Revisions — Victorville City Council, April 15, 2025

Revision to Agenda Item #9
• Revising Attachment B: Victorville Water District Basic Financial Statements for Fiscal Year ended June 30, 2024. o The watermark with the word “Draft” was removed from
the report.
o Page 4 of the document updated “April XX, 2025” to
April 10, 2025
o Page 43 of the report updated the following three blank values in the table for FY 2024:
 Plan’s Covered payroll = $7,424,195
 Plan’s proportionate share of the net pension liability as percentage of its covered payroll to 237.21%
 Fiduciary net pension as a percentage of the total
pension liability to 16.51%.
o Page 45 of the report updated the following two blank values in the table for FY 2024:
 Covered payroll = 9,139,039
 Contributions as a percentage of covered payroll =

20.00%
o Page 46 of the report updated the following blank value in the table for FY 2024:
 Covered-employee payroll = $8,679,777
• Revising Attachment C, Southern California Logistics Airport Authority Basic Financial Statements for Fiscal Year ended June 30, 2024.
o The watermark with the word “Draft” was removed from
the report.
o Page 4 of the document updated “April XX, 2025” to
April 10, 2025
o Page 40, section C, updated the contribution amount from “$15,213” to “20,166; “$90” in administrative costs to
$78, and “$7,724” in subsidy to $7,892.
o Page 53 of the report updated the following three blank values in the table for FY 2024:
 Plan’s Covered payroll = $2,069,493
 Plan’s proportionate share of the net pension liability as percentage of its covered payroll to 238.23%
 Fiduciary net pension as a percentage of the total
pension liability to 4.62%.
o Page 55 of the report updated the following two blank values in the table for FY 2024:
 Covered payroll = 1,565,360
 Contributions as a percentage of covered payroll =

19.57%
o Page 57 of the report updated the following two blank values in the table for FY 2024:
 Plans covered payroll = $2,557,509
 Plan’s proportionate share of the total OPEB liability as percentage of its covered payroll = 83.07%

Victorville, California
Financial Statements and
Independent Auditor’s Report
For the year ended June 30, 2024

Southern California Logistics Airport Authority
Table of Contents
For the year ended June 30, 2024
Page
i
Independent Auditor’s Report ................................................................................................................................... 1 Basic Financial Statements:

Statement of Net Position .................................................................................................. ................................. 7 Statement of Revenues, Expenses and Changes in Net Position ................................................................ .. 8 Statement of Cash Flows .................................................................................................... ............................... 10 Notes to Basic Financial Statements ................................................................................................................ 15 Required Supplementary Information (Unaudited):

Schedule of the Proportionate Share of the Net Pension Liability ............................................................ ..... 52 Schedule of Pension Plan Contributions ...................................................................................... ...................... 54 Schedule of Changes in Total OPEB Liability and Related Ratios ................................................................. 56 Supplementary Information:

Combining Statement of Net Position ......................................................................................... ....................... 62 Combining Statement of Revenues, Expenses, and Change in Net Position ................................................ 64 ii
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INDEPENDENT AUDITOR’S REPORT
To the Board of Directors
of the Southern California Logistics Airport Authority
Victorville, California
Report on the Audit of the Financial Statements
Opinions
We have audited the financial statements of the Southern California Logistics Airport Authority (SCLAA), a component unit of the City of Victorville, California, as of and for the year ended June 30, 2024, and the related notes to the financial statements, which collectively comprise the SCLAA’s basic financial statements as listed in the table of contents.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the SCLAA, as of June 30, 2024, and the respective changes in financial position and cash flows thereof for the year then ended in accordance with a ccounting principles generally accepted in the United States of America.

Basis for Opinions
We conducted our audit in accordance with auditing st andards 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 Un ited States. 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 SCLAA and to meet our other ethical responsibilities, in accordance with the relevant ethica l requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Responsibilities of Management for the Financial Statements The SCLAA’s management is responsible for the preparation and fair presentation of the financial statements in accordance with accoun ting 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 SCLAA’s ability to continue as a going concern for twelve months beyond the financ ial statement date, including any currently known information that may raise substantial doubt shortly thereafter.

To the Board of Directors
of the Southern California Logistics Airport Authority
Victorville, California

Page 2 ends

Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS 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 in volve 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 aggr egate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with GAAS, we:
x Exercise professional judgment and maintain professional skepticism throughout the audit. x 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 rega rding the amounts and disclosures in the financial statements.
x 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 SCLAA’s internal control. Accordingly, no such opinion is expressed. x 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.
x Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the SCLAA’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.
2 To the Board of Directors
of the Southern California Logistics Airport Authority
Victorville, California

Page 3 ends

Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the required pension schedules and other post-employment benefit plan schedules be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Govern mental Accounting Standards Board who considers it to be an essential part of financial reporting for pl acing 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 auditing standards generally accept ed in the United States of America, which consisted of inquiries of manage ment about the methods of preparing the information and comparing the information for consistency with ma nagement’s responses to our inquiries, the basic financial statements, and other knowle dge 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.

Management has omitted management’s discussion and analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a pa rt of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of the financial reporting for placing the basic financ ial statements in an appropriate op erational, economic, or historical context. Our opinion on the basic financial statements is not affected by this missing information.

Supplementary Information
Our audit was conducted for the purpose of forming opin ions on the financial statements that collectively comprise the SCLAA’s basic financial statements. Th e combining statements of the SCLAA are presented for purposes of additional analysis and are not a required part of the basic financial statements.

The combining statements of the SCLAA are the respon sibility of management and were derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlyi ng accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the Unit ed States of America. In our opinion, the combining statements of the SCLAA are fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Report on Summarized Comparative Information
The prior year summarized comparative information has been derived from the SCLAA’s June 30, 2023 financial statements. The prior year financial statements of the SCLAA as of and for the year ended June 30, 2023, were audited by other auditors whose report da ted June 10, 2024, expressed an unmodified opinion on those statements.
3 To the Board of Directors
of the Southern California Logistics Airport Authority
Victorville, California

Page 4 ends

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 o f i n t e r n a l c o n t r o l o v e r f i n a n c i a l r e p o r t i n g o r o n c o m p l i a n c e . T h a t r e p o r t i s a n i n t e g r a l p a r t o f a n a u d i t performed in accordance with Government Auditing Standards in considering the SCLAA’s internal control over financial reporting and compliance.

Badawi & Associates, CPAs
Berkeley, California
April 10, 2025
4 BASIC

FINANCIAL STATEMENTS
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6 Southern California Logistics Airport Authority
Statement of Net Position
June 30, 2024
(With Comparative Data for June 30, 2023)
2024 2023
ASSETS
Current Assets:

Cash and investments 41,290,155$ 37,577,125 $ Cash and investments with fiscal agent 26,097,008 24,761,205 Accounts receivable, net 401,630 390,776
Interest receivable 287,912 136,228
Due from other governments 864,253 152,472
Leases receivable 7,246,566 7,770,582
Inventory 3,612 13,878
Total current assets 76,191,136 70,802,266
Noncurrent:

Prepaid Items 4,149 55,594
Advances to City of Victorville 1,600,000 2,000,000 Leases 77,962,659 83,207,311
Nondepreciable capital assets 15,760,072 13,981,248 Depreciable capital assets, net 101,596,327 109,697,569 Total noncurrent assets 196,923,207 208,941,722
Total assets 273,114,343 279,743,988

DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows - OPEB related 237,333 267,603 Deferred outflows - pension related 1,768,477 1,709,212 Deferred charge on refunding 1,263,381 1,397,897 Total deferred outflows of resources 3,269,191 3,374,712

LIABILITIES
Current liabilities:

Accounts payable 594,660 445,642
Interest payable 1,197,937 1,228,041
Deposits payable 742,742 720,696
Unearned revenue 850,360 1,063,573
Compensated absences - due within one year 133,833 117,127 Total OPEB liability - due within one year 8,504 30,446 Long-term debt - current portion 7,245,000 7,002,127
Total current liabilities 10,773,036 10,607,652
Noncurrent liabilities:

Advances from other governments 11,678,089 11,267,089
Total OPEB liability 2,115,912 2,009,638
Net pension liability 4,930,171 4,503,688
Long-term debt 267,735,859 273,130,418
Compensated absences 112,463 98,425
Total noncurrent liabilities 286,572,494 291,009,258
Total liabilities 297,345,530 301,616,910

DEFERRED INFLOWS OF RESOURCES
Deferred inflows - OPEB related 762,29 1 854,840
Deferred inflows - pension related 183,799 234,104
Deferred inflows - lease
s 80,139,808 87,570,873
Total deferred inflows of resources 81,085,898 88,659,817

NET POSITION
Net investment in capital assets (130,492,014) (130,315,399) Unrestricted 28,444,120 23,157,372
Total net position (102,047,894)$ (107,158,027)$ See accompanying Notes to Basic Financial Statements.
7 Southern California Logistics Airport Authority
Statement of Revenues, Expenses, and Changes in Net Position For the year ended June 30, 2024
(With Comparative Data for the year ended June 30, 2023) 2024 2023
OPERATING REVENUES:

Charges for services
Landing fees 1,492,219$ 1,992,027 $
Fuel flowage fees 382,140 309,239
Rent and lease revenue 10,424,249 10,907,800
Total charges for services 12,298,608 13,209,066
Fines and forfeitures 25,274 28,873
Other 851,560 438,339
Total operating revenues 13,175,442 13,676,278 OPERATING EXPENSES:

Personnel services 3,664,583 3,329,516 Maintenance and operations 7,034,343 7,432,535
Depreciation 9,480,389 9,744,648
Total operating expenses 20,179,315 20,506,699 Operating income (loss) (7,003,873) (6,830,421) NONOPERATING REVENUES (EXPENSES):

Taxes 21,875,148 22,072,684
Investment income 4,998,166 3,494,189
Interest expense (16,804,585) (16,864,762)
Gain on sale of capital assets - 14,236,886
Other nonoperating expenses 322,056 (19,137)
Proceeds from capital asset sold to City - 1,929,34 1
Capital asset sold to City - (1,895,090)
Total nonoperating revenues (expenses) 10,390,785 22,954,111 Income before contributions and transfers 3,386,912 16,123,690 CONTRIBUTIONS AND TRANSFERS:

Capital contributions - 183,723 Capital grants 1,723,221 183,722
Capital contribution from tenant - 1,814 Total contributions and transfers 1,723,221 369,259 Change in net position 5,110,133 16,492,949 NET POSITION:

Beginning of year (107,158,027) (123,650,976)
End of year (102,047,894)$ (107,158,027)$
See accompanying Notes to Basic Financial Statements.
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9 Southern California Logistics Airport Authority
Statement of Cash Flows
For the year ended June 30, 2024
(With Comparative Data for the year ended June 30, 2023) 2024 2023
CASH FLOWS FROM OPERATING ACTIVITIES:

Cash received from customers 2,871,228$ 1,918,566$ Cash payments to employees for services (3,294,873) (3,200,698) Cash payments to suppliers for goods and services (6,823,614) (8,359,154) Net cash provided by (used in) operating activities (7,247,259) (9,641,286) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:

Cash received from other governments 21,574,367 22,500,969 Cash paid to City of Victorville (11,000) (2,233,072) Net cash provided by (used in)
Noncapital financing activities 21,563,367 20,267,897 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:

Cash received from sale of capital assets - 14,408,189 Capital grants 1,723,221 183,722
Cash received from City for acquisition of capital assets - 1,929,341 Cash received from leases and rent 8,761,852 9,129,103 Cash payments to acquire capital assets (3,157,971) (782,127) Principal paid on capital-related debt (6,885,000
) (6,550,000)
Interest paid on capital-related debt (14,555,859) (14,906,576) Net cash provided by (used in) capital and related
Financing activities (14,113,757) 3,411,652 CASH FLOWS FROM INVESTING ACTIVITIES:

Interest received on investments 4,846,482 3,457,131
Net cash provided by (used) by investing activities 4,846,482 3,457,131 NET INCREASE IN CASH AND CASH EQUIVALENTS 5,048,833 17,495,394 CASH AND CASH EQUIVALENTS - Beginning of year 62,338,330 44,842,936 CASH AND CASH EQUIVALENTS - End of year 67,387,163$ 62,338,330 $

RECONCILIATION OF CASH AND CASH EQUIVALENTS TO
STATEMENT OF NET POSITION:

Cash and investments 41,290,155 37,577,125 Cash and investments with fiscal agent 26,097,008 24,761,205 Cash and cash equivalents 67,387,163 62,338,330 See accompanying Notes to Basic Financial Statements.
10 Southern California Logistics Airport Authority
Statement of Cash Flows (Continued)
For the year ended June 30, 2024
(With Comparative Data For The Year Ended June 30, 2023) 2024 2023

RECONCILIATION OF OPERATING LOSS TO NET CASH

PROVIDED (USED) BY OPERATING ACTIVITIES
Operating loss (7,003,873)$ (6,830,421)$
Adjustments to reconcile operating loss to net cash
Provided (used) by operating activities:

Depreciation 9,480,389 9,744,648
Operating rental and lease revenue (10,424,249) (10,907,800) Nonoperating miscellaneous expense 322,056 (19,137)
(Increase) decrease in assets:

Accounts receivable, net (10,854) 231,545
Inventory 10,266 16,027
Prepaid items 51,445 (1,839)
Deferred outflows - OPEB 30,270 33,753
Deferred outflows - pension (59,265) (879,487)
Increase (decrease) in liabilities:

Accounts payable 149,018 (940,807)
Deposits payable 22,046 (824,798)
Unearned revenue (213,213) (237,522)
Accrued compensated absences 30,744 (24,661)
Total OPEB liability 84,332 (323,701)
Net pension liability 426,483 1,904,161
Deferred inflows - OPEB (92,549) 335,660
Deferred inflows - pension (50,305 ) (916,907)
Net cash provided by (used in) operating activities (7,247,259)$ (9,641,286) $

SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING

AND FINANCING ACTIVITY
Developer/tenant contributed capital assets - $ 185,537$ Interest accretion expenses 1,641,446 1,527,079
Amortization of bond discounts and premiums 91,868 91,868 Total $1,733,314 $1,804,484
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12 NOTES TO BASIC

FINANCIAL STATEMENTS
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14 Southern California Logistics Airport Authority
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The basic financial statements of the Southern California Logistics Airport Authority (SCLAA) have been prepared in conformity with generally accepted accoun ting principles (GAAP) as applied to governmental agencies. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The more significant of the SCLAA’s accounting policies are described below.

