMENT A

 



 
 
   





ATTACHMENT B

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STANTON HOUSING AUTHORITY
(A COMPONENT UNIT OF

THE CITY OF STANTON)

ANNUAL FINANCIAL REPORT
YEAR ENDED JUNE 30, 2023

ATTACHMENT B

STANTON HOUSING AUTHORITY

TABLE OF CONTENTS
YEAR ENDED JUNE 30, 2023
INDEPENDENT AUDITORS’ REPORT 1
MANAGEMENT’S DISCUSSION AND ANALYSIS 3

BASIC FINANCIAL STATEMENTS

GOVERNMENT-WIDE FINANCIAL STATEMENTS
STATEMENT OF NET POSITION 13
STATEMENT OF ACTIVITIES 14

FUND FINANCIAL STATEMENTS
BALANCE SHEET – GENERAL FUND 16
RECONCILIATION OF THE BALANCE SHEET – GENERAL

FUND TO THE GOVERNMENT-WIDE STATEMENT OF NET
POSITION 17

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCE – GENERAL FUND 18

RECONCILIATION OF THE STATEMENT OF REVENUES,
EXPENDITURES, AND CHANGES IN FUND BALANCE –

GENERAL FUND TO THE GOVERNMENT-WIDE STATEMENT
OF ACTIVITIES 19
NOTES TO BASIC FINANCIAL STATEMENTS 21

REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED)

CALPERS MISCELLANEOUS PENSION PLAN

SCHEDULE OF PROPORTIONATE SHARE OF THE NET
PENSION LIABILITY 38
SCHEDULE OF CONTRIBUTIONS 40
BUDGETARY COMPARISON SCHEDULE 42
NOTE TO REQUIRED SUPPLEMENTARY INFORMATION 43

ATTACHMENT B

1 Board of Directors
City of Stanton, California
Stanton, California
INDEPENDENT AUDITORS’ REPORT
Opinions
We have audited the accompanying financial statements of the governmental activities and major fund Stanton Housing Authority, a component unit of the City of Stanton, California, as of and for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the Stanton Housing Authority’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 and major fund Stanton Housing Authority, as of June 30, 2023, and the respective changes in financial position 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 Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Stanton Housing Authority, 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 Stanton Housing Authority’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.

Auditor’s 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 auditor’s 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 generally accepted 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.
438 Old Newport Blvd – Newport Beach, CA 92663
Phone (949) 346-2900 – www.gruberlopezinc.com

ATTACHMENT B

2 Board of Directors
City of Stanton, California
In performing an audit in accordance with generally accepted 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 the Stanton Housing Authority’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 the Stanton Housing Authority’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.

Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, the schedules of proportionate share of the net pension liability and the schedules of contributions for the CalPERS miscellaneous plan, and the budgetary comparison schedule for the Stanton Housing Authority, identified as Required Supplementary Information (RSI) in the accompanying table of contents, be presented to supplement the basic financial statements. Such information, 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 RSI in accordance with auditing standards generally accepted in the United States of America, 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 RSI because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 6, 2023, on our consideration of the Stanton Housing Authority’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 Stanton’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 the Stanton Housing Authority’s internal control over financial reporting and compliance.

Gruber and Lopez, Inc.

Newport Beach, California
December 6 2023
Gruber and Lopez, Inc.

ATTACHMENT B

3 MANAGEMENT’S DISCUSSION AND ANALYSIS

ATTACHMENT B

4 MANAGEMENT’S DISCUSSION AND ANALYSIS
As management of the Stanton Housing Authority (Housing Authority), we offer readers of the Housing Authority’s financial statements this narrative overview and analysis of the financial activities of the Housing Authority for the fiscal year ended June 30, 2023. Please read it in conjunction with the accompanying transmittal letter at the front of this report, and the basic financial statements, which follow this section.

FINANCIAL HIGHLIGHTS
 The assets and deferred outflows of resources of the Housing Authority exceeded its liabilities and deferred inflows of resources on June 30, 2023, by $31.3 million. This amount is referred to as the net position of the Housing Authority. Of this amount, $10.2 million is restricted net position and may be used for the Housing Authority’s affordable housing programs.  During fiscal year 2022-23, the Housing Authority’s overall net position decreased by $3.1 million, primarily due to a $2.5 million affordable housing grant provided to JHC-Beach3LLC (“JHC”), and the demolition of the building located at 8861 Pacific Avenue.

OVERVIEW OF THE FINANCIAL STATEMENTS
Management’s discussion and analysis is intended to serve as an introduction to the Housing Authority’s basic financial statements. The Housing Authority’s basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the basic financial statements. This report also consists of required 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 Housing Authority’s finances, in a manner similar to a private-sector business. There are two government-wide financial statements:
the Statement of Net Position and the Statement of Activities. They present information for the government as a whole and present a longer-term view of the Housing Authority’s finances. These two statements help to answer the question: “Is the Housing Authority as a whole better off or worse off as a result of this year’s activities?”
The Statement of Net Position presents information on all of the Housing Authority’s assets, deferred outflows of resources, liabilities, and deferred inflows of resources with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the Housing Authority is improving or deteriorating.

The Statement of Activities presents information showing how the government’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying events giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in the future fiscal periods (e.g., uncollected rent and earned but unused vacation leave).

ATTACHMENT B

5 The governmental activities of the Housing Authority are primarily funded by rental income from the Housing Authority’s Tina Pacific properties include the following functions: general government, community development, public safety, and public works.

Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The Housing Authority, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The Housing Authority’s activities are reported in the General Fund.

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 the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances on spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements.

Because the focus of governmental fund is narrower than that of the government-wide financial statements, 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 government’s near-term financing decisions.

Both the governmental fund balance sheet and governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.

Notes to Basic Financial Statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements.

Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the Housing Authority’s budgetary policies and supplementary information on the Housing Authority’s defined benefit plans.

FINANCIAL ANALYSIS OF THE GOVERNMENT-WIDE STATEMENTS
As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. In the case of the Housing Authority, assets and deferred outflows exceeded liabilities by $31.3 million as of June 30, 2023. In comparison, total net position was $34.4 million as of June 30, 2022.

The largest portion of the Housing Authority’s net position at June 30, 2023, ($20.6 million or

65.7% of total net position), reflects its investment in capital assets (e.g., land and buildings). The Housing Authority’s capital assets are currently used for affordable housing programs, primarily the Tina Pacific affordable housing project.

The remaining $10.7 million is restricted net position, representing resources that are subject to external restrictions or enabling legislation on how they may be used. The Housing Authority’s restricted net position is restricted for low- and moderate-income housing programs.

ATTACHMENT B

6 A summary of the government-wide Statement of Net Position follows:

2023 2022 % Change
Current and other assets $ 10,947,651 $ 14,212,674 -23.0% Capital assets 20,558,771 21,081,772 -2.5%
Total assets 31,506,422 35,294,446 -10.7%
Deferred outflows of resources 89,121 36,347 145.2%
Long-term liabilities 207,186 102,756 101.6%
Other liabilities 91,151 780,435 -88.3%
Total liabilities 298,337 883,191 -66.2%
Deferred inflows of resources 16,757 97,475 -82.8%
Net position:
21, 20,558,771 -2.5% 081,772
Restricted 10,721,678 13,268,355 -19.2%
Total net position $ 31,280,449 $ 34,350,127 -8.9%
Investment in capital assets

ATTACHMENT B

7 A summary of the government-wide Statement of Activities follows:

During the current fiscal year, the Housing Authority’s net position decreased by $3.1 million, primarily due to a $2.5 million affordable housing grant provided to JHC-Beach3LLC, and the demolition of the building located at 8861 Pacific Avenue. 2023 2022 % Change
Revenues:

Program Revenue:

Charges for services $ 671,330 $ 616,454 8.9%
General revenues:

Investment earnings (loss) 265,277 (120,362) 320.4%
Gain on sale of capital assets - -100.0% 430,902
Miscellaneous 213 14,006 -98.5%
Transfer from City of Stanton - 25,093 -100.0%
Total revenues 936,820 -3.0% 966,093
Expenses:

General government 195,476 26.8% 154,169
Community development 3,725,154 287.9% 960,290
Public safety 85,868 99,946 -16.4%
Total expenses 4, 006,498 1,214,405 229.9%
Change in Net Position (3,069,678) (248,312) 1136.2%
Net position, beginning of year 34,350,127 34,598,439 -0.7% Net position, end of year 31,280,449 $ $ 34,350,127 -8.9%

ATTACHMENT B

8 Revenues decreased by $29,273, or 3.0%, from the prior year.

Charges for services increased by $54,876, or 8.9% from the previous fiscal year due to additional rental income received during the current fiscal year due to Quality Management Group (QMG), the Housing Authority’s property management company, actively collecting past due rent amounts with California’s statewide moratorium on evictions ending in June 2022.

Investment earnings increased by $385,639, or 320.4%, in fiscal year 2022-23, due to the change in fair value in the Housing Authority’s investment portfolio. Chandler Asset Management LLC began providing investment advisory services to the City of Stanton in September 2023. The diversification of the Housing Authority’s share in the City’s investment portfolio as well as higher yields on investment securities contributed to the additional investment earnings. In addition, the average yield of the California Local Agency Investment Fund (LAIF) was 2.17% in fiscal year 2022-23, compared to 0.37% in fiscal year 2021-22.

ATTACHMENT B

9 Gain on sale of capital assets decreased by 100% in fiscal year 2022-23 because the Housing Authority sold the property located at 7455 Katella Avenue, which resulted in a realized gain of $430,902 (the difference between the sales proceeds and the original cost of the property) during the previous fiscal year.

Miscellaneous revenues decreased by $13,793, or 98.5%, during the current fiscal year because the Housing Authority received one time tax refunds from Mission Escrow Inc. for properties purchased in previous fiscal years.

Transfer from the City of Stanton decreased by 100% in fiscal year 2022-23 because the $25,093 the Housing Authority received from the City was for the one time reimbursement for legal expenses that were funded by developer deposit revenues collected by the City.

The cost of all governmental activities during fiscal year 2022-23 was $4.0 million. Total expenses increased by $2.8 million, or 229.9%, from the previous fiscal year.

ATTACHMENT B

10 General government expenses increased by $41,307, or 26.8%, primarily due to increased legal costs associated with the Tina/Pacific affordable housing project and increased personnel costs due to the City’s 8% cost-of-living-adjustment that was effective July 1, 2022, as well as an overall increase in the cost of employee benefits.

Community development expenses increased by $2.8 million, or 287.9%, primarily due to a $2.5 million affordable housing grant provided to JHC and the demolition of the building located at 8861 Pacific Avenue. JHC received a grant from the Housing Authority to acquire and rehabilitate the property that was formerly occupied by Riviera Motel located at 11892 Beach Boulevard in Stanton. The rehabilitated property will be used as a 21-unit affordable residential rental complex and will be operated as permanent supportive housing for individuals making less than or equal to 30% Area Median Income (AMI). During fiscal year 2022-23, the Housing Authority demolished the building located at 8861 Pacific Avenue. The cost to demolish the buildings was $93,800 and resulted in an additional loss on disposal of $250,185 (the net book value of the assets).

Public safety expenses decreased by $14,078, or 16.4% from the previous year, primarily due to less costs paid for relocating misplaced people.

FINANCIAL ANALYSIS OF THE GENERAL FUND
As noted earlier, the Housing Authority uses fund accounting to ensure compliance with financerelated legal requirements. The focus of the Housing Authority’s General Fund is to provide information on near-term inflows, outflows, and balances of spending resources. Such information is useful in assessing the Housing Authority’s financing requirements.

As of June 30, 2023, the General Fund reported a total fund balance of $10.9 million, which represents a decrease of approximately $2.5 million, or 19.2%, from the previous fiscal year, primarily due to the $2.5 million affordable housing grant provided to JHC, previously discussed.

CAPITAL ASSETS
Total capital assets decreased by $523,001 or 2.5% from the previous fiscal year, due to the demolition of the property located at 8861 Pacific Avenue. Additional information on the Housing Authority’s capital assets can be found in Note 3 in the Notes to the Basic Financial Statements.

ECONOMIC FACTORS AND NEXT YEAR’S BUDGET
The Housing Authority maintains a conservative approach to budgeting revenues and expenditures. Management takes an active role in monitoring the application of the budget during 2023 2022
%
Change
Land $ 15,243,865 $ 15,243,865 0.0%
Buildings and improvements 5,314,906 5,837,907 -9.0%
Totals $ 20,558,771 $ 21,081,772 -2.5%

ATTACHMENT B

11 the fiscal year to apply any necessary changes to projected revenues as well as appropriated expenditures. The Fiscal Year 2023-24 Adopted Budget includes an increase in revenues of 1.4% and a reduction in expenditures of 68.5% due to one-time expenditures incurred during fiscal year 2022-23. The fiscal year 2022-23 budget was balanced after using $575,710 in fund balance.

REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview of the Housing Authority’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional information should be addressed to:

Michelle Bannigan, Finance Director, City of Stanton, 7800 Katella Avenue, Stanton, California 90680.

ATTACHMENT B

12 GOVERNMENT-WIDE FINANCIAL STATEMENTS

ATTACHMENT B

Governmental
Activities

ASSETS AND DEFERRED OUTFLOWS OF RESOURCES
Cash and investments (Note 2) $ 9,850,045
Receivables 79,606
Notes and loans receivable (Note 4) 1,018,000
Capital assets (Note 3):

Non-depreciable 15,243,865
Depreciable, net 5,314,906
Total assets 31,506,422
Deferred pension related items (Note 5) 89,121
Total deferred outflows of resources 89,121

LIABILITIES AND DEFERRED INFLOWS OF RESOURCES
Accounts payable 77,066
Deposits payable 12,900
Unearned revenue 1,185
Long-term liabilities:

Net pension liability (Note 5) 207,186
Total liabilities 298,337
Deferred pension related items (Note 5) 16,757
Total deferred inflows of resources 16,757

NET POSITION
Net investment in capital assets 20,558,771
Restricted for:

Low and moderate income housing 10,721,678
Total net position $ 31,280,449

STANTON HOUSING AUTHORITY
Statement of Net Position
June 30, 2023
See accompanying notes to the basic financial statements. 13 ATTACHMENT B

Net (Expense)
Revenue and
Changes in
Net Position
Operating Capital Governmental
Charges for Grants and Grants and Activities
Expenses Services Contributions Contributions Total
Governmental activities:

General government $ 195,476 $ - -$ -$ (195,476) $
Public safety 85,868 - - - (85,868)
Community development 3,725,154 671,330 - (3,053,824) - Total governmental activities 4,006,498 $ $ 671,330 -$ (3,335,168) -$ General revenues:

Investment earnings (loss) 265,277
Miscellaneous 213
Total general revenues and transfers 265,490
Change in net position (3,069,678)
Net position - beginning of year 34,350,127
Net position - end of year $ 31,280,449

STANTON HOUSING AUTHORITY
Statement of Activities
For the Year Ended June 30, 2023
Program Revenues
Functions/Programs
See accompanying notes to the basic financial statements. 14 ATTACHMENT B

15 FUND FINANCIAL STATEMENTS

ATTACHMENT B

Cash and investments $ 9,850,045
Receivables:

Accounts 2,550
Interest 77,056
Notes and loans receivable 1,018,000
Total assets $ 10,947,651

LIABILITIES AND FUND BALANCES
Liabilities:

Accounts payable $ 77,066
Deposits payable 12,900
Unearned revenues 1,185
Total liabilities 91,151
Fund Balances:

Nonspendable 1,018,000
Restricted for Low and Moderate-Income Housing 9,838,500 Total fund balances 10,856,500
Total liabilities and fund balances $ 10,947,651
ASSETS

STANTON HOUSING AUTHORITY
June 30, 2023
Balance Sheet - General Fund
See accompanying notes to the basic financial statements. 16 ATTACHMENT B

Total Fund Balances - Total Governmental Funds $ 10,856,500 Capital assets 23,330,435
Accumulated depreciation (2,771,664)
Total capital assets 20,558,771
Deferred Outflows of Resources - Pension Related 89,121 Deferred Inflows of Resources - Pension Related (16,757) Net Pension Liability (207,186)
Net position of governmental activities $ 31,280,449
Capital assets used in governmental activities were not current financial resources. Therefore, they were not reported in the Governmental Funds Balance Sheet.

Pension-related debt applicable to the Authority's governmental activities is not due and payable in the current period and accordingly is not reported as fund liabilities. Deferred outflows of resources and deferred inflows of resources related to pensions are only reported in the statement of net position as the changes in these amounts affect only the government-wide statements for governmental activities.

STANTON HOUSING AUTHORITY
Reconciliation of the Balance Sheet - General Fund
to the Government-wide Statement of Net Position
June 30, 2023
Amounts reported for governmental activities in the Statement of Net Position were reported differently because:

See accompanying notes to the basic financial statements. 17 ATTACHMENT B

REVENUES:

Investment income (loss) 265,277 $
Rental income 671,330
Miscellaneous 213
Total revenues 936,820
EXPENDITURES:

Current:

General government 201,254
Public safety 88,181
Community development 722,906
Capital outlay 2,500,218
Total expenditures 3,512,559
NET CHANGE IN FUND BALANCE (2,575,739)
Fund balances, beginning of year 13,432,239
Fund balances, end of year 10,856,500 $
Statement of Revenues, Expenditures, and Changes in Fund Balance -

STANTON HOUSING AUTHORITY
General Fund
For the Year Ended June 30, 2023
See accompanying notes to the basic financial statements. 18 ATTACHMENT B

Net Change in Fund Balances - Total Governmental Funds $ (2,575,739) Depreciation expenses (272,816)
Loss on disposition of capital assets (250,185)
Total capital assets (523,001)
29,062
Change in net position of governmental activities $ (3,069,678) 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.

STANTON HOUSING AUTHORITY
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balance - General Fund to the Governmental-wide Statement of Activities For the Year Ended June 30, 2023
Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over the estimated useful lives as depreciation expense. This is the amount by which capital outlays exceed depreciation and retirements in the current period.

Governmental activities in the Statement of Activities were reported differently because:

See accompanying notes to the basic financial statements. 19 ATTACHMENT B

20 NOTES TO BASIC FINANCIAL STATEMENTS

ATTACHMENT B

STANTON HOUSING AUTHORITY

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
21 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The basic financial statements of the Stanton Housing Authority (the Authority), have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) as applied to governmental agencies. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The more significant Authority accounting policies are described below.

A. Description of Reporting Entity
The Authority was formed on March 22, 2011, by City of Stanton Council to facilitate the retention and use of transferred properties from the former Stanton Redevelopment Agency consistent with the redevelopment plan and for the purposes of ongoing maintenance of completed development projects. The Authority is an integral part of the reporting entity of the City. The funds of the Authority have been included within the scope of the basic financial statements of the City because City Council exercises oversight responsibility over the operations of the Authority and has a financial benefit/burden relationship.

B. Financial Statement Presentation
The accounting and financial reporting treatment is determined by the applicable measurement focus and basis of accounting. Measurement focus indicates the type of resources being measured, such as current financial resources or economic resources.

The basis of accounting indicates the timing of transactions or events for recognition in the financial statements.

Government-Wide Financial Statements
The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Under the economic resources measurement focus, all assets, deferred outflows of resources, liabilities, and deferred inflows of resources (whether current or noncurrent) associated with their activity are included on their statement of net position. The statement of activities presents the change in net position. Under the accrual basis of accounting, revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. The statement of activities demonstrates the degree to which the direct expenses of a given function are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function.

ATTACHMENT B

STANTON HOUSING AUTHORITY

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
22 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. Financial Statement Presentation (Continued)
Government-Wide Financial Statements (Continued)
The types of transactions reported as program revenues for the Authority can be reported in three categories:

1. Charges for services

2. Operating grants and contributions

3. Capital grants and contributions
Charges for services include rental income for the Tina Way and Pacific Avenue properties received from lessees who use and directly benefit from the goods, services or privileges provided by a given function. Grants and contributions include revenues restricted to meeting the operational or capital requirements of a particular function.

The Authority’s capital grants and contributions consist of bond proceeds received from the Stanton Successor Agency that were utilized to facilitate the capital projects for which those bonds were issued. Investment earnings and miscellaneous revenues are properly not included among program revenues and are reported instead as general revenues.

Amounts to acquire capital assets are capitalized as assets in the government-wide financial statements, rather than reported as expenses. Proceeds of long-term debt are recorded as a liability in the government-wide financial statements, rather than as another financing source. Amounts paid to reduce long-term indebtedness of the reporting government are reported as a reduction of the related liability, rather than as an expenditure. The Authority has no long-term debt.

Governmental Fund Financial Statements
Governmental fund financial statements include a balance sheet and a statement of revenue, expenditures, and changes in fund balance for the Authority. The governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting.

Under the current financial resources measurement focus, only current assets and current liabilities are generally included on the balance sheet. The reported fund balance is considered to be a measure of available spendable resources. Noncurrent portions of long-term receivables due to the governmental fund are reported on its balance sheets in spite of its spending measurement focus. The statement of revenues, expenditures, and changes in fund balance present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in fund balance. Accordingly, this statement is said to present a summary of sources and uses of available spendable resources during a period.

ATTACHMENT B

STANTON HOUSING AUTHORITY

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
23 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. Financial Statement Presentation (Continued)
Governmental Fund Financial Statements (Continued)
Under the modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available to finance expenditures in the current period. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the Authority considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, except for principal and interest on general long-term liabilities, which are recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures in governmental funds. Issuance of long-term debt and acquisition of capital leases are reported as other financing sources.

Rental income and interest associated with the current fiscal period are all considered to be susceptible to accrual and have been recognized as revenues of the current fiscal period. Entitlements are recorded as revenues when all eligibility requirements are met, including time requirements, and the amount is received during the period or within the availability period for this revenue source (within 60 days of year-end). Expendituredriven grants are recognized as revenue when the qualifying expenditures have been incurred and all eligibility requirements have been met, and the amount is received during the period or within the availability period for this revenue (within 60 days of yearend). Amounts owed to the Authority, which are not available, are recorded as receivables and deferred inflows of resources. All other revenue items are considered to be measurable and available only when cash is received by the government.

C. Deferred Outflows/Inflows of Resources
In addition to assets, the statement of net position reports a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period and will not be recognized as an outflow of resources (expense/expenditure) until that time. The Authority has the following items that qualify for reporting in this category:
 Deferred outflow related to pensions equal to employer contributions made after the measurement date of the net pension liability.
 Deferred outflow from pensions resulting from differences between actual and expected experiences. These amounts are amortized over a closed period equal to the average of the expected remaining service lives of all employees that are provided with pensions through the plan.
 Deferred outflow related to pensions resulting from the net differences between projected and actual earnings on plan investments. These amounts are amortized over five years.

ATTACHMENT B

STANTON HOUSING AUTHORITY

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
24 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Deferred Outflows/Inflows of Resources (Continued)
In addition to liabilities, the statement of net position and governmental funds balance sheet reports a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period and will not be recognized as an inflow of resources (revenue) until that time. The Authority has the following items that qualify for reporting in this category:
 Deferred inflow related to pensions for changes in assumptions and changes in proportion and differences between the employer’s contributions and the employer’s proportionate share of contributions. These amounts are amortized over a closed period equal to the average of the expected remaining service lives of all employees that are provided with pensions through the plans.

D. Net Position Flow Assumptions
Sometimes the Authority will fund outlays for a particular purpose from both restricted (e.g., restricted bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted - net position and unrestricted - net position in the government wide financial statements, a flow assumption must be made about the order in which the resources are considered to be applied.

It is the Authority’s practice to consider restricted - net position to have been depleted before unrestricted - net position is applied.

E. Assets, Liabilities, and Net Position or Equity
Cash and Investments
Investments are reported in the accompanying financial statements at fair value, which is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Investments that are not traded on a market, such as investments in external pools, are valued based on the stated fair value represented by the external pool (in relation to the amortized cost of that portfolio). Changes in fair value that occur during a fiscal year are recognized as investment income for that fiscal year. Investment income includes interest earnings, changes in fair value, and any gains or losses realized upon the liquidation, maturity or sale of investments.

Cash and investments are pooled with other City funds for investment purposes, with interest being allocated monthly to all funds legally requiring allocation and to other various funds at the direction of management based on the month-end pooled funds’ cash and investment balances. Interest income for cash and investments excluded from pooled cash is credited directly to the related fund. Investment policies applicable to the Authority’s funds are those of the City and are included in the notes to the City’s basic financial statements.

ATTACHMENT B

STANTON HOUSING AUTHORITY

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
25 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) E. Assets, Liabilities, and Net Position or Equity (Continued) Capital Assets
Capital assets, which include land, are reported in the government-wide financial statements. Acquired assets are recorded at historical cost or estimated historical cost.

Donated assets are valued at the acquisition value of the assets on the date on which they were contributed. The costs of normal maintenance and repairs that do not add value to the assets or materially extend the life are not capitalized. Capital assets are defined as assets with an initial individual cost of more than $5,000 and an estimated useful life in excess of one year with the exception of land, structures and improvements, and infrastructure, which have a threshold of $50,000. Depreciation is charged to operations using the straight-line method of depreciation over the estimated useful lives of the assets as follows:

Buildings 20-50 Years
Net Position
In the government-wide financial statements, net position is classified in the following applicable categories:

Investment in Capital Assets - This amount consists of capital assets net of accumulated depreciation and reduced by outstanding debt that is attributed to the acquisition, construction, or improvement of the assets. The Authority has no debt related to capital assets.

Restricted Net Position – This amount is restricted by 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.

Fund Balance
The fund balance reported on the fund statements is classified in the following applicable categories:

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

Restricted – This classification includes amounts that can be spent only for specific purposes stipulated by constitution, external resource providers, or through enabling legislation.

ATTACHMENT B

STANTON HOUSING AUTHORITY

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
26 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) E. Assets, Liabilities, and Net Position or Equity (Continued) Fund Balance (Continued)
Committed – This classification includes amounts for which the use of such amounts is constrained by limitations that the government imposes upon itself at its highest level of decision making, normally the governing body, and that remain binding unless removed in the same manner. The Authority Council is considered the highest authority for the Authority, and the adoption of a formal resolution prior to the end of the fiscal year is required to establish a fund balance commitment. Once adopted, the limitation imposed by the resolution remains in place until a similar action is taken (the adoption of resolution) to remove or revise the limitation. The Authority has no committed fund balance.

Assigned – This classification includes amounts to be used by the government for specific purposes but do not meet the criteria to be classified as restricted or committed. In governmental funds, other than the general fund, assigned fund balance represents the remaining amount that is not restricted or committed.

Assignment of resources can be done by the highest level of decision making or by a committee or official designated for that purpose. The Authority Board has authorized the Finance Director for that purpose. The Finance Director determines the assigned amount based on encumbrances and any future budget deficits. The Authority has no assigned fund balance.

Unassigned – This classification is used only to report a deficit balance resulting from overspending for specific purposes for which amounts had been restricted, committed or assigned.

Spending Policy
When expenditures are incurred for purposes for which all restricted, committed, assigned, and unassigned fund balances are available, the Authority’s policy is to apply in the following order, except for instances wherein an ordinance specifies the fund balance:
 Restricted
 Committed
 Assigned
 Unassigned

ATTACHMENT B

STANTON HOUSING AUTHORITY

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
27 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) F. 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 Authority’s California Public Employees’ Retirement System (CalPERS) 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.

G. Use of Estimates
The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amount of assets, deferred outflows of resources, liabilities, and deferred inflows of resources and disclosure of contingent assets and liabilities at the statement of net position date and reported amounts of revenues and expenses during the reporting period.

Estimates are used to determine the net pension liability and corresponding deferred outflows of resources and deferred inflows of resources, and certain liabilities. Actual results may differ from those estimates.

NOTE 2 CASH AND INVESTMENTS
Cash and Investments
Cash and investments as of June 30, 2023, were classified in the accompanying financial statements as follows:

Statement of Net Position:

Cash and Investments $ 9,850,045
Cash and investments as of June 30, 2023, consists of the following:

Deposits With Financial Institutions $ 46,909
Equity in City of Stanton Pooled Cash and Investments 585,096 Local Agency Investment Fund (LAIF) 9,218,040
Total Cash and Investments $ 9,850,045

ATTACHMENT B

STANTON HOUSING AUTHORITY

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
28 NOTE 2 CASH AND INVESTMENTS (CONTINUED)
Equity in the Cash and Investment Pool of the City of Stanton The Authority has no separate bank accounts or investments other than LAIF and its equity in the cash and investment pool managed by the City. The Authority is a voluntary participant in the City’s pool. This pool is governed by and under the regulatory oversight of the Investment Policy adopted by the Council of the City of Stanton. The Authority has not adopted an investment policy separate from that of the City. The fair value of the Authority’s investment in this pool is reported in the accompanying financial statements at amounts based upon the Authority’s pro rata share of the fair value calculated by the City for the entire City portfolio. The balance available for withdrawal is based on the accounting records maintained by the City, which are recorded at the estimated fair value.

Investments Authorized by the City of Stanton’s Investment Policy The table below identifies investment types that are authorized for the City of Stanton by the California Government Code and the City’s investment policy. The City’s Investment Policy is reviewed and adopted by the City Council each year. Regarding allowable investment types, the investment policy is more conservative and restrictive than the investment vehicles authorized by Section 53600.5 of the California Government Code. Investment vehicles not specifically mentioned in the City’s investment policy are not authorized unless the policy is amended by the City Council or is approved as part of the provisions of the bond indentures. Investments are limited to the following:

Maximum Maximum
Investment Types Authorized by State Law Maximum Percentage Investment in or the City’s Investment Policy Maturity* of Portfolio One Issuer United States Treasury Notes 5 Years 100% None
United States Government-Sponsored
Agency Securities - noncallable 5 Years 100% 25%
United States Government Sponsored
Agency Securities -callable
5 Years 20% 25%
Local Agency Securities 5 Years 100% 5%
Collateralized Time Deposits (Nonnegotiable
Certificates of Deposit) 5 Years 20% None
Banker’s Acceptances 180 Days 40% 5%
Commercial Paper 270 Days 25% 5%
Medium-Term Corporate Notes 5 Years 30% 5%
Negotiable Certificates of Deposit 5 Years 30% 5%
Money Market Mutual Funds N/A 20% None
Asset-Backed and Mortgage-Backed Securities 5 Years 20% 5% Supranational 5 Years 30% 10%
Local Government Investment Pools N/A 100% None
Certificate of Deposit Placement Service (CDARS) 5 Years 30% None *Excluding amounts held by bond trustees that are not subject to California Government Code restrictions.

N/A - Not Applicable

ATTACHMENT B

STANTON HOUSING AUTHORITY

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
29 NOTE 2 CASH AND INVESTMENTS (CONTINUED)
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. The Authority manages its exposure to interest rate risk 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.

The Authority’s investment in both LAIF and the City’s investment pool are available upon demand.

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 a nationally recognized statistical rating organization. None of the Authority’s investments are rated.

Custodial Credit Risk
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. The California Government Code and the Authority’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 market 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 deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. Any deposits in excess of depository insurance limits at the end of the year are collateralized by securities held at the depository financial institution’s trust department.

Investment in State Investment Pool
The Authority is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The fair value of the Authority’s investment in this pool is reported in the accompanying financial statements at amounts based upon the Authority’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.

ATTACHMENT B

STANTON HOUSING AUTHORITY

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
30 NOTE 2 CASH AND INVESTMENTS (CONTINUED)
Fair Value Measurements
The Authority categorizes its fair value measurement within the fair value hierarchy established by GAAP. 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 price of similar assets in active markets, and Level 3 inputs are significant unobservable inputs. The Authority’s investment in LAIF and the City investment pool are not subject to the fair value hierarchy.

NOTE 3 CAPITAL ASSETS
A summary of changes in the capital assets activity for the year ended June 30, 2023, is as follows:

Beginning Ending
Description Balance Additions Deletions Balance
Non-depreciable:

Land $15,243,865 $ - $ - $15,243,865
Total non-depreciable 15,243,865 - - 15,243,865
Depreciable:

Buildings and improvements 8,478,165 - (391,595) 8,086,570 Less accumulated
depreciation for:

Buildings and improvements (2,640,258) (272,816) 141,410 (2,771,664) Total depreciable
capital assets, net 5,837,907 (272,816) (250,185) 5,314,906 Total capital assets, net $21,081,772 $ (272,816) $ (250,185) $20,558,771 Depreciation expense of $272,816 was charged to the community development program.

