Vernon City Council
January 20, 2026

1 INVOICE
115 Technology Dr, A-201, Trumbull, CT 06611
t.203-268-5961 f.203-459-0301 e. [email protected] Number FGGI142-4-2 Date 11/12/2025
Sold To Ship To
City of Vernon
4963 South Soto Street,
Vernon, CA, 90058
US
Phone :

Fax :

City of Vernon
Jeff Fraga- [email protected]
4963 South Soto Street,
Vernon, CA, 90058
US
Phone :

Fax :

Bearings SN 7200 TX93/3C - Malburg Generation CA
Salesperson P.O.Number Ship Via Terms
Isabella Osak 00250490 FCA Illkirch France 100% prior to shipment Serial # Model Customer Reference
7200 TX90/3C Malburg CA SN 7200
Line # Quantity Product Description Part Number Unit Price Ext. Price 5 1 Shipping (Additional) $22,018.22 $22,018.22
Sub Total $22,018.22
Deposit $0.00
Total USD $22,018.21
Quotation is in USD
Warranty: 12 months of operation, 18 months after delivery, whichever occurs first. Must be installed by FGGS, as we are the only authorized service provider, to validate warranty If line 5 is purchased, DDP shipping from Flender France to Vernon CA to include all duties, taxes, custom clearance fees, insurance, and delivery Shipping price subject to change at time of pick up based on lead time.

All duty rates are subject to change without notice based on current government policies.

Duty rates provided are a good faith estimate, however, will be/can be updated based on new direction from various governments at the time of actual import. .
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Item 10 Page 2 of 212

2 FIRST GLOBAL GEAR SERVICES LLC TERMS AND CONDITIONS - SERVICES AND PARTS NOTICE: Sale of any services and/or parts ordered by Customer is expressly conditioned on Customer's assent to the terms contained herein. Any additional or different terms proposed by Customer are expressly objected to and will not be binding upon FGGS unless specifically assented to in writing by FGGS. FGGS's quotation is valid for 90 days, unless withdrawn prior to receipt of Customer's acceptance.

1. WARRANTY.
a. Services and Parts. Services performed on Customer's equipment by FGGS and any parts supplied by FGGS ("Work") are warranted to conform to the description of such products as provided in the FGGS catalog, analytical data or other literature, to the quotation specifications and to be free from defects in workmanship, material and title for a period of twelve months following the equipment's return to service, or eighteen months following completion of Work or delivery of the part, whichever occurs first. If any services or parts fail to meet the foregoing warranty, at FGGS's option, FGGS shall correct such failure by reperforming any portion of the nonconforming services or repairing or replacing any nonconforming or defective parts. Where a nonconforming or defective part cannot be corrected by FGGS's reasonable efforts, the parties will negotiate an equitable adjustment in price. All costs and risks of access to the equipment, disassembly, installation and reassembly associated with the corrective action shall be borne by Customer, if not included in the original Work scope. The supply of repaired or replacement parts, or reperformed services shall not extend the duration of the warranty period. b. Exclusive. The preceding paragraphs set forth the exclusive remedies for claims (except as to title) based on failure to conform to the Contract specifications or defects in workmanship, material, parts or services, or professional errors or omissions which may be asserted under any theory including, for example, breach of contract, indemnity, warranty, tort (including FGGS's negligence), strict liability or otherwise. Upon the expiration of the warranty period, all such liability shall terminate and Customer shall have a reasonable time, within ten (10) days after the warranty period, to give written notice of any nonconformance or defects that appear during the warranty period. NO IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR PURPOSE SHALL APPLY.
d. Limits. FGGS's obligations under this Article 1 shall not apply to any part or portion thereof, which (a) is nonconforming or defective due to normal wear and tear including that due to environment or operation, or (b) has a normal life inherently shorter than the warranty period, or (c) is not properly stored, installed, used or maintained other than pursuant to FGGS's written instructions or approval, or (d) has been subjected to any other kind of misuse or detrimental exposure or has been involved in an accident. In addition, this warranty shall be void if FGGS is not promptly notified of any failure in writing or has not been given prompt and complete access to the failed parts or equipment including full access to all diagnostic and repair efforts.

2. LIMITATIONS OF LIABILITY.
a. Notwithstanding anything else contained in this Contract, in no event, whether as a result of breach of contract, indemnity, warranty, tort (including FGGS's negligence), strict liability or otherwise, shall FGGS's liability to Customer, its subsidiaries and affiliates, successors or assigns, or its insurers for any loss or damage arising out of, connected with, or resulting from the Contract, or from FGGS's performance or breach, or from any Work covered by or furnished under the Contract or any extension or expansion thereof (including remedial warranty efforts), exceed the price of the Purchase Order giving rise to the claim.

Except as to title to any parts furnished, all such liability shall terminate upon the expiration of the warranty period specified in Article 1. Any such claim of liability must be commenced in no event later than one year from the termination of the warranty period in accordance with Article 17. This limitation of liability shall not apply to the indemnity for bodily injury or death as set forth in Article 4.
b. If FGGS furnishes Customer with advice or assistance concerning any part supplied hereunder or any part, system or equipment in which any such part may be installed and which is not required pursuant to this Contract, the furnishing of such advice or assistance will not subject FGGS to any liability.

C. Customer waives all rights of recovery against FGGS and all rights of subrogation, whether Customer's claim is brought under breach of contract, indemnity, warranty, tort, strict liability or otherwise, for loss or damage to the property of Customer to the extent such claim is covered by insurance maintained by Customer. For the purposes of Articles 2 and 3, the term "FGGS" includes FGGS and its subcontractors, suppliers, subsidiaries and affiliates, their directors, officers, agents, employees, successors and assigns and authorized representatives.

3. CONSEQUENTIAL DAMAGES.

Notwithstanding anything else contained in this Contract, in no event, whether as a result of breach of contract, indemnity, warranty, tort, strict liability or otherwise, shall FGGS be liable to Customer or its subsidiaries and affiliates, successors or assigns, or its insurers for any special, incidental, exemplary, indirect or consequential damages, including, without limitation, loss of profits or revenues, loss of use of any property, parts or any associated equipment, damage to associated equipment, cost of capital, cost of purchased power, cost of substitute equipment, facilities, parts, services or replacement power, downtime costs or claims of customers of Customer for such damages.
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Item 10 Page 3 of 212

3 FGGS Terms and Conditions Services and PARTS

4. INDEMNITY.

FGGS and Customer each agree to defend, indemnify, and hold harmless the other party, including the other party's subcontractors, suppliers, subsidiaries and affiliates, their directors, officers, agents, employees, successors and assigns and authorized representatives, from and against any claim, loss, damage or expense for all bodily injury or death, but only to the extent that such bodily injury or death is caused by the indemnifying party's negligence. In the event that such bodily injury or death is caused by the joint or concurrent negligence of FGGS and Customer, the claim, loss, damage or expense shall be borne by each party in proportion to its own negligence.

5. INSURANCE.

FGGS, at its expense, shall procure and maintain in effect without interruption during the term of this Contract, policies of insurance providing the coverages and limits specified, and complying with the other requirements stated below (all amounts below are stated in US dollars):
a. Worker's Compensation in statutory amounts with a minimum limit of $1,000,000. b. Commercial General Liability on an Occurrence Basis, with the following coverages and limits:
i. Per Occurrence $1,000,000
ii. General Aggregate $1,000,000
C. Automobile Liability covering automobiles of FGGS, including owned, hired and non-owned automobiles, for Bodily Injury and Property Damage with a combined single limit of $1,000,000 each Occurrence. d. Excess Liability in Umbrella Form with a limit of $1,000,000 each Occurrence, $1,000,000 Aggregate.

6. PATENTS.

FGGS warrants that parts furnished hereunder shall be delivered free of any rightful claim of any third party for infringement of any U.S. patent. If notified promptly in writing and given authority, information and assistance, FGGS shall defend, or may settle, at its expense, any suit or proceeding against Customer so far as based on a claimed infringement of a U.S. patent which would result in a breach of this warranty. In case any part is in such suit held to constitute such an infringement of a U.S. patent and the use for the purpose intended of said part is enjoined, FGGS shall, at its expense and option, either procure for Customer the right to continue using said part, or replace same with a noninfringing part, or modify same so it becomes noninfringing, or remove the part and refund the Contract price. The foregoing states the entire liability of FGGS for patent infringement.

The preceding paragraph shall not apply to any parts specified by Customer or manufactured to Customer's design, or purchased from other sources, or to the use of any parts furnished hereunder in conjunction with any other parts in a combination not furnished by FGGS as part of this Contract.

7. DELIVERY.

Completion dates are approximate and are based upon prompt receipt of the equipment and all necessary information from Customer, or ready access to same if Work is to be done at Customer's facility. Unless otherwise specified by FGGS, all shipments of parts are FCA Manufacturer's facility (Incoterms). The method of shipment for each item is listed in Seller's quotation. Immediately upon Customer's receipt of any goods or parts shipped hereunder, Customer shall inspect the goods or parts and shall notify FGGS in writing of any claims for shortages, defects or damages and shall hold the goods or parts for FGGSs written instructions concerning disposition. If Customer fails to so notify FGGS within five days after the goods or parts have been received by Customer, such goods or parts shall conclusively be deemed to conform to the terms and conditions hereof and to have been irrevocably accepted by the Customer.

8. EXCUSABLE DELAYS.

FGGS shall not be liable for any delay in delivery or performance, or for any failure to manufacture, deliver, or perform Work due to (a) any cause beyond its reasonable control; or (b) any act of God, act of Customer, act of civil or military authority, government priority, fire, severe weather condition, earthquake, strike or other labor disturbance, flood, epidemic, war (declared or undeclared, including civil unrest), riot, terrorist act, delay in transportation or car shortage; or (c) act (or omission) of Customer, including failure to promptly: (i) provide FGGS with information and approvals necessary proceed with performance, (ii) comply with the terms of payment, or (iii) inability on account of any cause beyond the reasonable control of FGGS to obtain necessary materials, components, services or facilities. The date of delivery or of performance shall be extended for a period equal to the time lost by reason of delay, plus such additional time as may be reasonably necessary to overcome the effect of such excusable delay.

FGGS shall notify Customer, as soon as practicable, of the revised date of delivery or of performance. If FGGS is delayed by acts or omissions of Customer, or by the prerequisite work of Customer's other contractors or suppliers, FGGS shall also be entitled to an equitable price adjustment.

9. PAYMENTS AND FINANCIAL CONDITION. Unless otherwise specified by FGGS in its quotation, payments under the Purchase Order shall be due within 30 days of FGGS's issuance of the applicable invoice.

If Customer fails to fulfill any condition of its payment obligations, FGGS may suspend performance and delivery. Any cost incurred by FGGS in accordance with such suspension shall be payable by Customer upon submission of FGGS's invoices.

Any order for Work by Customer shall constitute a representation that Customer is solvent. If the financial condition of Customer at any time does not, in the judgment of FGGS, justify continuance of FGGS's obligations hereunder on the terms of payment agreed upon, FGGS may require full or partial payment in advance or shall be entitled to terminate the Contract and receive termination charges. In the event of bankruptcy or insolvency of Customer or in the event any proceeding is brought against Customer, voluntarily or involuntarily, under the bankruptcy or any insolvency laws, FGGS shall be entitled to cancel any order then outstanding at any time during the period allowed for filing claims against Customer and shall receive reimbursement for its proper cancellation charges. FGGS's rights under this Article 9 are in addition to all rights available to it at law or in equity. .
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Item 10 Page 4 of 212

4 FGGS Terms and Conditions Services and PARTS

10. TERMINATION.
a. By Customer. Customer shall be entitled to terminate the Contract in the event FGGS fails to commence reasonable cure within thirty (30) days after notice from Customer specifying a material default. FGGS's liability for material default shall be limited to the direct costs that Customer must pay a third party to correct the default, subject however to the limitations contained in Articles 2 & 3. FGGS shall be entitled to recover reasonable termination charges on any order that is terminated unless FGGS is in prior material breach of these Terms and Conditions. Termination of an order shall not relieve either party of any obligation arising prior to termination.
b. By FGGS. If Customer fails to fulfill any condition of its payment obligations and does not correct such failure in the manner and time satisfactory to FGGS, then FGGS may, terminate the Contract in respect to the portion of the parts not delivered and work not yet performed. Customer shall pay FGGS its reasonable and proper termination charges in the event of such termination, in addition to the amounts owed up to the date of termination.

11. TITLE. Title to parts not yet incorporated into Customer's equipment will pass to Customer upon FGGS's receipt of all payments for the parts/services under this Contract. Title and right of possession of equipment repaired, modified, inspected, tested, or maintained under this Contract shall remain with Customer, subject to any applicable lien rights of FGGS and to its right of sale in the event of nonpayment as provided in Article 9.

12. TAXES. In addition to any price specified herein, Customer shall pay the gross amount of any present or future sales, use, excise, value- added, withholding, or other similar tax applicable to the price, sale, or delivery of any parts or services furnished hereunder or to their use by FGGS or Customer, or Customer shall furnish FGGS with a tax exemption certificate acceptable to the taxing authorities.

13. COMPLIANCE WITH LAWS. All transactions hereunder shall at all times be subject to and conditioned upon compliance with all applicable export control laws and regulations of the U.S. Government and any amendments thereof. Customer agrees that it shall not, except as said laws and regulations may expressly permit, make any disposition by way of transshipment, re-export, diversion or otherwise, of U.S. origin goods and technical data (including computer software), or the direct product thereof, supplied by FGGS hereunder. The obligations of the parties to comply with all applicable U.S. export control laws and regulations shall survive any termination, or discharge of any other contract obligations.

Customer undertakes to keep fully informed of, and to comply with, the export control laws and regulations of the U.S.

Government and any amendments thereof. Customer certifies that the parts, materials, services, technical data, software or other information or assistance furnished by FGGS under the Contract will not be (a) used by any individual or entity listed as a prohibited party on any list of the U.S. Government of prohibited or denied parties, (b) sent to any party in a country listed as a prohibited country by the U.S. Government, or (c) used in the design, development, production, stockpiling or use of chemical, biological, or nuclear weapons either by Customer or by any entity acting on Customer's behalf.

Notwithstanding any other provisions herein, Customer shall be responsible for timely obtaining any required authorization, such as an export license, import license, foreign exchange permit, work permit or any other governmental authorization required for the performance of the Work. Customer and FGGS shall provide each other reasonable assistance in obtaining required authorizations. FGGS shall not be liable if any authorization is delayed, denied, revoked, restricted or not renewed and Customer shall not be relieved thereby of its obligations to pay FGGS for its parts or services or any other charges which are the obligation of the Customer hereunder.

14. RESERVATION OF RIGHTS.

FGGS Reserves the right to make copies, prepare derivative works of, or reverse engineer any portion of the components, parts, materials or other information supplied or created under the Contract. Such copies, derivative works or reverse engineering information and data shall be the sole property of FGGS, the use of which shall not be restricted in anyway by Customer. FGGS reserves the right to use any portion of the components, parts, materials or other information supplied or created under the Contract in the development of any other products or intellectual property of any kind, the ownership of which shall vest exclusively in FGGS. The work performed by FGGS shall not be considered "work for hire." Any and all information related to, or arising out of FGGS's intellectual property or improvements is deemed to be the information of FGGS. If any such right, title or interest becomes vested in Customer by operation of law or otherwise, Customer will do everything necessary, to vest all such right, title and interest in FGGS. Customer will execute such further and other documents and do such further and other things as may be necessary to carry out and give effect to the obligations contained in this paragraph, provided however, neither party is obligated to enter into a further business relationship with the other party.

15. DISPUTE RESOLUTION.

All disputes arising in connection with the Contract shall be settled, if possible, by amicable negotiation of the parties. In the event of any dispute, controversy or claim arising out of, connected with, or relating to this Contract, within 30 days of notice of such dispute, the Parties agree to arrange a face-to-face meeting between their respective senior executive officers or their designated representatives to resolve such dispute. For services performed or parts sold within the United States of America, if the matter is not resolved by negotiations, either party shall have the right to pursue any legal remedy available. .
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Item 10 Page 5 of 212

5 FGGS Terms and Conditions Services and PARTS

16. GENERAL.

The provisions of this Contract are for the benefit of the parties hereto and not for any other party or person except as specifically provided herein.

Orders arising hereunder may be changed or amended only by written agreement signed by both FGGS and Customer, setting forth the particular changes to be made and the effect, if any, of such changes on the price and time of delivery. Customer may not cancel this order unless such cancellation is expressly agreed to in writing by FGGS. In such event, FGGS will advise Customer of the total charge for such cancellation, including any applicable cancellation fees, and Customer shall pay such charges, including, but not limited to, storage and shipment costs, costs of producing non-standard materials, costs of purchasing non-returnable materials, cancellation costs imposed on FGGS by its suppliers, and any other cost resulting from cancellation of this order by Customer which is permitted by FGGS.

Any Work furnished by FGGS hereunder will be performed in compliance with the Fair Labor Standards Act of 1938, as amended and applicable. FGGS will comply with applicable federal, state, and local laws and regulations as of the date of any quotation which relate to (a) equal employment opportunity (including the seven paragraphs appearing in Section 202 of Executive Order 11246, as amended); (b) workers' compensation; and (c) the performance of any services in Manufacturer's facilities. Price and, if necessary, delivery will be equitably adjusted to compensate FGGS for the cost of compliance with any other laws or regulations.

The delegation or assignment by Customer of any or all of its duties or rights hereunder without FGGS's prior written consent shall be void. FGGS reserves the right to assign any portion of the Contract or work to any affiliated entity, division or subsidiary within the FGGS family.

The 16 Articles in these Terms and Conditions, including FGGS's quotation and the Customer's Purchase Order (excluding any terms and conditions contained on the Purchase Order) collectively referred to herein as the "Contract", contain the entire and only agreement between Customer and FGGS respecting the terms and conditions and supersedes and cancels all previous negotiations, agreements, commitments, representations and writings in respect thereto. No modification, amendment, rescission, waiver or other change shall be binding on FGGS unless agreed to in writing by FGGS's authorized representative.

The validity, performance, and all matters relating to the interpretation and effect of this Contract and any amendment hereof shall be exclusively governed by the law of the State of Connecticut without giving effect to any conflicts of laws or choice of law rules that would apply the law of another jurisdiction. The United Nations Convention on Contracts for the International Sale of Goods shall not apply. The invalidity, in whole or part, of any of the articles or paragraphs in these Terms and Conditions will not affect the remainder of such article or paragraph or any other article or paragraph. When used in this Contract, the terms (a) "including" and "includes" mean "including but not limited to" the specifically enumerated things, states, or actions that follow such terms, and (b) "or" means "one or the other or all" of the specifically enumerated things, states, or actions that follow such term.

The following Articles shall survive termination of this Contract: Article 1 (Warranty), Article 2 (Limitation of Liability), Article 3 (Consequential Damages), Article 4 (Indemnity), Article 6 (Patents), Article 12 (Taxes), Article 13 (Compliance with Laws), Article 14 (Reservation of Rights), Article 15 (Dispute Resolution), Article 16 (General) and any remaining payment obligations of Customer.
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Item 10 Page 6 of 212
City Council Agenda Report
Meeting Date: January 20, 2026
From: Brian Saeki, City Administrator
Department: City Administration
Submitted by: Lilia Hernandez, Assistant to the City Administrator Subject
Report on Emergency Purchase Approved by the City Administrator Recommendation
Receive and file the report on the emergency sewer repairs performed by Ocean Blue Environmental Services, Inc. for a total amount of $525,658.35 as approved by the City Administrator pursuant to Vernon Municipal Code Section 3.32.250.

Background
On July 29, 2025, the City responded to a report of grease on the street at 5400 Alcoa Avenue.

The sewer backup was caused by the discharge of heavy grease into the city-owned sewer main, resulting in a blockage that led to an overflow spill out from the sewer manhole. Due to the timesensitive nature of the emergency, and with the City’s Vactor truck out of service, staff sought an experienced contractor to perform the difficult task of jet-cleaning the pipes and controlling any hazardous materials from entering the storm drain system.

Failure to adequately address the issue in a timely manner could have resulted in an overflow spill, and led to a severe health and safety hazard. Increases in bacteria resulting from a spill can pose serious health risks with symptoms including abdominal cramping, diarrhea, ear and eye infections, liver infections, ulcers, and muscle aches. Moreover, spills entering the storm drain system may result in significant environmental impacts and can lead to regulatory penalties or fines imposed by state or federal agencies. Staff had to act immediately to contain the situation and prevent any additional damage and health risks, thus the repairs/maintenance were assigned to Ocean Blue Environmental Services, Inc. (Ocean Blue) without a competitive process pursuant to the emergency purchasing provisions identified in Vernon Municipal Code (VMC) Section 3.32.250.

Ocean Blue performed the emergency work over several days, which involved using a CCTV camera to locate areas with heavy grease, cleaning the sewer system with a hydrojet, and vacuuming the solid waste, including food and grease debris in the main sewer lines affected by the blockage. In addition, Ocean Blue transported and disposed of all solid waste collected.

On November 19, 2025, the City Administrator approved payment to Ocean Blue in the amount of $525,658.35 for the emergency work performed to restore waste flow and prevent health/environmental issues. The work met the criteria outlined in the VMC for emergency services as such discharges pose an immediate and unforeseen risk to health, life, and the environment. This report to the City Council regarding the circumstances of the emergency work is being provided as required by VMC Section 3.32.250.

The City is now equipped with a new Vactor truck and staff would be able to perform any necessary cleanup work should a similar emergency arise in the future.

Fiscal Impact
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Item 11 Page 1 of 214
The fiscal impact was $525,658.35. Sufficient funds were available in the General Fund, Public Works, Street Maintenance, Repairs & Maintenance Account No. 011-040-430-529000 for the current fiscal year.

Attachments
None.
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Item 11 Page 2 of 214
City Council Agenda Report
Meeting Date: January 20, 2026
From: Brian Saeki, City Administrator
Department: City Administration
Submitted by: Lilia Hernandez, Assistant to the City Administrator Subject
Report on Vehicle Purchase Approved by the City Administrator Recommendation
Receive and file report on City Administrator approved vehicle purchase of one 2025 Ram 2500 Rebel from Van Nuys Chrysler Dodge Jeep Ram for a total amount of $81,222.68.

Background
Historically, the City has purchased vehicles through Sourcewell, a government agency and purchasing cooperative offering competitively solicited cooperative purchasing contracts that other government agencies can utilize for procurement. However, in recent years, vehicle purchases through Sourcewell have been extremely difficult to achieve due to limited inventory, long lead times for production, and a high demand for vehicles from other public agencies. As an alternative to Sourcewell and to maintain an adequate fleet, the City needs to make vehicle purchases directly from dealerships. When purchasing from dealerships, staff still encounters challenges as vehicle inventory is low, demand is high, and dealerships do not offer the convenience of holding vehicles for lengthy bidding and procurement processes. To secure necessary vehicles, staff must be able to complete the purchasing process expeditiously.

In December 2025, Vernon Public Utilities (VPU) required a new vehicle for its field operations.

The new vehicle was to replace a 1986 Ford Ranger (City vehicle ID L175) that was no longer a reliable vehicle and was deemed a surplus vehicle earlier in the year. In addition to facilitating field operations in the City, the new vehicle was also to be utilized to navigate and maintain unpaved wildland areas owned by the City in Kern County. To obtain a competitive price, staff researched twenty-seven (27) local dealerships in search of a vehicle that fulfilled its fleet requirements. Staff identified four (4) local dealerships that listed a 2025 Ram 2500 Power Wagon or Rebel on their websites and requested informal quotes based on website availability.

Van Nuys Chrysler Dodge Jeep Ram (CDJR) offered the most competitive price for the desired vehicle including a $4,000 discount. Subsequently, VPU requested approval from the City Administrator for the purchase of one 2025 Ram 2500 Rebel from CDJR for a total amount of $81,222.68. The City Administrator approved the purchase, as CDJR was the only dealership that had a vehicle that met the City’s requirements, including color and trim, and offered the lowest quote. The vehicle purchased by the City was delivered in early December 2025.

Given the challenges associated with vehicle purchases, staff is working on amendments to the Vernon Municipal Code to enable future vehicle purchases.

Fiscal Impact
The fiscal impact was not-to-exceed $81,222.68. Sufficient funds were available in the Electric Fund, Field Operations, Capital Outlay, Account No. 055-050-550-660000 for the current fiscal year.

Attachments
None. .
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Item 12 Page 1 of 215
City Council Agenda Report
Meeting Date: January 20, 2026
From: Daniel S. Wall, P.E., Director of Public Works-City Engineer Department: Public Works
Submitted by: Rosemary Lozada, Management Analyst
Subject
Purchase Contract with D&R Office Works, Inc.

Recommendation
A. Approve and authorize issuance of a purchase contract with D&R Office Works, Inc. for the purchase, delivery and installation of office furniture for the relocation of the Fire Department office for a total amount not-to-exceed $24,538.79; and B. Authorize a contingency amount of ten percent (10%) or $2,453.88 for unforeseen price increases or substitutions due to inventory availability, and grant authority to the City Administrator to issue Change Orders for an amount up to the contingency amount, if necessary.

Background
The Fire Department inspection group is being relocated from its current offices in City Hall to an office trailer behind City Hall. The Public Works Department (PW) has engaged D&R Office Works, Inc. for the purchase, delivery and installation of office furniture for the Fire Department’s new workspace. As part of the departmental space reallocation associated with the Information Technology office expansion, the Fire Department staff will be relocated from their existing workspace inside City Hall to the designated office trailer located at the rear of the property. To ensure continuity of administrative operations and maintain functional workspaces, office furnishings will need to be purchased for the new location as existing furniture is unsuitable for relocation due to space limitations. The new furnishings will ensure continued administrative support, proper document storage, and safe work conditions following the move.

As a registered participant of OMNIA Partners, a cooperative purchasing organization, the proposed purchase from D&R is exempt from competitive bidding requirements pursuant to Vernon Municipal Code (VMC) Section 3.32.110(A)(5b), which exempts, “Contracts for supplies, equipment or services…when supplies, equipment or services can be purchased from a vendor offering the same prices, terms and conditions as in a previous award from the City or another public agency either by competitive bid or through a negotiated process and, in the opinion of the Finance Director [or designee], it is to the advantage of the City to do so.” The Finance Director concurs that it is advantageous for the City to move forward with the proposed purchase as OMNIA Partners provides competitively solicited cooperative purchasing contracts that comply with the City’s purchasing requirements.

Per VMC 3.32.030(B), City Council approval is required if, in the twelve (12) months preceding the effective date of a proposed new, renewed, or otherwise amended contract, the City has paid or awarded the vendor more than $100,000. Within the past twelve (12) months, the City has paid or awarded D&R a total of approximately $124,331.68.

Fiscal Impact
The fiscal impact is not-to-exceed $26,992.67 (including the 10% contingency). Sufficient funds are available in the General Fund, Public Works Department, Facilities Maintenance, Supplies Account No. 011-040-415-522000 for the current fiscal year. .
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Item 13 Page 1 of 223
Attachments

1. D&R Office Works, Inc. Proposal
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Item 13 Page 2 of 223

ACCTS PAY
City of Vernon
4305 Santa Fe Ave
Vernon CA 90058
Kenny Jackson
City of Vernon -FD TRAILER
4105 Santa Fe Ave
Vernon CA
323-974-2391 cell
SOLD TO: SHIP TO:

PROPOSAL
P:

E:

Quotation Expires after 30 Days
11/21/2025 ACCTS PAY 5469 Karen Braun
Qty Part Number Part Description Sell Ext Sell

DATE SALESPERSON CUSTOMER NO CUSTOMER PO NO PROPOSAL NO Line #
1 1 HON OMNIA PARTNERS CONTRACT #R240117 HON $0.00 $0.00 2 1 HON HF22 MASTER KEY (ONE KEY) $18.95 $18.95
Sub Total: $18.95

BREAKROOM
3 1 HON HTLP96 PRESIDE LAMINATE PANEL BASEFOR 96W TABLE TOPS $341.05 $341.05 $(L1STD) Grd L1 Standard Laminates
~ ~Undecided~
925 1410-A15G-C12S-UB Link - Four Leg Guest Chair w/Casters, w/Arms, Upholstered Back and Seat
4 6 $321.11 $1,926.66
Fabric Grade Selection Fabric Grade C GRADE-C
Grade C Fabrics Skipped Option ...

Frame Finish Selection Silver SF
CAL TB 133 Fire Barrier No Cal TB 133 (standard upholstery) ~ 5 1 HON HTLC4896 Preside Preside 96W x 48D Rect Shaped Laminate Top $486.40 $486.40 Edge Option T-Mold .E
Select Edge Color Skipped Option ...

Select Grommet No Grommets .N
Select Laminate Grd L1 Standard Laminates $(L1STD)
Select Grade 1 Laminate Finish Skipped Option ...

Sub Total: $2,754.11

CHIEF'S OFFICE
6 1 HON HGRMTAC2 POWER GROMMET - 2 OUTLETS 10FT CORD $95.53 $95.53 7 1 HAT KT-27 Keyboard Tray, 11" track, 27"W x 10"D, Black finish $173.28 $173.28

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Item 13 Page 3 of 223
11/21/2025 ACCTS PAY 5469 Karen Braun
Qty Part Number Part Description Sell Ext Sell

DATE SALESPERSON CUSTOMER NO CUSTOMER PO NO PROPOSAL NO Line #
8 4 HON HF23S CONTAIN SATIN REMOVABLE LOCK CORE KIT $20.13 $80.52 .~ Skipped Option
HAT 7000-800 7000 Single, 24" Radial Arm with flexmount, 800, Supports flat monitor 10-22 lbs
9 1 $200.16 $200.16
MONITOR ARM FINISH Silver 124 (S)
PLASTIC ACCENT Black (BLK-AC)
10 1 HON H1522 WOOD CENTER DRAWER 22W X 15-3/8D $142.14 $142.14 $(L1STD) Grd L1 Standard Laminates
~ ~Undecided~
925 1410-A15G-UB Link - Four Leg Guest Chair, w/Arms, Upholstered Back and Seat
11 2 $304.00 $608.00
Fabric Grade Selection Fabric Grade C GRADE-C
Grade C Fabrics Skipped Option ...

Frame Finish Selection Silver SF
CAL TB 133 Fire Barrier No Cal TB 133 (standard upholstery) ~ 12 1 HON HNL241879WLR 18X24X78-1/8 WARDROBE/STORAGE CAB LAM DR RT $1,098.55 $1,098.55 .~ Skipped Option
$(L1STD) Grd L1 Standard Laminates
~ ~Undecided~
$(L1STD) Grd L1 Standard Laminates
~ ~Undecided~
13 1 HON HNL2442BF 42x24x29-1/2 Bridge w/full mod $276.76 $276.76 Select Edge Detail Smooth Flat .G
Edgeband Color Selection Skipped Option ...

Select Grommet Color Skipped Option ...

Select Top Laminate Color Skipped Option ...

Select Chassis Laminate Color Grd L1 Standard Laminates $(L1STD) Select Grade 1 Laminate Finish Skipped Option ...
14 1 HON HNL2436LD4 36x24x59-1/2 Lateral File four drawer $1,364.00 $1,364.00 Select Edge Detail Smooth Flat .G
Edgeband Color Selection Skipped Option ...

Select Handle Detail Skipped Option ...

Select Top Laminate Color Skipped Option ...

Select Chassis Laminate Color Grd L1 Standard Laminates $(L1STD) Select Grade 1 Laminate Finish Skipped Option ...

Select Front Color Grd L1 Standard Laminates $(L1STD)
Select Grade 1 Laminate Finish Skipped Option ...
15 1 HON HNL2472RLC 72x24x29-1/2 Credenza w/Lateral Rt $1,016.84 $1,016.84 Select Edge Detail Smooth Flat .G
Edgeband Color Selection Skipped Option ...

Select Handle Detail Skipped Option ...

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Item 13 Page 4 of 223
11/21/2025 ACCTS PAY 5469 Karen Braun
Qty Part Number Part Description Sell Ext Sell

DATE SALESPERSON CUSTOMER NO CUSTOMER PO NO PROPOSAL NO Line #
Select Grommet Color Skipped Option ...

Select Top Laminate Color Skipped Option ...

Select Chassis Laminate Color Grd L1 Standard Laminates $(L1STD) Select Grade 1 Laminate Finish Skipped Option ...

Select Front Color Grd L1 Standard Laminates $(L1STD)
Select Grade 1 Laminate Finish Skipped Option ...
16 1 HON HNL3672LPBR 72x36x29-1/2 Lf Ped Desk bow top recess mod $1,190.64 $1,190.64 Select Edge Detail Smooth Flat .G
Edgeband Color Selection Skipped Option ...

Select Handle Detail Skipped Option ...

Select Grommet Color Skipped Option ...

Select Top Laminate Color Skipped Option ...

Select Chassis Laminate Color Grd L1 Standard Laminates $(L1STD) Select Grade 1 Laminate Finish Skipped Option ...

Select Front Color Grd L1 Standard Laminates $(L1STD)
Select Grade 1 Laminate Finish Skipped Option ...
17 1 925 3580-Y6-A58-MB Tori - Mesh Back High Back - Height/Width Adjustable Arms $435.00 $435.00 Fabric Grade Selection Fabric Grade C GRADE-C
Grade C Fabrics Skipped Option ...

Mesh Selection M61 - Black Mesh M61
Frame Color Selection Dove Gray Frame PDG
Arm Color Dove Gray ~
Base Selection 27" Low-Profile Nylon Base - Dove Gray BA26D Casters Selection 60mm Hoodless Accented Casters - Dove Gray C6D Cylinder Selection CY20 - Standard Cylinder (Seat Height: 16.5"-20.5") CY20 Seat Slider Selection Seat Slider 2.5" Side Paddle Activated SS Lumbar Selection w/ Lumbar LB
Sub Total: $6,681.42

INSPECTORS
18 3 HON HGRMTAC2 POWER GROMMET - 2 OUTLETS 10FT CORD $95.53 $286.59 19 3 HON HPWRTRGH36 CABLE MANAGEMENT TROUGH 36 W - GRAPHITE ONLY $48.05 $144.15 20 3 HAT KT-27 Keyboard Tray, 11" track, 27"W x 10"D, Black finish $173.28 $519.84 21 2 HON HF23C LOCK CORE REPLACEMENT KIT BRUSHED CHROME $20.72 $41.44 .~ Skipped Option
22 1 HON HFSC183640W FLAGSHIP BOOKCASE 3-SHELF 36W X 18D X 39-1/8H $528.84 $528.84 .~ Skipped Option
HAT 7000-800 7000 Single, 24" Radial Arm with flexmount, 800, Supports flat monitor 10-22 lbs
23 2 $200.16 $400.32

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Item 13 Page 5 of 223
11/21/2025 ACCTS PAY 5469 Karen Braun
Qty Part Number Part Description Sell Ext Sell

DATE SALESPERSON CUSTOMER NO CUSTOMER PO NO PROPOSAL NO Line #
MONITOR ARM FINISH Silver 124 (S)
PLASTIC ACCENT Black (BLK-AC)
24 1 HON H9180A FLAGSHIP 36W 2-DRW A PULL LATERAL 36W 28H 18D $659.37 $659.37 .X OMT Core to Order Key Alike
.~ Skipped Option
HON H9184A FLAGSHIP 36W 4-DRW A PULL LATERAL 52-1/2H 18D W/O POST
25 1 $1,122.11 $1,122.11
.X OMT Core to Order Key Alike
.~ Skipped Option
HON HSISLAUTNPNB3618S
1 26 1 ISLANDS TOP 18DX36W SPAN 1 $157.89 $157.89
$(L1STD) Grd L1 Standard Laminate
~ ~Undecided~
.~ Skipped Option
27 3 HON HHATB2S2LC 2 STAGE 2 LEG RECTANGLE C FOOT $462.55 $1,387.65 $(P1) P1 Paint Opts
~ ~Undecided~
.X Standard Glide
.MEM Memory Preset
28 3 HON HHATW3072CT 72W X 30D RECT WORKSURFACE C/T BASE $233.29 $699.87 $(L1STD) Grd L1 Standard Laminates
~ ~Undecided~
.~ Skipped Option
.X No Grommet
.P Black
925 3560-Y1-A59-MB Tori - Mesh Back Mid Back - Height/Width/Pad Adjustable Arms
29 3 $399.00 $1,197.00
Fabric Grade Selection Fabric Grade C GRADE-C
Grade C Fabrics Skipped Option ...

Mesh Selection M61 - Black Mesh M61
Frame Color Selection Dove Gray Frame PDG
Arm Color Dove Gray ~
Base Selection 27" Low-Profile Nylon Base - Dove Gray BA26D Casters Selection 60mm Hoodless Accented Casters - Dove Gray C6D Cylinder Selection CY20 - Standard Cylinder (Seat Height: 16.5"-20.5") CY20 Seat Slider Selection Seat Slider 2.5" Side Paddle Activated SS Lumbar Selection w/ Lumbar LB
Sub Total: $7,145.07
ITC
30 1 HON HGRMTAC2 POWER GROMMET - 2 OUTLETS 10FT CORD $95.53 $95.53

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Item 13 Page 6 of 223
11/21/2025 ACCTS PAY 5469 Karen Braun
Qty Part Number Part Description Sell Ext Sell

DATE SALESPERSON CUSTOMER NO CUSTOMER PO NO PROPOSAL NO Line #
31 1 HON HPWRTRGH36 CABLE MANAGEMENT TROUGH 36 W - GRAPHITE ONLY $48.05 $48.05 32 1 HAT KT-27 Keyboard Tray, 11" track, 27"W x 10"D, Black finish $173.28 $173.28 33 2 HON HF23C LOCK CORE REPLACEMENT KIT BRUSHED CHROME $20.72 $41.44 .~ Skipped Option
HAT 7000-800 7000 Single, 24" Radial Arm with flexmount, 800, Supports flat monitor 10-22 lbs
34 1 $200.16 $200.16
MONITOR ARM FINISH Silver 124 (S)
PLASTIC ACCENT Black (BLK-AC)
35 1 HON H19730A FLAGSHIP SERIES PEDESTAL A PULL FREESTANDING B/B $337.20 $337.20 .X OMT Core to Order Key Alike
.~ Skipped Option
36 1 HON H19830A FLAGSHIP SERIES PEDESTAL A PULL FREESTANDING F/F $337.20 $337.20 .X OMT Core to Order Key Alike
.~ Skipped Option
37 1 HON HHATM3S3LT MAX 3 STAGE 3 LEG T FOOT $1,073.58 $1,073.58 $(P1) P1 Paint Opts
~ ~Undecided~
.X Standard Glide
.MEM Memory Preset
38 1 HON HHATW3042CT 42W X 30D RECT WORKSURFACE C/T BASE $161.34 $161.34 $(L1STD) Grd L1 Standard Laminates
~ ~Undecided~
.~ Skipped Option
.X No Grommet
39 1 HON HHATCC724830L 72X48X30X30 CORNER COVE LH $351.12 $351.12 $(L1STD) Grd L1 Standard Laminates
~ ~Undecided~
.~ Skipped Option
.X No Grommet
.P Black
925 3560-Y1-A59-MB Tori - Mesh Back Mid Back - Height/Width/Pad Adjustable Arms
40 1 $399.00 $399.00
Fabric Grade Selection Fabric Grade C GRADE-C
Grade C Fabrics Skipped Option ...

Mesh Selection M61 - Black Mesh M61
Frame Color Selection Dove Gray Frame PDG
Arm Color Dove Gray ~
Base Selection 27" Low-Profile Nylon Base - Dove Gray BA26D

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.

Item 13 Page 7 of 223
11/21/2025 ACCTS PAY 5469 Karen Braun
Qty Part Number Part Description Sell Ext Sell

DATE SALESPERSON CUSTOMER NO CUSTOMER PO NO PROPOSAL NO Line #
Casters Selection 60mm Hoodless Accented Casters - Dove Gray C6D Cylinder Selection CY20 - Standard Cylinder (Seat Height: 16.5"-20.5") CY20 Seat Slider Selection Seat Slider 2.5" Side Paddle Activated SS Lumbar Selection w/ Lumbar LB
Sub Total: $3,217.90
Delivery and Installation $1,744.05 $1,744.05
HON TARIFF SURCHARGE $300.00 $300.00
925 TARIFF SURCHARGE $195.55 $195.55
HAT TARIFF SURCHARGE $150.00 $150.00
Sales Tax $2,331.74 $2,331.74
Total: $24,538.79
Terms: 50% Deposit - Balance C.O.D.- Unless an account has been set up Quote Expires after 30 days
Unless otherwise noted, delivery and installation are during normal business hours.

Area to be cleared of all existing furniture and obstructions prior to delivery.

Carry up of furniture is NOT included in Quotation unless noted.

Once ordered, furniture cannot be cancelled or returned APPROVED BY_______________________________DATE____________

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Item 13 Page 8 of 223
City Council Agenda Report
Meeting Date: January 20, 2026
From: Freddie Agyin, Director of Health and Environmental Control Department: Health and Environmental Control
Submitted by: Dulce Gonzalez, Management Analyst
Subject
Appointment of Health Officer for the City of Vernon
Recommendation
A. Pursuant to Vernon Municipal Code (VMC) Section 3.32.110 (B)(2), find that it is in the best interests of the City to award a three-year term service agreement for health officer services to Steven H. Florman, M.D., without a competitive selection process, based on his qualifications and in-depth familiarity with the City’s public health infrastructure and community; and B. Adopt Resolution No. 2026-001 appointing Steven H. Florman, M.D. as the Health Officer for the City of Vernon, approving and authorizing the execution of a services agreement for health officer services for a total not-to-exceed $90,000 over the three-year term, and repealing Resolution No. 2024-027.