A. Description of the Reporting Entity
The Southern California Logistics Airport Authority (SCLAA), a component unit of the City of Victorville, was formed in June of 1997 by the City of Victorville and the former Victorville Redevelopment Agency.

Prior to the dissolution of the Victorville Redevelopm ent Agency in 2012, the Victorville Water District was added as a member of the JPA. The purpose of SCLAA is to provide for the coordination of long- range planning of the territory of George Air Force Base (now Southern California Logistics Airport, or the Airport). The Victor Valley Economic Development Authority (VVEDA), a Joint Powers Authority of the City of Victorville and other entities, was auth orized to exclusively exercise the powers of a redevelopment agency in the area including and surrounding the Airport. VVEDA subsequently delegated to the SCLAA all of its redevelopment auth ority over the portion of the VVEDA project area comprised of the Airport.

B. Relationship to the City of Victorville
The SCLAA is an integral part of the reporting entity of the City of Victorville (the City) and is reflected as a blended component unit within the City of Victorville. The SCLAA fund has been included within the scope of the basic financial statements of the City because, although it is a legally separate organization, the City Council is the governing board and has financial accountability over the operations of the SCLAA. Only the SCLAA fund is included herein and these financial statements, therefore, do not purport to represent the financial position or results of operations of the City of Victorville, California.

C. Basic Financial Statements
The basic financial statements are comprised of the statement of net position, the statement of revenues, expenses, and changes in net position, the statement of cash flows and the notes to the basic financial statements.

D. Basis of Accounting, Measurement Focus, and Financial Statement Presentation The SCLAA is accounted for as an enterprise fund (proprietary fund type). A fund is an accounting entity with a self-balancing set of accounts established to record the financial position and results of operations of a specific governmental activity. The activities of enterprise funds closely resemble those ongoing businesses in which the purpose is to conserve and add to basic resources while meeting operating expenses from current revenues. Enterprise funds account for operations that provide services on a continuous basis and are substantially financed by revenues derived from user charges. 15 Southern California Logistics Airport Authority
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued D. Basis of Accounting, Measurement Focus, and Financial Statement Presentation, Continued The accounting and financial reporting treatment is determined by the applicable measurement focus and basis of accounting. Measurement focus indicates the type of resources being measured such as economic resources. The basis of accounting indicates the timing of transactions or events for recognition in the financial statements.

Proprietary funds are presented using the economic resources measurement focus. This means that all assets, deferred outflows of resources, liabilities, and deferred inflows of resour ces (whether current or noncurrent) associated with their activity are included on their statement of net position.

Proprietary funds are presented using the accrual ba sis of accounting. Revenues are recognized when they are earned and expenses are recognized when the related goods or services are delivered, regardless of when the related cash flows take place. Amounts paid to acquire capital assets are capitalized as assets.

Proceeds of long-term debt and acquisitions under capital leases are recorded as a liability. Amounts paid to reduce long-term indebtedness are reported as a reduction of the related liability. Bond premiums and discounts are deferred and amortized over the life of the bonds using the straight-line method for bonds issued through 2021 and the effective interest method for bonds issued thereafter. Bonds payable are reported net of the applicable bond premium or discount. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenses.

The SCLAA distinguishes operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from provid ing services and producing and delivering goods in connection with airport and rental operations. The principal operating revenues of the SCLAA are charges to customers for services, which includes landing fees, fuel flowage fees, and rent and lease revenue, fines and forfeitures, and other reimbursements. Operating expenses include personnel services, maintenance and operational costs, and depreciation of capital assets. All revenues and expenses not meeting this definition, such as taxes, investment income, and interest expense, are reported as nonoperating revenues and expenses.

E. Cash and Investments
Investments are reported in the accompanying statement of net position at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Changes in fair value that occur during a fiscal year are recognized as investment income re ported for that fiscal year. Investment income includes interest earnings, changes in fair value, and any gains or losses realized upon the liquidation or sale of investments.
16 Southern California Logistics Airport Authority
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued F. Cash Equivalents
For purposes of the statement of cash flows, cash equivalents are defined as short-term, highly liquid investments that are both readily convertible to known amounts of cash or so near their maturity that they present insignificant risk of changes in value be cause of changes in interest rates. Cash equivalents include the cash and investments held by a fiscal agent.

G. Accounts Receivable
The SCLAA specifically identifies accounts that are deemed uncollectable and offsets the receivable by an allowance for doubtful accounts. The amounts recorded as accounts receivable include various reimbursements and fees due to the SCLAA, net of an allowance for doubtful accounts totaling $125,642 as of June 30, 2024.

H. Due from Other Governments
The amounts recorded as a receivable due from other governments includes grant revenues collected or provided by Federal, State, County, and City Governments and unremitted to the City as of June 30, 2024.

I. Inventory and Prepaid Items
The SCLAA uses the consumption method of accounting for inventories. Inventory consists primarily of supplies for construction and repair that are valued at cost using the weighted average method. Certain payments to vendors that reflect costs applicable to future accounting periods are recorded as prepaid items utilizing the consumption method.

J. Leases
When the SCLAA is a lessee, a lease liability and a leas e asset is recognized at the commencement of the lease term, unless the lease is a short-term lease, or it transfers ownership of the underlying asset. The lease liability is measured at the present value of pa yments expected to be made during the lease term (less any lease incentives). The lease asset is measur ed at the amount of the initial measurement of the lease liability, plus any payments made to the lessor at or before the commencement of the lease term and certain direct costs.

When the SCLAA is a lessor, a lease receivable and a deferred inflow of resources is recognized at the commencement of the lease term, with certain exceptions for leases of assets held as investments, certain regulated leases, short-term leases, and leases that tr ansfer ownership of the underlying asset. The lease receivable is measured at the present value of lease payments expected to be received during the lease term. The deferred inflow of resources is measured at the value of the lease receivable plus any payments received at or before the commencement of the lease term that relate to future periods. 17 Southern California Logistics Airport Authority
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued K. Capital Assets
Tangible capital assets (including infrastructure) are valued at cost where historical records are available and at an estimated historical cost where no historical records exist. Donated tangible capital assets are valued at acquisition value on the date of donation. SBITA assets are initially measured as the sum of the present value of payments expected to be made during the subscription term, payments associated with the SBITA contract made to the SBITA vendor at the commencement of the subscription term, when applicable, and capitalizable implementation costs, less any SBITA vendor incentives received form the SBITA vendor at the commencement of the SBITA term. SBITA assets are amortized in a systematic and rational manner over the shorter of the subscription term or the useful life of the underlying IT assets.

SCLAA capitalizes all assets with an initial individual cost of more than $5,000 and a useful life in excess of one year. The cost of normal maintenance and repairs that do not add to the value of the assets or materially extend the life are not capitalized.

Depreciation is computed utilizing the straight-line method over the following useful lives for tangible capital assets:

L. Compensated Absences
A liability is recorded for unused vacation and similar compensatory leave balances since the employees’ entitlement to these balances is attributable to servic es already rendered and it is probable that virtually all of these balances will be liquidated by either paid time off or payments upon termination or retirement.

A liability is recorded for unused sick leave balances only to the extent that it is probable that the unused balances will result in termination payments. This is estimated by including in the liability the unused balances of employees currently entitled to receiv e termination payment, as well as those who are expected to become eligible to re ceive termination benefits as a result of continuing their employment with the City. Other amounts of unused sick leave ar e excluded from the liability since their payment is contingent solely upon the occurrence of a future even t (illness), which is outside the control of the City and the employee.

The balance of unpaid vacation and vested sick leave at year-end is recorded as a long-term liability in the financial statements.
18 Southern California Logistics Airport Authority
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued M. Unearned Revenue
Unearned revenue is recorded when the SCLAA receives funds for which the goods or services have not yet been provided and, therefore, revenue has not yet been earned. The balance in unearned revenue for the SCLAA primarily consists of funds received in advance from tenants in which the City serves as the lessor.

N. Deferred Outflows and Deferred Inflows of Resources
In addition to assets, the statement of net position reports a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net assets that applies to future peri ods and so will not be recognized as an outflow of resources (expense) until that time. The category of deferred outflow of resources reported in the statement of net position is related to a loss on re funding, pension, and other postemployment benefits.

A deferred loss on refunding results from the difference in the carrying value of the refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. Deferred outflows on pension and other postemployment benefits are more fully discussed in Notes 6 and 7, respectively.

The SCLAAs deferred inflows of resources reported on the statement of net position relate to leases, pension and other postemployment benefits. Amounts for leases are for amounts not yet received that are deferred and recognized as an inflow of resources in the period that the amounts are available or earned.

Pension and other postemployment benefits deferred inflows of resources are more fully discussed in Notes 9 and 10, respectively.

O. Net Position
Net position is classified in the following categories:

Net Investment in Capital Assets – This amount consists of capital assets net of accumulated depreciation and reduced by outstanding debt (including premiu ms and discounts) and capital related payables that are attributed to the acquisition, construction, or improvement of the assets.

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

Unrestricted Net Position – This amount is the remaining net position that does not meet the definition of “invested in capital assets” or “restricted net position.” 19 Southern California Logistics Airport Authority
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued O. Net Position, Continued
Sometimes the SCLAA will fund outlays for a particular purpose from both restricted (e.g., restricted bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted net position and unrestricted net position, a flow assumption must be made about the order in which the resources are considered to be applied. It is the SCLAA’s practice to consider restricted net position to have been depleted before unrestricted net position is applied, unless otherwise directed by Council.

P. Pensions
For purposes of measuring the net pension liability, deferred outflows and inflows of resources related to pensions, and pension expense, information about th e fiduciary net position of the SCLAA’s California Public Employees’ Retirement System (CalPERS) pl ans (Plans) and additions to/deductions from the Plans’ fiduciary net position have been determined on the same basis as they are reported by the CalPERS.

For this purpose, benefit payments (including refund s of employee contributions) are recognized when currently due and payable in accordance with the benefit terms. Investments are reported at fair value.

CalPERS audited financial statements are publicly av ailable reports that can be obtained at CalPERS’ website under Forms and Publications.

Q. Prior Year Data
Selected information regarding the prior year ha s been included in the accompanying financial statements. This information has been included for comparison purposes only and does not represent a complete presentation in accordance with accounting principles generally accepted in the United States of America. Accordingly, such information should be read in conjunction with the SCLAA’s prior year financial statements, from which this selected financial data was derived.

R. Estimates
The presentation of basic financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, deferred outflo ws of resources, liabilities, and deferred inflows of resources and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
20 Southern California Logistics Airport Authority
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

2. CASH AND INVESTMENTS
Cash and investments as of June 30, 2024, are classified in the accompanying financial statements as follows:

Cash and investment as of June 30, 2024, consist of the following:

A. Investments Pool of the City of Victorville
The SCLAA has no separate bank accounts or investments other than investments held by bond trustee, and their investment in LAIF. The SCLAA’s equity in the cash and investment pool is managed by the City of Victorville. The SCLAA is a voluntary participant in that pool. This pool is governed by and under the regulatory oversight of the Investment Policy adop ted by the City Council of the City of Victorville.

The SCLAA has not adopted an investme nt policy separate from that of the City of Victorville. The fair value of the Authority’s investment in this pool is reported in the accompanying financial statements at amounts based upon the SCLAA’s pro-rata share of the fair value calculated by the City for the entire City portfolio. The balance available for withdrawal is based on the accounting records maintained by the City, which are recorded on an original cost basis.
21 Southern California Logistics Airport Authority
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

2. CASH AND INVESTMENTS, Continued
B. Investments Authorized by the California Go vernment Code and the City’s Investment Policy The City adopts the investment policy for the SCLAA. The table below identifies the investment types that are authorized for the SCLAA by the California Government Code and the City’s investment policy.

The table also identifies certain provisions of the California Government Code (or the City’s investment policy, if more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustees that are governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code or the City’s investment policy.

B. Investments Authorized by Debt Agreements
Investment of debt proceeds held by bond trustee are governed by provisions of the debt agreements, rather than the general provisions of the California Government Code or the SCLAA’s investment policy.

The table below identifies the investment types that are authorized for investments held by bond trustee.

The table also identifies certain provisions of these debt agreements that address interest rate risk and concentration of credit risk.
22 Southern California Logistics Airport Authority
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

2. CASH AND INVESTMENTS, Continued
C. Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the Authority manages its exposure to interest rate risk is by purchasing a combination of shorter-term and longer-term investments and by timing cash flows from maturities so that a portion of the portfo lio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations.

Information about the sensitivity of the fair values of the Authority’s investments (including investments held by bond trustee) to market interest rate fluctu ations is provided by the following table that shows the distribution of these investments by maturity.

D. Disclosures Relating to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. 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 Standard & Poor’s rating as of year-end for each investment type.

E. Concentration of Credit Risk
The investment policy of the SCLAA contains no limitat ions on the amount that can be invested in any one issuer beyond that stipulated by the California Government Code. The SCLAA has no investments in any one issuer (other than LAIF and money market mutual funds) that represent 5% or more of the City’s investments.
23 Southern California Logistics Airport Authority
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

2. CASH AND INVESTMENTS, Continued
F. Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code and the City’s investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits: The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository re gulated under state law (unless so waived by the governmental unit).