NOTE 4 NOTES AND LOANS RECEIVABLE
The notes and loans receivable balance at June 30, 2023, was as follows:

Stanton Accessible Apartments Construction $ 398,932
First-Time Home Buyer 40,000
Housing Rehabilitation 978,000
Allowance for Doubtful Accounts (398,932)
Total $ 1,018,000
In November 2004, the former Redevelopment Agency entered into a Residual Receipts Promissory Note with Stanton Accessible Apartments Construction. Under the terms of the agreement, the former Redevelopment Agency loaned $258,261 to Stanton Accessible Apartments Construction. The note commenced on May 5, 2005, and bears interest at 3% per year. The note was transferred to the Housing Authority on February 1, 2012. The total amount outstanding, including accrued interest at June 30, 2023, was $398,932, with an allowance for the forgivable amount of $398,932.

ATTACHMENT B

STANTON HOUSING AUTHORITY

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
31 NOTE 4 NOTES AND LOANS RECEIVABLE (CONTINUED)
The First Time Home Buyer Assistance Program, or HOMES, was created by the former Redevelopment Agency in order to help existing and new residents purchase their first home. The HOMES program provides up to $40,000 in down payment assistance for eligible first-time home buyers of low to moderate income. Assistance is in the form of a 45-year loan with interest and payments deferred for the first 10 years of the loan. The HOMES loan is secured by a second trust deed in conjunction with a first mortgage offered by a participating lender. The loan was transferred to the Housing Authority on February 1, 2012.

The total amount outstanding at June 30, 2023, was $40,000.

The Housing Rehabilitation Loan Program offers loans of up to $50,000 for newer homes and up to $75,000 for pre-1960 homes to low- and moderate-income households. The purpose of the program is to assist Stanton’s homeowners with addressing code violations and eliminating blighted, unsafe, unsanitary, and deteriorating living conditions. The loans are interest free with deferred payments until the property is sold, refinanced, or a change in title occurs. The loans were transferred to the Housing Authority on February 1, 2012. The total amount outstanding at June 30, 2023, was $978,000.

NOTE 5 RETIREMENT PLANS
A. General Information about the Pension Plans
Plan Descriptions
The Authority participates in the City’s Pension Plans. All qualified permanent and probationary employees are eligible to participate in the City’s Miscellaneous Employee Pension Plans, which are cost-sharing multiple-employer defined benefit pension plans administered by CalPERS. Benefit provisions under the plans are established by state statute and Authority 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.

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 one year of fulltime 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 1.5% at 65 formula, eligibility for service retirement is age 55 with at least five years of services.

PEPRA miscellaneous members become eligible for service retirement upon attainment of age 52 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. Safety members can receive a special death benefit if the member dies while actively employed and the death is job related.

ATTACHMENT B

STANTON HOUSING AUTHORITY

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
32 NOTE 5 RETIREMENT PLANS (CONTINUED)
A. General Information about the Pension Plans (Continued) Benefits Provided (Continued)
Fire members may receive the alternate death benefit in lieu of the Basic Death Benefit or the 1957 Survivor Benefit if the member dies while actively employed and has at least 20 years of total CalPERS service. The cost of living adjustments for each plan are applied as specified by the California Public Employees’ Retirement Law.

The plans’ provisions and benefits in effect at the measurement date ended June 30, 2022, are summarized as follows:

Miscellaneous
Tier I Tier II Tier III - PEPRA
On or Prior to After On or After
Hire Date August 27, 2011 August 27, 2011 January 1, 2013 Benefit Formula 2%@55 2%@60 2%@62
Benefit Vesting Schedule 5 Years of Service 5 Years of Service 5 Years of Service Benefit Payments Monthly for Life Monthly for Life Monthly for Life Retirement Age 50 - 67 50 - 67 52 - 67
Monthly Benefits, as a % of Eligible
Compensation 1.426% to 2.418% 1.092% to 2.418% 1.0% to 2.5% Required Employee Contribution Rates 7.000% 7.000% 6.750% Required Employer Contribution Rates
Normal Cost Rate 10.870% 8.630% 7.470%
Payment of Unfunded Liability $ 17,568 $ 82 $ 185
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’s 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 Authority is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. Authority 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 Authority’s portion of the pension contributions for the year ended June 30, 2023 was $24,876.

ATTACHMENT B

STANTON HOUSING AUTHORITY

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
33 NOTE 5 RETIREMENT PLANS (CONTINUED)
B. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions
As of June 30, 2023, the Authority reported net pension liabilities for its proportionate shares of the net pension liability of each plan as follows:

Miscellaneous
Proportionate
Share of
Net Pension
Liability
$ 207,186
The Authority’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, 2022, 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, 2021, rolled forward to June 30, 2022, using standard update procedures. The Authority’s proportionate share of the net pension liability was based on a projection of the Authority’s long-term share of contributions to the pension plans relative to the projected contributions of all participating employers, actuarially determined.

The Authority’s proportionate share of the net pension liability for each plan as of the measurement date ended June 30, 2021 and 2022, was as follows:

Miscellaneous
Proportion - June 30, 2021 2.95000%
Proportion - June 30, 2022 2.95000%
Change - Increase (Decrease) (0.00000%)
For the year ended June 30, 2023, the Authority recognized pension credit of $4,154. At June 30, 2023, the Authority reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Miscellaneous
Deferred Outflows
of Resources
Deferred Inflows
of Resources
Pension contributions subsequent to
measurement date

$ 24,876

$ -
Change in proportion 902 (5,337)
Change in assumptions 21,231 -
Difference in actual contributions vs.
proportionate share of contributions

-

(8,633)
Difference between expected and
actual experience

4,161

(2,787)
Differences between projected and
actual earnings on plan investments

37,951

-

Total $ 89,121 $ (16,757)

ATTACHMENT B

STANTON HOUSING AUTHORITY

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
34 NOTE 5 RETIREMENT PLANS (CONTINUED)
B. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions (Continued)
Deferred outflows of resources related to contributions subsequent to the measurement date reported as $24,876, will be recognized as a reduction of the net pension liability in the year ending June 30, 2024. Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized as pension expense as follows:

Year Ended
June 30

Miscellaneous
2024 $ 10,287
2025 9,036
2026 4,953
2027 23,212
$ 47,488
Actuarial Assumptions
The total pension liability was based on the following assumptions:

Miscellaneous
Valuation Date June 30, 2021
Measurement Date June 30, 2022
Actuarial Cost Method Entry-Age Normal
Cost Method
Actuarial Assumptions:

Discount Rate 6.90%
Inflation 2.50%
Salary Increase (1)
Mortality Rate Table (2)
Post-Retirement Benefit Increase
(1) Varies by entry age and service.
(3)
(2) The mortality table used was developed based on CalPERS-specific data. The probabilities of mortality are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015. Pre-retirement and Post-retirement mortality rates includes 15 years of projected mortality improvement using 90% of Scale MP-2016 published by the Society of Actuaries. For more details on this table, please refer to the CalPERS Experience Study and Review of Actuarial Assumptions report from December 2017 that can be found on the CalPERS website.
(3) The less of contract COLA or 2.50% until Purchasing Power Protection Allowance Floor on purchasing power applies, 2.50% thereafter.

ATTACHMENT B

STANTON HOUSING AUTHORITY

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
35 NOTE 5 RETIREMENT PLANS (CONTINUED)
B. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions (Continued)
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 longterm market return expectations, as well as the expected pension fund cash flows.

Projected returns for all asset classes are estimated and, combined with risk estimates, are used to project compound (geometric) returns over the long term. The discount rate used to discount liabilities was informed by the long-term projected portfolio return.

The expected real rates of return by asset class are as follows:

Assumed
Asset
Asset Class (a) Allocation
Real
Return (b)(c)
Public Equity 18.00% 4.50%
Fixed Income 45.00% 1.40%
TIPS 20.00% 0.50%
Commodities 3.00% 1.10%
REITs 14.00% 3.70%
Total 100.00%
(a) Commodities and REITs are included in Public Equity; TIPS are included in Fixed Income. (b) An expected inflation of 2.3% used for this period. (c) Figures are based on the 2021-22 Asset Liability Management study.

ATTACHMENT B

STANTON HOUSING AUTHORITY

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
36 NOTE 5 RETIREMENT PLANS (CONTINUED)
B. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions (Continued)
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.

Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate
The following presents the Authority’s proportionate share of the net pension liability for each plan, calculated using the discount rate for each plan, as well as what the Authority’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate:

Miscellaneous
1% Decrease 5.90%
Net Pension Liability $ 312,602
Current Discount Rate 6.90%
Net Pension Liability $ 207,186
1% Increase 7.90%
Net Pension Liability (Asset) $ 120,454
Pension Plans Fiduciary Net Position
Detailed information about each pension plan’s
separately issued CalPERS financial reports.
fiduciary net position is available in the
C. Payable to the Pension Plans
At June 30, 2023, the Authority had no outstanding amount of contributions to the pension plans required for the year ended June 30, 2023.

NOTE 6 SUBSEQUENT EVENTS
Management has evaluated subsequent events through December 6, 2023 which is the date the financial statements were available to be issued, and has determined that there are no transactions that will have a significant impact on the Authority.

ATTACHMENT B

37 REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED)

ATTACHMENT B

Fiscal year ended June 30 2023 2022 2021 2020 2019
Measurement period June 30 2022 2021 2020 2019 2018
Proportion of the net pension liability 2.95% 2.95% 5.44% 3.39% 3.39% Proportionate share of the net pension
liability $ 207,186 $ 102,756 $ 328,093 $ 188,943 $ 171,503 Covered payroll $ 105,085 $ 171,105 $ 92,886 $ 86,249 $ 89,653 Proportionate Share of the net pension
liability as percentage of covered payroll 197.16% 60.05% 353.22% 219.07% 191.30% Proportionate Share of the Fiduciary
Net Position as a percentage
of the Total Pension Liability 73.21% 85.91% 74.82% 76.17% 75.26% 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.

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:

The discount rate was reduced from 7.65% to 7.15%.

From fiscal year June 30, 2018 to June 30, 2021:

There were no significant changes in assumptions.

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

Effective with the June 20, 2021 valuation date (2022 measurement date), the accounting discount rate was reduced from 7.15% to 6.90%
* - Fiscal year 2015 was the 1st year of implementation, therefore only nine years are shown.

STANTON HOUSING AUTHORITY
Schedule of Proportionate Share of the Net Pension Liability Year Ended June 30, 2023
Last 10 Fiscal Years *
38 ATTACHMENT B

Fiscal year ended June 30 2018 2017 2016 2015
Measurement period June 30 2017 2016 2015 2014
Proportion of the net pension liability 3.39% 3.39% 3.39% 3.39% Proportionate share of the net pension
liability $ 174,231 $ 148,691 $ 110,824 $ 123,495
Covered payroll $ 74,185 $ 71,092 $ 66,722 $ 63,893
Proportionate Share of the net pension
liability as percentage of covered payroll 234.86% 209.15% 166.10% 193.28% Proportionate Share of the Fiduciary
Net Position as a percentage
of the Total Pension Liability 73.31% 74.06% 82.31% 80.06%

STANTON HOUSING AUTHORITY
Schedule of Proportionate Share of the Net Pension Liability Last 10 Fiscal Years * (Continued)
Year Ended June 30, 2023
39 ATTACHMENT B

Fiscal year ended June 30 2023 2022 2021 2020 2019
Contractually required contribution (actuarially determined 24,8 $ 21,831 76 $ 37,811 $ 20,389 $ 15,914 $ Contributions in relation to the actuarially
determined contributions (24,876) (21,831) (37,811) (20,389) (15,914) Contribution deficiency (excess) - $ - $ - $ - $ - $
Covered payroll 115,479 $ 105,085 $ 171,105 $ 92,886 $ 86,249 $ Contributions as a percentage of covered payroll 21.54% 20.77% 22.10% 21.95% 18.45% Notes to schedule:

Valuation date 6/30/2020 6/30/2019 6/30/2018 6/30/2017 6/30/2016 Methods and assumptions used to
determine contribution rates:

Actuarial cost method Entry Age Entry Age Entry Age Entry Age Entry Age Amortization method (1) (1) (1) (1) (1)
Asset valuation method Fair Value Fair Value Fair Value Fair Value Fair Value Inflation 2.500% 2.500% 2.500% 2.625% 2.750%
Salary increases 2.75% (2) (2) (2) (2) (2)
Investment rate of return 7.00% (3) 7.00% (3) 7.00% (3) 7.25% (3) 7.375% (3) Retirement age (4) (4) (4) (4) (4)
Mortality (5) (5) (5) (5) (5)
(1) Level percentage of payroll, closed
(2) Depending on age, service, and type of employment
(3) Net of pension plan investment expense, including inflation (4) 50 for all plans with exception of 52 for Miscellaneous 2% @ 62 (5) Mortality assumptions are based on mortality rates resulting from the most recent CalPERS Experience Study adopted by the CalPERS Board.
* - Fiscal year 2015 was the 1st year of implementation, therefore only nine years are shown.

Year Ended June 30, 2023

STANTON HOUSING AUTHORITY
Schedule of Contributions
Last 10 Fiscal Years *
40 ATTACHMENT B

Fiscal year ended June 30 2018 2017 2016 2015
Contractually required contribution (actuarially determined) 13, $ 11,105 655 $ 9,765 $ 25,263$ Contributions in relation to the actuarially
determined contributions (13,655) (11,105) (25,263) (9,765) Contribution deficiency (excess) - $ - $ - $ - $
Covered payroll 89,653 $ 74,185 $ 71,092 $ 66,722$
Contributions as a percentage of covered payroll 15.23% 14.97% 13.74% 37.86% Notes to schedule:

Valuation date 6/30/2015 6/30/2014 6/30/2013 6/30/2012
Methods and assumptions used to
determine contribution rates:

Actuarial cost method Entry Age Entry Age Entry Age Entry Age Amortization method (1) (1) (1) (1)
Asset valuation method Fair Value Fair Value Fair Value 15 Year
Smoothed
Market
Method
Inflation 2.750% 2.750% 2.750% 2.750%
Salary increases (2) (2) (2) (2)
Investment rate of return 7.50% (3) 7.50% (3) 7.50% (3) 7.50% (3) Retirement age (4) (4) (4) (4)
Mortality (5) (5) (5) (5)
Year Ended June 30, 2023

STANTON HOUSING AUTHORITY
Schedule of Contributions
Last 10 Fiscal Years * (Continued)
41 ATTACHMENT B

Original Final Actual Variance with
Budget Budget Amounts Final Budget

REVENUES
Investment income (loss) 25,000 $ 25,000 $ 265,277 $ 240,277 $ Rental income 560,000 610,000 671,330 61,330
Miscellaneous 1,000 1,000 213 (787)
Total revenues 586,000 636,000 936,820 300,820

EXPENDITURES
Current:

General government 431,975 434,725 201,254 233,471
Public safety 104,055 103,835 88,181 15,654
Community development 739,865 833,665 722,906 110,759
Capital outlay - 2,500,220 2 2,500,218
Total expenditures 1,275,895 3,872,445 3,512,559 359,886 Net change in fund balance $ (689,895) $ (3,236,445) (2,575,739) $ (59,066) Fund balance, beginning of year 13,432,239
Fund balance, end of year 10,856,500 $

STANTON HOUSING AUTHORITY
Budgetary Comparison Schedule
For the Year Ended June 30, 2023
42 ATTACHMENT B

STANTON HOUSING AUTHORITY
43 NOTE TO REQUIRED SUPPLEMENTARY INFORMATION
JUNE 30, 2023
NOTE 1 BUDGET AND BUDGETARY ACCOUNTING
The Authority adopts an annual budget prepared on the modified accrual basis. The Executive Director is required, under Municipal Code Section 2.08.050, to prepare and submit to the Board of Directors the annual budget of the Authority and administer it after adoption. Legally, expenditures may not exceed total appropriations at the fund level. The Executive Director is authorized to transfer budgeted amounts within the accounts of any fund; however, any revisions between funds must be approved by the Board of Directors.

Prior year appropriations lapse, unless they are encumbered at year-end, and reappropriated through the formal budget process.

The budgetary information shown for revenues and expenditures represent the original adopted budget adjusted for any changes made by the Board of Directors or Executive Director.

ATTACHMENT B

City of Stanton
Single Audit Report on Schedule of Expenditures of Federal Awards June 30, 2023

ATTACHMENT C

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CITY OF STANTON
Single Audit Report on Schedule of Expenditures of Federal Award Programs June 30, 2023

TABLE OF CONTENTS
Page
Report on Internal Control Over Financial Reporting
and on Compliance and Other Matters Based on an
Audit of Financial Statements Performed in
Accordance with Government Auditing Standards 1
Report on Compliance for Each Major
Program and on Internal Control Over Compliance
Required by the Uniform Guidance 3
Schedule of Expenditures of Federal Awards 6
Notes to Schedule of Expenditures of Federal Awards 7
Schedule of Findings and Questioned Costs 8
Summary Schedule of Prior Audit Findings 9

ATTACHMENT C

438 Old Newport Blvd, Newport Beach, CA 92663
Phone (949) 346-2900 –www.gruberlopezinc.com
1 Honorable Mayor and City Council
City of Stanton
Stanton, California
INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL

REPORTING AND ON COMPLIANCE AND

OTHER MATTERS BASED ON AN AUDIT OF

FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH

GOVERNMENT AUDITING STANDARDS
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of City of Stanton, California (City) as of and for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise City of Stanton’s basic financial statements, and have issued our report thereon dated February 14, 2024.

Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered City of Stanton’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of City of Stanton’s internal control. Accordingly, we do not express an opinion on the effectiveness of City of Stanton’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses.

However, material weaknesses may exist that have not been identified.

ATTACHMENT C

2 Honorable Mayor and City Council
City of Stanton
Page Two
Compliance and Other Matters
As part of obtaining reasonable assurance about whether City of Stanton’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Gruber and Lopez, Inc.

Newport Beach, California
February 14, 2024
Gruber and Lopez, Inc.

ATTACHMENT C

438 Old Newport Blvd, Newport Beach, CA 92663
Phone (949) 346-2900 –www.gruberlopezinc.com
3 Honorable Mayor and City Council
City of Stanton
Stanton, California
INDEPENDENT AUDITORS’ REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON

INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE Report on Compliance for Each Major Federal Program
Opinion on Each Major Federal Program
We have audited City of Stanton CA’s compliance with the types of compliance requirements identified as subject to audit in the OMB Compliance Supplement that could have a direct and material effect on each of City of Stanton CA’s major federal programs for the year ended June 30, 2023. City of Stanton CA’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs.

In our opinion, City of Stanton CA complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2023.

Basis for Opinion on Each Major Federal Program
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Our responsibilities under those standards and the Uniform Guidance are further described in the Auditor’s Responsibilities for the Audit of Compliance section of our report.

We are required to be independent of City of Stanton CA and to meet our other ethical responsibilities, in accordance with 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 opinion on compliance for each major federal program. Our audit does not provide a legal determination of City of Stanton CA’s compliance with the compliance requirements referred to above.

Responsibilities of Management for Compliance
Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules, and provisions of contracts or grant agreements applicable to City of Stanton CA’s federal programs.

Auditor’s Responsibilities for the Audit of Compliance
Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on City of Stanton CA’s compliance based on our audit. 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 generally accepted auditing standards, Government Auditing Standards, and the Uniform Guidance will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

ATTACHMENT C

4 Honorable Mayor and City Council
City of Stanton
Page Two
Noncompliance with the compliance requirements referred to above is considered material if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about City of Stanton CA’s compliance with the requirements of each major federal program as a whole.

In performing an audit in accordance with generally accepted auditing standards, Government Auditing Standards, and the Uniform Guidance, we:
 Exercise professional judgment and maintain professional skepticism throughout the audit.  Identify and assess the risks of material noncompliance, 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 City of Stanton CA’s compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances.
 Obtain an understanding of City of Stanton CA’s internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of City of Stanton CA’s internal control over compliance. Accordingly, no such opinion is expressed.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit.

Report on Internal Control over Compliance
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the Auditor’s Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance. Given these limitations, during our audit we did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, material weaknesses or significant deficiencies in internal control over compliance may exist that were not identified.

Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed.

ATTACHMENT C

5 Honorable Mayor and City Council
City of Stanton
Page Three
Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of City of Stanton CA, as of and for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise City of Stanton CA’s basic financial statements. We issued our report thereon dated February 14, 2024, which contained unmodified opinions on those financial statements. Our audit was performed for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by the Uniform Guidance and is 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 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 auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awards is fairly stated in all material respects in relation to the basic financial statements as a whole.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of Uniform Guidance. Accordingly, this report is not suitable for any other purpose.

Gruber and Lopez, Inc.

Newport Beach, California
February 14, 2024
Gruber and Lopez, Inc.

ATTACHMENT C

Federal Program Federal Amount
Federal Grantor/ Assistance Identification Award Provided to Pass-through Grantor/Program Listing Number Expenditures Subrecipients U.S. Department of Housing and Urban Development
Passed through the OC Community Resources Department of the County of Orange:

Community Development Block Grant 14.218 21-23-0034-PFI 350,000 $ - Total U.S. Department of Housing and Urban Development 350,000 - U.S. Department of Justice
Direct assistance:

Edward Byrne Memorial Justice Assistance Grant Program 16.738 GRANT13651473 1,036,330 1,036,330 Passed through the OC Sheriff Department of the
County of Orange:

Edward Byrne Memorial Justice Assistance Grant Program 16.738 2018-DJ-BX-820 8,937 - -
Total U.S. Department of Justice * 1,036,330 1,045,267
U.S. Department of Treasury
Passed through the State of California-OES:

Coronavirus State and Local Recovery Funds 21.027 Family Resource Center 223,581 - Coronavirus State and Local Recovery Funds 21.027 FY 22-23 7,807,247 - Total U.S. Department of Treasury * - 8,030,828
U.S. Department of Health and Human Services
Passed through the SSA Department of the
County of Orange:

93.556 FMK1120 65,464 -

93.558 FMK1120 38,748

93.645 FMK1120 9,117
Promoting Safe and Stable Families
Temporary Assistance for Needy Families
Stephanie Tubbs Jones Child Welfare Services Program
Community-Based Child Abuse Prevention Grants 93.590 FMK1120 20,800 Total U.S. Department of Health and Human Services 134,129 - Total Federal Awards $ 9,560,224 1,036,330
*Denotes major federal program.

CITY OF STANTON
Schedule of Expenditures of Federal Awards
For the Year Ended June 30, 2023
6 See accompanying notes to schedule of expenditures of federal awards.

ATTACHMENT C

7 CITY OF STANTON
Notes to the Schedule of Expenditures of Federal Awards June 30, 2023
(1) Summary of Significant Accounting Policies Applicable to the Schedule of Expenditures of Federal Awards
The financial reporting entity, as defined by Governmental Accounting Standard Board (GASB), consists of the primary government, which is the City of Stanton, California (City), entities for which the primary government is financially accountable, and other entities for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity’s financial statements to be misleading or incomplete.

The City Council acts as the governing body and is able to impose its will on the following entities by establishing financial accountability:
 Housing Authority of City of Stanton
(a) Scope of Presentation
The accompanying schedule presents only the expenditures incurred by the City of Stanton (City) that are reimbursable under federal programs of federal agencies providing financial assistance. For purposes of this schedule, financial assistance includes both federal financial assistance received directly from a federal agency and expended, as well as federal funds received indirectly by City of Stanton from a nonfederal agency and expended. Only the portion of program expenditures reimbursable with such federal funds are reported in the accompanying schedule. Program expenses in excess of the maximum federal reimbursement authorized or the portion of program expenses that were funded with state, local or other non-federal funds are excluded from the accompanying schedule.
(b) Basis of Accounting
Funds received under the various grant programs have been recorded within the general fund and special revenue funds of the City. The City utilizes the modified accrual basis of accounting for governmental funds. The accompanying schedule of expenditures of federal awards is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Office of Management and Budget Uniform Grant Guidance).
(c) De Minimus Indirect Cost Rate
The City elected to use the 10% de minimus indirect cost rate for the year ended June 30, 2023, however, no indirect cost rates were charged to any federal programs. (d) Subrecipients
The following payments were made to subrecipients for the year ended June 30, 2023:

Assistance Listing #16.738
Hope Center of Orange County $1,036,330

ATTACHMENT C

8 CITY OF STANTON
Schedule of Findings and Questioned Costs
Year ended June 30, 2023
Summary of Auditors’ Results
A) Findings Related to the Financial Statements which are Required to be Reported in Accordance with GAGAS

1. An unmodified report was issued by the auditors on the financial statements of the auditee.

2. There were no material weaknesses in internal control nor were there any significant deficiencies.

3. There were no instances of noncompliance or other matters that were required to be reported under Government Auditing Standards.
(B) Findings and Questioned Costs for Federal Awards as Defined in 2 CFR 200.515(d)

4. There were no material weaknesses or significant deficiencies in internal control over federal major programs of the auditee.

5. An unmodified report was issued by the auditors on compliance for federal major programs.

6. The audit disclosed no audit findings of federal awards required by the auditors to be reported under 2 CFR 200.515(d)

7. The major federal programs of the auditee were the: (1) Assistance Listing #21.027 U.S.

Department of Treasury – Coronavirus State and Local Fiscal Recovery Funds and; (2) Assistance Listing #16.738 U.S. Department of Justice – Edward Bryne Memorial Justice Assistance Grant.

8. The dollar threshold used to distinguish Type A and Type B programs was $750,000 under 2 CFR 200.518 (b) (1).

9. The auditee was not considered a low risk auditee as defined by 2 CFR 200.518 for the year ended June 30, 2023 for purposes of determining major programs.

ATTACHMENT C

9 CITY OF STANTON
Summary Schedule of Prior Year (June 30, 2022) Audit Findings Year ended June 30, 2023
There were no findings noted for fiscal year June 30, 2022.

ATTACHMENT C

CITY OF STANTON
Stanton, California
Report on Communication
With Those Charged with Governance
June 30, 2023

ATTACHMENT D

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CITY OF STANTON
Stanton, California
Report On Communication
With Those Charged With Governance
June 30, 2023
INDEX
PAGE
REPORT ON COMMUNICATION WITH THOSE CHARGED WITH GOVERNANCE 1 - 3 EXHIBIT A - GENERAL RECOMMENDATIONS 4 - 5

ATTACHMENT D

1 438 Old Newport Blvd, Newport Beach, CA 92663
Phone (949) 346-2900 –www.gruberlopezinc.com
City of Stanton
Stanton, California
To the Honorable Mayor and City Council:

We have audited the financial statements of the government activities, business-type activities, each major fund, and the aggregate remaining fund information of the City of Stanton, California (City) for the year ended June 30, 2023, and have issued our report thereon dated February 14, 2024. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards and Government Auditing Standards, as well as certain information related to the engagement contract dated July 20, 2023. Professional standards also require that we communicate to you the following information related to our audit.

Significant Audit Findings
Qualitative Aspects of Accounting Practice
Management is responsible for the selection and use of appropriate accounting policies.

The significant accounting policies used by the City are described in Note 1 to the financial statements. The City adopted Statement on Governmental Accounting Standards (GASB Statements) No. 91-Conduit Debt; and No 96-Subscription Based IT Agreements. The adoption of the GASB Nos. 91 and 96 did not significantly impact the City. We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period.

Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the City’s financial statements were:
 Management’s estimate of capitalizing certain infrastructure assets that prolong its’ useful life (as opposed to classifying as routine maintenance expense) and depreciation expense on capital assets. We have evaluated the key factors and assumptions used to estimate the capitalization of infrastructure assets and useful lives on depreciation expense in determining that they are reasonable in relation to the financial statements taken as a whole.
 Management’s estimate of the net pension liability and net OPEB liability and their allocation to various funds. We have evaluated the key factors and assumptions used to estimate the net pension liability and its allocation to various funds of the City in determining that they are reasonable in relation to the financial statements taken as a whole.

ATTACHMENT D

2 City of Stanton
Honorable Mayor and City Council
Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users. The most sensitive disclosure affecting the financial statements was:
 The disclosure of Contingencies in Note 15 to the financial statements concerning potential claims against the City for possible disallowed costs or noncompliance with certain grantor restrictions. As of the date of this letter, Management is not aware of any disallowed costs or noncompliance with grantor restrictions.

Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing our audit.

Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. We noted no significant adjustments as a result of audit procedures. We were not aware of any significant uncorrected misstatements.

Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor’s report. We are pleased to report that no such disagreements arose during the course of our audit.

Management Representations
We have requested certain representations from management that are included in the management representation letter dated February 14, 2024.

Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to the City’s financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts.

To our knowledge, there were no such consultations.

Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as City of Stanton’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention.

ATTACHMENT D

3 City of Stanton
Honorable Mayor and City Council
Other Matters
We applied certain limited procedures to City of Stanton, which is required supplementary information (RSI) that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding 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 did not audit the RSI and do not express an opinion or provide any assurance on the RSI.

We were engaged to report on the supplementary information as described in the table of contents in the financial statements, which accompany the financial statements but are not RSI. With respect to this supplementary information, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves.

We were not engaged to report on the supplementary information as described in the table of contents in the financial statements, which accompany the financial statements but are not RSI. We did not audit or perform other procedures on this other information and we do not express an opinion or provide any assurance on it.

Restriction on Use
This report is intended solely for the information and use of the City Council and management, and is not intended to be and should not be used by anyone other than these specified parties.

GRUBER AND LOPEZ, INC.

Newport Beach, California
February 14, 2024 Gruber and Lopez, Inc.

ATTACHMENT D

4 EXHIBIT A- GENERAL MATTERS
2023-1 Investment Policy Requirements
Based on our review of the City’s own investment policy, the policy states the Treasurer’s Report should have a disclosure that there is a “net financial advantage” to using the City’s financial investment advisors.

However, the City’s treasurer’s report did not provide such statement for fiscal year 2022/2023.

Recommendation: We recommend that the City add a statement to its Treasurer’s Report with the aforementioned language above to comply with its investment policy.

Management’s Response: The City will update its investment policy when it’s reviewed and approved for Fiscal Year 2024-25. (The Fiscal Year 2023-24 investment policy was already approved in June 2023.) The City’s contract with Chandler Asset Management, LLC (“Chandler”) specifies the benchmark to evaluate the effectiveness of their services.

The City’s benchmark for evaluating the effectiveness of the investment advisor’s performance is the 1-5 Year U.S. Treasury and Agency Index rate. The quarterly investment reports Chandler provides to the City (that are forwarded to the City Council through the City Manager’s monthly update) compares the average yield of the portfolio managed by Chandler to this benchmark factor. The monthly Treasurer’s Report reports the City’s yield in comparison to the monthly yield published by the State Treasurer’s Office for the Local Agency Investment Fund (LAIF) to communicate the effectiveness of Chandler’s performance compared to whether City staff continued to manage the investment portfolio in house.

This is a more realistic benchmark method considering over 90% of the portfolio that City staff is management is invested in LAIF.

ATTACHMENT D

438 Old Newport Blvd, Newport Beach, CA 92663
Phone (949) 346-2900 –www.gruberlopezinc.com
Honorable Mayor and City Council
City of Stanton
Stanton, California
Independent Accountants’ Report on Applying Agreed-Upon Procedures Appropriations Limit Worksheets
We have performed the procedures enumerated below on the appropriations limit calculation worksheets of the City of Stanton, California (City) for the year ended June 30, 2023. The City’s management is responsible for the appropriations limit calculation worksheets.

The City has agreed to and acknowledged that the procedures performed are appropriate for the intended purpose of meeting the requirements of Section 1.5 of Article XIIIB of the California Constitution (Constitution) and the League of California Cities as presented in the League publication entitled Article XIIIB Appropriations Limitation Uniform Guidelines (Guidelines). This report may not be suitable for any other purpose. The procedures performed may not address all the items of interest to a user of this report and may not meet the needs of all users of this report and, as such, users are responsible for determining whether the procedures performed are appropriate for their purposes.

The procedures and associated findings are as follows:

1. We obtained the worksheets referred to above and compared the limit and annual adjustment factors included in those worksheets to the limit and annual adjustment factors that were adopted by resolution of the City Council. We also compared the population and inflation options included in the aforementioned worksheets to those that were selected by a recorded vote.

Results: No exceptions were noted as a result of our procedures.

ATTACHMENT E

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City Council
City of Stanton, California
Page Two

2. We recalculated the mathematical computations reflected in the City worksheets.

Results: No exceptions were noted as a result of our procedures.