Background
Pursuant to California Health and Safety Code (HSC) Section 101450, each city is required to take necessary measures to preserve and protect public health. Additionally, HSC Section 101460 mandates that every city must appoint a health officer unless it has a contractual agreement with the county for such services. Since the City of Vernon does not currently have a contract with the County of Los Angeles for health officer services, it is required to formally appoint a qualified health officer to comply with state law and maintain an effective local public health authority. For the past several years, the City has opted to contract for the position instead of hiring, as a contract is the most cost-effective approach to meet the City’s needs.

On November 19, 2024, the City Council adopted Resolution No. 2024-027, appointing Steven H. Florman, M.D., as the City’s Health Officer and authorizing the execution of a one-year professional services agreement for health officer services. Dr. Florman brings extensive experience and expertise in clinical medicine, public health, and healthcare administration, with specialized skills in epidemiology, biostatistics, and disaster preparedness. Over the past thirtyfive years, Dr. Florman has established a longstanding record of service and trust within the Vernon community through the successful operation of his medical clinic. His leadership experience and thorough understanding of the National Incident Management System (NIMS) enhance his ability to coordinate emergency response operations and implement effective public health programs. Continuing Dr. Florman’s appointment will enable the Health Department to fully exercise its delegated public health authority, ensuring the uninterrupted provision of health officer services. Maintaining continuity in this role is crucial for compliance with state mandates and for the City’s readiness to tackle ongoing and emerging public health challenges.

Pursuant to Vernon Municipal Code (VMC) Section 3.32.110(B)(2), the City Council has the authority to exempt certain agreements from competitive selection requirements if deemed beneficial for the City. Given Dr. Florman’s proven qualifications, long-standing community service, and in-depth familiarity with the City’s public health infrastructure, staff recommends that the City Council exercise this exemption to ensure the continuity, efficiency, and effectiveness of health officer services. Making use of the exemption is further supported, as based on previous outreach to professional organizations including the National Association of County and City . .

Item 14 Page 1 of 25
Health Officials, a formal process is unlikely to garner interest as qualified professionals seek full-time employment for such roles.

The proposed services agreement with Dr. Florman has been reviewed and approved as to form by the City Attorney’s Office.

Fiscal Impact
The fiscal impact is not-to-exceed $90,000. Sufficient funds are available in the General Fund, Health Department, Health Services Account No. 011-020-200-529230 for the current fiscal year and will be budgeted in subsequent years.

Attachments

1. Resolution No. 2026-001
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Item 14 Page 2 of 25
RESOLUTION NO. 2026-001

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VERNON
APPOINTING STEVEN H. FLORMAN, M.D., AS THE HEALTH OFFICER

FOR THE CITY OF VERNON AND APPROVING AND AUTHORIZING THE

EXECUTION OF A SERVICES AGREEMENT FOR HEALTH OFFICER
SERVICES AND REPEALING RESOLUTION NO. 2024-027
SECTION 1. Recitals.

A. Pursuant to California Health and Safety Code (HSC) Section 101450, each City is mandated to take measures as may be necessary to preserve and protect public health.

B. As required by HSC Section 101460, and since the City does not currently contract with the County, the City must appoint a health officer in order to formalize the roles and responsibilities of the Health Department and exercise its full delegated authority.

C. The City Council of the City of Vernon desires to appoint Steven H. Florman, M.D. to serve as Health Officer for the City of Vernon, approve and authorize the execution of a Services Agreement for Health Officer Services for a three-year period, effective November 1, 2025, and repeal Resolution No. 2024-027.

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF VERNON AS FOLLOWS:

SECTION 2. The City Council of the City of Vernon hereby finds and determines that the above recitals are true and correct.

SECTION 3. The City Council of the City of Vernon hereby appoints Steven H.

Florman, M.D., to serve as the Health Officer for the City of Vernon, effective November 1, 2025.

SECTION 4. The City Council of the City of Vernon hereby approves the Services Agreement with Steven H. Florman, M.D., in substantially the same form as attached hereto as Exhibit A.

SECTION 5. The City Council of the City of Vernon hereby authorizes the City Administrator to execute said Agreement for, and on behalf of, the City of Vernon and the City Clerk is hereby authorized to attest thereto.

SECTION 6. The City Council hereby instructs the City Administrator, or designee, to take whatever actions are deemed necessary or desirable for the purpose of implementing and carrying out the purposes of this Resolution and the transactions herein .
.

Item 14 Page 3 of 25
Resolution No. 2026-001

_______________________
approved or authorized, including but not limited to, any non-substantive changes to the Agreement attached herein.

SECTION 7. The City Council of the City of Vernon hereby directs the City Clerk to give a fully executed Agreement to Steven H. Florman, M.D.

SECTION 8. All resolutions or parts of resolutions, specifically Resolution No. 2024-027, not consistent with or in conflict with this resolution are hereby repealed.

SECTION 9. Severability. If any provision of this Resolution or the application thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications, and to this end, the provisions of this Resolution are declared to be severable.

SECTION 10. The City Clerk, or Deputy City Clerk, shall certify the passage and adoption of this resolution and enter it into the book of original resolutions.

APPROVED AND ADOPTED January 20, 2026.
________________________
LETICIA LOPEZ, Mayor
ATTEST:

GENOVEVA ROCHA, City Clerk
APPROVED AS TO FORM:

ZAYNAH MOUSSA-MILWARD,
City Attorney
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Item 14 Page 4 of 25
Resolution No. 2026-001

_______________________

CERTIFICATION

STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) ss.

CITY OF VERNON )
I do hereby certify that the attached is a true copy of Resolution No. 2026-001 that was passed and adopted at the Regular Meeting held on January 20, 2026, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:
__________________________
GENOVEVA ROCHA, City Clerk
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Item 14 Page 5 of 25
SERVICES AGREEMENT BETWEEN THE CITY OF VERNON AND STEVEN H.

FLORMAN, M.D. FOR HEALTH OFFICER SERVICES

COVER PAGE
Contractor: Steven H. Florman, M.D.

Responsible Principal of Contractor: Steven H. Florman, M.D.

Notice Information - Contractor: Address on file with Health Department Telephone: (323) 687-0170
Notice Information - City: City of Vernon
4305 Santa Fe Avenue
Vernon, CA 90058
Attention: Freddie Agyin, Director
Health and Environmental Control
Telephone: (323) 826-1448
Commencement Date: November 1, 2025
Termination Date: October 31, 2028
Consideration: Total not to exceed $90,000 (includes all applicable sales tax); and more
particularly described in Exhibit B
Records Retention Period Three (3) years, pursuant to Section

11.20 Resolution No. 2026-001

____________________
Exhibit A
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Item 14 Page 6 of 25
Steven H. Florman, M.D.

Services Agreement

SERVICES AGREEMENT BETWEEN THE CITY OF VERNON AND STEVEN H.

FLORMAN, M.D. FOR HEALTH OFFICER SERVICES
This Agreement is made between the City of Vernon, a California charter City and California municipal corporation (“City”), and Steven H. Florman, M.D. (“Contractor”).

The City and Contractor agree as follows:

1.0 EMPLOYMENT OF CONTRACTOR. City agrees to engage Contractor to perform the services as hereinafter set forth as authorized by the City Council on December 16, 2025.

2.0 SCOPE OF SERVICES.

2.1 Contractor shall perform all work necessary to complete the services set forth in the Scope of Services, Exhibit “A”, a copy which is attached to and incorporated into this Agreement by reference.

2.2 All services shall be performed to the satisfaction of City.

2.3 All services shall be performed in a competent, professional, and satisfactory manner in accordance with the prevailing industry standards for such services.

3.0 PERSONNEL.

3.1 Contractor represents that it employs, or will employ, at its own expense, all personnel required to perform the services under this Agreement.

3.2 Contractor shall not subcontract any services to be performed by it under this Agreement without prior written approval of City.

3.3 All of the services required hereunder will be performed by Contractor or by City approved subcontractors. Contractor, and all personnel engaged in the work, shall be fully qualified and authorized or permitted under State and local law to perform such services and shall be subject to approval by the City.

4.0 TERM. The term of this Agreement shall commence on November 1, 2025, and it shall continue until October 31, 2028, unless terminated at an earlier date pursuant to the provisions thereof.

Resolution No. 2026-001

____________________
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Item 14 Page 7 of 25
Steven H. Florman, M.D.

Services Agreement

5.0 COMPENSATION AND FEES.

5.1 Contractor has established rates for the City of Vernon which are comparable to and do not exceed the best rates offered to other governmental entities in and around Los Angeles County for the same services. For satisfactory and timely performance of the services, the City will pay Contractor in accordance with the payment schedule set forth in Exhibit “B” attached hereto and incorporated herein by reference.

5.2 Contractor's grand total compensation for the entire term of this Agreement, shall not exceed $90,000 without the prior authorization of the City, as appropriate, and written amendment of this Agreement.

5.3 Contractor shall, at its sole cost and expense, furnish all necessary and incidental labor, material, supplies, facilities, equipment, and transportation which may be required for furnishing services pursuant to this Agreement. Materials shall be of the highest quality. The above Agreement fee shall include all staff time and all clerical, administrative, overhead, insurance, reproduction, telephone, air travel, auto rental, subsistence, and all related costs and expenses.

5.4 City shall reimburse Contractor only for those costs or expenses specifically approved in this Agreement, or specifically approved in writing in advance by City. Unless otherwise approved, such costs shall be limited and include nothing more than the following costs incurred by Contractor:

5.4.1 The actual costs of subcontractors for performance of any of the services that Contractor agrees to render pursuant to this Agreement, which have been approved in advance by City and awarded in accordance with this Agreement.

5.4.2 Approved reproduction charges.

5.4.3 Actual costs and/or other costs and/or payments specifically authorized in advance in writing and incurred by Contractor in the performance of this Agreement.

5.5 Contractor shall not receive any compensation for extra work performed without the prior written authorization of City. As used herein, “extra work” means any work that is determined by City to be necessary for the proper completion of Resolution No. 2026-001

____________________
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Item 14 Page 8 of 25
Steven H. Florman, M.D.

Services Agreement

the Project, but which is not included within the Scope of Services and which the parties did not reasonably anticipate would be necessary at the time of execution of this Agreement. Compensation for any authorized extra work shall be paid in accordance with the payment schedule as set forth in Exhibit “B,” if the extra work has been approved by the City.

5.6 Licenses, Permits, Fees, and Assessments. Contractor shall obtain, at Contractor’s sole cost and expense, such licenses, permits, and approvals as may be required by law for the performance of the services required by this Agreement.

Contractor shall have the sole obligation to pay for any fees, assessments, and taxes, plus applicable penalties and interest, which may be imposed by law and which arise from or are necessary for the performance of the Services by this Agreement.

6.0 PAYMENT.

6.1 As scheduled services are completed, Contractor shall submit to the City an invoice for the services completed, authorized expenses, and authorized extra work actually performed or incurred according to said schedule.

6.2 Each such invoice shall state the basis for the amount invoiced, including a detailed description of the services completed, the number of hours spent, reimbursable expenses incurred and any extra work performed.

6.3 Contractor shall also submit a progress report with each invoice that describes in reasonable detail the services and the extra work, if any, performed in the immediately preceding calendar month.

6.4 Contractor understands and agrees that invoices which lack sufficient detail to measure performance will be returned and not processed for payment.

6.5 City will pay Contractor the amount invoiced within thirty (30) days after the City approves the invoice.

6.6 Payment of such invoices shall be payment in full for all services, authorized costs, and authorized extra work covered by that invoice.

7.0 CITY'S RESPONSIBILITY. City shall cooperate with Contractor as may be reasonably necessary for Contractor to perform its services; and will give any Resolution No. 2026-001

____________________
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Item 14 Page 9 of 25
Steven H. Florman, M.D.

Services Agreement

required decisions as promptly as practicable so as to avoid unreasonable delay in the progress of Contractor's services.

8.0 COORDINATION OF SERVICES. Contractor 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.

9.0 INDEMNITY. Contractor agrees to indemnify City, its officers, elected officials, employees and agents against, and will hold and save each of them harmless from, any and all actions, suits, claims, damages to persons or property, losses, costs, penalties, obligations, errors, omissions or liabilities (herein “claims or liabilities”), including but not limited to professional negligence, that may be asserted or claimed by any person, firm or entity arising out of or in connection with the work, operations or activities of Contractor, its agents, employees, subcontractors, or invitees, provided for herein, or arising from the acts or omissions of Contractor hereunder, or arising from Contractor’s performance of or failure to perform any term, provision, covenant or condition of this Agreement, except to the extent such claims or liabilities arise from the gross negligence or willful misconduct of City, its officers, elected officials, agents or employees.

10.0 INSURANCE. City has been informed and accepts, in approving this Agreement, that Contractor does not maintain Professional Liability or Errors and Omissions Insurance. The acknowledgment and acceptance set forth herein are subject to the Indemnification and Immunities provisions set forth in Section 9.0 above.

11.0 GENERAL TERMS AND CONDITIONS.

11.1 INDEPENDENT CONTRACTOR.

11.1.1 It is understood that in the performance of the services herein provided for, Contractor shall be, and is, an independent contractor, and is not an agent, officer or employee of City and shall furnish such services in its own manner and method except as required by this Agreement, or any applicable statute, rule, or regulation. Further, Contractor has and shall retain the right to exercise full control over the employment, direction, compensation and discharge of all persons employed by Contractor in the performance of the services hereunder. City assumes no liability for Resolution No. 2026-001

____________________
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Item 14 Page 10 of 25
Steven H. Florman, M.D.

Services Agreement

Contractor’s actions and performance, nor assumes responsibility for taxes, bonds, payments, or other commitments, implied or explicit, by or for Contractor. Contractor shall be solely responsible for, and shall indemnify, defend and save City harmless from all matters relating to the payment of its employees, subcontractors and independent contractors, including compliance with social security, withholding and all other wages, salaries, benefits, taxes, exactions, and regulations of any nature whatsoever.

11.1.2 Contractor acknowledges that Contractor and any
subcontractors, agents or employees employed by Contractor shall not, under any circumstances, be considered employees of the City, and that they shall not be entitled to any of the benefits or rights afforded employees of City, including, but not limited to, sick leave, vacation leave, holiday pay, Public Employees Retirement System benefits, or health, life, dental, long-term disability or workers' compensation insurance benefits.

11.2 CONTRACTOR NOT AGENT. Except as the City may authorize in writing, Contractor and its subcontractors shall have no authority, express or implied, to act on behalf of or bind the City in any capacity whatsoever as agents or otherwise.

11.3 OWNERSHIP OF WORK. All documents and materials furnished by the City to Contractor shall remain the property of the City and shall be returned to the City upon termination of this Agreement. All reports, drawings, plans, specifications, computer tapes, floppy disks and printouts, studies, memoranda, computation sheets, and other documents prepared by Contractor in furtherance of the work shall be the sole property of City and shall be delivered to City whenever requested at no additional cost to the City. Contractor shall keep such documents and materials on file and available for audit by the City for at least three (3) years after completion or earlier termination of this Agreement. Contractor may make duplicate copies of such materials and documents for its own files or for such other purposes as may be authorized in writing by the City.

11.4 CORRECTION OF WORK. Contractor shall promptly correct any defective, inaccurate or incomplete tasks, deliverables, goods, services and other work, without additional cost to the City. The performance or acceptance of services Resolution No. 2026-001

____________________
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Item 14 Page 11 of 25
Steven H. Florman, M.D.

Services Agreement

furnished by Contractor shall not relieve the Contractor from the obligation to correct subsequently discovered defects, inaccuracy, or incompleteness.

11.5 RESPONSIBILITY FOR ERRORS. Contractor shall be responsible for its work and results under this Agreement. Contractor, when requested, shall furnish clarification and/or explanation as may be required by the City, regarding any services rendered under this Agreement at no additional cost to City. In the event that an error or omission attributable to Contractor occurs, then Contractor shall, at no cost to City, provide all necessary design drawings, estimates and other Contractor professional services necessary to rectify and correct the matter to the sole satisfaction of City and to participate in any meeting required with regard to the correction.

11.6 WAIVER. The City's waiver of any term, condition, breach, or default of this Agreement shall not be considered to be a waiver of any other term, condition, default or breach, nor of a subsequent breach of the one waived. The delay or failure of either party at any time to require performance or compliance by the other of any of its obligations or agreements shall in no way be deemed a waiver of those rights to require such performance or compliance. No waiver of any provision of this Agreement shall be effective unless in writing and executed by a duly authorized representative of the party against whom enforcement of a waiver is sought.

11.7 SUCCESSORS. This Agreement shall inure to the benefit of, and shall be binding upon, the parties hereto and their respective heirs, successors, and/or assigns.

11.8 NO ASSIGNMENT. Contractor shall not assign or transfer this Agreement or any rights hereunder without the prior written consent of the City and approval by the City Attorney, which may be withheld in the City's sole discretion. Any unauthorized assignment or transfer shall be null and void and shall constitute a material breach by the Contractor of its obligations under this Agreement. No assignment shall release the original parties from their obligations or otherwise constitute a novation.

11.9 COMPLIANCE WITH LAWS. Contractor shall comply with all Federal, State, County and City laws, ordinances, rules and regulations, which are, as Resolution No. 2026-001

____________________
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Item 14 Page 12 of 25
Steven H. Florman, M.D.

Services Agreement

amended from time to time, incorporated herein and applicable to the performance hereof. Violation of any law material to performance of this Agreement shall entitle the City to terminate the Agreement and otherwise pursue its remedies. Further, if the Contractor performs any work knowing it to be contrary to such laws, rules, and regulations Contractor shall be solely responsible for all costs arising therefrom.

11.10 ATTORNEY'S FEES. If any action at law or in equity is brought to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorney's fees, costs, and necessary disbursements in addition to any other relief to which such party may be entitled.

11.11 INTERPRETATION.

11.11.1 Applicable Law. This Agreement shall be deemed an agreement and shall be governed by and construed in accordance with the laws of the State of California. Contractor agrees that the State and Federal courts which sit in the State of California shall have exclusive jurisdiction over all controversies and disputes arising hereunder, and submits to the jurisdiction thereof.

11.11.2 Entire Agreement. This Agreement, including any exhibits attached hereto, constitutes the entire agreement and understanding between the parties regarding its subject matter and supersedes all prior or contemporaneous negotiations, representations, understandings, correspondence, documentation, and agreements (written or oral).

11.11.3 Written Amendment. This Agreement may only be
changed by written amendment executed by Contractor and the City Administrator or other authorized representative of the City, subject to any requisite authorization by the City Council. Any oral representations or modifications concerning this Agreement shall be of no force or effect.

11.11.4 Severability. If any provision in this Agreement is held by any court of competent jurisdiction to be invalid, illegal, void, or unenforceable, such portion shall be deemed severed from this Agreement, and the remaining provisions shall nevertheless continue in full force and effect as fully as though such invalid, illegal, or unenforceable portion had never been part of this Agreement.

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11.11.5 Order of Precedence. In case of conflict between the terms of this Agreement and the terms contained in any document attached as an Exhibit or otherwise incorporated by reference, the terms of this Agreement shall strictly prevail. 11.11.6 Construction. In the event an ambiguity or question of intent or interpretation arises with respect to this Agreement, this Agreement shall be construed as if drafted jointly by the parties and in accordance with its fair meaning.

There shall be no presumption or burden of proof favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.

11.12 TIME OF ESSENCE. Time is strictly of the essence of this agreement and each and every covenant, term, and provision hereof.

11.13 AUTHORITY OF CONTRACTOR. The Contractor hereby
represents and warrants to the City that the Contractor has the right, power, legal capacity, and authority to enter into and perform its obligations under this Agreement, and its execution of this Agreement has been duly authorized.

11.14 ARBITRATION OF DISPUTES. Any dispute for under $25,000 arising out of or relating to the negotiation, construction, performance, non-performance, breach, or any other aspect of this Agreement, shall be settled by binding arbitration in accordance with the Commercial Rules of the American Arbitration Association at Los Angeles, California and judgment upon the award rendered by the Arbitrators may be entered in any court having jurisdiction thereof. The City does not waive its right to object to the timeliness or sufficiency of any claim filed or required to be filed against the City and reserves the right to conduct full discovery.

11.15 NOTICES. Any notice or demand to be given by one party to the other must be given in writing and by personal delivery or prepaid first-class, registered or certified mail, addressed as follows. Notice simply to the City of Vernon or any other City department is not adequate notice.

If to the City:

City of Vernon
Attention: Freddie Agyin, Director
Department of Health and Environmental Control
4305 Santa Fe Avenue
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Vernon, CA 90058
If to the Contractor:

Steven Florman, M.D.

Address on file with Health Department
Any such notice shall be deemed to have been given upon delivery, if personally delivered, or, if mailed, upon receipt, or upon expiration of three (3) business days from the date of posting, whichever is earlier. Either party may change the address at which it desires to receive notice upon giving written notice of such request to the other party.

11.16 NO THIRD PARTY RIGHTS. This Agreement is entered into for the sole benefit of City and Contractor and no other parties are intended to be direct or incidental beneficiaries of this Agreement and no third party shall have any right or remedy in, under, or to this Agreement.

11.17 TERMINATION FOR CONVENIENCE (Without Cause). City may terminate this Agreement in whole or in part at any time, for any cause or without cause, upon fifteen (15) calendar days' written notice to Contractor. If the Agreement is thus terminated by City for reasons other than Contractor's failure to perform its obligations, City shall pay Contractor a prorated amount based on the services satisfactorily completed and accepted prior to the effective date of termination. Such payment shall be Contractor's exclusive remedy for termination without cause.

11.18 DEFAULT. In the event either party materially defaults in its obligations hereunder, the other party may declare a default and terminate this Agreement by written notice to the defaulting party. The notice shall specify the basis for the default. The Agreement shall terminate unless such default is cured before the effective date of termination stated in such notice, which date shall be no sooner than ten (10) days after the date of the notice. In case of default by Contractor, the City reserves the right to procure the goods or services from other sources and to hold the Contractor responsible for any excess costs occasioned to the City thereby. Contractor shall not be held accountable for additional costs incurred due to delay or default as a Resolution No. 2026-001

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result of Force Majeure. Contractor must notify the City immediately upon knowing that non-performance or delay will apply to this Agreement as a result of Force Majeure. At that time Contractor is to submit in writing a Recovery Plan for this Agreement. If the Recovery Plan is not acceptable to the City or not received within 10 days of the necessary notification of Force Majeure default, then the City may cancel this order in its entirety at no cost to the City, owing only for goods and services completed to that point.

11.19 TERMINATION FOR CAUSE. Termination for cause shall relieve the terminating party of further liability or responsibility under this Agreement, including the payment of money, except for payment for services satisfactorily and timely performed prior to the service of the notice of termination, and except for reimbursement of (1) any payments made by the City for service not subsequently performed in a timely and satisfactory manner, and (2) costs incurred by the City in obtaining substitute performance. If this Agreement is terminated as provided herein, City may require, at no additional cost to City, that Contractor provide all finished or unfinished documents, data, and other information of any kind prepared by Contractor in connection with the performance of Services under this Agreement. Contractor shall be required to provide such document and other information within fifteen (15) days of the request.

11.19.1 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.

11.20 MAINTENANCE AND INSPECTION OF RECORDS.

The City, or its authorized auditors or representatives, shall have access to and the right to audit and reproduce any of the Contractor's records to the extent the City deems necessary to insure it is receiving all money to which it is entitled under the Agreement and/or is paying only the amounts to which Contractor is properly entitled under the Agreement or for other purposes relating to the Agreement.

The Contractor shall maintain and preserve all such records for a period of at least three (3) years after termination of the Agreement.

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The Contractor shall maintain all such records in the City of Vernon.

If not, the Contractor shall, upon request, promptly deliver the records to the City of Vernon or reimburse the City for all reasonable and extra costs incurred in conducting the audit at a location other than the City of Vernon, including, but not limited to, such additional (out of the City) expenses for personnel, salaries, private auditors, travel, lodging, meals, and overhead.

11.21 CONFLICT. Contractor hereby represents, warrants, and certifies that no member, officer, or employee of the Contractor is a director, officer, or employee of the City of Vernon, or a member of any of its boards, commissions, or committees, except to the extent permitted by law.

11.22 HEADINGS. Paragraphs and subparagraph headings contained in this Agreement are included solely for convenience and are not intended to modify, explain or to be a full or accurate description of the content thereof and shall not in any way affect the meaning or interpretation of this Agreement.

11.23 ENFORCEMENT OF WAGE AND HOUR LAWS. Eight hours labor constitutes a legal day's work. The Contractor, or subcontractor, if any, shall forfeit twenty-five dollars ($25) for each worker employed in the execution of this Agreement by the respective Contractor or subcontractor for each calendar day during which the worker is required or permitted to work more than 8 hours in any one calendar day and 40 hours in any one calendar week in violation of the provisions of Sections 1810 through 1815 of the California Labor Code as a penalty paid to the City; provided, however, work performed by employees of contractors in excess of 8 hours per day, and 40 hours during any one week, shall be permitted upon compensation for all hours worked in excess of 8 hours per day at not less than 1½ times the basic rate of pay.

11.24 EQUAL EMPLOYMENT OPPORTUNITY PRACTICES. Contractor certifies and represents that, during the performance of this Agreement, it and any other parties with whom it may subcontract shall adhere to equal employment opportunity practices to assure that applicants, employees and recipients of service are treated equally and are not discriminated against because of their race, religion, color, national origin, ancestry, disability, sex, age, medical condition, sexual orientation or marital Resolution No. 2026-001

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status. Contractor further certifies that it will not maintain any segregated facilities.

Contractor further agrees to comply with The Equal Employment Opportunity Practices provisions as set forth in Exhibit “C”.
[Signatures Begin on Next Page].

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Commencement Date stated on the cover page.

City of Vernon, a California charter City
and California municipal corporation
By: ____________________________
Brian Saeki,
City Administrator
Steven H. Florman, M.D.

By:

Name:Steven H. Florman____________
Title: M.D.

ATTEST:
_______________________________
Genoveva Rocha,
City Clerk
By:

Name:

Title:

APPROVED AS TO FORM:
_______________________________
Zaynah Moussa-Milward,
City Attorney
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EXHIBIT A

SCOPE OF SERVICES
Background:

The City of Vernon is an industrial city of 5.2 square miles located several miles to the southeast of Downtown Los Angeles in Southern California. Vernon currently houses more than 1,800 businesses that employ approximately 55,000 people, serving as a vital economic engine in the region. Offering an environment uniquely friendly to business. Vernon is home to industries including food and agriculture, apparel, steel, plastics, logistics, and home furnishings. Vernon is also home to approximately 300 residents.

Public Health Officer:

The City of Vernon is seeking a qualified consultant to serve as a contract Health Officer for the Department of Health and Environmental Control. The individual will assume the duties of the Health Officer set forth in the Health and Safety Code of the State, including working jointly with the Director of Health and Environmental Control to ensure the effectiveness of the mandated health protection function of local government.

The individual will receive general direction from the Director of the Health and Environmental Control Department. Services shall be limited to no more than fifteen (15) hours per week unless approved in advance by the Director of Health and Environmental Control.

Duties may include, but are not limited to, the following which are referenced in the California Health and Safety Code:
• Serve as the Health Officer for the City of Vernon and advise the Department of Health and Environmental Control in preventive measures to protect and preserve public health.
• Work with the Director of the Department of Health and Environmental Control to take measures that may be necessary to prevent and control the spread of disease.
• Consult with physicians in the diagnosis, investigation, and treatment of communicable diseases.
• Consult and provide policy recommendations regarding communicable disease control, outbreak investigations, and emergency preparedness and response. • Provide recommendations regarding the declaration of local emergencies, as indicated.

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• Work with the Director of Health and Environmental Control to ensure the enforcement of codes and regulations, as well as local ordinances, through mechanisms up to and including the use of police powers. • Advise policy-makers on community design issues that affect health, the development of public health policy, and implementation of effective public health programs.
• Work with the Director of Health and Environmental Control to inform, educate, and empower the community and individuals about health issues. • Provide recommendations to protect and advance the health of the city by educating the public and advocating for effective disease prevention and health promotion programs and activities. Assist in the assessment and reporting of the health status of the community using multiple epidemiological surveys and statistical methods.
• Represent the city before Boards, Commissions, political bodies, associations, and the general public.
• Coordinate with other health officers regionally and statewide. • Direct the inspection, examination, isolation, quarantine, and decontamination of persons, places, and things within the city necessary to protect public health. • Inform the City Council about types of health issues that may affect the city. • Assist the Department in planning, organizing, and coordinating all-hazard disaster preparedness and response.
• Consult with the medical and administrative staff of local hospitals and academic centers and assist the Department in surveillance and planning to improve public health indicators.
• Assist the Department with writing local ordinances and the interpretation of state laws
• Perform related duties as needed.

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QUALIFICATIONS:

Knowledge of:
• Clinical medicine, public health and health care (e.g., epidemiology, biostatistics, environmental health, maternal and child health) management and administration.
• Federal, State and local laws governing public health programs and laws, statutes, and regulations governing California Health Services providers and JCAHO and other regulatory requirements.
• The legislative process.
• Disaster preparedness and the National Incident Management System (NIMS) • Principles of government organization, public financing, and budgeting. • Quality assurance as it applies to public health programs/services. • The latest developments in medicine, including local public health programs and ethics.

Skill/Ability to:
• Serve as public health link to the local medical community and local medical association.
• Understand, interpret and apply provisions of federal, state and local legislation, rules and regulations pertinent to the administration of Public Health programs, including COVID-19 protocols
• Evaluate health risks and hazards and communicate information effectively and proactively
• Facilitate the interaction of and foster partnerships with a complex mix of public agencies, community-based organizations, and the private sector that impact public health and policy
• Provide written and oral communication in various forms, such as reports, recommendations, and memos.

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Education and Experience:
• The candidate must be a physician. Any combination of education and experience that would likely provide the required knowledge and skills.

Completion of a residency program and three years of administrative or supervisory experience. A Master's degree in Public Health and/or completion of a residency in preventive medicine is required.

Licensure/Certification:
• License to practice medicine in the State of California and in good standing.

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EXHIBIT B

FEE FOR SERVICE
Hourly Rate: $250 per hour
Consultant shall bill at the applicable hourly rate for services provided under the Services Agreement for City of Vernon Health Officer Services.

Consultant shall submit invoices to the City of Vernon, Director of Health and Environmental Control on a bi-weekly basis.

In addition to the compensation provided above, the City will reimburse Consultant for reasonable travel-related costs and expenses for work performed under this contract, including mileage for ground transportation in the amount set forth by the Internal Revenue Service standard mileage rate. Travel expenses or travel time beyond Southern California must be approved by the Director of Health and Environmental Control in writing and in advance.

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EXHIBIT C

EQUAL EMPLOYMENT OPPORTUNITY

PRACTICES PROVISIONS
A. Contractor certifies and represents that, during the performance of this Agreement, the contractor and each subcontractor shall adhere to equal opportunity employment practices to assure that applicants and employees are treated equally and are not discriminated against because of their race, religious creed, color, national origin, ancestry, handicap, sex, or age. Contractor further certifies that it will not maintain any segregated facilities.

B. Contractor agrees that it shall, in all solicitations or advertisements for applicants for employment placed by or on behalf of Contractor, state that it is an "Equal Opportunity Employer" or that all qualified applicants will receive consideration for employment without regard to their race, religious creed, color, national origin, ancestry, handicap, sex or age.

C. Contractor agrees that it shall, if requested to do so by the City, certify that it has not, in the performance of this Agreement, discriminated against applicants or employees because of their membership in a protected class.

D. Contractor agrees to provide the City with access to, and, if requested to do so by City, through its awarding authority, provide copies of all of its records pertaining or relating to its employment practices, except to the extent such records or portions of such records are confidential or privileged under state or federal law.

E. Nothing contained in this Agreement shall be construed in any manner as to require or permit any act which is prohibited by law.

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City Council Agenda Report
Meeting Date: January 20, 2026
From: Alice Hui, Director of Finance/City Treasurer
Department: Finance
Submitted by: Angela Melgar, Finance Manager
Subject
Fiscal Year 2024-25 Audited Financial Reports
Recommendation
A. Receive and file the Fiscal Year 2024-25 Annual Financial Statements; and B. Extend submission of the Fiscal Year 2025-26 Annual Financial Statements and Report to the City Council to January 19, 2027.

Background
City Charter Article 8.11 requires City Council to appoint a California certified public accounting firm to provide an independent, annual audit of all City accounts, including the accounts of all departments, officers and employees who receive, handle or disburse public funds. Audits are to be performed in accordance with the generally accepted auditing standards (GAAS) set forth for financial audits by the American Institute of Certified Public Accountants (AICPA) Auditing Standards Board (ASB) and the U.S. Government Accountability Office’s (GAO) Government Auditing Standards. Additionally, the Charter requires the final audit to be submitted to Council 120 days after the end of the fiscal year but allows Council to extend the deadline. Accordingly, on January 21,2025 the City Council extended the deadline for the Fiscal Year (FY) 2024-25 Final Audit and Report to Council to January 20, 2026.

The FY 2024-25 financial audit was conducted by the City’s independent auditors, The Pun Group LLP, Certified Public Accountants and Business Advisors. The Finance Department is pleased to report that the City received an unmodified opinion, commonly known as a “clean opinion”, indicating that no material deficiencies were identified in the City’s internal controls, financial condition, or operations. Throughout the audit process, City staff worked closely with the auditors and provided full access to all requested financial records, including the City’s financial software, to support the audit and the issuance of the clean opinion. The independent auditors’ unmodified opinion provides assurance that the City’s financial statements fairly present, in all material respects, the financial position of the City, changes in financial position, and cash flows for the fiscal year ended June 30, 2025. A representative from The Pun Group LLP will provide a presentation on the results of the FY 2024-25 audit.

The FY 2024-25 represents the first year the Finance Department prepared an Annual Comprehensive Financial Report (ACFR), which includes the City's audited financial statements and required statistical information that comply with the Government Finance Officer Association's (GFOA) award guidelines. The GFOA established the Certificate of Achievement for Excellence in Financial Reporting Program to recognize state and local governments that go beyond the minimum requirements of generally accepted accounting principles and demonstrate transparency and full disclosure in the annual comprehensive financial reports. The ACFR was prepared in accordance with the Generally Accepted Accounting Principles (GAAP) along with the reporting requirements of the Governmental Accounting Standards Board (GASB). The report has been submitted to the GFOA Certificates of Achievement for Excellence in Financial Reporting Program, the highest recognition awarded in governmental accounting and financial reporting.
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As noted above, Charter Article 8.11 requires that the final audit be submitted to Council within 120 days after the end of the fiscal year. With the City’s fiscal year ending on June 30, FY 2025- 26 audited financial statements would need to be submitted to Council by late October 2026. However, 120 days after the end of the fiscal year (June 30) is not feasible as it can take several months to receive all documents from outside contractors and vendors to accrue all expenditures related to the prior year, finalize journal entries, reconciliations and for the auditors to complete their audit and produce the final audited financial reports. Moreover, industry best practice is 18 months after a budget is adopted, which places finalization of the audited financial reports by end of the calendar year and presentation to Council soon after. Pursuant to Charter Article 8.11, the City Council may extend the deadline for submission of audited financial statements beyond 120 days after the end of the fiscal year. Accordingly, staff requests an extension for submission of the final audit and report to Council for FY 2025-26 Annual Financial Statements to January 19, 2027.

Fiscal Impact
There is no fiscal impact associated with this report.

Attachments

1. Annual Comprehensive Financial Report for FY Ended June 30, 2025

2. Audited VPU Financial Statements for FY Ended June 30, 2025

3. Auditor Presentation
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Annual Comprehensive
Financial Report
Year Ended June 30, 2025 .
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City of Vernon, California
Annual Comprehensive Financial Report
Year Ended June 30, 2025
Prepared by the Finance Department
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City of Vernon
Annual Comprehensive Financial Report
For the Year Ended June 30, 2025
Table of Contents
Page
INTRODUCTORY SECTION (UNAUDITED):

Letter of Transmittal ............................................................................................................................................ i Elected Officials ............................................................................................................................................... viii Principal Officers ............................................................................................................................................... ix Organizational Chart ............................................................................................................................................ x FINANCIAL SECTION:

Independent Auditor’s Report on the Audit of the Financial Statements ........................................................... 1 Management’s Discussion and Analysis (Required Supplementary Information) (Unaudited) ....................... 5 Basic Financial Statements:

Government-Wide Financial Statements:

Statement of Net Position ............................................................................................................................ 20 Statement of Activities ................................................................................................................................ 22 Fund Financial Statements:

Governmental Fund Financial Statements:

Balance Sheet ........................................................................................................................................ 29 Reconciliation of the Governmental Fund Balance Sheet
to the Government-Wide Statement of Net Position ...................................................................... 30 Statement of Revenues, Expenditures, and Change in Fund Balance ................................................... 31 Reconciliation of the Governmental Fund Statement of Revenues, Expenditures, and Change in Fund Balance to the Government-Wide Statement of Activities ................................................................................................................... 32 Proprietary Fund Financial Statements:

Statement of Net Position ..................................................................................................................... 34 Statement of Revenues, Expenses, and Changes in Net Position ......................................................... 37 Statement of Cash Flows ....................................................................................................................... 38 Fiduciary Fund Financial Statements:

Statement of Fiduciary Net Position ..................................................................................................... 43 Statement of Changes in Fiduciary Net Position .................................................................................. 44 Notes to the Basic Financial Statements ............................................................................................................ 49 .
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City of Vernon
Annual Comprehensive Financial Report
For the Year Ended June 30, 2025
Table of Contents (Continued)
Page
Required Supplementary Information:

Budgetary Comparison Schedules:

General Fund ............................................................................................................................................... 95 Notes to the Budgetary Comparison Schedule ............................................................................................ 97 Schedule of Changes in Net Pension Liability and Related Ratios – Miscellaneous Plan ................................. 98 Schedule of Changes in Net Pension Liability and Related Ratios – Safety Plan ........................................... 100 Schedule of the City's Proportionate Share of the Net Pension Liability and Related Ratios – Safety Plan ............................................................................................................... 101 Schedule of the City’s Contributions – Pensions ............................................................................................. 102 Schedule of Changes in Net Other Postemployment Benefits Liability and Related Ratios ........................... 106 Schedule of Contributions – Other Postemployment Benefits ......................................................................... 108 STATISTICAL SECTION (UNAUDITED):

Description of Statistical Section Contents ...................................................................................................... 113 Financial Trends:

Net Position by Component ............................................................................................................................. 114 Changes in Net Position ................................................................................................................................... 116 Fund Balances – Governmental Funds ............................................................................................................ 120 Changes in Fund Balances – Governmental Funds .......................................................................................... 122 Revenue Capacity:

Governmental Activities Tax Revenues By Source ......................................................................................... 124 Assessed Value and Estimated Actual of Taxable Property ............................................................................ 126 Direct and Overlapping Property Tax Rates .................................................................................................... 127 Ten Principal Property Taxpayers .................................................................................................................... 128 Property Tax Levies and Collections ............................................................................................................... 129 Taxable Sales by Category ............................................................................................................................... 130 Debt Capacity:

Direct and Overlapping Debt ........................................................................................................................... 132 Legal Debt Margin ........................................................................................................................................... 133 Ratios of Outstanding Debt by Type ................................................................................................................ 134 Ratios of General Bonded Debt Outstanding ................................................................................................... 135 Pledged-Revenue Coverage ............................................................................................................................. 136 Demographic and Economic Information:

Demographic and Economic Statistics ............................................................................................................. 137 Operating Information:

Principal Employers ......................................................................................................................................... 138 Full-time and Part-time City Employees .......................................................................................................... 139 .
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December 29, 2025
Honorable Mayor and Members of the City Council
City of Vernon, California
In accordance with the Charter of the City of Vernon (City) and State Law, we are pleased to present the Annual Comprehensive Financial Report (ACFR) for the fiscal year ended June 30, 2025. The purpose of this report is to provide the City Council, residents, general public, and interested parties with a broad financial outlook of the City, as measured by the financial activity and operational achievements of its various funds, as well as to comply with State law.

Responsibility for both the accuracy of the data and the completeness, and fairness of the presentation, including disclosures, rests with the City’s management. To the best of our knowledge and belief, the enclosed data is accurate in all material respects and is reported in a manner that fairly represents the financial position and operational results of the City.

Additionally, to the best of our knowledge, there are no untrue statements or omissions of material facts within the financial statements. All disclosures necessary to enable the reader to gain a maximum understanding of the City’s financial activities have been included.

The City is required to issue annually a report on its financial position and activity, and that an independent firm of certified public accountants audits the report. As such, the ACFR is prepared in accordance with generally accepted accounting principles (GAAP) and using the guidelines set forth by the Governmental Accounting Standards Board (GASB). This year’s audit was completed by The Pun Group LLP, Certified Public Accountants and Business Advisors, and an unmodified (“clean”) opinion was issued on the City’s financial statements for the fiscal year ended June 30, 2025. The independent auditor’s report is found in front of the financial section of the ACFR.