The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure SCLAA deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. At June 30, 2024, the SCLAA’s deposits (bank balances) were equity in the City of Victorville’s pool, which was insured by the fede ral depository insurance limits or collateralized as required under California Law.

For investments identified herein as held by bond tr ustee, the bond trustee selects the investment under the terms of the applicable trust agreement, acquires the investment, and holds the investment on behalf of the reporting government.

G. Investment in State Investment Pool
The SCLAA is a voluntary participant in the Local Agen cy Investment Fund (LAIF) that is regulated by the California Government Code under the oversight of the Treasurer of the state of California. The fair value of the SCLAA’s investment in this pool is re ported in the accompanying financial statements at amounts based upon the SCLAA’s pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF.

H. Fair Value Measurements
The SCLAA categorizes its fair value measurement within the fair value hierarchy established by accounting principles generally accepted in the Un ited States of America. The fair value framework provides a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

The three levels of fair value hierarchy are described as follows:
24 Southern California Logistics Airport Authority
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

2. CASH AND INVESTMENTS, Continued
H. Fair Value Measurements, Continued
Level 1 – Inputs to the valuation methodology are un adjusted quoted prices for identical assets or liabilities in active markets.

Level 2 – Inputs other than quoted prices included within the Level 1 that are observable for the asset or liability, either directly or indirectly, and fair value is determined through the use of models or other valuation methodologies including:
- Quoted prices for similar assets or liabilities in active markets; - Quoted prices for identical or similar assets or liabilities in markets that are inactive; - Inputs other than quoted prices that are observable for the asset or liability; - I n p u t s t h a t a r e d e r i v e d p r i n c i p a l l y f r o m o r c o r r o b o r a t e d b y o b s e r v a b l e m a r k e t d a t a b y correlation of other items.

Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurements. These unobservable inputs reflect the SCLAA’s own assumptions about the inputs market participants would use in pricing the asset or liability (including assumptions about risk).

These unobservable inputs are developed based on the best information available in the circumstances and may include the SCLAA’s own data.

The SCLAA’s investments in LAIF and money market mutual funds (held by bond trustee) are not subject to the fair value measurement hierarchy.
25 Southern California Logistics Airport Authority
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

3. CAPITAL ASSETS
The following is a summary of changes in capital assets for SCLAA at June 30, 2024:

Depreciation expense for the SCLAA was $9,480,389 for the year ended June 30, 2024. 26 Southern California Logistics Airport Authority
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

4. LONG-TERM LIABILITIES
A summary of changes in long-term liabilities for the year ended June 30, 2024, is noted below:

See pledged revenue information at the end of this note.

A. Tax Allocation Parity Bonds, Series 2005A
In June 2005, the SCLAA issued $42,185,000 principa l amount of Tax Allocation Parity Bonds, Series 2005A. This debt was issued to finance certain public capital improvements benefiting the SCLAA.

On February 8, 2006, $1.8 million of bond proceeds was invested in land for the construction of a new City library. Prior to this purchase (on November 3, 2005), the Board of Directors of the SCLAA adopted a resolution with the intent of entering into a loan agreement between the SCLAA and the City with respect to this land purchase. On September 21, 2010, City Council approved this loan agreement. Legal counsel for the City has indicated that approval by the bond insurer is not required for the investment of proceeds not held by the bond trustee.

Bonds maturing on December 1, 2010, December 1, 2016, December 1, 2020, December 1, 2025, December 1, 2030, and December 1, 2035 in the amounts of $2,765,000, $3,365,000, $5,140,000, $6,335,000, $7,870,000, and $15,335,000, respectively, are term bonds. The outstanding bonds bear interest at 3.50% to 5.00% due June 1 and December 1 of each year.

The bonds are subject to redemption prior to maturity as described in the bond covenants. The bonds maturing on or after June 1, 2016 are subject to optional redemption in whole or in part by lot, without premium.
27 Southern California Logistics Airport Authority
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

4. LONG-TERM LIABILITIES, Continued
A. Tax Allocation Parity Bonds, Series 2005A, Continued The bonds maturing on December 1, 2010, December 1, 2016, December 1, 2020, December 1, 2025, December 1, 2030, and December 1, 2035 are subject to mandatory redemption in part by lot, without premium, commencing December 1, 2007, December 1, 2012, December 1, 2016, December 1, 2021, December 1, 2026, and December 1, 2031, respectively, from sinking fund payments made by SCLAA.

In the fiscal year ended June 30, 2006, these bonds were partially defeased by the issuance of the Tax Allocation Revenue Parity Bonds, Refunding Series 2005 (Non-Housing). As of June 30, 2024, the required reserve for the Bonds was met with fiscal agent cash. The Bonds are a special obligation of the SCLAA payable from tax increment revenues. The amount of bonds outstanding at June 30, 2024 is $10,565,000.

B. Tax Allocation Revenue Parity Bonds, Refunding Series 2006 (Non-Housing) In June 2006, the SCLAA issued $62,780,000 principal amount of Tax Allocation Revenue Parity Bonds, Refunding Series 2006. The proceeds were used to refund the 2001 Tax Allocation Bonds, the 2003 Tax Allocation Bonds, and a portion of 2005 Tax Allocation Bonds. As a result, the 2001 and 2003 Tax Allocation Bonds are considered to be defeased, and the 2005 Tax Allocation Bonds are considered to be partially defeased. The respective liabilities have been removed from the statement of net position.

Bonds maturing on December 1, 2026, December 1, 2031, December 1, 2036, and December 1, 2043 in the amounts of $6,895,000, $8,595,000, $10,810,000, an d $20,335,000, respectively, are term bonds. The outstanding bonds bear interest at 4.50% to 5.00% due June 1 and December 1 of each year.

The bonds maturing on December 1, 2026, December 1, 2031, December 1, 2036, and December 1, 2043 are subject to mandatory redemption in part by lot, without premium, commencing December 1, 2022, December 1, 2027, December 1, 2032, and December 1, 2037, respectively, from sinking fund payments made by SCLAA.

As of June 30, 2024, the required reserve for the Bonds was met with fiscal agent cash. The bonds are a special obligation of the SCLAA payable from tax increment revenues. The amount of bonds outstanding at June 30, 2024 is $44,055,000.

C. Tax Allocation Revenue Parity Bonds, Refunding Series 2006 (Housing Set-Aside) In June 2006, the SCLAA issued $16,855,000 principal amount of Housing Set-Aside Revenue Bonds, Refunding Series 2006. The proceeds were used to refund all of the 2003 Tax Allocation Bonds and a portion of the 2005 Tax Allocation Parity Bonds. As a result, the 2003 Tax Allocation Bond is considered to be defeased and the liability has been removed from the statement of net position.

Bonds maturing on December 1, 2026, December 1, 2031, December 1, 2036, and December 1, 2043 in the amounts of $1,855,000, $2,305,000, $2,905,000, and $5,460,000, respectively, are term bonds. The outstanding bonds bear interest at 4.50% to 5.00% due June 1 and December 1 of each year. 28 Southern California Logistics Airport Authority
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

4. LONG-TERM LIABILITIES, Continued
C. Tax Allocation Revenue Parity Bonds, Refund ing Series 2006 (Housing Set-Aside), Continued The bonds are subject to redemption prior to maturity as described in the bond covenants. The bonds maturing on or after June 1, 2016 are subject to opti onal redemption in whole or in part by lot without premium.

D. Tax Allocation Revenue Parity Bonds, Taxable Series 2006 In June 2006, the SCLAA issued $45,020,000 principal amount of Tax Allocation Revenue Parity Bonds, Taxable Series 2006. The proceeds were used to finance certain redevelopment activities benefiting the SCLAA.

Bonds maturing on December 1, 2036 and December 1, 2043 in the amounts of $20,080,000, and $24,940,000, respectively, are term bonds. The outsta nding bonds bear interest at 6.10% due June 1 and December 1 of each year.

The bonds are subject to redemption prior to maturity as described in the bond covenants. The bonds are subject to optional redemption in whole or in part by lot, subject to a premium.

The bonds maturing on December 1, 2036 and December 1, 2043 are subject to mandatory redemption in part by pro-rata, without premium, commencing December 1, 2006 and December 1, 2037, respectively, from sinking fund payments made by SCLAA.

E. Taxable Tax Allocation Revenue Parity Bonds, Forward Series 2006 In November 2006, SCLAA issued $34,980,000 principal amount of Taxable Tax Allocation Revenue Parity Bonds, Forward Series 2006. The proceeds were us ed to finance and refinance certain redevelopment activities benefiting the SCLAA.

The bonds mature from December 1, 2007 to December 1, 2043 in varying amounts. Principal is payable in annual installments ranging from $50,000 to $2,320,000, commencing December 1, 2007. The bonds accrue interest at rates between 6.25% and 6.30%. Interest on the bonds is payable semi-annually on each June 1 and December 1, commencing June 1, 2007.
29 Southern California Logistics Airport Authority
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

4. LONG-TERM LIABILITIES, Continued
E. Taxable Tax Allocation Revenue Parity Bonds, Forward Series 2006, Continued The bonds are subject to optional and mandatory redemption prior to maturity.

F. Taxable Subordinate Tax Allocation Revenue Bonds, Series 2006 In November 2006, the SCLAA issued $64,165,000 principal amount of Taxable Subordinate Tax Allocation Revenue Bonds, Series 2006. The proceeds were used to finance certain redevelopment activities benefiting the SCLAA.

The bonds mature from December 1, 2007 to December 1, 2043 in varying amounts. Principal is payable in annual installments ranging from $395,000 to $4,135,000, commencing December 1, 2007. The bonds accrue interest at 6.05%. Interest on the bonds is payable semiannually on each June 1 and December 1, commencing June 1, 2007.

The bonds are subject to optional and mandatory redemption prior to maturity. As of June 30, 2024, the required reserve for the Bonds was met with fiscal agent cash. The bonds are a special obligation of the SCLAA payable from tax increment revenues. The amount of bonds outstanding at June 30, 2024 is $50,120,000.

G. Taxable Housing Set-Aside Revenue Parity Bonds, Series 2007 In March 2007, the SCLAA issued $41,460,000 princi pal amount of Taxable Housing Set-Aside Revenue Parity Bonds, Series 2007. The proceeds were used to finance certain low-and moderate-income housing programs of the Authority. On July 7, 2009, $20,000,000 of bond proceeds were invested in a loan to the Victorville Water District. Legal counsel for the City has indicated that approval by the bond insurer is not required for the investment of proceeds not held by the bond trustee. In February 2013, this loan was repaid in full with interest.

Bonds maturing on December 1, 2012, December 1, 2017, December 1, 2022, December 1, 2027, and December 1, 2043 in the amounts of $3,265,000, $2,800,000, $3,620,000, $4,685,000, and $27,090,000, respectively, are term bonds. The outstanding bond s bear interest at 5.00%, 5.20%, 5.25%, 5.40%, and

5.55% due June 1 and December 1 of each year.

The bonds are subject to optional redemption in whole or in part by lot, without premium.

As of June 30, 2024, the required reserve for the Bonds was met with fiscal agent cash and an insurance policy. The bonds are a special obligation of the SCLAA payable from tax increment revenues. The amount of bonds outstanding at June 30, 2024 is $30,935,000. 30 Southern California Logistics Airport Authority
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

4. LONG-TERM LIABILITIES, Continued
H. Subordinate Tax Allocation Revenue Bonds, Series 2007 (Non-Housing) In December 2007, the SCLAA issued $42,000,000 principal amount Subordinate Tax Allocation Revenue Bonds, Series 2007. The proceeds were used to fin ance certain redevelopment activities benefiting the SCLAA.

Bonds maturing on December 1, 2008, December 1, 2009, December 1, 2012, December 1, 2017, December 1, 2022, December 1, 2027, December 1, 2032, Decemb er 1, 2032, December 1, 2037, December 1, 2037, December 1, 2037, December 1, 2043 and December 1, 2043 in the amounts of $480,000, $425,000, $1,395,000, $2,805,000, $3,640,000, $4,745,000, $3,000 ,000, $3,275,000, $3,325,000, $3,800,000, $1,250,000, $9,210,000, and $4,650,000, respectively, are term bonds. The outstanding bonds bear interest at 4.000%,

4.200%, 4.375%, 5.250%, 5.375%, 5.600%, 5.900%, 6.000%, 5.900%, 6.000%, 6.100%, 5.900%, and 6.150% due June 1 and December 1 of each year.

The bonds are subject to redemption prior to maturity at the option of the Authority, on or after December 1, 2017, in whole or in part by lot, without premium.

The bonds maturing on the dates described above are subject to mandatory redemption in part by lot, without premium, commencing Decemb er 1, 2010, December 1, 2013, December 1, 2018, December 1, 2023, December 1, 2028, December 1, 2028, December 1, 2033, December 1, 2033, December 1, 2033, December 1, 2038, and December 1, 2038, respectively, from sinking fund payments made by SCLAA.

I. Subordinate Tax Allocation Revenue Bonds, Series 2008A In May 2008, the SCLAA issued $13,334,925 principa l amount of Subordinate Tax Allocation Revenue Bonds, Series 2008A. The proceeds were used to finance certain redevelopment activities benefiting the SCLAA and to partially refund the $35,000,000 principal amount of Subordinate Tax Allocation Revenue Notes, Series 2008.

Bonds maturing on December 1, 2010, December 1, 2013, December 1, 2018, December 1, 2023, December 1, 2033, December 1, 2038, and December 1, 2043 in the amounts of $130,000, $215,000, $340,000, $530,000, $1,675,000, $1,285,000, and $1,720,000, respectively, are Current Interest Bonds. The outstanding bonds bear interest at 4.25%, 4.50%, 5.00%, 5.25%, 6.00%, 6.00%, and 6.00% due June 1 and December 1 of each year.