3. We compared the current year information used to determine the current year limit and found that it agreed to worksheets prepared by the City and to information provided by the State Department of Finance.

Results: No exceptions were noted as a result of our procedures.

4. We compared the amount of the prior year appropriations limit presented in the worksheets to the amount adopted by the City Council for the prior year.

Results: No exceptions were noted as a result of our procedures.

We were engaged by the City to perform this agreed-upon procedures engagement and conducted our engagement in accordance with attestation standards established by the American Institute of Certified Public Accountants.

We were not engaged to and did not conduct an examination or review engagement, the objective of which would be the expression of an opinion or conclusion, respectively, on meeting the requirements of the Constitution and Guidelines. Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you.

We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements related to our agreed-upon procedures engagement.

This report is intended solely for the information and use of the City and is not intended to be and should not be used by anyone other than those specified parties. However, this report is a matter of public record and its distribution is not limited.

Gruber and Lopez, Inc.

Newport Beach, California
February 14, 2024
Gruber and Lopez, Inc.

ATTACHMENT E

1 CITY OF STANTON

REPORT TO THE CITY COUNCIL
TO: Honorable Mayor and Members of the City Council
DATE: February 27, 2024
SUBJECT: RESOLUTION INITIATING PROCEEDINGS AND ORDERING THE

ENGINEER TO PREPARE AND TO FILE A REPORT FOR THE
STANTON LIGHTING AND LANDSCAPING DISTRICT NO. 1
REPORT IN BRIEF:

As part of the annual update to the Lighting and Landscaping District No. 1, certain procedural resolutions must be adopted by the City Council. The proposed resolution orders the Engineer’s report for the Fiscal Year 2024/25 update.

RECOMMENDED ACTION:

1. City Council find that this item is not subject to California Environmental Quality Act (“CEQA”) pursuant to Section 15378(b)(5) (Organizational or administrative activities of governments that will not result in direct or indirect physical changes in the environment); and

2. Adopt Resolution No. 2024-04 initiating proceedings and ordering the Engineer’s report for the Fiscal Year 2024/25 update, entitled:
“A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF STANTON,

CALIFORNIA, INITIATING PROCEEDINGS FOR THE ANNUAL

ASSESSMENTS FOR THE STANTON LIGHTING AND LANDSCAPING
DISTRICT NO. 1 FOR THE FISCAL YEAR BEGINNING JULY 1, 2024, AND ENDING JUNE 30, 2025; AND ORDERING THE ENGINEER TO PREPARE AND FILE A REPORT IN ACCORDANCE THEREWITH”.

ANALYSIS:

The Stanton Lighting and Landscaping District No. 1 (“District”) was formed on March 10, 1981, and currently provides funding for maintenance and improvements for the City’s street lights, traffic signals, and medians. Each parcel in the City is assessed a proportionate share of the District’s costs each year. The assessments appear on the property tax bill. Assessments are established upon an Engineer’s assessment of each property’s relative benefit from the services provided by the District.

Item: 6H
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2 Each year, an update to the Engineer’s report must be produced relative to the District’s annual assessments. The Finance Department solicited quotes from qualified firms to perform this work (and the annual tax administration services) on behalf of the City for Fiscal Years 2024/25 and 2025/26. Harris & Associates, who has provided this service for the City of Stanton for several years, was selected as the best qualified vendor to continue this service. The total cost of their services for the next two fiscal years was less than $40,000 (within the City Manager’s purchasing authority).

FISCAL IMPACT:

None.

ENVIRONMENTAL IMPACT:

None.

LEGAL REVIEW:

None.

PUBLIC NOTIFICATION:

Through the agenda posting process.

STRATEGIC PLAN OBJECTIVE ADDRESSED:

Obj. No. 4: Ensure fiscal stability and efficiency in governance.

Prepared by: Michelle Bannigan, Finance Director
Approved by: Hannah Shin-Heydorn, City Manager
Attachment:

A. Resolution No. 2024-04
RESOLUTION NO. 2024-04

RESOLUTION NO. 2024-04

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF STANTON, CALIFORNIA,

INTIATING PROCEEDINGS FOR THE ANNUAL ASSESSMENTS FOR THE STANTON LIGHTING AND LANDSCAPING DISTRICT NO. 1 FOR THE FISCAL YEAR BEGINNING JULY 1, 2024, AND ENDING JUNE 30, 2025; AND ORDERING THE

ENGINEER TO PREPARE AND FILE A REPORT IN ACCORDANCE THEREWITH WHEREAS, on March 10, 1981, the City Council adopted Resolution No. 81-20 forming the Stanton Lighting and Landscaping District No. 1 (“the District”), pursuant to the provisions of the “Landscape and Lighting Act of 1972,” being Division 15, Part 2 of the Streets and Highways Code of the State of California (the “Act”); and WHEREAS, the public interest and convenience require the City to initiate proceedings for the level of Annual Assessments within the District for Fiscal Year 2024/25, for the purposes provided therefore in the Act and in Resolution No. 81-20; and WHEREAS, Section 22622 of the Act requires the City to adopt a resolution generally describing any proposed new improvements or any substantial changes in the existing improvements and ordering the Engineer to prepare and file a report in accordance with Article 4 of the Act.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF STANTON DOES RESOLVE, DECLARE, DETERMINE, AND ORDER AS FOLLOWS:

SECTION 1: The above recitals are true and correct.

SECTION 2: The City Council further finds that this Resolution is not subject to the California Environmental Quality Act (“CEQA”) pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378 of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has not potential for resulting in physical change to the environment, directly, or indirectly).

SECTION 3: Except as set forth in the Engineer’s Report, no new improvements or substantial changes in existing improvements are contemplated within the District.

SECTION 4: The City Manager is directed to cause the preparation of a report in accordance with Article 4 of the Act for the District, and upon completion, to file said report with the City Clerk, who shall then submit the same to the City Council for its consideration.

SECTION 5: The City Clerk shall certify as to the adoption of this Resolution.

Attachment: A
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RESOLUTION NO. 2024-04

ADOPTED, SIGNED AND APPROVED this 27th day of February 2024. _____________________________________
DAVID J. SHAWVER, MAYOR
APPROVED AS TO FORM:
____________________________________

HONGDAO NGUYEN, CITY ATTORNEY
ATTEST:

I, PATRICIA A. VAZQUEZ, City Clerk of the City of Stanton, California DO HEREBY CERTIFY that the foregoing Resolution, being Resolution No. 2024-04 has been duly signed by the Mayor and attested by the City Clerk, all at a regular meeting of the Stanton City Council, held on February 27, 2024 and that the same was adopted, signed, and approved by the following vote to wit:

AYES:

NOES:

ABSENT:

ABSTAIN:

PATRICIA A. VAZQUEZ, CITY CLERK

ATTACHMENT A
1 CITY OF STANTON

REPORT TO THE CITY COUNCIL
TO: Honorable Mayor and Members of the City Council
DATE: February 27, 2024
SUBJECT: REQUEST FOR PROPOSALS FOR PARKING ENFORCEMENT

SERVICES
REPORT IN BRIEF:

The City of Stanton will issue a Request for Proposals (RFP) from qualified parking enforcement service providers for the provision of comprehensive parking enforcement services for an initial two year-term, with two two-year extensions to be exercised at the City’s discretion.

RECOMMENDED ACTION:

1. City Council find that this item is not subject to California Environmental Quality Act (“CEQA”) pursuant to Sections 15378(b)(5)(Organizational or administrative activities of governments that will not result in direct or indirect physical changes in the environment); and

2. Receive and file the report.

BACKGROUND:

Illegal parking in the City is a regular challenge that impacts public safety and the quality of life of residents, businesses, and visitors. Parking enforcement services are currently provided by Public Safety Services Department and Orange County Sheriff’s Department personnel. During Fiscal Year 2022-23, Public Safety Services personnel issued approximately 5,000 citations related to parking. Parking enforcement primarily occurs between the hours of 6:00 am to 5:00 pm, Monday – Friday. While both Public Safety Services Department personnel and the Orange County Sheriff’s Department personnel provide good service, parking enforcement activities are routinely impacted by competing priorities and calls for service. Therefore, parking enforcement is inconsistent from day to day, and especially in the evening hours and on weekends.

Item: 6I
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2 ANALYSIS AND JUSTIFICATION:

The current level of staffing and resources allocated to parking enforcement, combined with the frequency and intensity of competing calls for service, have made it difficult to conduct comprehensive parking enforcement activities throughout the City with existing resources. The City aims to improve public safety and the quality of life for residents, businesses, and visitors by reducing the number of illegally parked vehicles through implementation of a consistent and thorough contract parking enforcement program which will also discourage reckless parking and encourage compliance with local regulations and safety measures.

To procure contract parking enforcement services, the City will issue a RFP for an initial two-year term, with two two-year extensions that may be exercised at the City’s sole discretion. The following provisions have been included in the RFP (attached).

SCOPE OF SERVICES
The professional services provider will be required to perform the following:

1. Provide a minimum of one (1) staffed parking enforcement vehicle operating within the City seven days a week, 24 hours a day, 365 days a year. a. The contractor may include optional services that may include additional vehicles. Pricing for optional services shall be detailed in the cost proposal.

2. Conduct parking enforcement services in accordance with all parking regulations and ordinances throughout the City, including business areas and residential communities. These enforcement responsibilities shall include, but are not limited to:
a. Safety regulations as posted or marked
b. Residential permit parking districts
c. Time limited parking
d. Oversized vehicle parking
e. Temporary parking restrictions as posted or marked
f. Citizen requests for enforcement such as a blocked driveway g. Citizen requests for enforcement such as parking on private property

3. Coordinate with City staff and the Orange County Sheriff's Department to develop coverage schedules to maximize effectiveness and prevent duplication of efforts.

4. Conduct operations with handheld citation-issuance devices to ensure citations are being administered and tracked through the selected service utilized by the City.
3 5. Initiate vehicle tows, if necessary, to remove vehicles creating public safety concerns (i.e., blocking driveways, blocking fire hydrants, blocking ingress or egress to areas meant for the general public, etc.)

6. Participate in community meetings, as needed, to provide insight on parking enforcement operations and gain knowledge about areas where additional parking enforcement will be required.

7. Be available to the City’s Public Safety Services Department, the Orange County Sheriff’s Department, and the Orange County Fire Authority to respond to requests for service during operation periods.

8. The scope of services does not require the contractor to administer administrative hearings for contested parking citations; however, the City may require the contractor to participate in such proceedings as needed.

PARKING ENFORCEMENT PERSONNEL & TRAINING
Enforcement staff must have the education, skills, and qualities required to fulfill the tasks outlined in this RFP, including the ability to use contractor-supplied vehicles and other equipment before being assigned. The contractor shall ensure that each employee assigned to provide parking enforcement services has sufficient job-related training to successfully perform their duties, including any necessary re-training or follow-up training required to correct deficiencies in performance. Training shall include, but not be limited to, the following:
• Information on parking statues, laws, ordinances, regulations, and resolutions enacted by the Federal Government, the State of California, and the City of Stanton
• Parking enforcement programs and policies adopted by the City of Stanton • Operation of equipment, including instruction on communication procedures, radio devices, citation devices, and vehicle use
• Tasks and responsibilities under regular and emergency operating conditions • Physical layout of the City
• Knowledge of best practices in public relations, customer service, and conflict mitigation techniques
The City retains the right to be involved in the recruitment/selection process of new contracted enforcement staff or of staff assigned to perform enforcement duties within the City. In hiring enforcement staff, Contractor ensures that all staff:
• Are at least eighteen (18) years of age.
• Are physically and mentally capable of performing all required enforcement duties.
• Have the ability to give and follow oral and written instructions in English. • Have the ability to operate a computer and a variety of computer software. 4 • Have the ability to establish and maintain effective working relationships with the public and City officials.
• Have a valid California State driver’s license, provide any accident history and maintain a clean driving record for the duration of the agreement. • Have the ability to remain calm and use judgment and initiative in an emergency. • Are bondable.
• Possess a high school diploma or G.E.D. certificate.
• Have no criminal record and are able to pass an annual drug screening test.

FISCAL IMPACT:

There is no fiscal impact associated with the recommended action.

ENVIRONMENTAL IMPACT:

In accordance with the requirements of the California Environmental Quality Act (CEQA), this item is not subject to CEQA pursuant to Sections 15378(b)(5)(Organizational or administrative activities of governments that will not result in direct or indirect physical changes in the environment).

PUBLIC NOTIFICATION:

Public notification provided through the regular agenda process.

LEGAL REVIEW:

None.

STRATEGIC PLAN OBJECTIVES ADDRESSED:

Obj. No. 1: Provide a safe community.

Obj. No. 2: Promote a strong local economy.

Obj. No. 5: Provide a high quality of life.

Obj. No. 6: Maintain and promote a responsive, high quality and transparent government.

Prepared by: Jim Wren, Public Safety Services Director
Approved by: Hannah Shin-Heydorn, City Manager
Attachment(s):

A. RFP for Parking Enforcement Services

REQUEST FOR PROPOSALS (RFP)
FOR

PARKING ENFORCEMENT SERVICES

CITY OF STANTON
Administration Department
7800 Katella Avenue
Stanton, CA 90680
(714) 379-9222 | StantonCA.gov
Approved for Advertising:
______________________

HANNAH SHIN-HEYDORN
City Manager
[email protected]
(714) 890-4203
KEY RFP DATES (Subject to Change):

Issue Date: Wednesday, February 28, 2024
Deadline for Questions: Thursday, March 7, 2024, at 4:30 pm PDT Proposal Due Date: Thursday, April 4, 2024, at 4:30 pm PDT Presentation/Interviews: April/May 2024
Attachment: A
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I. GENERAL DESCRIPTION AND INTRODUCTION
The City of Stanton (City) is requesting proposals from qualified firms to provide parking enforcement services. The award resulting from this Request for Proposals (RFP) will be for an initial two-year term, with two two-year extensions that may be exercised at the City’s sole discretion.

The City of Stanton is conveniently located in Orange County, north of the California 22 Freeway and south of the California 91 Freeway. Known for its strong sense of community and tremendous growth potential in residential, commercial, and industrial land use, Stanton leverages both Los Angeles County and Orange County markets to promote balanced planned development. The City has been successful with the substantial revitalization of major regions, including Stanton Central Park and the Rodeo 39 Public Market.

A relatively modest-sized municipality of approximately 3.1 square miles with a population of nearly 40,000 residents, the City of Stanton embraces its motto of “Community Pride and Forward Vision”. In recent years, the City has embarked upon a variety of civic improvement projects to facilitate increased commercial activity, reinvigoration of the downtown area, and a high quality of life. Simultaneously, private development and redevelopment projects have raised Stanton’s profile as a diverse, thriving city that is the ideal location to live, work, and play.

Proposals must conform to the requirements of this Request for Proposals (RFP), and proposals must be submitted in a sealed envelope to the Administration Department no later than 4:30 p.m. on Thursday, April 4, 2024.

The City reserves the right to waive any irregularities in any proposal, or to reject any proposal that does not comply with this RFP. The City alone, using criteria determined by the City, will select the most qualified candidate.

The successful contractor will be required to enter into an agreement with the City, which will include the requirements of this RFP as well as other requirements to be specified at a later date. By submitting a proposal, the Contractor agrees to all the terms of this RFP.

All questions and/or inquiries regarding this RFP shall be directed to Jason Huynh, Management Analyst, via email at [email protected] by 4:30 p.m. on Thursday, March 7, 2024. Responses to inquiries, if they significantly change or clarify the RFP requirements or any aspect of the procurement process, will be forwarded via written (emailed) addenda to all proposers and posted publicly.

II. SCOPE OF SERVICES
Illegal parking in Stanton is a common issue affecting public safety and the quality of life of residents, businesses, and visitors.

CURRENT PARKING ENFORCEMENT PROGRAM
Parking enforcement services are currently provided by Public Safety Services Department and Orange County Sheriff’s Department personnel. During Fiscal Year 2022-23, Public Safety Services personnel issued approximately 5,000 citations related to parking. Parking enforcement primarily occurs between the hours of 6:00 am to 5:00 pm, Monday – Friday. While both Public Safety Services Department personnel and the Orange County Sheriff’s Department personnel provide good service, parking enforcement activities are routinely impacted by competing priorities and calls for service. Therefore, parking enforcement is inconsistent from day to day, and especially in the evening hours and on weekends.

To process the parking citations, the City currently contracts with Turbo Data Systems.

GOAL
The City aims to improve public safety and the quality of life for residents, businesses, and visitors by reducing the number of illegally parked vehicles.

Implementing a consistent and thorough parking enforcement program can discourage reckless parking and encourage compliance with local regulations and safety measures.

SCOPE OF WORK
The City is seeking written proposals from qualified parking enforcement service providers to provide comprehensive parking enforcement services for an initial two-year term, with two two-year extensions that may be exercised at the City’s sole discretion.

The ideal parking enforcement service provider will work in partnership with the City and must have prior experience in providing parking enforcement services for a municipal government. In addition, the provider must have an expert level of understanding of the California Vehicle Code. Citation processing, noticing, payment plans, and other duties outside of the scope of work will be handled by the City.

The professional services provider will be required to perform the following:

1. Provide a minimum of one (1) staffed parking enforcement vehicle operating within the City seven days a week, 24 hours a day, 365 days a year.
a. The contractor may include optional services that may include additional vehicles. Pricing for optional services shall be detailed in the cost proposal.

2. Conduct parking enforcement services in accordance with all parking regulations and ordinances throughout the City, including business areas and residential communities. These enforcement responsibilities shall include, but are not limited to:
a. Safety regulations as posted or marked
b. Residential permit parking districts
c. Time limited parking
d. Oversized vehicle parking
e. Temporary parking restrictions as posted or marked
f. Citizen requests for enforcement such as a blocked driveway g. Citizen requests for enforcement such as parking on private property

3. Coordinate with City staff and the Orange County Sheriff's Department to develop coverage schedules to maximize effectiveness and prevent duplication of efforts.

4. Conduct operations with handheld citation-issuance devices to ensure citations are being administered and tracked through the selected service utilized by the City.

5. Initiate vehicle tows, if necessary, to remove vehicles creating public safety concerns (i.e., blocking driveways, blocking fire hydrants, blocking ingress or egress to areas meant for the general public, etc.)

6. Participate in community meetings, as needed, to provide insight on parking enforcement operations and gain knowledge about areas where additional parking enforcement will be required.

7. Be available to the City’s Public Safety Services Department, the Orange County Sheriff’s Department, and the Orange County Fire Authority to respond to requests for service during operation periods.

8. The scope of services does not require the contractor to administer administrative hearings for contested parking citations; however, the City may require the contractor to participate in such proceedings as needed.

PARKING ENFORCEMENT PERSONNEL & TRAINING
Enforcement staff must have the education, skills, and qualities required to fulfill the tasks outlined in this RFP, including the ability to use contractorsupplied vehicles and other equipment before being assigned. The contractor shall ensure that each employee assigned to provide parking enforcement services has sufficient job-related training to successfully perform their duties, including any necessary re-training or follow-up training required to correct deficiencies in performance. Training shall include, but not be limited to, the following:
• Information on parking statues, laws, ordinances, regulations, and resolutions enacted by the Federal Government, the State of California, and the City of Stanton
• Parking enforcement programs and policies adopted by the City of Stanton
• Operation of equipment, including instruction on communication procedures, radio devices, citation devices, and vehicle use • Tasks and responsibilities under regular and emergency operating conditions
• Physical layout of the City
• Knowledge of best practices in public relations, customer service, and conflict mitigation techniques
The City retains the right to be involved in the recruitment/selection process of new contracted enforcement staff or of staff assigned to perform enforcement duties within the City. In hiring enforcement staff, Contractor ensures that all staff:
• Are at least eighteen (18) years of age.
• Are physically and mentally capable of performing all required enforcement duties.

• Have the ability to give and follow oral and written instructions in English.
• Have the ability to operate a computer and a variety of computer software.
• Have the ability to establish and maintain effective working relationships with the public and City officials.
• Have a valid California State driver’s license, provide any accident history and maintain a clean driving record for the duration of the agreement. • Have the ability to remain calm and use judgment and initiative in an emergency.
• Are bondable.
• Possess a high school diploma or G.E.D. certificate.
• Have no criminal record and are able to pass an annual drug screening test.

ENFORCEMENT VEHICLES
The contractor will supply, manage, operate, and maintain the enforcement vehicles for their parking enforcement staff. Vehicles are to be kept clean and well maintained consistent with first-class parking enforcement operations.

The preference for enforcement vehicle power is petroleum-electric hybrid engines. All vehicles must be clearly identifiable as conducting business on behalf of the City of Stanton. The contractor will not use the enforcement vehicles within the City limits for purposes other than those required under the Agreement.

EQUIPMENT AND SUPPLIES
The contractor shall provide all necessary equipment and supplies to fulfill the terms of the agreement, including but not limited to mobile ticket writers, ticket rolls, and envelopes; safety equipment; tape measures; flashlights; and batteries. Flashlights shall be of sufficient illumination to allow enforcement officers to read vehicle identification numbers (VINs) during all hours. All equipment shall be in good working order, and in conformity with all applicable statutes, laws, ordinances, and regulations. Personal vehicles or other unauthorized equipment shall not be used to perform parking enforcement services without the City’s written approval. No one performing services under this contract shall be armed.

UNIFORMS AND STAFF IDENTIFICATION

The Contractor shall provide uniforms to all staff members. The contractor will also provide staff members with photo identification, name tags, and badges that clearly state the company name and the staff person’s name. City must approve all uniforms and all staff must be clearly identifiable as conducting business on behalf of the City.

PARKING ENFORCEMENT WORKSPACE
If needed, the City will designate office space for contracted staff to conduct administrative work associated with the parking enforcement duties within the City.

III. SUBMISSION REQUIREMENTS
In order to be considered, the Contractor must submit before the deadline one (1) electronic copy of the complete proposal to:

[email protected].

Contractors must submit their proposals as set forth below:
• Proposals shall be titled “Proposal to Provide Parking Enforcement Services”.
• All materials shall be sized to 8 ½” x 11” sheets, with a minimum of 11-pt font, and saved to a PDF version for transmission.
• Proposals should not include any unnecessarily elaborate promotional material.
• Proposals should be clear and concise—lengthy narrative is discouraged.

A complete proposal consists of the following four (4) elements: letter of transmittal, services proposal, proposal acknowledgement form, and separate fee proposal.

LETTER OF TRANSMITTAL
The Letter of Transmittal shall be addressed to Hannah Shin-Heydorn, City Manager, and, at a minimum, must contain all of the following information:
• Identification of the contractor. Identification shall include the legal name and corporate address of the company. Identification shall also

include the telephone number, fax number (if applicable), and email address of the contact person for the period of proposal evaluation. • A statement representing that the contractor has thoroughly examined and become familiar with the work required in this RFP and attesting that the contractor is capable of performing quality work to achieve the objectives of the City of Stanton.
• Acknowledgment of receipt of all addenda, if any.
• Signed statement attesting that all information submitted with the proposal is true and correct.
• A statement declaring that the proposal shall remain valid for a period of not less than one hundred twenty (120) days from the date of submittal. • Signature, name, and title of the official authorized to bind contractor to the terms of the proposal.

SERVICES PROPOSAL
The Services Proposal shall consist of the following sections (in order):

1. Qualifications, Relevant Experience, and References
This section of the proposal shall establish the ability of the Contractor to satisfactorily perform the required work by reasons of:
• Experience in performing work of a similar nature to the required services shown in the Scope of Services
• Proven competence in the services to be provided; strength and stability of the firm
• Staffing capacity
• Track record of meeting schedules on similar projects and supportive client references
This section shall, at a minimum:
• Provide a brief profile of the Contractor’s firm, including the types of services offered; year founded; type of organization (i.e., corporation, limited liability company, partnership, or sole proprietorship); Federal Employer ID Number (FEIN); contractor license number (if applicable); website; number, size, and location of offices; and total number of employees.
• Provide a general description of the firm’s financial condition and identify any conditions (e.g., bankruptcy, settlements paid in the

last five years, pending litigation, planned office closures, impending merger, etc.) that may impede the Contractor’s ability to provide these services.
• Describe the firm’s relevant experience in performing work of a similar nature to that solicited in this RFP, highlighting the participation in such work by the key personnel proposed for assignment to the City.
• Identify sub-contractors by company name, address, contact person, telephone number, email address, and project function, if applicable. The list should include a summary of the roles and responsibilities of each sub-contractor.
• Provide a minimum of three (3) references for completed work in the past five (5) years similar to the required services shown in the Scope of Services. Furnish the name, title, address, telephone number, and email address of the person at each client
agency/organization who is most knowledgeable about the work performed. Include a description of the services provided, timeframe of work, and total cost.
• Provide a list of all public agencies that have terminated contracts with the firm in the last five (5) years. Furnish the name, title, address, telephone number, and email address of the person at each client agency/organization who is most knowledgeable about the work performed. Include a description of the services provided, timeframe of work, and total cost. The firm is permitted to briefly explain the reason(s) for termination(s), as well.

2. Proposed Team
• Furnish brief résumés (two pages maximum per résumé) for the proposed Project Manager (day-to-day contact) and key personnel (including sub-contractors).
• Describe key personnel’s specialized training, experience, and professional competence in the area(s) directly related to this RFP. • Describe the specific project responsibilities for each key personnel member.
• Include a statement that key personnel will have undergone criminal background and fingerprinting checks (at Contractor’s sole expense) that finds such personnel clear of any sexual, drugrelated, or felony convictions.

• Include a statement that key personnel will be available to the extent proposed for the duration of the required services, acknowledging that no person designated as “key” shall be removed or replaced without the prior written concurrence of the City.

3. Approach
Contractor shall provide a detailed narrative of the project approach, methodology, and services they will employ. Contractor shall include a detailed description of specific activities, if any, they will require of City staff. Contractor shall provide timeframes for the transition.

4. Exceptions and Deviations
Contractor shall state any exceptions or deviations from the requirements of this RFP, segregating “technical” exceptions from “contractual” exceptions. Any Consumer Price Index (CPI) and other annual cost increases are to be noted as contractual exceptions. Where the Contractor wishes to propose alternative approaches to meeting the City’s technical or contractual requirements, these shall be thoroughly explained. If no contractual exceptions are noted, Contractor will be deemed to have no objection to the contract requirements as set forth in EXHIBIT B, “Sample Professional Services Agreement.”

SEPARATE FEE PROPOSAL
In a separate file, Contractor shall provide their cost proposal. Pricing shall be based on a fixed-price, all-inclusive basis, with individual fees detailed by lineitems. If needed, Contractor shall include a reimbursables budget for any reproduction, mileage, mailing, etc. All taxes and licenses, including, but not limited to, a Stanton City Business License, required for this work shall be obtained at the sole expense of the Contractor. Be sure to state any assumptions on which costs are based.

Any special materials will be purchased by the Contractor only after discussed and authorized by the City’s (contract) Representative or designee in writing.

When the Contractor is performing, or is requested to perform, work beyond the Scope of Services, an amendment to the Professional Services Agreement

will be executed between the City and Contractor. In such instances, payment will be based on the hourly rates identified in the Allocation of Resources Table & Rate Sheet.

IV. SELECTION CRITERIA
Submitted proposals will be evaluated based on the following factors, but may not be limited to just these factors:

Criteria Approximate
Weight
Approach and ability to providing services, including the methods and techniques to be utilized for assessment and ongoing management, transition plan, and customer
service
25%
Demonstrated record of success on similar work
performed for other municipalities or enterprises 25%
Cost of the services to reflect value and fiscal prudence 25% Qualifications of the individuals who will provide the
services 25%
V. SELECTION PROCESS
Selection of the Contractor will be made in accordance with the provision of Chapter 10 of the California Government Code, Sections 4526 and 4529.5, stating that the selection of professional services is made based on competence and qualifications for the types of services to be performed at a fair and reasonable price. The fee proposals will be opened and evaluated after qualification evaluations of all proposers are complete. The contract award shall be made to the Contractor providing the best value to the City.

Each proposal will be reviewed to determine if it meets the submittal requirements contained within this RFP. Failure to meet the requirements for the RFP will be cause for rejection of the proposal. The City may reject any proposal if it is conditional, incomplete, or contains irregularities. The City may request written clarification or additional documentation for any proposal. The City may waive an immaterial deviation in a proposal, but this shall in no way modify the proposal document or excuse the Contractor from compliance with the contract requirements if the Contractor is awarded the contract.

The City reserves the right to require in-person interviews with and/or presentations from Contractors, if deemed necessary, after the evaluation of the written proposals. In this case, the Contractors of the highest-scoring written proposals will be invited to interviews/present prior to final selection of the Contractor.

The successful Contractor to whom work is awarded shall, within ten (10) days after being notified, enter into a contract with the City for the work in accordance with the specifications and shall furnish all required documents necessary to enter into said contract. Failure of the successful bidder to execute the contract within the ten (10)-day window shall be just cause for the City to contract with the next responsible Contractor.

A kick-off meeting shall be held after the final execution of the contract.

Contractor and its team will meet with City staff to conduct introductions, discuss scope of services, and confirm the implementation process.

VI. GENERAL PROVISIONS
Pre-contractual expenses are defined as expenses incurred by the Contractor in: (1) preparing the proposal; (2) submitting the proposal to the City; (3) presenting during the selection interview; (4) negotiating with the City on any matter related to the proposal; and (5) any other expenses incurred by the Contractor prior to an executed Agreement.

The City shall not, in any event, be liable for any pre-contractual expenses incurred by the Contractor. Services shall not commence until the Professional Services Agreement has been executed by the City.

By submitting a proposal, Contractor attests that they have not been a party to any collusion among proposers in restraint of freedom of competition. This means that the Contractor has not directly or indirectly entered into any agreement, express or implied, with any other proposer(s) for the purposes of controlling the price or scope of services of said proposal or limiting the number of proposals submitted to the City.

The City reserves the right to retain all proposals submitted, and to use any idea in a proposal, regardless of whether the proposal was selected. Materials submitted by respondents are subject to public inspection under the California Public Records Act (Government Code Sec. 6250 et seq.). Any language

purporting to render the entire proposal confidential or proprietary will be ineffective and disregarded.

All property rights, including publication rights of all reports produced by the selected firm in connection with services performed under this agreement, shall be vested in the City.

The City reserves the right to amend or withdraw this RFP at any time without prior notice. Further, the City makes no representations that any Agreement will be awarded to any Consultant responding to this RFP. The City expressly reserves the right to postpone reviewing the proposals for its own convenience and to reject any and all proposals responding to this RFP without indicating any reasons for such rejection(s).
55414.00000\32996936.2
Exhibit B

CITY OF STANTON

PROFESSIONAL SERVICES AGREEMENT
FOR

PARKING ENFORCEMENT SERVICES

1. PARTIES AND DATE.

This Agreement is made and entered into this day of , 2024, by and between the City of Stanton, a municipal organization organized under the laws of the State of California with its principal place of business at 7800 Katella Avenue, Stanton, California 90680 (“City”) and [INSERT NAME OF COMPANY], a [INSERT TYPE OF BUSINESS; CORPORATION; LIMITED LIABILITY COMPANY; ETC.], with its principal place of business at [INSERT ADDRESS] (“Consultant”). City and Consultant are sometimes individually referred to herein as “Party” and collectively as “Parties.”

2. RECITALS.

2.1 Consultant.

Consultant desires to perform and assume responsibility for the provision of professional Parking Enforcement services required by the City on the terms and conditions set forth in this Agreement. Consultant represents that it is experienced in providing professional Parking Enforcement services to public clients, is licensed in the State of California, and is familiar with the plans of City.

2.2 Project.

City desires to engage Consultant to render such services for the General Day-to-Day Parking Enforcement project (“Project”) as set forth in this Agreement.

3. TERMS.

3.1 Scope of Services and Term.

3.1.1 General Scope of Services. Consultant promises and agrees to furnish to the City all labor, materials, tools, equipment, services, and incidental and customary work necessary to fully and adequately supply the professional Parking and Enforcement services necessary for the Project (“Services”). The Services are more particularly described in Exhibit “A” attached hereto and incorporated herein by reference. All Services shall be subject to, and performed in accordance with, this Agreement, the exhibits attached hereto and incorporated herein by reference, and all applicable local, state, and federal laws, rules, and regulations.