Management’s Discussion and Analysis (MD&A) immediately follow the independent auditor’s report and provides a narrative overview and analysis of the basic financial statements. This transmittal letter is designed to complement and read in conjunction with the MD&A.

City of Vernon Profile
As one of the few full-service cities in California, the City of Vernon has much to offer. Since it was founded in 1905, Vernon has maintained a business-friendly environment, thus allowing the City to remain one of Southern California’s prime locations for industry of all types. Within its 5.2 square mile boundary, Vernon houses more than 1,800 businesses that employ approximately 55,000 people from nearby communities throughout the Greater Los Angeles Area. These include food and agriculture, apparel, steel, plastics, logistics, home furnishing companies and soon a new data center, serving as a vital economic engine in the region. .
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Vernon is a charter city and operates under the Council-Manager form of government. The five-member City Council is elected at-large to serve 5-year terms. The Mayor and Mayor Pro Tem position is rotated annually among Council Members in order of election. The City Council is the legislative authority of the City and sets the policies under which the City operates. The City Council provides leadership through policy development regarding the current practices and future direction of the City. The City Council appoints the City Administrator and the City Attorney, as well as members of the City’s commissions. The City Administrator is responsible for overseeing City employees who implement all the City's programs, services, and projects.

Vernon is a prime location for businesses as it is located just south of downtown Los Angeles, close to LAX, the Ports of Los Angeles and Long Beach, and in close proximity to major transportation hubs. The City provides a one-stop shop for land use services with expedient inhouse plan reviews and permitting, integrated fire inspections and health department approvals, and an unmatched suite of quality utility services to fulfill all business needs.

Additionally, the City continues to make strides in developing its community relationships.

Through seasonal community outreach events, it connects with Vernon residents and those residents in neighboring communities in the southeast region. The City circulates a Resident Newsletter quarterly and is also active on its social media platforms, focusing on dissemination of information that is relevant to the community and ensuring that its population is well-informed on City matters. By forging these connections with community members, the City is confident that the bi-directional conversations that result will allow it to better serve the needs of its constituents.

Local Economy
While the California economy has largely recovered from the pandemic-related recession, several business sectors continue to show signs of stress in the overall economic outlook. Global economies remain challenged by persistent inflation and interest rate volatility, which continue to place pressure on housing affordability, vehicle sales, and other interest-sensitive sectors.

Additional factors that may impact current growth patterns and domestic budget spending include labor market disruptions, wage pressures, and uncertainty surrounding trade and tariff policies affecting industrial supplies and equipment. Despite these ongoing uncertainties, economic forecasts for the US economy remain relatively resilient, supported by steady consumer spending and unemployment levels that remain low by historical standards, helping to reduce the likelihood of an economic downturn.

Inflation continues to be one of the most challenging obstacles global economies have attempted to overcome. The Federal Reserve maintained a restrictive monetary policy stance in 2024, holding the federal funds target rate at approximately 5.25% to address elevated inflation. Inflation moderated to 2.9% in 2024 but remained above the Federal Reserve’s long-term target of 2.0%. As of September 2025, inflation increased slightly to 3.0%, indicating continued price pressures despite tight monetary conditions. As the Federal Reserve begins a gradual shift toward interest rate cuts, the economy continues to experience slow job growth. And households remain challenged by elevated costs of goods and services. The pace and magnitude of rate adjustments through 2026 are expected to serve as key indicators of whether inflation is sustainably moving toward the Federal Reserve’s 2.0% target and whether broader economic conditions are stabilizing. . .

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California’s economy continues to expand but at a slower pace than the national economy.

As of November 2025, the State’s unemployment rate was 5.6%, which is higher than the national average of 4.6%. Job growth within California also appears to be slowing, partly due to the State’s labor shortage, negative population growth, and high housing costs. If these conditions continue to persist, this may further impede the State’s long-term economic growth by causing consumers to make tradeoffs in household spending budgets. While Governor Newsom proposed the first State budget in two years that will not have a deficit, the recent natural disasters in Los Angeles County and threat of potential funding cuts from the incoming presidential administration could erase these positive estimates and would likely continue economic uncertainty for local governments where they must continue to implement unfunded State mandates. Economists are forecasting stronger but still limited growth at the State level in 2025 and 2026.

The relative health of the City’s finances can be attributed to five (5) successive fiscal years of focused attention on improving the alignment of ongoing expenditures with ongoing revenues.

While the City has enjoyed positive financial health in the recent past, it is essential to implement all available measures to safeguard against potential economic downturns that could impinge upon the City’s primary revenue sources: sales, parcel, and utility users tax. Given the ongoing national economic challenges, including continuing inflation, constrained supply in the goods, services, and labor markets, and market volatility, the City must proactively enhance revenues and improve operational efficiency to prevent impact from future slowdowns in the economy.

The City’s annual obligated costs, such as contract costs, insurance, pension obligations, and unfunded mandates, continue to rise over time and compete against other budget priorities.

The largest obligated costs include pension costs related to the CalPERS Unfunded Accrued Liability (UAL). The UAL mainly fluctuates due to investment returns and changes in the discount rate. CalPERS recently announced a preliminary net investment return of 11.6% for FY 2024-25.

When factoring in CalPERS’ discount rate of 6.8%, the estimated funded status now stands at 79% as of June 30, 2025, which is an increase from 75% at June 30, 2024. The recent gain and loss, change in the discount rate, and assumption changes have led to variable funding status, which directly impacts the City’s pension costs and overall budget strategies; the City will continue to monitor this issue closely.

The City has also embarked on several key studies that may affect future budgetary planning.

In August 2023, the City Council approved Vernon Public Utilities’ (VPU’s) long-term rate strategy, which included reasonable electric growth estimates, reinforced our commitment to competitive base rates, and a stable Energy Cost Adjustment Billing Factor. In August 2024 Council approved the Vernon Public Utilities Financial Reserves Policy that supports overall financial strategy and managing of financial risks, ensuring that we can navigate future challenges and make necessary investments while continuing to provide reliable and affordable services.
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FY 2025-26 Operating Budget
The budget reflects tempered optimism, as global and local economic conditions continue to face both new and ongoing challenges that require ongoing evaluation of spending strategies, The City’s long-term economic health will depend on maintaining healthy reserves through fiscally conservative budgets and polices, planning for future economic opportunities, and sustaining a strong financial position through prudent, long-range policy decisions and sound fiscal management.

The City will continue to monitor key economic indicators, revenue sources, and spending levels as part of its sound, conservative fiscal approach. The City will continue to build on the successes and achievements realized in the current year and remains committed to providing high-quality services to its residents and customers.

The City’s primary revenue sources, including sales and use taxes, parcel taxes and utility users taxes, experienced steady growth during the current fiscal year despite broader economic challenges. As the City enters into fiscal year (FY) 2025-26, we are optimistic about continued growth but have applied conservative budgeting principles during the budget development process based on analysis of historical performance and trends, as well as industry, economic, and news reports. The City will continue to monitor key economic indicators, revenue sources, and spending levels as part of its sound, conservative fiscal approach.

Long Term Financial Planning
Under the direction of the Mayor and City Council, City management identifies the priorities that shape the path leading into the City’s future. City initiatives are reevaluated regularly, and new goals are frequently vetted to ensure that City efforts are consistent with the priorities of our policy body and the community. The City strives each year to better fulfill its mission of delivering outstanding municipal services that are responsive, comprehensive, and beneficial to the entire community by continuing its tradition of fostering innovation, ingenuity, and opportunity within its operations. City staff remains focused on actions that achieve the primary goals of tending to the public’s needs, building neighborhood connections, and governing for results that strengthen our community. The City’s dedication to improvement and modernization has created an environment where City of Vernon residents and businesses are informed and able to collaborate with staff, voice their concerns, and have access to a plethora of information on the City and their chosen topic(s) of interest. As these relationships flourish, businesses, and residents alike are able to enjoy all that Vernon has to offer while also participating in guiding Vernon down its path into the future. Below are major ongoing initiatives that will contribute to the growth and overall improvement of the City.

1. Vernon has the ability and flexibility to realign its services to meet the needs of new and emerging businesses, as well as existing businesses, to cultivate economic development, working with individual businesses to understand and respond to their needs in a manner that benefits both the community and the business. The City’s Good Governance and Reform initiatives provide a tangible demonstration of the overarching commitment to . sound governance and best business practices.
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Item 15 Page 12 of 295

2. Based upon the City’s electricity enterprise debt service schedule, there will be a significant reduction in debt service starting in FY 2028-29. With input from business and residential communities, the City continues to evaluate its position and initiatives to ensure that electric rates remain competitive and that infrastructure needs are being addressed.

3. The City has two major tax revenue streams that are facing expiration in June 2028. The Special Safety Parcel Tax and the Utility Users Tax, approved by voters in 2018, generate in approximately $14.6 million annually in revenues that support general services, including public safety, street and park maintenance. Extension of these two measures is imperative for the City’s future financial well-being. City staff will be working to present a ballot measure in upcoming years to address this need.

4. The inherent governance challenges in the City, due to a very small residential population, continue to be addressed by its residents, businesses, Chamber of Commerce, and City Council. Over the past 5 years, the public has become much more engaged in the political process and continues to keep a watchful eye on all important issues facing the City. The disincorporation controversy raised by Assembly Bill 46 in 2011 has been addressed with the whole-hearted adoption of key reforms and comprehensive implementation of best practices in all City operations. There are several projects underway which will potentially increase Vernon’s residential population.

5. The City has joined several similarly situated cities in a coordinated advocacy effort, referring themselves collectively as the “Big 5”, to request legislative changes to the State’s current street and road funding allocation methodology. These cities share unique characteristics, including a high concentration of employment, industrial activity, and heavy truck traffic that place disproportionate demands on local transportation infrastructure. Through this collaboration, the Cities are engaging with state legislators to seek a more equitable funding formula that better reflects roadway usage, maintenance needs, and the economic activity supported by these jurisdictions.

6. The shutdown of the Exide recycled battery plant operation has been and will continue to be under State of California oversight. The Department of Toxic Substances Control is entirely responsible for monitoring the site and all related cleanup on a continual basis. The State of California has established funding for the Exide plant cleanup effort collected through a fee on each battery recycled along with any restitution from Exide which remains a global company. There is no direct impact on City operations and Exide does not pose a concern to existing Vernon businesses.

7. Vernon’s electric rates remain competitive, and in many cases, lower than adjacent municipal and investor-owned utilities. However, in many respects, Vernon’s electric utility services continue to outperform its neighboring peers thanks to a higher reliability rating and greater customer satisfaction. In fact, VPU is a three-time recipient of the RP3 Diamond Level Award, the highest reliability award from the American Public Power Association (APPA), which reflects our continued investment in utility infrastructure and commitment to safety and workforce development.
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8. Since the purchase of Malburg Generating Station (MGS), Vernon Public Utilities is optimizing the operating profile for operational savings, revenue growth and continued coordination with the CAISO to prevent statewide rolling blackouts and requests to run MGS when energy is needed most across the electric grid. Since 2016, Vernon Public Utilities has maintained its Reliable Public Power Provider designation from the APPA for its excellence in reliability and, as noted above, has earned the highest designation at Diamond Level for three consecutive terms.

Financial and Internal Controls
Management of the City is responsible for establishing and maintaining internal controls designed to ensure that the assets of the government are protected from loss, theft, or misuse, and to ensure that adequate accounting data are compiled to allow for the preparation of financial statements in conformity with U.S. generally accepted accounting principles. Internal controls are designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgments by management.

This report consists of management’s representations concerning the finances of the City. As a result, management assumes full responsibility for the completeness and reliability of all the information presented in this report. Management asserts that, to the best of their knowledge and belief, this financial report is complete and reliable in all material respects.

Single Audit
The City is legally required to undergo an annual single audit in conformity with the provisions of the Single Audit Act of 1984 and the U.S. Office of Management and Budget Uniform Guidance, Audits of State and Local Governments, if total federal grant expenditures exceed $750,000 in a single year. Throughout the course of FY 2024-25, the City expended federal funds in excess of the $750,000 threshold, and therefore the City is subject to Single Audit requirements.

Budgetary Controls
The City maintains budgetary controls to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the City Council. Activities of all governmental funds and proprietary funds are included in the annual appropriated budget. The level of budgetary control (that is, the level at which expenditures cannot legally exceed the appropriated amount) is established at the departmental level. .
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Spending Limitation
Management foresees no problem for several years in complying with the spending limitation under the Gann Initiative passed by the California voters in 1979, which created Article XIIIB of the State Constitution. The City's independent auditors have attested to the accuracy of the computation of the spending limitations for the current period, which indicated that the City’s tax proceeds are substantially under the established Gann Limit and are not expected to reach that limit in the foreseeable future.

Independent Audit
The City requires an annual audit by independent certified public accountants, the auditing firm, The Pun Group LLC, was selected to audit the City’s accounting records. The auditor’s report on the basic financial statements, combined and individual fund statements, and schedules is included in the financial section of this report.

Acknowledgements
The preparation of this annual comprehensive financial report was made possible by the staff of the Finance department, the City Administrator’s office, Department Heads and assigned staff, and the expertise of the City’s auditors, The Pun Group LLP. Each member of this team has our sincere appreciation.

In closing, without the leadership and support of the City Council, the preparation and results presented within this report would not have been conceivable. Their steadfast leadership has made possible the implementation of the City’s important, innovative concepts in fiscal management discussed herein.

Respectfully submitted,
Alice Hui
Finance Director
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Item 15 Page 15 of 295

CITY COUNCIL
Leticia Lopez
Mayor
Melissa Ybarra
Mayor Pro Tem
Jesus Rivera
Council Member
Crystal Larios
Council Member
Judith Merlo
Council Member
As of June 30, 2025
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Freddie Agyin
Director of Health & Environmental Control
Su Tan
Director of Human Resources
Daniel Wall
Director of Public Works

PRINCIPAL OFFICERS
Brian Saeki
City Administrator
Zaynah Moussa
City Attorney
Angela Kimmey
Deputy City Administrator
Todd Dusenberry
General Manager of Public Utilities
Robert Sousa
Police Chief
Genoveva Rocha
City Clerk
Alice Hui
Director of Finance
As of June 30, 2025
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ORGANIZATIONAL CHART
As of June 30, 2025
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6 Hutton Centre Drive, Suite 1200
Santa Ana, California 92707 INDEPENDENT AUDITOR’S REPORT To the Honorable Mayor and Members of the City Council
of the City of Vernon
Vernon, California
Report on the Audit of the Financial Statements
Opinions
We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Vernon, California (the “City”), as of and for the year ended June 30, 2025, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.

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

Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (“GAAS”), and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States (“Government Auditing Standards”). 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 City and to meet our other ethical responsibilities, in accordance with the relevant requirements relating to out audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Responsibility of Management for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’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.

Emphasis of Matters
Change in Accounting Principle
As discussed in Notes 1 and 12 to the financial statements, the City adopted new accounting principal, GASB Statement No. 101, Compensated Absences in 2025 and resulted in restatement of beginning fund balances. Our opinions are not modified with respect to this matter. . .

Item 15 Page 19 of 295
To the Honorable Mayor and Members of the City Council
of the City of Vernon
Vernon, California

2 Auditor’s Responsibility 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 GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with GAAS and Government Auditing Standards, we  exercise professional judgment and maintain professional skepticism throughout the audit.  identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.  obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’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 City’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 Budgetary Comparison Schedule, the Schedule of Changes in Net Pension Liabilities and Related Ratios – Miscellaneous Plan and Safety Plan, the Schedule of Proportionate Share of the Net Pension Liabilities and Related Ratios – Safety Plan, the Schedule of Contributions – Pensions, the Schedules of Changes in Net Other Postemployment Benefits Liability and Related Ratios, and the Schedules of Contributions – Other Postemployment Benefits be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by Government Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the Required Supplementary Information in accordance with GAAS, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. . .

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To the Honorable Mayor and Members of the City Council
of the City of Vernon
Vernon, California

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

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

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 29, 2025 on our consideration of the City’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’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 City’s internal control over financial reporting and compliance.

Santa Ana, California
December 29, 2025
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City of Vernon, California
Management’s Discussion and Analysis (Unaudited)
June 30, 2025
5 As management of the City of Vernon (“the City”), we offer readers of the financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2025.

FINANCIAL HIGHLIGHTS
 As of June 30, 2025, the City’s total net position (assets plus deferred outflows of resources less liabilities and less deferred inflows of resources) was $523.8 million.  The City’s total net position increased $107.6 million from the prior year. This is due to various factors, primarily a $60.8 million increase in business-type activity assets and $52.6 million decrease in liabilities. The increase is largely due to cash; there was $34.9 million more in charges for services in the business-type activity funds when compared to the prior fiscal year.

Additionally, there was $10 million more in capital contributions and grants citywide. In liabilities, there was a significant decrease due long-term revenue bonds paid down by $54.67 million. Overall, there were positive factors to increase the net position, however the pension related deferred outflows of resources was the source of a decrease to the City’s deferred outflows of resources of $14.8 million; however, the net pension liability decreased slightly by $2.6 million.
 The City’s General Fund reported an ending fund balances of $54.24 million, an increase of $4.96 million in comparison with the prior fiscal year of $49.28 million. The fund balance increased due to lower than budgeted expenditures in the funds, however revenues for the year also increased slightly due to anticipated increase of parcel tax revenues. Of the $54.24 million fund balance, $134 thousand, or 0.25%, of this total is non-spendable (not available for new spending). The restricted fund balance categories of $7.19 million, or 13.26%, is spendable for restricted purposes. The committed fund balance of $20.3 million, or 37.42%, represents amounts formally restricted or committed that are intended to be used for specific purposes. The unassigned fund balance category of $26.62 million, or 49.07%, represents the City’s fund balance reserves.
 The City’s business-type funds had a change in net position before transfers of $111.2 million.

The electric fund activity accounted for the majority of the increase reporting a change in net position for fiscal year (FY) 2024-25 of $109.0 million, compared with a $75.7 million change in net position in FY 2023-24. The electric fund is the largest fund for business-type activity and accounts for the operation and maintenance, including capital investment, of the City’s electric utility. Revenues for this fund are primarily from electric sales to customers. The total net position for the electric fund as of June 30, 2025 is $400.4 million. The net position in the prior year was $291.34 million, as restated.

OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis are intended to serve as an introduction to the City's basic financial statements. The City's basic financial statements comprise three components: (i) government-wide financial statements, (ii) fund financial statements, and (iii) notes to the basic financial statements.

Government-wide Financial Statements
The government-wide financial statements are designed to provide readers with a broad overview of the City's finances, in a manner similar to a private-sector business.

The statement of net position presents information on all of the City's total assets and deferred outflows of resources and total liabilities and deferred inflows of resources, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the fina .ncial position of the City is improving or deteriorating. .

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City of Vernon, California
Management’s Discussion and Analysis (Unaudited) (Continued) June 30, 2025
6 The statement of activities presents information showing how the City's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event 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 future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave).

Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, public safety, public works, and health services. The business-type activities of the City is administered by the Vernon Public Utilities which consists of the Electric, Gas, Water, and Fiber Optics utilities.

The government-wide financial statements include not only the City of Vernon (known as the primary government), but also blended component units. Certain blended component units, although legally separate entities are, in substance, part of the primary government’s operations and are included as part of the primary government. Fiduciary funds are not presented in the government-wide financial statements as the resources are not available to support City programs.

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 City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds.
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City of Vernon, California
Management’s Discussion and Analysis (Unaudited) (Continued) June 30, 2025
7 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 of 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 funds 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 funds balance sheet and the governmental funds statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.

The City adopts an annual appropriated budget for its General Fund. A budgetary comparison schedule has been provided for the General Fund.

Proprietary funds
The City’s proprietary funds consist of enterprise funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for its Vernon Public Utilities which consists of the Electric, Gas, Water, and Fiber Optics utilities.

Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the Vernon Public Utilities.

Fiduciary funds
Fiduciary funds are used to account for resources held for the benefit of parties outside of the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support City programs. The accounting used for fiduciary funds is much like that used for proprietary funds.

Notes to the 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.
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City of Vernon, California
Management’s Discussion and Analysis (Unaudited) (Continued) June 30, 2025
8 GOVERNMENT-WIDE FINANCIAL ANALYSIS
City’s Net Position
The table below summarizes the government-wide Statement of Net Position as of June 30, 2024 and June 30, 2025, and is as follows:

City of Vernon
Statement of Net Position
Years ended June 30, 2025 and 2024
Over time, net position may serve as a useful indicator of a City's financial position. At June 30, 2025, the City’s net position was $523.8 million, an increase of $107.6 million over the net position of $416.2 million at June 30, 2024.

The largest portion of the City's net position ($424.0 million) is its investment in capital assets (e.g., land, buildings, infrastructure, and equipment, right-to-use assets, etc.), net of related debt. The City uses capital assets to provide services to residents; consequently, these assets are not available for future spending.

This category of net position increased mainly from the construction of ongoing, or nearly completed projects such as the city-wide tree well project, Electrical service upgrades, Well and Reservoir rehabilitation, and upgrading the existing fiber optics network system.

The City's restricted net position totals $40.5 million. Restricted net position represents resources that are subject to external restrictions on how they may be used, such as debt. The remaining balance of $59.3 million represents the unrestricted net position.
2025 2024 2025 2024 2025 2024
Assets:

Current and other assets 54,970,444 $ 51,022,969 $ 269,605,955 $ 220,601,582 $ 324,576,399 $ 271,624,551 $ Restricted assets 7,190,533 6,636,473 28,364,291 31,852,647 35,554,824 38,489,120 Capital assets 157,026,228 159,189,173 472,849,702 457,552,315 629,875,930 616,741,488 Total assets 219,187,205 216,848,615 770,819,948 710,006,544 990,007,153 926,855,159 Deferred Outflows of Resources:

Pension related 34,380,158 47,429,249 10,124,154 13,425,619 44,504,312 60,854,868 OPEB liability related 3,597,039 2,234,060 1,059,245 632,386 4,656,284 2,866,446 Bond Refunding related - - 1,327,398 1,529,380 1,327,398 1,529,380 49,663,309 37,977,197 12,510,797 15,587,385 50,487,994 65,250,694 Liabilities:

Current liabilities 7,322,148 7,772,412 84,210,267 73,762,315 91,532,415 81,534,727 Long-term liabilities 144,356,911 147,607,543 271,150,038 334,159,365 415,506,949 481,766,908 Total liabilities 151,679,059 155,379,955 355,360,305 407,921,680 507,039,364 563,301,635 Deferred Inflows of Resources:

Pension related 2,860,051 4,076,117 842,218 1,153,810 3,702,269 5,229,927 OPEB related 1,866,272 2,947,177 549,573 834,246 2,415,845 3,781,423 Lease Related 3,531,395 3,605,976 - - 3,531,395 3,605,976 10,629,270 8,257,718 1,391,791 1,988,056 9,649,509 12,617,326 Net Position:

Net investment in
capital assets 156,332,518 158,365,002 267,705,683 216,779,121 424,038,201 375,144,123 Restricted 7,190,533 6,636,474 33,293,721 34,263,566 40,484,254 40,900,040 Unrestricted (66,295,426) (64,498,777) 125,579,245 64,641,506 59,283,819 142,729 Total net position 97,227,625 $ 100,502,699 $ 426,578,649 $ 315,684,193 $ 523,806,274 $ 416,186,892 $ Statement of Net Position
Table 1
Governmental Activities Business-Type Activities Total
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City of Vernon, California
Management’s Discussion and Analysis (Unaudited) (Continued) June 30, 2025
9 Total net position increased by $107.6 million, or 25.9%, from an excess of revenues over expenses. This net increase was reflected by an increase of $59.1 million and $48.9 million in unrestricted net position and net investment in capital assets, respectively; offset with a $0.4 million decrease in restricted net position.

The increase in assets is primarily due to an increase in current and other assets of $53 million and a decrease of $66.3 million of long-term liabilities. The excess of revenues over expenses will be analyzed in conjunction with the Statement of Activities.

Following is a summary of the government-wide Statement of Activities which illustrates the City’s overall $108.1 million increase (prior to adjustment for restatement) in net position resulting from program expenses being less than total program and general revenues. A discussion regarding significant changes in revenues and expenses follows the table below.

City of Vernon
Statement of Activities
Years ended June 30, 2025 and 2024
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City of Vernon, California
Management’s Discussion and Analysis (Unaudited) (Continued) June 30, 2025
10 Government-wide revenues increased overall by $31.6 million to $357.0 million. The majority of this increase is due to an increase of $19.4 million for Vernon Public Utilities revenues. There was an increase of $10.2 million in capital contributions and grants. Of that amount, $9.3 million was the capital contribution from the City’s first data center customer. This represents the City’s ownership interest in capital work performed by Vernon Public Utilities but paid in full by the data center customer. The City actively sought out grant opportunities with the flattening and decline in City revenues.

The most significant portion of the City's general revenue came from sales and use taxes, parcel taxes, and utility user taxes which accounted for 18.5%, 21.7% and 16.7% of total governmental activities fund revenues, respectively. Charges for services accounted for 17.1% of total revenue. Additionally, 7.5% was received from business license taxes, 7.2% from property taxes, and the remaining 11.2% was from other taxes, rental income, grants, and investment income. Vernon Public Utilities (VPU) accounted for 77.7% of the City’s total revenue. There were higher than expected revenues in the electric fund for FY 2024-25.

Government-wide expenses of all the City programs and services decreased by $3.3 million to $248.9 million. Governmental Activities increased by $2.1 million while the Business Type Activities decreased by $5.4 million. Expenses include salaries, operation costs, adjustments for depreciation, long-term debt, and pension costs. The net decrease in Government-wide expenses was $3.3 million and is spread across the City's programs with a decrease in Vernon public utilities by $5.4 million, and $0.9 million in public works.

There are additional smaller decreases in expenses in health services activities and interest expense. The decreases are offset with public safety expenses by $2.7 million and general government expenses by $0.5 million.

Vernon Public Utilities accounted for 66.7% of the total expenses, General Government for 7.4%, Public Safety for 18.3%, Public Works for 6.5%, and Health for 1.0%. Interest Expense accounts for a minimal amount of the remaining expenses.

Governmental activities decreased by $3.2 million before transfers to the increase in net position resulting from expenses exceeding revenues.

Revenues of governmental activities report a net increase over the prior year of $3.2 million, to $79.8 million. The increase is primarily attributed to a $2.7 million increase in taxes. Parcel taxes revenue went up $1.1 million, or 7.1%.

Expenses of governmental activities increased by a net $2.1 million, or 2.6%. The net decrease is spread across the City's programs with Police increasing by $2.7 million, General Government increasing by $0.5 million, offset with decreases in Public Works by $0.9 million and Health services by $0.2 million. Interest expense experienced a very negligible change.
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Item 15 Page 28 of 295
City of Vernon, California
Management’s Discussion and Analysis (Unaudited) (Continued) June 30, 2025
11 The following two charts show the source and use of funds for Governmental Activities:

Charges for
services
17%
Operating
contributions and
grants
2%
Capital
contributions and
grants
1%
Property taxes
7%
Sales taxes
Parcel taxes 19%
22%
Utility users
taxes
17%
Franchise taxes
3%
Business license
taxes
7%
Other taxes
0%
Investment income
3%
Rental
income
1%
Other
income
1%
Governmental Activities
Revenue by Source
FY 2025
General
government
22%
Public safety
55%
Public works
20%
Health services
3%
Interest
expense
0%
Governmental Activities
Expenses by Function
FY 2025
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Item 15 Page 29 of 295
City of Vernon, California
Management’s Discussion and Analysis (Unaudited) (Continued) June 30, 2025
12 Business-type activities consists of the Electric, Gas, Water and Fiber Utilities Enterprise Funds. The total net position at the end of the year was $426.6 million as compared to $315.7 million at the end of the prior fiscal year. This represents an increase in net position of $110.9 million.

Revenues of $277.2 million are comprised of electric, water, natural gas, and fiber sales. This is an increase of $28.4 million over the prior fiscal year's total revenue of $248.8 million. In addition to the $9.3 million increase in capital contributions, the total revenue growth was due to increases in Electric Wholesale Revenues of $11.4 million, Capacity Reservation Charges of $3.0 million, Engineering Services Revenue of $2.8 million, and Construction Revenue of $2.0 million. -
50,000,000
100,000,000
150,000,000
200,000,000
250,000,000
300,000,000
2025 2024
Business-type Activities- Revenues and
Expenses
Fiscal Years Ended June 30, 2025 and 2024
Revenues Expenses
.
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Item 15 Page 30 of 295
City of Vernon, California
Management’s Discussion and Analysis (Unaudited) (Continued) June 30, 2025
13 FINANCIAL ANALYSIS OF THE GOVERNMENTAL FUNDS
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with financerelated legal requirements.

Governmental funds
The focus of the City's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City's financing requirements. In particular, the nonspendable, restricted, committed, assigned, and unassigned fund balances may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year.

At the end of the current fiscal year, the City's governmental funds reported a combined ending fund balances of $54.2 million an increase of $4.9 million from the prior year. Approximately 0.25% of the total fund balance amount, $134 thousand, constitutes nonspendable fund balance, which are amounts that are not in a spendable form or are required to be maintained intact. Approximately 13.26% of the total fund balance amount, $7.2 million, constitutes restricted fund balance, which are amounts that can be spent only for specific purposes stipulated by external resource providers, constitutionally, or through enabling legislation. Approximately 34.42% of the total fund balance amount, $20.3 million, constitutes committed fund balance, which are amounts that the City Council set aside for various reserves. The remainder of the fund balance amount, $26.6 million or 49.07%, is an unassigned fund balance to indicate that it is the residual classification that is not contained in the other classifications.

The General Fund is the operating fund of the City. At the end of the current fiscal year, the total fund balance was $54.2 which represents 71.8% of the total expenditures for the year.

Proprietary funds
The City's proprietary funds provide the same type of information found in the government-wide financial statements but in more detail.

Unrestricted net position for the Vernon Public Utilities at the end of the year amounted to a balance of $125.6 million. The total increase in net position for the Vernon Public Utilities was $111.0 million.

Other factors concerning the finances of these funds have already been addressed in the discussion of the City's business-type activities.
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Item 15 Page 31 of 295
City of Vernon, California
Management’s Discussion and Analysis (Unaudited) (Continued) June 30, 2025
14 GENERAL FUND AND BUDGETARY HIGHLIGHTS
For the current year, the General Fund’s total positive variance between the final budgeted amounts and the actual amount of change in fund balance was $13.7 million. The key reasons for this variance were due to lower actual expenditures than projected of approximately $10.8 million.

For the current year, the General Fund’s total positive variance between the final budgeted estimated revenues and actual revenues was $2.4 million. The main reason for the variance, was that general taxes came in $1.9 million higher than anticipated and investment earnings were $1.1 million (or 101%) higher than budgeted.

For the current year, the General Fund’s total positive variance between the final budgeted amount and the actual amount for expenditures was $10.8 million. The key reasons for this variance were due to higher appropriations than actual expenditures in capital outlay; there were $7.6 million more capital expenditures anticipated in the fiscal year. Additionally, there were $2.0 million less actual expenditures in public works related to professional services.

CAPITAL ASSET AND DEBT ADMINISTRATION
Capital assets
The City's capital assets for its governmental and business-type activities as of June 30, 2025, amounts to $629.9 million (net of accumulated depreciation). This investment in capital assets includes land, construction in progress, building, utility system improvements, machinery and equipment, infrastructure such as roads, and intangible assets such as environmental emission credits. There is an increase of $13.3 million due to capital assets; more notably the increase derives from the business-type activities. There is an increase to Construction in Progress of $9.7 million for the Electric fund and $30.0 million in capital additions to the distribution plant. For additional information, see Note 5 of this report.

Outstanding debt
As of June 30, 2025, the following debt remains outstanding:
 $34,530,000 City of Vernon Electric System Revenue Bonds, 2008 Taxable Series A  $2,865,000 City of Vernon Electric System Revenue Bonds, 2012 Taxable Series B  $41,075,000 City of Vernon Electric System Revenue Bonds, 2015 Taxable Series A  $19,305,000 City of Vernon Electric System Revenue Bonds, 2020 Series A  $109,700,000 City of Vernon Electric System Revenue Bonds, 2021 Taxable Series A  $42,495,000 City of Vernon Electric System Revenue Bonds, 2022 Taxable Series A  $13,810,000 City of Vernon Water System Revenue Bonds, 2020 Taxable Series A  $802,325 City of Vernon agreement with the Water Replenishment District of Southern California
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Item 15 Page 32 of 295
City of Vernon, California
Management’s Discussion and Analysis (Unaudited) (Continued) June 30, 2025
15 The City of Vernon Electric System Revenue Bonds, 2008 Taxable Series A were issued to provide funds to (i) finance the cost of certain capital improvements to the City’s Electric System, (ii) fund a deposit to the Debt Service Reserve Fund, and (iii) to pay costs of issuance of the 2008 Bonds.

The City of Vernon Electric System Revenue Bonds, 2012 Taxable Series B were issued to provide funds to (i) refund the $28,680,000 aggregate principal amount of 2009 Bonds maturing on August 1, 2012, (ii) to pay a portion of the Costs of the 2012 Project, and (iii) to pay costs of issuance of the 2012 Taxable Series B Bonds.

The City of Vernon Electric System Revenue Bonds, 2015 Taxable Series A were issued to provide funds to (i) refund a portion of the Outstanding Electric System Revenue Bonds, 2009 Series A; (ii) finance the costs of certain capital improvements to the City’s Electric System by reimbursing the Electric System for the prior payment of such costs from the Light and Power Fund; (iii) fund a deposit to the Debt Service Reserve Fund; and (iv) pay costs of issuance of the 2015 Bonds.

The City of Vernon Electric System Revenue Bonds, 2020 Series A were issued to provide funds to (i) finance the acquisition and construction of certain capital improvements to the Electric System of the City, (ii) to refund all of the City’s outstanding Electric System Revenue Bonds, 2009 Series A, and (iii) to pay costs of issuance of the 2020 Bonds.

The City of Vernon Electric System Revenue Bonds, 2021 Series A were issued to provide funds: (i) to pay the costs of the acquisition by the City of Vernon of a 134-megawatt natural gas-fired generating facility located within the city limits on land owned by the City, together with certain related electrical interconnection facilities and other assets, property, and contractual rights, (ii) to fund a deposit to the Debt Service Reserve Fund in satisfaction of the Debt Service Reserve Requirement, and (iii) to pay costs of issuance of the 2021 Bonds.

The City of Vernon Electric System Revenue Bonds, 2022 Series A were issued to (i) refund and defease all the City’s outstanding Electric System Revenue Bonds, 2012 Series A and a portion of the City’s outstanding Electric System Revenue Bonds, 2012 Taxable Series B and (ii) to pay costs of issuance of the 2022 Bonds.

The City of Vernon Water System Revenue Bonds, 2020 Series A were issued to provide funds to (i) finance the acquisition and construction of certain capital improvements to the Water System of the City, (ii) purchase a municipal bond debt service reserve insurance policy for deposit in the Reserve Fund in satisfaction of the Reserve Requirement, and (iii) to pay costs of issuance of the 2020 Bonds.

As of June 30, 2025, the ratings on all Electric System Revenue Bonds of the City were A-/Stable by S&P and Baa1/Positive by Moody’s. The rating on Water System Revenue Bonds is A-/Stable by S&P and is not rated by Moody’s.

Additional information on the City's long-term debt can be found in Note 6 of this report. .
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Item 15 Page 33 of 295
City of Vernon, California
Management’s Discussion and Analysis (Unaudited) (Continued) June 30, 2025
16 ECONOMIC FACTORS AND NEW YEAR’S BUDGET AND RATES
Local and state economies continual growth throughout fiscal year 2024-25 has tapered due to prolonged historical high inflation and the increased interest rates by the Federal Reserve. Cities continue to be challenged in forecasting the economy and preparing the budget for the next fiscal year.

The City’s revenues while the cost of goods and services continue to increase in response to volatile economic changes. In response, these factors were considered in preparing the City and VPU’s budget for fiscal year 2025-26.
 The City developed a conservative spending plan addressing City Council and community priorities while focusing on operations at full capacity, deferring maintenance and capital projects while still focused on delivering quality core municipal services.  VPU continues to respond to inflation, tariffs, and supply chain issues, including higher costs for materials and supplies, chemicals, and construction costs to maintain its generation, transmission, and distribution infrastructure, and to make capital investments to continue to provide exceptionally reliable service and competitively priced utilities.  In support of the City’s business development plans, VPU continues to collaborate with City staff to attract new businesses and industries to Vernon, especially in the development of green commerce. VPU is a dedicated partner invested in the stability and growth of the Vernon community. VPU is committed to maintaining a strong financial and operational position for the future, which includes implementing its multi-year capital plan as well as continuous improvement in its operations for efficiency and cost savings.

REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview of the City's finances for all those with an interest in the City's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Director of Finance at the City of Vernon, 4305 Santa Fe Avenue, Vernon, California, 90058. .
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Item 15 Page 34 of 295

BASIC FINANCIAL STATEMENTS
17 .
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18 .
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GOVERNMENT-WIDE FINANCIAL STATEMENTS
19 .
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Item 15 Page 37 of 295
Governmental Business-Type
Activities Activities Total
ASSETS
Current assets:

Cash $ 202,569,198 27,748,183 $ 230,317,381 $
Investments 17,808,087 19,786,026 37,594,113
Accounts receivable, net 15,242,076 206,266 15,448,342
Taxes receivable - 3,164,687 3,164,687
Interest receivable 166,731 - 166,731
Notes and loans receivable - 17,416 17,416
Other receivables - 295,818 295,818
Accrued unbilled revenue 24,911,377 - 24,911,377
Internal balances (3,574) 3,574 -
Lease receivable - due within one year - 70,611 70,611
Prepaid items 619,338 116,615 735,953
Inventory - 471,811 471,811
Total current assets 261,785,044 51,409,196 313,194,240 Noncurrent assets:

Restricted cash and investments 28,364,291 7,190,533 35,554,824 Lease receivable, due in more than one year 3,561,248 - 3,561,248 Prepaid items 934,159 - 934,159
Deposits 6,886,752 - 6,886,752
Capital assets:

Capital assets, not being depreciated 79,838,390 65,473,768 145,312,158 Capital assets, being depreciated, net 392,774,024 90,711,294 483,485,318 Intangible assets, being amortized, net 237,288 841,166 1,078,454 Total capital assets, net 472,849,702 157,026,228 629,875,930 Total noncurrent assets 509,034,904 167,778,009 676,812,913 Total assets 770,819,948 219,187,205 990,007,153

DEFERRED OUTFLOWS OF RESOURCES
Pension related items 10,124,154 34,380,158 44,504,312
Other postemployment benefits related items 1,059,245 3,597,039 4,656,284 Deferred charges on refunding 1,327,398 - 1,327,398
Total deferred outflows of resources 12,510,797 37,977,197 50,487,994 City of Vernon
Primary Government
June 30, 2025
Statement of Net Position
See accompanying Notes to the Basic Financial Statements. 20 .
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Item 15 Page 38 of 295
Governmental Business-Type
Activities Activities Total

LIABILITIES
Current liabilities:

Accounts payable 14,098,428 2,005,431 16,103,859
Accrued wages and benefits 644,631 986,904 1,631,535
Accrued interest payable 5,256,268 10,819 5,267,087
Unearned revenue 5,808,390 929,302 6,737,692
Customer deposits payable 528,569 463,793 992,362
Lease liabilities - due within one year - 24,212 24,212 Subscription liabilities - due within one year 53,798 283,759 337,557 Compensated absences - due within one year 945,709 520,648 1,466,357 Claims and judgments - due within one year 1,672,219 - 1,672,219 Bonds payable - due within one year - 57,160,000 57,160,000 Note payable - due within one year 139,535 - 139,535
Total current liabilities 84,210,267 7,322,148 91,532,415 Noncurrent liabilities:

Lease liabilities - due in more than one year - 48,288 48,288 Subscription liabilities - due in more than one year 16,336 294,951 311,287 Compensated absences - due in more than one year 1,891,418 1,041,297 2,932,715 Claims and judgments - due in more than one year 3,863,005 - 3,863,005 Bonds payable - due in more than one year - 228,715,501 228,715,501 Note payable - due in more than one year 662,790 - 662,790 Net pension liability 38,072,894 129,290,048 167,362,942 Net other postemployment benefits liability 2,641,220 8,969,201 11,610,421 Total noncurrent liabilities 144,356,911 271,150,038 415,506,949 Total liabilities 355,360,305 151,679,059 507,039,364

DEFERRED INFLOWS OF RESOURCES
Pension related items 842,218 2,860,051 3,702,269
Other postemployment benefits related items 549,573 1,866,272 2,415,845 Lease related item - 3,531,395 3,531,395
Total deferred inflows of resources 1,391,791 8,257,718 9,649,509

NET POSITION
Net investment in capital assets 156,332,518 267,705,683 424,038,201 Restricted:

Debt service 28,015,891 - 28,015,891
Assembly Bill 1890 5,277,830 - 5,277,830
Employee flexible spending account - 26,105 26,105
Street improvements - 4,254,835 4,254,835
Asset forfeiture funds - 453,242 453,242
Drug abuse program - 5,440 5,440
Metropolitan transit authority program - 77,244 77,244
Safe clean water program - 2,373,667 2,373,667
Unrestricted (deficit) (66,295,426) 125,579,245 59,283,819 Total net position $ 426,578,649 97,227,625 $ 523,806,274 $ Primary Government
June 30, 2025
Statement of Net Position (Continued)
City of Vernon
See accompanying Notes to the Basic Financial Statements. 21 .
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Item 15 Page 39 of 295
Operating Capital
Charges for Grants and Grants and
Functions/Programs Expenses Services Contributions Contributions Governmental Activities:

General government $ 9,516,923 18,514,217 $ 5,264 $ - $ Public safety 146,277 45,618,994 418,009 -
Public works 16,267,803 3,384,200 954,601 970,938
Health services 2,503,889 622,973 442,203 -
Interest and fiscal charges 17,486 - - -
Total governmental activities 13,670,373 82,922,389 1,820,077 970,938 Business-type Activities:

Electric 142,547,220 236,259,709 - 9,262,207
Gas 13,713,874 13,979,744 - -
Water 9,696,115 8,996,669 - -
Fiber optics 757,994 497,200 - -
Total business-type activities 260,432,768 166,015,757 - 9,262,207 Total primary government $ 274,103,141 248,938,146 $ 1,820,077 $ 10,233,145 $ Program Revenues
City of Vernon
Statement of Activities
For the Year Ended June 30, 2025
See accompanying Notes to the Basic Financial Statements. 22 .
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Item 15 Page 40 of 295
Governmental Business-Type
Functions/Programs Activities Activities Total
Governmental Activities:

General government $ - (8,992,030) $ (8,992,030) $
Public safety - (45,054,708) (45,054,708)
Public works (10,958,064) - (10,958,064)
Economic development - (1,438,713) (1,438,713)
Interest and fiscal charges (17,486) - (17,486)
Total governmental activities - (66,461,001) (66,461,001) Business-type Activities:

Electric 102,974,696 - 102,974,696
Gas 265,870 - 265,870
Water 699,446 - 699,446
Fiber optics (260,794) - (260,794)
Total business-type activities 103,679,218 - 103,679,218 Total primary government 103,679,218 (66,461,001) 37,218,217 General revenues and transfers:

General revenues:

Taxes:

Property taxes 5,728,557 - 5,728,557
Parcel taxes 17,335,301 - 17,335,301
Utility users taxes 13,346,507 - 13,346,507
Franchise taxes 2,252,369 - 2,252,369
Business license taxes 5,957,917 - 5,957,917
Sales and use taxes 14,785,358 - 14,785,358
Other taxes 15,354 - 15,354
Total taxes - 59,421,363 59,421,363
Investment income 2,160,049 7,543,795 9,703,844
Rental income 607,465 - 607,465
Other income 1,109,985 - 1,109,985
Total general revenues 7,543,795 63,298,862 70,842,657
Transfers (173,828) 173,828 -
Changes in net position 111,049,185 (2,988,311) 108,060,874 Net position - beginning of year, as restated (Note 11) 315,529,464 100,215,936 415,745,400 Net position - end of year $ 426,578,649 97,227,625 $ 523,806,274 $ Net (Expenses) Revenues and
Changes in Net Position
City of Vernon
Statement of Activities (Continued)
For the Year Ended June 30, 2025
See accompanying Notes to the Basic Financial Statements. 23 .
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24 .
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FUND FINANCIAL STATEMENTS
25 .
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26 .
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GOVERNMENTAL FUND FINANCIAL STATEMENTS
27 .
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28 .
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Item 15 Page 46 of 295
General
Fund
ASSETS
Cash $ 27,748,183
Investments 19,786,026
Restricted cash and investments 7,190,533
Accounts receivable, net 206,266
Taxes receivable 3,164,687
Lease receivable 3,631,859
Notes and loans receivable 17,416
Other receivables 295,818
Due from other funds 3,574
Inventories and prepaid items 116,615
Total assets $ 62,160,977

LIABILITIES, DEFERRED INFLOW OF

RESOURCES, AND FUND BALANCE
Liabilities:

Accounts payable $ 2,005,431
Accrued wages and benefits 986,904
Unearned revenue 929,302
Deposits payable 463,793
Total liabilities 4,385,430
Deferred inflow of resources:

Leases related item 3,531,395
Total deferred inflow of resources 3,531,395
Fund Balance:

Nonspendable 134,031
Restricted for:

Employee Flexible Spending Account 26,105
Street improvements 4,254,835
Asset forfeiture funds 453,242
Drug Abuse Program 5,440
Metropolitan Transit Authority Programs 77,244
Safe Clean Water Program 2,373,667
Committed 20,300,000
Unassigned 26,619,588
Total fund balance 54,244,152
Total liabilities, deferred inflow of
resources, and fund balance $ 62,160,977
City of Vernon
Balance Sheet
Governmental Fund
June 30, 2025
See accompanying Notes to the Basic Financial Statements. 29 .
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Item 15 Page 47 of 295
Total Fund Balances - Total Governmental Funds $ 54,244,152 Amounts reported for governmental activities in the statement of net position are different because:

Nondepreciable assets 65,473,768 $
Depreciable assets, net 90,711,294
Intangible assets, net 841,166 157,026,228
34,380,158
Net pension liability (129,290,048)
(2,860,051)
3,597,039
Net OPEB liabilities (8,969,201)
(1,866,272)
(72,500)
(578,710)
(10,819)
(2,837,127)
(5,535,224)
Net position of governmental activities $ 97,227,625
Claims payable
Net pension liabilities and the related deferred outflows of resources and deferred inflows of resources are not due and payable in the current period or not available for current expenditures and are not reported in the governmental fund financial statements:

Pension related deferred outflows of resources
Pension related deferred inflows of resources
Net other postemployment benefits liability and the related deferred outflows of resources and deferred inflows of resources are not due and payable in the current period or not available for current expenditures and are not reported in the governmental fund financial statements:

OPEB related deferred outflows of resources
OPEB related deferred inflows of resources
Long-term liabilities applicable to the City's governmental activities are not due and payable in the current period and, accordingly are not reported as fund liabilities. All liabilities, both current and long-term are reported in the Statement of Net Position. Those liabilities consist of:

Compensated absences
Lease liabilities
Accrued interest payable
Subscription liabilities
Amount reported in government-wide statement of position:

City of Vernon
Reconciliation of the Governmental Fund Balance Sheet
to the Government-Wide Statement of Net Position
June 30, 2025
Capital assets used in governmental activities are not current financial resources and therefore are not reported in governmental funds. Those assets consist of:

See accompanying Notes to the Basic Financial Statements. 30 .
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Item 15 Page 48 of 295
General
Fund
REVENUES:

Taxes $ 63,905,412
Special assessments 2,007,786
Licenses, and permits 3,351,460
Fines, forfeitures, and penalties 211,727
Intergovernmental 1,166,772
Investment earnings 2,160,049
Charges for services 5,693,292
Rent income 607,465
Other revenues 656,287
Total revenues 79,760,250
EXPENDITURES:

Current:

General government 17,367,423
Public safety 39,046,478
Public works 11,854,153
Health services 2,503,084
Capital outlay 4,065,696
Debt service:

Principal retirement 677,440
Interest and fiscal charges 21,590
Total expenditures 75,535,864
REVENUES OVER EXPENDITURES 4,224,386
OTHER FINANCING SOURCES:

Transfer in 173,828
Proceeds from sale of capital asset 39,385
Issuance of debt 521,215
Total other financing sources 734,428
NET CHANGE IN FUND BALANCE 4,958,814
FUND BALANCE:

Beginning of year 49,285,338
End of year $ 54,244,152
For the Year Ended June 30, 2025
Governmental Fund
Statement of Revenues, Expenditures, and Change in Fund Balance City of Vernon
See accompanying Notes to the Basic Financial Statements. 31 .
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Item 15 Page 49 of 295
Net change in fund balances - total governmental funds: $ 4,958,814 Amounts reported for governmental activities in the Statement of Activities are different because:

Capital outlay expenditures 4,065,696 $
Depreciation and amortization expense (6,228,641) (2,162,945) Change in compensated absences 223,154
Change in claims payable (2,289,152)
Pension expense, net of pension contribution made after measurement date (8,625,633) OPEB expense, net of OPEB contribution made after measurement date 4,747,122 Interest expense 4,104
Issuance of long-term debt (521,215)
Principal repayment of long-term debt 677,440
Change in net position of governmental activities $ (2,988,311) Some expenses reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in the governmental funds:

City of Vernon
in Fund Balance to the Government-Wide Statement of Activities For the Year Ended June 30, 2025
Governmental funds report capital outlays as expenditures. However, in the Statement of Activities, the cost of those capital assets is allocated over the estimated useful lives as depreciation expense. This is the amount by which capital expenditures exceeded depreciation in the current period:

Reconciliation of the Governmental Fund Statement of Revenues, Expenditures, and Change See accompanying Notes to the Basic Financial Statements. 32 .
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Item 15 Page 50 of 295

PROPRIETARY FUND FINANCIAL STATEMENTS
33 .
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Item 15 Page 51 of 295
Nonmajor
Electric Gas Water (Fiber Optics)
Fund Fund Fund Fund Total
ASSETS
Current assets:

Cash $ 18,026,356 171,910,827 $ 12,608,230 $ 23,785 $ 202,569,198 $ Investments - 9,238,544 8,569,543 - 17,808,087
Accounts receivable, net 766,490 12,920,345 1,531,945 23,296 15,242,076 Interest receivable - 166,730 1 - 166,731
Accrued unbilled revenue 965,465 22,368,473 1,577,439 - 24,911,377 Prepaid items - 616,620 2,718 - 619,338
Inventory - 471,811 - - 471,811
Total current assets 19,758,311 217,693,350 24,289,876 47,081 261,788,618 Noncurrent assets:

Restricted cash and investments 28,363,878 - 413 - 28,364,291 Advances to other funds 33,171,579 - - - 33,171,579
Prepayment to Southern California Public
Power Authority 934,159 - - - 934,159
Deposits - 6,886,752 - - 6,886,752
Capital assets:

Capital assets, not being depreciated 74,948,539 - 4,889,851 - 79,838,390 Capital assets, being depreciated, net 359,537,869 13,330,214 18,364,562 1,541,379 392,774,024 Intangible assets, being amortized, net 237,288 - - - 237,288 Total capital assets 434,723,696 13,330,214 23,254,413 1,541,379 472,849,702 Total noncurrent assets 13,330,214 504,080,064 23,254,826 1,541,379 542,206,483 Total assets 33,088,525 721,773,414 47,544,702 1,588,460 803,995,101

DEFERRED OUTFLOW OF RESOURCES
Pension related items 8,091,062 651,588 1,373,181 8,323 10,124,154 Other postemployment benefits related items 846,531 68,173 143,670 871 1,059,245 Deferred charges on refunding - 1,327,398 - - 1,327,398 Total deferred outflow of resources $ 719,761 10,264,991 $ 1,516,851 $ 9,194 $ 12,510,797 $ (Continued)
Enterprise Funds
City of Vernon
Statement of Net Position
Proprietary Funds
June 30, 2025
Business-Type Activities
See accompanying Notes to the Basic Financial Statements. 34 .
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Item 15 Page 52 of 295
Nonmajor
Electric Gas Water (Fiber Optics)
Fund Fund Fund Fund Total

LIABILITIES
Current liabilities:

Accounts payable $ 199,142 13,226,875 $ 655,564 $ 16,847 $ 14,098,428 $ Accrued wages and benefits 33,505 529,462 81,664 0 644,631 Accrued interest payable - 5,030,237 226,031 - 5,256,268 Unearned revenue - 5,808,390 - - 5,808,390
Customer deposits 13,558 401,627 113,384 - 528,569
Due to other funds - 3,574 - - 3,574
Subscription liabilities, due within one year - 53,798 - - 53,798 Compensated absences, due within one year 15,587 458,499 46,141 421 520,648 Bonds payable, due within one year - 57,160,000 - - 57,160,000 Note payable, due within one year - - 139,535 - 139,535 Total current liabilities 261,792 82,672,462 1,262,319 17,268 84,213,841 Noncurrent liabilities:

Advances from other funds 28,745,823 - - 4,425,756 33,171,579 Subscription liabilities, due in more than one year 16,336 - - - 16,336 Compensated absences, due in more than one year 31,174 916,998 92,283 842 1,041,297 Bonds payable, due in more than one year - 214,426,909 14,288,592 - 228,715,501 Note payable, due in more than one year - - 662,790 - 662,790 Net pension liability 2,450,361 30,427,252 5,163,984 31,297 38,072,894 Net other postemployment benefits liability 169,988 2,110,821 358,240 2,171 2,641,220 Total noncurrent liabilities 31,397,346 247,898,316 20,565,889 4,460,066 304,321,617 Total liabilities 31,659,138 330,570,778 21,828,208 4,477,334 388,535,458

DEFERRED INFLOWS OF RESOURCES
Pension related items 673,087 54,205 114,234 692 842,218 Other postemployment benefits related items 439,210 35,370 74,541 452 549,573 Total deferred inflows of resources 89,575 1,112,297 188,775 1,144 1,391,791

NET POSITION
Net investment in capital assets 244,670,594 13,330,214 8,163,496 1,541,379 267,705,683 Restricted for:

Debt service - 28,015,478 413 - 28,015,891
Assembly Bill 1890 - 5,277,830 - - 5,277,830
Unrestricted (deficit) (11,270,641) 122,391,428 18,880,661 (4,422,203) 125,579,245 Total net position $ 2,059,573 400,355,330 $ 27,044,570 $ (2,880,824) $ 426,578,649 $

(Concluded)
Business-Type Activities
Enterprise Funds
City of Vernon
Statement of Net Position (Continued)
Proprietary Funds
June 30, 2025
See accompanying Notes to the Basic Financial Statements. 35 .
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36 .
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Item 15 Page 54 of 295
Nonmajor
Electric Gas Water (Fiber Optics)
Fund Fund Fund Fund Total
OPERATING REVENUES:

Charges for services $ 13,979,744 236,259,709 $ 9,696,115 $ 497,200 $ 260,432,768 $ Total operating revenues 13,979,744 236,259,709 9,696,115 497,200 260,432,768 OPERATING EXPENSES:

Cost of sales 13,016,836 109,568,489 7,640,887 498,224 130,724,436 Depreciation and amortization expense 697,038 24,156,962 813,883 259,770 25,927,653 Total operating expenses 13,713,874 133,725,451 8,454,770 757,994 156,652,089 OPERATING INCOME (LOSS) 265,870 102,534,258 1,241,345 (260,794) 103,780,679 NONOPERATING REVENUES (EXPENSES):

Investment income 5,942,659 330,469 837,975 571 7,111,674 Net increase (decrease) in fair value of investments (1,139) 271,697 161,563 - 432,121 Interest expense (8,694,817) - (541,899) - (9,236,716)
Loss on disposal of assets (126,952) - - - (126,952)
Total nonoperating revenues (expenses) 329,330 (2,607,413) 457,639 571 (1,819,873) INCOME BEFORE TRANSFERS 595,200 99,926,845 1,698,984 (260,223) 101,960,806

CAPITAL CONTRIBUTION
AND TRANSFERS:

Capital contributions 9,262,207 - - - 9,262,207
Transfers out - (173,828) - - (173,828)
Total capital contributions and transfers - 9,088,379 - - 9,088,379 CHANGE IN NET POSITION 595,200 109,015,224 1,698,984 (260,223) 111,049,185 NET POSITION:

Beginning of year, as previously reported 291,469,620 1,470,909 25,363,903 (2,620,239) 315,684,193 Change in accounting principle (129,514) (6,536) (18,317) (362) (154,729) Beginning of year, as restated (Note 11) 291,340,106 1,464,373 25,345,586 (2,620,601) 315,529,464 End of year 400,355,330 $ 2,059,573 $ 27,044,570 $ (2,880,824) $ 426,578,649 $ City of Vernon
Statement of Revenues, Expenses, and Changes in Net Position Proprietary Funds
Enterprise Funds
For the Year Ended June 30, 2025
Business-Type Activities
See accompanying Notes to the Basic Financial Statements. 37 .
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Item 15 Page 55 of 295
Nonmajor
Electric Gas Water (Fiber Optics)
Fund Fund Fund Fund Total
CASH FLOWS FROM OPERATING ACTIVITIES:

Cash receipts from customers and users 236,856,839 $ 13,864,054 $ 9,804,963 $ 518,718 $ 261,044,574 $ Cash paid to suppliers for goods and services (89,808,500) (11,571,285) (5,158,666) (700,702) (107,239,153) Cash paid to employees for services (14,343,107) (1,100,150) (2,314,477) (16,391) (17,774,125) Net cash provided by (used in) operating activities 1,192,619 132,705,232 2,331,820 (198,375) 136,031,296

CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES:

Transfer to City - (173,828) - - (173,828)
Receipt from other funds 52,125 - - - 52,125
Payment to other funds - - - (47,851) (47,851)
Net cash (used in) noncapital financing activities - (121,703) - (47,851) (169,554)

CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES:

Acquisition of capital assets (31,145,252) - (671,920) (127,174) (31,944,346) Receipt on sale of capital assets 15,283 - - - 15,283
Principal paid on long-term debt (54,560,037) - (414,535) - (54,974,572) Interest paid on long-term debt (15,314,340) - (566,709) - (15,881,049) Net cash (used in) capital and related
financing activities - (101,004,346) (1,653,164) (127,174) (102,784,684) CASH FLOWS FROM INVESTING ACTIVITIES:

Receipt from matured investments 245,000 15,249,000 - - 15,494,000 Interest received 330,469 5,992,560 838,064 571 7,161,664 Net cash provided by investing activities 575,469 21,241,560 838,064 571 22,655,664 Net increase (decrease) in cash and
cash equivalents 1,768,088 52,820,743 1,516,720 (372,829) 55,732,722 CASH AND CASH EQUIVALENTS:

Beginning of year 16,258,268 147,453,962 11,091,923 396,614 175,200,767 End of year $ 18,026,356 200,274,705 $ 12,608,643 $ 23,785 $ 230,933,489 $ CASH AND CASH EQUIVALENTS:

Cash and cash equivalents 171,910,827 $ 18,026,356 $ 12,608,230 $ 23,785 $ 202,569,198 $ Restricted cash and investment - 28,363,878 413 - 28,364,291 Total cash and cash equivalents $ 18,026,356 200,274,705 $ 12,608,643 $ 23,785 $ 230,933,489 $ NONCASH ITEMS:

Unrealized gain on investment 271,697 $ (1,139) $ 161,563 $ - $ 432,121 $ Capital contributions 9,262,207 $ - $ - $ - $ 9,262,207 $ Acquisition of subscription asset (160,722) $ - $ - $ - $ (160,722) $ Issuance of subscription liability 160,722 $ - $ - $ - $ 160,722 $ (Continued)
Business-Type Activities
Enterprise Funds
City of Vernon
Statement of Cash Flows
Proprietary Funds
For the Year Ended June 30, 2025
See accompanying Notes to the Basic Financial Statements. 38 .
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Item 15 Page 56 of 295
Nonmajor
Electric Gas Water (Fiber Optics)
Fund Fund Fund Fund Total

OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY
(USED IN) OPERATING ACTIVITIES:

Operating income (loss) 102,534,258 $ 265,870 $ 1,241,345 $ (260,794) $ 103,780,679 $ Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities:

Depreciation and amortization 24,156,962 697,038 813,883 259,770 25,927,653 Change in assets and liabilities:
(Increase) decrease in accounts receivable (2,032,033) (97,609) (334,778) 21,518 (2,442,902) (Increase) decrease in accrued unbilled revenue (79,128) (18,081) 443,626 - 346,417 (Increase) decrease in inventories and prepaid items 294,144 - 3,002 - 297,146 (Increase) decrease in customer deposits (3,100,099) - - - (3,100,099) (Increase) decrease in deferred outflows
of resources related to pensions 2,706,539 162,102 428,001 4,823 3,301,465 (Increase) decrease in deferred outflows
of resources related to OPEB (337,932) (29,846) (58,829) (252) (426,859) Increase (decrease) in accounts payable 3,094,975 57,577 (174,641) (216,335) 2,761,576 Increase (decrease) in accrued wages and benefits 240,074 18,725 64,932 - 323,731 Increase (decrease) in deposits payable 4,000 - (80,604) - (76,604) Increase (decrease) in unearned revenue 5,808,390 - - - 5,808,390 Increase (decrease) in compensated absences 93,834 13,908 1,435 74 109,251 Increase (decrease) in net pension liabilities 263,281 177,251 132,235 (5,423) 567,344 Increase (decrease) in OPEB liabilities (455,429) (23,401) (69,844) (953) (549,627) Increase (decrease) in deferred inflows
of resources related to pension (254,869) (15,724) (40,561) (438) (311,592) Increase (decrease) in deferred inflows
of resources related to OPEB (231,735) (15,191) (37,382) (365) (284,673) Total adjustment 926,749 30,170,974 1,090,475 62,419 32,250,617 Net cash provided by (used in)
operating activities $ 1,192,619 132,705,232 $ 2,331,820 $ (198,375) $ 136,031,296 $ (Concluded)
Proprietary Funds
City of Vernon
Statement of Cash Flows (Continued)
For the Year Ended June 30, 2025
Enterprise Funds
Business-Type Activities
See accompanying Notes to the Basic Financial Statements. 39 .
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40 .
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Item 15 Page 58 of 295

FIDUCIARY FUND FINANCIAL STATEMENTS
41 .
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Item 15 Page 60 of 295
Private-Purpose Custodial
Trust Fund Fund
Successor Southeast Water
Agency Trust Coalition Joint
Fund Powers Authority
ASSETS
Cash and investments $ - 4,179,966 $
Cash with fiscal agents - 1
Total assets - 4,179,967

LIABILITIES
Current liabilities:

Accounts payable - 138,150
Bond interest payable - 204,775
Bonds payable, due within one year 3,625,000 -
Noncurrent liabilities:

Bonds payable, due in more than one year 11,095,000 -
Total liabilities - 15,062,925

NET POSITION (DEFICIT)
Restricted for other governments (10,882,958) $ - $
City of Vernon
Statement of Fiduciary Net Position
Fiduciary Funds
June 30, 2025
See accompanying Notes to the Basic Financial Statements. 43 .
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Item 15 Page 61 of 295
Private-Purpose Custodial
Trust Fund Fund
Successor Southeast Water
Agency Trust Coalition Joint
Fund Powers Authority
ADDITIONS:

Redevelopment property tax trust fund $ - 4,599,413 $
Investment income 12,184 439
Total additions 439 4,611,597
DEDUCTIONS:

Professional fees - 146,400
Administrative expenses - 738,298
Interest expense - 635,220
Transfer of fiduciary responsibility to the City of Norwalk 210,482 - Total deductions 210,482 1,519,918
Change in net position (210,043) 3,091,679
NET POSITION :

Beginning of year 210,043 (13,974,637)
End of year $ - (10,882,958) $
City of Vernon
Statement of Changes in Fiduciary Net Position
Fiduciary Funds
For the Year Ended June 30, 2025
See accompanying Notes to the Basic Financial Statements. 44 .
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Item 15 Page 62 of 295
45 NOTES TO THE BASIC FINANCIAL STATEMENTS
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Item 15 Page 63 of 295
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Item 15 Page 64 of 295
City of Vernon
Index to the Notes to the Basic Financial Statements
For the Year Ended June 30, 2025
47 Note 1 – Summary of Significant Accounting Policies ....................................................................................... 49 A. Financial Reporting Entity ................................................................................................................... 49 B. Basis of Accounting and Measurement Focus ..................................................................................... 49 C. Cash, Cash Equivalents and Investments ............................................................................................. 51 D. Fair Value Measurement ...................................................................................................................... 52 E. Interfund Transactions. ........................................................................................................................ 52 F. Inventories and Prepaid Items .............................................................................................................. 52 G. Lease Receivables ................................................................................................................................ 53 H. Capital Assets ....................................................................................................................................... 53 I. Deferred Outflows and Inflows of Resources ...................................................................................... 54 J. Unearned and Unavailable Revenue .................................................................................................... 54 K. Compensated Absences ........................................................................................................................ 55 L. Claims Payable ..................................................................................................................................... 55 M. Lease Liabilities ................................................................................................................................... 55 N. Subscription Liabilities ........................................................................................................................ 55 O. Long-Term Debt .................................................................................................................................. 56 P. Pensions. .............................................................................................................................................. 56 Q. Other Postemployment Benefits (“OPEB”) ......................................................................................... 57 R. Property Taxes ..................................................................................................................................... 57 S. Net Position and Fund Balances .......................................................................................................... 58 T. Use of Estimates................................................................................................................................... 59 U. Implementation of New GASB Pronouncements ................................................................................ 59 Note 2 – Cash, Cash Equivalents, and Investments ............................................................................................ 60 A. Deposits ................................................................................................................................................ 60 B. Investments .......................................................................................................................................... 61 C. Local Agency Investment Fund (“LAIF”) ........................................................................................... 61 D. Fair Value Measurement ...................................................................................................................... 62 E. Risk Disclosures ................................................................................................................................... 62 Note 3 – Lease Receivables ................................................................................................................................... 64 Note 4 – Interfund Transactions .......................................................................................................................... 64 A. Due From/To Other Funds ................................................................................................................... 64 B. Advances To/From Other Funds .......................................................................................................... 65 C. Interfund Transfers ............................................................................................................................... 65 Note 5 – Capital Assets .......................................................................................................................................... 66 A. Governmental Activities ...................................................................................................................... 66 B. Business-Type Activities .................................................................................................................... 67 Note 6 – Long-Term Liabilities ............................................................................................................................ 68 A. Governmental Activities ...................................................................................................................... 68 B. Business-Type Activities .................................................................................................................... 70 C. Fiduciary Funds ................................................................................................................................... 76 D. Expense Stabilization Fund .................................................................................................................. 76 E. Right to Accelerate Upon Default ........................................................................................................ 77 F. Credit Rating ........................................................................................................................................ 77 .
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Item 15 Page 65 of 295
City of Vernon
Index to the Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2025
48 Note 7 – Risk Management ................................................................................................................................... 77 Note 8 – Pension Plan ............................................................................................................................................ 78 A. General Information about the Pension Plan ....................................................................................... 78 B. Net Pension Liability ........................................................................................................................... 80 C. Changes in the Net Pension Liability ................................................................................................... 82 D. Pension Expense, Deferred Outflows and Inflows of Resources Related to Pensions ........................ 84 Note 9 – Other Postemployment Benefits (“OPEB”) ......................................................................................... 85 A. General Information about the OPEB Plan .......................................................................................... 85 B. Net OPEB Liability .............................................................................................................................. 86 C. Changes in Net OPEB Liability ........................................................................................................... 87 Note 10 – Net Investments in Capital Assets ....................................................................................................... 89 Note 11 – Prior Period Adjustments .................................................................................................................... 89 Note 12 – Southern California Public Power Authority .................................................................................... 90 A. Take or Pay Contract ............................................................................................................................ 90 B. Power Purchase Commitments ............................................................................................................ 90 Note 13 – Commitment and Contingencies ......................................................................................................... 92 .
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Item 15 Page 66 of 295
City of Vernon
Notes to the Basic Financial Statements
For the Year Ended June 30, 2025
49 Note 1 – Summary of Significant Accounting Policies
The basic financial statements of the City of Vernon, California, (the “City”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. 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 following is a summary of the significant policies:

A. Financial Reporting Entity
The City was incorporated on September 16, 1905 under the general laws of the State of California. Effective July 1, 1988, the City became a Charter City. The City operates under a Council-City Administrator form of government. Five Vernon citizens make up the Vernon City Council and each is elected to a five-year term of office. The Mayor position is rotated annually among City Council Members in order of election. The City provides full services to its citizens, including: public safety, public utilities, planning and zoning, and health services.

The financial statements include the financial activities of the City of Vernon, the primary government, and its fiduciary component units which include the Vernon Redevelopment Successor and Southeast Water Coalition.

The City had no discretely presented component units.

B. Basis of Accounting and Measurement Focus
The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for by providing a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures or expenses, as appropriate. City resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled.

The Government-Wide Financial Statements are presented on an “economic resources” measurement focus and the accrual basis of accounting. Accordingly, all of the City’s assets and liabilities, including capital assets, as well as infrastructure assets, and long-term liabilities, are included in the accompanying Statement of Net Position. The Statement of Activities presents changes in net position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. On an accrual basis, revenue from sales taxes is recognized in the period in which the taxable sale takes place. Revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.

Eligibility requirements include timing requirements, which specify the year when the resources are required to be used or the year when use is first permitted, matching requirements, in which the City must provide local resources to be used for a specified purpose, and expenditure requirements, in which the resources are provided to the City on a reimbursement basis. Fiduciary activities are not included in these statements.

Certain types of transactions are reported as program revenues for the City in three categories:
 Charges for services
 Operating grants and contributions
 Capital grants and contributions
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Item 15 Page 67 of 295
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
50 Note 1 – Summary of Significant Accounting Policies (Continued) B. Basis of Accounting and Measurement Focus (Continued) Governmental Fund Financial Statements
A Balance Sheet and a Statement of Revenues, Expenditures and Changes in Fund Balance are presented for governmental fund. Accompanying schedules are presented to reconcile and explain the differences in fund balance as presented in these statements, to the net position presented in the government-wide financial statements.

Governmental fund is accounted for on a spending or “current financial resources” measurement focus and the modified accrual basis of accounting. Accordingly, only current assets and current liabilities are included on the Balance Sheet. The Statement of Revenues, Expenditures and Change in Fund Balance presents increases (revenue and other financing sources) and decreases (expenditures and other financing uses) in net current assets. 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 of the current period. For this purpose, the City 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. However, debt service expenditures, expenditures related to compensated absences, claims and judgments, pension and other post-employment benefits are recorded only when payment is due.

Revenues are recorded when received in cash, except those revenues subject to accrual are recognized when due.

Property taxes, taxpayer-assessed tax revenues (e.g., franchise taxes, sales taxes, motor vehicle fees, etc.), net of estimated refunds and uncollectible amounts, and intergovernmental revenues associated with the current fiscal period are all considered susceptible to accrual and so have been recognized as revenues of the current fiscal period to the extent normally collected within the availability period, as defined above.

The City reports one major governmental fund:
 The General Fund is the City's primary operating fund. It is used to account for all financial resources of the general government, except those required to be accounted for in another fund.

Proprietary Fund Financial Statements
Proprietary funds are accounted for using the “economic resources” measurement focus and the accrual basis of accounting. Accordingly, all assets and liabilities (whether current or noncurrent) are included on the Statement of Net Position. The Statement of Revenues, Expenses and Changes in Net Position presents increases (revenues) and decreases (expenses) in total net position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned, while expenses are recognized in the period in which the liability is incurred.

Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the Electric, Gas, Water, and Fiber Optics Enterprise Funds are charges to customers for sales and services. Operating expenses for the proprietary funds include the costs of sales and services, administrative expenses and depreciation on capital assets.

All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. .
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Item 15 Page 68 of 295
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
51 Note 1 – Summary of Significant Accounting Policies (Continued) B. Basis of Accounting and Measurement Focus (Continued) Proprietary Fund Financial Statements (Continued)
The City reports the following major proprietary funds:
 Electric Enterprise Fund - accounts for the operation and maintenance of the City's electric utility plant.

Revenues for this fund are primarily from charges for services.  Gas Enterprise Fund - accounts for the operation and maintenance of the City's gas utility plant. Revenues for this fund are primarily from charges for services.
 Water Enterprise Fund - accounts for the operation and maintenance of the City's water utility plant.

Revenues for this fund are primarily from charges for services.

The City also reports a fiber optics nonmajor proprietary fund to account for the maintenance and operation of the City’s fiber optics utility plant.

Fiduciary Fund Financial Statements
Fiduciary fund financial statements include a Statement of Fiduciary Net Position and a Statement of Changes in Fiduciary Net Position. The City’s fiduciary funds represent custodial funds and private purpose trust funds. Both custodial funds and the private purpose trust funds are accounted for on the full accrual basis of accounting where the assets associated with the activity are controlled by the City and the assets are not derived 1) solely from the government’s own-source revenues or 2) from government-mandated nonexchange transactions or voluntary nonexchange transactions.

The City reports the following two fiduciary funds:

Vernon Redevelopment Successor Agency Private-Purpose Trust Fund - The Successor Agency for the former Vernon Redevelopment Agency (the “Successor Agency”) was established on February 1, 2012 in accordance to the Assembly Bill X1 26 that provides for the dissolution of all redevelopment agencies in the State of California. Effective February 1, 2012, successor agencies in California will only be allocated revenue in the amount that is necessary to pay the estimated annual installment payments on enforceable obligations of the former redevelopment agency until all enforceable obligations of the prior redevelopment agency have been paid in full and all assets have been liquidated. The activities of the Successor Agency are reported in a fiduciary fund (private-purpose trust fund) in the financial statements of the City.

Custodial Funds - To account for assets and activities related to the Southeast Water Coalition Joint Powers Agreement. During the year ended June 30, 2025, the administration responsibilities and related assets of the Southeast Water Coalition JPA were transferred to the City of Norwalk.

C. Cash, Cash Equivalents and Investments
The City’s cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturity of three months or less from the date of acquisition. The City pools the main operating cash account. Cash in excess of current requirements is invested and reported as investments. It is the City's intent to hold investments until maturity. However, the City may, in response to market conditions, sell investments prior to maturity in order to improve the quality, liquidity or yield of the portfolio. Interest earnings are apportioned among funds each month based on ending cash and investment balances of each fund. .
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Item 15 Page 69 of 295
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
52 Note 1 – Summary of Significant Accounting Policies (Continued) C. Cash, Cash Equivalents and Investments (Continued)
Highly liquid market investments with maturities of one year or less at time of purchase are stated at amortized cost. All other investments are stated at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction. In determining the amount, the City uses the market approach, one of the three acceptable valuation techniques. Market approach uses prices generated for identical or similar assets or liabilities.

D. Fair Value Measurement
U.S. GAAP defines fair value, establishes a framework for measuring fair value and establishes disclosure about fair value measurement. Investments, unless otherwise specified at fair value in the financial statements, are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Levels of inputs are as follows:

 Level 1 – Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date.
 Level 2 – Inputs, other than quoted prices included in Level 1, that are observable for the assets or liabilities through corroboration with market data at the measurement date.  Level 3 – Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the assets or liabilities at the measurement date.

E. Interfund Transactions
Outstanding short-term borrowing between funds are reported as “due from/to other funds”. Interfund loans are reported as advances to and from other funds and are eliminated upon consolidation. Advances to other funds are presented as nonspendable in General Fund’s fund balance to indicate that they are not in a spendable form. Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as "internal balances." F. Inventories and Prepaid Items
Inventories within the various fund types consist of materials and supplies which are valued at cost on a first-in, first-out basis. Reported expenditures reflect the consumption method of recognizing inventory-related expenditures.

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

A nonspendable fund balance has been reported in the governmental fund to show that inventories and prepaid items do not constitute “available spendable resources,” even though they are a component of current assets.

The City made a prepayment to Southern California Public Power Authority (“SCPPA”) for the City’s share of SCPPA’s payoff of the Hoover Center and Air Slots debt. This prepaid amount is amortized over the life of the debt based on the annual debt services obligation. See Note 12 for further information regarding SCPPA. .
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Item 15 Page 70 of 295
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
53 Note 1 – Summary of Significant Accounting Policies (Continued) G. Lease Receivable
The City is a lessor for leases of land and recognizes lease receivables and deferred inflows of resources in the financial statements. Variable payments based on future performance or usage of the underlying asset are not included in the measurement of the lease receivable.

At the commencement of a lease, the lease receivable is measured at the present value of payments expected to be received during the lease term. The City established a threshold of $15,000 for lease receivables. Subsequently, the lease receivable is reduced by the principal portion of lease payments received. The deferred inflows of resources are initially measured as the initial amount of the lease receivable, adjusted for lease payments received at or before the lease commencement date. Subsequently, the deferred inflows of resources are recognized as revenue over the life of the lease term in a systematic and rational method.

Key estimates and judgments include how the City determines (1) the discount rate it uses to discount the expected lease receipts to present value, (2) lease term, and (3) lease receipts.  The City uses incremental borrowing rate (IBR) provided by the financial institution at July 1, 2021 for existing leases or the current rate at the time a new lease is executed.  The lease term includes the noncancelable period of the lease plus any option periods that are likely to be exercised.
 Lease receipts included in the measurement of the lease receivable is composed of fixed payments from the lessee.

The City monitors changes in circumstances that would require a remeasurement of its lease and will remeasure the lease receivable and deferred inflows of resources if certain changes occur that are expected to significantly affect the amount of the lease receivable.

H. Capital Assets
In the government-wide and proprietary fund financial statements, capital assets are recorded at cost where historical records are available and at an estimated original cost where no historical records exist. Donated capital assets are valued at their acquisition value. Capital assets include intangible assets with indefinite lives and public domain (infrastructure) general capital assets consisting of certain improvements including water wells, pumping stations, electric generation, transmission, and distribution improvements assets. The capitalization threshold for all capital assets is $5,000. Capital assets used in operations are depreciated using the straight-line method over their estimated useful lives in the government-wide and proprietary funds statements.

Capital assets used in operations are depreciated over their estimated useful lives using the straight-line method.

The lives used for depreciation purposes are as follows:

Assets Years
Infrastructures 10-50
Utility Plant and Buildings 25-50
Improvements 10-20
Right-to-use equipment 3
Machinery and equipment 3-35
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Item 15 Page 71 of 295
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
54 Note 1 – Summary of Significant Accounting Policies (Continued) H. Capital Assets (Continued)
Maintenance and repairs are charged to operations when incurred. Betterments and major improvements, which significantly increase values, change capacities or extend useful lives, are capitalized. Upon sale or retirement of capital assets, the cost and related accumulated depreciation are removed from the respective accounts and any resulting gain or loss is included in the changes in net financial position.

The governmental fund financial statements do not present capital assets. Instead, capital assets purchases are reported as capital outlay expenditures or other functional expenditures such as public works. As such, capital assets are shown as a reconciling item in the Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position.

The City established a threshold to recognize right‐to‐use assets, including lease assets or subscription-based information technology arrangement (“SBITA”) assets (“subscription assets”), in the government‐wide financial statements and proprietary fund financial statements for right-to-use asset over $15,000.

Lease assets are recorded at the amount of the initial measurement of the lease liabilities and adjusted by any lease payments made to the lessor at or before the commencement of the lease term, less any lease incentives received from the lessor at or before the commencement of the lease term along with any initial direct costs that are ancillary charges necessary to place the lease assets into service. Lease assets are amortized using the straight-line method over the shorter of the lease term or the useful life of the underlying asset, unless the lease contains a purchase option that the City has determined is reasonably certain of being exercised. In this case, the lease asset is amortized over the useful life of the underlying asset.

Subscription assets are recorded at the amount of the initial measurement of the SBITA liabilities (“subscription liabilities”) and adjusted by any subscription payments to the SBITA vendor at or before the commencement of the subscription term, less any incentives received from the SBITA vendor at or before the commencement of the subscription term along with subscription implementation costs. Subscription assets are amortized over the shorter of the subscription term or the useful life of the underlying IT assets.

I. Deferred Outflows and Inflows of Resources
The statement of net position reports separate sections for deferred outflows of resources and deferred inflows of resources, when applicable.

Deferred Outflows of Resources represents consumption of net assets that applies to future periods.

Deferred Inflows of Resources represents acquisition of net assets that applies to future periods.

J. Unearned and Unavailable Revenue
Unearned revenue is reported for transactions for which revenue has not yet been earned. Typical transactions recorded as unearned revenues are grant revenues received in advance.

In the governmental fund financial statements, unavailable revenue is reported when transactions have not yet met the revenue recognition criteria based on the modified accrual basis of accounting. The City reports unavailable revenue when an asset is reported in governmental fund financial statements but the revenue is not available. . .

Item 15 Page 72 of 295
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
55 Note 1 – Summary of Significant Accounting Policies (Continued) K. Compensated Absences
Accumulated vacation and sick leave is accrued when incurred in the government-wide, proprietary and fiduciary fund financial statements. A liability for accrued vacation is recorded in the governmental fund only to the extent that such amounts have matured (i.e., as a result of employee resignations and retirements). Upon termination of employment, the City will pay the employee all accumulated vacation leave at 100% of the employee’s base hourly rate.

L. Claims Payable
When it is probable that a claim liability has been incurred at year-end and the amount of the loss can be reasonably estimated, the City records the estimated loss, net of any insurance coverage, under its self- insurance program.

Claims payable, which includes an estimate for incurred but not reported (“IBNR”) claims, is recorded in the General Fund.

M. Lease Liabilities
The City recognizes lease liabilities with an initial, individual value of $15,000 or more with a lease term greater than one year in the government-wide and proprietary fund financial statements. Variable payments based on future performance of the lessee or usage of the underlying asset are not included in the measurement of the lease liability.

At the commencement of a lease, the City initially measures the lease liability at the present value of payments expected to be made during the lease term. Subsequently, the lease liability is reduced by the principal portion of lease payments made.