Bonds maturing on December 1 of each year beginning 2044 through 2050 in the initial principal amounts of $1,316,266, $1,216,397, $1,123,621, $1,037,536, $957,600, $883,633, and $814,910 are Capital Appreciation Bonds. The outstanding bonds bear yields to maturity of 7.300%, 7.320%, 7.340%, 7.360%, 7.380%, 7.400%, and 7.420%. All of the bonds have a future maturity value of $131,805,000 at June 30, 2024. 31 Southern California Logistics Airport Authority
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

4. LONG-TERM LIABILITIES, Continued
I. Subordinate Tax Allocation Revenue Bonds, Series 2008A The current interest bonds are subject to redemption pr ior to maturity at the option of the Authority, on or after December 1, 2018, in whole or in part by lot, without premium. The Capital Appreciation Bonds are subject to optional redemption in whole or in part by lot, without premium.

J. Debt Service Requirements to Maturity
The annual requirements to amortize outstanding SCLAA debt as of June 30, 2024, are as follows for each fiscal year ending June 30:

K. Pledged Revenue
All of the above Tax Allocation Bonds are collateralized by the pledging of certain revenues. The amount and term of the remainder of these commitments are indicated in the debt service to maturity tables presented in the accompanying notes. The purposes for which the proceeds of the related debt issuances were utilized are disclosed in the debt descriptions in the accompanying notes.

The SCLAA contains a portion of the Victor Valley Economic Development Authority (VVEDA) Successor Agency (see Note 8 for additional information). Th e RPTTF (tax increment distributions) from VVEDA represent the primary revenue of the SCLAA.
32 Southern California Logistics Airport Authority
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

4. LONG-TERM LIABILITIES, Continued
K. Pledged Revenue, Continued
As a result of the state’s action to dissolve all re development agencies in the state of California, the VVEDA Successor Agency no longer receives the full amount of tax increment previously pledged by the dissolved redevelopment agency to its bondholders. In its place is a new revenue stream (RPTTF distributions) provided to the VVEDA Successor Agency that represents only that portion of tax increment that is necessary to pay the approved enforceable obligations that come due for that fiscal year.

For the current year, pledged gross revenue (net of certain expenses were so required by the debt agreement) as a percentage of debt service payments are indicated in the table below:

5. ADVANCES TO/FROM
A. Advances to/from the City
a) Per a loan agreement approved on September 15, 2009 by the Board of Victorville RDA, a $10,000,000 advance was made from the Bear Valley Road Redeve lopment Project Area (RDA Capital Project Fund) to the SCLAA. The advance is to be used to continue redevelopment at SCLAA and to fund prior years’ capital improvements and redevelopment project expenses. The advance bears interest at 3% using the simple interest method in accordance with SB-107. The outstanding balance of the advance as of June 30, 2024, is $11,678,089.
33 Southern California Logistics Airport Authority
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

5. ADVANCES TO/FROM, Continued
A. Advances to/from the City, Continued
b) A loan agreement was signed on April 18, 2023 by the City Council that authorizes the SCLAA to loan $2,000,000 to the City’s nonmajor gas utility enterprise fund for the construction of new gas infrastructure that will allow for the purchase of lower priced natural gas and future growth at SCLAA. The loan principal shall be repaid in five equal installments of $400,000 to commence in the year ending June 30, 2024 and conclude in the year ending June 30, 2028. Interest shall begin to accrue on the total principal amount commencing on July 1, 2023, and shall thereafter be calculated annually on the balance of the outstanding principal and shall be payable each year on June 30 at the annualized (averaged) LAIF rate of return. The outstanding balance of the advance as of June 30, 2024 is $1,600,,000. Due to the uncertainty on when sufficient tax increment will be available to make payments on this loan, the obligation has not yet been included on the ROPS to re quest funding for repayment. In future fiscal years, the loan will be added to the ROPS.

6. PENSION PLAN
A. General Information about the Pension Plan
Plan Description
All qualified permanent and probationary employee s are eligible to participate in the City’s Miscellaneous Plan, agent multiple-employer defi ned benefit pension plans administered by the California Public Employees’ Retirement System (C alPERS), which acts as a common investment and administrative agent for its participating member employers. The SCLAA’s share of the net pension liability is reported as a cost-sharing plan in these financial statements. Benefit provisions under the Plan are established by State statute and Local Governme nt resolution. CalPERS issues publicly available reports that include a full description of the pension plan regarding benefit provisions, assumptions, and membership information that can be found on the CalPERS website.

Benefits Provided
CalPERS provides service retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members, who must be public employ ees and beneficiaries. Benefits are based on years of credited service, equal to one year of full-time employment. Members with five years of total service are eligible to retire at age 50 to 62 with statutorily reduced benefits. For employees hired into a plan with the 1.5% at 65 formula, eligibility for service retirement is age 55 with at least five years of services. PEPRA miscellaneous members become eligible for service retirement upon attainment of age 52 with at least five years of service. All members are eligible for nonduty disability benefits after fi ve years of service. The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost-of-living adjustments for each plan are applied as specified by the Public Employees’ Retirement Law.
34 Southern California Logistics Airport Authority
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

6. PENSION PLAN, Continued
A. General Information about the Pension Plan, Continued The Plan’s provisions and benefits in effect as of the measurement period ended June 30, 2023, are summarized as follows:

Contributions
Section 20814(c) of the California Public Employee s’ Retirement Law requires that the employer contribution rates for all public employers are determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through CalPERS’ annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded a ccrued liability. The SCLA A is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. SCLAA contribution rates may change if plan contracts are amended. Payments made by the employer to satisfy contribution requirements that are identified by the pension plan terms as plan member contributions requirements are classified as plan member contributions. For the fiscal year ended June 30, 2024, SCLAA made contributions totaling $515,986.
35 Southern California Logistics Airport Authority
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

6. PENSION PLAN, Continued
B. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions Actuarial Assumptions
The total pension liability for the Miscellaneous Plan for the June 30, 2023 measurement period was determined by an actuarial valuation as of June 30, 2022, with update procedures used to roll forward the total pension liability to June 30, 2023. The total pension liability for the Miscellaneous Plan was based on the following assumptions:

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. 36 Southern California Logistics Airport Authority
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

6. PENSION PLAN, Continued
B. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions, Continued
In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations. Using historical returns all of the funds’ asset classes, expected compound (geometric) returns were calculated over the next 20 years using a building-block approach.

The expected rate of return was then adjusted to account for assumed administrative expenses of 10 Basis points. The expected real rates of return by asset class are as follows:

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 fr om 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 l o n g -t e r m e xp e c t e d r at e o f r e t ur n o n pl a n in v e s t me nt s w a s ap p l i ed t o a ll p e r i o d s o f p r o je c t e d b e n e fi t payments to determine the total pension liability.

Change in Assumptions
The discount rate and long-term rate of return remained the same as prior year from 6.90% to 6.90% and the inflation rate remained the same as 2.30% from the measurement date June 30, 2022 to June 30, 2023. 37 Southern California Logistics Airport Authority
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

6. PENSION PLAN, Continued
B. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions, Continued
Proportionate Share of Net Pension Liability – City’s Miscellaneous Agent Multiple-Employer Plan Allocation to the SCLAA
The SCLAA’s net pension liability for the Plan is measured as the proportionate share of the net pension liability. The SCLAA’s proportionate share of the net pension liability was based on a projection of the SCLAA’s long-term share of contributions to the Miscellaneous Plan relative to the projected contributions of the City, actuarially determined.

The SCLAA’s proportionate share of the net pension liability for the Miscellaneous Plan as of the measurement dates ended June 30, 2022 and 2023, was as follows:

Pension Expense and Deferred Outflows and Inflows of Resources For the year ended June 30, 2024, the SCLAA recognized pension expense of $669,532 for the Miscellaneous Plan. At June 30, 2024, the SCLAA reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources for the Miscellaneous Plan:
$515,986 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ending June 30, 2025. Differences between projected and actual investment earnings are amortized on a five-year straight-line basis and all other amounts are amortized over the expected average remaining service lives of all members that are provided with benefits.
38 Southern California Logistics Airport Authority
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

6. PENSION PLAN, Continued
B. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions, Continued
Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:

Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the SCLAA’s proportionate share of the net pension liability for the Miscellaneous Plan, calculated using the discount rate of 6.90%, as well as what the SCLAA’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate:

Pension Plan Fiduciary Net Position
Detailed information about each pension plan’s fiduciary net position is available in the separate issued CalPERS financial reports.

Payable to the Pension Plan
At June 30, 2024, the SCLAA had no outstanding amount of contributions to the Miscellaneous Plan required for the year ended June 30, 2024.
39 Southern California Logistics Airport Authority
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

7. OTHER POST-EMPLOYMENT BENEFTIS PLAN
A. Plan Descriptions
The SCLAA participates in the City’s Other Postemployment Benefits Defined Benefit Pension Plan and the SCLAA’s share of the total OPEB liability is reported as a cost-sharing plan in these financial statements.

The City Plan provides medical benefits to eligible retired City employees and beneficiaries in accordance with various labor agreements. The plan covers employ ees who retire directly from the City with eight years of service. The City provides a contribution up to a certain amount (a portion of the HMO single premium). The percentage varies based on years of service.

B. Funding Policy
The contribution requirements of plan members and the City are established and may be amended by City Council. The contribution required to be made under City Council and labor agreement requirements is based on a pay-as-you-go basis (i.e., as medical insurance premiums become due). The City has not established a trust that is administered by the City for the purpose of holding assets accumulated for plan C. Contributions
The City Plan and its contribution requirements ar e established by Memoranda of Understanding with the applicable employee bargaining units and may be amended by agreements between the City and the bargaining units. The annual contribution is based on the year’s retiree medical premiums (pay-as-you- go basis). For the fiscal year ended June 30, 2024, the SCLAA’s cash contributions were $20,166 in cash benefit payments, $78 in administrative costs, and the estimated implied subsidy was $7,892, resulting in total payments of $28,136.

D. Total OPEB Liability
The City’s total OPEB liability was measured as of June 30, 2023 and determined by an actuarial valuation as of June 30, 2022.
40 Southern California Logistics Airport Authority
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

7. OTHER POST-EMPLOYMENT BENEFTIS PLAN, Continued
E. Discount Rate
The discount rate used to measure the total OPEB liability was 3.65%. The discount rate is determined based on the Bond Buyer 20-Bond Index since the City has not established a trust.

G. Change in Actuarial Assumptions
The following actuarial assumption changes occurred form the measurement periods ended June 30, 2022 to 2023:
x The discount rate changed from 3.54% to 3.65% based on changes in the index. x Inflation remained unchanged at 2.50%.
x The healthcare trend rate remained unchanged as follows: Non-Medicare rate is 8.5%, Medicare (Non-Kaiser) is 7.5%, and Medicare (Kaiser) is 6.25%.
x Demographic assumptions were updated from the CalPERS 1997-2015 Experience Study to the CalPERS 2000-2019 Experience Study.
x Mortality improvement was updated from Scale MP-2020 to Scale MP-2021.

H. Allocation of Total OPEB Liability
The SCLAA’s proportionate share of the total OPEB liability as of the measurement dates ended June 30, 2022 and 2023, was as follows:

I. Sensitivity of the Total OPEB Liability to Changes in the Discount Rate The following presents the SCLAA’s proportionate share of the total OPEB liability if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate:
41 Southern California Logistics Airport Authority
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

7. OTHER POST-EMPLOYMENT BENEFTIS PLAN, Continued
J. Sensitivity of the Total OPEB Liability to Changes in the Health Care Cost Trend Rates The following presents the SCLAA’s proportionate share of the total OPEB liability if it were calculated using health care cost trend rates that are one pe rcentage point lower (Non -Medicare: 7.5% for 2024 decreasing to 2.45% in 2076; Medicare (Non-Kaiser): 6.5% for 2024, decreasing to an ultimate rate of 2.45% in 2076; Medicare (Kaiser): 5.25% for 2024, decreasing to an ultimate rate of 2.45% in 2076) or one percentage point higher (Non-Medicare: 9.5% for 2 024 decreasing to 4.45% in 2076; Medicare (Non- Kaiser): 8.5% for 2024, decreasing to an ultimate rate of 4.45% in 2076; Medicare (Kaiser): 7.25% for 2024, decreasing to an ultimate rate of 4.45% in 2076) than the current rate:

K. Recognition of Deferred Outflows and Deferred Inflows of Resources Gains and losses related to changes in total OPEB liability are recognized in OPEB expense systematically over time. Amounts are first recognized in OPEB expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflo ws and deferred inflows of resources related to OPEB and are to be recognized in future OPEB expense.

The recognition period differs depending on the source of the gain or loss:

L. OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB For the fiscal year ended June 30, 2024, the SCLAA recognized OPEB expense of $84,694. As of fiscal year ended June 30, 2024, the SCLAA reported deferred ou tflows/inflows of resources related to OPEB from the following sources:
42 Southern California Logistics Airport Authority
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

7. OTHER POST-EMPLOYMENT BENEFTIS PLAN, Continued
L. OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB, Continued The $33,992 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the Total OPEB liability during the fiscal year ending June 30, 2024. Other amounts reported as deferred outflows of resources related to OPEB will be recognized as expense as follows:

M. Payable to the Pension Plan
At June 30, 2024, the SCLAA had no outstanding amount of contributions to the OPEB plan required for the year ended June 30, 2024.

8. COMMITMENT AND CONTINGENCIES
A. Litigation
The SCLAA is a defendant in certain legal actions arising in the normal course of operations. The accompanying basic financial statements reflect a liab ility for the probable amounts of loss associated with these claims.

B. Southern California Logistics Airport Authority and Stirling Enterprise LLC In the early 1990s, the U.S. Air Force closed George Air Force Base (former Base). In response the local communities formed the Victor Valley Economic Development Authority (VVEDA). VVEDA and the Air Force entered into agreements to lease and ultimately transfer title to the former Base to VVEDA. The subject land is designated as either Public Bene fit Transfer (PBT) Parcels or Economic Development Conveyance (EDC) Parcels. The PBT Parcels are made up of approximately 2,200 acres previously used by the U.S. Air Force and are restricted to use as an airport. These parcels were transferred to SCLAA at no cost.