3.1.2 Term. The term of this Agreement shall be from [INSERT START DATE] to [INSERT ENDING DATE], unless earlier terminated as provided herein. The City Manager shall have the unilateral option, at its sole discretion, to renew this Agreement annually for no more than two additional one-year terms. Consultant shall complete the Services within the term of this Agreement, and shall meet any other established schedules and deadlines. 55414.00000\32996936.2
- 2 -

3.2 Responsibilities of Consultant.

3.2.1 Independent Contractors, Control and Payment of Subordinates; Independent Contractor. The Services shall be performed by Consultant or under its supervision.

Consultant will determine the means, methods, and details of performing the Services subject to the requirements of this Agreement. City retains Consultant on an independent contractor basis and not as an employee. Consultant shall complete, execute, and submit to City a Request for Taxpayer Identification Number and Certification (IRS Form W-9) prior to commencement of any Services under this Agreement. Consultant retains the right to perform similar or different services for others during the term of this Agreement. Any additional personnel performing the Services under this Agreement on behalf of Consultant shall also not be employees of City and shall at all times be under Consultant’s exclusive direction and control. Neither City, nor any of its officials, officers, directors, employees or agents shall have control over the conduct of Consultant or any of Consultant's officers, employees, or agents, except as set forth in this Agreement. Consultant shall pay all wages, salaries, and other amounts due such personnel in connection with their performance of Services under this Agreement and as required by law. Consultant shall be responsible for all reports and obligations respecting such additional personnel, including, but not limited to, social security taxes, income tax withholding, unemployment insurance, disability insurance, and workers’ compensation insurance.

3.2.2 Schedule of Services. Consultant shall perform the Services expeditiously, within the term of this Agreement, and in accordance with the Schedule of Services set forth in Exhibit “B” attached hereto and incorporated herein by reference. Consultant represents that it has the professional and technical personnel required to perform the Services in conformance with such conditions. In order to facilitate Consultant’s conformance with the Schedule, City shall respond to Consultant’s submittals in a timely manner. Upon request of City, Consultant shall provide a more detailed schedule of anticipated performance to meet the Schedule of Services.

3.2.3 Conformance to Applicable Requirements. All work prepared by Consultant shall be subject to the approval of City.

3.2.4 Substitution of Key Personnel. Consultant has represented to City that certain key personnel will perform and coordinate the Services under this Agreement. Should one or more of such personnel become unavailable, Consultant may substitute other personnel of at least equal competence upon written approval of City. In the event that City and Consultant cannot agree as to the substitution of key personnel, City shall be entitled to terminate this Agreement for cause. As discussed below, any personnel who fail or refuse to perform the Services in a manner acceptable to the City, or who are determined by the City to be uncooperative, incompetent, a threat to the adequate or timely completion of the Project or a threat to the safety of persons or property, shall be promptly removed from the Project by the Consultant at the request of the City.

The key personnel for performance of this Agreement are as follows: [INSERT NAME(S)].

3.2.5 City’s Representative. The City hereby designates the City Manager, or his or her designee, to act as its representative for the performance of this Agreement (“City’s Representative”). City’s Representative shall have the power to act on behalf of the City for all purposes under this Contract. The City Manager hereby designates Steven Martin, IT Specialist, or his or her designee, as the City’s contact for the implementation of the Services hereunder. 55414.00000\32996936.2
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Consultant shall not accept direction or orders from any person other than the City’s Representative or his or her designee.

3.2.6 Consultant’s Representative. Consultant hereby designates [INSERT NAME OR TITLE], or his or her designee, to act as its representative for the performance of this Agreement (“Consultant’s Representative”). Consultant’s Representative shall have full authority to represent and act on behalf of the Consultant for all purposes under this Agreement. The Consultant’s Representative shall supervise and direct the Services, using his best skill and attention, and shall be responsible for all means, methods, techniques, sequences, and procedures and for the satisfactory coordination of all portions of the Services under this Agreement.

3.2.7 Coordination of Services. Consultant agrees to work closely with City staff in the performance of Services and shall be available to City’s staff, consultants, and other staff at all reasonable times.

3.2.8 Standard of Care; Performance of Employees. Consultant shall perform all Services under this Agreement in a skillful and competent manner, consistent with the standards generally recognized as being employed by professionals in the same discipline in the State of California. Consultant represents and maintains that it is skilled in the professional calling necessary to perform the Services. Consultant warrants that all employees and subconsultants shall have sufficient skill and experience to perform the Services assigned to them. Finally, Consultant represents that it, its employees and subconsultants have all licenses, permits, qualifications and approvals of whatever nature that are legally required to perform the Services and that such licenses and approvals shall be maintained throughout the term of this Agreement.

As provided for in the indemnification provisions of this Agreement, Consultant shall perform, at its own cost and expense and without reimbursement from the City, any services necessary to correct errors or omissions which are caused by the Consultant’s failure to comply with the standard of care provided for herein. Any employee of the Consultant or its sub-consultants who is determined by the City to be uncooperative, incompetent, a threat to the adequate or timely completion of the Project, a threat to the safety of persons or property, or any employee who fails or refuses to perform the Services in a manner acceptable to the City, shall be promptly removed from the Project by the Consultant and shall not be re-employed to perform any of the Services or to work on the Project.

3.2.9 Laws and Regulations. Consultant shall keep itself fully informed of and in compliance with all local, state, and federal laws, rules and regulations in any manner affecting the performance of the Project or the Services, including all Cal/OSHA requirements, and shall give all notices required by law. Consultant shall be liable for all violations of such laws and regulations in connection with Services. If the Consultant performs any work knowing it to be contrary to such laws, rules and regulations, Consultant shall be solely responsible for all costs arising therefrom. Consultant shall defend, indemnify, and hold City, its officials, directors, officers, employees, agents, and volunteers free and harmless, pursuant to the indemnification provisions of this Agreement, from any claim or liability arising out of any failure or alleged failure to comply with such laws, rules or regulations.

3.2.10 Insurance.
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3.2.10.1 Time for Compliance. Consultant shall not commence Work under this Agreement until it has provided evidence satisfactory to the City that it has secured all insurance required under this section. In addition, Consultant shall not allow any subconsultant to commence work on any subcontract until it has provided evidence satisfactory to the City that the subconsultant has secured all insurance required under this section.

3.2.10.2 Types of Insurance Required. As a condition precedent to the effectiveness of this Agreement for work to be performed hereunder and without limiting the indemnity provisions of the Agreement, the Consultant in partial performance of its obligations under such Agreement, shall procure and maintain in full force and effect during the term of the Agreement, the following policies of insurance. If the existing policies do not meet the Insurance Requirements set forth herein, Consultant agrees to amend, supplement, or endorse the policies to do so.
(a) Commercial General Liability: Commercial General Liability Insurance which affords coverage at least as broad as Insurance Services Office “occurrence” form CG 0001, with minimum limits of at least $1,000,000 per occurrence, and if written with an aggregate, the aggregate shall be double the per occurrence limit.

Defense costs shall be paid in addition to the limits.

The policy shall contain no endorsements or provisions limiting coverage for (1) contractual liability; (2) cross liability exclusion for claims or suits by one insured against another; or (3) contain any other exclusion contrary to the Agreement.
(b) Automobile Liability Insurance: Automobile Liability Insurance with coverage at least as broad as Insurance Services Office Form CA 0001 covering “Any Auto” (Symbol 1) with minimum limits of $1,000,000 for each accident.
(c) Professional Liability: Professional Liability insurance with minimum limits of $1,000,000. Covered professional services shall specifically include all work to be performed under the Agreement and delete any exclusions that may potentially affect the work to be performed (for example, any exclusions relating to lead, asbestos, pollution, testing, underground storage tanks, laboratory analysis, soil work, etc.).

If coverage is written on a claims-made basis, the retroactive date shall precede the effective date of the initial Agreement and continuous coverage will be maintained or an extended reporting period will be exercised for a period of at least three (3) years from termination or expiration of this Agreement.
(d) Workers’ Compensation: Workers’ Compensation Insurance, as required by the State of California and Employer’s Liability 55414.00000\32996936.2
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Insurance with a limit of not less than $1,000,000 per accident for bodily injury and disease.

3.2.10.3 Endorsements. Required insurance policies shall not be in compliance if they include any limiting provision or endorsement that has not been submitted to the City for approval.
(a) The policy or policies of insurance required by Section 3.2.10.2 (a) Commercial General Liability and (c) Contractor’s Pollution Liability shall be endorsed to provide the following:
(1) Additional Insured: The City, its officials, officers, employees, agents, and volunteers shall be additional
insureds with regard to liability and defense of suits or claims arising out of the performance of the Agreement.

Additional Insured Endorsements shall not (1) be restricted to “ongoing operations”; (2) exclude “contractual liability”; (3) restrict coverage to “sole” liability of Consultant; or (4) contain any other exclusions contrary to the Agreement. (2) Cancellation: Required insurance policies shall not be canceled or the coverage reduced until a thirty (30) day written notice of cancellation has been served upon the City except ten (10) days shall be allowed for non-payment of premium.
(b) The policy or policies of insurance required by Section 3.2.10.2 (b) Automobile Liability and (d) Professional Liability shall be endorsed to provide the following:
(1) Cancellation: Required insurance policies shall not be canceled or the coverage reduced until a thirty (30) day written notice of cancellation has been served upon the City except ten (10) days shall be allowed for non-payment of premium.
(c) The policy or policies of insurance required by Section 3.2.10.2 (e) Workers’ Compensation shall be endorsed to provide the following:
(1) Waiver of Subrogation: A waiver of subrogation stating that the insurer waives all rights of subrogation against the indemnified parties.
(2) Cancellation: Required insurance policies shall not be canceled or the coverage reduced until a thirty (30) day written notice of cancellation has been served upon the City 55414.00000\32996936.2
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except ten (10) days shall be allowed for non-payment of premium.

3.2.10.4 Primary and Non-Contributing Insurance. All insurance coverages shall be primary and any other insurance, deductible, or self-insurance maintained by the indemnified parties shall not contribute with this primary insurance. Policies shall contain or be endorsed to contain such provisions.

3.2.10.5 Waiver of Subrogation. Required insurance coverages shall not prohibit Consultant from waiving the right of subrogation prior to a loss. Consultant shall waive all subrogation rights against the indemnified parties. Policies shall contain or be endorsed to contain such provisions.

3.2.10.6 Deductible. Any deductible or self-insured retention must be approved in writing by the City and shall protect the indemnified parties in the same manner and to the same extent as they would have been protected had the policy or policies not contained a deductible or self-insured retention.

3.2.10.7 Evidence of Insurance. The Consultant, concurrently with the execution of the Agreement, and as a condition precedent to the effectiveness thereof, shall deliver either certified copies of the required policies, or original certificates and endorsements on forms approved by the City. The certificates and endorsements for each insurance policy shall be signed by a person authorized by that insurer to bind coverage on its behalf. At least fifteen (15 days) prior to the expiration of any such policy, evidence of insurance showing that such insurance coverage has been renewed or extended shall be filed with the City. If such coverage is cancelled or reduced, Consultant shall, within ten (10) days after receipt of written notice of such cancellation or reduction of coverage, file with the City evidence of insurance showing that the required insurance has been reinstated or has been provided through another insurance company or companies.

3.2.10.8 Failure to Maintain Coverage. Consultant agrees to suspend and cease all operations hereunder during such period of time as the required insurance coverage is not in effect and evidence of insurance has not been furnished to the City. The City shall have the right to withhold any payment due to the Consultant until Consultant has fully complied with the insurance provisions of this Agreement.

In the event that the Consultant’s operations are suspended for failure to maintain required insurance coverage, the Consultant shall not be entitled to an extension of time for completion of the Services because of production lost during suspension.

3.2.10.9 Acceptability of Insurers. Each such policy shall be from a company or companies with a current A.M. Best’s rating of no less than A:VII and authorized to do business in the State of California, or otherwise allowed to place insurance through surplus line brokers under applicable provisions of the California Insurance Code or any federal law.

3.2.10.10 Insurance for Subconsultants. All Subconsultants shall be included as additional insureds under the Consultant’s policies, or the Consultant shall be responsible for causing Subconsultants to purchase the appropriate insurance in compliance with 55414.00000\32996936.2
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the terms of these Insurance Requirements, including adding the City as an Additional Insured to the Subconsultant’s policies.

3.2.11 Safety. Consultant shall execute and maintain its work so as to avoid injury or damage to any person or property. In carrying out its Services, the Consultant shall at all times be in compliance with all applicable local, state, and federal laws, rules and regulations, and shall exercise all necessary precautions for the safety of employees appropriate to the nature of the work and the conditions under which the work is to be performed. Safety precautions as applicable shall include, but shall not be limited to: (A) adequate life protection and life-saving equipment and procedures; (B) instructions in accident prevention for all employees and subconsultants, such as safe walkways, scaffolds, fall protection ladders, bridges, gang planks, confined space procedures, trenching and shoring, equipment and other safety devices, equipment and wearing apparel as are necessary or lawfully required to prevent accidents or injuries; and (C) adequate facilities for the proper inspection and maintenance of all safety measures.

3.3 Fees and Payments.

3.3.1 Compensation. Consultant shall receive compensation, including authorized reimbursements, for all Services rendered under this Agreement at the rates set forth in Exhibit “C” attached hereto and incorporated herein by reference. The total compensation shall not exceed [INSERT WRITTEN DOLLAR AMOUNT] DOLLARS ($[INSERT NUMBER]) (“Total Compensation”) without written approval of City’s City Manager. Extra Work may be authorized, as described below, and if authorized, will be compensated at the rates and manner set forth in this Agreement.

3.3.2 Payment of Compensation. Consultant shall submit to City a monthly itemized statement which indicates work completed and hours of Services rendered by Consultant.

The statement shall describe the amount of Services and supplies provided since the initial commencement date, or since the start of the subsequent billing periods, as appropriate, through the date of the statement. City shall, within 45 days of receiving such statement, review the statement and pay all approved charges thereon.

3.3.3 Reimbursement for Expenses. Consultant shall not be reimbursed for any expenses unless authorized in writing by City.

3.3.4 Extra Work. At any time during the term of this Agreement, City may request that Consultant perform Extra Work. As used herein, “Extra Work” means any work which is determined by City to be necessary for the proper completion of the Project, but which the Parties did not reasonably anticipate would be necessary at the execution of this Agreement.

Consultant shall not perform, nor be compensated for, Extra Work without written authorization from the City.

3.3.5 Prevailing Wages. Consultant is aware of the requirements of California Labor Code Section 1720, et seq., and 1770, et seq., as well as California Code of Regulations, Title 8, Section 16000, et seq., (“Prevailing Wage Laws”), which require the payment of prevailing wage rates and the performance of other requirements on “public works” and “maintenance” projects. If the Services are being performed as part of an applicable “public works” or 55414.00000\32996936.2
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“maintenance” project, as defined by the Prevailing Wage Laws, and if the total compensation is $1,000 or more, Consultant agrees to fully comply with such Prevailing Wage Laws. City shall provide Consultant with a copy of the prevailing rates of per diem wages in effect at the commencement of this Agreement. Consultant shall make copies of the prevailing rates of per diem wages for each craft, classification or type of worker needed to execute the Services available to interested parties upon request and shall post copies at the Consultant’s principal place of business and at the project site. It is the intent of the parties to effectuate the requirements of sections 1771, 1774, 1775, 1776, 1777.5, 1813, and 1815 of the Labor Code within this Agreement, and Consultant shall therefore comply with such Labor Code sections to the fullest extent required by law. Consultant shall defend, indemnify, and hold the City, its elected officials, officers, employees, agents, and volunteers free and harmless from any claim or liability arising out of any failure or alleged failure to comply with the Prevailing Wage Laws.

3.4 Accounting Records.

3.4.1 Maintenance and Inspection. Consultant shall maintain complete and accurate records with respect to all costs and expenses incurred under this Agreement. All such records shall be clearly identifiable. Consultant shall allow a representative of City during normal business hours to examine, audit, and make transcripts or copies of such records and any other documents created pursuant to this Agreement. Consultant shall allow inspection of all work, data, documents, proceedings, and activities related to the Agreement for a period of three (3) years from the date of final payment under this Agreement.

3.5 General Provisions.

3.5.1 Termination of Agreement.

3.5.1.1 Grounds for Termination. City may, by written notice to Consultant, terminate the whole or any part of this Agreement at any time and without cause by giving written notice to Consultant of such termination, and specifying the effective date thereof, at least seven (7) days before the effective date of such termination. Upon termination, Consultant shall be compensated only for those services which have been adequately rendered to City, and Consultant shall be entitled to no further compensation. Consultant may not terminate this Agreement except for cause.

3.5.1.2 Effect of Termination. If this Agreement is terminated as provided herein, City may require Consultant to provide all finished or unfinished Documents and Data and other information of any kind prepared by Consultant in connection with the performance of Services under this Agreement. Consultant shall be required to provide such document and other information within fifteen (15) days of the request.

3.5.1.3 Additional Services. In the event this Agreement is terminated in whole or in part as provided herein, City may procure, upon such terms and in such manner as it may determine appropriate, services similar to those terminated.

3.5.2 Delivery of Notices. All notices permitted or required under this Agreement shall be given to the respective parties at the following address, or at such other address as the respective parties may provide in writing for this purpose:
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Consultant:
[INSERT NAME, ADDRESS & CONTACT PERSON]
City:

City of Stanton
7800 Katella Avenue
Stanton, CA 90680
Attn: Hannah Shin-Heydorn, Administration Department
Such notice shall be deemed made when personally delivered or when mailed, forty-eight (48) hours after deposit in the U.S. Mail, first class postage prepaid and addressed to the party at its applicable address. Actual notice shall be deemed adequate notice on the date actual notice occurred, regardless of the method of service.

3.5.3 Ownership of Materials and Confidentiality.

3.5.3.1 Documents & Data; Licensing of Intellectual Property. This Agreement creates a non-exclusive and perpetual license for City to copy, use, modify, reuse, or sublicense any and all copyrights, designs, and other intellectual property embodied in plans, specifications, studies, drawings, estimates, and other documents or works of authorship fixed in any tangible medium of expression, including, but not limited to, physical drawings or data magnetically or otherwise recorded on computer diskettes, which are prepared or caused to be prepared by Consultant under this Agreement (“Documents & Data”). Consultant shall require all subconsultants to agree in writing that City is granted a non-exclusive and perpetual license for any Documents & Data the subconsultant prepares under this Agreement. Consultant represents and warrants that Consultant has the legal right to license any and all Documents & Data.

Consultant makes no such representation and warranty in regard to Documents & Data which were prepared by design professionals other than Consultant or provided to Consultant by the City. City shall not be limited in any way in its use of the Documents and Data at any time, provided that any such use not within the purposes intended by this Agreement shall be at City’s sole risk.

3.5.3.2 Confidentiality. All ideas, memoranda, specifications, plans, procedures, drawings, descriptions, computer program data, input record data, written information, and other Documents and Data either created by or provided to Consultant in connection with the performance of this Agreement shall be held confidential by Consultant. Such materials shall not, without the prior written consent of City, be used by Consultant for any purposes other than the performance of the Services. Nor shall such materials be disclosed to any person or entity not connected with the performance of the Services or the Project. Nothing furnished to Consultant which is otherwise known to Consultant or is generally known, or has become known, to the related industry shall be deemed confidential. Consultant shall not use City’s name or insignia, photographs of the Project, or any publicity pertaining to the Services or the Project in any magazine, trade paper, newspaper, television or radio production or other similar medium without the prior written consent of City.

3.5.3.3 Confidential Information. The City shall refrain from releasing Consultant’s proprietary information (“Proprietary Information”) unless the City’s legal counsel 55414.00000\32996936.2
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determines that the release of the Proprietary Information is required by the California Public Records Act or other applicable state or federal law, or order of a court of competent jurisdiction, in which case the City shall notify Consultant of its intention to release Proprietary Information.

Consultant shall have five (5) working days after receipt of the Release Notice to give City written notice of Consultant’s objection to the City’s release of Proprietary Information. Consultant shall indemnify, defend, and hold harmless the City, and its officers, directors, employees, and agents from and against all liability, loss, cost or expense (including attorney’s fees) arising out of a legal action brought to compel the release of Proprietary Information. City shall not release the Proprietary Information after receipt of the Objection Notice unless either: (1) Consultant fails to fully indemnify, defend (with City’s choice of legal counsel), and hold City harmless from any legal action brought to compel such release; and/or (2) a final and non-appealable order by a court of competent jurisdiction requires that City release such information.

3.5.4 Cooperation; Further Acts. The Parties shall fully cooperate with one another and shall take any additional acts or sign any additional documents as may be necessary, appropriate or convenient to attain the purposes of this Agreement.

3.5.5 Attorney’s Fees. If either party commences an action against the other party, either legal, administrative, or otherwise, arising out of or in connection with this Agreement, the prevailing party in such litigation shall be entitled to have and recover from the losing party reasonable attorney’s fees and all other costs of such action.

3.5.6 Indemnification.

To the fullest extent permitted by law, Consultant shall defend (with counsel of City’s choosing), indemnify and hold the City, its officials, officers, employees, volunteers and agents free and harmless from any and all claims, demands, causes of action, costs, expenses, liability, loss, damage or injury of any kind, in law or equity, to property or persons, including wrongful death, in any manner arising out of, pertaining to, or incident to any alleged acts, errors or omissions, or willful misconduct of Consultant, its officials, officers, employees, subcontractors, consultants or agents in connection with the performance of the Consultant's Services, the Project or this Agreement, including without limitation the payment of all damages, expert witness fees and attorneys fees and other related costs and expenses. Consultant's obligation to indemnify shall not be restricted to insurance proceeds, if any, received by the Consultant or the City, its officials, officers, employees, agents, or volunteers.

If Consultant’s obligation to defend, indemnify, and/or hold harmless arises out of Consultant’s performance as a “design professional” (as that term is defined under Civil Code section 2782.8), then, and only to the extent required by Civil Code section 2782.8, which is fully incorporated herein, Consultant’s indemnification obligation shall be limited to claims that arise out of, pertain to, or relate to the negligence, recklessness, or willful misconduct of the Consultant, and, upon Consultant obtaining a final adjudication by a court of competent jurisdiction, Consultant’s liability for such claim, including the cost to defend, shall not exceed the Consultant’s proportionate percentage of fault.

3.5.7 Entire Agreement. This Agreement contains the entire Agreement of the parties with respect to the subject matter hereof, and supersedes all prior negotiations, 55414.00000\32996936.2
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understandings, or agreements. This Agreement may only be modified by a writing signed by both parties.

3.5.8 Governing Law. This Agreement shall be governed by the laws of the State of California. Venue shall be in Orange County.

3.5.9 Time of Essence. Time is of the essence for each and every provision of this Agreement.

3.6 City’s Right to Employ Other Consultants. City reserves right to employ other consultants in connection with this Project.

3.7 Successors and Assigns. This Agreement shall be binding on the successors and assigns of the parties.

3.8 Assignment or Transfer. Consultant shall not assign, hypothecate, or transfer, either directly or by operation of law, this Agreement or any interest herein without the prior written consent of the City. Any attempt to do so shall be null and void, and any assignees, hypothecates or transferees shall acquire no right or interest by reason of such attempted assignment, hypothecation or transfer.

3.9 Construction; References; Captions. Since the Parties or their agents have participated fully in the preparation of this Agreement, the language of this Agreement shall be construed simply, according to its fair meaning, and not strictly for or against any Party. Any term referencing time, days or period for performance shall be deemed calendar days and not work days.

All references to Consultant include all personnel, employees, agents, and subconsultants of Consultant, except as otherwise specified in this Agreement. All references to City include its elected officials, officers, employees, agents, and volunteers except as otherwise specified in this Agreement. The captions of the various articles and paragraphs are for convenience and ease of reference only, and do not define, limit, augment, or describe the scope, content, or intent of this Agreement.

3.10 Amendment; Modification. No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing and signed by both Parties.

3.11 Waiver. No waiver of any default shall constitute a waiver of any other default or breach, whether of the same or other covenant or condition. No waiver, benefit, privilege, or service voluntarily given or performed by a Party shall give the other Party any contractual rights by custom, estoppel, or otherwise.

3.12 No Third-Party Beneficiaries. There are no intended third-party beneficiaries of any right or obligation assumed by the Parties.

3.13 Invalidity; Severability. If any portion of this Agreement is declared invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions shall continue in full force and effect.
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3.14 Prohibited Interests. Consultant maintains and warrants that it has not employed nor retained any company or person, other than a bona fide employee working solely for Consultant, to solicit or secure this Agreement. Further, Consultant warrants that it has not paid nor has it agreed to pay any company or person, other than a bona fide employee working solely for Consultant, any fee, commission, percentage, brokerage fee, gift or other consideration contingent upon or resulting from the award or making of this Agreement. For breach or violation of this warranty, City shall have the right to rescind this Agreement without liability. For the term of this Agreement, no member, officer or employee of City, during the term of his or her service with City, shall have any direct interest in this Agreement, or obtain any present or anticipated material benefit arising therefrom.

3.15 Equal Opportunity Employment. Consultant represents that it is an equal opportunity employer and it shall not discriminate against any subconsultant, employee or applicant for employment because of race, religion, color, national origin, handicap, ancestry, sex or age. Such non-discrimination shall include, but not be limited to, all activities related to initial employment, upgrading, demotion, transfer, recruitment or recruitment advertising, layoff or termination. Consultant shall also comply with all relevant provisions of City’s Minority Business Enterprise program, Affirmative Action Plan or other related programs or guidelines currently in effect or hereinafter enacted.

3.16 Labor Certification. By its signature hereunder, Consultant certifies that it is aware of the provisions of Section 3700 of the California Labor Code, which require every employer to be insured against liability for Worker’s Compensation or to undertake self-insurance in accordance with the provisions of that Code, and agrees to comply with such provisions before commencing the performance of the Services.

3.17 Authority to Enter Agreement. Consultant has all requisite power and authority to conduct its business and to execute, deliver, and perform the Agreement. Each Party warrants that the individuals who have signed this Agreement have the legal power, right, and authority to make this Agreement and bind each respective Party.

3.18 Counterparts. This Agreement may be signed in counterparts, each of which shall constitute an original.

3.19 Declaration of Political Contributions. Consultant shall, throughout the term of this Agreement, submit to City an annual statement in writing declaring any political contributions of money, in-kind services, or loan made to any member of the City Council within the previous twelve-month period by the Consultant and all of Consultant’s employees, including any employee(s) that Consultant intends to assign to perform the Services described in this Agreement.

3.20 Subcontracting.

3.20.1 Prior Approval Required. Consultant shall not subcontract any portion of the work required by this Agreement, except as expressly stated herein, without prior written approval of City. Subcontracts, if any, shall contain a provision making them subject to all provisions stipulated in this Agreement.
[Signatures on following page.]
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IN WITNESS WHEREOF, the parties have executed this Professional Services Agreement on this ____ day of __________, 2023.

CITY OF STANTON [INSERT NAME OF CONSULTANT]
By:
___________________
City Manager
By:

Name:

Title:
[If Corporation, TWO SIGNATURES,
President OR Vice President AND Secretary,

AND CORPORATE SEAL OF
CONSULTANT REQUIRED]
ATTEST:

By:

Patricia Vazquez
City Clerk
By:

APPROVED AS TO FORM:

By:

Best Best & Krieger LLP
City Attorney
55414.00000\32996936.2
A-1
EXHIBIT “A”

SCOPE OF SERVICES
[INSERT SCOPE OF SERVICES]
55414.00000\32996936.2
B-1
EXHIBIT “B”

SCHEDULE OF SERVICES
[INSERT SCHEDULE OF SERVICES]
55414.00000\32996936.2
C-1
EXHIBIT “C”

COMPENSATION
[INSERT RATES & AUTHORIZED REIMBURSABLE EXPENSES]

CITY OF STANTON

REPORT TO CITY COUNCIL
TO: Honorable Mayor and Members of the City Council
DATE: February 27, 2024
SUBJECT: AN EXTENSION OF AN INTERIM URGENCY ORDINANCE OF THE

CITY COUNCIL OF THE CITY OF STANTON, CALIFORNIA,

ESTABLISHING A TEMPORARY MORATORIUM ON THE

ESTABLISHMENT OF ANY NEW TOBACCO RETAILER BUSINESS,

AS DEFINED, AND TEMPORARY MORATORIUM ON ANY

EXPANSION, ENLARGEMENT, AND/OR ALTERATION OF ANY

EXISTING TOBACCO RETAILER BUSINESSES PENDING STUDY AND
THE PREPARATION OF AN UPDATE TO THE CITY’S MUNICIPAL

CODE AND ZONING CODE PURSUANT TO GOVERNMENT CODE
SECTIONS 65858 AND 36937 AND DETERMINING THE ORDINANCE

TO BE EXEMPT FROM CEQA
REPORT IN BRIEF:

Due to the continuing need to protect the public safety, health, and welfare of the community from illegal sales of flavored tobacco products, and the comprehensive nature of the necessary review of the applicable Municipal Code regulations including operational standards, zoning regulations, and other pertinent revisions aimed at reducing the unlawful sale of flavored tobacco products, the City Council is asked to consider an extension of the interim urgency ordinance to temporarily prohibit the establishment of any new tobacco retailer business and/or the expansion, enlargement, or alteration of any existing tobacco retailer businesses within the City. The interim urgency ordinance would provide the City with sufficient time to develop new municipal and zoning code regulations. The length of the moratorium would be 10 months and 15 days.

RECOMMENDED ACTIONS:

1. City Council find that the proposed urgency ordinance is:
a) Not a “project” within the meaning of Section 15378 of the State of California Environmental Quality Act (“CEQA”) Guidelines (Title 14 of the California Code of Regulations) because it has no potential for resulting in physical change in the environment, directly or indirectly; and
Item: 7A
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2 b) Exempt from the requirements of CEQA under Section 15061(b)(3) of the CEQA Guidelines, as it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment.

2. Receive and file the 10-day action report for the conclusion of the 45-day moratorium; and

3. Adopt Urgency Ordinance No. 1139, entitled:
“AN EXTENSION OF AN INTERIM URGENCY ORDINANCE OF THE

CITY COUNCIL OF THE CITY OF STANTON, CALIFORNIA

ESTABLISHING A TEMPORARY MORATORIUM ON THE

ESTABLISHMENT OF ANY NEW TOBACCO RETAILER BUSINESS, AS

DEFINED, AND A TEMPORARY MORATORIUM ON ANY EXPANSION,

ENLARGEMENT, AND/OR ALTERATION OF ANY EXISTING TOBACCO
RETAILER BUSINESS FOR 10 MONTHS AND 15 DAYS PENDING
STUDY AND THE PREPARATION OF AN UPDATE TO THE CITY’S

MUNICIPAL CODE AND ZONING CODE PURSUANT TO GOVERNMENT
CODE SECTIONS 65858 AND 36937 AND DETERMINING THE
ORDINANCE TO BE EXEMPT FROM CEQA”.

BACKGROUND:

Under the California Constitution and pursuant to its police powers, the City is charged with protecting the health, safety, and welfare of its citizens. California Business and Professions Code section 22971.3 also authorizes cities to implement local tobacco licensing laws in alignment with state law. The City currently regulates the sale of tobacco products and licensing of tobacco retailers through Chapters 5.66 and 5.67 of the SMC.

This interim urgency ordinance applies exclusively to retailers within the City meeting the criteria of a “tobacco retailer,” which means any individual, business, or entity that sells, offers for sale, or does or offers to exchange for any form of consideration, tobacco, tobacco products or tobacco paraphernalia, and that has at least fifty percent of tobacco, tobacco products, or tobacco paraphernalia as the retailer’s regular stock in trade, as displayed for sale or exchange, in the retail establishment (hereinafter, “Subject Tobacco Retailers”). This definition is without regard to the quantity of tobacco, tobacco products, or tobacco paraphernalia actually sold or exchanged.