Key estimates and judgments related to leases include how the City determines (1) the discount rate it uses to discount the expected lease payments to present value, (2) lease term, and (3) lease payments.  The City uses the interest rate charged by the lessor as the discount rate. When the interest rate charged by the lessor is not provided, the State generally uses its estimated incremental borrowing rate as the discount rate for leases.
 The lease term includes the noncancellable period of the lease. Lease payments included in the measurement of the lease liability are composed of fixed payments and purchase option price that the City is reasonably certain to exercise.

The City monitors changes in circumstances that would require a remeasurement of its lease and will remeasure any lease asset and liability if certain changes occur that are expected to significantly affect the amount of the lease liability.

N. Subscription Liabilities
The City recognizes subscription liabilities with an initial, individual value of $15,000 or more with a subscription term greater than one year in the government-wide and proprietary fund financial statements. Variable payments based on future performance of the City or usage of the underlying asset are not included in the measurement of the subscription liability.
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Item 15 Page 73 of 295
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
56 Note 1 – Summary of Significant Accounting Policies (Continued) N. Subscription Liabilities (Continued)
At the commencement of a subscription, the City initially measures the subscription liability at the present value of payments expected to be made during the lease term. Subsequently, the subscription liability is reduced by the principal portion of subscription payments made.

Key estimates and judgments related to subscription include how the City determines (1) the discount rate it uses to discount the expected v payments to present value, (2) subscription term, and (3) subscription payments.  The City uses incremental borrowing rate provided by the financial institution at July 1, 2022 for existing subscription or the current rate at the time a new subscription is executed.  The subscription term includes the noncancellable period of the SBITA. Subscription payments included in the measurement of the subscription liability are composed of fixed payments.

The City monitors changes in circumstances that would require a remeasurement of its SBITA and will remeasure any subscription asset and liability if certain changes occur that are expected to significantly affect the amount of the subscription liability.

O. Long-Term Debt
In the government-wide financial statements and proprietary fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the appropriate activities. Bonds payable are reported net of the applicable bond premium or discount. Debt issuance costs except for any portion related to prepaid insurance were recognized as expense in the period incurred. Premium or discount not considered as part of the reacquisition price was amortized over the life of the bond.

The governmental fund financial statements do not present long-term liabilities. Consequently, long-term debt is shown as a reconciling item in the Reconciliation of the Governmental Funds Balance Sheet to the GovernmentWide Statement of Net Position.

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

General Fund is used to liquidate pension liabilities for governmental fund.

The following timeframes are used for pension reporting:

Valuation Date June 30, 2023
Measurement Date June 30, 2024
Measurement Period July 1, 2023 to June 30, 2024
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Item 15 Page 74 of 295
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
57 Note 1 – Summary of Significant Accounting Policies (Continued) P. Pensions (Continued)
Gains and losses related to changes in total pension liability and fiduciary net position are recognized in pension expense systematically over time. The first amortized amounts are recognized in pension expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to pensions and are to be recognized in future pension expense. The amortization period differs depending on the source of the gain or loss. The difference between projected and actual earnings is amortized straight-line over 5 years. All other amounts are amortized straight-line over the average expected remaining service lives of all members that are provided with benefits (active, inactive, and retired) as of the beginning of the measurement period.

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

General Fund is typically used to liquidate OPEB liabilities for governmental funds.

The following timeframes are reported OPEB reporting:

Valuation Date June 30, 2024
Measurement Date June 30, 2024
Measurement Period July 1, 2023 to June 30, 2024
Gains and losses related to changes in total OPEB liability and fiduciary net position are recognized in OPEB expense systematically over time. The first amortized amounts are recognized in OPEB expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to OPEB and are to be recognized in future OPEB expense. The amortization period differs depending on the sources of gain or loss. The difference between projected and actual earnings is amortized on a straight-line basis over 5 years. All other amounts are amortized on a straight-line basis over the average expected remaining service lives of all members that are provided with benefits (active, inactive, and retired) at the beginning of the measurement period.

R. Property Taxes
The County of Los Angeles levies, collects and apportions property taxes for all taxing jurisdictions within the County. Property taxes are determined by applying approved rates to the properties’ assessed values. The County remits property taxes applicable to the City less an applicable to the City less an administrative fee throughout the year.
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Item 15 Page 75 of 295
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
58 Note 1 – Summary of Significant Accounting Policies (Continued) R. Property Taxes (Continued)
Under California law, property taxes are assessed and collected by the counties for up to 1% of assessed property value, plus other increases approved by the voters. Property taxes collected are pooled and then allocated to the cities based on complex formulas. Property taxes are assessed, collected and allocated by Los Angeles County throughout the fiscal year. The following are key dates pertaining to property taxes:

January 1
July 1 to June 30
November 1 and February 1
December 10 and April 10
Lien Date
Levy Date
Due Dates
Delinquent Dates
Property taxes receivable for the governmental fund types, which have been remitted within 60 days subsequent to year end, are considered measurable and available and recognized as revenues. All other property taxes are offset by deferred property tax inflows of resources and, accordingly, have not been recorded as revenue. Taxes are considered past due on the above delinquent dates, at which time the applicable property is subject to lien, and penalties and interest are assessed.

S. Net Position and Fund Balances
In the Government-Wide Financial Statements and proprietary fund financial statements, net position is classified as follows:

Net Investment in Capital Assets – This component of net position consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of retention payable and debt that are attributable to the acquisition, construction, or improvement of those assets, and related deferred outflows and inflows of resources, net of unspent debt proceeds.

Restricted – This component of net position consists of restricted assets reduced by liabilities and deferred inflows of resources related to those assets.

Unrestricted – This component of net position is the amount of the assets, deferred outflows of resources, liabilities, and deferred inflows of resources that are not included in the determination of net investment in capital assets or the restricted component of net position.

When expenses are incurred for purposes for which both restricted and unrestricted components of net position are available, the City’s policy is to apply the restricted component of net position first, then the unrestricted component of net position as needed.

In the Governmental Fund Financial Statements, fund balances are classified as follows:

Nonspendable – Nonspendable fund balances are items that cannot be spent because they are not in spendable form, such as prepaid items and inventories, or items that are legally or contractually required to be maintained intact, such as principal of an endowment or revolving loan funds.

Restricted – Restricted fund balances encompass the portion of net fund resources subject to externally enforceable legal restrictions. This includes externally imposed restrictions by creditors, such as through debt covenants, grantors, contributors, laws or regulations of other governments, as well as restrictions imposed by law through constitutional provisions or enabling legislation. .
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Item 15 Page 76 of 295
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
59 Note 1 – Summary of Significant Accounting Policies (Continued) S. Net Position and Fund Balances (Continued)
Committed – Committed fund balances encompass the portion of net fund resources, the use of which is constrained by limitations that the government imposes upon itself at its highest level of decision making, normally the governing body, and that remain binding unless removed in the same manner. The City Council is considered the highest authority for the City. Adoption of a resolution by the City Council is required to commit resources or to rescind the commitment.

Unassigned – This amount is for any portion of the fund balances that do not fall into one of the above categories. The General Fund is the only fund that reports a positive unassigned fund balance amount. In other governmental funds, it is not appropriate to report a positive unassigned fund balance amount. However, in governmental funds other than General Fund, if expenditures incurred for specific purposes exceed the amounts that are restricted, committed or assigned to those purposes, it may be necessary to report a negative unassigned fund balance in that fund.

The City establishes encumbrance to record the amount of purchase orders, contracts, and other obligations, which have not yet been fulfilled, cancelled or discharged. Encumbrances outstanding at year end do not constitute expenditures or liabilities. Encumbrances outstanding at year-end are reported as a component of committed fund balance. Unencumbered appropriations lapse at year-end.

When expenditures are incurred for purposes for which all restricted, committed, assigned and unassigned fund balances are available, the City’s policy is to apply in the following order, except for instances wherein an ordinance specifies the fund balance:
 Restricted
 Committed
 Assigned
 Unassigned
T. Use of Estimates
The preparation of the basic financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

U. Implementation of New GASB Pronouncements
Effective in the current fiscal year:

GASB Statement No. 101 – In June 2022, the GASB issued Statement No. 101, Compensated Absences. The objective of this Statement is to better meet the information needs of financial statement users by updating the recognition and measurement guidance for compensated absences. That objective is achieved by aligning the recognition and measurement guidance under a unified model and by amending certain previously required disclosures. The requirements of this Statement are effective for fiscal years beginning after December 15, 2023, and all reporting periods thereafter. Implementation of this Statement resulted in a restatement of the beginning net position as of July 1, 2024, as presented in Note 11.
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Item 15 Page 77 of 295
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
60 Note 2 – Cash, Cash Equivalents, and Investments
The City maintains a cash and investment pool, which includes cash balances and authorized investments of all funds.

Certain restricted funds which are held and invested by independent outside custodians through contractual agreements are not pooled. These restricted funds include cash and investments with fiscal agents.

The City had the following cash, cash equivalents, and investments at June 30, 2025:

Fiduciary
Fund
Governmental Business-Type Statement of
Activities Activities Net Position Total
Cash and cash equivalents 27,748,183 $ 202,569,198 $ 4,179,966 $ 234,497,347 $ Investments 19,786,026 17,808,087 - 37,594,113
Restricted cash and investments 7,190,533 28,364,291 1 35,554,825 Total cash and investments $ 248,741,576 54,724,742 $ 4,179,967 $ 307,646,285 $ Government-Wide
Statement of Net Position
The City’s cash and investments at June 30, 2025, in more detail:

Cash and cash equivalents:

Cash on hand 2,000 $
Deposits with financial institutions 109,827,769
Local Agency Investment Fund 702,975
Money Market Funds 131,155,136
Total cash and cash equivalents 241,687,880
Investments:

Municipal bonds 656,716
U.S. Government Sponsored Enterprise Securities 30,466,055 Negotiable Certificates of Deposit 6,471,342
Total investments 37,594,113
Investments with fiscal agents:

Money Market Funds 28,364,292
Total $ 307,646,285
A. Deposits
The carrying amounts of the City’s demand deposits were $109,827,769 at June 30, 2025. Bank balances at that date were $109,124,673, the total amount of which was collateralized or insured with accounts held by the pledging financial institutions in the City’s name as discussed below.

The California Government Code requires California banks and savings and loan associations to secure the City’s cash deposits by pledging securities as collateral. This Code states that collateral pledged in this manner shall have the effect of perfecting a security interest in such collateral superior to those of a general creditor. Thus, collateral for cash deposits is considered to be held in the City's name. .
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Item 15 Page 78 of 295
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
61 Note 2 – Cash, Cash Equivalents, and Investments (Continued) A. Deposits (Continued)
The market value of pledged securities must equal at least 110% of the City's cash deposits. California law also allows institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the City’s total cash deposits. The City may waive collateral requirements for cash deposits, which are fully insured up to $250,000 by the Federal Deposit Insurance Corporation (“FDIC”). The City did not waive the collateral requirement for deposits insured by FDIC. The City follows the practice of pooling cash and investments of all funds, except for funds required to be held by fiscal agents under the provisions of bond indentures. Interest income earned on pooled cash and investments is allocated on an accounting period basis to the various funds based on the period-end cash and investment balances. Interest income from cash and investments with fiscal agents is credited directly to the related fund.

B. Investments
Under the provisions of the City’s investment policy, and in accordance with California Government Code, the following investments are authorized:

Maximum Maximum
Maximum Percentage Investments in
Authorized Investment Type Maturity Allowed1 One Issuer United States Treasury Bills, Bonds and Notes 5 Years None None United States Government Sponsored Agency Securities 5 Years None None Local Agency Bonds 5 Years None None
California State and Local Agency Bonds 5 Years 30% None Negotiable Certificates of Deposit 5 Years 30% None
Corporate Notes 5 Years 30% None
Non-Government issued Mortgage-backed pass-through
securities, collateralized Mortgage obligations and Asset-backed securities
5 Years 20% None
Repurchasement Agreement 1 year None None
Banker's Acceptance Notes 180 Days 40% 30%
Commercial Paper 270 Days 25% 10% of the issuer outstanding paper Reverse Repurchase Agreements 92 Days 20% None
Mutual Funds N/A 20% 10% of the issuer outstanding paper Local Agency Investment Fund (LAIF) N/A None None
N/A - Not Applicable
1 Excluding amounts held by bond trustee that are not subject to California Government Code restrictions.

C. Local Agency Investment Fund (“LAIF”)
The City is a participant in LAIF which is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. As of June 30, 2025, the City had $702,975 invested in LAIF.

The fair value of the City’s portion in the pool is the same as the value of the pool shares and reported at amortized cost.
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Item 15 Page 79 of 295
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
62 Note 2 – Cash, Cash Equivalents, and Investments (Continued) D. Fair Value Measurement
At June 30, 2025, investments are reported at fair value. The following table presents the fair value measurements of investments on a recurring basis and the levels with GASB 72 fair value hierarchy in which the fair value measurements fall at June 30, 2025:

Quoted Prices in Active Significant
Market for Identical Other Observable
Investment Type Assets (Level 1) Inputs (Level 2) Uncategorized Total Municipal bonds - $ 656,716 $ - $ 656,716 $
U.S. Government Sponsored
Enterprise Securities - 30,466,055 - 30,466,055
Negotiable Certificates of Deposit* 6,471,342 - - 6,471,342 Investments with fiscal agents:

Money Market Funds - - 28,364,292 28,364,292
Total $ 37,594,113 - $ 28,364,292 $ 65,958,405 $
*
Priced based on significant observable inputs.

Measurement Input
E. Risk Disclosures
Interest Rate Risk - As a means of limiting its exposure to fair value losses arising from rising interest rates, the City’s investment policy limits investments to a maximum maturity of five years. At June 30, 2025, the City had the following investment maturities:
1 Year 1 Year to 3 Years to
Investment Type or Less 3 Years 5 Years Total
Municipal bonds - $ 656,716 $ - $ 656,716 $
U.S. Government Sponsored
Enterprise Securities - 23,451,911 7,014,144 30,466,055 Negotiable Certificates of Deposit 1,236,234 3,254,768 1,980,340 6,471,342 Investments with fiscal agents:

Money Market Funds 28,364,292 - - 28,364,292
Total $ 27,363,395 29,600,526 $ 8,994,484 $ 65,958,405 $ Remaining Maturity
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Item 15 Page 80 of 295
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
63 Note 2 – Cash, Cash Equivalents, and Investments (Continued) E. Risk Disclosures (Continued)
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. Presented below is the minimum rating required by (where applicable) the California Government Code, the City’s investment policy, or debt agreements, and the actual rating, by Standard and Poor’s and Moody’s at June 30, 2025 for each investment type:

Fair Value Minimum Not Required
at Legal to be
Investment Type June 30, 2025 Rating AAA Other Rated
Municipal bonds 656,716 $ AAA 656,716 $ - $ - $
U.S. Government Sponsored
Enterprise Securities 30,466,055 AAA 30,466,055 - -
Negotiable Certificates of Deposit 6,471,342 N/A - 6,471,342 - Investments with fiscal agents:

Money Market Funds 28,364,292 AAA 28,364,292 - -
Total $ 59,487,063 65,958,405 $ 6,471,342 $ - $
N/A - Not Required
Concentration of Credit Risk
The investment policy of the City contains no limitations on the amount that can be invested in any one issuer excluding a 10% limitation on commercial papers, mutual funds, and money market mutual funds and a 30% limitation on bankers’ acceptances. The City’s investment policy places no limit on the amount of debt proceeds held by a bond trustee that the trustee may invest in one issuer that is governed by the provisions of debt agreements of the City, beyond that stipulated by the California Government Code. Investments in any one issuer (other than U.S. Treasury securities, mutual funds, and external investments pools) that represent 5% or more of the total City investments are as follows:

Reported
Issuer Investment Type Amount Percentage
Federal Home Loan Mortgage Corporation U.S. Government Agency Bonds 23,451,911 $ 13.84% Custodial Credit Risk
The 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 deposits or will not be able to recover collateral securities that are in the possession of a third party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, a government will not be able to recover the value of investment or collateral securities that are in the possession of the third party. At June 30, 2025, none of the City’s deposits or investments were exposed to custodial credit risk.
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Item 15 Page 81 of 295
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
64 Note 3 – Lease Receivables
Lease receivables consist of agreement with others for the right–to–use of the underlying assets for land owned by the City. The lease expires in January 2061. The incremental borrowing rate used was 2.01%. For the year ended June 30, 2025, the City recognized $99,243 in lease revenue and $73,756 in interest revenue for the General Fund. The outstanding receivables are in the amounts of $3,631,859 for General Fund.

The future required payments for these leases, including interest, are as follows:

Year Ending
June 30, Principal Interest Total
2026 70,611 $ 72,352 $ 142,963 $
2027 72,043 70,920 142,963
2028 73,504 69,458 142,962
2029 74,996 67,967 142,963
2030 76,517 66,446 142,963
2031-2035 406,507 308,306 714,813
2036-2040 449,446 265,367 714,813
2041-2045 496,922 217,891 714,813
2046-2050 549,413 165,401 714,814
2051-2055 607,448 107,366 714,814
2056-2060 671,613 43,201 714,814
2061 82,839 556 83,395
Total 3,631,859 $ 1,455,231 $ 5,087,090 $
Governmental Activities
Note 4 – Interfund Transactions
A. Due From/To Other Funds
At June 30, 2025, the City had the following due from/to other funds:

Due From
Other Funds
Governmental
Fund
General
Due to Other Funds Fund
Proprietary Fund
Electric Enterprise Fund 3,574 $
The interfund balances resulted from borrowing of cash for temporary purposes. All balances are expected to be reimbursed within the subsequent year.
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Item 15 Page 82 of 295
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
65 Note 4 – Interfund Transactions (Continued)
B. Advances To/From Other Funds
At June 30, 2025, the City had the following advances:

Gas Fiber Optics
Advances to Other Funds Enterprise Fund Enterprise Fund Total Proprietary Fund
Electric Enterprise Fund 28,745,823 $ 4,425,756 33,171,579 $ Advances from Other Funds
Proprietary Funds
The advances between the Electric Enterprise Fund and the Gas and Fiber Optics Enterprise Funds do not accrue interest due to the nature of the City’s operational relationship and capital projects funded by the Electric Enterprise Fund that benefit all City operations. On November 6, 2012, the City adopted Resolution No. 2012-215 extending the repayment term of the advance from 15 months to a period of over 10 years.

C. Interfund Transfers
At June 30, 2025, the City had the following interfund transfers:

Transfers In
Governmental
Fund
General
Transfers Out Fund
Proprietary Fund
Electric Enterprise Fund $ 173,828
The Electric Enterprise Fund transfer of $173,828 to the General Fund was for the ERP system implementation costs.
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Item 15 Page 83 of 295
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
66 Note 5 – Capital Assets
A. Governmental Activities
A summary of changes in the capital assets for the governmental activities for the year ended June 30, 2025 is as follows:

Balance Balance
July 1, 2024 Additions Deletions Transfers June 30, 2025 Capital assets, not being depreciated:

Land 62,818,200 $ - $ - $ - $ 62,818,200 $
Construction in progress 2,879,812 413,656 - (637,900) 2,655,568 Total capital assets, not being depreciated 413,656 65,698,012 - (637,900) 65,473,768 Capital assets, being depreciated:

Buildings and improvements 17,005,293 287,218 - - 17,292,511 Improvements Other Than Buildings 12,416,050 1,374,147 - 411,500 14,201,697 Machinery and equipment 17,069,642 787,822 (109,199) - 17,748,265 Infrastructure 162,030,339 681,638 - 226,400 162,938,377 Total capital assets, being depreciated 3,130,825 208,521,324 (109,199) 637,900 212,180,850 Less accumulated depreciation for:

Buildings and improvements (10,427,845) (425,727) - - (10,853,572) Improvements Other Than Buildings (7,328,502) (426,104) - - (7,754,606) Machinery and equipment (12,189,698) (1,020,486) 109,199 - (13,100,985) Infrastructure (86,028,870) (3,731,523) - - (89,760,393) Total accumulated depreciation (5,603,840) (115,974,915) 109,199 - (121,469,556) Total capital assets, being depreciated, net (2,473,015) 92,546,409 - 637,900 90,711,294 Intangible assets, being amortized
Right-to-use lease assets 56,857 74,657 (56,857) - 74,657 Right-to-use subscription assets 1,524,381 446,558 (222,844) - 1,748,095 Total intangible assets, being amortized 521,215 1,581,238 (279,701) - 1,822,752 Less accumulated amortization for:

Right-to-use lease assets (56,857) (2,074) 56,857 - (2,074) Right-to-use subscription assets (579,629) (622,727) 222,844 - (979,512) Total accumulated amortization (624,801) (636,486) 279,701 - (981,586) Total intangible assets, being amortized, net (103,586) 944,752 - - 841,166 Governmental activities capital assets, net $ (2,162,945) 159,189,173 $ - $ - $ 157,026,228 $ Depreciation and amortization expense was charged to functions of the governmental activities for the year ended June 30, 2025 as follows:

General government 1,003,513 $
Public safety 274,745
Public works 4,917,435
Health 32,948
Total depreciation and amortization expense $ 6,228,641 .
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Item 15 Page 84 of 295
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
67 Note 5 – Capital Assets (Continued)
B. Business-Type Activities
A summary of changes in the capital assets for the business-type activities for the year ended June 30, 2025 is as follows:

Balance Balance
July 1, 2024 Additions Deletions Transfers June 30, 2025 Capital assets, not being depreciated:

Electric utility - Land 13, $ - 193,594 $ - $ - $ 13,193,594 $ Water utility - Water - 467,640 - - 467,640
Electric utility - Intangibles - Environmental credits 4, 124,123 032,117 (142,235) - 4,014,005 Electric utility - Construction in progress 48, 9,710,978 029,962 - - 57,740,940 Water utility - Construction in progress 6, 503,386 468,629 - (2,549,804) 4,422,211 Total capital assets, not being depreciated 10,338,487 72,191,942 (142,235) (2,549,804) 79,838,390 Capital assets, being depreciated:

Electric utility - Production plant 213,205,825 - - - 213,205,825 Electric utility - Transmission plant 3, - 572,945 - - 3,572,945 Electric utility - Distribution plant 291, 30,040,008 452,868 - - 321,492,876 Electric utility - General plant 10, 532,350 486,873 (26,326) - 10,992,897 Water utility plant 31, 168,534 870,086 - 2,549,804 34,588,424 Gas utility plant 27, - 245,131 - - 27,245,131
Fiber Optic utility plant 4, 127,174 848,490 - - 4,975,664 Total capital assets, being depreciated 30,868,066 582,682,218 (26,326) 2,549,804 616,073,762 Less accumulated depreciation for:

Electric utility - Production plant (47,962,499) (14,298,020) - - (62,260,519) Electric utility - Transmission plant (2, (71,717) 551,421) - - (2,623,138) Electric utility - Distribution plant (107, (9,170,961) 950,887) - - (117,121,848) Electric utility - General plant (7, (533,538) 213,957) 26,326 - (7,721,169) Water utility plant (15, (813,883) 409,979) - - (16,223,862) Gas utility plant (13, (697,038) 217,879) - - (13,914,917) Fiber Optic utility plant (3, (259,770) 174,515) - - (3,434,285) Total accumulated depreciation (25,844,927) (197,481,137) 26,326 - (223,299,738) Total capital assets, being depreciated, net 5,023,139 385,201,081 - 2,549,804 392,774,024 Intangible assets, being amortized
Electric utility right-to-use subscription assets 160,722 209,511 - - 370,233 Total intangible assets, being amortized 160,722 209,511 - - 370,233 Less accumulated amortization for:

Electric utility right-to-use subscription assets (50, (82,726) 219) - - (132,945) Total accumulated amortization (82,726) (50,219) - - (132,945) Total intangible assets, being amortized, net 77,996 159,292 - - 237,288 Business-type activities capital assets, net $ 15,439,622 457,552,315 $ (142,235) $ - $ 472,849,702 $ .
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Item 15 Page 85 of 295
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
68 Note 5 – Capital Assets (Continued)
B. Business-Type Activities (Continued)
Depreciation and amortization expense was charged to functions of the business-type activities for the year ended June 30, 2025 as follows:

Electric Fund 24,156,962 $
Gas Fund 697,038
Water Fund 813,883
Fiber Optic Fund 259,770
Total depreciation and amortization expense $ 25,927,653 Note 6 – Long-Term Liabilities
A. Governmental Activities
A summary of changes in long-term liabilities for governmental activities for the year ended June 30, 2025 is as follows:

Balance
July 1, 2024 Balance Due within Due in More
(As Restated) Additions Deletions June 30, 2025 One Year Than One Year Governmental Activities:

Lease liabilities - $ 74,657 $ (2,157) $ 72,500 $ 24,212 $ 48,288 $ Subscription liabilities 807,435 446,558 (675,283) 578,710 283,759 294,951 Compensated absences * 3,060,281 - (223,154) 2,837,127 945,709 1,891,418 Claims and judgments 3,246,072 3,740,828 (1,451,676) 5,535,224 1,672,219 3,863,005 Total governmental activities $ 4,262,043 7,113,788 $ (2,352,270) $ 9,023,561 $ 2,925,899 $ 6,097,662 $ * Shown as net change during the year.

Lease liabilities
As of June 30, 2025, the City had 1 active lease. The lease has payments ranging from $23,408 to $24,212 and interest rate of $2.7230%. As of June 30, 2025, the total value of the lease liability is $72,500. The right-to-use asset at June 30, 2025 of $74,657 with accumulated amortization of $2,074 is included Note 5.

The future annual lease payments are as follows:

Year Ending
June 30, Principal Interest Total
2026 24,212 $ 1,673 $ 25,885 $
2027 24,880 1,006 25,886
2028 23,408 320 23,728
Total $ 2,999 72,500 $ 75,499 $
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Item 15 Page 86 of 295
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
69 Note 6 – Long-Term Liabilities (Continued)
A. Governmental Activities (Continued)
Subscription liabilities
The City entered into subscription agreements with various vendors for software. The agreements expire from March 5, 2026 to July 22, 2029 with interest rates ranging from 2.02% to 3.76%.

The future annual subscription payments are as follows:

Year Ending
June 30, Principal Interest Total
2026 283,759 $ 17,018 $ 300,777 $
2027 192,957 8,192 201,149
2028 101,994 2,890 104,884
Total 578,710 $ 28,100 $ 606,810 $
Compensated Absences
Under certain circumstances and according to the negotiated labor agreements, City employees are allowed to accumulate annual leave. The annual leave amount is accrued and accounted for as compensated absences. At June 30, 2025, compensated absences were in the amount of $2,837,127.

Claims and Judgments
Refer to Note 7 for more information on claims and judgments. .
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Item 15 Page 87 of 295
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
70 Note 6 – Long-Term Liabilities (Continued)
B. Business-Type Activities
The following is a summary of changes in long-term liabilities for business-type activities for the year ended June 30, 2025:

Balance
July 1, 2024 Balance Due within Due in More
(As Restated) Additions Deletions June 30, 2025 One Year Than One Year Business-Type activities
Public Borrowings:

Revenue Bonds:
2008 Taxable Revenue Bonds - Series A - Electric 35,750,000 $ - $ (1,220,000) $ 34,530,000 $ 1,330,000 $ 33,200,000 $ 2012 Taxable Revenue Bonds - Series B - Electric 4,170,000 - (1,305,000) 2,865,000 1,390,000 1,475,000 2015 Taxable Revenue Bonds - Series A - Electric 65,660,000 - (24,585,000) 41,075,000 25,780,000 15,295,000 2020 Taxable Revenue Bonds - Series A - Electric 19,305,000 - - 19,305,000 - 19,305,000 2021 Taxable Revenue Bonds - Series A - Electric 132,100,000 - (22,400,000) 109,700,000 23,530,000 86,170,000 2022 Taxable Revenue Bonds - Series A - Electric 47,380,000 - (4,885,000) 42,495,000 5,130,000 37,365,000 2020 Taxable Revenue Bonds - Series A - Water 14,085,000 - (275,000) 13,810,000 - 13,810,000 Total Revenue Bonds 318,450,000 - (54,670,000) 263,780,000 57,160,000 206,620,000 Unamortized Premiums/(Discounts):
2008 Taxable Revenue Bonds - Series A - Electric (1,831) - 131 (1,700) - (1,700) 2012 Taxable Revenue Bonds - Series B - Electric (36,393) - 16,797 (19,596) - (19,596) 2015 Taxable Revenue Bonds - Series A - Electric (385,385) - 355,739 (29,646) - (29,646) 2020 Taxable Revenue Bonds - Series A - Electric 5,738,633 - (438,621) 5,300,012 - 5,300,012 2021 Taxable Revenue Bonds - Series A - Electric 13,664,932 - (4,940,838) 8,724,094 - 8,724,094 2022 Taxable Revenue Bonds - Series A - Electric 8,499,792 - (856,047) 7,643,745 - 7,643,745 2020 Taxable Revenue Bonds - Series A - Water 497,673 - (19,081) 478,592 - 478,592 Total Unamortized Premiums/(Discounts) 27,977,421 - (5,881,920) 22,095,501 - 22,095,501 Total Public Offering 346,427,421 - (60,551,920) 285,875,501 57,160,000 228,715,501 Direct Borrowing:

Water Replenishment District Note Payable 941,860 - (139,535) 802,325 139,535 662,790 Total Direct Borrowing 941,860 - (139,535) 802,325 139,535 662,790 Subscription liabilities 74,449 160,722 (165,037) 70,134 53,798 16,336 Compensated absences* 1,452,694 109,251 - 1,561,945 520,648 1,041,297 Total business-Type activities $ 269,973 348,896,424 $ (60,856,492) $ 288,309,905 $ 57,873,981 $ 230,435,924 $ * Shown as net change during the year
$43,765,000 Electric System Revenue Bonds (2008 Taxable Series A) The bonds are special obligation bonds which are secured by an irrevocable pledge of electric revenues payable to bondholders. Under the Bond Indenture of Trust, interest and principal on the bonds are payable from Net Revenues (or Revenues less Operation and Maintenance Expenses) and/or amounts in the Light and Power Enterprise (as those terms are defined in the Indenture of Trust). The City of Vernon Electric System Revenue Bonds, 2008 Taxable Series A were issued to provide funds to (i) finance the cost of certain capital improvements to the City’s Electric System, (ii) fund a deposit to the Debt Service Reserve Fund, and (iii) to pay costs of issuance of the 2008 Bonds. The total unpaid balance as of June 30, 2025, was $34,530,000. .
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Item 15 Page 88 of 295
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
71 Note 6 – Long-Term Liabilities (Continued)
B. Business-Type Activities (Continued)
$43,765,000 Electric System Revenue Bonds (2008 Taxable Series A) (Continued) The future annual debt service requirements for the Taxable Revenue Bonds, Series 2008A are as follows:

Year Ending
June 30, Principal Interest Total
2026 1,330,000 $ 2,909,004 $ 4,239,004 $
2027 1,450,000 2,789,603 4,239,603
2028 1,580,000 2,659,464 4,239,464
2029 1,720,000 2,517,729 4,237,729
2030 1,875,000 2,363,324 4,238,324
2031-2035 12,220,000 8,969,249 21,189,249
2036-2039 14,355,000 2,598,690 16,953,690
Total 34,530,000 $ 24,807,063 $ 59,337,063 $
$35,100,000 Electric System Revenue Bonds (2012 Taxable Series B) On January 10, 2012, the City issued Electric System Revenue Bonds, 2012 Series B, in the amount of $35,100,000.

During the fiscal year ended 2022, a portion of the Electric System Revenue Bonds were refunded with the issuance of the Electric System Revenue Bonds 2022 Series A. The bonds are special obligation bonds which are secured by an irrevocable pledge of electric revenues payable to bondholders. Under the Bond Indenture of Trust, interest and principal on the bonds are payable from Net Revenues (or Revenues less Operation and Maintenance Expenses) and/or amounts in the Light and Power Enterprise (as those terms are defined in the Indenture of Trust). The City of Vernon Electric System Revenue Bonds, 2012 Taxable Series B were issued to provide funds to (i) refund the $28,680,000 aggregate principal amount of 2009 Bonds maturing on August 1, 2012, (ii) to pay a portion of the Costs of the 2012 Project, and (iii) to pay costs of issuance of the 2012 Taxable Series B Bonds. The total unpaid balance as of June 30, 2025, was $2,865,000.

The future annual debt service requirements for the Taxable Revenue Bonds, Series 2012B are as follows:

Year Ending
June 30, Principal Interest Total
2026 1,390,000 $ 140,181 $ 1,530,181
2027 1,475,000 47,938 1,522,938
Total 2,865,000 $ 188,119 $ 3,053,119 $
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Item 15 Page 89 of 295
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
72 Note 6 – Long-Term Liabilities (Continued)
B. Business-Type Activities (Continued)
$111,720,000 Electric System Revenue Bonds (2015 Taxable Series A) The bonds are special obligation bonds which are secured by an irrevocable pledge of electric revenues payable to bondholders. Under the Bond Indenture of Trust, interest and principal on the bonds are payable from Net Revenues (or Revenues less Operation and Maintenance Expenses) and/or amounts in the Light and Power Enterprise (as those terms are defined in the Indenture of Trust). The City of Vernon Electric System Revenue Bonds, 2015 Taxable Series A were issued to provide funds to (i) refund a portion of the Outstanding Electric System Revenue Bonds, 2009 Series A; (ii) finance the costs of certain capital improvements to the City’s Electric System by reimbursing the Electric System for the prior payment of such Costs from the Light and Power Fund; (iii) fund a deposit to the Debt Service Reserve Fund; and (iv) pay costs of issuance of the 2015 Bonds. The total unpaid balance as of June 30, 2025, was $41,075,000.

The future annual debt service requirements for the Taxable Revenue Bonds, Series 2015A are as follows:

Year Ending
June 30, Principal Interest Total
2026 25,780,000 $ 1,341,193 $ 27,121,193 $
2027 15,295,000 370,904 15,665,904
$ 1,712,097 41,075,000 $ 42,787,097 $
$71,990,000 Electric System Revenue Bonds (2020 Series A) The bonds are special obligation bonds which are secured by an irrevocable pledge of electric revenues payable to bondholders. Under the Bond Indenture of Trust, interest and principal on the bonds are payable from Net Revenues (or Revenues less Operation and Maintenance Expenses) and/or amounts in the Light and Power Enterprise (as those terms are defined in the Indenture of Trust). The City of Vernon Electric System Revenue Bonds, 2020 Series A were issued to provide funds to (i) finance the acquisition and construction of certain capital improvements to the Electric System of the City, (ii) to refund all the City’s outstanding Electric System Revenue Bonds, 2009 Series A, and (iii) to pay costs of issuance of the 2020 Bonds. The total unpaid balance as of June 30, 2025, was $19,305,000.

The future annual debt service requirements for the Taxable Revenue Bonds, Series 2020A are as follows:

Year Ending
June 30, Principal Interest Total
2026 - $ 965,250 $ 965,250 $
2027 - 965,250 965,250
2028 - 965,250 965,250
2029 1,525,000 927,125 2,452,125
2030 1,605,000 848,875 2,453,875
2031-2035 9,340,000 2,923,250 12,263,250
2036-2038 6,835,000 524,125 7,359,125
Total 19,305,000 $ 8,119,125 $ 27,424,125 $
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Item 15 Page 90 of 295
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
73 Note 6 – Long-Term Liabilities (Continued)
B. Business-Type Activities (Continued)
$183,815,000 Electric System Revenue Bonds (2021 Series A) In December 2021, the City of Vernon issued 2021A Electric System Revenue Bonds in the amount of $183,815,000 (i) to pay the costs of the acquisition by the City of Vernon of a 134-megawatt natural gas-fired generating facility located within the City limits on land owned by the City, together with certain related electrical interconnection facilities and other assets, property, and contractual rights; (ii) to fund a deposit to the Debt Service Reserve Fund in satisfaction of the Debt Service Reserve Requirement; and (iii) to pay costs of issuance of the 2021 bonds.

The bonds bear interest rates between 4.00%-5.00% that are payable on a semi-annual basis on April 1 and October 1, commencing April 1, 2022. The bonds are special obligation bonds which are secured by an irrevocable pledge of electric revenues payable to bondholders. The total unpaid balance as of June 30, 2025, was $109,700,000.

The future annual debt service requirements for the Taxable Revenue Bonds, Series 2021A are as follows:

Year Ending
June 30, Principal Interest Total
2026 23,530,000 $ 5,190,875 $ 28,720,875 $
2027 31,255,000 3,917,875 35,172,875
2028 54,915,000 2,059,375 56,974,375
Total 109,700,000 $ 11,168,125 $ 120,868,125 $
$52,070,000 Electric System Revenue Bonds (2022 Series A) In December 2021, the City of Vernon issued 2022A Electric System Revenue Bonds in the amount of $52,070,000 to refund the 2012A Electric System Revenue Bonds, a portion of the 2012B Electric Revenue Bonds, and provide for the costs of issuing the bonds.

Under the Bond Indenture of Trust, interest and principal on the bonds are payable from Net Revenues (or Revenues less Operation and Maintenance Expenses) and/or amounts in the Light and Power Enterprise (as those terms are defined in the Indenture of Trust). The City of Vernon Electric System Revenue Bonds, 2022 Series A were issued to (i) refund and defease all of the City’s outstanding Electric System Revenue Bonds, 2012 Series A and a portion of the City’s outstanding Electric System Revenue bonds, 2012 Taxable Series B and (ii) pay costs of issuance of the 2022 Bonds.

The bonds bear interest rates between 4.00%-5.00% that are payable on a semi-annual basis beginning February 1 and August 1, commencing on August 1, 2022. The bonds are special obligation bonds which are secured by an irrevocable pledge of electric revenues payable to bondholders. The total unpaid balance as of June 30, 2025, was $42,495,000.
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Item 15 Page 91 of 295
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
74 Note 6 – Long-Term Liabilities (Continued)
B. Business-Type Activities (Continued)
$52,070,000 Electric System Revenue Bonds (2022 Series A) (Continued) The future annual debt service requirements for the Taxable Revenue Bonds, Series 2022A are as follows:

Year Ending
June 30, Principal Interest Total
2026 5,130,000 $ 1,996,500 $ 7,126,500 $
2027 5,405,000 1,733,125 7,138,125
2028 950,000 1,574,250 2,524,250
2029 1,000,000 1,525,500 2,525,500
2030 1,055,000 1,474,125 2,529,125
2031-2035 6,120,000 6,504,500 12,624,500
2036-2040 11,420,000 4,676,750 16,096,750
2041-2042 11,415,000 577,875 11,992,875
Total 42,495,000 $ 20,062,625 $ 62,557,625 $
$14,840,000 Water System Revenue Bonds (2020 Series A)
The bonds are special obligation bonds which are secured by an irrevocable pledge of water revenues payable to bondholders. Under the Indenture of Trust dated May 6, 2020, interest and principal on the bonds are payable from Net Revenues (or Revenues less Operation and Maintenance Expenses) and/or amounts in the Water Enterprise (as those terms are defined in the Indenture of Trust). The total unpaid balance as of June 30, 2025, was $13,810,000.

The future annual debt service requirements for the Taxable Revenue Bonds, Series 2020A are as follows:

Year Ending
June 30, Principal Interest Total
2026 - $ 542,475 $ 542,475 $
2027 - 542,475 542,475
2028 - 542,475 542,475
2029 - 542,475 542,475
2030 - 542,475 542,475
2031-2035 1,985,000 2,265,750 4,250,750
2036-2040 2,180,000 1,725,625 3,905,625
2041-2045 2,680,000 1,264,100 3,944,100
2046-2050 3,180,000 718,025 3,898,025
2051 3,785,000 66,238 3,851,238
Total 13,810,000 $ 8,752,113 $ 22,562,113 $
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Item 15 Page 92 of 295
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
75 Note 6 – Long-Term Liabilities (Continued)
B. Business-Type Activities (Continued)
Water Replenishment District Note Payable – Direct Borrowing In May 2019, the City entered into an agreement with Water Replenishment District of Southern California (WRD) for assistance with the construction of a new groundwater well or rehabilitation of an existing groundwater well.

The promissory note is unsecured and has a no interest basis for an amount not to exceed $1,500,000. As of June 30, 2022, WRD has disbursed all of the funds under the agreement to the City. The note is payable in quarterly principal payments commencing September 1, 2020, in an amount which, together with all quarterly payments, will be sufficient to fully amortize the principal balance of the note by the maturity date of April 1, 2031. The total unpaid balance as of June 30, 2025, was $802,235.

Upon an event of default, WRD may declare any or all of the outstanding and unpaid principal balance immediately due and payable, without presentment, demand, protest, notice of protest, notice of acceleration or of intention to accelerate or any other notice, declaration or act of any kind, all of which are hereby expressly waived by the City.

The future annual debt service requirements are as follows:

Year Ending
June 30, Principal Interest Total
2026 139,535 $ - $ 139,535 $
2027 139,535 - 139,535
2028 139,535 - 139,535
2029 139,535 - 139,535
2030 139,535 - 139,535
2031 104,650 - 104,650
Total 802,325 $ - $ 802,325 $
Subscription liabilities
The City entered into subscription agreements with various vendors for software. The agreements expire from October 18, 2026 to July 22, 2029 with interest rates ranging from 2.450% to 3.764%.