The EDC Parcels are made up of approximately 1,800 acres of adjacent property which may be developed for use as commercial property. SCLAA paid $1,636,489 and is required to pay additional $37,176 for these EDC Parcels. In 1993 a Redevelopment Plan was adopted by VVEDA establishing a redevelopment project area encompassing the former Base as well as approximately 55,000 additional acres. VVEDA delegated its decision-making authority relative to the former Base, now known as SCLAA. 43 Southern California Logistics Airport Authority
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

8. COMMITMENT AND CONTINGENCIES, Continued
B. Southern California Logistics Airport Auth ority and Stirling Enterprise LLC, Continued SCLAA adopted a Specific Plan in conformity with the Redevelopment Plan and adopted a Master Development Plan establishing its goal to develop th e area as a cargo and aircraft maintenance facility and a business/industrial center thereby creating jobs and improving economic conditions in the Victor Valley.

In July 1998, SCLAA and Stirling Enterprises, LLC and it s related entities (Stirling) entered into the first of several agreements for the marketing, acquisition, operation, and development of SCLAA. The Fourth Amended and Restated Master Agreement (Stirling Agreement) is the current agreement superseding all previous versions.

C. Revenues from Sales of Land
In August 2016, three agreements with Stirling were approved by the SCLAA Board of Directors that were intended to serve as a framework that encourages development before the expiration of the Master Agreement (MA). The three agreements are a Satisfac tion and Termination Agreement, a Disposition, Exchange, and Development Agreement (#2), and an Option and Development Agreement.

The Disposition, Exchange, and Development Agreement allows for the removal of approximately 280- acres of Airport-owned property from the definition of EDC Parcels and the title transfer in fee to Stirling, of approximately 280 acres. The Airport-owned pr operty will become available for the Airport for revenue-producing purposes and the Airport will have the flexibility to develop the subject property on a ground-lease basis with aviation and nonaviation (Section 2.01 of the Development and Exchange Agreement). Revenue sharing will only exist relating to these parcels if the respective transaction is procured by Stirling and be split 80/20 with the larger share to benefit SCLAA.

The Agreement also provides for the disposition of additional off-airport property. In addition to the Stirling Exchange Parcels, SCLAA will then transfer, in fee, 200 acres of property for the $.0203/psf purchase price ($176,448) and participate in revenue sharing for net proceeds in an amount equal to 30% (Section 2.03 of the Development and Exchange Agre ement). Net proceeds are generally defined to be revenues generated from the eventual sale by Stirling that are residual to infrastructure costs, EIR costs and developer credits. The Agreement also transfers the public infrastructure obligations of the Authority pursuant to the MA and DDA to Stirling.

Finally, the Option Agreement, in connection with performance obligations related to the Development and Exchange Agreement, will provide Stirling th e ability to acquire additional acreage currently provided for in the Master Agreement. Such an exercise of option will occur in 50-acre increments based on Stirling having developed 500,000 square feet of property owned by it. The Option Agreement is set up to run through December 2050 and can terminate sooner due to nonperformance described in Section

1.5 of the Option and Development Agreement.
44 Southern California Logistics Airport Authority
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

8. COMMITMENT AND CONTINGENCIES, Continued
D. Management
Stirling is allowed to lease or cause to be leased the EDC Parcels and shall participate in 20% of the Net Lease Revenue from any such leases. The Authority has retained the right to lease the PBT Parcels and retain revenues from those leases, but shall allow Stir ling to participate in 20% of any net lease revenues from tenants who may be procured by Stirling and approval by the Authority. Any revenues from other interim uses on the former Base such as filming will be shared on a 50%/50% basis between Stirling and Authority.

9. SCLAA’S FINANCIAL CONDITION, SIGNIFICANT FINANCIAL OBLIGATIONS, AND MANAGEMENT’S PLANS
In fiscal year 08/09, the assessed value for the Victor Valley Redevelopment Project Area was approximately $9.49 billion. Beginning in fiscal year 09/10, there were significant decreases in assessed value for the Victor Valley Redevelopment Project Area . Assessed values for the Project Area reached a low point of $6.6 Billion in fiscal year 12/13. The decrease was largely the result of the Great Recession.

Since fiscal year 12/13, assessed values have increased steadily. For fiscal year 20/21, the assessed value for the Project Area was approximately $9.99 billion. The steady increase in assessed values have resulted in the SCLAA paying all past due debt service in the previous fiscal year. As of the December 1, 2018 tax distribution, the SCLAA was no longer in default. In 2018, Moody’s issued an upgraded rating on the Successor Agency to the Victor Valley Economic Development Authority (VVEDA) Housing Set-Aside Tax Allocation Bonds and the Non-Housing Tax Alloca tion Bonds to “stable” outlook as a result of resolving the outstanding defaults, and the prospectiv e analysis on increasing assessed values in the project area.

During fiscal year 19/20 and 20/21, SCLAA had result s that were not as favorable as fiscal year 18/19 with a net loss of $3.5 million and $2.5 million, respectively. However, in fiscal years 22/23 and 23/24, SCLAA had a positive net income of $16,492,949 and $5,110,133, respectively. A summary of the financial condition of the SCLAA enterprise fund is as follows:

A. Management’s Plans with Respect to its Financial Condition Management plans to ensure that annual expenditures do not exceed annual revenues and to build the reserves that are necessary to provide for economic uncertainties.

The SCLAA has continued to maintain a balance budget since 2007-2008 and all revenues are projected to cover current liabilities.
45 Southern California Logistics Airport Authority
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

9. SCLAA’S FINANCIAL CONDITION, SIGNIFICANT FINANCIAL OBLIGATIONS, AND MANAGEMENT’S PLANS, Continued
A. Management’s Plans with Respect to its Financial Condition, Continued Regarding the SCLAA’s financial condition, an Interfund loan agreement was signed July 1, 2016 by the Board of SCLAA and a $10,000,000 advance was made available from the 2007 SCLA Housing bond fund to the Airport Operations Fund and has been used to subsidize operations. The advance had a term repayment of five years, with an annualized Wall Street Journal Prime Rate as the interest rate. In October 2022, the outstanding balance of the loan was repaid. The advance was within the fund itself.

10. JOINTLY GOVERNED ORGANIZATIONS
A. Victor Valley Economic Development Authority
The Victor Valley Economic Development Authority (VVEDA) was formed in 1992 by the Cities of Victorville and Hesperia, the Town of Apple Valley, and the County of San Bernardino to provide the mechanism and funding to manage development of the property formerly known as the George Air Force Base, facilitate the successful reuse of the property, and promote economic development within the area surrounding the Air Base. In 2000, the City of Adelanto was added as a member of the Authority. In December 2011, Assembly Bill 1X 26 (the Bill) disso lved VVEDA, and as such all assets of the former VVEDA have been transferred to the VVEDA Successor Agency and are subject to the distribution’s provisions of the Bill. The SCLAA contains a portion of the VVEDA Successor Agency with the Town of Apple Valley and City of Adelanto comprising the rest of the VVEDA Successor Agency. The RPTTF (tax increment distributions) from VVEDA represent the primary revenue of the SCLAA. Financial statements may be obtained by sending a written request to Vi ctor Valley Economic Development Authority, 18374 Phantom Street, Victorville, CA 92394.

11. SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER REDEVELOPMENT AGENCY On December 29, 2011, the California Supreme Court upheld Assembly Bill 1X 26 (the Bill) that provides for the dissolution of all redevelopment agencies in the state of California. This action impacted the SCLAA because the SCLAA has historically funded its operations and debt service using significant tax increment revenue from the Victor Valley Economic Development Agency (VVEDA). VVEDA has acted as a pass-through agency for the various recipients of tax increment revenue in the Victor Valley and is subject to the dissolution requirements of the Bill.

The Bill provides that upon dissolution of a redevelopment agency, either the city or another unit of local government will agree to serve as the “successor agency” to hold the assets until they are distributed to other units of state and local government. On Januar y 17, 2012, the Victorville City Council elected to become the Successor Agency for the former redevelopment agency in accordance with the Bill as part of City resolution number 12-005.
46 Southern California Logistics Airport Authority
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

11. SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER REDEVELOPMENT AGENCY, Continued
After enactment of the law, which occurred on June 28, 2011, redevelopment agencies in the state of California cannot enter into new projects, obligations, or commitments. Subject to the control of a newly established oversight board, remaining assets can only be used to pay enforceable obligations in existence at the date of dissolution (including the completion of any unfinished projects that were subject to legally enforceable contractual commitments).

12. LEASES
The SCLAA, acting as lessor, leases buildings and land under long-term, noncancelable lease agreements.

The leases expire at various dates through 2056 and provide for renewal options ranging from 1 year to 55 years. During the year ended June 30, 2024, the SCLAA recognized $7,770,582 and $1,784,891 in lease revenue and interest revenue, respectively, pursuant to these contracts.

Certain leases provide for increases in future mi nimum annual rental payments based on a defined percent in the contract or increases in the Consumer Price Index, subject to certain minimum increases.

Lease revenue comprises a majority of the SCLAA’s operating revenues, therefore, this activity is considered to be the principal operation of the SCLAA.

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

SUPPLEMENTARY INFORMATION
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51 Southern California Logistics Airport Authority
Required Supplementary Information
For the year ended June 30, 2024
CalPERS Cost Sharing Plan
Schedule of the Proportionate Share of the Net Pension Liability - Last Ten Fiscal Years Reporting Fiscal Year 2015 2016 2017 2018
Measurement Date 6/30/2014 6/30/2015 6/30/2016 6/30/2017 Plan's proportion of the net pension liability 6.67% 6.87% 7.07% 6.95% Plan's proportionate share of
the net pension liability 1,880,791 $ 2,090,587 $ 2,805,052 $ 3,210,086 $ Plan's covered payroll 1,310,612 $ 1,343,244 $ 1,368,422 $ 1,579,911 $ Plan's proportionate share of
the net pension liability as percentage
of its covered payroll 143.50% 155.64% 204.98% 203.18%
Fiduciary net position as a percentage of the
total pension liability 6.67% 5.50% 5.33% 5.18%
Notes to the schedule:

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

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

There were no changes in assumptions.

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

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

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

There were no significant changes in assumptions.

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

From fiscal year June 30, 2023 to June 30, 2024:

The discount rate and long-term rate of return decreased from 7.15% to 6.90% and the inflation rate decreased from

2.50% to 2.30%.

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

The discount rate and long-term rate of return remain the same as the prior year at 6.90%, and the inflation rate is also unchanged from the prior year at 2.30%
Benefit Changes:

There were no changes to benefit terms that applied to all members of the Public Agency Pool.

However, individual employers in the Plan may have provided a benefit improvement to their employees by granting Two Years Additional Service Credit to members retiring during a specified time period (a.k.a. Golden Handshakes).

Changes in Assumptions:
52 2019 2020 2021 2022 2023 2024
6/30/2018 6/30/2019 6/30/2020 6/30/2021 6/30/2022 6/30/2023

6.90% 6.86% 6.84% 7.18% 6.58% 6.51%
3,189,455$ 3,546,936$ 3,838,581$ 2,599,527$ 4,503,687$ 4,930,169$ 1,565,360$ 1,534,654$ 1,686,096$ 1,676,551$ 1,868,216$ 2,069,493$ 203.75% 231.12% 227.66% 155.05% 241.07% 238.23%

5.22% 5.11% 5.04% 6.03% 4.73% 4.62%
53 Southern California Logistics Airport Authority
Required Supplementary Information
For the year ended June 30, 2024
CalPERS Cost Sharing Plan
Schedule of Pension Plan Contributions - Last 10 Fiscal Years Fiscal Year Ended 2015 2016 2017 2018
Actuarially determined contribution 197,631$ 233,116 $ 273,075 $ 275,299 $ Contributions in relation to actuarially
deemed contributions (197,631) (233,116) (273,075) (275,299) Contribution deficiency (excess) - $ - $ - $ - $ Covered payroll 1,343,244 $ 1,368,422 $ 1,579,911 $ 1,565,360 $ Contributions as a percentage of
covered payroll 14.71% 17.04% 17.28% 17.59%
Notes to Schedule:

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

Actuarial cost method Entry age
Amortization method Level percentage of payroll, closed Asset valuation method Fair Value except for 2015 is Market Value of Assets Discount Rate 6.90%
Inflation 2.75% to 2.30%
Salary increases
Retirement age 50 and up
Annual increase vary by category, entry age and duration of service
54 2019 2020 2021 2022 2023 2024
279,699$ 345,578$ 381,393$ 414,447$ 484,566$ 515,986$ (279,699) (345,578) (381,393) (414,447) (484,566) (515,986) -$ -$ -$ -$ -$ -$ 1,534,654$ 1,686,096$ 1,676,551$ 1,868,216$ 2,069,493$ 1,988,118$

18.23% 20.50% 22.75% 22.18% 23.41% 25.95%
6/30/2016 6/30/2017 6/30/2018 6/30/2019 6/30/2020 6/30/2022 55 Southern California Logistics Airport Authority
Required Supplementary Information
For the year ended June 30, 2024
OPEB Plan
Schedule of the Proportionate Share of Total OPEB Liability - Last Ten Fiscal Years* Reporting Fiscal Year 2018 2019 2020 2021
Measurement Date 6/30/2017 6/30/2018 6/30/2019 6/30/2020 Plan's proportion of the total OPEB liability 8.43% 8.57% 8.19% 7.99% Plan's proportionate share of
the total OPEB liability 2,014,829 $ 1,888,372 $ 2,093,649 $ 2,214,981 $ Plan's covered payroll 1,494,600 $ 1,735,340 $ 1,993,268 $ 2,348,399 $ Plan's proportionate share of
the total OPEB liability as percentage
of its covered payroll 134.81% 108.82% 105.04% 94.32%
Notes to Schedule:

Changes in Assumptions:

Discount Rate 3.58% 3.87% 3.50% 2.21%
Mortality Improvement Rates Scale MP-2016 Scale MP-2018 Scale MP-2018 Scale MP-2020 In the June 30, 2018 measurement period, the pre-65 waived retiree re-election was updated to be 10% after age 65. * Fiscal year 2018 was the 1st year of implementation.