Amidst continued public health and safety concerns, particularly regarding the sale of tobacco to minors and its adverse impact on public health, there is a pressing need for the City to reevaluate and update these regulations. Several key initiatives in California highlight the ongoing challenges posed by tobacco retailing, especially in its influence on adolescent tobacco consumption.
3 SB 793, enacted in 2020 with the aim of reducing youth tobacco use, banned the sale of flavored tobacco products statewide. The importance of this measure was further validated when California voters approved Proposition 31 in the November 2022 election to uphold the ban on flavored tobacco sales. Enforced under California Health and Safety Code section 104559.5, this legislation explicitly empowers local governments to enact even stricter tobacco access restrictions than those outlined in the statute. Complementing this critical health initiative, the California Legislature adopted Assembly Bill 935 in 2023 to bolster the enforcement mechanisms of the flavored tobacco ban. Some municipalities, like the City of Santa Monica, have adopted stringent anti-smoking ordinances, including bans on smoking in specific public areas and near multi-unit housing entrances.1
Despite initiatives targeting flavored tobacco use among minors, recent CDC data reveals a persistent challenge: 12.6% of high school students and 6.6% of middle school students reported current use of tobacco products.2 E-cigarettes continue to be the most prevalent tobacco product among these age groups for the tenth consecutive year. Among those currently using e-cigarettes, 89.4% used flavored tobacco products.

Additionally, CDC findings suggest a strong tendency for youths who experiment with ecigarettes to remain users. The sustained popularity of e-cigarettes and flavored tobacco among young people is a significant concern presenting immediate health risks and potential long-term consequences for public health and safety.

In recent inspections of vape and smoke shops by the City, it was found that five out of 11 shops continued to sell flavored tobacco products in violation of SB 793 and the Stanton Municipal Code. These ongoing sales pose a significant threat to community health, particularly impacting minors who are more likely to be enticed by flavored tobacco products. The alarming number of tobacco retailers violating local and state laws regarding the sale of flavored tobacco products within the City’s jurisdiction indicate a need for the City to immediately strengthen its enforcement strategies and licensing protocols.

At its meeting of January 23, 2023, the Council adopted Urgency Ordinance No. 1138, establishing a 45-day moratorium on the establishment of any new tobacco retailer business and/or the expansion, enlargement, or alteration of existing tobacco retailer businesses within the City.

ANALYSIS/JUSTIFICATION:

Chapter 5.66 of the SMC, last revised in 2000, regulates the sale of tobacco products and outlines conduct prohibited by tobacco retailers within the City. Under Chapter 5.67, 1 Santa Monica Municipal Code § 4.44.020(a).
2 CDC, Tobacco Product Use Among U.S. Middle and High School Students — National Youth Tobacco Survey, 2023 (Nov. 3, 2023)
https://www.cdc.gov/mmwr/volumes/72/wr/mm7244a1.htm#:~:text=In%202023%2C%2010.0%25%20of%20middle%20and%20high %20school%20students%20(,to%201.97%20million%20in%202023. 4 updated in 2019, it is mandatory for Subject Tobacco Retailers to obtain a valid registration to operate within the City. With the current background in mind, City staff intends to propose revisions to these chapters to include, among other things, additional operational standards and other pertinent revisions aimed at reducing the unlawful sale of flavored tobacco products. The application of zoning regulations to tobacco retailers will also require time for further research and analysis. City staff requires additional time to review all the applicable Municipal Code regulations to provide the Council with a comprehensive analysis and recommendations intended to protect the public safety, health, and welfare of the community.

Government Code Section 36937 authorizes the City Council to adopt an urgency ordinance “for the immediate preservation of the public peace, health or safety.” Government Code Section 65858 authorizes the City Council to adopt an interim ordinance “to protect the public safety, health, and welfare…to prohibit any uses that may be in conflict with a contemplated general plan, specific plan, or zoning proposal that the legislative body, planning commission or the planning department is considering or studying or intends to study within a reasonable time.” As noted in the “Background” section, above, there is an immediate need to preserve and protect the public peace, health, safety, and welfare from the illegal sale of flavored tobacco products. City staff has already begun to analyze the City’s Municipal and Zoning regulations. These efforts are expected to culminate in comprehensive updates to the City’s laws. Thus, an interim urgency ordinance squarely meets the requirements of Government Code Sections 36937 and 65858 and is needed, immediately.

The attached interim urgency ordinance (Attachment 1) includes the requisite Government Code findings and, if adopted, would extend the current moratorium to an additional 10 months and 15-days to provide staff with additional time to research, study, and prepare recommendations for the Council’s consideration. If adopted, the following restrictions would be in place for the duration of the urgency ordinance:

1. No Subject Tobacco Retailer business, use, or operation would be able to establish within the City.

2. No existing Subject Tobacco Retailer business, use, or operation would be authorized to expand, enlarge, or alter its physical footprint.

3. The City will not approve or issue any use permit, license, variance, building permit, business license, or other applicable entitlement, license, permit, or approval for the establishment, expansion, enlargement, or alteration of any Subject Tobacco Retailer business, use, or operation within the City. The exceptions to the moratorium are for existing businesses to make ordinary repairs and maintenance or if state or federal law requires an exception. 5 In order for the urgency ordinance to be effective, four-fifths (4/5) of the City Council must approve the ordinance. Thereafter, the ordinance would remain in effect for 10 months and 15 days from its adoption (unless earlier repealed, terminated, or extended by the Council).

FISCAL IMPACT:

There is no fiscal impact associated with the recommended actions.

ENVIRONMENTAL IMPACT:

In accordance with the requirements of California Environmental Quality Act (“CEQA”), the project is exempt pursuant to Sections 15378 and Section 15061(b)(3) of the State CEQA Guidelines (Title 14 of the California Code of Regulations).

PUBLIC NOTIFICATION:

Public notice for this item was made through the regular agenda process.

STRATEGIC PLAN OBJECTIVES ADDRESSED:

Obj. No. 1: Provide a safe community.

Obj. No. 5: Provide a high quality of life.

Prepared by: James Wren, Public Safety Services Director Reviewed by: Office of the City Attorney
Approved by: Hannah Shin-Heydorn, City Manager
Attachments:

A. Memorandum for the 10-day report on actions taken by City staff during the 45- day moratorium
B. Interim Urgency Ordinance No. 1139
TO: City Council
FROM: James Wren, Public Safety Services Director
DATE: February 13, 2024
SUBJECT: REPORT ON MEASURES TAKEN TO ALLEVIATE THE CONDITIONS WHICH LED TO THE ADOPTION OF ORDINANCE NO. 1138 ESTABLISHING

A TEMPORARY MORATORIUM ON THE ESTABLISHMENT OF ANY NEW

TOBACCO RETAILER BUSINESSES AND A TEMPORARY MORATORIUM

ON ANY EXPANSION, ENLARGEMENT, AND/OR ALTERATION OF ANY

EXISTING TOBACCO RETAILER BUSINESSES
On January 23, 2024, the City Council adopted Ordinance No. 1138, enacting a 45-day moratorium on the establishment of any new tobacco retailer businesses and/or the expansion, enlargement, or alteration of existing tobacco retailer businesses within the City.

The Ordinance required the City to issue a report at least ten (10) days prior to the expiration of the Ordinance or any extension, describing the measures taken to alleviate the condition(s) which led to the adoption of the initial moratorium in the Ordinance. The conditions that led to the adoption of the Ordinance were listed in the Ordinance and still exist as of the date of this report.

Since the enactment of the Ordinance, the following actions have been taken:
1) The City’s Public Safety Department has begun researching municipal codes of surrounding cities related to the illegal sale of flavored tobacco products. 2) The City’s Public Safety Department has begun reviewing the City’s Municipal Code to identify revisions related to tobacco retailers, to include, among other things, additional operational standards.
3) The City’s Public Safety Department has begun reviewing the City’s existing zoning regulations related to tobacco retailers.
4) The City’s Public Safety Department has prepared and proposed a 10-month and 15-day moratorium on the establishment of any new tobacco retailer businesses and/or the expansion, enlargement, or alteration of existing tobacco retailer businesses within the City.

In light of the complexity of this matter, the City requires additional time to study the issues related to tobacco retailers and the illegal sale of flavored tobacco in the City to determine the best way to protect the public health, safety, and welfare of the community. While this study is being conducted and potential new ordinances are being prepared, staff believes that it is critical for the Council to establish a 10-month and 15-day moratorium.

Attachment: A
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INTERIM URGENCY ORDINANCE NO. 1139
PAGE 1 OF 5
INTERIM URGENCY ORDINANCE NO. 1139

AN EXTENSION OF AN INTERIM URGENCY ORDINANCE OF THE CITY COUNCIL

OF THE CITY OF STANTON, CALIFORNIA ESTABLISHING A TEMPORARY

MORATORIUM ON THE ESTABLISHMENT OF ANY NEW TOBACCO RETAILER

BUSINESS, AS DEFINED, AND A TEMPORARY MORATORIUM ON ANY

EXPANSION, ENLARGEMENT, AND/OR ALTERATION OF ANY EXISTING

TOBACCO RETAILER BUSINESS PENDING STUDY AND THE PREPARATION OF AN UPDATE TO THE CITY’S MUNICIPAL CODE AND ZONING CODE PURSUANT TO GOVERNMENT CODE SECTIONS 65858 AND 36937 AND DETERMINING THE

ORDINANCE TO BE EXEMPT FROM CEQA
WHEREAS, pursuant to Cal. Const. Art. XI, Sec. 7 and under the City of Stanton’s (“City”) general police powers, the City is empowered and charged with responsibility for the health, safety, and welfare of its citizens; and
WHEREAS, the City protects the health, safety, and welfare of the community through numerous avenues, including by establishing and enforcing zoning, licensing and health, and safety regulations on specified commercial activities; and WHEREAS, the City has observed ongoing violations among local tobacco retailers that continue to sell flavored tobacco products in violation of state law and Stanton Municipal Code (“SMC”) section 5.67.030(H); and
WHEREAS, recent data from the Centers for Disease Control and Prevention reveals that 10% of middle school and high school students were active tobacco users in 2023.

E-cigarettes remain the most used tobacco product by this population with an alarming

89.4% of current e-cigarette users reporting use of flavored tobacco products; and WHEREAS, tobacco retailers where unlawful activities are not curtailed pose substantial and immediate threats to the health, safety, and welfare of the Stanton community, particularly to the City’s youth. These detrimental effects encompass, among other things (1) increased likelihood of youth addiction due to the appeal of flavored tobacco products; (2) elevated exposure of minors to tobacco-related health risks, including respiratory diseases and the potential for long-term dependency; and (3) undermining public health initiatives aimed at curbing tobacco use among adolescents; and WHEREAS, Chapters 5.66 and 5.67 of the SMC regulate the sale of tobacco products, mandate tobacco retailers to register with the City before engaging in the sale of tobacco products, and establishes mandatory operational standards for such retailers.

However, these provisions need to be comprehensively revised and updated to address the sale of flavored tobacco products throughout the City; and WHEREAS, per Government Code Sections 36937 and 65858, the City Council may adopt an Interim Urgency Ordinance to protect the public safety, health, and welfare from an event, occurrence, or set of circumstances; and Attachment: B
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INTERIM URGENCY ORDINANCE NO. 1139
PAGE 2 OF 5
WHEREAS, due to the unlawful sale of flavored tobacco products being predominantly observed in smoke and vape shops that specialize in the sale of tobacco products or tobacco paraphernalia, this Interim Urgency Ordinance shall apply exclusively to those businesses classified as a “tobacco retailer” as defined as any individual, business, or entity that sells, offers for sale, or does or offers to exchange for any form of consideration, tobacco, tobacco products or tobacco paraphernalia, and that has at least fifty percent of tobacco, tobacco products, or tobacco paraphernalia as the retailer’s regular stock in trade, as displayed for sale or exchange, in the retail establishment (hereinafter, “Subject Tobacco Retailers”). This definition is without regard to the quantity of tobacco, tobacco products, or tobacco paraphernalia actually sold or exchanged; and
WHEREAS, City staff in collaboration with the City Attorney's office are conducting research to understand the impacts of Subject Tobacco Retailers and uses on community welfare and explore potential amendments to the City's regulatory process and zoning codes to protect public health, safety, and welfare and mitigate potential illegalities occurring at these businesses; and
WHEREAS, as a result, and in consideration of the staff report, written and verbal public testimony, and the full record before it, the City Council previously adopted an interim urgency ordinance that instituted a 45-day moratorium to allow staff and the City Council the opportunity to research and select the best course of action for the City’s citizens, youth, and the community at large. This Ordinance extends that moratorium for an additional 10 months and 15 days to provide the City and staff additional time to study the issues and suggest any revisions.

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

SECTION 1: The above recitals are true and correct and are incorporated herein by reference.

SECTION 2: The City Council finds that this Ordinance is not a project within the meaning of Section 15378 of the State of California Environmental Quality Act (“CEQA”) Guidelines, because it has no potential for resulting in physical change in the environment, directly or indirectly. The City Council further finds, under Title 14 of the California Code of Regulations, section 15061(b)(3) that this Interim Urgency Ordinance is nonetheless exempt from the requirements of CEQA. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA.

SECTION 3: The City Council hereby enacts this Interim Urgency Ordinance under Government Code sections 36937 and 65858(a), which allow the City Council to adopt an Interim Urgency Ordinance by not less than a four-fifths vote. Section 65858 allows the City Council to protect the public safety, health, and welfare by prohibiting any use that may be in conflict with a zoning proposal that the City Council, Planning INTERIM URGENCY ORDINANCE NO. 1139
PAGE 3 OF 5
Commission, or department of the City is considering or studying or intends to study within a reasonable time. The purpose of this Urgency Ordinance is to maintain the status quo while the City evaluates whether and how to regulate the subject uses.

SECTION 4: The City Council hereby directs and orders as follows:

A. During the time that this Interim Urgency Ordinance is in effect, no new Subject Tobacco Retailer business, use, or operation may be established in the City; and
B. No existing Subject Tobacco Retailer business, use, or operation may be authorized or allowed to expand, enlarge, or alter its physical footprint while this Interim Urgency Ordinance is in effect; and
C. During the period that this Interim Urgency Ordinance is in effect, the City shall not approve or issue any permit, license, variance, building permit, business license, or any other applicable entitlement, license, permit, or approval for the establishment, expansion, enlargement, or alteration of any Subject Tobacco Retailer business, use, or operation within the City as provided in subsection (B), above. Notwithstanding the foregoing, the City may approve permits, licenses, or similar approvals for ordinary repairs or maintenance or as otherwise required by applicable federal, State, or local law.

SECTION 5: The City will continue to accept and process applications for uses prohibited by this moratorium if so required by state law. Any application received and processed during the moratorium shall be processed at the applicant’s sole cost and risk with the understanding that no permit, license, approval or other entitlement for a use covered by Section 4 of this Interim Urgency Ordinance may be issued while this moratorium or any extension of it is in effect.

SECTION 6: This ordinance is adopted under the provisions of Government Code Sections 36937 and 65858, and shall take effect immediately upon its passage by a four-fifths vote of the City Council. The City Council finds that Subject Tobacco Retailers where the unsafe and unlawful activities described herein occur pose significant, urgent, and immediate threats to the health, safety and welfare of the community — including, but not limited to, the heightened risk of youth addiction to nicotine and tobacco products, increased exposure of the community to tobacco-related health issues, and the undermining of public health efforts aimed at reducing tobacco use, especially among minors. Consequently, the City Council finds that this Interim Urgency Ordinance is necessary for the immediate preservation of the public health, safety, and welfare of the community. This interim Urgency Ordinance shall remain in effect for 10 months and 15 days from its adoption, unless earlier repealed, terminated, or extended.

INTERIM URGENCY ORDINANCE NO. 1139
PAGE 4 OF 5
SECTION 7: Not less than 10 days prior to the scheduled expiration of this Urgency Ordinance, staff shall issue a report to the City Council on the progress of its study and on determinations for how the City should proceed, insofar as conclusions have been drawn.

SECTION 8: If any provision of this Interim Urgency Ordinance or the application thereof to any person or circumstance is held invalid or unconstitutional, such invalidity or unconstitutionality shall not affect other provisions or applications of this Interim Urgency Ordinance which can be given effect without the invalid provision or application, and to this end the provisions of this Interim Urgency Ordinance are severable. The City Council hereby declares that it would have adopted this Ordinance irrespective of the invalidity of any particular portion thereof.

PASSED, APPROVED, AND ADOPTED this 27th day of February, 2024.

DAVID J. SHAWVER, MAYOR
ATTEST:

PATRICIA A. VAZQUEZ, CITY CLERK
APPROVED AS TO FORM:

HONGDAO NGUYEN, CITY ATTORNEY
INTERIM URGENCY ORDINANCE NO. 1139
PAGE 5 OF 5

STATE OF CALIFORNIA )
COUNTY OF ORANGE ) ss.

CITY OF STANTON )
I, Patricia A. Vazquez, City Clerk of the City of Stanton, California, do hereby certify that the foregoing Urgency Ordinance No. 1139 was duly introduced and adopted at a regular meeting of the City Council held on the 27th day of February, 2024, by the following roll-call vote, to wit:

AYES: COUNCILMEMBERS:

NOES: COUNCILMEMBERS:

ABSENT: COUNCILMEMBERS:

RECUSED: COUNCILMEMBERS:

PATRICIA A. VAZQUEZ, CITY CLERK

CITY OF STANTON

REPORT TO THE CITY COUNCIL
TO: Honorable Mayor and City Council
DATE: February 27, 2024
SUBJECT: INFORMATIONAL REPORT REGARDING RECENT STATE LAWS AND

CAMPAIGN CONTRIBUTIONS
REPORT IN BRIEF:

At its meeting on November 28, 2023, the City Council requested an informational report regarding new laws relating to campaign finance contribution limits and revisions to the “Levine Act,” which are Assembly Bill 571 and Senate Bill 1439, respectively. This report provides a summary of each law.

RECOMMENDED ACTION:

1. City Council declare this action categorically exempt under the California Environmental Quality Act (“CEQA”) under Section 15378(b)(5) – Organizational or administrative activities of governments that will not result in direct or indirect changes in the environment; and

2. Consider a presentation by the City Attorney’s Office and receive and file the report or provide further direction.

BACKGROUND AND ANALYSIS:

I. Assembly Bill 571 (“AB 571”) – Campaign Contributions Limits AB 571 was signed by the Governor in October 2019, and became effective on January 1, 2021, allowing cities and counties with no local campaign contribution limit to either set a local limit or default to the limit set for certain State elected offices (e.g., State Assembly or Senate). At the time of its adoption, Stanton did not adopt a local limit as authorized by AB 571, therefore defaulting to the State limit. The current State default limit on contributions from a single source, per election, is $5,500. This amount is subject to adjustment by the Fair Political Practices Commission (“FPPC”) in January of each odd year based upon the Consumer Price Index, rounded to the nearest hundred dollars. As such, the next adjustment will be in January of 2025.

Item: 9A
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A number of cities throughout the State have adopted a campaign contribution limit ordinance, and the FPPC maintains a list those cities. (See https://www.fppc.ca.gov/learn/Contribution-Limits-City-and-County-Candidates.html.) Nearby cities that have such an ordinance include Anaheim, Buena Park, and Irvine, and those cities may have adopted their ordinances prior to AB 571 being signed into law. If the City Council decides to consider adopting such an ordinance, then the following are some considerations:

1. The City would assume responsibility for enforcing contribution limits that vary from the State’s default contribution limits. The FPPC enforces contribution limits that align with the State’s contribution limit. If the City were to adopt contribution limits that are either higher or lower than the State default limit, then the City would be responsible for enforcing its self-imposed limits. Such enforcement could involve referral of a matter to the District Attorney for enforcement and could result in litigation when merited.

2. Campaign contribution limits would not apply to Independent Expenditures, Ballot Measure Committees or Committees Seeking an Officer’s Recall. A local campaign contribution limit can only apply to direct contributions made to the candidate or to the candidate’s controlled committee based on case law.

II. Senate Bill 1439 (“SB 1439”) – Campaign Contribution Restrictions to Elected Officials Pending a Contract or Entitlement
SB 1439 became effective on January 1, 2023, and made a number of substantial changes to the “Levine Act” (Gov. Code § 84308), which is a part of the Political Reform Act. These changes require elected officials to “conflict out” of certain proceedings involving persons who have made contributions to their respective political campaigns and also requires elected officials to “refuse” certain future contributions from persons who were financially involved in decisions of the local agency. The Levine Act previously only applied to local governing boards composed of appointed officials, such as planning commissioners. Effective January 1, 2023, SB 1439 extended the Levine Act’s coverage to elected governing boards, such as the City Council.

The Levine Act, as revised, imposes two key duties on City Councilmembers.

First, it prohibits Councilmembers from accepting, soliciting, or directing a campaign contribution (to their own campaign or another candidate’s campaign) of more than $250 if the donor is involved in a proceeding involving a license, permit, or other entitlement for use, including a contract award (including franchises), that is pending before the City. Under SB 1439, this prohibition continues for 12 months following the proceeding.

Second, the Levine Act now requires Councilmembers to recuse from any proceeding involving a license, permit, or other entitlement for use, including a contract award (including franchises), if they have received a campaign contribution of more than $250 from a person involved in the proceeding within the previous 12 months. The rule does not apply to labor contracts, personal employment contracts, or contracts that are competitively bid. (Gov. Code § 84308.)
The Levine Act applies to contributions from the parties directly involved in the proceeding, such as an applicant for an entitlement, as well as to other “participants” who actively support or oppose a particular decision in the proceeding and have a financial interest in the proceeding, and their agents.

The FPPC has adopted a two-prong approach when it comes to determining when a proceeding is considered “pending” for purposes of the Levine Act.

For Councilmembers, a proceeding is considered “pending” when:
(1) The decision is before the City Council for consideration, including when an item is placed on the agenda for discussion or decision; or
(2) It is reasonably foreseeable the decision will come before the City Council and the Councilmember knows or has reason to know the decision is within the jurisdiction of the City and will come before the Council for decision. (2 Cal. Code Regs. § 18438.2(b)(1).)
For a party or party’s agent, or a participant or participant’s agent, a proceeding is “pending” when it is before the jurisdiction of the City for its decision or other action. (2 Cal. Code Regs. § 18438.2(b)(2).)
In light of SB 1439, the following is required:
• Disclose. Before any decision in a proceeding involving a license, permit, or other entitlement for use (excluding certain contracts, as noted above), a Councilmember must disclose on the record if they have received a contribution of more than $250 in the preceding 12 months from a party or any participant in the proceeding. (Gov. Code § 84308(c).)
• Recuse. If a Councilmember knows or has reason to know that a party to the proceeding made a disqualifying contribution to the Councilmember, or a participant who made a disqualifying contribution has a financial interest in the decision, the Councilmember must recuse themselves from participating in the decision. The standard recusal procedure (disclosure, leaving the room, etc.) would apply.
o Or Return. If the contribution was received from a party before the Councilmember knew or had reason to know that the proceeding had commenced, or from a participant before the Councilmember knew or had reason to know of the participant’s financial interest in the proceeding, the Councilmember may return the contribution within 30 days from the time they knew or should have known about the contribution and relevant proceeding (for a party), or contribution and financial interest (for a participant) and may participate in the decision.
• Refuse. While the proceeding is pending and for 12 months after a final decision is rendered, Councilmembers must not accept, solicit, or direct a contribution of more than $250 from a party, participant, or their agents, if they know or have reason to know a party, participant or a party’s or participant’s agent has a financial interest in the decision.
o Or Return. If a Councilmember accepts, solicits, or directs a contribution of more than $250 during the 12 months after the date a final decision is rendered in the proceeding, the Councilmember may cure the violation by returning the contribution, or the portion of the contribution that exceeds $250, within 14 days of accepting, soliciting, or directing the contribution, whichever comes latest. This opportunity to cure is only available if the Councilmember did not knowingly and willfully accept, solicit, or direct the prohibited contribution, and the Councilmember of their controlled committee keeps a record of curing the violation. (Gov. Code § 84308(d)(2).)
There are a number of nuances related to the revised Levine Act. The FPPC has published some guides with hypothetical examples to illustrate those nuances, and they are attached to this report for the Council’s consideration.

FISCAL IMPACT:

There is no fiscal impact associated with the recommended action.

ENVIRONMENTAL IMPACT:

This action is categorically exempt under CEQA under Section 15378(b)(5) – organizational or administrative activities of governments that will not result in direct or indirect changes in the environment.

PUBLIC NOTIFICATION:

Public notification provided through the regular agenda process.

LEGAL REVIEW:

The City Attorney prepared this report.

STRATEGIC PLAN OBJECTIVE ADDRESSED:

Obj. No. 6: Maintain and promote a responsive, high quality and transparent government.

Prepared by: HongDao Nguyen, City Attorney
Approved by: Hannah Shin-Heydorn, City Manager
Attachments:

A. FPPC Section 84308 Guide for Officers
B. FPPC Section 84308 Guide for Parties, Participants, and Agents Fair Political Practices Commission 1 Officers and Section 84308 October 2023

CONTENTS
Introduction ................................................................................................................... 3 A. Am I an “Officer”? .................................................................................................. 4

1. Qualifications ....................................................................................................................................................4

2. Exceptions ........................................................................................................................................................4 B. What Are My Responsibilities and Limitations? .................................................. 5

1. Prohibition: Accepting, Soliciting, or Directing Contributions Exceeding $250 During 12-Month Period While the Proceeding is Pending and 12 Months After........................................................................................................5

2. Prohibition: Taking Part in Entitlement for Use Proceeding...............................................................................6

3. Disclosure Requirements: Contributions Received in Prior 12 months .............................................................6 C. Am I Taking Part in a “Pending License, Permit, or Other Entitlement for Use” Proceeding? .................................................................................................................. 7

1. License, Permit, or Other Entitlements for Use Proceedings ............................................................................7

2. When is the Proceeding “Pending”? .................................................................................................................8 D. For the Proceeding, Who Are the “Parties, Participants, or Their Agents”?..... 9

1. Parties...............................................................................................................................................................9

2. Participants .......................................................................................................................................................9

3. Agents.............................................................................................................................................................10 E. Do I “Know or Have Reason to Know” a Participant Has a “Financial Interest in the Proceeding”? .................................................................................................... 12

1. What is a Financial Interest in a Proceeding?.................................................................................................12

2. When Do I Know About it?..............................................................................................................................12

3. Standards and Facts Relevant to Particular Types of Participant’s Financial Interests...................................13 a. Explicitly Involved Interest in the Proceeding ..................................................................................................13 b. Business Entity Interest in the Proceeding. .....................................................................................................14 c. Real Property Interests in the Proceeding. .....................................................................................................15 d. Source of Income Interests.............................................................................................................................16 e. Source of Gift Interests...................................................................................................................................17 f. Personal Finances...........................................................................................................................................17 F. Have I “Willfully or Knowingly” Received a $250 or Greater Contribution From a Party, Participant, or Agent Within the Past 12 Months? ..................................... 18

1. Knowledge of a Contribution...........................................................................................................................18 Officers and Section 84308
October 2023
Attachment: A
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Fair Political Practices Commission 2 Officers and Section 84308 October 2023

2. How is the $250 Calculated? ..........................................................................................................................19 G. Can I Return a Contribution?............................................................................... 22 H. Frequently Asked Questions ............................................................................... 23 Fair Political Practices Commission 3 Officers and Section 84308 October 2023

INTRODUCTION
Section 84308 is a California law aimed at preventing “pay-to-play” practices, in part, by prohibiting parties, participants, and their respective agents in a proceeding involving a license, permit, or other entitlement for use (collectively referenced as an “entitlement for use proceeding” or “proceeding”) from contributing more than $250 to an officer of the agency the proceeding is before during a 12-month period. An officer is similarly prohibited from accepting, soliciting or directing such a contribution. The prohibition on contributions applies to any 12-month period while the proceeding is pending and for 12 months following the date a final decision is rendered in the proceeding.

Under Section 84308, the officer of an agency is required to disclose any contribution exceeding an aggregate $250 that a party or any participant has made to them within the 12 months preceding the proceeding. Further, the officer of an agency may not make, participate in making, or in any way attempt to use their official position to influence the decision in the proceeding pending before the agency if the officer has received a contribution of more than $250 within the preceding 12 months from a party, or a party’s agent. An officer of an agency is similarly prohibited from taking part in a proceeding if the officer received a contribution of more than $250 within the preceding 12 months from a participant, or participant’s agency, if the officer knows or has reason to know that the participant has a financial interest in the decision.

When it was first enacted in 1982, Section 84308 applied to appointed members of boards and commissions who were running for elective office. (Stats. 1982, ch. 1049 § 1 (“Levine Act”).) However, effective January 1, 2023, the Legislature expanded the scope of its prohibitions to apply to agencies whose members are directly elected by voters and extend the prohibitions from 3 months to 12 months after the final decision in a proceeding. (Stats. 2022, ch. 848 § 1 (“SB 1439”) .)
The following is a step-by-step guide to help you determine:
· Whether you are an “officer” subject to Section 84308’s prohibitions; · What your responsibilities are;
· What type of proceedings are covered;
· Who meets the definition of a party, participant or their agent; · When there is a financial interest involved; and
· What to do in the event you have accepted a contribution subject to the prohibitions in Section 84308.

Frequently Asked Questions are also addressed.

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A. AM I AN “OFFICER”?

1. Qualifications
Section 84308 defines “officer” as “any elected or appointed officer of an agency, any alternate to an elected or appointed officer of an agency, and any candidate for elected office in an agency.”
To determine whether you qualify as an “officer” for purposes of Section 84308, and an “officer of the agency” subject to the restrictions of Section 84308, ask yourself:
(1) Do I have the ability to:
a. “Make, participate in making, or in any way attempt to use my official position to influence” a decision (defined further below) in the relevant entitlement for use proceeding; or
b. Exercise authority or budgetary control over the agency of officers who may do so?
(2) Do I serve in any of the following capacities:
a. In an elected position;
b. As a member of a board or commission;
c. As the chief executive of a state agency or county, city or district of any kind; or
d. In a position with decision-making authority with respect to the proceeding and I am also a candidate for elected office or I was a candidate for elected office in the 12 months prior to the proceeding? If your answer to both of the above questions is “yes,” then you qualify as an “officer” for purposes of Section 84308 and you are an “officer of the agency” subject to the applicable restrictions.

Note: A candidate for elective office who does not meet any of the above criteria is not an “officer of the agency” and the Section 84308 restrictions applicable to an “officer of the agency” will not apply until such time as the candidate serves in one of the positions noted above. (See, e.g., Butler Advice Letter, No. A-23-103.)

2. Exceptions
The term “officer” does not apply to any person acting in any of the following positions:
· Member of the courts or any agency in the judicial branch; · Member of the Legislature;
· Member of the Board of Equalization; or
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· A Constitutional officer (i.e., the Governor, Lieutenant Governor, Attorney General, Controller, Insurance Commissioner, Secretary of State, State Treasurer, and Superintendent of Public Instruction).

B. WHAT ARE MY RESPONSIBILITIES AND
LIMITATIONS?
If you meet the definition of an “officer” under Section 84308 and are an “officer of the agency,” or become an “officer of the agency” following your candidacy, you are subject to the following prohibitions related to entitlement for use proceedings:

1. Prohibition: Accepting, Soliciting, or Directing Contributions Exceeding $250 During 12-Month Period While the Proceeding is Pending and 12 Months After
For any entitlement for use proceeding, you are prohibited from accepting, soliciting, or directing a contribution of more than two hundred fifty dollars ($250) from any party or a party’s agent, or from any participant or a participant’s agent if you know or have reason to know that the participant has a financial interest in the proceeding.

This applies during any 12-month period while the proceeding is pending and for 12 months following the date of the final decision.
12-Month Period Example 1
A party files an application with your office on January 1, 2023. The same day, the party contributes $250 to your campaign committee. Your agency’s consideration of the application extends beyond one year and, on January 1, 2024, the party contributes another $250 to your campaign committee. The party does not violate Section 84308 by making the second contribution while the proceeding is pending and you do not violate Section 84308 by accepting the second contribution because you have not received more than $250 during any 12-month period.

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2. Prohibition: Taking Part in Entitlement for Use Proceeding You are prohibited from making, participating in making, or in any way attempting to use your official position to influence the decision in an entitlement for use proceeding pending before the agency if you have willfully or knowingly received a contribution in an amount of more than two hundred fifty dollars ($250) within the preceding 12 months from a party or a party’s agent, or from any participant or a participant’s agent if you know or have reason to know that the participant has a financial interest in the decision. · Making a Governmental Decision: You “make” a governmental decision if you authorize or direct any action, vote, appoint a person, obligate or commit your agency to any course of action, or enter into any contractual agreement on behalf of your agency.
· Participating in a Governmental Decision: You “participate in making a governmental decision” if you provide information, an opinion, or a recommendation for the purpose of affecting the decision without significant intervening substantive review.
· Attempting to Use Official Position to Influence a Governmental Decision:

You “attempt to use your official position to influence a governmental decision” if you: (1) contact or appear before any official in your agency or in an agency subject to the authority or budgetary control of your agency for the purpose of affecting a decision; or (2) contact or appear before any official in any other government agency for the purpose of affecting a decision, and you act or purport to act within your authority or on behalf of your agency in making the contact.