The future annual subscription payments are as follows:

Year Ending
June 30, Principal Interest Total
2026 53,798 $ 2,341 $ 56,139 $
2027 16,336 464 16,800
Total 70,134 $ 2,805 $ 72,939 $
Compensated Absences
Under certain circumstances and according to the negotiated labor agreements, City employees are allowed to accumulate annual leave. The annual leave amount is accrued and accounted for as compensated absences. The balance outstanding at June 30, 2025, was $1,561,945.
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Item 15 Page 93 of 295
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
76 Note 6 – Long-Term Liabilities (Continued)
C. Fiduciary Funds
The following long-term obligations were approved by California State Department of Finance as enforceable obligations and were considered as accounting liabilities in accordance with GAAP.

Balance Balance Due within Due in More
July 1, 2024 Additions Deletions June 30, 2025 One Year Than One Year Fiduciary Activities:

Public Offering
2022 Tax Allocation Refunding
Bonds 18,165,000 $ - $ (3,445,000) $ 14,720,000 $ 3,625,000 $ 11,095,000 $ 2022 Taxable Tax Allocation Refunding Bonds
In July 2022, the Successor Agency of the former Redevelopment Agency of the City issued the 2022 Taxable Tax Allocation Refunding Bonds in the amount of $21,330,000 to a current refunding of the City’s 2005 Industrial Redevelopment Project Tax Allocation Bonds and 2011 Industrial Redevelopment Project Tax Allocation Bonds.

The bonds bear interest at rates between 3.489% and 4.431%. Interest on the bonds is payable annually on each March 1 and September 1. Principal payments are due in annual installments ranging from $3,165,000 to $4,030,000, commencing September 1, 2023 through September 1, 2028. The bonds are not subject to redemption prior to maturity. The refunding revenue bonds debt service payments will be made from the debt service funds.

The annual debt service requirements for the Taxable Tax Allocation Refunding Bonds are as follows:

Year Ending
June 30, Principal Interest Total
2026 3,625,000 $ 543,802 $ 4,168,802 $
2027 3,820,000 395,560 4,215,560
2028 4,030,000 230,814 4,260,814
2029 3,245,000 71,893 3,316,893
Total $ 1,242,069 14,720,000 $ 15,962,069 $
The 2022 Taxable Tax Allocation Refunding Bonds are secured by the Pledged Tax Revenues deposited in the Redevelopment Property Tax Trust Fund. The pledged tax revenues are to be used solely for the repayment of principal and interest on the bonds until they are paid in full through September 1, 2028 and are not available for other purposes during the duration that the bonds are outstanding. The total principal and interest remaining is approximately $15,962,069. Management expects that pledged tax revenues will be sufficient to make future principal and interest payments on the bonds.

D. Expense Stabilization Fund
The City maintains an Expense Stabilization Fund held in various investments in such amounts, at such times and from sources as shall be determined by the City in its sole discretion. In the event of default under the Indenture shall have occurred and is continuing, the Trustee shall transfer all moneys in the fund to the debt service funds as provided in the Indenture. Moneys on deposit in this fund may be withdrawn by the City at any time when no event of default exists under the Indenture. As of June 30, 2025, this fund has a balance of $44,659,748. . .

Item 15 Page 94 of 295
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
77 Note 6 – Long-Term Liabilities (Continued)
E. Right to Accelerate Upon Default
Notwithstanding anything contrary in the Indenture or in the Bonds, upon the occurrence of an Event of Default, the Trustee may, with the consent of each Credit Provider whose consent is required by a Supplemental Indenture or a Credit Support Agreement, and shall, at the direction of the Owners of a majority in principal amount of Outstanding Bonds (other than Bonds owned by or on behalf of the City) by written notice to the City, declare the principal of the Outstanding Bonds and the interest thereon to be immediately due and payable, whereupon such principal and interest shall, without further action, become and be immediately due and payable.

F. Credit Rating
As of June 30, 2025, the ratings on all Electric System Revenue Bonds are Baa1 positive by Moody’s and A- stable by S&P and the ratings on all Water System Revenue Bonds are A- by S&P.

Note 7 – Risk Management
The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets, errors, and omissions; injuries to employees, and natural disasters. The City utilizes insurance policy(s) to transfer these risks. Each policy has either self-insured retention or deductible, which are parts of our Risk Financing Program. There have been no significant settlements or reductions in insurance coverage during the past three fiscal years.

Starting in Fiscal 2010, the City chose to establish the Risk Financing Program in the General Fund, whereby assets are set aside for claim-litigation settlements associated with the above-mentioned risks up to their self-insured retentions or policy deductibles. AdminSure Inc. is the City’s Third-Party Administrator for workers’ compensation program and they provide basic services for general liability claims and litigation.

A summary of the insurance limits for fiscal year 2025 are as follows:

Insurance Type Program Limits Deductible/SIR (Self-Insured Retention) Property - Residential $7,950,653 $2,500
Property - Municipal $59,614,930 $25,000
Standalone Terrorism $100 Million Property Terrorism $0 $5 Million Terrorism Liability
$5 Million Active Shooter
Auto Physical Damage $10,000,000 $5,000
Government Crime $1,000,000 $25,000
Cyber Liability $5,000,000 $100,000
$5,000,000 $25,000
$5,000,000 per Claim $50,000 Utility Locs.
$100,000 Natural Gas Pipe
1st Excess Liability $5,000,000 $2 Million
$3 Million Law Enforcement
2nd Excess Liability $5,000,000 $5,000,000
3rd Excess Liability $5,000,000 $10,000,000
4th Excess Liability $5,000,000 $15,000,000
Excess Workers Compensation $50,000,000 $1,000,000
$1.5 Million Presumptive Loss
Special Events $2,000,000 $1,000,000 Each Occurrence
Property - Power Generating $100,000,000 Various
Excess Liability - Malburg Generating Station $100,000,000 - Property Insurance - Malburg Generating Station $200,000,000 - Commercial Property/EQ and FL - Malburg Generating Station $50,000,000 - Premise Pollution/Environmental Impairment
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Item 15 Page 95 of 295
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
78 Note 7 – Risk Management (Continued)
Changes in the balances of claims liabilities during the past three years are as follows:

Current Year Current Year
Balance at Claims and Changes Claim Balance at
Year Ended July 1 in Estimates Payments June 30
June 30, 2023 4,940,732 $ 1,529,740 $ (2,523,658) $ 3,946,814 $ June 30, 2024 3,946,814 410,974 (1,111,716) 3,246,072
June 30, 2025 3,246,072 3,740,828 (1,451,676) 5,535,224 Note 8 – Pension Plan
A. General Information about the Pension Plan
On October 1, 2020, the City transferred its fire department operations to Los Angeles County, California. The City's full-time safety (police and fire personnel) employees were converted from the City's agent multipleemployer defined benefit pension plan to a cost-sharing defined benefit pension plan during the fiscal year ended June 30, 2021.

Plan Description
The City contribution to the California Public Employees Retirement System (“CalPERS”), an agent multipleemployer defined benefit pension plan for miscellaneous employees and a cost-sharing multiple-employer defined benefit plan for safety employees. CalPERS acts as a common investment and administrative agent for participating public entities within the State of California. Benefit provisions and all other requirements are established by state statute and City ordinance. A full description of the pension plan regarding number of employees covered, benefit provisions, assumptions (for funding, but not accounting purposes), and membership information are listed in the June 30, 2024 Annual Actuarial Valuation Report. This report and CalPERS’ audited financial statements are publicly available reports that can be obtained at CalPERS’ website under Forms and Publications.

Benefits Provided
CalPERS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. Benefit provisions under both plans are established by State Statute and City Resolution as follows:

Classic PEPRA
Prior to On or After
Hire date January 1, 2013 January 1, 2013
Benefit formula 2.7% @ 55 2% @ 62
Benefit vesting schedule 5 years service 5 years service Benefit payments Monthly for life Monthly for life
Retirement age 50 yrs 52 yrs
Monthly benefits, as a % of eligible
compensation

2.0%-2.7%,
50 yrs - 55 yrs,
respectively

1.0%-2.0%,
52 yrs - 62 yrs,
respectively
Required employee contribution rate (FY24-25) 8.00% 7.00% Required employer contribution rate (FY24-25) 13.07% 13.07% Required employer contribution rate (FY23-24) 13.17% 13.17% Miscellaneous
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Item 15 Page 96 of 295
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
79 Note 8 – Pension Plan (Continued)
A. General Information about the Pension Plan (Continued) Benefits Provided (Continued)
Classic PEPRA
Prior to On or After
Hire date January 1, 2013 January 1, 2013
Benefit formula 3.0% @ 50 2.7% @ 57
Benefit vesting schedule 5 years service 5 years service Benefit payments Monthly for life Monthly for life
Retirement age 50 yrs 50 yrs
Monthly benefits, as a % of eligible 3%, 50 yrs
compensation
Required employee contribution rate (FY24-25) 9.00% 14.50% Required employer contribution rate (FY24-25) 28.18% 18.24% Required employer contribution rate (FY23-24) 27.40% 19.78% Safety

2.0% - 2.7%
50 yrs - 57 yrs,
respectively
Participants are eligible for non-industrial disability retirement if they become disabled and have at least 5 years credited service. There is no special age requirement. The standard non-industrial disability retirement benefit is a monthly allowance equal to 1.8 percent of final compensation, multiplied by service years.

Industrial disability benefits are not offered to miscellaneous employees. The City provides industrial disability retirement benefits to safety employees only. The industrial disability retirement benefit is a monthly allowance equal to 50 percent of final compensation.

An employee's beneficiary may receive the basic death benefit if the employee becomes deceased while actively employed. The employee must be actively employed with the City to be eligible for this benefit. An employee's survivor who is eligible for any other pre-retirement death benefit may choose to receive that death benefit instead of this basic death benefit. The basic death benefit is a lump sum in the amount of the employee's accumulated contributions, where interest is currently credited at 6.0 percent per year, plus a lump sum in the amount of one month's salary for each completed year of current service, up to a maximum of six months’ salary. For purposes of this benefit, one month's salary is defined as the member's average monthly full-time rate of compensation during the 12 months preceding death. Upon the death of a retiree, a one-time lump sum payment of $500 will be made to the retiree's designated survivor(s), or to the retiree 's estate. The lump sum payment amount increases to $2,000 for any death occurring on or after Jul1, 2023, due to SB 1168.

Benefit terms provide for annual cost-of-living adjustments to each employee's retirement allowance. Beginning the second calendar year after the year of retirement, retirement and survivor allowances will be annually adjusted on a compound basis up to 2 percent.
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Item 15 Page 97 of 295
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
80 Note 8 – Pension Plan (Continued)
A. General Information about the Pension Plan (Continued) Employees Covered by Benefit Terms
At June 30, 2023, the valuation date, the following employees were covered by the benefit terms:

Miscellaneous Safety
Active employees 172 40
Transferred and terminated employees 195 122
Retired employees and beneficiaries 224 303
Total 591 465
Plans
Contributions
Section 20814(c) of the California Public Employees’ Retirement Law (“PERL”) requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through CalPERS’ annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The employer is required to contribute the difference between the actuarially determined rate and the contribution rate of employees.

B. Net Pension Liability
Actuarial Methods and Assumption Used to Determine Total Pension Liability The June 30, 2023 valuation was rolled forward to determine the June 30, 2024 total pension liability, based on following actuarial methods and assumptions:

Actuarial Cost Method
Actuarial Assumptions:

Discount Rate
Inflation
Salary Increases
Mortality Rate Table(1)
Post Retirement Benefit Increase
Derived using CalPERS’ Membership Data for all Funds.
(1)The mortality table used was developed based on CalPERS-specific data. The probabilities of mortality are based on the 2021 CalPERS Experience Study and Review of Actuarial Assumptions. Mortality rates incorporate full generational mortality improvement using 80% of Scale MP-2020 published by the Society of Actuaries. For more details on this table, please refer to the 2021 experience study report from November 2021 that can be found on the CalPERS website.

Entry Age Normal

6.90%

2.30%
Varies by Entry Age and Service
The lesser of contract COLA or 2.30% until Purchasing
Power Protection. Allowance floor on purchasing power
applies, 2.30% thereafter.

Change of Assumptions
There were no assumption changes in 2024. .
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Item 15 Page 98 of 295
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
81 Note 8 – Pension Plan (Continued)
B. Net Pension Liability (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 long-term 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:

Asset Class1
Assumed Asset
Allocation Real Return1,2
Global Equity - Cap-weighted 30.00% 4.54%
Global Equity - Non-Cap-weighted 12.00% 3.84%
Private Equity 13.00% 7.28%
Treasury 5.00% 0.27%
Mortgage-backed Securities 5.00% 0.50%
Investment Grade Corporates 10.00% 1.56%
High Yield 5.00% 2.27%
Emerging Market Debt 5.00% 2.48%
Private Debt 5.00% 3.57%
Real Assets 15.00% 3.21%
Strategic Financing -5.00% -0.59%
100.00%
1 An expected inflation of 2.30% used for this period.
2 Figures are based on the 2021 Asset Liability Management study.

Discount Rate
The discount rate used to measure the total pension liability was 6.90%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total pension liability. .
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Item 15 Page 99 of 295
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
82 Note 8 – Pension Plan (Continued)
C. Changes in the Net Pension Liability
The following table shows the changes in net pension liability for the City’s Miscellaneous Plan recognized over the measurement period.

Total Pension Plan Fiduciary Net Net Pension
Liability Position Liability/(Asset)
(a) (b) (c) = (a) - (b)
Balance at June 30, 2023 (Valuation Date) 220,741,431 $ 157,089,630 $ 63,651,801 $ Changes Recognized for the Measurement Period:

Service cost 3,992,723 - 3,992,723
Interest on the total pension liability 15,270,398 - 15,270,398 Changes of benefit terms - - -
Changes of assumptions - - -
Difference between expected and actual experience 3,835,805 - 3,835,805 Net plan to plan resource movement - - -
Contributions from the employer - 7,479,028 (7,479,028) Contributions from employees - 1,582,734 (1,582,734)
Net investment income - 14,837,231 (14,837,231)
Benefit payments, including refunds
of employee contributions (10,526,999) (10,526,999) -
Administrative expense - (127,824) 127,824
Net Changes during July 1, 2023 to June 30, 2024 12,571,927 13,244,170 (672,243) Balance at June 30, 2024 (Measurement Date) 233,313,358 $ 170,333,800 $ 62,979,558 $ Increase (Decrease)
Proportionate Share of Net Pension Liability and Pension Expense The following table shows the City’s safety plan’s proportionate share of the risk pool collective net pension liability over the measure period.

Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability
(a) (b) (c) = (a) - (b)
Balance at 6/30/23 (Valuation Date) 314,080,530 $ 207,729,341 $ 106,351,189 $ Balance at 6/30/24 (Measurement Date) 322,928,396 218,545,012 104,383,384 Net Changes during 2023-2024 8,847,866 10,815,671 (1,967,805) Increase (Decrease)
The following is the approach established by the plan actuary to allocate the net pension liability and pension expense to the individual employers within the risk pool. (1) In determining a cost-sharing plan’s proportionate share, total amounts of liabilities and assets are first calculated for the risk pool as a whole on the valuation date (June 30, 2023). The risk pool’s fiduciary net position (“FNP”) subtracted from its total pension liability (“TPL”) determines the net pension liability (“NPL”) at the valuation date. .
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Item 15 Page 100 of 295
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
83 Note 8 – Pension Plan (Continued)
C. Changes in the Net Pension Liability (Continued)
Proportionate Share of Net Pension Liability and Pension Expense (Continued) (2) Using standard actuarial roll forward methods, the risk pool TPL is then computed at the measurement date (June 30, 2024). Risk pool FNP at the measurement date is then subtracted from this number to compute the NPL for the risk pool at the measurement date. For purposes of FNP in this step and any later reference thereto, the risk pool’s FNP at the measurement date denotes the aggregate risk pool’s FNP at June 30, 2024 less the sum of all additional side fund (or unfunded liability) contributions made by all employers during the measurement period (2023-2024).
(3) The individual plan’s TPL, FNP and NPL are also calculated at the valuation date. TPL is allocated based on the rate plan’s share of the actuarial accrued liability. FNP is allocated based on the rate plan’s share of market value assets.
(4) Two ratios are created by dividing the plan’s individual TPL and FNP as of the valuation date from (3) by the amounts in step (1), the risk pool’s total TPL and FNP, respectively. (5) The plan’s TPL as of the Measurement Date is equal to the risk pool TPL generated in (2) multiplied by the TPL ratio generated in (4). The plan’s FNP as of the Measurement Date is equal to the FNP generated in (2) multiplied by the FNP ratio generated in (4) plus any additional side fund (or unfunded liability) contributions made by the employer on behalf of the plan during the measurement period. (6) The plan’s NPL at the Measurement Date is the difference between the TPL and FNP calculated in (5).

Deferred outflows of resources, deferred inflows of resources, and pension expense are allocated based on the City’s share of net pension liability at the end of measurement date.

The City’s proportionate share of the net pension liability was as follows:

Safety Plan
June 30, 2023 0.8525%
June 30, 2024 0.8607%
Change - Increase (Decrease) 0.0082%
Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the net pension liability of the plans as of the measurement date, calculated using the discount rate of 6.90%, as well as what the net pension liability would be if it were calculated using a discount rate that is 1 percentage-point lower (5.90%) or 1 percentage-point higher (7.90%) than the current rate:

Discount Rate Current Discount Discount Rate
- 1% (5.90%) Rate (6.90%) + 1% (7.90%)
Miscellaneous Plan 95,818,530 $ 62,979,558 $ 36,100,458 $ Safety Plan 148,495,093 $ 104,383,384 $ 68,306,208 $
Plan's Net Pension Liability/(Asset)
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Item 15 Page 101 of 295
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
84 Note 8 – Pension Plan (Continued)
C. Changes in the Net Pension Liability (Continued)
Pension Plan Fiduciary Net Position
Detailed information about the plan’s fiduciary net position is available in the separately issued CalPERS financial report.

D. Pension Expense and Deferred Outflows and Deferred Inflows of Resources Related to Pensions For the year ended June 30, 2025, the City recognized pension expense in the amounts of $12,839,811 and $18,313,107 for the miscellaneous plan and safety plan, respectively.

As of measurement date of June 30, 2024, the City has deferred outflows and deferred inflows of resources related to pensions as follows:

Deferred Outflows Deferred Inflows
of Resources of Resources
Contribution made after measurement period 8,629,771 $ - $ Changes of assumptions - -
Difference between expected and actual experience 4,918,040 - Net difference between projected and actual earning
on pension plan investments 2,760,638 -
Total 16,308,449 $ - $
Miscellaneous Plan
Deferred Outflows Deferred Inflows
of Resources of Resources
Contribution made after measurement period 10,343,489 $ - $ Changes of assumptions 2,571,792 -
Difference between expected and actual experience 8,518,612 (276,977) Net difference between projected and actual earning
on pension plan investments 5,045,417 -
Adjustment due to differences in proportions 551,129 (2,381,903) Difference between City contributions and
proportionate share of contributions 1,165,424 (1,043,389) Total 28,195,863 $ (3,702,269) $
Safety Plan
The amounts above are net of outflows and inflows recognized in the 2023-2024 measurement period expense.

The expected average remaining service lifetime (“EARSL”) for the Miscellaneous and Safety Plans for the measurement period ending June 30, 2024, are 3.2 years and 3.8 years respectively, which were obtained by dividing the total service years of 1,918 and 630,177 (the sums of remaining service lifetimes of the active employees) by 591 and 166,163 (the total numbers of participants: active, inactive, and retired). Inactive employees and retirees have remaining service lifetimes equal to 0 in both plans. Total future service is based on the members’ probability of decrementing due to an event other than receiving a cash refund. $8,629,771, and $10,343,489 reported as deferred outflows of resources related to pensions for miscellaneous plan and safety plan, respectively, resulting from the City’s contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability and collectively net pension liability, respectively, in the year ending June 30, 2026.
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Item 15 Page 102 of 295
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
85 Note 8 – Pension Plan (Continued)
D. Pension Expense and Deferred Outflows and Deferred Inflows of Resources Related to Pensions (Continued) Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in the future pension expense as follows:

Measurement Period
Ending June 30 Miscellaneous Safety
2025 3,162,013 $ 5,132,681 $
2026 5,685,632 11,116,019
2027 (355,748) (372,281)
2028 (813,219) (1,726,314)
Total 7,678,678 $ 14,150,105 $
Deferred Outflows/(Inflows) of Resources
Note 9 – Other Postemployment Benefits (“OPEB”)
A. General Information about the OPEB Plan
Plan Description
The City administers a single-employer defined benefit post-employment healthcare plan (the “Plan”). Dependents are eligible to enroll, and benefits continue to surviving spouses.

Benefits Provided
Generally, the City will provide a postemployment benefit plan for the employee only to those who retire at age sixty (60) or later with twenty (20) years of continuous uninterrupted service up to the age of sixty-five (65).

Alternatively, employees who retire before the age of sixty (60) with twenty (20) years of continuous uninterrupted service, will be permitted to pay their medical and dental premium cost and upon reaching the age of sixty (60), the City will pay the premium for the medical and dental plans until they reach the age of sixty-five (65).

Resolution 2011-129 provided lifetime medical benefits to Police Management employees and their spouses, who have been employed as sworn safety personnel for a minimum of twenty (20) years and a minimum of ten (10) years of that service have been with the City of Vernon. Resolution 2011-127 sets forth the MOU of the Vernon Police Officers’ Benefit Association, provided lifetime medical benefits to those employees and their spouses, who have been employed as sworn safety personnel for a minimum of twenty (20) years and a minimum of ten (10) years of that service has been with the City of Vernon. Resolution 2012-217 granted specific retiree medical benefits to employees who retire during the 2012-2013 fiscal year in order to provide an incentive for early retirement whereby the City authorized the payment of medical and dental insurance premiums for eligible retiring employees and their eligible dependents with at least ten (10) years of service plus 5% for each additional full year of service above the ten (10) years of service, and that this offer be extended as an option to safety and safety management groups, at their discretion, in addition to the related options provided in the Vernon Firefighters Association MOU and the Vernon Police Officers’ Benefit Association MOU. Resolution 2013-06 declared that the retiree medical benefits which had not been a vested right for employees will continue to be nonvested right for employees who continue to be employed by the City on or after July 1, 2013, but will become a vested right for those who retire during the 2012-2013 fiscal year. The City’s plan is considered a substantive OPEB plan and the City recognizes cost in accordance with GASB Statem . ent No 75. The City may terminate its unvested OPEB in the future. .

Item 15 Page 103 of 295
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
86 Note 9 – Other Postemployment Benefits (“OPEB”) (Continued) A. General Information about the OPEB Plan (Continued)
Eligibility
All of the Plan’s employees became participants in accordance with a negotiated Memorandum of Understanding (“MOU”) as negotiated by each group or bargaining unit. In order to receive benefits, eligible employees must meet the minimum requirements defined in their MOU. At June 30, 2024 valuation date, the following numbers of participants were covered by the benefit terms:

Active plan members 212
Inactive plan members currently receiving benefits 122
Inactive plan members entitled to but not receiving benefits 15 Total 349
Contributions
The City has established an irrevocable OPEB trust with assets dedicated to paying future retiree medical benefits.

The City intends to contribute 100% or more of the actuarially determined contribution for the explicit subsidy liability only. The portion of the liability due to the implicit subsidy is not prefunded but is paid as benefits come due.

For the measurement period ended June 30, 2024, the City contributed $2,616,548 to the trust and retiree premiums and $577,673 implicit subsidy, resulting in a total contribution of $3,194,221.

B. Net OPEB Liability
The OPEB liability was measured as of June 30, 2024, and total liability used to calculate the net OPEB liability was determined by an actuarial valuation as of June 30, 2024.

Significant Actuarial Assumptions Used for Total OPEB Liability The total OPEB liability, measured as of June 30, 2024, was determined using the following actuarial assumptions:

Actuarial Cost Method
Actuarial Assumptions:

Asset Valuation Method
Inflation
Salary Increases
Long Term return on Assets
Discount Rate
Mortality Improvement
Healthcare Trend

2.80% wage inflation plus seniority, merit, and promotion salary increases based on CalPERS Expenditure Study and Review of Actuarial Assumptions published in November
2021
Entry-age normal, level percent of pay
Market value of assets

6.40% at June 30, 2024 and 5.10% at June 30, 2023

6.40% at June 30, 2024 and 6% at June 30, 2023

2.30%
CalPERS 2021 Experience Study; Project with MP Scale
Based on 2022 Getzen model with in inflation rate of 6.80% pre-Medicare / 4.90% Medicare decreasing gradually to an ultimate rate of 4.04% by 2075.
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Item 15 Page 104 of 295
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
87 Note 9 – Other Postemployment Benefits (“OPEB”) (Continued) B. Net OPEB Liability (Continued)
Change in assumptions
Discount rate increased from 6% at June 30, 2023 to 6.4% at June 30, 2024.

Discount Rate
The discount rate used to measure the total OPEB liability was 6.40%. The projection of cash flows used to determine the discount rate assumed that City contributions will be made at rates equal to the actuarially determined contribution rates. Based on those assumptions, the OPEB plan's fiduciary net position was projected to be available to make all projected OPEB payments for current active and inactive employees and beneficiaries. Therefore, the long-term expected rate of return on OPEB plan investments was applied to all periods of projected benefit payments to determine the total OPEB liability.

Expected Long-Term Rates of Return
Target 1-20 Year Projected
Asset Class Allocation Compound Return
Global Equity 49.00% 6.90%
Fixed Income 23.00% 4.10%
Global Real Estate (REITs) 20.00% 6.30%
Treasury Inflation Protected Securities (TIPS) 5.00% 3.90% Commodities 3.00% 4.60%
Total 100.00%
C. Changes in Net OPEB Liability
The following presents the changes in the net OPEB liability for the governmental activities’ Retiree Health Plan:

Total OPEB Plan Fiduciary Net Net OPEB
Liability Position Liability
(a) (b) (c) = (a) - (b)
Balance at June 30, 2023 27,673,716 $ 13,210,430 $ 14,463,286 $ Changes Recognized for the Measurement Period:

Service Cost 455,231 - 455,231
Interest on the total OPEB liability 1,633,187 - 1,633,187 Differences between expected and actual experience 883,441 - 883,441 Assumption changes (1,109,212) - (1,109,212)
Employer contributions including implicit subsidy - 3,194,221 (3,194,221) Net investment income - 1,525,758 (1,525,758)
Benefit payments (1,240,674) (1,240,674) -
Implicit subsidy (577,673) (577,673) -
Administrative expenses - (4,467) 4,467
Net Changes during July 1, 2023 to June 30, 2024 44,300 2,897,165 (2,852,865) Balance at June 30, 2024 (Measurement Date) 27,718,016 $ 16,107,595 $ 11,610,421 $ Increase (Decrease)
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Item 15 Page 105 of 295
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
88 Note 9 – Other Postemployment Benefits (“OPEB”) (Continued) C. Changes in Net OPEB Liability (Continued)
Sensitivity of the Net OPEB Liability to Change in the Discount Rate The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability would be if it were calculated using a discount rate that is 1 percentage-point lower (5.40 percent) or 1percentage- point higher (7.40 percent) than the current discount rate:

Discount Rate Current Discount Discount Rate
-1% (5.40%) Rate (6.40%) +1 % (7.40%)
$ 11,610,421 14,507,358 $ 9,157,162 $
Plan's Net OPEB Liability
Sensitivity of the Total OPEB Liability to Changes in the Health Care Cost Trend Rates The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability would be if it were calculated using healthcare cost trend rates that are 1 percentage-point lower or 1 percentage-point higher than the current healthcare cost trend rates:

Healthcare Cost Healthcare Cost Healthcare Cost
Trend Rate - 1% Trend Rate Trend Rate + 1%
$ 11,610,421 10,495,012 $ 12,749,433 $
Plan's Net OPEB Liability
OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB For the measurement period ended June 30, 2024, the City recognized OPEB credit of $(773,770). At June 30, 2025, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

Deferred Outflows Deferred Inflows
of Resources of Resources
Contribution made after measurement period 3,387,947 $ - $ Changes in assumptions 457,599 (1,176,084)
Difference between expected and actual experience 810,738 (1,185,596) Net difference between projected and actual earning on
OPEB plan investments - (54,165)
Total 4,656,284 $ (2,415,845) $
The effects on the total OPEB liability of (1) changes of economic and demographic assumptions or of other inputs and (2) differences between expected and actual experience are required to be included in the OPEB expense in a systematic and rational manner over a closed period equal to the average of the expected remaining service lives of all employees that are provided with benefits through the OPEB plan (active employees and inactive employees), beginning in the current period. The EARSL for the current period follows. Note, however, that for calculation purposes, 1 was used when calculating amortizations if the EARSL is less than 1 year.

EARSL: 8 Years .
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Item 15 Page 106 of 295
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
89 Note 9 – Other Postemployment Benefits (“OPEB”) (Continued) C. Changes in Net OPEB Liability (Continued)
OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB (Continued)
The $3,387,947 reported as deferred outflows of resources related to contributions subsequent to the June 30, 2024 measurement date will be recognized as a reduction of the net OPEB liability during the year ending June 30, 2026.

Other amounts reported as deferred outflows and inflows of resources related to OPEB will be recognized as expense as follows:

Measurement Deferred
Period Outflows/(Inflows)
Ending June 30 of Resources
2025 (456,085) $
2026 97,601
2027 (384,662)
2028 (289,870)
2029 (46,865)
Thereafter (67,627)
Total (1,147,508) $
Note 10 – Net Investment in Capital Assets
The investment in capital assets for governmental activities, business-type activities, and enterprise funds is calculated as follows:

Governmental Business-Type
Activities Activities Electric Gas Water Fiber Optics
Total capital assets, net 157,026,228 $ 472,849,702 $ 434,723,696 $ 13,330,214 $ 23,254,413 $ 1,541,379 $ Unspent capital debt proceed - 348,400 348,400 - - -
Deferred loss on refunding debt - 795,362 795,362 - - - Retention payable (42,500) - - - - -
Capital related debt (651,210) (206,287,781) (191,196,864) - (15,090,917) - Net investment in capital assets 156,332,518 $ 267,705,683 $ 244,670,594 $ 13,330,214 $ 8,163,496 $ 1,541,379 $ Enterprise Funds
Note 11 – Prior Period Adjustments
The beginning net position was restated to reflect this correction as follows:

Governmental Business-Type
Activities Activities Electric Gas Water Fiber Optics
June 30, 2024, as previously reported 100,502,699 $ 315,684,193 $ 291,469,620 $ 1,470,909 $ 25,363,903 $ (2,620,239) $ Change in accounting principle (286,763) (154,729) (129,514) (6,536) (18,317) (362) June 30, 2024, as restated $ 315,529,464 100,215,936 $ 291,340,106 $ 1,464,373 $ 25,345,586 $ (2,620,601) $ Enterprise Funds
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Item 15 Page 107 of 295
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
90 Note 12 – Southern California Public Power Authority The Southern California Public Power Authority (the “SCPPA”) was formed in 1980 as a not for profit joint powers agency. SCPPA is currently comprised of 11 Southern California cities and an irrigation district. The SCPPA’s purpose is planning, financing, acquiring, constructing, and operating of projects that generate or transmit electric energy for sale to its participants. The joint powers agreement has a term expiring in 2030 or such later date as all bonds and notes of SCPPA and interest thereon have been paid in full or adequate provisions for payments have been made. A copy of SCPPA’s audited financial statements can be reviewed on their website at www.scppa.org or can be obtained by written request at 1160 Nicole Ct Glendora, CA 91740.

A. Take or Pay Contract
The SCPPA’s interest of entitlements in natural gas generation, and transmission projects are jointly owned with other utilities. Under these arrangements, a participating member has an undivided interest in a utility plant and is responsible for its proportionate share of the costs of construction and operation and is entitled to its proportionate share of the energy, available transmission capacity, or natural gas produced. Each joint plant participant, including the SCPPA, is responsible for financing its share of construction and operating costs. The City has the following “take or pay” contract with the SCPPA:

Palo Verde Project
The SCPPA purchases a 5.91% interest in the Palo Verde Nuclear Generating Station (the “Station”), a nuclearfired generating station near Phoenix, Arizona, from Salt River Project Agricultural Improvement and Power District, and a 6.55% share of the right to use certain portions of the Arizona Nuclear Power Project Valley Transmission System. The City has a 4.9% entitlement share of the SCPPA’s interest in the station.

Between 1983 and 2008, the SCPPA issued $3.266 billion in debt of Power Project Revenue Bonds for the Station to finance the bonds and the purchase of the SCPPA’s share of the Station and related transmission right. The bonds are not obligations of any member of the SCPPA or public agency other than the SCPPA. Under a power sales contract with the SCPPA, the City is obliged on a “take or pay” basis for its proportionate share of power generated, as well as to make payments for its proportionate share of the operating and maintenance expenses of the Station, debt service on the bonds and any other debt, whether or not the project or any part thereof or its output is suspended, reduced or terminated. The City took its proportionate share of the power generated and its proportionate share of costs during the fiscal year 2025 was $3,794,993. The City expects no significant increases in costs related to its nuclear resources.

B. Power Purchase Commitments
The SCPPA has entered into power purchase agreements with project participants. These agreements are substantially “take-and-pay” contracts where there may be other obligations not associated with the of energy. The City has entered into power purchase agreements with the SCPPA related to the following projects:
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Item 15 Page 108 of 295
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
91 Note 12 – Southern California Public Power Authority (Continued) B. Power Purchase Commitments (Continued)
Astoria 2 Solar Project
On July 23, 2014, the SCPPA entered into a power purchase agreement with Recurrent Energy for solar energy from the Astoria 2 Solar Project. SCPPA is entitled to 35 MW of photovoltaic generating capacity from commercial operation to December 31, 2021 and 45 MW of generating capacity from January 1, 2022 until the expected expiration date of December 31, 2036. The commercial operation date was December 2016. Power and Water Resources Pooling SCPPA, Lodi, Corona, Moreno Valley, and Rancho Cucamonga, are each buying the output of a separate portion of the facility, which is located in Kern County, California. SCPPA has purchase options in the 10th, 15th, and 20th Contract Years. The project is forecasted to start at a capacity factor of 31% with a 0.5% annual degradation. ACES Power Marketing is the third-party scheduling coordinator for the project. The City contracted to purchase 57.1429% until December 31, 2021, and 66.6667% thereafter, of the output. The City’s proportionate share of costs for fiscal year 2025 was $4,466,172.

Puente Hills Landfill Gas-to-Energy Project
On June 25, 2014, the SCPPA entered into a power purchase agreement with County Sanitation District No. 2 of Los Angeles County for 46 MW of the electric generation from a landfill gas to energy facility, located in Whittier, California. The project began deliveries to the SCPPA on January 1, 2017 for a term of 10 years. The City contacted to purchase 23.2558% of the output. The City’s proportional share of the costs during fiscal year 2025 was $1,605,423.

Antelope DSR 1 Solar Project
On July 16, 2015, the SCPPA, entered into a power purchase agreement with Antelope DSR 1, LLC for 50 MW solar photovoltaic generating capacity from the Antelope DSR 1 Solar Facility. The facility is located near Lancaster, California, and commercial operation occurred on December 16, 2016 for a term of 20 years. The City’s proportionate share of costs during fiscal year 2025 was $2,707,676.

Hoover Dam Hydroelectric Power Plant
The Hoover Dam Hydroelectric Power Plant is located on the Arizona-Nevada border, approximately 25 miles southeast of Las Vegas. This hydropower plant is part of the larger Hoover Dam facility, which was completed in 1935 and controls the flow of the Colorado River. The Hoover Dam facility consists of 17 generating units and two service generating units with a total installed capacity of 2,080 MW. In 1987, Vernon entered a power purchase agreement to purchase 22 MW of firm capacity from the Western Area Power Administration. SCPPA and other contractor allocations of Hoover power have been extended for 50 years beyond the power purchase agreement’s original expiration in 2017, which now expires in 2067. The City’s proportionate share of costs during fiscal year 2025 was $624,506.

Desert Harvest 2 REC Solar PV Project
On December 17, 2020, SCPPA executed a power purchase agreement with EDF Renewables for 70 MW of solar PV capacity from the Desert Harvest 2 Solar PV project. The project is a fixed-tilt PV system that interconnects at the Marketplace substation and is located on 1,200 acres of Bureau of Land Management land in Desert Center, California. The REC + Index agreement serves the cities of Anaheim, Burbank, and Vernon. VPU is entitled to

17.14 percent of the Project’s output or about 12 MW. This power purchase agreement, which expires at the end of 2045, only provides renewable energy credits (RECs). The City’s proportionate share of costs during fiscal year 2025 was $422,882.
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Item 15 Page 109 of 295
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
92 Note 12 – Southern California Public Power Authority (Continued) B. Power Purchase Commitments (Continued)
Daggett Solar PV and BESS Project
The Daggett Solar plus BESS project is a single‑axis tracker 65 MW solar with a 33 MW 4‑hour Lithium‑Ion BESS.

The commercial operation date was December 12, 2023. The project, located in the City of Daggett in San Bernardino County, is a portion of an approximately 482 MW solar PV facility. The project is being developed by Clearway Energy Group and is owned by Daggett Solar Power 2 LLC.

On June 24, 2022, SCPPA executed a PPA for 65 MW for the cities of Vernon and Cerritos. The PPA entitles VPU to 60 MW of solar PV output and 30 MW of energy storage. The commercial operation date was December 12, 2023. The power purchase agreement expires on December 31, 2044. The City’s proportionate share of costs during fiscal year 2025 was $3,940,066.

Note 13 – Commitment and Contingencies
Contract with Los Angeles County Fire Department
The City contracted with the County of Los Angeles (“LA County”) for Fire services on May 20, 2020, setting forth terms and conditions under which LA County will provide fire protection, paramedic, and incidental services in the City for the next ten years. The City is to pay LA County the annual fee on a monthly basis. During the initial five-year period, the annual fee limitation shall not exceed 4% per fiscal year, during the sixth year of the agreement the annual fee limitation shall be the average of the preceding four years’ percentage increases plus 1%. During the seventh year of the agreement and each subsequent fiscal year, the annual fee limitation shall be the average of the immediate preceding five years’ percentage increases in the Annual Fee of 1%. Additionally, there are conversion costs that will be paid in 36 equal monthly payments. The agreement shall remain in effect for a minimum of 10 years, subsequently it will be renewed for one-year period. Either party may terminate this agreement any time after the expiration of the initial 10-year period term upon one year’s written notice. The contract costs for the year ended June 30, 2025 was totaled $16,750,891.
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REQUIRED SUPPLEMENTARY INFORMATION
(UNAUDITED)
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Original Final Variance with
Budget Budget Actual Final Budget
REVENUES:

Taxes $ 62,010,122 62,010,122 $ 63,905,412 $ $ 1,895,290 Special assessments 1,711,000 1,711,000 2,007,786 296,786 Licenses and permits 2,389,400 2,389,400 3,351,460 962,060 Fines, forfeitures, and penalties 162,200 162,200 211,727 49,527 Intergovernmental 3,650,257 3,650,257 1,166,772 (2,483,485) Investment earnings 1,074,905 1,074,905 2,160,049 1,085,144 Charges for services 5,236,802 5,236,802 5,693,292 456,490 Rent income 541,500 541,500 607,465 65,965
Other revenues 550,000 550,000 106,287 656,287
Total revenues 77,326,186 77,326,186 79,760,250 2,434,064 EXPENDITURES:

Current:

General government 18,443,492 18,581,492 17,367,423 1,214,069 Public safety 38,316,936 38,762,340 39,046,478 (284,138) Public works 13,443,988 13,867,417 11,854,153 2,013,264 Health services 3,527,981 3,527,981 2,503,084 1,024,897 Capital outlay 11,624,882 11,093,357 4,065,696 7,559,186 Debt service:

Principal retirement - - 677,440 (677,440)
Interest and fiscal charges - - 21,590 (21,590)
Total expenditures 86,364,112 84,825,754 75,535,864 10,828,248

EXCESS (DEFICIENCY) OF REVENUES OVER
(UNDER) EXPENDITURES (9,037,926) (7,499,568) 4,224,386 13,262,312 OTHER FINANCING SOURCES:

Transfer in 300,000 300,000 173,828 (126,172)
Proceeds from sale of capital asset - - 39,385 39,385
Issuance of debt - - 521,215 521,215
Total other financing sources 300,000 300,000 734,428 434,428 NET CHANGE IN FUND BALANCE $ (8,737,926) (7,199,568) $ 4,958,814 13,696,740 $ FUND BALANCE:

Beginning of year 49,285,338
End of year $ 54,244,152
City of Vernon
Required Supplementary Information (Unaudited)
Budgetary Comparison Schedule - General Fund
For the Year Ended June 30, 2025
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City of Vernon
Required Supplementary Information (Unaudited)
Notes to the Budgetary Comparison Schedule
For the Year Ended June 30, 2025
Budgetary Information
The City adheres to the following general procedures in establishing its annual budget, which is reflected in the accompanying General Fund budgetary comparison schedule.

Encumbrances outstanding at year-end do not constitute expenditures or liabilities. Encumbrances outstanding at year-end are reported as committed fund balance for subsequent year expenditures through City Council action. Unencumbered appropriations lapse at year-end.