In the June 30, 2020 measurement period, the medical trend rate for Kaiser Senior Advantage plans decreased from 6.5% to

5.0%.

In the June 30, 2022 measurement period, the following medical trend rates changed: Non-Medicare increased from 7.0% to

8.5%; Medicare increased from 6.1% to 7.5%; and Kaiser increased from 7.0% to 6.25%.

The mortality, retirement, disability, and termination rates for the measurement periods ended June 30, 2017 and 2018 were based on the CalPERS 1997-2011 Experience Study and CalPERS 1997-2015 Experience Study, respectively.

In the June 30, 2023 measurement period, the following medical trend rates remained unchanged: Non-Medicare increased by 8.5%, Medicare increased by 7.5%, and Kaiser increased by 6.25%. 56 2022 2023 2024
6/30/2021 6/30/2022 6/30/2023

7.75% 8.64% 8.40%
2,363,785$ 2,040,084$ 2,124,416$
2,396,424$ 2,827,400$ 2,557,509$

98.64% 72.15% 83.07%
2% 3.54% 3.65%
Scale MP-2020 Scale MP-2021 Scale MP-2021
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58 SUPPLEMENTARY INFORMATION
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61 Southern California Logistics Airport Authority
Combining Statement of Net Position
June 30, 2024
(With Comparative Data for June 30, 2023)
Non Other
Aeronautical Aeronautical Services
ASSETS
Current assets:

Cash and investments 12,642,311$ 3,730,529$ 24,917,315$ Cash with fiscal agent - - 26,097,008
Accounts receivable 408,539 (6,909) -
Interest receivable 287,237 475 200
Due from other governments 864,253 - -
Leases 7,246,566 - -
Inventory 3,612 - -
Total current assets 21,452,518 3,724,095 51,014,523
Noncurrent:

Prepaid deposits 4,149 - -
Advances to City of Victorville - 1,600,000 -
Leases 77,908,435 54,224 -
Capital assets:

Nondepreciable capital assets 1,966,890 - 13,793,182
Depreciable capital assets 45,908,816 - 253,600,515
Accumulated depreciation (22,298,754) - (175,614,250)
Depreciable capital assets, net 23,610,062 - 77,986,265 Total noncurrent assets 103,489,536 1,654,224 91,779,447 Total assets 124,942,054 5,378,319 142,793,970

DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows - OPEB related 237,333 - -
Deferred outflow - pension related 1,768,477 - -
Deferred charge on refunding - - 1,263,381
Total deferred outflows of resources 2,005,810 - 1,263,381

LIABILITIES
Current liabilities:

Accounts payable 593,575 1,085 -
Interest payable - - 1,197,937
Deposits payable 722,327 20,415 -
Unearned revenue 850,360 - -
Compensated absences - due within one year 133,833
Total OPEB Liability - due within one year 8,504 - -
Long-term liabilities - due within one year - - 7,245,000 Total current liabilities 2,308,599 21,500 8,442,937
Noncurrent liabilities:

Advances from other governments - - 11,678,089
Total OPEB liability 2,115,912 - -
Net pension liability 4,930,171 --
Long-term debt - - 267,735,859
Compensated absences 112,463 - -
Total noncurrent liabilities 7,158,546 - 279,413,948
Total liabilities 9,467,145 21,500 287,856,885

DEFERRED INFLOWS OF RESOURCES
Deferred inflows - OPEB related 762,291 --
Deferred inflows - pension related 183,799 - -
Deferred Inflows - leases 79,343,682 47,025 749,101
Total deferred inflows of resources 80,289,772 47,025 749,101

NET POSITION
Net investment in capital assets 25,349,010 - (155,841,023) Unrestricted 11,841,937 5,309,794 11,292,388
Total net position 37,190,947$ 5,309,794 $ (144,548,635)$ 62 Eliminations 2024 2023
-$ 41,290,155$ 37,577,125$ - 26,097,008 24,761,205
- 401,630 390,776
- 287,912 136,228
- 864,253 152,472
- 7,246,566 7,770,582
- 3,612 13,878
- 76,191,136 70,802,266
- 4,149 55,594
- 1,600,000 2,000,000
- 77,962,659 83,207,311
- 15,760,072 13,981,248
- 299,509,33 1 -
- (197,913,004) -
- 101,596,327 109,697,569
- 196,923,207 208,941,722
- 273,114,343 279,743,988 - 237,333 267,603
- 1,768,477 1,709,212
- 1,263,38 1 1,397,897
- 3,269,191 3,374,712 - 594,660 445,642
- 1,197,937 1,228,041
- 742,742 720,696
- 850,360 1,063,573
133,833 117,127
- 8,504 30,446
- 7,245,000 7,002,127
- 10,773,036 10,607,652
- 11,678,089 11,267,089
- 2,115,912 2,009,638
- 4,930,171 4,503,688
- 267,735,859 273,130,418
- 112,463 98,425
- 286,572,494 291,009,258
- 297,345,530 301,616,910 - 762,29
1 854,840
- 183,799 234,104
- 80,139,808 87,570,873
- 81,085,898 88,659,817 - (130,492,014) (130,315,399)
- 28,444,120 23,157,372
-$ (102,047,894)$ (107,158,027)$ 63 Southern California Logistics Airport Authority
Combining Statement of Revenues, Expenses and Changes in Net Position For the year ended June 30, 2024
(With Comparative Data for the year ended June 30, 2023) Non Other
Aeronautical Aeronautical Services
OPERATING REVENUES:

Charges for services:

Landing fees 1,492,219$ - $ - $ Fuel flowage fees 382,140 - -
Rent and lease revenue 10,878,570 295,979 (750,300)
Total charges for services 12,752,929 295,979 (750,300) Fines and forfeitures 25,274 - - Other 799,243 52,317 -
Total operating revenues 13,577,446 348,296 (750,300) OPERATING EXPENSES:

Personnel services 3,663,390 1,193 -
Maintenance and operations 6,930,442 80,957 22,944
Depreciation 3,565,973 - 5,914,416
Total operating expenses 14,159,805 82,150 5,937,360 Operating income (loss) (582,359) 266,146 (6,687,660) NONOPERATING REVENUES (EXPENSES):

Taxes 399,213 - 21,475,935
Investment income 2,302,905 234,023 2,461,238
Interest expense - - (16,804,585 )
Gain on sale of capital aAssets ---
Other nonoperating exepenses 341,393 - (19,337) Proceeds from capital asset sold to City - - - Capital asset sold to City - - - Total nonoperating revenues (expenses) 3,043,511 234,023 7,113,251 Income before contributions and transfers 2,461,152 500,169 425,59 1 CONTRIBUTIONS AND TRANSFERS:

Capital contributions - - - Capital grants 1,723,221 - - Capital contribution from tenant - - - Transfers in 2,145,657 - - Transfers out - - (2,145,657) Total contributions and transfers 3,868,878 - (2,145,657) Change in net position 6,330,030 500,169 (1,720,066) NET POSITION:

Beginning of year 30,860,917 4,809,625 (142,828,569 )
End of year 37,190,947$ 5,309,794 $ (144,548,635)$ 64 Eliminations 2024 2023
-$ 1,492,219$ 1,992,027 $ - 382,140 309,239
- 10,424,249 10,907,800
- 12,298,608 13,209,066
- 25,274 28,873 - 851,560 438,339
- 13,175,442 13,676,278 - 3,664,583 3,329,516
- 7,034,343 7,432,535
- 9,480,389 9,744,648
- 20,179,315 20,506,699 - (7,003,873) (6,830,421) - 21,875,148 22,072,684
- 4,998,166 3,494,189
- (16,804,585
) (16,864,762)
- - 14,236,886
- 322,056 (19,137) - - 1,929,341 - - (1,895,090) - 10,390,785 22,954,111 - 3,386,912 16,123,690
- - 183,723 - 1,723,221 183,722 - - 1,814 (2,145,657) - - 2,145,657 - - - 1,723,221 369,259 - 5,110,133 16,492,949 - (107,158,027 ) (123,650,976)
-$ (102,047,894)$ (107,158,027) $ 65 This page intentionally left blank
66 Victorville, California
Financial Statements and
Independent Auditor’s Report
For the year ended June 30, 2024

Victorville Water District
Table of Contents
For the year ended June 30, 2024
Page
i
Independent Auditor’s Report ................................................................................................................................... 1 Basic Financial Statements:

Statement of Net Position .................................................................................................. ................................. 7 Statement of Revenues, Expenses and Changes in Fund Net Position ........................................................ 8 Statement of Cash Flows .................................................................................................... ............................... 10 Notes to Basic Financial Statements ................................................................................................................ 15 Required Supplementary Information (Unaudited):

Schedule of the Proportionate Share of the Net Pension Liability ............................................................ ..... 42 Schedule of Pension Plan Contributions ...................................................................................... ...................... 44 Schedule of Changes in Total OPEB Liability and Related Ratios ................................................................. 46 Supplementary Information:

Combining Statement of Net Position ......................................................................................... ....................... 50 Combining Statement of Revenues, Expenses, and Change in Net Position ................................................ 52 ii
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INDEPENDENT AUDITOR’S REPORT
To the Board of Directors
of the Victorville Water District
Victorville, California
Report on the Audit of the Financial Statements
Opinions
We have audited the financial statements of the Victorville Water District (District), a component unit of the City of Victorville, California, as of and for the ye ar ended June 30, 2024, and the related notes to the financial statements, which collectively comprise the Di strict’s basic financial statements as listed in the table of contents.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the District, as of June 30, 2024, and the respective changes in financial position and cash flows thereof for the year then ended in accordance with a ccounting principles generally accepted in the United States of America.

Basis for Opinions
We conducted our audit in accordance with auditing st andards 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 Un ited States. 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 indepe ndent of the District and to meet our other ethical responsibilities, in accordance with the relevant ethica l requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Responsibilities of Management for the Financial Statements The District’s management is responsible for the preparation and fair presentation of the financial statements in accordance with accoun ting 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 substant ial doubt about the District’s ability to continue as a going concern for twelve months beyond the financ ial statement date, including any currently known information that may raise substantial doubt shortly thereafter.

To the Board of Directors
of the Victorville Water District
Victorville, California

Page 2 ends

In performing an audit in accordance with GAAS, we:
x Exercise professional judgment and maintain professional skepticism throughout the audit. x 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 rega rding the amounts and disclosures in the financial statements.
x 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 District’s internal control. Accordingly, no such opinion is expressed. x 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.
x Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a going concern for a reasonable period of time.

Page 3 ends

We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Supplementary Information
Our audit was conducted for the purpose of forming opin ions on the financial statements that collectively comprise the District’s basic financial statements. The combining statements of the District are presented for purposes of additional analysis and are not a required part of the basic financial statements.

The combining statements of the District are the responsibility of management and were derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlyi ng accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the Unit ed States of America. In our opinion, the combining statements of the District are fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Report on Summarized Comparative Information
The prior year summarized comparative information ha s been derived from the District’s June 30, 2023 financial statements. The prior year financial statements of the District as of and for the year ended June 30, 2023, were audited by other auditors whose report da ted June 10, 2024, expressed an unmodified opinion on those statements.
3 To the Board of Directors
of the Victorville Water District
Victorville, California

Page 4 ends

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards , we have also issued our report dated April 10, 2025 on our consideration of the District’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, cont racts, and grant agreements and other matters. The p u r p o s e o f t h a t r e p o r t i s s o l e l y t o d e s c r i b e t h e s cope 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 o f i n t e r n a l c o n t r o l o v e r f i n a n c i a l r e p o r t i n g o r o n c o m p l i a n c e . T h a t r e p o r t i s a n i n t e g r a l p a r t o f a n a u d i t performed in accordance with Government Auditing Standards in considering the District’s internal control over financial reporting and compliance.