3. Disclosure Requirements: Contributions Received in Prior 12 months If you have received a contribution exceeding $250 from a party, participant, or agent thereof within the preceding 12 months, you are required to disclose (or have another agency officer or employee disclose on your behalf) the contribution as follows:
12-Month Period Example 2
A party files an application with your office on January 1, 2023. The same day, the party contributes $150 to your campaign committee. On July 1, 2023, the party contributes another $100. The matter is pending before you the proceeding extends beyond one year. On January 1, 2024, the party contributes another $250.

The party violates Section 84308 and you will violate Section 84308 by accepting the $250 contribution because you received more than $250 during a 12-month period.

You received $100 from the party on July 1, 2023, and $250 on January 1, 2024, for a total of $350 during a 12-month period.

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· Form: Disclosure may be made orally or in writing when made in a meeting.

Disclosure must be made in writing if no meeting is held. · Timing: If a public meeting is held, disclosure must be made at the beginning of the meeting. If you learn of the party’s contribution or the participant’s contribution and financial interest during the meeting, disclosure must be made before you continue to take part in the proceeding. If no public meeting is held, written disclosure must be entered into the agency’s public record. · Contents: The disclosure must include:
o The fact that you have received contributions from a party, participant, or agent thereof, greater than $250 within the preceding 12 months; and o The name(s) of the contributor(s).
· Legally Required Participation: If you are taking part in a governmental decision on the basis that your participation is legally required, the disclosure must also include:
o A summary description of the circumstances under which you believe the conflict may arise; and
o The legal basis for concluding there is no alternative source of decision.

C. AM I TAKING PART IN A “PENDING LICENSE,
PERMIT, OR OTHER ENTITLEMENT FOR USE”
PROCEEDING?

1. License, Permit, or Other Entitlements for Use Proceedings Section 84308 defines the term “license, permit, or other entitlement for use” to mean “all business, professional, trade, and land use licenses and permits and all other entitlements for use, including all entitlements for land use, all contracts (other than competitively bid, labor, or personal employment contracts), and all franchises.” The term “entitlement for use” is not defined by Section 84308. The overall scheme and purpose of Section 84308 suggests that the types of proceedings which should be covered by Section 84308 are those in which specific, identifiable persons are directly affected or in which there is a direct substantial financial impact upon the participants. The California courts have examined the term “entitlement for use” in other contexts. These decisions provide useful guidance; however, interpretation of the Act is not necessarily limited by interpretation of other laws. Below is a list of proceedings the FPPC has previously advised on as entitlement for use proceedings. (See, e.g., Velasquez Advice Letter, No. I-23-065; Quadri Advice Letter, No. A-02-096; Washington Advice Letter, No. I-91-521.)
Note: Section 84308 does not cover proceedings in which general policy decisions or rules are made or where the interests affected are many and diverse.

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2. When is the Proceeding “Pending”?
For an officer, an entitlement for use proceeding has commenced and is considered “pending” only when:
· The decision is before you for your consideration. If you are a member of a governing body, this includes any item placed on the agenda for discussion or decision at a public meeting of the body; or
· You know or have reason to know the proceeding is before the jurisdiction of your agency for its decision or other action, and it is reasonably foreseeable the decision will come before you in your decision-making capacity. · Note: A different definition of “pending” applies to parties, participants, and their agents. For these persons, it is “pending” when it is before the agency’s jurisdiction for action.

Examples of Entitlement for Use Proceedings
· Building and development permits
· Charter school petitions
· Conditional use permits
· Contracts generally, including
small purchase order agreements,
unless an exception applies
· Public street abandonments
· Private development plans
· Professional license revocations
· Rezoning of specific real estate
parcels
· Event permits
· Rulemaking procedures affecting a
particular industry where only a
small number of businesses are
affected
· Special district formation
proceedings involving the creation
of a special use or benefit to the
persons in the district
· Tentative subdivision and parcel
maps
· Zoning variances
Pending Proceeding Example 1
A non-profit organization submits a permit application to the City Parks Department to host a large event at a City park. You are a member of the City Council. Absent any outside knowledge, at this point, you do not “know or have reason to know” about the proceeding and, therefore, it is not “pending” for you. Therefore, you would not violate Section 84308 by accepting, soliciting, or directing a contribution of more than $250 from the non-profit at this point in the process.

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D. FOR THE PROCEEDING, WHO ARE THE “PARTIES,
PARTICIPANTS, OR THEIR AGENTS”?

1. Parties
Section 84308 defines “party” as “any person who files an application for, or is the subject of, a proceeding involving a license, permit, or other entitlement for use.”

2. Participants
Section 84308 defines “participant” as any person who is not a party but who actively supports or opposes a particular decision in an entitlement for use proceeding and who has a financial interest in the decision.

In general, a person will qualify as a participant if the person has a financial interest in the proceeding and communicates with you or agency staff for the purpose of influencing a decision in the proceeding. This includes when the person:
· Lobbies in person;
· Testifies in person; or
· Otherwise acts to influence a proceeding by communicating with an officer or employee of the agency for the purpose of influencing a decision in the proceeding.

Note: This does not include communications made to the public outside of the proceeding.

Pending Proceeding Example 2
Continuing the above example, the event permit application is rejected by the Parks Department and the non-profit appeals the decision to the City Council. The nonprofit’s permit item appears on the agenda for an upcoming City Council meeting. At this point, the proceeding is “pending” for you and you are now prohibited from accepting, soliciting, or directing a contribution of more than $250 from the non-profit.

Pending Proceeding Example 3
Alternatively, suppose that prior to the permit decision appearing on a City Council meeting agenda, a City staff member told you that the project was pending before the Parks Department and would likely come before the City Council at some point if the Parks Department rejects the application. Because you have this information, the proceeding would be “pending” for you, even though the item had not yet been included on a City Council meeting agenda.

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Financial Interests
In general, a person is considered to have a “financial interest” for purposes of Section 84308 if it is reasonably foreseeable the proceeding, or a governmental decision within the proceeding, would have a material financial effect on one or more of the person’s economic interests. Relevant economic interests include the person’s interests in business entities, real property, sources of income, sources of gifts, and personal finances.

Determining whether a person has a financial interest in a proceeding or particular governmental decision can be a complex matter. For this reason, if you have knowledge or reason to know that a person who may qualify as a participant in a proceeding has a potential financial interest, you should contact the FPPC for assistance to understand whether the duties and prohibitions of Section 84308 will apply. More information on financial interests, when a financial interest is “material” and when you would have “reason to know” is detailed further below.

3. Agents
A person is the “agent” of a party or participant in a pending entitlement for use proceeding if the person:
· Represents that party or participant for compensation; and · Appears before or otherwise communicates with the governmental agency for the purpose of influencing the pending proceeding.

Participant Example 1
One person sends a letter to the City Council regarding an entitlement for use proceeding. Another person makes a public comment regarding the entitlement for use proceeding during a public meeting. If either person has a financial interest in the proceeding, that person qualifies as a participant.

Participant Example 3
One person writes an op-ed article, published in the local paper, in support of the City Council approving an application in an entitlement for use proceeding. Another person protests outside of City Hall before the entitlement for use proceeding is held, yelling and chanting that the City Council should vote no on the underlying project. Even if one of these persons has a financial interest in the proceeding, as long as the person does not communicate directly with the officer or agency regarding the proceeding, the person is not a participant.

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Note: An individual will qualify as an agent only if the individual’s communication with an agency is for the purpose of influencing the pending proceeding. An individual whose communications with an agency are not made for the purpose of influencing the proceeding is not considered an agent for purposes of Section 84308, even if the individual receives compensation from a party or participant.

Agent Example 1
Ainsley Atkinson, an attorney, is paid to represent a client real estate developer, Rio Estates, in obtaining a real estate development agreement and drafts a letter in support of the project on behalf of Rio Estates. Atkinson sends the letter to the County Planning Commission ahead of the Commission’s consideration on whether to approve a building permit. Because Atkinson is paid to represent Rio Estates and has communicated with the agency for the purpose of influencing the proceeding, Atkinson is an agent for Rio Estates.

Agent Example 2
Suppose Atkinson’s letter in support of the project is sent to the County Planning Commission by Atkinson’s assistant, rather than Atkinson herself. Although the letter is intended to influence the proceeding, the assistant’s purpose in sending the letter is not; rather, the assistant’s purpose in sending the letter is administrative/secretarial.

Likewise, the assistant is not paid to represent Rio Estates; the assistant is paid to assist Atkinson. For these reasons, the assistant is not an agent Rio Estates.

Agent Example 3
Continuing the above examples, the Planning Commission considers the project application. The project architect, Priyanka Archer, hired by the client, attends the meeting and provides purely technical data and analysis in response to Planning Commission questions. As long as Archer does not otherwise engage in direct communications for the purpose of influencing the proceeding, Archer is not an agent for Rio Estates.

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E. DO I “KNOW OR HAVE REASON TO KNOW” A
PARTICIPANT HAS A “FINANCIAL INTEREST IN THE
PROCEEDING”?

1. What is a Financial Interest in a Proceeding?
Under the Political Reform Act, a person has a “financial interest” in a governmental decision when it is reasonably foreseeable that the governmental decision at issue would have a material financial effect (of a positive or negative nature) on a person’s interest in:
· A business entity as an employee, director, officer partner, trustee, manager or an investment interest of $2,000 or more.
· Real property with a value of $2,000 or more including a leasehold interest but not a month-to month tenancy.
· Source of income totaling $500 or more in the 12 months prior to the proceeding.
· Source of gift totaling $590 or more in the 12 months prior to the proceeding. · The participant’s personal finances or the participant’s immediate family member.

Note: For a party in an entitlement for use proceeding, Section 84308’s requirements and prohibitions automatically apply. The relevance of a “financial interest” in an entitlement for use proceeding is only relevant to determining whether an individual qualifies as a participant for purposes of Section 84308.

2. When Do I Know About it?
As an officer, you are considered to “know or have reason to know” that a participant has a financial interest in a decision only if you have actual knowledge of the financial interest, or the participant reveals facts in written or oral statements during the proceeding before you that make the participant’s financial interest apparent.

Under Section 84308, you are required to consider all relevant facts known to you in determining whether a participant has made a financial interest apparent. This includes:
· The specificity with which the participant has described their economic interests; · The potential for a material financial effect on those interests as a result of the decision; and
· The realistic possibility of the financial effect.

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Note: If a participant describes or mentions the financial impact a proceeding, or a governmental decision within the proceeding, would or could have on the participant’s financial interest you must consider the information provided and the impact the decision may have on the interest.

In addition to the general rule stated above, you will by default be deemed to have “reason to know” that a participant has a financial interest in the proceeding if you have facts indicating the participant has any of the following:
· A business entity interest that may see a significant increase or decrease in customers as a result of the proceeding;
· A real property interest located within 500 feet of the real property at issue in the proceeding. (Note: An officer does not have “reason to know” if the facts are solely that the participant has an economic interest located in the general vicinity of a business entity or real property at issue in the proceeding.)
· A business relationship with the applicant and the decision may result in additional services provided to the applicant.

Note: if the officer knows there is clear and convincing evidence establishing it is not reasonably foreseeable the decision will have material financial effect on the participant’s interests, the participant does not have a financial interest in the proceeding.

3. Standards and Facts Relevant to Particular Types of Participant’s Financial Interests
To determine whether you “know or have reason to know” that the participant has a financial interest in the decision for purposes of Section 84308, ask yourself if you have any of the information discussed below:
a. Explicitly Involved Interest in the Proceeding
If an individual has an economic interest such as a business entity, real property, or source of income explicitly involved in the proceeding, the individual will have a financial interest in the proceeding and therefore qualify as a participant. For example, if the individual’s employer is the applicant in the proceeding and the individual provides public comment—even in their capacity as a private citizen rather than as an agent advocating in their paid capacity as an employee—the individual will qualify as a participant.

However, in circumstances where it is not apparent that the individual’s economic interest is explicitly involved in the proceeding, consider the following:

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b. Business Entity Interest in the Proceeding.

Generally, a participant’s financial interest in a business entity not explicitly involved in a governmental decision will only become apparent if they reveal facts indicating any of the following:
· Change in Revenue: The decision may result in an increase or decrease of the entity's annual gross revenues, or the value of the entity's assets or liabilities, in an amount equal to or more than: (A) $1,000,000; or (B) five percent of the entity's annual gross revenues and the increase or decrease is at least $10,000. · Change in Expenses: The decision may cause the entity to incur or avoid additional expenses or to reduce or eliminate expenses in an amount equal to or more than:
(A) $250,000; or (B) one percent of the entity's annual gross revenues and the change in expenses is at least $2,500.
· Impact on Real Property: The entity has an interest in real property and: (A) the property is a named party in, or the subject of, the decision; or (B) there is clear and convincing evidence the decision would have a substantial effect on the property.

Business Entity Example 1
A person provides public comment at a City Council meeting, speaking in support of a developer’s permit application. The person specifies, “I work for the developer, but I’m not being paid to be here. I’m just here in my personal capacity because I think the project would benefit the community.” Here, the participant has a business entity interest in the applicant as their employer, and you know the proceeding would have a reasonably foreseeable, material financial effect on that business entity interest given the fact that the employer is the applicant in the proceeding.

Business Entity Example 2
Continuing the above example, another person stands up at the City Council meeting and provides public comment, stating, “I’m a licensed electrician and I think a development project of this size would bring a lot of valuable jobs to local tradespeople like me.” The person has indicated they have a business entity interest in their business as an electrician and has also indicated the project would potentially benefit their business, but has not provided any facts indicating their business could benefit, for example, by $1,000,000 or result in an increase of five percent of annual gross revenue and at least $10,000. Because of the general facts provided, you would not have reason to know that the individual has a financial interest in the proceeding.

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c. Real Property Interests in the Proceeding.

When considering the materiality of a financial effect on real property not explicitly involved in a governmental decision, the proximity of the participant’s real property to the real property at issue in the decision is of particular importance. Are you aware of any of the following concerning the participant’s real property - is it:
· Within 500 Feet: from the subject property of a governmental decision and there is no “clear and convincing evidence” the decision will have no measurable impact on the participant’s property.
· Between 500 and 1,000 Feet: from the subject property of a governmental decision and the decision would change the parcel’s:
o Development potential;
o Income producing potential;
o Highest and best use;
o Character by substantially altering traffic levels, intensity of use, parking, view, privacy, noise levels, or air quality; or
o Market value.

However, if you are aware that the participant’s real property is:
· Over 1,000 Feet: from the subject property of a governmental decision the decision is presumed to not have a reasonably foreseeable, material financial effect on the individual’s real property absent “clear and convincing evidence” of a substantial effect on the participant’s property.

Note: You are not considered to “know” or “have reason to know” of a participant’s financial interest in a decision solely as a result of the participant identifying an economic interest located in the general vicinity of a business entity or real property at issue in the proceeding.

Real Property Example 1
An individual provides public comment at a City Council meeting opposing a development project because of the effect they believe the project will have on nearby residences and notes, “I live near this project.” Based solely on these comments, you would not know or have reason to know whether the individual has a real property interest within 500 or 1,000 feet or further away from the project.

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If you are aware or the individual mentions they have a leasehold interest in real property, they will have a financial interest if the decision would: (1) Change the termination date of the lease; (2) Increase or decrease the potential rental value of the property; (3) Change the person’s use of the property; or (4) Impact the use and enjoyment of the property. A month-to-month tenancy is not a “real property interest” under the Act.

Note: There are certain exceptions applicable to determining a material interest in real property, such as when the proceeding includes a decision that solely concerns repairs/maintenance or replacement of existing streets, water, sewer, storm drainage or similar facilities. (For decisions relating the adoption or amendment of a General Plan, please consult Regulation 18702.2(d)(2) or seek further advice.) d. Source of Income Interests
Generally, a participant’s financial interest in a source of income not explicitly involved in the decision, will only become apparent if they reveal facts indicating any of the following and the source is a:
· Business Entity: Apply the standards discussed above for determining a material financial effect on business entity interests. · Nonprofit Organization: Apply the same standards discussed above use for determining a material financial effect on a business entity. · Individual:
o Personal Finances: The decision may affect the individual’s income, investments, assets, or liabilities by $1,000 or more;
o Impact on Business: The participant knows or has reason to know the individual has an interest in a business entity that will be materially financially affected under the standards pertaining to business entity interests, described above;
o Impact on Real Property: The participant knows or has reason to know the individual has an interest in real property and the property is a named party in, or the subject of the decision, or there is clear and convincing evidence the decision would have a substantial effect on the property.

Real Property Example 2
If, however, the individual said, “I live within 100 yards,” or “I live directly across the street” from the project, you would be aware that the individual lives within 500 feet of subject property and unless there are clear facts that the decision would have no measurable impact on her property, the Section 84308 requirements and prohibitions will apply to this person as a participant.

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“Nexus” Test: The governmental decision is also considered to have a reasonably foreseeable, material financial effect if it would achieve, defeat, aid, or hinder a purpose or goal of the source of income and the participant or their spouse receives or is promised the income for achieving the purpose or goal. e. Source of Gift Interests
Generally, a participant’s financial interest in an individual as a source of gift not explicitly involved in a governmental decision will only become apparent if they reveal facts indicating any of the following:
· Business Entity: Apply the standards discussed above for determining a material financial effect on business entity interests. · Nonprofit Organization: Apply the same standards discussed above for determining a material financial effect on a business entity. · Individuals:
o The individual’s personal finances will be materially impacted, as described in the “Personal Finances” section below;
o The participant knows or has reason to know the individual has an interest in a business entity or real property that will be materially financially affected under the standards pertaining to business entity or real property interests, described above;
o The participant knows or has reason to know the individual has an interest in real property and the property is a named party in, or the subject of the decision, or there is clear and convincing evidence the decision would have a substantial effect on the property.
f. Personal Finances
In general, a governmental decision’s reasonably foreseeable financial effect on a participant’s personal finances or the finances of the participant’s immediate family is material if the decision may result in the participant or participant’s immediate family member receiving a financial benefit or loss—other than a financial impact on a Source of Income Example
At a City Council meeting, a member of the public provides comment and states, “I work for the Downtown Business Chamber of Commerce and my job is to bring business to Downtown and help revitalize the Downtown area economy. Approval of this project would do just that.” Based on the person’s comments, you know it is reasonably foreseeable the proceeding would have material financial effect on the person’s source of income—the Downtown Business Chamber of Commerce—based on the nexus between the governmental decisions at issue and the Chamber of Commerce’s goals that the speaker is paid to achieve. The Section 84308 requirements and prohibitions would apply to this participant.

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business entity or real property interest—of $500 or more in any 12-month period due to the decision. This does not apply if the decision’s financial impact would affect the participant’s economic interest in a business entity or real property, as such financial effects are considered separately under the standards discussed above.

F. HAVE I “WILLFULLY OR KNOWINGLY” RECEIVED A
$250 OR GREATER CONTRIBUTION FROM A PARTY,
PARTICIPANT, OR AGENT WITHIN THE PAST 12
MONTHS?

1. Knowledge of a Contribution
As an officer, you are considered to have “willfully or knowingly” received a contribution under any of the following circumstances:
· Actual knowledge: You have actual knowledge of the contribution; · Disclosure by the Party: The contribution has been disclosed by the party pursuant to Section 84308(e) and Regulation 18438.8; or · Other Reasons to Know: You are aware of facts including, but not limited to:
o The party, participant, or another person has otherwise informed you that a contribution or contributions have been made to you;
o The party or participant has previously made two or more contributions of more than $250 to you;
o You personally solicited the party or participant for a contribution; or o You personally accepted a contribution from the party or participant. · Relevance of Prior Campaign Reporting: Note that the fact that a contribution was previously included in a campaign report filed by your campaign committee does not constitute “reason to know” of a party’s or participant’s contribution except in the following circumstances:
o The party’s proceeding has also been noticed on an agenda for a public meeting before the body or board of which you are a member or, o For officers not on a body or board, the proceeding is before you in your decision-making capacity.

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2. How is the $250 Calculated?
In determining whether you have received a contribution of more than $250 from a party, participant, or agent, consider the following:
· Aggregation: To determine whether you have received a contribution of more than $250 from a party or participant or their respective agent during a 12-month period, you must aggregate all of the following:
o All contributions made by the party or by the participant; with o All contributions made by the party’s agent or the participant’s agent during the shorter of: (A) The previous 12-month period; or (B) The period beginning on the date the party or participant first hired the agent as either a paid employee, contractor, or consultant; and
o All contributions made by an individual, other than an uncompensated officer of a nonprofit organization, or entity required to be aggregated with the party or participant and any agent of the party or participant under Section 82015.5 (see discussion below) of the Political Reform Act.

Exception: Although the above contributions generally must be aggregated for purposes of determining whether you have received a contribution exceeding $250, you do not have reason to know about a contribution from an individual or entity required to be aggregated with contributions by a party, participant, or agent—and you do not violate Section 84308 as a result of the contribution—if, at the time of the potential violation, both the following criteria are met:
(1) The party, participant, or agent has not disclosed the contribution on the record of the proceeding; and
(2) You do not otherwise know facts establishing that the contribution must be aggregated pursuant to Section 82015.5 and Regulation 18438.5.

Campaign Reporting Example
You are a City Councilmember. A development project application is included on the agenda for the next City Council meeting. The applicant has failed to disclose the $300 contribution he made to your campaign committee eight months ago, in violation of Section 84308. (Where the contribution is made prior to the proceeding, the party must disclose the contribution at the time of filing the application.) The project application was included on the City Council meeting agenda. The $300 contribution was included in a campaign report filed by your campaign committee. Accordingly, at the point the project application appears on the City Council meeting agenda, you have reason to know about the developer’s $300 contribution—even though the applicant did not disclose it in their initial application—and you must either recuse yourself from the proceeding or return the amount exceeding the $250 contribution limit.

Fair Political Practices Commission 20 Officers and Section 84308 October 2023
Section 82015.5
Section 82015.5 provides:
· If an individual directs or controls an entity’s contributions, the entity’s contributions shall be aggregated with contributions made by both of the following:
o That individual.
o Any other entity whose contributions that individual directs or controls.
· If two or more entities make contributions that are directed or controlled by a majority of the same persons, the contributions of those entities shall be aggregated.
· Contributions made by entities that are majority owned by a person shall be aggregated with the contributions of the majority owner and all other entities majority owned by that person, unless those entities act independently in their contribution-making decisions.

In practice, Section 82015.5’s aggregation rules will most frequently come into play when you have received a contribution from a party or participant, as well as a contribution from a business owned by the party or participant or from a parent/subsidiary/sister corporation of the party or participant.

Note: In general, a spouse of a party or participant is not also considered a party or participant and, therefore, contributions by a spouse are not aggregated with contributions by the party or participant. The two scenarios in which contributions by a spouse are aggregated with contributions by the party or participant are where:
(1) The proceeding involves real property or a business interest that is owned jointly by the spouses; or
(2) The spouse is acting as the agent of their party or participant spouse.

Fair Political Practices Commission 21 Officers and Section 84308 October 2023
Aggregation Example 1
A proceeding is on the agenda for the next public meeting of the governmental board you are a member of. You check whether the party involved has contributed to any of your controlled committees within the past 12 months and see that the party contributed $200 six months ago. No other contributions have been disclosed by the party or the party’s agent. Accordingly, you take part in the proceeding at the public meeting.

After the meeting, you learn that the party owns a company that also contributed $200 to your committee six months ago, for an aggregate total contribution of $400 within the past six months. Because the party and the party’s agent did not disclose the contribution by the party’s company and you did not know facts establishing that the contribution by the party’s company needed to be aggregated with the party’s contribution—i.e., you did not know of the connection between the party and the company—your participation in the proceeding was not a violation of Section 84308.

Aggregation Example 2
Using the above example, suppose that during the course of the meeting—after you have already begun participating—the party discloses that their company contributed $200 to your committee six months ago. At that point, you would know facts establishing that the contributions need to be aggregated and would amount to more than $250 within the past 12 months. Your continued participation in the proceeding would be a violation of Section 84308, unless you disclosed on the record of the proceeding the fact that the contributions were disqualifying and confirmed you would return the disqualifying portion of the contribution within 30 days and subsequently did, in fact, return the disqualifying portion of the contribution.

Fair Political Practices Commission 22 Officers and Section 84308 October 2023
G. CAN I RETURN A CONTRIBUTION?
Under Section 84308, you are permitted to return a contribution that would otherwise disqualify you from an entitlement for use proceeding if you return the contribution within 30 days from the time you know, or should have known, about the contribution and the proceeding. You are permitted to make such a return if:
(1) The contribution was received from a party prior to you knowing or having reason to know that a proceeding involving the party had commenced. For purposes of this provision, if you serve on a governing body or board, you are considered to know or have reason to know a proceeding involving the party has commenced if the proceeding has been noticed on the agenda for a public meeting of the board; or
(2) The contribution was received from a participant prior to you knowing or having reason to know that the participant had a financial interest in the proceeding.

If you are serving on a governing body or board and would otherwise be disqualified under Section 84308 from taking part in a proceeding, you may take part in the proceeding prior to returning the contribution if all the following criteria are met:
(1) The decision is made at a public meeting of the governing body or board; (2) You have known or should have known about the contribution and proceeding for fewer than 30 days;
(3) After learning of the contribution or proceeding and prior to taking part in any further discussion or decision, you disclose the fact of the disqualifying contribution on the record of the proceeding, as required by Section 84308(c), and confirm that the return will occur within 30 days from the time you knew, or should have known, about the contribution and proceeding; and
(4) The contribution is returned within that timeframe.

Return of Contribution Example
You are a member of the City Council. At a public meeting held on March 11, the City Council will consider a proposed development agreement. The developer donated $300 to your campaign committee six months ago. You learned about the proceeding when the meeting agenda was published 10 days ago, on March 1. At the beginning of the meeting, you disclose the contribution over $250 from the developer within the preceding 12 months, but state that you will return the disqualifying portion by March 31—30 days after you first knew, or should have known, about the contribution and proceeding. You may then take part in the proceeding without violating Section 84308 as long as the disqualifying portion is, in fact, returned by March 31.

Fair Political Practices Commission 23 Officers and Section 84308 October 2023
H. FREQUENTLY ASKED QUESTIONS

1. Is my local government position covered under Section 84308? Under Section 84308, “officer” means “any elected or appointed officer of an agency, any alternate to an elected or appointed officer of an agency, and any candidate for elective office in an agency.” This includes local government positions.

The only officials Section 84308’s requirements do not apply to are officials in the judicial branch, the Legislature, Board of Equalization, and constitutional officers.

2. What if I am an officer in the midst of a proceeding and the individual testifying in support of a project discloses they made a $300 contribution to my campaign and states they live “in the neighborhood near the project site.” Do I have “reason to know” that the individual has a financial interest in a proceeding so that they qualify as a “participant” for disclosure and recusal purposes? You must consider your knowledge and the specific facts provided. An officer does not know of a participant’s financial interest in a decision solely as a result of the participant identifying an economic interest located in the general vicinity of a business entity or real property at issue in the proceeding.

If, after considering the specificity of the facts provided, you are not certain, you should either:
(A) In an abundance of caution, recuse yourself from the proceeding until you can determine with certainty that the individual does not constitute a participant in the proceeding; or
(B) Not recuse, but follow the steps in the meeting for returning the disqualifying portion of the contribution received from the individual, including disclosing the contribution, pledging to return the disqualifying amount within the relevant timeframe, and then doing so. If the appropriate steps for the return of a contribution are completed, your continued participation in the proceeding does not constitute a violation of Section 84308.

As an officer, you are required to consider all relevant facts known by you at the time of the decision in determining whether the facts revealed by a person have made a financial interest apparent. You should familiarize yourself with the relevant “reasonable foreseeability” and “material financial effect” standards discussed in this document, as well as available on the FPPC website at https://fppc.ca.gov/learn/conflicts-of-interestrules.html and https://fppc.ca.gov/the-law/fppc-regulations/regulations-index.html (Regulations 18701 and 18702.1-18702.5). If you are uncertain whether the facts known by you make a person’s financial interest apparent, you may wish to seek advice from agency counsel or the FPPC.

Fair Political Practices Commission 24 Officers and Section 84308 October 2023

3. Other than being made “orally,” “in writing,” or “on the record,” what form must disclosure take?
Neither Section 84308 nor its related regulations specify the exact form disclosure must take beyond the requirements discussed in the “Disclosure” section above. Given the wide variety of agencies and jurisdictions Section 84308 applies to, disclosure may take different forms. For example, one agency may decide to include all relevant disclosures in writing as part of the meeting agenda, while another agency may choose to have agency counsel make a disclosure on an officer’s behalf and have the disclosure included in the meeting minutes. As long as a record of the disclosure is maintained by the agency and may be accessed by the public, the agency may decide on its preferred process for disclosure.

4. I am a candidate for office but I am not currently an officer of an agency.

Am I prohibited from accepting, soliciting, or directing a contribution from a party or participant involved in a proceeding before the agency the candidate is campaigning for office in?
No. A candidate for office who does not hold any other governmental position does not meet the definition of “officer of an agency” and therefore is not prohibited from accepting, soliciting, or directing such contributions from a party, participant, or agent, but may be prohibited from taking part in a proceeding involving the party, participant, or agent once elected if they have received a contribution of more than $250 within the preceding 12 months.

5. I am a candidate for a school board position and I am an employee of the County Planning permit department. Am I subject to Section 84308 due to my employment given that a building application does not in any way relate to a school board position?
Yes. You are subject to Section 84308. The office a candidate is running for does not need to relate to the entitlement for use proceeding in order for Section 84308 to apply.

6. Is a “strong mayor” with veto power over city council decisions permitted to exercise that veto power—even when the mayor has received ordinarily disqualifying contributions of more than $250 from a party, participant, or agent thereof—on the basis of “legally required participation”? Yes. Because a “strong mayor” is legally required to exercise the powers and fulfill the duties authorized by a city charter and, to the extent the city charter authorizes a mayor to take part in an entitlement for use proceeding, conduct that would ordinarily disqualify a mayor under Section 84308 does not prohibit the mayor from participating. (Granda Advice Letter, No. I-23-102.)
However, the legally required participation exception does not excuse other violations of Section 84308 and a strong mayor taking part in an entitlement Fair Political Practices Commission 25 Officers and Section 84308 October 2023
proceeding pursuant to the exception is still required to refrain from soliciting, directing, or receiving contributions from parties/participants while the proceeding is pending and for 12 months thereafter, and must also make all necessary disclosures.

7. Are personal contributions from members of a governmental board in their individual capacity considered contributions “from the governmental board”? Do the contributions need to be aggregated?
No. Contributions made in the member’s personal capacity, are not considered contributions from the governmental board and are not aggregated with contributions made by other members of the body or board made in their personal capacities.

8. May I accept, solicit, or direct contributions exceeding $250 from an unpaid, volunteer officer of a non-profit organization, if the organization is a party, participant, or agent in the proceeding?
Yes. Contributions from an uncompensated officer of a non-profit organization are not aggregated with contributions by the non-profit organization, given that the uncompensated officer does not have a financial interest in the proceeding. The nonprofit organization is not a “business entity” and it is not a “source of income “ to the volunteer officer.

9. I am an elected local officer. Can I be disqualified from taking part in an entitlement for use proceeding based on contributions the officer received in 2022, within 12 months of the proceeding?
No. Under Regulation 18438, Section 84308’s provisions, as amended by SB 1439 and effective as of January 1, 2023, do not apply to contributions received prior to that date. If Section 84308 did not apply to you before January 1, 2023, contributions you received and proceedings you participated in prior to that date do not implicate Section 84308.

10. Does the $250 limit apply to each candidate or each committee? For example, can a party donate $250 to two committees controlled by the same officer?
The $250 limit applies to each candidate, not each committee, such that a party, participant, or agent may not donate more than $250 across all of an officer’s controlled committees.

11. A business contributed more than $250 to my campaign a few months ago.

Now an employee of the business is coming before my agency in their personal capacity, applying for a building permit to remodel their home. Am I disqualified from the proceeding based on the business’s $250+ contribution? Generally, no. In the described circumstances, the employee would be the party in the proceeding, while the business would not be a party or agent of the employeeparty. Assuming the business is not structured in such a way that the “employee” is, in Fair Political Practices Commission 26 Officers and Section 84308 October 2023
fact, the majority owner of the company or directs or controls the company’s contributions, the contributions made by the company would not be aggregated with contributions made by the employee. Therefore, the officer who received a $250+ contribution from the company would not be disqualified from the proceeding.