An annual budget is adopted by the City Council that provides for the general operation of the City. The budget includes authorized expenditures and estimated revenues of the General Fund.

The budget is adopted on a modified accrual basis and formally integrated into the accounting system and employed as a management control device during the year.

Excess expenditures over appropriations are financed by beginning fund balance. The final budgeted amounts used in the accompanying General Fund budgetary comparison schedule include any amendments made during the fiscal year 2025. Encumbrances carried forward from the prior year are reflected in the original budget.

Encumbrances, which are commitments related to executory contracts for goods and services, are recorded to assure effective budgetary control and accountability.
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Fiscal year ended 2016 2017 2018 2019 2020
Measurement period 2014-15 2015-16 2016-17 2017-18 2018-19 Total pension liability
Service cost $ 2,129,659 1,962,270 $ 2,432,788 $ 2,826,440 $ 2,991,388 $ Interest 9,447,012 9,969,103 10,383,859 11,053,679 11,863,069 Changes in benefit terms - - - - -
Differences between expected and actual experience 1,046,363 (9,700,904) (711,339) 3,059,775 3,767,030 Changes of assumptions (2,466,126) - 9,321,776 (549,432) - Benefit payments, including refunds of employee
contributions (5,680,624) (5,748,657) (6,145,366) (6,166,082) (6,652,881) Net change in total pension liability 7,396,468 (6,438,372) 15,281,718 10,224,380 11,968,606 Total pension liability - beginning 131,078,192 137,516,564 138,474,660 153,756,378 163,980,758 Total pension liability - ending (a) $ 138,474,660 131,078,192 $ 153,756,378 $ 163,980,758 $ 175,949,364 $ Pension fiduciary net position
Contributions - employer 2,340,002 $ 3,140,644 $ 3,629,603 $ 3,380,432 $ 3,908,165 $ Contributions - employee 1,054,426 1,095,824 1,245,990 1,214,616 1,357,537 Net investment income 2,337,855 583,692 11,857,647 9,803,260 8,077,977 Benefit payments, including refunds of employee
contributions (5,680,624) (5,748,657) (6,145,366) (6,166,082) (6,652,881) Net plan to plan resources movement 18 (780) 1,118 (296) - Administrative expense (67,200) (124,052) (161,327) (186,518) (90,906) Other miscellaneous income/expense - - - (354,202) 296
Net change in plan fiduciary net position (996,477) (72,375) 10,427,665 7,691,210 6,600,188 Plan fiduciary net position - beginning
1 110,264,248 110,336,623 109,267,771 119,695,436 127,386,646 Plan fiduciary net position - ending (b) $ 109,267,771 110,264,248 $ 119,695,436 $ 127,386,646 $ 133,986,834 $ Plan net pension liability - ending (a) - (b) $ 29,206,889 20,813,944 $ 34,060,942 $ 36,594,112 $ 41,962,530 $ Plan fiduciary net position as a percentage 84.12% 78.91% 77.85% 77.68% 76.15% of the total pension liability
Covered payroll2
$ 13,150,103 11,708,057 $ 13,440,076 $ 15,146,241 $ 15,996,725 $ Plan net pension liability as a percentage of
covered payroll 177.77% 222.10% 253.43% 241.61% 262.32% 1 2
Notes to Schedule:

Includes one year’s payroll growth using 2.80% payroll growth assumption for fiscal year ended June 30, 2022 through 2024; 2.75% payroll growth assumption for fiscal years ended June 30, 2018-21; 3.00% payroll growth assumption for fiscal years ended June 30, 2014-17.

Benefit Changes: There were no changes in benefits.

Changes of Assumptions: There were no assumption changes in 2024 or 2023. Effective with the June 30, 2021 valuation date (2022 measurement date), the accounting discount rate was reduced from 7.15% to 6.90%. In determining the long-term expected rate of return, CalPERS took into account long-term market return expectations as well as the expected pension fund cash flows. In addition, demographic assumptions and the inflation rate assumption were changed in accordance with the 2021 CalPERS Experience Study and Review of Actuarial Assumptions. The accounting discount rate was 7.15% for measurement dates 2017 through 2021,

7.65% for measurement dates 2015 through 2016.

Additionally, CalPERS employees participate in various State of California agent pension plans and during Fiscal Year 2017-18, CalPERS recorded a correction to previously reported financial statements to properly reflect its proportionate share of activity related to pensions in accordance with GASB Statement No. 68, Accounting and Financial Reporting for Pensions (GASB 68).

For the Year Ended June 30, 2025
Last Ten Fiscal Years
California Public Employees' Retirement System Defined Pension Plan - Miscellaneous Plan City of Vernon
Required Supplementary Information (Unaudited)
Schedule of Changes in Net Pension Liability and Related Ratios 98 .
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Item 15 Page 116 of 295
Fiscal year ended 2021 2022 2023 2024 2025
Measurement period 2019-20 2020-21 2021-22 2022-23 2023-24 Total pension liability
Service cost $ 2,735,636 2,905,980 $ 3,251,213 $ 3,851,696 $ 3,992,723 $ Interest 12,502,379 13,153,255 13,576,496 14,444,637 15,270,398 Changes in benefit terms - - - 127,916 -
Differences between expected and actual experience 1,777,340 1,316,307 73,961 6,082,464 3,835,805 Changes of assumptions - - 6,500,648 - -
Benefit payments, including refunds of employee
contributions (7,720,453) (8,274,278) (11,569,889) (9,943,241) (10,526,999) Net change in total pension liability 9,391,953 9,004,213 11,832,429 14,563,472 12,571,927 Total pension liability - beginning 184,953,577 175,949,364 194,345,530 206,177,959 220,741,431 Total pension liability - ending (a) $ 194,345,530 184,953,577 $ 206,177,959 $ 220,741,431 $ 233,313,358 $ Pension fiduciary net position
Contributions - employer 4,501,532 $ 4,979,542 $ 5,956,560 $ 6,946,728 $ 7,479,028 $ Contributions - employee 1,271,580 1,161,711 1,439,715 1,454,329 1,582,734 Net investment income 6,484,512 30,012,771 (12,217,103) 9,159,309 14,837,231 Benefit payments, including refunds of employee
contributions (7,720,453) (8,274,278) (11,569,889) (9,943,241) (10,526,999) Net plan to plan resources movement - -
Administrative expense (138,188) (188,889) (103,456) (109,996) (127,824) Other miscellaneous income/expense - - - - -
Net change in plan fiduciary net position 27,741,558 4,348,282 (16,494,173) 7,507,129 13,244,170 Plan fiduciary net position - beginning 138,335,116 133,986,834 166,076,674 149,582,501 157,089,630 Plan fiduciary net position - ending (b) $ 166,076,674 138,335,116 $ 149,582,501 $ 157,089,630 $ 170,333,800 $ Plan net pension liability - ending (a) - (b) $ 28,268,856 46,618,461 $ 56,595,458 $ 63,651,801 $ 62,979,558 $ Plan fiduciary net position as a percentage 74.79% 85.45% 72.55% 71.16% 73.01% of the total pension liability
Covered payroll2
$ 15,355,968 15,399,491 $ 15,913,917 $ 19,011,334 $ 19,815,004 $ Plan net pension liability as a percentage of
covered payroll 302.73% 184.09% 355.63% 334.81% 317.84% For the Year Ended June 30, 2025
Last Ten Fiscal Years
California Public Employees' Retirement System Defined Pension Plan - Miscellaneous Plan (Continued) City of Vernon
Required Supplementary Information (Unaudited)
Schedule of Changes in Net Pension Liability and Related Ratios (Continued) 99 .
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Item 15 Page 117 of 295
Fiscal year 2016 2017 2018 2019 2020
Measurement period 2014-15 2015-16 2016-17 2017-18 2018-19 Total pension liability
Service cost 3,388,157 $ 3,454,025 $ 4,144,398 $ 4,414,740 $ 4,287,003 $ Interest 15,777,736 16,325,879 16,898,830 17,691,261 18,414,262 Differences between expected and actual experience (2,400,883) (2,430,394) (1,380,683) 2,008,618 (364,199) Changes of assumptions (3,878,396) - 14,134,794 (1,533,898) - Benefit payments, including refunds of employee
contributions (9,470,058) (9,736,302) (10,147,899) (10,992,416) (12,139,668) Net change in total pension liability 7,613,208 3,416,556 23,649,440 11,588,305 10,197,398 Total pension liability - beginning 218,981,708 215,565,152 226,594,916 250,244,356 261,832,661 Total pension liability - ending (a) $ 226,594,916 218,981,708 $ 250,244,356 $ 261,832,661 $ 272,030,059 $ Pension fiduciary net position
Contributions - employer 4,147,441 $ 5,116,412 $ 5,476,196 $ 6,109,373 $ 7,011,540 $ Contributions - employee 1,167,329 1,222,561 1,212,646 1,302,308 1,239,891 Net investment income 3,525,241 760,559 17,760,401 14,666,919 12,275,401 Benefit payments, including refunds of employee
contributions (9,470,058) (9,736,302) (10,147,899) (10,992,416) (12,139,668) Net plan to plan resources movement 24 780 (1,118) (431) - Administrative expense (191,323) (99,525) (237,068) (272,124) (131,969) Other miscellaneous income/expense - - - (516,768) 431
Net change in plan fiduciary net position (2,735,515) (821,346) 14,063,158 10,296,861 8,255,626 Plan fiduciary net position - beginning 163,303,716 164,125,062 160,568,201 174,631,359 184,928,220 Plan fiduciary net position - ending (b) $ 160,568,201 163,303,716 $ 174,631,359 $ 184,928,220 $ 193,183,846 $ Plan net pension liability - ending (a) - (b) $ 66,026,715 55,677,992 $ 75,612,997 $ 76,904,441 $ 78,846,213 $ Plan fiduciary net position as a percentage 74.57% 70.86% 69.78% 70.63% 71.02% of the total pension liability
Covered payroll $ 12,971,888 12,740,785 $ 13,879,896 $ 14,292,273 $ 13,737,311 $ Plan net pension liability as a percentage of
covered payroll 437.01% 509.00% 544.77% 538.08% 573.96% 1 Notes to Schedule:

Changes of Assumptions: In 2019, there were no changes. In 2018, demographic assumptions and inflation rate were changed in accordance to the CalPERS Experience Study and Review of Actuarial Assumptions December 2017. There were no changes in the discount rate. In 2017, the discount rate was reduced from 7.65 percent to 7.15 percent. In 2016, there were no changes. In 2015, amounts reported reflect an adjustment of the discount rate from 7.5 percent (net of administrative expense) to 7.65 percent (without a reduction for pension plan administrative expense.) In 2014, amounts reported were based on the 7.5 percent discount rate.

For the Year Ended June 30, 2025
Last Ten Fiscal Years1
California Public Employees' Retirement System Defined Pension Plan - Safety Plan City of Vernon
Required Supplementary Information (Unaudited)
Schedule of Changes in Net Pension Liability and Related Ratios Measurement period 2019-20 (fiscal year 2021) was the first year the City's Safety Plan converted from an Agent Multiple Plan to a Cost Sharing Plan. Therefore, only five years are shown.

Benefit Changes: There were no changes in benefits.
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Fiscal year 2021 2022 2023 2024 2025
Measurement period 2019-20 2020-21 2021-22 2022-23 2023-2024 City's proportion of the net pension liability 1.33110% 1.70286% 1.47167% 1.42277% 1.43171% City's proportionate share of the net pension liability 88,682,300 $ 59,761,800 $ 101,127,048 $ 106,351,189 $ 104,383,384 $ City's covered payroll 2 $ 7,618,673 11,770,766 $ 5,630,861 $ 5,788,525 $ 5,950,604 $ City's proportionate share of the net pension liability as a percentage of its covered payroll 753.41% 784.41% 1795.94% 1837.28% 1754.16% Plan fiduciary net position as a percentage of
the total pension liability 69.13% 79.73% 67.12% 67.12% 67.68% 1 Notes to Schedule:

Measurement period 2019-20 was the first year the City's Safety Plan was converted from an Agent Multiple Plan to a Cost Sharing Plan therefore only five years are shown.

Benefit Changes: There were no changes in benefits.

Changes of Assumptions: No change in 2023 or 2024. Effective with the June 30, 2021 valuation date (2022 measurement date), the accounting discount rate was reduced from 7.15% to 6.90%. In determining the long-term expected rate of return, CalPERS took into account long-term market return expectations as well as the expected pension fund cash flows. Projected returns for all asset classes are estimated, combined with risk estimates, and 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. In addition, demographic assumptions and the inflation rate assumption were changed in accordance with the 2021 CalPERS Experience Study and Review of Actuarial Assumptions. The accounting discount rate was 7.15% for measurement 2020 through 2021.

City of Vernon
Required Supplementary Information (Unaudited)
Schedule of the City's Proportionate Share of the Net Pension Liability and Related Ratios For the Year Ended June 30, 2025
Last Ten Fiscal Years1
California Public Employees' Retirement System Defined Pension Plan - Safety Plan 101
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Item 15 Page 119 of 295
Fiscal year 2016 2017 2018 2019 2020
Actuarially determined contribution 3,140,644 $ 3,629,603 $ 3,380,432 $ 3,908,165 $ 4,501,532 $ Contributions in relation to the
actuarially determined contribution (3,140,644) (3,629,603) (3,380,432) (3,908,165) (4,501,532) Contribution deficiency (excess) - $ - $ - $ - $ - $
Covered payroll1 $ 13,440,076 13,150,103 $ 15,146,241 $ 15,996,725 $ 15,827,780 $ Contributions as a percentage of covered payroll 23.88% 27.01% 22.32% 24.43% 28.44% 1 Notes to Schedule:

Methods and assumptions used to determine contribution rates:

Actuarial cost method Entry Age Actuarial Cost Method
Amortization method Level percentage of payroll
Asset valuation method Fair Market Value
Inflation 2.300%
Salary increases varies by entry age and service
Payroll Growth 2.800%
Investment rate of return
Retirement age
Mortality

6.8% Net of Pension Plan Investment and Administrative Expenses; includes Inflation.

The probabilities of retirement are based on the 2021 CalPERS Experience Study and Review of Actuarial Assumptions
The probabilities of mortality are based on the 2021 CalPERS Experience Study and Review of Actuarial Assumptions. Mortality rates incorporate full generational mortality improvement using 80% of Scale MP2020 published by the Society of Actuaries.

Includes on year's payroll growth using 2.80 percent payroll growth assumption for fiscal years ended June 30, 2022 through 2024; 2.75 percent payroll growth assumption for fiscal years ended June 30, 2018-2021; 3 percent payroll growth assumption for fiscal years ended June 30, 2014- 2017.

The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2024-25 were derived from the June 30, 2022 funding valuation report.

For the Year Ended June 30, 2025
Last Ten Fiscal Years
California Public Employees' Retirement System Defined Pension Plan - Miscellaneous Plan City of Vernon
Required Supplementary Information (Unaudited)
Schedule of Contributions - Pensions
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Fiscal year 2021 2022 2023 2024 2025
Actuarially determined contribution 4,979,542 $ 5,956,560 $ 6,946,728 $ 7,479,028 $ 8,629,771 $ Contributions in relation to the
actuarially determined contribution (4,979,542) (5,956,560) (6,946,728) (7,479,028) (8,629,771) Contribution deficiency (excess) - $ - $ - $ - $ - $
Covered payroll1 $ 15,913,917 14,803,225 $ 19,011,334 $ 19,815,004 $ 20,369,824 $ Contributions as a percentage of covered payroll 33.64% 37.43% 36.54% 37.74% 42.37% For the Year Ended June 30, 2025
Last Ten Fiscal Years
California Public Employees' Retirement System Defined Pension Plan - Miscellaneous Plan (Continued) City of Vernon
Required Supplementary Information (Unaudited)
Schedule of Contributions - Pensions (Continued)
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Fiscal year 2016 2017 2018 2019 2020
Actuarially determined contribution 5,116,412 $ 5,476,196 $ 6,109,373 $ 7,011,540 $ 7,834,050 $ Contributions in relation to the
actuarially determined contribution (5,116,412) (5,476,196) (6,109,373) (7,011,540) (7,834,050) Contribution deficiency (excess) - $ - $ - $ - $ - $
Covered payroll1 $ 13,879,896 12,971,888 $ 14,292,273 $ 13,737,311 $ 11,770,766 $ Contributions as a percentage of covered payroll. 39.44% 39.45% 42.75% 51.04% 66.56% 1 Notes to Schedule:

Methods and assumptions used to determine contribution rates:

Amortization method Level percentage of payroll
Discount rate 6.800%
Inflation 2.300%
Salary increases varies by entry age and service
Payroll Growth 2.800%
Retirement age
Mortality
Includes one year’s payroll growth using 2.80 percent payroll growth assumption for fiscal years ended June 30, 2022-24; 2.75 percent payroll growth assumption for fiscal years ended June 30, 2018-21; 3.00 percent payroll growth assumption for fiscal years ended June 30, 2014-17.

The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2024-25 were derived from the June 30, 2022 funding valuation report.

The probabilities of retirement are based on the 2021 CalPERS Experience Study and Review of Actuarial Assumptions
The mortality table was developed based on CalPERS-specific data. The rates incorporate Generational Mortality to capture ongoing mortality improvement using 80% of Scale MP 2020 published by the Society of Actuaries. For more details, please refer to the 2021 experience study report that can be found on the CalPERS website.

For the Year Ended June 30, 2025
Last Ten Fiscal Years
California Public Employees' Retirement System Defined Pension Plan - Safety Plan City of Vernon
Required Supplementary Information (Unaudited)
Schedule of Contributions - Pensions (Continued)
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Item 15 Page 122 of 295
Fiscal year 2021 2022 2023 2024 2025
Actuarially determined contribution 7,650,585 $ 8,258,888 $ 9,178,981 $ 9,074,009 $ 10,343,489 $ Contributions in relation to the
actuarially determined contribution (7,650,585) (8,258,888) (9,178,981) (9,074,009) (10,343,489) Contribution deficiency (excess) - $ - $ - $ - $ - $
Covered payroll1 $ 5,630,861 7,618,673 $ 5,788,525 $ 5,950,604 $ 6,117,221 $ Contributions as a percentage of covered payroll. 100.42% 146.67% 158.57% 158.57% 169.09% For the Year Ended June 30, 2025
Last Ten Fiscal Years
California Public Employees' Retirement System Defined Pension Plan - Safety Plan (Continued) City of Vernon
Required Supplementary Information (Unaudited)
Schedule of Contributions - Pensions (Continued)
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Item 15 Page 123 of 295
Fiscal year 2018 2019 2020 2021
Measurement period 2016-171 2017-18 2018-19 2019-20
Total OPEB liability
Service cost 1,166,825 $ 1,204,747 $ 549,137 $ 565,922 $ Interest 1,879,025 2,063,052 1,641,230 1,699,197
Changes of benefit terms - - - (800,265)
Differences between expected and actual experience - (6,680,583) - 206,148 Changes of assumptions (770,716) (7,657,196) (124,861) 579,724 Benefit payments, including implicit subsidy (838,818) (1,006,087) (1,158,450) (1,222,538) Net change in total pension liability (12,076,067) 1,436,316 907,056 1,028,188 Total OPEB liability - beginning 37,355,851 35,919,535 25,279,784 26,186,840 Total OPEB liability - ending (a) $ 25,279,784 37,355,851 $ 26,186,840 $ 27,215,028 $ OPEB fiduciary net position
Contributions - employer 1,898,138 $ 2,065,407 $ 2,989,393 $ 3,915,406 $ Net investment income (2,049) 65,276 258,220 44,684
Benefit payments, including refunds of employee contributions (838,818) (1,006,087) (1,158,450) (1,222,538) Administrative expense (4) (808) (629) (2,563)
Other expenses - (1,400) - -
Net change in plan fiduciary net position 1,057,267 1,122,388 2,088,534 2,734,989 Plan fiduciary net position - beginning 1,057,267 - 2,179,655 4,268,189 Plan fiduciary net position - ending (b) $ 2,179,655 1,057,267 $ 4,268,189 $ 7,003,178 $ Plan net OPEB liability - ending (a) - (b) $ 23,100,129 36,298,584 $ 21,918,651 $ 20,211,850 $ Plan fiduciary net position as a percentage 2.83% 8.62% 16.30% 25.73% of the total OPEB liability
Covered-employee payroll $ 33,496,565 33,511,114 $ 35,182,647 $ 31,958,957 $ Plan net OPEB liability as a percentage of
covered-employee payroll 108.32% 68.96% 62.30% 63.24%
1 Historical information is presented only for measurement periods after GASB 75 was implement in fiscal year of 2016-17 (measurement period of 2017-18). Additional years of information will be displayed as it becomes available.

City of Vernon
Required Supplementary Information (Unaudited)
Schedule of Changes in Net Other Postemployment Benefits Liability and Related Ratios For the Year Ended June 30, 2025
Last Ten Fiscal Years1
Other Postemployment Benefits ("OPEB") Plan
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Item 15 Page 124 of 295
Fiscal year 2022 2023 2024 2025
Measurement period 2020-21 2021-22 2022-23 2023-24
Total OPEB liability
Service cost 303,057 $ 365,851 $ 442,832 $ 455,231 $
Interest 1,682,954 1,689,071 1,618,949 1,633,187
Changes of benefit terms - (78,332) - -
Differences between expected and actual experience (677,446) (1,122,750) (141,690) 883,441 Changes of assumptions 66,075 565,573 - (1,109,212)
Benefit payments, including implicit subsidy (1,199,826) (1,483,582) (1,572,048) (1,818,347) Net change in total pension liability (64,169) 174,814 348,043 44,300 Total OPEB liability - beginning 27,389,842 27,215,028 27,325,673 27,673,716 Total OPEB liability - ending (a) $ 27,325,673 27,389,842 $ 27,673,716 $ 27,718,016 $ OPEB fiduciary net position
Contributions - employer 3,131,526 $ 3,022,275 $ 3,110,741 $ 3,194,221 $ Net investment income 2,084,289 (1,612,431) 735,506 1,525,758 Benefit payments, including refunds of employee contributions (1,199,826) (1,483,582) (1,572,048) (1,818,347) Administrative expense (2,958) (2,903) (3,337) (4,467)
Other expenses - - -
Net change in plan fiduciary net position (76,641) 4,013,031 2,270,862 2,897,165 Plan fiduciary net position - beginning 11,016,209 7,003,178 10,939,568 13,210,430 Plan fiduciary net position - ending (b) $ 10,939,568 11,016,209 $ 13,210,430 $ 16,107,595 $ Plan net OPEB liability - ending (a) - (b) $ 16,386,106 16,373,634 $ 14,463,286 $ 11,610,421 $ Plan fiduciary net position as a percentage 40.22% 40.03% 47.74% 58.11% of the total OPEB liability
Covered-employee payroll $ 25,376,320 31,702,877 $ 24,483,172 $ 25,180,948 $ Plan net OPEB liability as a percentage of
covered-employee payroll 51.65% 64.57% 59.07% 46.11%
Other Postemployment Benefits ("OPEB") Plan (Continued) City of Vernon
Required Supplementary Information (Unaudited)
Schedule of Changes in Net Other Postemployment Benefits Liability and Related Ratios (Continued) For the Year Ended June 30, 2025
Last Ten Fiscal Years1
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Item 15 Page 125 of 295
Fiscal year 2017 2018 2019 2020 2021
Actuarially determined contribution - $ 2,692,868 $ 2,692,898 $ 1,931,700 $ 1,538,693 $ Contributions in relation to the
actuarially determined contribution (1,898,138) (2,065,407) (2,989,393) (3,915,406) (3,131,526) Contribution deficiency (excess) (1,898,138) $ 627,461 $ (296,495) $ (1,983,706) $ (1,592,833) $ Covered-employee payroll $ 33,496,565 33,511,114 $ 35,182,647 $ 31,958,957 $ 31,702,877 $ Contributions as a percentage of covered-employee payroll. 5.66% 6.17% 8.50% 12.25% 9.88% 1 Notes to Schedule:

Methods and assumptions used to determine contribution rates:

Actuarial cost method Entry-age normal, level precent of pay Amortization method Closed period, level percent of pay Amortization period 30 years
Inflation 2.30%
Discount Rate 6.40%
Payroll Growth 2.80%
Healthcare trend rates 6.80%, trending down to 4.04%
Rate of return on assets 6.40%
The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2023-204 were derived from the June 30, 2020 funding valuation report.

Historical information is presented only for measurement periods after GASB 75 implementation in fiscal year of 2017-18 (measurement period of 2016-17). Additional years of information will be displayed as it becomes available.

City of Vernon
Required Supplementary Information (Unaudited)
Schedule of Contributions - Other Postemployment Benefits For the Year Ended June 30, 2025
Last Ten Fiscal Years1
Other Postemployment Benefits ("OPEB") Plan
108
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Item 15 Page 126 of 295
Fiscal year 2022 2023 2024 2025
Actuarially determined contribution 1,538,693 $ 1,402,612 $ 1,373,874 $ 1,294,733 $ Contributions in relation to the
actuarially determined contribution (3,022,276) (3,110,741) (3,194,221) (3,387,947) Contribution deficiency (excess) (1,483,583) $ (1,708,129) $ (1,820,347) $ (2,093,214) $ Covered-employee payroll $ 24,483,172 25,376,320 $ 25,180,948 $ 25,880,015 $ Contributions as a percentage of covered-employee payroll. 11.91% 12.71% 12.69% 13.09% City of Vernon
Required Supplementary Information (Unaudited)
Schedule of Contributions - Other Postemployment Benefits (Continued) For the Year Ended June 30, 2025
Last Ten Fiscal Years1
Other Postemployment Benefits ("OPEB") Plan (Continued) 109
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Item 15 Page 128 of 295

STATISTICAL SECTION
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Item 15 Page 130 of 295
Demographic and Economic Information
Offer information to help the reader understand the environment within which the City's financial activities take place.

Operating Information
Contain service and infrastructure data to help the reader understand how the City's financial report relates to the services the City provides and the activities it performs.

Sources:

Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year.

Statistical Section
This section of the City of Vernon's Comprehensive Annual Report provides detailed information to better understand information presented within the financial statements, note disclosures, and required supplementary information say about the City's overall financial health. This has not been audited by the independent auditor.

Financial Trends
Contain trend information to help the reader understand how the City's financial performance has changed over time.

Revenue Capacity
Contain information to help the reader assess the City's most significant local revenue source, the property tax.

Debt Capacity
Present information to help the reader assess the City's most significant local revenue source, the property tax. 113
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Item 15 Page 131 of 295
2025 2024 2023 2022 2021
Governmental Activities:

Net investment in capital assets 156,332 $ 158,365 $ 161,850 $ 162,747 $ 165,165 $ Restricted 7,190 6,637 5,750 4,422 4,145
Unrestricted (66,295) (64,499) (63,211) (92,856) (104,818) Total Governmental Activities Net Position 97,227 100,503 104,389 74,313 64,492 % change from prior year -3.3% -3.7% 40.5% 15.2% 15.4%
Business-type Activities:

Net investment in capital assets 267,706 216,779 191,511 168,788 148,443 Restricted 33,294 34,263 37,049 32,836 23,895
Unrestricted 125,579 64,642 4,822 (19,203) (24,932)
Total Business-Type Activities Net Position 426,579 315,684 233,382 182,421 147,406 % change from prior year 35.1% 35.3% 27.9% 23.8% 2.8%
Primary Government:

Net investment in capital assets 424,038 375,144 353,361 331,535 313,608 Restricted 40,484 40,900 42,799 37,258 28,040
Unrestricted 59,284 143 (58,389) (112,059) (129,750)
Total Primary Government Net Position 523,806 $ 416,187 $ 337,771 $ 256,734 $ 211,898 $ % change from prior year 25.9% 23.2% 31.6% 21.2% 6.3%
The City implemented GASB 68 effective July 1, 2014.

The City implemented GASB 75 effective July 1, 2017.
1 The City restated net position for governmental and business-type activities as of July 1, 2017, as a result of GASB 75 implementation.

Fiscal Year ending June 30,
City of Vernon
Net Position by Component - Last Ten Fiscal Years
(in thousands)
(accrual basis of accounting)
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Item 15 Page 132 of 295
2020 2019 2018 2017 1 2016
Governmental Activities:

Net investment in capital assets 170,034 $ 173,649 $ 176,689 $ 178,181 $ 45,949 $ Restricted 3,289 3,695 3,925 1,259 1,047
Unrestricted (117,424) (119,748) (118,217) (101,678) (128,817) Total Governmental Activities Net Position 55,899 57,596 62,397 77,762 (81,821) % change from prior year -2.9% -7.7% -19.8% -195.0% -3.6% Business-type Activities:

Net investment in capital assets 159,733 164,497 155,343 151,981 148,525 Restricted 23,932 - - - -
Unrestricted (40,278) (27,122) (24,981) (40,239) (24,201) Total Business-Type Activities Net Position 143,387 137,375 130,362 111,742 124,324 % change from prior year 4.4% 5.4% 16.7% -10.1% 10.8%
Primary Government:

Net investment in capital assets 329,767 338,146 332,032 330,162 194,474 Restricted 27,221 3,695 3,925 1,259 1,047
Unrestricted (157,702) (146,870) (143,198) (141,917) (153,018) Total Primary Government Net Position 199,286 $ 194,971 $ 192,759 $ 189,504 $ 42,503 $ % change from prior year 2.2% 1.1% 1.7% 345.9% 55.5%
The City implemented GASB 68 effective July 1, 2014.

The City implemented GASB 75 effective July 1, 2017.
1 The City restated net position for governmental and business-type activities as of July 1, 2017, as a result of GASB 75 implementation.

Fiscal Year ending June 30,
City of Vernon
Net Position by Component - Last Ten Fiscal Years (Continued) (in thousands)
(accrual basis of accounting)
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Item 15 Page 133 of 295
2025 2024 2023 2022 2021
Expenses:

Governmental activities:

General government 18,514 $ 17,991 $ 15,152 $ 17,565 $ 15,238 $ Public safety 45,619 42,899 17,616 35,417 33,920
Public works 16,268 17,165 13,267 11,812 10,468
Health services 2,504 2,717 1,524 1,416 1,280
Interest & fiscal charges 17 32 1 - 68
Total Governmental activities 82,922 80,804 47,560 66,210 60,974 Business-type activities:

Electric 142,547 131,899 188,824 176,601 182,726
Gas 13,714 14,739 18,181 18,479 15,582
Water 8,997 8,385 7,353 9,218 9,377
Fiber optics 758 971 482 409 571
Total Business-type activities 166,016 155,994 214,840 204,707 208,256 Total primary government 248,938 236,798 262,400 270,917 269,230 Program revenues:

Governmental activities:

Charges for services:

General government 9,517 9,301 9,681 8,525 8,780
Public safety 146 172 184 230 183
Public works 3,384 2,696 2,036 1,565 1,647
Health services 623 672 628 626 643
Operating grants and contributions 1,820 1,943 693 1,870 1,035 Capital grants and contributions 971 953 977 3,392 1,068 Total governmental activities 16,461 15,737 14,199 16,208 13,356 Business-type activities:

Charges for services:

Electric 236,260 201,710 233,136 208,539 184,828
Gas 13,980 14,091 19,064 18,706 16,154
Water 9,696 9,259 9,845 10,846 10,742
Fiber optics 497 503 525 480 481
Operating grants and contributions - - - 865 -
Capital grants and contributions 9,262 300 - - -
Total business-type activities 269,695 225,863 262,570 239,436 212,205 Total primary government 286,156 241,600 276,769 255,644 225,561 Net revenues (expenses):

Governmental activities (65,067) (66,461) (33,361) (50,002) (47,618) Business-type activities 69,869 103,679 47,730 34,729 3,949 Total primary government 37,218 4,802 14,369 (15,273) (43,669) (Continued)
Fiscal Year ending June 30,
City of Vernon
Changes in Net Position - Last Ten Fiscal Years
(in thousands)
(accrual basis of accounting)
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Item 15 Page 134 of 295
2025 2024 2023 2022 2021
General revenues and other changes in net position
Governmental activities:

Taxes:

Property taxes 5,729 5,110 4,841 4,983 4,700
Parcel taxes 17,335 16,188 15,453 15,214 14,651
Utility users tax 13,347 12,925 15,314 13,827 12,367
Franchise taxes 2,253 2,110 1,998 1,821 1,623
Business license taxes 5,958 5,579 5,781 5,929 5,811
Sales and use taxes 14,785 15,314 16,485 14,989 14,446
Other taxes 15 15 - 13 12
Investment income/(loss) 2,160 1,761 414 101 70
Rental income 607 591 519 208 -
Other income 1,110 1,245 2,073 2,737 2,531
Gain/(Loss) on disposal of capital assets - - 68 - -
Transfers 174 342 492 - -
Total governmental activities 63,473 61,180 63,438 59,822 56,211 Business-type activities:

Investment income 7,544 7,742 4,712 286 69
Other income - - - - -
Gain/(Loss) on disposal of capital assets - (285) (989) - - Legal settlement - - - - -
Transfers (174) (342) (492) - -
Total business-type activities 7,370 7,115 3,231 286 69 Total primary government 70,843 68,295 66,669 60,108 56,280 Changes in net position
Governmental activities (3,887) (2,988) 30,077 9,820 8,593 Business-type activities 76,984 111,049 50,961 35,015 4,018 Change in net position - total primary
government $ 73,097 108,061 $ 81,038 $ 44,835 $ 12,611 $ (Continued)
The City implemented GASB 68 effective July 1, 2014.
1 Prior to July 1, 2016, the electric and gas utilities were consolidated and reported as the Light & Power Enterprise for financial reporting purposes.

City of Vernon
Changes in Net Position - Last Ten Fiscal Years (Continued) (in thousands)
(accrual basis of accounting)
Fiscal Year ending June 30,
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Item 15 Page 135 of 295
2020 2019 2018 2017 2016 1
Expenses:

Governmental activities:

General government 17,838 $ 14,311 $ 13,839 $ 12,393 $ 13,938 $ Public safety 33,620 38,116 37,948 23,549 30,961
Public works 11,223 12,583 11,330 8,667 6,682
Health services 1,148 1,435 2,053 1,601 1,972
Interest & fiscal charges 76 84 41 45 -
Total Governmental activities 63,905 66,529 65,211 46,255 53,553 Business-type activities:

Electric 175,615 169,777 165,632 159,521 174,295
Gas 11,612 17,140 39,313 39,792 -
Water 9,294 7,893 8,212 7,084 6,825
Fiber optics 450 651 585 563 594
Total Business-type activities 196,971 195,461 213,742 206,960 181,714 Total primary government 260,876 261,990 278,953 253,215 235,267 Program revenues:

Governmental activities:

Charges for services:

General government 3,965 3,925 3,926 3,836 3,231
Public safety 373 910 770 567 722
Public works 1,470 2,010 2,515 1,739 2,058
Health services 857 2,476 1,941 1,743 1,605
Operating grants and contributions 772 1,206 2,224 2,046 1,582 Capital grants and contributions 174 346 222 272 2
Total governmental activities 7,611 10,873 11,598 10,203 9,200 Business-type activities:

Charges for services:

Electric 181,225 178,149 172,227 174,537 199,501
Gas 14,261 17,335 39,835 40,163 -
Water 10,460 9,345 9,393 8,805 8,042
Fiber optics 601 649 639 483 487
Operating grants and contributions - - - - -
Capital grants and contributions - - - - -
Total business-type activities 206,547 205,478 222,094 223,988 208,030 Total primary government 214,158 216,351 233,692 234,191 217,230 Net revenues (expenses):

Governmental activities (55,656) (56,294) (53,613) (36,052) (44,353) Business-type activities 10,017 9,576 8,352 17,028 26,316 Total primary government (46,718) (45,639) (45,261) (19,024) (18,037) (Continued)
Fiscal Year ending June 30,
City of Vernon
Changes in Net Position - Last Ten Fiscal Years (Continued) (in thousands)
(accrual basis of accounting)
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Item 15 Page 136 of 295
2020 2019 2018 2017 2016 1
General revenues and other changes in net position
Governmental activities:

Taxes:

Property taxes 4,523 4,113 4,180 4,508 4,251
Parcel taxes 13,538 13,535 12,833 11,668 11,914
Utility users tax 11,758 11,209 2,015 1,983 1,945
Franchise taxes 1,535 1,427 1,356 1,260 1,256
Business license taxes 5,417 5,746 5,704 5,500 5,453
Sales and use taxes 9,558 8,794 7,639 6,082 6,115
Other taxes 11 13 11 10 10
Investment income/(loss) 138 101 22 66 (21)
Rental income - - - - -
Other income 3,536 1,344 684 833 832
Gain/(Loss) on disposal of capital assets - 2 597 - 618 Transfers 4,583 4,572 14,345 13,122 15,072
Total governmental activities 54,597 50,856 49,386 45,032 47,445 Business-type activities:

Investment income 1,019 1,556 1,174 304 (4)
Other income - - - - 652
Gain/(Loss) on disposal of capital assets - 13 792 - 195 Legal settlement - - 329 41 -
Transfers (4,583) (4,572) 8,252 (13,122) (15,072)
Total business-type activities (3,564) (3,003) 10,547 (12,777) (14,229) Total primary government 51,033 47,853 59,933 32,255 33,216 Changes in net position
Governmental activities (4,800) (1,697) (4,227) 8,980 3,092 Business-type activities 7,014 6,012 18,899 4,251 12,087 Change in net position - total primary
government $ 2,214 4,315 $ 14,672 $ 13,231 $ 15,179 $
(Concluded)
The City implemented GASB 68 effective July 1, 2014.
1 Prior to July 1, 2016, the electric and gas utilities were consolidated and reported as the Light & Power Enterprise for financial reporting purposes.

City of Vernon
Changes in Net Position - Last Ten Fiscal Years (Continued) (in thousands)
(accrual basis of accounting)
Fiscal Year ending June 30,
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Item 15 Page 137 of 295
2025 2024 2023 2022 2021
General fund:

Nonspendable 134 $ 199 $ 116 $ 168 $ 52 $
Restricted 7,190 6,636 5,750 4,422 4,146
Committed 20,300 13,000 10,000 - -
Unassigned 26,620 29,450 26,126 23,256 12,769
Total general fund 54,244 49,285 41,992 27,846 16,967
Total governmental funds 54,244 $ 49,285 $ 41,992 $ 27,846 $ 16,967 $ 1 This schedule reports using the modified accrual basis of accounting.

Fiscal Year Ending June 30,
City of Vernon
Fund Balances of Governmental Funds 1
Last Ten Fiscal Years
(in thousands)
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Item 15 Page 138 of 295
2020 2019 2018 2017 2016
General fund:

Nonspendable 755 $ 835 $ 654 $ 664 $ 618 $
Restricted 3,289 3,695 3,925 1,259 1,048
Committed - - - - -
Unassigned 4,478 (3,346) (7,345) (12,781) (12,520)
Total general fund 8,522 1,184 (2,766) (10,858) (10,854) Total governmental funds 8,522 $ 1,184 $ (2,766) $ (10,858) $ (10,854) $ 1 This schedule reports using the modified accrual basis of accounting.

Fiscal Year Ending June 30,
City of Vernon
Fund Balances of Governmental Funds 1 (Continued)
Last Ten Fiscal Years
(in thousands)
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Item 15 Page 139 of 295
2025 2024 2023 2022 2021
Revenues:

Taxes 63,905 $ 61,723 $ 59,629 $ 56,687 $ 53,677 $
Special assessments 2,008 1,954 1,879 1,704 1,524
Licenses and permits 3,351 2,459 2,387 2,158 2,084
Fines, forfeitures, and penalties 212 666 274 258 137
Intergovernmental 1,167 1,279 2,353 1,789 1,365
Investment earnings 2,160 1,761 414 101 71
Charges for services 5,693 5,295 10,245 10,277 9,577
Rent income 608 591 519 514 -
Other revenues 656 847 1,043 876 1,132
Total revenues 76,575 79,760 78,743 74,364 69,567
Expenditures:

Current:

General government 17,367 15,760 15,630 17,085 15,129
Public safety 39,047 36,573 33,860 34,346 34,755
Public works 11,854 11,673 9,695 7,688 7,055
Health services 2,503 2,524 1,691 1,412 1,357
Capital outlay 4,066 3,541 4,593 2,928 3,312
Debt service:

Principal retirement 677 508 226 25 -
Interest and fiscal charges 22 17 1 - -
Total expenditures 70,596 75,536 65,696 63,484 61,608
Excess of revenues over
(under) expenditures 5,979 4,224 13,047 10,880 7,959
Other financing sources (uses):

Transfers in 174 342 491 - -
Proceeds from sale of capital asset 39 70 68 - 486
Issuance of debt 521 903 539 - -
Capital lease - - - -
Total other financing sources (uses) 1,315 734 1,098 - 486 Net change in fund balances $ 7,294 4,958 $ 14,145 $ 10,880 $ 8,445 $ Debt service as a percentage of
non-capital expenditures 0.98% 0.78% 0.37% 0.04% 0.00%
1 This schedule reports using the modified accrual basis of accounting.