Badawi & Associates, CPAs
Berkeley, California
April 10, 2025
4 BASIC

FINANCIAL STATEMENTS
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6 Victorville Water District
Statement of Net Position
June 30, 2024
(With Comparative Data for June 30, 2023)
2024 2023
ASSETS
Current Assets:

Cash and investments 85,120,299$ 78,986,58 1$ Cash with fiscal agent 836,588 836,639
Accounts receivable 5,640,186 5,176,781
Interest receivable 371,279 248,870
Due from other governments 28,707 19,946
Inventory 1,604,610 866,934
Total current assets 93,601,669 86,135,751
Noncurrent:

Deposits and prepaid items 51,763 28,306
Capital assets:

Nondepreciable 37,054,907 40,643,195
Depreciable or amortizable, net 120,138,363 119,672,824 Total noncurrent assets 157,245,033 160,344,325
Total assets 250,846,702 246,480,076

DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows - OPEB related 2,287,149 2,707,614
Deferred outflow - pension related 6,305,417 6,095,478
Total deferred outflows of resources 8,592,566 8,803,092

LIABILITIES
Current liabilities:

Accounts payable 2,857,836 4,376,617
Interest payable 153,385 161,029
Prepaid water connection fees - 217,489
Deposits payable 1,748,554 1,700,469
Compensated absences - due within one year 561,302 527,666 Total OPEB liability - due within one year 338,738 273,537 Long-term liabilities - due within one year 454,620 434,428 Total current liabilities 6,114,435 7,691,235
Noncurrent liabilities:

Total OPEB liability 11,690,747 11,388,426
Net pension liability 17,610,716 16,156,738
Long-term debt 7,329,311 7,790,160
Compensated absences 154,792 145,516
Total noncurrent liabilities 36,785,566 35,480,840
Total liabilities 42,900,001 43,172,075

DEFERRED INFLOWS OF RESOURCES
Deferred inflows - OPEB related 3,234,388 3,985,338
Deferred inflows - pension related 851,599 1,029,801
Total deferred inflows of resources 4,085,987 5,015,139

NET POSITION
Net investment in capital assets 149,171,073 151,942,967 Unrestricted 63,282,207 55,152,987
Total net position 212,453,280$ 207,095,954 $ See accompanying Notes to Basic Financial Statements.
7 Victorville Water District
Statement of Revenues, Expenses and Changes in Net Position For the year ended June 30, 2024
(With Comparative Data for the year ended June 30, 2023) 2024 2023
OPERATING REVENUES:

Utility sales 29,871,480$ 30,269,489 $
Meter and service fees 11,326,765 9,801,678
Pass-thru charges for services 1,149,312 1,211,013
Fines and forfeitures 386,446 485,824
Arsenic surcharge 301,506 285,035
Other 243,233 242,429
Total operating revenues 43,278,742 42,295,468 OPERATING EXPENSES:

Personnel services 12,737,893 11,648,542 Maintenance and operations 19,532,107 19,228,008
Production costs 6,411,631 5,434,263
Pass-thru production costs 1,178,512 1,211,013
Depreciation and amortization 6,570,505 6,524,962
Total operating expenses 46,430,648 44,046,788 Operating income (loss) (3,151,906) (1,751,320) NONOPERATING REVENUES (EXPENSES):

Taxes 1,567,817 1,335,019
Investment income 5,013,463 1,898,079
Interest expense (1,387,860) (381,764)
Gain on disposal of assets - 338,923
Other nonoperating expenses (2,024,057) (220,750)
Total nonoperating revenues (expenses) 3,169,363 2,969,507 Income before contributions and transfers 17,457 1,218,187 CONTRIBUTIONS AND TRANSFERS:

Connection fees 4,242,660 3,749,915
Alternate water source fees 484,220 528,412
Capital restricted use fees 587,276 586,681
Capital contributions - 10,000
Transfers in 25,713 -
Contributions to the City of Victorville -( 7 3 , 1 2 5 ) Total contributions and transfers 5,339,869 4,801,883 Change in net position 5,357,326 6,020,070 NET POSITION:

Beginning of year 207,095,954 201,075,884
End of year 212,453,280$ 207,095,954 $
See accompanying Notes to Basic Financial Statements.
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9 Victorville Water District
Statement of Cash Flows
For the year ended June 30, 2024
(With Comparative Data for the Year Ended June 30, 2023) 2024 2023
CASH FLOWS FROM OPERATING ACTIVITIES:

Cash received from customers and users 41,075,670$ 41,565,129$ Receipts from other operating activities 5,069,090 - Cash payments to employees for services (11,592,107) (11,108,779) Cash payments to suppliers for goods and services (29,619,653) (19,431,426) Net cash provided by (used in) operating activities 4,933,000 11,024,924 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:

Cash received from other governments 1,567,817 1,335,019 Transfers in 25,713 -
Net cash provided by (used in) noncapital financing activities 1,593,530 1,335,019 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:

Cash received from the sale of capital assets - 614,109 Cash payments to the City of Victorville for acquisition of capital assets -( 73,125) Cash payments to acquire capital assets and other assets (3,447,756) (8,983,075) SBITA principal payments (9,464) (9,888)
Principal paid on capital-related debt (431,193) (410,000) Interest paid on capital-related debt (1,395,504) (395,388) Net cash provided by (used in) capital and related financing activities (5,283,917) (9,257,367) CASH FLOWS FROM INVESTING ACTIVITIES:

Investment Purchase
s --
Interest received 4,891,105 1,705,536
Net cash provided by (used in) investing activities 4,891,105 1,705,536 Net cash flows 6,133,718 4,808,112
CASH AND INVESTMENTS - Beginning of year 78,986,581 74,178,469 CASH AND INVESTMENTS - End of year 85,120,299$ 78,986,581 $ See accompanying Notes to Basic Financial Statements.
10 Victorville Water District
Statement of Cash Flows (Continued)
For the year ended June 30, 2024
(With Comparative Data for the Year Ended June 30, 2023) 2024 2023

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

Operating income (loss) (3,151,906)$ (1,751,320)$ Adjustments to reconcile operating income (loss) to
net cash provided by (used in) operating activities:

Depreciation 6,570,505 6,524,962
Nonoperating miscellaneous revenue (expense) and capital contributions 3,290,099 4,644,258 (Increase) decrease in assets and deferred outflows:

Accounts receivable (463,405) 1,163,723
Due from other governments (8,761) 14,706
Prepaid expense --
Inventories (737,676) 81,339
Prepaid deposits (23,457) (6,783)
Deferred outflows - OPEB 420,465 (600,946)
Deferred outflows - pension (209,939) (3,218,593)
Increase (decrease) in liabilities and deferred inflows:

Accounts payable (1,518,781) (216,222)
Prepaid water connection fees (217,489) -
Deposits payable 48,085 30,498
Compensated absences 42,912 122,244
Total OPEB liabilty 367,522 (866,269)
Net pension liability 1,453,978 6,893,711
Deferred inflows - OPEB (750,950) 1,565,151
Deferred inflows - pension (178,202) (3,355,535)
Net cash provided by (used in) operating activities 4,933,000$ 11,024,924 $ NONCASH TRANSACTIONS:

Developer/tenant contributed capital assets - $ 10,000$ SBITA acquisition - 30,652
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12 NOTES TO BASIC

FINANCIAL STATEMENTS
13 This page intentionally left blank
14 Victorville Water District
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The basic financial statements of the Victorville Water Di strict (District) have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to governmental agencies. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The more significant of the District’s accounting policies are described below.

A. Description of the Reporting Entity
On August 15, 2007, the Victor Valley Water District and the Baldy Mesa Water District were consolidated into a subsidiary district of the City of Victorville (t he City), known as the Victorville Water District (the District), per Resolution No. 2977 of the Executiv e Officer of the Local Agency Formation Commission (LAFCO) of San Bernardino County, which adopted a change of organization without election. All of the liabilities including debt obligations of the Victor Valley Water District and the Baldy Mesa Water District were assumed by this subsidiary district and the City upon consolidation. Upon consolidation of the two districts, the City consolidated the operations and activities of its Water Department and Water Funds into the District to serve all of the water customers of the City under this District. The basic operations of the District are financed by user charges plus capital contributions to finance growth of the water delivery system. The District is governed by a five-member Board of Directors (the City Council), each holding staggered four-year terms.

The District is an integral part of the reporting entity of the City of Victorville (the City) and is reflected as a blended component unit within the City of Vict orville. Blended component units are, in substance, part of the primary government’s operations, even though they are legally separate entities. The District fund has been included within the scope of the basic financial statements of the City because the City Council is the governing board and has financial accoun tability over the operations of the District. Only the District fund is included herein and these financial statements, therefore, do not purport to represent the financial position or results of operations of the City of Victorville, California.

B. Basic Financial Statements
The basic financial statements are comprised of the statement of net position, the statement of revenues, expenses, and changes in net position, the statement of cash flows, and the notes to the basic financial statements.

C. Basis of Accounting, Measurement Focus, and Financial Statement Presentation The District reports its activities as an enterprise fu nd (proprietary fund type), which is used to account for operations that are financed and operated in a manner similar to a private business enterprise, where the intent of the District is that the costs of providing water to its customers on a continuing basis be financed or recovered primarily through user charges (water sales and services), capital grants and similar funding.
15 Victorville Water District
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued C. Basis of Accounting, Measurement Focus, and Financial Statement Presentation, Continued The accounting and financial reporting treatment is determined by the applicable measurement focus and basis of accounting. Measurement focus indicates the type of resources being measured such as economic resources. The basis of accounting indicates the timing of transactions or events for recognition in the financial statements.

Proceeds of long-term debt and acquisitions under leases and SBITAs are recorded as a liability. Amounts paid to reduce long-term indebtedness are reported as a reduction of the related liability. Bond premiums and discounts are deferred and amortized over the life of the bonds using the straight-line method. Bonds payable are reported net of the applicable bond premium or discount. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenses.

The District distinguishes operating revenues and expenses from nonoperating items. Operating revenues, such as water sales and service charges that include utility sales, meter and service fees, pass- thru charges, fines and forfeitures, arsenic surcharge, and other reimbursements, result from exchange transactions associated with the principal activities of the District. Exchange transactions are those in which each party receives and gives up essentially equal values. Nonoperating revenues, such as taxes and investment income, result from nonexchange transactions, in which, the District gives (receives) value without directly receiving (giving) value in exchange.

Operating expenses, such as the cost or providing water, include the personnel services, maintenance and operations, productions costs, pass-thru production co sts, and depreciation and amortization on capital assets. All expenses not meeting this definition, such as interest expense, are reported as nonoperating expenses.

D. Cash and Investments
Investments are reported in the accompanying statement of net position at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Changes in fair value that occur during a fiscal year are recognized as investment income re ported for that fiscal year. Investment income includes interest earnings, changes in fair value, and any gains or losses realized upon the liquidation or sale of investments.
16 Victorville Water District
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued E. Cash Equivalents
For purposes of the statement of cash flows, cash equivalents are defined as short-term, highly liquid investments with original maturities of three months or less from the date of acquisition that are both readily convertible to known amounts of cash or so near their maturity that they present insignificant risk of changes in value because of changes in intere st rates. Cash equivalents include the cash and investments held by a fiscal agent.

F. Accounts Receivable, Net
The District extends credit to customers in the normal course of operations. When management deems customer accounts uncollectible, the District uses the allowance method for the reservation and directly write-off of those accounts.

G. Inventory
The District uses the consumption method of accounting for inventories. Inventory consists primarily of water meters, pipe and pipe fittings for construction, and repair to the District’s water transmission and distribution system. Materials and supplies are valued at cost using a weighted average method.

H. Prepaid Deposits
Certain payments to vendors reflect costs or deposits applicable to future accounting periods and are recorded as prepaid items in the basic financial statements utilizing the consumption method.

I. Capital Assets
Tangible capital assets are valued at cost where hi storical records are available and at an estimated historical cost where no historical records exist. Donated tangible capital assets are recorded at estimated acquisition value at the date of donation. SBITA assets are initially measured as the sum of the present value of payments expected to be made during th e subscription term, payments associated with the SBITA contract made to the SBITA vendor at the commencement of the subscription term, when applicable, and capitalizable implementation costs, less any SBITA vendor incentives received form the SBITA vendor at the commencement of the SBITA term. SBITA assets are amortized in a systematic and rational manner over the shorter of the subscription term or the useful life of the underlying IT assets.

The District capitalizes all assets with an initial indi vidual cost of more than $5,000 and a useful life in excess of one year. The cost of normal maintenance and repairs that do not add to the value of the assets or materially extend the life are not capitalized.
17 Victorville Water District
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued I. Capital Assets, Continued
Depreciation is computed utilizing the straight-line method over the following useful lives:

J. Customer Deposits
Based on a customer’s credit, the District may require a deposit deemed reasonable by the District. These deposits are held to pay off close out bills or to cover delinquent payments.

K. Compensated Absences
A liability is recorded for unused vacation and similar compensatory leave balances since the employees’ entitlement to these balances is attributable to servic es already rendered and it is probable that virtually all of these balances will be liquidated by either paid time off or payments upon termination or retirement.

A liability is recorded for unused sick leave balances only to the extent that it is probable that the unused balances will result in termination payments. This is estimated by including in the liability the unused balances of employees currently entitled to receiv e termination payment, as well as those who are expected to become eligible to re ceive termination benefits as a result of continuing their employment with the District. Other amounts of unused sick leave are excluded from the liability since their payment is contingent solely upon the occurrence of a future event (illness), which is outside the control of the District and the employee.

The balance of unpaid vacation and vested sick leave at year-end is recorded as a long- term liability in the financial statements.

Buildings and Improvements 10 to 50 Years
Computer and Communications 5 Years
Furniture and Equipment 3 to 7 Years
Infrastructure:

Transmission and Distribution Systems 40 Years
Source of Supply – Wells 10 to 40 Years
Water Treatment Systems 5 to 10 Years
Intangibles 5 to 25 Years
Vehicles 8 to 15 Years
18 Victorville Water District
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued L. Deferred Outflows and Deferred Inflows of Resources
In addition to assets, the statement of net position reports a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net assets that applies to future peri ods and so will not be recognized as an outflow of resources (expense) until that time. The category of deferred outflow of resources reported in the statement of net position is related to pension and other postemployment benefits, which are more fully discussed in Notes 6 and 5, respectively.

In addition to liabilities, the statement of net position reports a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net assets that applies to future periods and will not be recognized as an inflow of resources (revenue) until that time. The District’s deferred infl ows of resources reported on the statement of net position relate to pension and other postemployment benefits, which are more fully discussed in Notes 6 and 5, respectively.

M. Prepaid Water Connection Fees
Prepaid connection fees were received before year-end but will not be earned until the properties are developed and connected to the District’s system.

N. Capital Contributions
Capital contributions represent cash and capital asset additions contributed to the District through the collection of AB-1600 connection fees, by property owners, granting agencies, or real estate developers desiring services that require capital expenditures or capacity commitment.

O. Net Position
Net Position is classified in the following categories:

Net Investment in Capital Assets – This amount consists or capital assets net of accumulated depreciation and reduced by outstanding debt (including premiums and discounts) that attributed to the acquisition, construction, or improvement of the assets.