12. Are project labor agreements establishing the terms and conditions of employment for workers on certain projects considered exempt “labor contracts” under Section 84308?
Yes. A “labor contract” is defined as “a contract or agreement reached through collective bargaining or with a representative group regarding the salary, benefits, or terms and conditions under an employment or retirement policy for employees or retirees, including a project labor agreement entered into under Public Contract Code Section 2500.”

13. If a union representative provides public comment in support or in opposition of a governmental decision and indicates the decision will have a financial impact on its members, is the union considered a “participant”? Only if the union organization itself has a financial interest under the standards applicable to a nonprofit organization. To be a “participant,” a person (including a nonprofit organization) must have a financial interest in the proceeding. A nonprofit organization such as a union does not necessarily have a financial interest in a proceeding solely because it would be beneficial to the organization’s members.

The relevant standards for determining a reasonably foreseeable, material financial effect on a nonprofit organization, such as a union, are:
· Change in Receipts: The decision may result in an increase or decrease of the organization's annual gross receipts, or the value of the organization's assets or liabilities, in an amount equal to or more than: $1,000,000; or five percent of the organization's annual gross receipts and the increase or decrease is equal to or greater than $10,000.
· Change in Expenses: The decision may cause the organization to incur or avoid additional expenses or to reduce or eliminate expenses in an amount equal to or more than: $250,000; or one percent of the organization's annual gross receipts and the change in expenses is equal to or greater than $2,500. · Impact on Real Property: The official knows or has reason to know that the organization has an interest in real property and: the property is a named party in, or the subject of, the decision; or there is clear and convincing evidence the decision would have a substantial effect on the property.

Accordingly, unless it is reasonably foreseeable that a nonprofit organization would experience any of the above financial effects (e.g., the union’s receipt of union dues increases by $1,000,000 as a result of the increased union wages caused by a government contract), the nonprofit organization will not qualify as a “participant” and an Fair Political Practices Commission 27 Officers and Section 84308 October 2023
officer is not prohibited from receiving more than $250 from the organization advocating for or against a particular decision in an entitlement proceeding.

Fair Political Practices Commission 1 Parties, Participants, Agents, and Section 84308 October 2023

CONTENTS
Introduction.............................................................................................................................. 2 A. What is a “Proceeding Involving a License, Permit, or Other Entitlement for Use”? .. 3 B. Am I a “Party,” “Participant,” or “Agent”?...................................................................... 4

1. Parties...............................................................................................................................................................4

2. Participants .......................................................................................................................................................4

3. Agents...............................................................................................................................................................5 C. Who Qualifies as an “Officer of an Agency”?................................................................. 7 D. When is an Entitlement Proceeding “Pending”?............................................................ 8 E. How is the $250 Limit Calculated?................................................................................... 9 F. What Are My Responsibilities If I Have Made Greater Than $250 in Contributions Within the Past 12 Months? ...................................................................................................10

1. Prohibition on Further Contributions During a 12-Month Period......................................................................10

2. Disclosure .......................................................................................................................................................11 G. Frequently Asked Questions...........................................................................................12 Parties, Participants, Agents,
and Section 84308
October 2023
Attachment: B
Click here to return to the agenda.

Fair Political Practices Commission 2 Parties, Participants, Agents, and Section 84308 October 2023

INTRODUCTION
Section 84308 is a California law aimed at preventing “pay-to-play practices,” in part, by prohibiting parties, participants, and their respective agents in a proceeding involving a license, permit, or other entitlement for use (collectively referenced as a “entitlement for use proceeding” or “proceeding”) from contributing more than $250 to an officer of the agency the proceeding is before during a 12-month period. The prohibition applies to any 12-month period while the proceeding is pending and for 12 months following the date a final decision is rendered in the proceeding.

Additionally, in an entitlement for use proceeding, a party—but not a participant— is required to disclose any contributions exceeding an aggregate $250 that the party and their agents have made to an officer of the agency within the preceding 12 months.

When it was first enacted in 1982, Section 84308 applied to appointed members of boards and commissions who were running for elective office. (Stats. 1982, ch. 1049 § 1 (“Levine Act”).) However, effective January 1, 2023, the Legislature expanded the scope of its prohibitions to apply to agencies whose members are directly elected by voters and extend the prohibitions from 3 months to 12 months after the final decision in a proceeding. (Stats. 2022, ch. 848 § 1 (“SB 1439”).)
The following is a step-by-step guide to help you determine:
· What is a “proceeding involving a license, permit, or other entitlement for use”?
· Am I a “party,” “participant,” or “agent”?
· Who qualifies as an “officer of an agency”?
· When is the proceeding “pending”?
· How is the $250 limit calculated?
Frequently Asked Questions are also addressed.

Fair Political Practices Commission 3 Parties, Participants, Agents, and Section 84308 October 2023
A. WHAT IS A “PROCEEDING INVOLVING A LICENSE,
PERMIT, OR OTHER ENTITLEMENT FOR USE”?
Section 84308 defines the term “license, permit, or other entitlement for use” to mean “all business, professional, trade, and land use licenses and permits and all other entitlements for use, including all entitlements for land use, all contracts (other than competitively bid, labor, or personal employment contracts), and all franchises.” The term “entitlement for use” is not defined by Section 84308.The overall scheme and purpose of Section 84308 suggests that the types of proceedings which should be covered by Section 84308 are those in which specific, identifiable persons are directly affected or in which there is a direct substantial financial impact upon the participants. The California courts have examined the term “entitlement for use” in other contexts. These decisions provide useful guidance; however, interpretation of the Act is not necessarily limited by interpretation of other laws. Below is a list of proceedings FPPC staff have previously advised are entitlement for use proceedings. (See, e.g., Velasquez Advice Letter, No. I-23-065; Quadri Advice Letter, No. A-02-096; Washington Advice Letter, No. I-91-521.)
Note: Section 84308 does not cover proceedings in which general policy decisions or rules are made or where the interests affected are many and diverse.

Examples of Entitlement for Use Proceedings
· Building and development permits
· Charter school petitions
· Conditional use permits
· Contracts generally, including
small purchase order agreements,
unless an exception applies
· Public street abandonments
· Private development plans
· Professional license revocations
· Rezoning of specific real estate
parcels
· Event Permits
· Rulemaking procedures affecting a
particular industry where only a
small number of businesses are
affected
· Special district formation
proceedings involving the creation
of a special use or benefit to the
persons in the district
· Tentative subdivision and parcel
maps
· Zoning variances
Fair Political Practices Commission 4 Parties, Participants, Agents, and Section 84308 October 2023
B. AM I A “PARTY,” “PARTICIPANT,” OR “AGENT”?

1. Parties
Section 84308 defines “party” as “any person who files an application for, or is the subject of, a proceeding involving a license, permit, or other entitlement for use.” In general, if you applied for a permit, license or for a right to use property in a particular way (for example, a short-term vacation rental application) that requires the agency’s discretionary approval, you will qualify as a party in an entitlement for use proceeding.

2. Participants
Section 84308 defines “participant” as any person who is not a party but who actively supports or opposes a particular decision in an entitlement for use proceeding and who has a financial interest in the decision.

In general, you will qualify as a participant if you have a financial interest in the proceeding and you communicate with an officer or employee of the agency for the purpose of influencing a decision in the proceeding.

Note: You would not qualify as a “participant” based on communications made to the public outside of the proceeding, such as publishing an op-ed in a local newspaper or protesting outside of a government building.

Participant Example 1
You send a letter to the City Council regarding an entitlement for use proceeding. If you have a financial interest in the proceeding, you qualify as a participant.

Participant Example 2
You make a public comment regarding an entitlement for use proceeding during a public meeting. If you have a financial interest in the proceeding, you qualify as a participant.

Participant Example 3
You write an op-ed article, published in the local paper, in support or opposition of a particular outcome in an entitlement for use proceeding. Even if you have a financial interest in the proceeding, as long as you do not communicate directly with the officer or agency regarding the proceeding, you do not qualify as a participant.

Fair Political Practices Commission 5 Parties, Participants, Agents, and Section 84308 October 2023
Financial Interests
Central to many of the above examples is the question of whether you have a “financial interest” in the proceeding such that you may qualify as a “participant.” In general, you are considered to have a “financial interest” for purposes of Section 84308 if it is reasonably foreseeable the proceeding, or a governmental decision within the proceeding, would have a material financial effect on one or more of your economic interests. Relevant economic interests include your interests in business entities, real property, sources of income, sources of gifts, and personal finances.

Determining whether you have a financial interest in a proceeding or particular governmental decision can be a complex matter. For this reason, if you have participated or are continuing to take part in an entitlement for use proceeding and you are not sure whether you have a financial interest in the decision, you should contact the FPPC for assistance. If you have a financial interest in the proceeding, such that you qualify as a “participant” for purposes of Section 84308, you are prohibited from contributing more than $250 to an officer of the agency while the proceeding is pending and for 12 months thereafter. More information on financial interests and when a financial interest is “material” can be found in our “Officers and Section 84308” Guide.

3. Agents
A person is your “agent” (as a party or participant) in an entitlement for use proceeding if the person:
· Represents you for compensation; and
· Appears before or otherwise communicates with the governmental agency for the purpose of influencing the pending proceeding.

Note: An individual will qualify as an agent only if the individual’s communication with an agency is for the purpose of influencing the pending proceeding. An individual whose communications with an agency are not made for the purpose of influencing the proceeding is not considered an agent, even if the individual receives compensation from a party or participant.

Participant Example 4
You protest outside of City Hall before an entitlement for use proceeding is held, yelling and chanting that the City Council should vote “no” on the underlying project.

Because the communication is made in a public setting outside of the proceeding itself, you do not qualify as a participant based on your protesting.

Fair Political Practices Commission 6 Parties, Participants, Agents, and Section 84308 October 2023
Agent Example 1
Ainsley Atkinson, an attorney, is paid to represent you in obtaining a real estate development agreement and drafts a letter in support of the project on your behalf.

Atkinson sends the letter to the County Planning Commission ahead of the Commission’s consideration on whether to approve a building permit. Because Atkinson is paid to represent you and has communicated with the agency for the purpose of influencing the proceeding, Atkinson is your agent.

Agent Example 2
Continuing the above example, suppose Atkinson’s letter in support of the project is sent to the County Planning Commission by the attorney’s assistant, rather than Atkinson herself. Although the letter is intended to influence the proceeding, the assistant’s purpose in sending the letter is not; rather, the assistant’s purpose in sending the letter is administrative/secretarial. Likewise, the assistant is not paid to represent you; the assistant is paid to assist Atkinson. For these reasons, the assistant is not your agent.

Agent Example 3
Continuing the above examples, suppose a public meeting is held where the Planning Commission considers the project application. At the meeting, the project architect you hired, Priyanka Archer, attends in order to provide purely technical data or analysis in response to any questions the Planning Commission has. As long as the information is not provided for the purpose of influencing the proceeding, Archer is not your agent.

Fair Political Practices Commission 7 Parties, Participants, Agents, and Section 84308 October 2023
C. WHO QUALIFIES AS AN “OFFICER OF AN AGENCY”?
Section 84308 defines “officer” as “any elected or appointed officer of an agency, any alternate to an elected or appointed officer of an agency, and any candidate for elected office in an agency.” In general, the term “officer of an agency” encompasses any individual who:
(1) Is appointed, elected, or is an employee of the agency who is also running for office; and
(2) May make, participate in making, or attempt to use their official position to influence a decision in the entitlement for use proceeding, or exercises authority or budgetary control over the agency of officers who may do so.

As a party, participant, or agent thereof, you are prohibited from contributing more than $250 in the aggregate to an officer of an agency during a 12 month period while the proceeding is pending and for 12 months after the final decision in the proceeding.

Officer Example 1
You have submitted a building permit application to the City Planning Commission.

Because the City Council exercises authority or budgetary control over the Planning Commission, you are not only prohibited from contributing more than $250 to a member of the Planning Commission who is running for elective office while the proceeding is pending and for 12 months thereafter, but that prohibition also applies to contributions made to members of the City Council as “officers of the agency,” as well as certain City officials who are also running for elective office and have decisionmaking authority with respect to the proceeding.

Officer Example 2
You are negotiating with City representatives regarding the City’s potential purchase of a parcel of land you own. While the proceeding is pending, you contribute $500 to a candidate for City Council. Although the candidate meets the definition of “officer,” they do not meet the more specific definition of “officer of an agency,” to whom you are prohibited to contribute more than $250 to while an entitlement for use proceeding is pending. Accordingly, your contribution of $500 does not violate Section 84308.

However, if the candidate won their election and your $500 contribution occurred within the preceding 12 months, the new City Councilmember would be prohibited from taking part in the proceeding if it was still pending before the City Council.

Fair Political Practices Commission 8 Parties, Participants, Agents, and Section 84308 October 2023
D. WHEN IS AN ENTITLEMENT PROCEEDING
“PENDING”?
For a party or party’s agent, or a participant or participant’s agent, an entitlement for use proceeding is “pending” when it is before the jurisdiction of the agency for its decision or other action.

In other words, for a party and party’s agent, an entitlement for use proceeding is considered pending the moment the proceeding is initiated, most often triggered by the party’s filing of an application with the agency.

Note: As described above, in order to be considered a “participant,” an individual has to have a financial interest in the entitlement for use proceeding and have communicated with an officer or employee of the agency for the purpose of influencing the proceeding. Accordingly, although an entitlement for use proceeding may have already been initiated by, say, a party’s filing of an application, an individual other than a party or the party’s agent is not prohibited from contributing more than $250 in the aggregate until after they qualify as a participant or participant’s agent.

Pending Proceeding Example 1
You file an application with the City Parks Department to host a large, ticketed event at a City park. The application will initially be considered and decided by the Parks Department, but a denial by the Parks Department may be appealed to the City Council. For you, the project is pending with respect to the City Parks Department, and with respect to the City Council.

Pending Proceeding Example 2
Continuing the above example, suppose the Parks Department denies your application, but you decide not to appeal the decision to the City Council. Although you have privately decided not to appeal the decision, no “final decision” has been reached during the period in which the Parks Department’s decision may still be appealed. Accordingly, the proceeding is still considered pending with respect to the City Council for purposes of Section 84308.

Fair Political Practices Commission 9 Parties, Participants, Agents, and Section 84308 October 2023
E. HOW IS THE $250 LIMIT CALCULATED?
Section 84308’s prohibition on contributions exceeding $250 over a 12 month period refers to the aggregate value of contributions made over that time period. For example, you are not permitted to contribute a total of $1,000 to an officer in a 12 month period simply by making four $250 contributions.

Knowing the aggregate value of contributions you have made to an officer of an agency over a 12-month period is important for purposes of: (1) avoiding a violation of Section 84308 by contributing more than $250 during a 12-month period; and (2) if you are a party, ensuring contributions over $250 made in the preceding 12 months are properly disclosed.

To determine whether you have contributed more than $250 as a party or participant during a 12-month period, you must aggregate the following:
(1) All contributions you have made;
(2) All contributions made by your agent during the shorter of: (A) the previous 12- month period; or (B) the period beginning on the date you first hired the agent as either a paid employee, contractor, or consultant.
(3) All contributions made by an individual, other than an uncompensated officer of a non-profit organization, required to be aggregated with contributions made by you and your agent under Section 82015.5 of the Political Reform Act.

Section 82015.5
Section 82015.5 provides:
· If you direct or control an entity’s contributions, the entity’s contributions shall be aggregated with contributions made by you; and any other entity whose contributions that individual directs or controls.
· If two or more entities make contributions that are directed or controlled by a majority of the same persons, the contributions of those entities shall be aggregated.
· Contributions made by entities that are majority owned by you shall be aggregated with your contributions, as well as the contributions of all other entities majority owned by you, unless those entities act independently in their contribution-making decisions.

In practice, Section 82015.5’s aggregation rules will most frequently come into play when you make a contribution in your personal capacity, and make another contribution through a business that you direct or control.

Fair Political Practices Commission 10 Parties, Participants, Agents, and Section 84308 October 2023
F. WHAT ARE MY RESPONSIBILITIES IF I HAVE MADE
GREATER THAN $250 IN CONTRIBUTIONS WITHIN THE
PAST 12 MONTHS?

1. Prohibition on Further Contributions During a 12-Month Period Section 84308 prohibits parties, participants, and their agents from “mak[ing] a contribution of more than two hundred fifty dollars ($250) to any officer of [the agency the entitlement for use proceeding is before] during the proceeding and for 12 months following the date a final decision is rendered by the agency in the proceeding.” Each contribution beyond the $250 limit may constitute a separate violation of this provision. Accordingly, if you have already violated Section 84308 by contributing more than $250 to an officer during a 12-month period while a proceeding is pending and for 12 months thereafter, you should be aware that additional contributions in violation of Section 84308 may carry additional penalties.

Aggregation Example
You contributed $100 to a Planning Commissioner’s campaign committee on January 1, the day before you submitted a building permit application to the planning commission. On February 1, you contributed another $50 to the campaign committee, but did so through your business. On March 1, you hired an attorney to represent you and, that same day, your attorney submitted a letter in support of your application to the Planning Commission. Your attorney had previously contributed $100 to the Planning Commissioner’s campaign committee on February 1, before she became your agent. On April 1, your attorney contributes another $50 to the Planning Commissioner’s campaign committee. For purposes of aggregation, the relevant contributions are:
· January 1: Your personal $100 contribution
· February 1: Your business’s $50 contribution
· April 1: Your agent’s $50 contribution
In total, your aggregate contribution to the Planning Commissioner is $200 and does not need to be disclosed. Although your agent also donated another $100 to the Commissioner’s campaign committee on February 1, that contribution was made before she became your agent and, consequently, is not aggregated with your contributions. Accordingly, you (and those whose contributions are aggregated with yours, including your agent) may contribute an additional $50 within a 12-month period, but any more than that during the 12-month period would violate Section 84308 and must be disclosed.

Fair Political Practices Commission 11 Parties, Participants, Agents, and Section 84308 October 2023

2. Disclosure
If you are a party to an entitlement for use proceeding and your aggregate contribution to an officer of the agency over the past 12 months is greater than $250, you are required to disclose the contribution as follows:
· Timing:
o Contributions Made Before Pending Proceeding: If you made the contribution before the proceeding is pending, you must make the disclosure on the date you file your application or otherwise initiate the proceeding (Note: you do not violate Section 84308 by making a contribution greater than $250 during the 12 months preceding an entitlement for use proceeding, but such contributions must still be disclosed);
o Contributions Made During Pending Proceeding: If you made a contribution exceeding $250 while the proceeding is pending (in violation of Section 84308), you are required to disclose that contribution within 30 days of making the contribution, or the date on which you make your first appearance before or communication with the agency regarding the proceeding following the contribution, whichever is earliest. o Agents: If an agent of yours makes an appearance before or communicates with the agency subsequent to your previous disclosure, you or the agent must disclose the agent’s identity on the date of the agent’s first appearance or communication with the agency following your disclosure. · Contents: The disclosure must include:
o The amount contributed by you, your agent, and those required to be aggregated with your contributions under Section 82015.5 within the preceding 12 months; and
o The name(s) of the contributor(s).
· Form: Neither Section 84308 nor its related regulations specify the exact form disclosure must take beyond the requirements discussed in the “Disclosure” section above. Given the wide variety of agencies and jurisdictions Section 84308 applies to, disclosure may take different forms. Your disclosure must be made “on the record of the proceeding,” and, if applicable, conform to the format specified by the agency. This may include, for example, noting the contribution on your application or submitting a separate form to accompany your application.

Note: While a party to a proceeding is required to follow the disclosure procedure described above, a participant in a proceeding does not have any disclosure requirements. However, a participant is still prohibited from contributing more than $250 while the proceeding is pending and for 12 months thereafter.

Fair Political Practices Commission 12 Parties, Participants, Agents, and Section 84308 October 2023
G. FREQUENTLY ASKED QUESTIONS

1. What are the potential consequences for violating Section 84308? As with most provisions of the Political Reform Act, a violation of Section 84308 may result in a civil action brought by the FPPC for an amount up to five thousand dollars ($5,000) per violation.

The Political Reform Act also provides that, as a criminal matter, any person who knowingly or willingly violates any provision of the Act is guilty of a misdemeanor and subject to a fine of up to the greater of ten thousand dollars ($10,000) or three times the amount the person unlawfully contributed upon conviction for each violation.

2. What is the best way to know if I have a financial interest in an entitlement for use proceeding?
If you are a party in an entitlement for use proceeding, Section 84308’s requirements and prohibitions automatically apply to you. The relevance of a “financial interest” in an entitlement for use proceeding is only relevant to determining whether an individual qualifies as a “participant” for purposes of Section 84308.

If you have participated, or would like to participate in an entitlement for use proceeding but are unsure of whether you may qualify as a “participant,” under Section 84308, you should contact the FPPC with any questions. As a general rule, however, you have a financial interest in an entitlement for use proceeding if it is reasonably foreseeable the proceeding, or a governmental decision that is a part of the proceeding, would have a material financial effect on an economic interest of yours, such as a business interest, a real property interest, or a source of income. You may also find it helpful to review our guide on Officers and Section 84308, available on our website (https://www.fppc.ca.gov/learn/pay-to-play-limits-and-prohibitions.html), as it contains a more detailed discussion regarding the determination of financial interests for Section 84308 purposes. Additional information on conflicts of interest may be found at https://www.fppc.ca.gov/learn/conflicts-of-interest-rules.html.

3. If I am a party or qualify as a participant in an entitlement for use proceeding, does the $250 limit include contributions made by my spouse? In general, spouses’ contributions are not aggregated for purposes of disqualification under Section 84308, except in the following two scenarios:
(1) Where the proceeding involves property or a business that is owned jointly by the spouses; or
(2) Where the spouse is acting as the agent of the party or participant spouse.

Fair Political Practices Commission 13 Parties, Participants, Agents, and Section 84308 October 2023

4. If my employer is a party in an entitlement for use proceeding, am I prohibited from contributing more than $250 to an officer of the agency? Are my contributions aggregated with my employer’s contributions? In most cases, the fact that your employer is a party in a proceeding will not impact your ability to contribute more than $250 to an officer of the agency the proceeding is pending before. The mere fact that you are an employee of a company does not mean you also qualify as a party, participant, or agent; rather, additional circumstances would have to apply.
· Parties: In order to be treated as a party based on the fact that your employer is a party—and therefore have your contributions aggregated with your employer’s—you would have to be more than merely a “rank-and-file” employee.

Rather, you would have to be an individual who directs or controls your employer’s campaign contributions or be the majority owner of the company. · Agents: To be considered an agent based on your employer’s status as a party, as discussed above, you would have to: (1) represent your employer for compensation; and (2) appear before or otherwise communicate with the governmental agency for the purpose of influencing the pending proceeding.

Example: if you felt strongly about the proceeding and decided to submit a public comment in support of your employer’s application in a proceeding—but did so in your personal capacity rather than as an employee as a part of your job—you would not qualify as an “agent” on the basis of your employment and communication with the agency, but you may still qualify as a participant. · Participants: If you communicate with an officer or agency for the purpose of influencing a proceeding, but do not do so as an agent, you may qualify as a participant. As discussed above, you will generally qualify as a participant in situations where: (1) you communicate with the agency or an officer of the agency for purposes of influencing the proceeding; and (2) you have a financial interest in the proceeding—that is, where the proceeding would have a reasonably foreseeable, material financial effect on your source of income.

In the ordinary context where your employer is a business entity or non-profit organization, a proceeding will be considered to have a reasonably foreseeable, material financial effect on the entity or organization if the entity/organization is a party in the proceeding.

5. Does Section 84308 apply the same way to non-profit organizations as it does to businesses?
In general, Section 84308 applies the same to non-profit organizations as it does to businesses and any other entity or individual. A non-profit organization may be subject to the $250 limit if the organization qualifies as a party, participant, or agent of a Fair Political Practices Commission 14 Parties, Participants, Agents, and Section 84308 October 2023
party or participant. Similarly, as discussed in Question 4 above, officers and employees of a non-profit organization are not subject to Section 84308 unless the officers or employees themselves qualify as parties, participants, or agents.

The one distinction between Section 84308’s treatment of non-profit organizations compared to other entities is that the contributions of a non-profit officer whose contributions would ordinarily be aggregated with contributions by the non-profit pursuant to Section 82015.5 (see discussion above) are not aggregated if the non-profit officer is uncompensated.

6. What if the entitlement for use proceeding lasts longer than one year? Am I prohibited from contributing more than $250 even if the proceeding extends to, say, two or three years?
Section 84308’s $250 contribution limit applies to any 12-month period before, during, and immediately after an entitlement for use proceeding. In the event that a proceeding extends longer than 12 months, a party, participant, or agent would not violate Section 84308 by making an additional contribution, as long as the total contribution within the preceding 12 months was $250 or less.

For example, if on January 1, 2023, a party filed an application for an entitlement that would eventually be considered by the city council and, that same day, the party contributed $250 to each city councilmember, then on January 1, 2024, the party would be permitted to contribute an additional $250 to each city councilmember and would not be required to disclose those contributions.

Re-framing the above example, suppose the party contributed only $150 to each councilmember on January 1, 2023, then contributed an additional $100 to each councilmember on July 1, 2023. On January 1, 2024, the party would be permitted to contribute an additional $150, not $250 as in the above example. This is because the $100 contribution from July 1, 2023 occurred within the preceding 12 months. If the party contributed $150 on January 1, 2023, and $100 on July 1, 2023, the party would be permitted to contribute another $250 on July 1, 2024, because at that point the party would not have made any contribution within the preceding 12 months.

7. What if it has been less than 12 months since I made a contribution in 2022? Do contributions made in 2022 count toward the $250 limit? Under Regulation 18438, Section 84308’s provisions, as amended by SB 1439 and effective as of January 1, 2023, do not apply to contributions received prior to that date. Accordingly, if you made a contribution to an elected official in 2022, that contribution does not implicate Section 84308’s prohibitions and requirements (e.g., a party is not required to disclose a $250+ contribution that occurred in 2022).

Fair Political Practices Commission 15 Parties, Participants, Agents, and Section 84308 October 2023

8. May I contribute $250 to one committee controlled by a candidate and also contribute $250 to another committee controlled by the same candidate? The $250 limit applies to each candidate, not each committee, such that a party, participant, or agent may not donate more than $250 across all of an officer’s controlled committees.

9. Are project labor agreements establishing the terms and conditions of employment for workers on certain projects considered exempt “labor contracts” under Section 84308?
Yes. A “labor contract” is defined as “a contract or agreement reached through collective bargaining or with a representative group regarding the salary, benefits, or terms and conditions under an employment or retirement policy for employees or retirees, including a project labor agreement entered into under Public Contract Code Section 2500.”

10. If a union representative provides public comment in support or in opposition of a governmental decision and indicates the decision will have a financial impact on its members, is the union considered a “participant”? To be a “participant,” a person or entity (including a non-profit organization) must have a financial interest in the proceeding. A non-profit organization such as a union does not necessarily have a financial interest in a proceeding solely because it would be beneficial to the organization’s members. Rather, the proceeding would need to have a reasonably foreseeable, material financial effect on the organization itself. The relevant standards for determining a reasonably foreseeable, material financial effect on a nonprofit organization are:
· Change in Receipts: The decision may result in an increase or decrease of the organization's annual gross receipts, or the value of the organization's assets or liabilities, in an amount equal to or more than: $1,000,000; or five percent of the organization's annual gross receipts and the increase or decrease is equal to or greater than $10,000.
· Change in Expenses: The decision may cause the organization to incur or avoid additional expenses or to reduce or eliminate expenses in an amount equal to or more than: $250,000; or one percent of the organization's annual gross receipts and the change in expenses is equal to or greater than $2,500. · Impact on Real Property: The official knows or has reason to know that the organization has an interest in real property and: the property is a named party in, or the subject of, the decision; or there is clear and convincing evidence the decision would have a substantial effect on the property.

Accordingly, unless it is reasonably foreseeable that a non-profit organization would experience any of the above financial effects (e.g., the union’s receipt of union dues increases by $1,000,000 as a result of the increased union wages caused by a Fair Political Practices Commission 16 Parties, Participants, Agents, and Section 84308 October 2023
government contract), the non-profit organization will not qualify as a “participant” and an officer is not prohibited from receiving more than $250 from the organization advocating for or against a particular decision in an entitlement proceeding. 1 CITY OF STANTON

REPORT TO THE CITY COUNCIL
TO: Honorable Mayor and Members of the City Council
DATE: February 27, 2024
SUBJECT: AUTHORIZATION FOR MAYOR AND COUNCIL MEMBERS TO

ATTEND UPCOMING MEETINGS AND EVENTS
REPORT IN BRIEF:

Pursuant to the City of Stanton Travel and Reimbursement policy, the Mayor and/or a Council Member must receive City Council approval prior to a trip if the trip will exceed $500. Council will consider the following requests for travel:
• Mayor David J. Shawver
o Event: League of California Cities 2024 City Leader Summit o Location: Sacramento, CA
o Dates: April 17 – 19, 2024
• Mayor David J. Shawver
o Event: Southern California Association of Governments (SCAG) 59th Annual Regional Conference and General Assembly
o Location: Palm Desert, CA
o Dates: May 2 – 3, 2024
• Council Member Donald Torres
o Event: League of California Cities 2024 City Leader Summit o Location: Sacramento, CA
o Dates: April 17 – 19, 2024
RECOMMENDED ACTION:

1. City Council find that this item is not subject to California Environmental Quality Act (“CEQA”) pursuant to Sections 15378(b)(5)(Organizational or administrative activities of governments that will not result in direct or indirect physical changes in the environment); and

2. Authorize the Mayor and/or Council Member attendance at the proposed meetings and events as desired and authorize staff to make a budget adjustment as needed to cover registration and travel costs.

Item: 9B
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2 ANALYSIS/JUSTIFICATION:

The League of California Cities (Cal Cities’) 2024 City Leader Summit is scheduled for April 17 - 19, 2024 in Sacramento. The City Leaders Summit is a unique advocacy and education event. During the event, city leaders will spend a full day meeting with legislators to discuss the most pertinent issues affecting their cities and attend two days of in-depth educational sessions to explore local solutions to statewide problems.

The Southern California Association of Government’s (SCAG) 59th Annual Regional Conference and General Assembly is scheduled for May 2 – 3, 2024 in Palm Desert, California. The conference program will feature the many geographic, demographic and economic advantages and challenges for 2024 and beyond within Southern California, requiring proactive collaboration across local boundaries. Following final adoption of the Connect SoCal 2024 Regional Transportation Plan/Sustainable Communities Strategy, the conference program will feature local and regional leaders who will meet to share and learn from each other on the future of mobility, housing and communities, the environment and the economy.

FISCAL IMPACT:

The per person cost to attend the League of California Cities 2024 City Leader Summit is as follows:
• Registration: $650
• Hotel (3 nights): $800 (not including applicable taxes and fees) • Parking (3 nights): $75
• Flight (as of 02/13/2024): $200
• Per diem (3 days): $270
• Transportation:
o Uber/Lyft $100
o Car rental $400
TOTAL: $2,095 – $2,395 (dependent upon transportation)
TOTAL X 2: $4,190 – $4,790 (dependent upon transportation) The per person cost to attend the Southern California Association of Governments (SCAG) 59th Annual Regional Conference and General Assembly is as follows:
• Registration: Free for elected officials in the SCAG region • Hotel (1 night): Covered by SCAG
• Hotel (1 night): $250 (not including applicable taxes and fees) • Parking (3 days): $150
• Per diem (3 days): $150 - $250
• Mileage: $200
TOTAL: $750 – $850 (dependent upon per diem)
3 The Fiscal Year 2023-24 Adopted Operating Budget includes $15,000 in Account No. 101-1100-607110 for City Council Travel/Conference/Meetings. To-date the current amount available is $10,950. Utilizing the highest estimates, the fiscal impact of approving these requests is approximately $5,640.

ENVIRONMENTAL IMPACT:

This item is not subject to California Environmental Quality Act (“CEQA”) pursuant to Sections 15378(b)(5)(Organizational or administrative activities of governments that will not result in direct or indirect physical changes in the environment).

PUBLIC NOTIFICATION:

Through the normal agenda process.