Fiscal Year Ending June 30,
City of Vernon
Changes in Fund Balances of Governmental Funds 1
Last Ten Fiscal Years
(in thousands)
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Item 15 Page 140 of 295
2020 2019 2018 2017 2016
Revenues:

Taxes 45,565 $ 44,131 $ 32,457 $ 29,846 $ 29,787 $
Special assessments 1,433 1,334 1,247 1,141 1,117
Licenses and permits 1,543 3,679 3,351 2,518 2,548
Fines, forfeitures, and penalties 249 254 271 215 243
Intergovernmental 927 1,648 2,479 2,350 1,615
Investment earnings 138 101 22 66 (21)
Charges for services 4,709 4,694 4,773 4,679 4,156
Rent income - - - -
Other revenues 3,061 1,315 1,442 1,299 1,511
Total revenues 57,156 57,625 46,042 42,114 40,956
Expenditures:

Current:

General government 16,603 13,012 11,405 13,156 11,277
Public safety 28,880 32,768 29,997 30,356 28,154
Public works 6,889 7,229 6,727 6,239 5,879
Health services 1,090 1,370 1,843 1,888 2,026
Capital outlay 1,408 3,400 4,300 3,600 5,016
Debt service:

Principal retirement - - - - -
Interest and fiscal charges - - - - -
Total expenditures 57,779 54,870 54,272 55,239 52,352
Excess of revenues over
(under) expenditures (623) 2,755 (8,230) (13,125) (11,396) Other financing sources (uses):

Transfers in 4,583 4,572 14,345 13,122 15,072
Proceeds from sale of capital asset - - 597 - 1,113
Issuance of debt - 2 - - -
Capital lease - - 1,378 - -
Total other financing sources (uses) 4,574 4,583 16,320 13,122 16,185 Net change in fund balances $ 3,951 7,338 $ 8,090 $ (3) $ 4,789 $ Debt service as a percentage of
non-capital expenditures 0.00% 0.00% 0.00% 0.00% 0.00%
1 This schedule reports using the modified accrual basis of accounting.

Fiscal Year Ending June 30,
City of Vernon
Changes in Fund Balances of Governmental Funds 1 (Continued) Last Ten Fiscal Years
(in thousands)
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Item 15 Page 141 of 295
Fiscal Year Utility Users
Ended June 30 Property Tax Warehouse Public Safety Tax Franchise Fees 2016 4,251,386 $ 11,913,720 $ - $ 1,944,586 $ 1,255,747 $ 2017 4,507,801 11,667,885 - 1,983,319 1,260,032
2018 4,180,208 12,833,305 - 2,014,994 1,356,474
2019 4,113,120 13,535,471 - 11,209,144 1,427,398
2020 4,523,551 11,435,170 2,102,946 11,758,238 1,535,062 2021 4,700,085 12,537,964 2,113,133 12,367,272 1,622,649 2022 4,982,723 13,022,827 2,191,865 13,826,831 1,821,409 2023 4,840,920 13,201,594 2,251,103 15,313,832 1,997,970 2024 5,110,322 13,965,056 2,223,118 12,925,358 2,109,962 2025 5,728,557 15,020,209 2,315,092 13,346,507 2,252,369 Special Parcel Tax
City of Vernon
Governmental Activities Tax Revenues By Source
Last Ten Fiscal Years
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Fiscal Year Business License Sales Tax -
Ended June 30 Tax Other Taxes Sales & Use Tax District Tax Total Taxes 2016 5,453,028 $ 10,133 $ 6,114,503 $ - $ 30,945,119 $
2017 5,500,213 10,460 6,081,507 - 31,013,234
2018 5,703,749 11,114 7,639,092 - 33,740,954
2019 5,745,716 12,878 8,794,423 - 44,840,169
2020 5,416,628 11,335 9,557,747 - 46,342,697
2021 5,810,837 11,864 11,198,382 3,247,193 53,611,400
2022 5,929,166 12,805 10,660,252 4,328,794 56,778,694
2023 5,781,048 - 11,412,997 5,072,572 59,874,059
2024 5,579,556 14,757 10,202,845 5,110,711 57,243,709
2025 5,957,917 15,354 9,791,187 4,994,171 59,423,388
City of Vernon
Governmental Activities Tax Revenues By Source (Continued) Last Ten Fiscal Years
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Fiscal Year Taxable Total
Ended Less: Assessed Direct Tax
June 30 Secured Unsecured Exemptions Value Rate
2016 3,751,389 $ 830,494 $ (29,846) $ 4,552,037 $ 0.08569 2017 3,943,105 823,059 (35,085) 4,731,079 0.08547
2018 4,211,959 862,759 (33,476) 5,041,242 0.08479
2019 4,523,752 901,739 (33,476) 5,392,015 0.08494
2020 5,058,828 1,056,770 (32,042) 6,083,556 0.08423
2021 5,332,762 1,083,928 (32,042) 6,384,648 0.08384
2022 5,780,355 1,104,611 (51,437) 6,833,529 0.08368
2023 6,094,230 1,239,403 (49,804) 7,283,829 0.08340
2024 6,630,864 1,367,180 (49,792) 7,948,252 0.08311
2025 6,781,466 1,520,580 (65,571) 8,236,475 0.08317
NOTE:

Source: Los Angeles County Assessor 2024/25 Combined Tax Rolls and the SBE Non Unitary Tax Roll In 1978 the voters of the State of California passed Proposition 13 which limited property taxes to a total maximum rate of 1% based upon the assessed value of the property being taxed. Each year, the assessed value of property may be increased by an "inflation factor" (limited to a maximum increase of 2%). With few exceptions, property is only re-assessed at the time that it is sold to a new owner. At that point, the new assessed value is reassessed at the purchase price of the property sold. The assessed valuation data shown above represents the only data currently available with respect to the actual market value of taxable property and is subject to the limitations described above.

City of Vernon
Assessed Value and Estimated Actual of Taxable Property Last Ten Fiscal Years
(in thousands of dollars)
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Agency 2025 2024 2023 2022 2021 2020 2019 2018 2017 2016 Basic Levy1 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 La Community College District 0.0514 0.06023 0.02488 0.0438 0.0402 0.0272 0.04621 0.04599 0.03596 0.03575 Los Angeles Unified School District 0.128 0.12422 0.1211 0.1132 0.13993 0.12552 0.12323 0.12219 0.13110 0.12971 Metropolitan Water District 0.00700 0.00350 0.0035 0.0035 0.0035 0.0035 0.0035 0.0035 0.0035 0.0035 Total Direct & Overlapping
2 Tax Rates 1.18638 1.18795 1.14945 1.16049 1.18359 1.15619 1.17294 1.17168 1.17056 1.16896 City's Share of 1% Levy Per Prop 133 0.07276 0.07276 0.0728 0.0728 0.0728 0.0728 0.07278 0.07278 0.0728 0.0728 Redevelopment Rate
4 Total Direct Rate
5 0.0832 0.0831 0.0834 0.08368 0.0838 0.0842 0.08494 0.08479 0.0855 0.0857 Notes:

Source: The HdL Companies, Los Angeles County Assessor
Last Ten Fiscal Years
City of Vernon
Direct and Overlapping Property Tax Rates
(Rate per $100 of assessed value)
5 Total Direct Rate is the weighted average of all individual direct rates applied to by the government preparing the statistical section information and excludes revenues derived from aircraft taxes. Beginning in 2013/14 the Total Direct Rate no longer includes revenue generated from the former redevelopment tax rate areas. Challenges to recognized enforceable obligations are assumed to have been resolved during 2012/13. For the purpose of this report, residual revenue is assumed to be distributed to the City in the same proportions as general fund revenue. 1 In 1978, California voters passed Proposition 13 which set the property tax rate at a 1.00% fixed amount. This 1.00% is shared by all taxing agencies for which the subject property resides within. In addition to the 1.00% fixed amount, property owners are charged taxes as a percentage of assessed property values for the payment of any voter approved bonds. 2 Overlapping rates are those of local and county governments that apply to property owners within the City. Not all overlapping rates apply to all city property owners.
3 City's Share of 1% Levy is based on the City's share of the general fund tax rate area with the largest net taxable value within the city. ERAF general fund tax shifts may not be included in tax ratio figures. 4 Redevelopment Rate is based on the largest RDA tax rate area and includes only rate(s) from indebtedness adopted prior to 1989 per California State statue. RDA direct and overlapping rates are applied only to the incremental property values. The approval of ABX1 26 eliminated Redevelopment from the State of California for the fiscal year 2012-13 and years thereafter. 127
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Item 15 Page 145 of 295
Taxpayer
No. of
Parcels Assessed Value
Percetage of
Total City
Property
Assessed
Value
No. of
Parcels Assessed Value
Percetage of
Total City
Property
Assessed
Value
2900 FRUITLAND AVENUE INVESTORS LLC 5 184,365,000 $ 2.24% PROLOGIS TARGETED US LOGISTICS FUND LP 4 182,222,029 2.21% GIC VERNON LLC 3 169,218,000 2.05%
REXFORD INDUSTRIAL REALTY LP 8 121,052,530 1.47%
SOUTHLAND BOX COMPANY 1 119,035,527 1.45%
BPP PACIFIC INDUSTRIAL CA REIT OWNER LLC 13 115,001,609 1.40% R PLANET EARTH LLC 3 96,740,279 1.17%
OWENS BROCKWAY GLASS CONTAINER INC 1 88,827,644 1.08% 6 63,877,549 $ 1.40% BAKER COMMODITIES INC 13 84,421,631 1.02% 17 73,531,468 1.62% CAPE ANN PROPERTIES LLC 1 81,747,051 0.99%
CLOUGHERTY PACKING COMPANY LLC 4 115,725,263 2.54%
BICENT CA MALBURG, LLC 2 75,965,000 1.67%
NORAN COMPANY 3 67,601,160 1.49%
LBA REALTY FUND III COMPANY IX LLC 13 59,256,853 1.30%
UB HANNIBAL LLC 10 56,803,827 1.25%
CATELLUS FINANCE 1 LLC 9 50,013,035 1.10%
PACKAGING CORPORATION OF AMERICA 2 42,497,653 0.93%
U S GROWERS COLD STORAGE INC 7 42,015,252 0.92%
Total taxable assessed value of ten largest taxpayers 52 1,242,631,300 15.09% 73 647,287,060 14.22% Total taxable assessed value of other taxpayers 6,993,843,768 84.91% 3,904,749,593 85.78% Total taxable assessed value of all taxpayers $ 100.00% 4,552,036,653 8,236,475,068 $ 100.00% Data Source: Los Angeles County Assessor 2024/25 Combined Tax Rolls and the SBE Non Unitary Tax Roll.

Source: The HdL Companies, Los Angeles County Assessor
2025 2016
City of Vernon
Ten Principal Property Taxpayers
Year Ended June 30, 2025
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Delinquent Tax
Fiscal Taxes Levied Collections in
Year Ended for the Percent Subsequent Percent
June 30 Fiscal Year Amount of Levy Years Amount of Levy 2016 2,509,933 $ 2,489,799 $ 99.20% (47,983) $ 2,441,815 $ 97.29% 2017 2,495,954 2,380,757 95.38% 47,897 2,428,654 97.30% 2018 2,588,569 2,552,235 98.60% (30,787) 2,521,449 97.41% 2019 2,670,824 2,601,322 97.40% 2,145 2,603,466 97.48%
2020 2,922,755 2,833,470 96.95% (20,618) 2,812,852 96.24% 2021 2,892,608 2,875,822 99.42% (95,169) 2,780,652 96.13% 2022 3,036,754 2,945,704 97.00% (32,022) 2,913,683 95.95% 2023 3,128,569 3,090,697 98.79% (92,579) 2,998,118 95.83% 2024 3,453,236 3,299,785 95.56% 15,255 3,315,040 96.00% 2025 3,521,311 3,283,866 93.26% 97,767 3,381,633 96.03% Note: 1 The figures provided for property tax levies and collections are for the City of Vernon.

Source: Los Angeles County Auditor Controller's Office
City of Vernon
Property Tax Levies and Collections 1
Last Ten Fiscal Years
Collection within the
Fiscal Year of Levy Total Collections to Date
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2025 2024 2023 2022 2021
Accommodation and Food Services 109,035 $ 108,981 $ 107,822 $ 97,260 $ 85,727 $ Agriculture, Forestry, Fishing and Hunting 334,050 356,636 370,210 392,350 392,769 Arts, Entertainment, and Recreation 340 459 389 80 -
Construction 2,051,479 2,072,547 2,028,764 2,078,279 1,916,931 Educational Services 602 158 111 110 1,010
Information 118,624 113,268 44,195 33,536 25,612
Manufacturing 2,476,111 2,928,177 2,743,229 2,828,180 2,140,659 Mining, Quarrying, and Oil and Gas Extraction 610,958 604,798 1,151,671 966,544 1,133,769 Other Services (except Public Administration) 28,876 28,057 26,882 22,285 18,214 Professional, Scientific, and Technical Services - - - 1,710 8,980 Real Estate and Rental and Leasing 101,900 117,615 113,784 105,628 70,133 Retail Trade 1,571,809 1,696,207 1,678,671 1,458,105 3,271,502 Utilities 160,219 189,680 79,220 81,775 40,697
Undefined 36,646 14,954 116,278 124,878 20,396
Total 7,600,648 $ 8,231,537 $ 8,461,227 $ 8,190,719 $ 9,126,400 $

Source: Neumo
Note: Due to confidentiality issues, the names of the ten largest revenue payers are not available. The categories presented are intended to provide alternative information regarding the sources of the City's revenue.

City of Vernon
Taxable Sales by Category
Last Ten Calendar Years
(in thousands of dollars)
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Item 15 Page 148 of 295
2020 2019 2018 2017 2016
Accommodation and Food Services 98,297 $ 98,648 $ 92,788 $ 74,823 $ 76,559 $ Agriculture, Forestry, Fishing and Hunting 329,988 472,529 352,180 360,334 204,633 Arts, Entertainment, and Recreation 167 - - - 35
Construction 2,028,041 1,790,667 1,607,157 1,374,631 1,327,433 Educational Services 2,000 7,185 1,475 914 1,183
Information 36,212 40,758 60,467 44,717 52,680
Manufacturing 1,977,718 2,001,396 2,208,970 1,980,456 1,884,265 Mining, Quarrying, and Oil and Gas Extraction 646,789 391,869 388,975 464,128 293,783 Other Services (except Public Administration) 19,897 22,253 19,906 24,082 22,353 Professional, Scientific, and Technical Services 1,456 299 400 270 175 Real Estate and Rental and Leasing 119,684 116,780 80,509 72,011 100,110 Retail Trade 2,603,040 2,329,633 1,644,830 1,291,428 826,802 Utilities 36,081 39,604 28,742 24,274 26,315
Undefined 144,483 25,217 27,344 20,072 28,486
Total 8,043,852 $ 7,336,838 $ 6,513,743 $ 5,732,141 $ 4,844,812 $

Source: Neumo
Note: Due to confidentiality issues, the names of the ten largest revenue payers are not available. The categories presented are intended to provide alternative information regarding the sources of the City's revenue.

City of Vernon
Taxable Sales by Category (Continued)
Last Ten Calendar Years
(in thousands of dollars)
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Item 15 Page 149 of 295
Total 2024-25 Assessed Valuation 8,236,475,068 $
Percentage Estimated
Total Debt Applicable Share of
6/30/2025 to City 1 Debt
Overlapping Tax and Assessment Debt:

Metropolitan Water District 17,155,000 $ 0.202% 34,653 $ Los Angeles Community College District 4,919,505,000 0.693% 34,092,170 Los Angeles Unified School District 11,745,405,000 0.847% 99,483,580 Total Gross Overlapping Tax and Assessment Debt $ 133,610,403 Less: Los Angeles Unified School District economically defeased general obligation bonds (3,906,620) Total Net Overlapping Tax and Assessment Debt $ 129,703,783 Direct and Overlapping General Fund Debt
Los Angeles County General Fund Obligations 3,036,637,390 $ 0.392% 11,903,619 $ Los Angeles County Superintendent of Schools Certificates of Participation 2,331,775 0.392% 9,141 Los Angeles Unified School District Certificates of Participation 225,010,000 0.847% 1,905,835 City of Vernon General Fund Obligations - 100% -
Total Direct and Overlapping General Fund Debt $ 13,818,595 Overlapping Tax Increment Debt (Successor Agency): $ 100% 14,720,000 14,720,000 $ Total Direct Debt -
Total Overlapping Debt $ 162,148,998
Gross Combined Total Debt $ 162,148,998
Net Combined Total Debt $ 158,242,378
Ratios to 2024-25 Assessed Valuation:

Direct Debt ($0) …......................................................................... 0.00% Total Gross Overlapping Tax and Assessment Debt …................ 1.62% Total Net Overlapping Tax and Assessment Debt ….................... 1.57% Gross Combined Total Debt …....................................................... 1.97% Net Combined Total Debt …........................................................... 1.92% Ratio to Redevelopment Successor Agency Incremental Valuation ($4,519,824,619) Overlapping Tax Increment Debt …......................................... 0.33% Source: MuniServices, LLC / Neumo
California Municipal Statistics, Inc.

City of Vernon
Direct and Overlapping Debt
June 30, 2025
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 capital lease obligations. 132
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Adjusted Debt
Fiscal Assessed Conversion Assessed Debt Limit Applicable Legal Year Valuation Percentage Valuation Percentage Debt Limit to Limit Debt Margin 2015-16 4,552,036,653 $ 25% 1,138,009,163 $ 15% 170,701,374 $ - $ 170,701,374 $ 2016-17 4,731,078,594 25% 1,182,769,649 15% 177,415,447 - 177,415,447 2017-18 4,178,483,344 25% 1,044,620,836 15% 156,693,125 - 156,693,125 2018-19 5,392,014,909 25% 1,348,003,727 15% 202,200,559 - 202,200,559 2019-20 6,083,555,787 25% 1,520,888,947 15% 228,133,342 - 228,133,342 2020-21 6,384,648,293 25% 1,596,162,073 15% 239,424,311 - 239,424,311 2021-22 6,833,529,252 25% 1,708,382,313 15% 256,257,347 - 256,257,347 2022-23 7,283,828,840 25% 1,820,957,210 15% 273,143,582 - 273,143,582 2023-24 7,948,251,550 25% 1,987,062,888 15% 298,059,433 - 298,059,433 2024-25 8,236,475,068 25% 2,059,118,767 15% 308,867,815 - 308,867,815

Source: The HdL Companies, Los Angeles County Assessor

City of Vernon
Legal Debt Margin
Last Ten Fiscal Years
Note: The Government Code of the State of California provides for a legal debt limit of 15% of assessed valuation. However, this provision was enacted when assessed valuation was based upon 25% of market value. Effective 1981-82, assessed value became equivalent to full market value.

The computations shown 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 located within the state.
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Fiscal
Year Capital Total Taxable Water Total Total Percentage Debt Ended Lease Subscription Governmental Revenue Subscription Note Business- Primary of Personal per June 30 Liability Liabilities 5 Activities 1 Bonds Liabilities 5 Payable Type Activities Government Income 2 Capita 3 2016 - $ - $ - $ 391,305,000 $ - $ - $ 391,305,000 $ 391,305,000 $ 33217.74% 1,863,357 $ 2017 1,208,587 - 1,208,587 367,830,000 - - 367,830,000 369,038,587 18424.29% 1,765,735 2018 2,469,811 - 2,469,811 342,015,000 - - 342,015,000 344,484,811 13274.94% 1,648,253 2019 2,230,883 - 2,230,883 312,710,000 - 687,577 313,397,577 315,628,460 7859.27% 1,048,600 2020 1,983,809 - 1,983,809 310,995,000 - 1,068,776 312,063,776 314,047,585 6714.72% 1,057,399 2021 56,857 - 56,857 281,475,000 - 1,360,465 282,835,465 282,892,322 6985.00% 958,957 2022 31,660 67,469 99,129 420,910,000 - 1,220,930 422,130,934 422,230,063 8752.70% 2,029,952 2023 6,347 405,706 412,053 370,550,000 - 1,081,395 371,631,395 372,043,448 6346.70% 1,814,846 2024 - 807,435 807,435 318,450,000 74,449 941,860 319,466,309 320,273,744 4795.95% 1,562,311 2025 72,500 283,759 356,259 263,780,000 53,798 802,325 264,636,123 264,992,382 3875.29% 1,280,156 Notes: Details regarding the City's outstanding debt can be found in the notes to the financial statements. 1 Does not include noncommitment debt.
2 This ratio is calculated using personal income for the prior calendar year. 3 The ratio is calculated using population for the prior calendar year. 4 The Vernon Utility Authority issued 2021 and 2022 Electric System Revenue bonds. 5 The City implemented GASB 96 "Subscription-Based Information Technology Arrangements" in FY 2023-24. The balance in 2022 is the restated balance.

City of Vernon
Ratios of Outstanding Debt by Type
Last Ten Fiscal Years
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Item 15 Page 152 of 295
Fiscal Year Capital Percent of
Ended Lease Assessed Per
June 30 Liability Total Value 1 Capita
2016 - $ - $ 0.00% - $
2017 1,208,587 1,208,587 25.55% 5,783
2018 2,469,811 2,469,811 48.99% 11,817
2019 2,230,883 2,230,883 41.37% 7,412
2020 1,983,809 1,983,809 32.61% 6,679
2021 56,857 56,857 0.93% 193
2022 31,660 31,660 0.50% 152
2023 6,347 6,347 0.09% 31
2024 - - 0.00% -
2025 72,500 72,500 0.88% 350
Note: General bonded debt is debt payable with government fund resources. 1 Assessed value has been used because the actual value of taxable property is not readily available in the State of California.

Outstanding General Bonded Debt
City of Vernon
Ratios of General Bonded Debt Outstanding
Last Ten Fiscal Years
(in thousands, except Per Capita)
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Fiscal Year Net
Ended Gross Operating Available
June 30 Revenue Expenses 1 Revenue Principal Interest Total Coverage 2016 207,543 $ 156,733 $ 50,810 $ 106,220 $ 17,075 $ 123,295 $ 0.41 2017 183,342 136,072 47,270 23,475 23,523 46,998 1.01
2018 181,620 144,225 37,395 25,815 22,209 48,024 0.78
2019 187,494 149,147 38,347 29,305 20,712 50,017 0.77
2020 191,685 156,909 34,776 88,545 19,310 107,855 0.32
2021 195,569 164,234 31,335 29,520 18,991 48,511 0.65
2022 219,385 152,326 67,059 96,450 14,163 110,613 0.61
2023 242,980 164,925 78,055 50,360 14,742 65,102 1.20
2024 210,969 105,202 105,767 52,100 10,979 63,079 1.68
2025 245,955 117,209 128,746 54,670 9,236 63,906 2.01
The taxable bonds issued are special obligation bonds what are secured by an irrevocable pledge of electric revenues payable to bondholders. See Note 6 for detail of business-type debt service financing. 1 Excludes depreciation.

Source: City of Vernon
Debt Service
City of Vernon
Pledged-Revenue Coverage
Vernon Public Utility Electric and Water Revenue Bonds
Last Ten Fiscal Years
(in thousands)
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Calendar City Personal Income Per Capita Unemployment Median Year Population (in thousands) Personal Income Rate Age 2015 210 1,178 $ 5,611 $ 2.9% 41.5
2016 209 2,003 9,585 2.9% 51.3
2017 209 2,595 12,402 6.5% 34.9
2018 301 4,016 13,341 7.0% 34.3
2019 297 4,677 15,745 2.0% 36.5
2020 295 4,050 13,729 0.0% 26.5
2021 208 4,824 23,190 13.2% 26.8
2022 205 5,862 28,596 6.1% 28.1
2023 205 6,678 32,573 6.1% 28.7
2024 207 6,838 33,034 6.6% 28.3
Source: The HDL Companies
City of Vernon
Demographic and Economic Statistics
Last Ten Years
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Employer
Number of
Employees
Percent of Total
Employment (%)
Number of
Employees
Percent of Total
Employment (%)
Tina's Burritos (Camino Real Kitchens-Owner) 550 550.00% N/A N/A Rose & Shore Inc - Rite-Way - R.B.R. 509 509.00%
Overhill Farms Inc. 330 330.00%
Gavina Gourmet Coffee 261 261.00%
City of Vernon 234 234.00%
Whole Foods Market Distribution Center 187 187.00%
Core-Mark 147 147.00%
Packaging Corporation Of America 143 143.00%
The Mochie Ice Cream Company 143 143.00%
Amazon Fresh Fulfillment Center 118 118.00%
Total Top 10 Employers 2,622 2622.00% N/A N/A
Total City Labor Force (1) 100 N/A
Source: FY 2016, Historical data is not available, as this represents the City’s first Statistical Section.

Notes:

The following Employers have not responded to our
headcount inquires:
> CRL - C.R. Laurence Co
> Golden West Food Group - GWFG
> Martin Svensson Home
> Nucor Warehouse Systems
> Popcornopolis
(1) Total City Labor Force provided by EDD Labor Force Data.

Results based on direct correspondence with city's local businesses.

City of Vernon
Principal Employers
Last Fiscal Year and Nine Years Ago
2025 2016
Source: MuniServices, LLC / Neumo
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As of June
30 General
government
Public
safety
Public
works
Health
services Electric Gas Water Fire Total
2016 38.3 53.5 44.0 9.5 40.3 4.1 14.5 66.0 270.1
2017 39.8 54.0 44.0 10.0 41.3 4.1 14.5 67.0 274.6
2018 39.8 55.0 49.0 10.0 42.3 4.1 16.5 67.0 283.6
2019 39.8 55.0 49.0 9.0 42.3 4.1 16.5 67.0 282.6
2020 36.5 57.0 44.0 7.3 40.6 4.0 15.4 52.5 257.3
2021 36.5 57.0 44.0 7.3 40.6 5.0 15.4 52.5 258.3
2022 37.0 57.0 45.0 7.3 50.2 5.0 14.3 0.5 216.2
2023 38.5 59.0 45.0 8.2 63.1 5.0 14.1 - 232.9
2024 40.0 59.0 47.5 8.7 61.7 5.5 14.5 - 236.8
2025 39.0 58.0 47.0 12.0 64.0 4.0 12.0 - 236.0
Source: City of Vernon Finance Department
City of Vernon
Full-time and Part-time City Employees
by Function
Last Ten Fiscal Years
Full-time and Part-time Employees by function
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Vernon Public Utilities
(The Electric, Gas, Water and Fiber
Optics Enterprise Funds of the City of
Vernon)
Vernon, California
Financial Statements and
Independent Auditor’s Reports
For the Year Ended June 30, 2025
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Item 15 Page 160 of 295
City of Vernon
Vernon Public Utilities
For the Year Ended June 30, 2025
Table of Contents
Page
INTRODUCTORY SECTION (UNAUDITED):

A Message From The General Manager of Vernon Public Utilities .................................................................... i FINANCIAL SECTION:

Independent Auditor’s Report on the Audit of the Financial Statements .......................................................... 1 Management’s Discussion and Analysis (Required Supplementary Information) (Unaudited) ...................... 5 Basic Financial Statements:

Statement of Net Position ................................................................................................................................ 12 Statement of Revenues, Expenses, and Changes in Net Position .................................................................... 15 Statement of Cash Flows ................................................................................................................................. 16 Notes to the Basic Financial Statements .......................................................................................................... 23 Required Supplementary Information (Unaudited):

Schedule of Proportionate Share of the Net Pension Liability and Related Ratios ........................................... 56 Schedule of Contributions – Pensions ............................................................................................................... 58 Schedule of Proportionate Share of the Net Other Postemployment Benefits Liability and Related Ratios .... 60 Schedule of Contributions – Other Postemployment Benefits .......................................................................... 62 Supplementary Information:

Combining Statement of Net Position ............................................................................................................... 66 Combining Statement of Revenues, Expenses, and Changes in Net Position ................................................... 69 Combining Statement of Cash Flows ................................................................................................................ 70 .
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Message from the General Manager
The past year presented significant challenges for the greater Los Angeles area, marked by extreme weather events and natural disasters. During these critical moments, Vernon Public Utilities (VPU) not only maintained reliability within the City but also answered the call for mutual assistance, deploying crews to aid communities impacted by the Eaton Fire in Altadena that were hit the hardest by wildfire. These events provided valuable insights into our own disaster preparedness, prompting us to enhance our staffing and operational procedures for the future.

Amidst these challenges, VPU has achieved a notable financial milestone. Moody’s rating agency revised our Electric Enterprise outlook from "stable" to "positive", recognizing VPU’s improved operational and financial position.

This endorsement is vital to our financial stability, as a stronger credit rating secures more favorable financing terms, which reduces our cost of capital. This, in turn, enables continued capital investment in infrastructure and attracts a broader pool of strategic business partners.

Operational excellence remains a core focus. VPU is proud to announce its fourth consecutive Diamond Level Reliable Public Power Provider (RP3) designation from the American Public Power Association. This prestigious award, the highest attainable level of achievement, covers a three-year term, marking 12 consecutive years of Diamond Level excellence for VPU.

Looking ahead, VPU reaffirms its commitment to a clean energy transition that is affordable, responsible and equitable. We are dedicated to greening our grid while keeping rates competitive, without unduly burdening customers and stakeholders within the greater Southeast LA communities. To help achieve this, we have initiated an expansion of transmission connections with Southern California Edison. This strategy balances local resource adequacy with imported zerocarbon energy to minimize costs, while meeting the demands of clean commerce growth in Vernon.

As we spearhead carbon-neutral technologies to support large-scale developments—expected to increase our electric load in the coming years—we remain a proactive partner with our stakeholders in building a thriving, sustainable future for Vernon.

Sincerely,
Todd Dusenberry
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Item 15 Page 163 of 295
FY 2025 VPU At-A-Glance
Water Fiber
Electric
Number of customers: 1,711
Service area in square miles: 5.2
Number of distribution miles: 123
Number of poles: 4,000
Number of substations: 9
Current Year Peak Day in MW: 167
Gas
Number of customers: 109
Service area in square miles: 5.2
Number of distribution miles: 44.3
Number of transmission miles: 7.3
Total use in MMBtu: 5,998,079
Current Year Peak Day in MMBtu:
28,622
Number of customers: 860
Service area in square miles: 4.8
Number of miles of water mains: 49
Number of wells: 7
Total Reservoir Capacity (in Millions of
Gallons): 16.6
Number of Booster Stations: 3
Peak Day in Acre Feet: 19.3
Number of customers: 84
Service area in square miles: 5.2
Number of circuit miles: 2,495
Average Daily Peak in Mbps: 400
Current Year Peak Day in Gbps: 1.35
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ELECTRIC FUND
Introduction
Vernon Public Utilities (VPU) is committed to providing the Vernon community with reliable, safe, and competitive rates while also achieving California's clean energy goals. As a publicly owned utility, VPU is focused on its customers, responsible operations, and a sustainable future. This commitment is reflected in its transparent operations, competitive rates, and policies tailored to the community's needs. By embracing emerging technologies and strategic opportunities, VPU is building a full-service utility that will shape a sustainable energy future for Vernon in partnership with the local community.

Awards
Since 2016, VPU has maintained its Reliable Public Power Provider (RP3) designation from the American Public Power Association (APPA) for its excellence in reliability. APPA designates the RP3 award to utilities that demonstrate exceptional proficiency in four key areas: safety, reliability, workforce development, and system improvement.

VPU has earned the highest designation for the RP3 award – Diamond Level –for four consecutive terms, encompassing twelve years from 2016 to 2028. This award recognizes VPU’s continued commitment to operating an efficient, safe and reliable electric distribution system.

VPU also demonstrated its continued commitment to workplace safety by receiving the APPA Safety Award of Excellence in 2024. In addition, VPU has also been nationally recognized for Excellence in Reliability in 2024 through APPA’s eReliability Tracker program.

Reliability
Reliability is the cornerstone of VPU operations. VPU utilizes IEEE’s beta methodology to track reliability metrics to assess and enhance the resilience and dependability of VPU’s services. By tracking and analyzing key reliability indicators, VPU proactively identifies areas for improvement, allocates resources effectively, and implements targeted strategies to provide consistent and uninterrupted power supply to its valued customers.

Reliability Indices
VPU tracks three reliability indices that the electric utility industry uses to assess and improve the performance of power distribution systems.

System Average Interruption Frequency Index (SAIFI) - represents the average number of power outages an average customer experiences in a year.
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Item 15 Page 165 of 295
System Average Interruption Duration Index (SAIDI) - measures the average amount of time that an average customer experiences power outages in a year.

Customer Average Interruption Duration Index (CAIDI) - measures the average length of time it takes for a customer's power to be restored after an outage.

VPU leverages data and industry benchmarks
to improve service quality, minimize downtime,
and ensure a reliable power supply. VPU
benchmarks its performance against data from
the U.S. Energy Information Administration
(EIA) to ensure alignment with industry
standards and best practices.

For the data year of 2024, VPU’s average
customer experienced 0.6 outages for 47
minutes. The restoration time was
approximately 80.7 minutes. These metrics
place VPU among the top 25 percent of the electric industry in reliability. Being in the top quartile of electric utility reliability benchmarking signifies VPU’s commitment to excellence, ensuring that the utility consistently delivers dependable service, promotes customer satisfaction, and contributes positively to the overall health of the community it serves. 38.0 38.2 44.7 29.747.0 101.3122.2 113.1 89.2 92.8 74.996.1 84.9 77.297.6 0 20
40 60
80 100
120
140
2020 2021 2022 2023 2024
SAIDI 2020 - 2024
System Average Interruption Duation Index
VPU All POUs & IOUs CA Utilities

0.7 0.5

0.6 0.5

0.6 1.0

1.3 1.1

0.9 0.9

0.7 0.8

0.8 0.7

0.8 0.0

0.2 0.4

0.6 0.8

1.0 1.2

1.4 2020 2021 2022 2023 2024
SAIFI 2020 - 2024
System Average Interruption Frequency
Index
VPU All POUs & IOUs CA Utilities

53.2 76.0

71.9 56.9

80.7 104.7
118.3
112.9

96.3 102.2
100.8
104.9
108.2
109.3
122.2
0 20
40 60
80 100
120
140
2020 2021 2022 2023 2024
CAIDI 2020 - 2024
Customer Average Interruption Index
VPU All POUs & IOUs CA Utilities
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Cause of Outages
Nearly all outages in the City of Vernon are from
accidental causes. Contact with metallic balloons is
the primary cause of outages. Birds and other
wildlife are the second leading cause of outages.

Note that the outages reflected in the chart below
are for both momentary and sustained outages
(outages lasting 5 minutes or longer).

Metallic Balloon
58%
Unknown
13%
Bird
8%
Vandalism
7%
Other - Wildlife
7%
Equipment
3%
Tree
2% Vehicle Accident
2%
Outage Causes
Figure 1: Balloons are the leading cause of outages
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Energy Resources
VPU is actively shifting its energy generation portfolio to comply with state mandates for renewable energy and zero-carbon sources. Currently, VPU participates in the California Independent System Operator (CAISO) wholesale energy markets, and its energy mix includes:

Natural Gas (41%), renewables (40%), nuclear (8%), large hydro (2%), and remaining are market purchases (9%).

VPU updated its Integrated Resource Plan in October 2023, with a central goal of increasing renewable energy generation to 60% by 2030. This plan reflects VPU's commitment to a cleaner energy future for Vernon.

Natural Gas
41%
Renewables
40%
Nuclear
8%
Large Hydro
2% Market
Purchases
9%
Vernon Public Utilities Energy Mix
Compliance Period 4 (2021 - 2024)
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Distribution System Capital Improvement Plan
VPU continues its investment in a resilient grid. To ensure reliable, safe, and sustainable power, VPU updates its Capital Improvement Plan annually. Our current focus is on replacing aging equipment and increasing voltage capacity to improve safety, and preparing the grid for future energy demands.
x Grid Expansion: VPU is actively preparing for increased load, having completed designs for multiple data center substations and finalized a construction agreement with SCE for incoming source lines.
x System Modernization: VPU successfully launched its SF6 reduction pilot program and began physical upgrades at the Leonis substation to increase circuit flexibility.

VPU’s dedication to system improvements supports the City's growth and ensures reliable service.

The estimated budget for the Fiscal Year 2025-26 CIP is $26 million, demonstrating a significant commitment to critical and reliable infrastructure.

Figure 2: Prime Substation
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WATER FUND
Introduction
The VPU Water Division has been working for over a century to ensure that this critical infrastructure is able to provide safe, reliable, and affordability priced water services to more than 800 customers, distributing around 1.8 billion gallons of water annually.

To accomplish its mission, the VPU Water Division proactively maintains the water infrastructure, responds to any issues as soon as possible, and plans for the future needs of the water system in order to ensure that the water delivered meets the highest quality standards. By prioritizing reliability, sustainability, and affordability, the VPU Water Division team ensures that the Water Fund continues to succeed financially and operationally.

Reliability
With a network of 7 Wells, 2 booster plants, and reservoirs with a total capacity of 16.6 million gallons spanning the City, as well as a direct connection to the Metropolitan Water District, the VPU Water Division ensures a consistent supply of potable water even during periods of peak demand or drought. This commitment to reliability is further bolstered by a water quality monitoring program that meets rigorous Federal and State regulations.

VPU employs a multi-faceted approach to ensuring water quality, including:
• Source Water Protection
• Advanced Treatment Processes
• Rigorous Water Quality Monitoring
• Transparency and Public Communication
Capital Projects
The Water Fund continues to implement major capital investments that began in FY 2019-20. The VPU Water Division has made significant capital investments in such projects as well rehabilitations; design of a treatment system for Well 20; and a system-wide seismic vulnerability assessment to ensure the continued reliability of the Water system. The current five-year capital investment program from FY 2025-26 through FY2029-30 totals over $18 million. viii
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GAS FUND
Introduction
VPU is the only public utility in the state to operate a natural gas transmission system. Among the more than 1,000 publicly-owned natural gas systems in the United States, Vernon’s gas system is consistently ranked as the 15th largest municipal gas system by volume. VPU is proud to share that its natural gas division is also an award-winning entity and a multiple recipient of the Safety Management Excellence Award from the American Public Gas Association.

VPU’s gas division operates a state-of-the-art system delivering natural gas to over 100 customers, including residential, commercial, and industrial clients. Customers can save money and reduce their environmental impact with VPU’s gas rebates and incentives for energy-saving upgrades.

VPU’s skilled technicians ensure the safety and reliability of our system with prompt leak detection and repair. VPU’s gas division maintains a strong safety record through rigorous pipeline inspections, a robust Integrity Management Plan, and annual joint training with local emergency responders.

Awards
In 2021, the division received the APGA Safety Management Excellence Award, which highlights comprehensive and effective safety management systems. Furthermore, the division has been honored with the APGA Safety Award for six consecutive years since 2020. This consistent recognition of excellence in safety practices underscores the VPU Gas Division's dedication to maintaining a safe working environment and prioritizing the well-being of its employees and the community.

Gas Energy Efficiency Rebate
The VPU Gas Division supports its commercial and industrial gas customers in their efforts to decrease energy consumption and greenhouse gas (GHG) emissions through an Energy Efficiency Rebate Program, which assists customers in saving money, improving energy efficiency, and reducing GHG emissions. The rebate covers a wide range of projects, such as upgrading to highefficiency equipment, implementing energy-saving retrofits, and replacing its fleet for lower or zero-emission vehicles and forklifts.
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FIBER OPTICS FUND
The VPU Fiber Optics Division offers high-speed fiber optic internet service to residents and businesses in Vernon with several options:
x Fiber: End to End solution for businesses interested in keeping their network local between different locations in the City of Vernon.
x Fiber DIA Internet (Business): Direct Internet Access through the VPU Fiber network. x Residential Internet: Reliable and low-cost internet access for Vernon residents.

VPU’s fiber system delivers symmetrical speeds up to 1GB with a 100GB system capacity, exceeding AT&T speeds by up to 5x. VPU fiber offers dedicated service lines, 24/7 technical support, consistent bi-directional high-speed connection, and 99.9% uptime, ensuring a reliable and high-performance connection. Dark fiber leases are also available. Recent upgrades have been made keeping in mind the future growth of the fiber system and to meet the needs of the customers.
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6 Hutton Centre Drive, Suite 1200
Santa Ana, California 92707
INDEPENDENT AUDITOR’S REPORT
To the Honorable Mayor and Members of the City Council
of the City of Vernon
Vernon, California
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of the Vernon Public Utilities (the “VPU”) of the City of Vernon, California (the “City), as of and for the year ended June 30, 2025, and the related notes to the financial statements, which collectively comprise the VPU’s basic financial statements as listed in the table of contents.

In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the financial position of the VPU as of June 30, 2025, and the change in financial position, and cash flows for the year then ended, in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (“GAAS”), and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States (“Government Auditing Standards”). 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 VPU and to meet our other ethical responsibilities, in accordance with the relevant requirements relating to out audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Emphasis of Matter
As discussed in Note 1, the financial statements present only the basic financial statements of the VPU and do not purport to, and do not, present fairly the financial statements of the City as of June 30, 2025, the changes in its financial position, or where applicable, its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter.

Change in Accounting Principle
As discussed in Notes 1 and 11 to the financial statements, the City adopted new accounting principal, GASB Statement No. 101, Compensated Absences in 2025 and resulted in restatement of beginning net position. Our opinion is not modified with respect to this matter.
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Item 15 Page 173 of 295
To the Honorable Mayor and Members of the City Council
of the City of Vernon
Vernon, California