STRATEGIC PLAN OBJECTIVE ADDRESSED:

Obj. No. 6: Maintain and promote a responsive, high quality and transparent government.

Prepared by: Patricia A. Vazquez, City Clerk
Fiscal Impact Reviewed by: Michelle Bannigan, Finance Director Approved by: Hannah Shin-Heydorn, City Manager
Attachments:

A. League of California Cities 2024 City Leader Summit Announcement B. Southern California Association of Governments (SCAG) 59th Annual Regional Conference and General Assembly Announcement
City Leaders Summit
April 17-19, 2024
SAFE Credit Union Convention Center
1400 J Street, Sacramento, CA
The City Leaders Summit offers opportunities for city leaders from across the state to influence policy decisions in the Capitol and gain top-notch leadership skills. City officials can meet with legislators to advocate for cities’ top priorities and participate in peer-topeer discussions and in-depth sessions covering topics ranging from leadership to emerging issues facing cities. We hope you join us April 17-19 at the SAFE Credit Union Convention Center for our 2024 City Leaders Summit!
2024 Summit Information
Registration
Capacity is limited, and registration is subject to sell out prior to the registration deadline. Register early!
Full Registration Includes: • admission to all educational sessions • admission to the Wednesday evening reception, Thursday breakfast and lunch, and Friday breakfast
• access to all program materials
Attendees can register through their MyCalCities account. If you have not used your MyCalCities account already, please review details about the portal and contact us for questions.

Register online through your MyCalCities account by Wednesday, March 27.

If you are registering someone other than yourself, first sign in as yourself and then choose the option to register someone else.

Attachment: A
Click here to return to the agenda.

Note: Registrations through MyCalCities are available for credit card payments only. If you need to be invoiced and pay with a check, create your account and then reach out to conference registrar, Megan Dunn, to request an invoice. Full payment is due at the time of registration.

To request an accommodation or for inquiries about accessibility, please contact conference registrar, Megan Dunn. Every effort will be made to honor requests submitted.

View Cal Cities’ event and meeting policies in advance of the seminar.

Full Conference Registration Fees Member-City Officials and City Staff $650 Non-Member City Officials and City Staff $1,650
All Others $850

One-Day Registration Fees Wednesday-only registration for member city officials and city staff $160 Thursday and Friday-only registration for member city officials and city staff $485 Wednesday-only non-member city registration $1,160
Thursday and Friday-only non-member city registration $1,485 Wednesday-only registration for all others $340
Thursday and Friday-only registration for all others $540 Guest Pass to Wednesday Reception $50

*The guest/spouse fee is restricted to persons who are not city or public officials, are not related to any Cal Cities Partner or sponsor, and would have no professional reason to attend the conference. It includes admission to Wednesday’s networking reception only.

There is no refund for the cancellation of a guest/spouse registration. It is not advisable to use city funds to register a guest/spouse.

Refund Policy Advance registrants unable to attend will receive a refund of rate paid, minus a $75 processing charge, only when a written request is submitted to Megan Dunn, and received on or before March 27. Refunds will not be available after this date. If you are unable to attend, you may substitute a colleague for your entire registration.

Hotel and Travel
A limited number of hotel rooms are available at a reduced rate for conference attendees.

The discounted hotel rate cut-off is March 26, 2024. Hotels are subject to sell out prior to the deadline – reserve early!

STEP ONE: Register for the Conference

STEP TWO: Book a hotel room
Once registration is complete, you will receive a confirmation e-mail directing you to the group housing reservations page.

Hyatt Regency Sacramento
1209 L Street
Sacramento, CA 95814
(916) 443-1234

Group Hotel Rate (per night): $229 – Single/Double Occupancy (plus tax and fees)

Residence Inn Capitol Park
1121 15th Street
Sacramento, CA 95814
916-443-0600

Group Hotel Rate (per night): $230 – Single/Double Occupancy (plus tax and fees)

Hotel Changes or Cancellations Hotel reservation changes, date modifications, early check-out, or cancellations must be made directly through the hotel. Please note that after March 26, 2024 has passed, you may incur a financial penalty and minimum one-night room charge or attrition fees.

PLEASE NOTE: The information you provide to Cal Cities when registering for a Cal Cities conference or meeting may be shared with the conference or meeting hotel(s). The hotel(s) will also share with Cal Cities the information you provide to the hotel(s) when you make your hotel reservation for the conference or meeting. The information shared between Cal Cities and the hotel(s) will be limited to your first name, last name, email, and dates/length of stay in the hotel.

CAUTION! You must be registered for the conference prior to booking a hotel room. Do not make a hotel reservation unless you are sure it is needed. Your city/company will be financially responsible for all cancellation/attrition fees. If you are making hotel reservations for others, please confirm with each individual, in advance, that they actually need hotel accommodations and intend to use them on the dates you are reserving.

Parking and Transportation Please visit the SAFE Credit Union Convention Center’s website for information regarding nearby parking garages.

Hyatt Regency Sacramento
Self-Parking: $25.00 for overnight parking or $30.00 for day use.

Valet Parking (per day): $37.00 for overnight parking or $40.00 for day use.

Residence Inn
Self-Parking: $25.00 for overnight parking

Nearby airport:

Sacramento International Airport (SMF): 11 miles
Schedule at a Glance
*Schedule subject to change
Wednesday, April 17
Registration Open
8:30 a.m.–5:30 p.m.

Opening General Session
10 a.m.-noon
Day one of the conference focuses on legislative advocacy. Join Cal Cities leadership and lobbyists for an update on high priority legislation that you will want to advocate on when you meet with legislative officers later in the day.

Lunch on Your Own/Meetings with Legislators
Noon–2:00 p.m.

Educational Session
2:00–3:30 p.m.

Educational Session
3:45-5:00 p.m.

Reception
5:00-7:00 p.m.

Thursday, April 18
Registration Open
7:00 a.m.–4:00 p.m.

Networking Breakfast
7:00-8:15 a.m.

General Session
8:30-10:00 a.m.

Concurrent Educational Sessions
10:15-11:30 a.m.

Networking Lunch
11:30 a.m.-12:30 p.m.

Concurrent Educational Sessions
12:45-2:00 p.m.

Concurrent Educational Sessions
2:15-3:30 p.m.

Concurrent Educational Sessions
3:45-5:00 p.m.

Friday, April 19
Registration Open
7:30-11:00 a.m.

Networking Breakfast
7:45-8:45 a.m.

Concurrent Educational Sessions
9:00-10:15 a.m.

Closing General Session
10:30 a.m.-noon
Adjourn
Noon
2024 REGIONAL CONFERENCE & GENERAL ASSEMBLY
MAY 2-3, 2024

JW MARRIOTT DESERT SPRINGS RESORT & SPA
SCAG will host the 59th Annual Regional Conference and General Assembly on May 2- 3 at the JW Marriott Desert Springs Resort & Spa in Palm Desert.

Southern California has many geographic, demographic and economic advantages, but the challenges of 2024 and beyond will require proactive collaboration across local boundaries. Following final adoption of the Connect SoCal 2024 Regional Transportation Plan/Sustainable Communities Strategy, the 2024 Regional Conference and General Assembly brings together local and regional leaders to share and learn from each other on the future of mobility, housing and communities, the environment and the economy.

Register online to join leaders in business, planning and public policy working to accelerate the region at the 59th annual Regional Conference and General Assembly.

Attachment: B
Click here to return to the agenda.

Event Information:

TICKETS
Registration Early Bird Online Onsite
General Admission $400 $550 $700
SCAG Region Elected Official Free Free Free
SCAG Region City Manager Free Free Free
SCAG Region Student $150 $150 $150
Deadline March 29 April 26 May 3

REFUND POLICY
If an attendee for the 2024 Regional Conference & General Assembly cancels on or before April 12, the attendee will receive a full refund of registration fees.

If an attendee for the 2024 Regional Conference & General Assembly cancels after April 12, the attendee will not receive a refund of registration fees unless due to an emergency.

If an attendee for the 2024 Regional Conference & General Assembly cancels after the start of the conference on May 2, no refund of registration fees will be issued.

Requests for refunds after the refund deadline must include an explanation for the reason and be submitted in writing. Upon receipt of a request to refund registration fees, SCAG will evaluate each circumstance and determine whether the request is granted. Please allow up to five (5) business days to process your refund request.

HOTELS
The conference room rate is $205 per night. The cutoff date to book a hotel room at the discounted rate is Monday, April 15. SCAG cannot guarantee any rooms past this date.

You will receive a separate confirmation email for your hotel reservation.

LOCATION & PARKING
JW Marriott Desert Springs Resort & Spa
74-855 Country Club Drive, Palm Desert, CA 92260
The event venue has ample parking. For overnight guests, self-parking is included in the resort fee. For all other attendees, mention SCAG to self-park for $15 per day. Valet parking is $40 for overnight.

AGENDA
MAY 1 | WEDNESDAY
3 p.m. EXECUTIVE/ADMINISTRATIVE COMMITTEE MEETING
6 p.m. PRESIDENT’S RECEPTION (Invitation Only)
MAY 2 | THURSDAY
8 a.m. REGISTRATION, NETWORKING & CONTINENTAL BREAKFAST 9 a.m. REGIONAL COUNCIL MEETING
10 a.m. WELCOME & OPENING REMARKS
11 a.m. GENERAL ASSEMBLY MEETING
12:15 p.m. SUSTAINABILITY AWARDS LUNCHEON
2:15 p.m. BREAKOUT SESSIONS I
2:15 p.m. STUDENT SHOWCASE
3:15 p.m. BREAK & NETWORKING
3:45 p.m. BREAKOUT SESSIONS II
3:45 p.m. STUDENT SHOWCASE
5:30 p.m. EVENING RECEPTION
MAY 3 | FRIDAY
8 a.m. REGISTRATION
8:30 a.m. BREAKFAST
9 a.m. WELCOME
9:10 a.m. STUDENT SHOWCASE AWARDS
9:30 a.m. KEYNOTE ADDRESS
10 a.m. PLENARY PANEL SESSION
11:15 a.m. CONFERENCE WRAP-UP
1 CITY OF STANTON

REPORT TO THE CITY COUNCIL
TO: Honorable Mayor and Members of the City Council
DATE: February 27, 2024
SUBJECT: APPROVE THE BUDGET ADJUSTMENTS PROPOSED FOR THE MIDYEAR BUDGET UPDATE FOR FISCAL YEAR 2023/24 REPORT IN BRIEF:

During the course of the fiscal year, it is often necessary to adjust estimated revenues and expenditure appropriations in various program areas, projects, and funds. Revenue for all City funds is increasing by $4.2 million and expenditures for all City funds is increasing by $4.6 million. Nearly half of the revenue increase, $1.7 million, is to adjust investment income due to increased interest earned from the City’s investment portfolio.

In Fiscal Year 2022/23, the City earned over $1.7 million in interest income. This trend has continued through the first half of the current fiscal year. All of the proposed changes to the Fiscal Year 2023/24 Adopted Operating Budget, including detailed explanations, are presented in Attachment A.

General Fund revenue is increasing by $2.1 million, and expenditures are decreasing by $748,425 resulting in a net increase in fund balance of $2.9 million, which will increase the General Fund’s available fund balance to a revised projected amount of $35.8 million by June 30, 2024.

Housing Authority revenue is increasing by $280,000, primarily due to interest income as previously discussed. Housing Authority expenditures are increasing by $4.3 million, primarily for relocation services for residents of the Tina Pacific affordable housing project.

RECOMMENDED ACTIONS:

1. City Council find that this item is not subject to California Environmental Quality Act (“CEQA”) pursuant to Sections 15378(b)(5) (Organizational or administrative activities of governments that will not result in direct or indirect physical changes in the environment); and

2. City Council approve the budget adjustments summarized in Attachment A.

Item: 9C
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2 BACKGROUND:

Attachment B illustrates the impact of the proposed adjustments to each fund’s revenue account. Attachment C illustrates the impact of the proposed adjustments to each fund’s expenditure account. Attachment D summarizes the impact of the proposed adjustments to the City’s Capital Improvement Program (CIP) for the current fiscal year.

Finally, Attachment E illustrates the impact of the proposed adjustments on each fund’s fund balance and includes a revised projected ending fund balance for June 30, 2024.

ANALYSIS:

General Fund Revenues (Attachment B, pages 1-6)
The City’s General Fund is reported in two funds, #101 (for the main General Fund activity) and #102 (for the Transaction & Use Tax Fund, i.e., Measure GG, activity). A summary of General Fund revenues is as follows:

Description
Amended
Budget
Proposed
Adjustments Elimination*
Revised
Budget
% of
Total
Property Taxes $ 9,163,100 $ 249,450 $ 9,412,550 28.6%
Sales Taxes 5,471,900 (95,170) 5,376,730 16.3%
Franchise Fees 1,157,000 184,470 1,341,470 4.1%
UUT 2,176,400 343,325 2,519,725 7.7%
Other Taxes 1,451,600 (48,600) 1,403,000 4.3%
Intergovernmental 520,990 (54,740) 466,250 1.4%
Charges for Services 144,720 - 144,720 0.4%
Fees and Permits 2,791,875 521,290 3,313,165 10.1%
Fines and Forfeitures 442,700 32,755 475,455 1.4%
Use of Money & Property 420,085 467,400 887,485 2.7%
Other Revenue 197,846 567,033 764,879 2.3%
Transfers In 882,000 4,000 (200,000) 686,000 2.1%
Sub-total 24,820,216 2,171,213 (200,000) 26,791,429
Transaction and Use Tax 6,154,000 (24,530) 6,129,470 18.6% Total General Fund Revenues $ 30,974,216 $ 2,146,683 $ (200,000) $ 32,920,899 100.0% * - Transfer from Transaction & Use Tax Fund to General Fund for Rodeo 39 loan repayment.

Property Taxes (29% of General Fund revenues) – Property taxes are the second largest funding source for General Fund operations. The County collects property taxes in April and December. The County’s website posts the amount of secured and unsecured property taxes that will be levied for Fiscal Year 2023/24, which is based on the assessed valuation of properties as of January 1, 2022. The City’s Fiscal Year 2023/24 adopted budget estimated a 4% increase in assessed valuation, however, the City’s assessed valuation increased 7% in Fiscal Year 2023/24. Total Fiscal Year 2023/24 estimated property tax revenue is increasing by $249,450, primarily due to adjusting redevelopment-related pass through property tax revenue and property tax received in lieu of vehicle license fees based on the actual January 2024 payments received. (The City collects 50% of the total annual revenue in January.) 3 Sales Tax and Transaction & Use Tax (35% of total General Fund revenues) – The largest funding source for the General Fund are sales tax and transaction and use tax revenues. When the Fiscal Year 2023/24 Budget was adopted, the City’s consultant, HdL, Inc. estimated sales tax and transaction and use tax would be consistent (no change) from the Fiscal Year 2022/23 amended budget. As of September 30, 2023 (the most recent sales tax information available), retail sales in Stanton were 5% lower during the quarter ended September 30, 2023, compared to the same quarter the previous year. In comparison, retail sales activity only decreased 1.1% in Orange County and Statewide during this period. Two issues are the main drivers of the decline:
fuel prices were over $0.30 less per gallon during this quarter in 2023 compared to the same quarter in 2022 and the City’s share in the Countywide sales tax pool decreased by 5.4% during this quarter. HdL revised their Fiscal Year 2023/24 sales tax and transaction and use tax revenue estimates, resulting in reductions of $95,170 and $24,530, respectively. (HdL’s revised revenue estimates include the sales and transaction and use taxes from the City’s four retail cannabis businesses that opened during the current fiscal year.)
Franchise Fees (4% of General Fund revenues) – This category consists of franchise fees the City receives from cable TV, electric, gas, refuse, and water service providers.

The fees are assessed at 5% of gross receipts. Staff is proposing an adjustment to increase revenues by $184,470 to be consistent with Fiscal Year 2022/23 actuals. (25% of this adjustment represents approximately $45,470 due from the Public Cable Television Authority (PCTA) for cable TV franchise fee revenue for the quarter ended June 30, 2023. As of the date of this staff report, this balance remains due to the City.) Utility User Taxes (UUT) (8% of General Fund revenues) – This category consists of the 5% utility user tax assessed on charges of electricity, gas, water, and telephone charges. Staff is proposing an adjustment to increase revenues by $343,325, to be consistent with the revenues collected in the previous fiscal year. UUT for electricity and gas services represent 94% of this adjustment.

Other Taxes (4% of General Fund revenues) – This category includes transient and occupancy tax (TOT), cannabis tax, and business license tax revenue. The original TOT revenue estimate used for the Fiscal Year 2023/24 adopted budget projected an increase of 3% from the Fiscal Year 2022/23 budgeted amount. However, actual revenue collected through January is approximately 8% lower than the amount collected for the same period in the previous year due to reduced occupancy at the motels. In addition, one motel business is expected to close during the fiscal year. As a result, staff recommends reducing the Fiscal Year 2023/24 TOT revenue estimate by $48,600.

Fiscal Year 2021/22 actual TOT revenue exceeded the Fiscal Year 2021/22 budget by approximately $81,000. The Fiscal Year 2023/24 adopted budget expected $620,000 in cannabis tax revenue. The City has collected approximately $416,000 (67%) of this revenue goal for cannabis sales through December 31, 2023. The majority of the revenue (94%) was collected from the two retail cannabis businesses that opened during Summer 2023. The other two retail cannabis businesses opened at the end of 4 calendar year 2023 (in October and November). No adjustment to the Fiscal Year 2023/24 cannabis tax revenue estimate is proposed at this time.

Intergovernmental Revenue (1% of General Fund revenues) – This category includes federal, state, and local grant revenues, as well as funds from the County of Orange for the City’s share of waste disposal revenue and the City’s share of public safety sales tax revenue. The proposed reduction of $54,740 in this category is to reflect a decrease of $50,000 in the City’s share of waste disposal revenue based on the average of the two previous fiscal years and to reduce the City’s share of Proposition 172 public safety sales tax revenue by $4,740 based on an updated estimate provided by HdL.

Fees and Permits (10% of General Fund revenues) – This category consists of fees charged to fund City services in building, engineering, and community services. Staff proposed an adjustment to increase revenues by $521,290 based on actual revenue collected through January. The City collected $386,650 in developer contributions for beautification, neighborhood preservation, and other public benefit fees. These revenues will be set aside in the General Fund’s committed fund balance because they can only be spent on activities outlined in the developer agreements. In addition, increases to the following revenues are proposed: other fees and permits for permit issuance fees ($45,000); forfeited construction and demolition deposits ($75,000); recycling fees ($22,140); and other developmental fees ($2,500). Lastly, an adjustment is proposed to eliminate the $10,000 in revenue budgeted for cannabis business renewal permit fees that will not be collected in Fiscal Year 2023/24.

Fines and Forfeitures (1% of General Fund revenues) – This category consists of fines charged to individuals for violating State law and the City’s Municipal Code. An adjustment is proposed to increase these revenues by $32,755 primarily due to increased parking citation revenue based on Fiscal Year 2022/23 actuals.

Use of Money & Property (3% of General Fund revenues) – This category accounts for revenue generated from the investment of City funds and the renting of City properties. The City has contracted with Chandler Asset Management (Chandler) to provide investment portfolio management services since June 2022. Over the last eighteen months, Chandler has improved the overall interest earned on the City’s investment portfolio by investing in different types of securities (corporate notes, supranational) and by investing in longer term securities (with maturity dates between two and five years) with higher interest rates. Due to the combination of Chandler’s investment strategy and the Federal Reserve increasing interest rates for U.S.

Treasuries and federal agency securities, the City’s interest revenue has been significant over the last eighteen months. The City earned over $1.7 million in interest in Fiscal Year 2022/23 (across all City funds). The City’s investment portfolio is performing just as well through the first half of Fiscal Year 2023/24 with total interest revenue received at $1.1 million for all City funds. As a result, the General Fund includes an adjustment to increase the Fiscal Year 2023/24 revenue estimate for interest by $460,000.
5 On November 22, 2022, the City Council approved a lease agreement with PCTA to lease the facility at Dotson Park from January 1, 2023, through December 31, 2023.

Although the initial lease term ended, the agreement has transitioned to a month-tomonth lease as PCTA continues to occupy the property. As a result, an adjustment is proposed to increase property rental revenue by $7,400 to reflect the rent income anticipated from January 1, 2024, through June 30, 2024.

Other Revenue (2% of General Fund revenues) – This category consists of revenues that do not meet the definition of the other revenue categories (fees, taxes, fines). The types of revenues in this category are primarily donations, loan repayments, and expense reimbursements. An adjustment is proposed to increase these revenues by $567,033. The primary component of this adjustment is to increase the loan repayment from the Landscape Maintenance District Fund by $526,473 to repay the interfund loan in full. The interfund loan’s term is seven years, scheduled to be paid in full on June 30, 2028. However, the Landscape Maintenance District Fund currently has sufficient funds to repay the loan in full during the current fiscal year due to increased property tax revenue collected over the last few fiscal years.

The other adjustments in this category include an increase of $21,000 to reflect donations received for special events (community art boxes, State of the City, and the 2023 tree lighting event) and $19,560 due from Caltrans for Fiscal Year 2022/23 expense reimbursements that were collected during Fiscal Year 2023/24.

Transfers In (2%) – An adjustment is proposed to increase this revenue by $4,000 to reflect additional assessment revenue available from the Fire Protective Services Tax Fund to reimburse the General Fund for fire protection services costs provided by the Orange County Fire Authority (OCFA).
6 General Fund Expenditures (Attachment C, pages 1-3)
A summary of General Fund expenditures is provided in the following table:

Description
Amended
Budget
Proposed
Adjustment Elimination*
Revised
Budget
% of
Total
General Fund (#101)
Administration $ 2,682,549 $ 68,770 $ 2,751,319 8.2%
Finance 1,080,665 6,715.000 1,087,380 3.2%
Public Safety 16,057,621 (1,756,191) 14,301,430 42.6%
Public Works 3,100,195 47,965 3,148,160 9.4%
Community Development 1,711,225 11,110 1,722,335 5.1%
Community Services 1,703,905 4,325 1,708,230 5.1%
Non-Departmental 390,000 5,000 395,000 1.2%
Transfers Out 1,605,976 20,155 1,626,131 4.8%
Sub-total 28,332,136 (1,592,151) - 26,739,985
Transaction & Use Tax Fund (#102)
Finance $ 6,500 $ - $ 6,500 0.0%
Public Safety 5,947,500 843,726 6,791,226 20.2%
Transfers Out 200,000 - (200,000) - 0.0%
Sub-total 6,154,000 843,726 (200,000) 6,797,726
Total General Fund Expenditures $ 34,486,136 $ (748,425) $ (200,000) $ 33,537,711 100.0% * - Transfer from Transaction & Use Tax Fund to General Fund for Rodeo 39 loan repayment.

Revised Fiscal Year 2023/24 General Fund expenditures are decreasing by $748,425.

The most significant adjustments to General Fund expenditures are:
• Reduction of law enforcement contract costs with County of Orange due to approval of labor contract agreements ($707,345);
• Reduction of law enforcement contract costs due to anticipated vacancy credit, net of overtime costs ($250,000);
• Additional funding for City Attorney costs associated with prosecution, code enforcement and public safety issues ($330,000);
• Unfunding of new ERP system for Finance ($300,000); and • Additional funding for general liability claims ($52,275).

Lastly, although there is no impact to the General Fund as a whole, the proposed adjustments include shifting $843,726 in law enforcement contract costs from the “main” General Fund (#101) to the Transaction & Use Tax Fund in an effort to spend the Measure GG revenues first.
7 Per Attachment E (page 1), the City’s General Fund reserves and available fund balance (“discretionary fund balance”) is estimated to be $35.8 million, 112% of Fiscal Year 2023/24 General Fund operating expenditures, by June 30, 2024, as shown in the table below.

Estimated
Balance
at 6/30/24
Set aside per Reserve Policy $ 14,400,000
Committed Developer Contributions 2,192,446
Assigned Fund Balance 2,762,092
Unassigned Fund Balance 16,448,159
Total Discretionary Fund Balance $ 35,802,697
Fiscal Year 2023/24 Law Enforcement Contract Costs
When the City’s budget was adopted in June 2023, the Fiscal Year 2023/24 law enforcement contract costs were unknown at the time because the County of Orange was in the process of negotiations with four labor bargaining groups: Association of Orange County Deputy Sheriffs (AOCDS); Association of County Law Enforcement Managers (ACLEM); Orange County Employees Association (OCEA); and Orange County Managers Association (OCMA). Since then, the County approved agreements with each labor bargaining group through June 27, 2025. The agreements include cost of living increases for all bargaining groups ranging from 4.25% to 5.00% effective June 28, 2024, and an additional cost of living increase of 4.00% for all bargaining groups effective June 27, 2025. Certain premium pays and other benefits are effective retroactively as of December 29, 2023. The City’s Fiscal Year 2023/24 law enforcement contract costs are $13.4 million, an increase of $206,400 (2%) from the Fiscal Year 2022/23 contract costs. (The spreadsheet summarizing the breakdown of the contract costs is included in Attachment F.) The preliminary estimate staff received from the County for the City’s Fiscal Year 2024/25 law enforcement contract costs reflects an increase of $1.0 million (8%).

Proposed Adjustments to Revenues and Expenditures in Other Funds Significant revenue and expenditure adjustments in other funds include the following:
• Gas Tax Fund (#211) – An adjustment is proposed to increase expenditures by $70,760, primarily for: additional funding for the Catherine Street sidewalk repairs ($15,000); funding for the City match for the Katella Avenue Regional Traffic Synchronization Project managed by the Orange County Transportation Authority ($15,000); and additional funding for minor street repairs as needed for the remainder of the fiscal year ($40,000).
8 • Lighting Maintenance 1919 Act Fund (#224) – An adjustment is proposed to increase expenditures by $526,473 to repay the interfund loan received from the General Fund in full as previously discussed.
• Street Impact Fees Fund (#261) – An adjustment is proposed to increase revenues by $125,000 to reflect revenue collected through January for residential development projects.
• Traffic Signal Impact Fees Fund (#262) – An adjustment is proposed to increase revenues by $25,000 to reflect revenue collected through January for residential development projects.
• Community Center Impact Fees Fund (#263) – An adjustment is proposed to increase revenues by $85,500 to reflect revenue collected through January for residential development projects.
• Police Services Impact Fees Fund (#264) – An adjustment is proposed to increase revenues by $77,000 to reflect revenue collected through January for residential development projects.
• Housing Authority Fund (#285) – Adjustments are proposed to increase revenue by $280,000, primarily due to interest income as previously discussed; and to increase expenditures by $4.3 million, primarily for relocation services for residents of the Tina Pacific affordable housing project. • Expendable Deposits Fund (#801) – Adjustments are proposed to increase revenue and expenditures by $61,068 and $51,140, respectively, based on actual deposits collected to fund City Attorney and other consulting costs for development projects.
• Sewer Maintenance Fund (#501) – An adjustment is proposed to increase revenue for sewer connection fees collected for Orange County Sanitation District by $300,000 based on actual activity through January. This revenue is offset by an adjustment to increase expenditures by $300,000 because the City passes the revenue through to the District.
• Liability/Risk Management Fund (#603) – An adjustment is proposed to increase expenditures by $60,000 to provide additional funding for general liability claims.

As of February 22, 2024, the City has paid over $92,000 for claims. This expenditure increase is offset by additional revenue from interest and reimbursements from other City Funds. (The total impact of this cost increase to the General Fund is $52,275.
9 Proposed Adjustments to the City’s Capital Improvement Program (CIP) (Attachment D) The Fiscal Year 2023/24 CIP budget includes $7.0 million from the Fiscal Year 2023/24 Adopted Budget and $12.7 million in carryover funding from Fiscal Year 2022/23, and $37,000 in additional appropriations approved by City Council since July 1, 2023, for a total amended budget of $19.7 million. Adjustments are proposed to increase the total CIP budget by $13,009 to provide additional funding for the Family Resource Center Improvements Projects (Phases 1 and 2) (Task Codes 2022-2001 + 2023-201). The additional costs will be funded from interest earned on the unspent American Rescue Plan Act (ARPA) funds received from the County and the available balance in the Capital Projects Fund (#305).

In addition, although there is no impact to the total CIP budget as a whole, the proposed adjustments include swapping $838,710 in the funding allocation for the Fiscal Year 2022/23 Citywide Street Rehabilitation Project (Task Code 2023-101) and Cerritos Avenue Street Resurfacing Project (Task 2024-102). Both projects are partially funded with Gas Tax and Measure M Funds. The City must spend approximately $340,585 in Measure M funds by June 30, 2024, per the Measure M2 Ordinance’s requirements.

The City recently paid the contractor for the Cerritos Avenue Street Resurfacing Project that was recently completed. Shifting the funding allocation for these two projects will ensure the City satisfies the Measure M spending requirement for Fiscal Year 2023/24.

A similar adjustment is proposed for funding the Annual Sewer Rehabilitation Project.

There is no change to the total project budget, however, an adjustment is proposed to eliminate the $109,845 in funding from the Sewer Capital Improvement Fund (#502) and fund this amount from the Sewer Maintenance Fund (#501) instead due to insufficient funds available in the Sewer Capital Improvement Fund.

FISCAL IMPACT:

The fiscal impact of the proposed budget adjustments is summarized in the “Net Impact to Available Fund Balance” column on Attachment A.

ENVIRONMENTAL IMPACT:

None.

LEGAL REVIEW:

None.

PUBLIC NOTIFICATION:

Through the normal agenda posting process.
10 STRATEGIC PLAN OBJECTIVE ADDRESSED:

Obj. No. 4: Ensure fiscal stability and efficiency in governance.

Prepared by: Michelle Bannigan, Finance Director
Approved by: Hannah Shin-Heydorn, City Manager
Attachments:

A. Proposed Budget Adjustments
B. Revenues and Transfers In by Fund
C. Operating Expenditures and Transfers Out by Fund
D. Capital Improvement Program (CIP) Expenditures
E. Reserve Balances by Fund
F. Final Fiscal Year 2023/24 OCSD Contract Cost Estimate Net Impact
to Available
Revenue Expenditure Fund
Description Adjustments Adjustments Balance
GENERAL FUND #101
Early repayment of loan to the Landscape Maintenance District Fund $          526,473 Adjust investment income based on current portfolio performance to date and Fiscal Year 2022/23 actuals             460,000
Reduce total contracted law enforcement contract costs for Fiscal Year 2023/24 from $14.1 million to $13.4 million per final contract spreadsheet received from County of Orange in February $        (707,345) Law enforcement contract cost savings anticipated during current fiscal year due to vacancy credits            (250,000)
Shifting funding of OCSD contract costs to the Measure GG Fund based on additional funding available due to better than expected results in Fiscal Year 2022/23            (843,726)
Adjust City Attorney costs based on actual costs for services billed through December 2023             330,000
Unfund purchase of new ERP system for Finance            (300,000) Adjust property tax revenue based on actual revenue collected through January 2023             249,450
Adjust developer contributions for revenues collected through January for beautification, neighborhood preservation and public benefit fees             386,650 Adjust sales tax revenue based on updated estimate provided by City's consultant, HdL, Inc.              (95,170)
Adjust utility user tax revenues based on Fiscal Year 2022/23 results             343,325 Adjust franchise fee revenues based on Fiscal Year 2022/23 results             139,000 Adjust revenue from County for waste disposal agreement based on Fiscal Year 2022/23 results              (50,000)
Adjust transient occupancy tax revenue based on actual revenue collected for motel stays through December 2023 and motel closure anticipated in Spring 2024              (48,600)
Adjust Cable franchise fee revenue to include revenue for the quarter ended June 30, 2023, that was not recognized in the prior year revenues because payment was not received by Public Cable Television Authority (PCTA) on or before August 31, 2023               45,470
Adjust recycling fee revenue to include revenue for the quarter ended June 30, 2023, that was not recognized in the prior year revenues because payment was not received from Pick Your Part on or before August 31, 2023               22,140 Adjust expense reimbursement revenues for Fiscal Year 2022/23 revenues that were not recognized in the prior year revenues because payment was not received from Caltrans on or before August 31, 2023               19,560 Adjust parking citation revenue based on actual activity to date (offset by contracted parking citation processing costs)               30,000                 4,500 Adjust other permit revenue and forfeited construction and demolition deposits based on actual activity through January             122,500 City of Stanton

PROPOSED BUDGET ADJUSTMENTS
FISCAL YEAR 2023/24

ATTACHMENT A