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

Unrestricted Net Position – This amount is all of the net position that does not meet the definition of “net investment in capital assets” or “restricted net position.” Sometimes the District will fund outlays for a particular purpose from both restricted (e.g., restricted bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted net position and unrestricted net position, a flow assumption must be made about the order in which the resources are considered to be applied. It is the Distri ct’s practice to consider restricted net position to have been depleted before unrestricted net position is applied, unless otherwise directed by Council. 19 Victorville Water District
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued P. Pensions
For purposes of measuring the net pension liability, deferred outflows and inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the District’s California Public Employees’ Retirement System (CalPERS) pl ans (Plans) and additions to/deductions from the Plans’ fiduciary net position have been determined on the same basis as they are reported by the CalPERS.

CalPERS audited financial statements are publicly av ailable reports that can be obtained at CalPERS’ website under Forms and Publications.

Q. Prior Year Data
Selected information regarding the prior year ha d been included in the accompanying financial statements. This information has been included for comparison purposes only and does not represent a complete presentation in accordance with accounting principles generally accepted in the United States of America. Accordingly, such information should be read in conjunction with the District’s prior year financial statements, from which this selected financial data was derived.

R. Estimates
The presentation of basic financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, deferred outflo ws of resources, liabilities, and deferred inflows of resources and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
20 Victorville Water District
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

2. CASH AND INVESTMENTS
Cash and investments as of June 30, 2024, are classified in the accompanying financial statements The following is a summary of the cash and investments at June 30, 2024:

A. Investments Pool of the City of Victorville
The District’s equity in the cash and investment City pool is managed by the City of Victorville. The District is a voluntary participant in that pool. Th is pool is governed by and under the regulatory oversight of the Investment Policy adopted by the City Council of the City of Victorville. The District has not adopted an investment policy separate from that of the City of Victorville. The fair value of the District’s investment in this pool is reported in the accompanying financial statements at amounts based upon the District’s pro-rata share of the fair value calculated by the City for the entire City portfolio. The balance available for withdrawal is based on the accounting records maintained by the City, which are recorded on an original cost basis.

B. Investments Authorized by the California Gove rnment Code and the City’s Investment Policy The City adopts the investment policy for the Distri ct. The table on the following page identifies the investment types that are authorized for the District by the California Government Code and the City’s investment policy. The table also identifies certain provisions of the California Government Code (or the City’s investment policy, if more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustees that are governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code or the City’s investment policy. 21 Victorville Water District
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

2. CASH AND INVESTMENTS, Continued
B. Investments Authorized by the California Governme nt Code and the City’s Investment Policy, Continued C. Investments Authorized by Debt Agreements
Investments of debt proceeds held by bond trustee are governed by provisions of the debt agreements, rather than the general provisions of the California Government Code or the District’s investment policy.

The following table identifies the investment types that are authorized for investments held by bond trustee. The table also identifies certain provisions of these debt agreements that address interest rate risk and concentration of credit risk.
22 Victorville Water District
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

2. CASH AND INVESTMENTS, Continued
D. Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the District manages its exposure to interest rate risk is by purchasing a combination of shorter- term and longer-term investments and by timing cash flows from maturities so that a portion of the portfo lio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations.

Information about the sensit ivity of the fair values of the District’s investments (including investments held by bond trustee) to market interest rate fluctu ations is provided by the following table that shows the distribution of these investments by maturity:
23 Victorville Water District
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

2. CASH AND INVESTMENTS, Continued
E. Disclosures Relating to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. 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 Standard & Poor’s rating as of year-end for each investment type.
* The District's GIC is with Financial Security Assurance (FSA). The contract required FSA to deposit cash, governmental securities, or governmental bonds as collateral with Bank of New York, at a value of at least 100%, 104%, or 105%, respectfully, of the investment balance. the termination of the investment contract and release of collateral would occur in the event of default by FSA. As of June 30, 2024, FSA was not in default and the value of the collateral met the requirements.

The investment policy of the District contains no limitations on the amount that can be invested in any one issuer beyond that stipulated by the California Government Code. The District has no investments in any one issuer (other than LAIF and money market mutual funds) that represent 5% or more of the City’s investments.
24 Victorville Water District
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

2. CASH AND INVESTMENTS, Continued
F. Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside pa rty. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code and the City’s investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits: The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit).

The market value of the pledged securities in the co llateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure District deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. At June 30, 2024, the District’s deposits (bank balances) were insured by the federal depository insurance limits or collateralized as required under California Law.

For investments identified herein as held by bond trustee, the bond trustee selects the investment under the terms of the applicable trust agreement, acquires the investment, and holds the investment on behalf of the reporting government.

G. Investment in State Investment Pool
The District is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by the California Government Code under the oversight of the Treasurer of the state of California. The fair value of the District’s investment in this pool is reported in the a ccompanying financial statements at amounts based upon the District’s pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF.
25 Victorville Water District
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

2. CASH AND INVESTMENTS, Continued
H. Fair Value Measurements
The District categorizes its fair value measurement within the fair value hierarchy established by accounting principles generally ac cepted in the United States of America. The fair value framework provides a hierarchy that prioritizes the inputs to va luation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of fair value hierarchy are described as follows:

Level 1 – Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets.

Quoted prices for similar assets or liabilities in active markets.

Quoted prices for identical or similar assets or liabilities in markets that are inactive.

Inputs other than quoted prices that are observable for the asset or liability.

Inputs that are derived principally from or corroborated by observable market data by correlation of other items.

Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurements. These unobservable inputs reflect the District’s own assumptions about the inputs market participants would use in pricing the asset or liability (including assumptions about risk).

These unobservable inputs are developed base d on the best information available in the circumstances and may include the District’s own data.

The District’s investments in LAIF and money market mutual funds (held by bond trustee) are not subject to the fair value measurement hierarchy. The District’s investment in the GIC are included in Level 3 since they are not actively traded. To value the GIC, the District verified the collateral required was held at a minimum of 100% of the value reported above and recorded the investment at that amount. 26 Victorville Water District
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

3. CAPITAL ASSETS
For the year ended June 30, 2024 the City’s capital asset activity was as follows:

Depreciation and amortization expense for the District was $6,570,505 for the year ended June 30, 2024. 27 Victorville Water District
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

4. LONG-TERM LIABILITIES
A summary of changes in long-term liabilities for the year ended June 30, 2024, is noted below:

A. SBITAs
The District has entered into subscription based- information technology ar rangements (SBITAs) for various software licenses. The SBITA arrangements expire at various dates through 2025 and do not provide for renewal options. The interest rates vary from 2.4% to 2.7% and there are no variable payments.

The future subscription payments under SBITA agreements are as follows:

Right-to-use assets acquired through SBITAs, net of accumulated amortization, are reported in Note 3, Capital Assets.

B. 2006 Certificates of Participation
On March 1, 2006, the City of Victorville’s Baldy Mesa Water District issued 2006 Certificates of Participation. The proceeds were used to finance public improvements within the Baldy Mesa Water District service area.

The Certificates of Participation had a stated interest rates ranging from 3.20% to 5.00%. The annual debt service is a special limited obligation of the District payable from and secured by a pledge of and lien on the net revenues of the District - see end of note. Pr incipal and interest payments are due each August 1 and interest only payments are due each February 1. The amount of Certificates of Participation outstanding at June 30, 2024 is $7,700,000.
28 Victorville Water District
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

4. LONG-TERM LIABILITIES, Continued
B. 2006 Certificates of Participation, Continued
The annual requirements to amortize outstanding debt of the District as of June 30, 2024, are as follows for each fiscal year ending June 30:

C. Rate Covenant
The 2006 Certificates of Participation require that the Baldy Mesa Water District to generate sufficient net revenues which are at least equal to 110% of the amount of the installment payments and Parity Obligation coming due and payable in each fiscal year. The 2006 Certificates of Participation were issued before Baldy Mesa and Victor Valley Water District were consolidated into Victorville Water District. The City performed the calculation that demonstrated compliance with rate covenant for the fiscal year ended June 30, 2024. The calculation was prepared using revenues and the proportionate expenses applicable to the Baldy Mesa Water District.

D. Pledged Revenues
The District has a debt issuance outstanding that is collateralized by the pledging of certain revenues. The amount and term of the remainder of this commitment is indicated in the debt service to maturity table presented previously. The purpose for which the procee ds of the related debt issuance was utilized are disclosed in the debt description noted previously.

For the current year, pledged gross revenue (or net of certain expenses where so required by the debt agreement) as a percentage of the debt service payments are indicated in the table below:
29 Victorville Water District
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

5. OTHER POST EMPLOYMENT BENEFITS (OPEB)
A. Plan Description
The District Plan provides medical benefits to eligible retired Water District employees and beneficiaries in accordance with various labor agreements. The plan covers employees who retire directly from the District with five years of service. The District Plan also provides Dental and Vision benefits to eligible former Water District employees with 15 years of service. The District also pays life insurance premium for eight Water District retirees and no benefit is av ailable for future retirees. The District provides a contribution up to a certain amount (a portion of the Health Net HMO single premium). The percentage varies based on years of service.

B. Funding Policy
The contribution requirements of plan members and the District are established and may be amended by City Council. The contribution required to be made under City Council and labor agreement requirements is based on a pay-as-you-go basis (i.e., as medical insurance premiums become due). The District has not established a trust for the purpose of holding assets accumulated for plan benefits.

C. Employees Covered
As of the June 30, 2023 measurement date, the following current and former employees were covered by the benefit terms under the Plan:

D. Contributions
The District Plan and its contribution requirements are established by Memoranda of Understanding with the applicable employee bargaining units and may be amended by agreements between the District and the bargaining units.

The annual contribution is based on the year’s retiree medical premiums (pay-as-you-go basis). For the fiscal year ended June 30, 2024, the District’s cash contributions were $251,494 for current premiums, administrative costs of $938, and the estimated implied subsidy was $69,000 resulting in total payments of $321,432.
30 Victorville Water District
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

5. OTHER POST EMPLOYMENT BENEFITS (OPEB), Continued
E. OPEB Liability
The District’s total OPEB liability was measured as of June 30, 2023 and was determined by an actuarial valuation dated June 30, 2023.

F. Discount Rate
The discount rate used to measure the total OPEB li ability was 3.65%. The discount rate is determined based on the Bond Buyer 20-Bond Index since the District has not established a trust.

G. Change in Actu arial Assumptions
The following actuarial assumption changes occurred form the measurement periods ended June 30, 2023 to 2024:

The discount rate changed from 3.54% to 3.65% based on changes in the index.

Inflation was same as prior year at 2.50%.

The healthcare trend rate remained unchanged as follows: Non-Medicare rate is 8.5%, Medicare (Non-Kaiser) is 7.5%, and Medicare (Kaiser) is 6.25%.

Demographic assumptions were updated from the CalPERS 1997-2015 Experience Study to the CalPERS 2000-2019 Experience Study.

Mortality improvement was updated from Scale MP-2020 to Scale MP-2021. 31 Victorville Water District
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

5. OTHER POST EMPLOYMENT BENEFITS (OPEB), Continued
H. Changes in the Total OPEB Liability
The changes in the total OPEB liability for the District Plan are as follows:

I. Sensitivity of the Total OPEB Liability to Changes in the Discount Rate The following presents the total OPEB liability of the District if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate:

J. Sensitivity of the Total OPEB Liability to Changes in Health Care Cost Trend Rates The following presents the total OPEB liability of the District if it were calculated using health care cost trend rates that are one percentage point lower (Non-Medicare: 7.5% for 2024 decreasing to 2.45% in 2076; Medicare (Non-Kaiser): 6.5% for 2024, decreasing to an ultimate rate of 2.45% in 2076; Medicare (Kaiser): 5.25% for 2024, decreasing to an ultimate rate of 2.45% in 2076) or one percentage point higher (Non-Medicare: 9.5% for 2024 decreasing to 4.45% in 2076; Medicare (Non-Kaiser): 8.5% for 2024, decreasing to an ultimate rate of 4.45% in 2076; Medicare (Kaiser): 7.25% for 2024, decreasing to an ultimate rate of 4.45% in 2076) than the current rate:
32 Victorville Water District
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

5. OTHER POST EMPLOYMENT BENEFITS (OPEB), Continued
K. Recognition of Deferred Outflows and Deferred Inflows of Resources Gains and losses related to changes in the total OPEB liability are recognized in OPEB expense systematically over time. Amounts are first recognized in OPEB expense for the year the gain or loss occurs. The remaining amounts are categorized as defe rred outflows and deferred inflows of resources related to OPEB and are recognized in future OPEB expense.

The recognition period differs depending on the source of the gain or loss:

L. OPEB Expense and Deferred Outflows/In flows of Resources Related to OPEB For the fiscal year ended June 30, 2024, the District recognized OPEB expense of $358,469. As of the fiscal year ended June 30, 2024, the District reported deferred outflows/inflows of resources related to OPEB from the following sources:

The $321,432 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the total OPEB liability during the fiscal year ending June 30, 2025. Other amounts reported as deferred outflows/inflows of resources related to OPEB will be recognized as expense as follows:
33 Victorville Water District
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

5. OTHER POST EMPLOYMENT BENEFITS (OPEB), Continued
M. Payable to the OPEB Plan
At June 30, 2024, the District had no outstanding amount of contributions to the OPEB plan required for the year ended June 30, 2024.

6. PENSION PLAN
A. General Information about the Pension Plans
Plan Description
All qualified permanent and probationary employee s are eligible to participate in the City’s Miscellaneous Plan, agent multiple-employer defi ned benefit pension plans administered by the California Public Employees’ Retirement System (C alPERS), which acts as a common investment and administrative agent for its participating member employers. The District’s share of the net pension liability is reported as a cost-sharing plan in these financial statements. Benefit provisions under the Plan are established by State statute and Local Governme nt resolution. CalPERS issues publicly available reports that include a full description of the pension plan regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website.

Benefits Provided
CalPERS provides service retirement and disability benefits, annual cost-of-living adjustments and death benefits to plan members, who must be public employ ees and beneficiaries. Benefits are based on years of credited service, equal to one year of full-time employment. Members with five years of total service are eligible to retire at age 50 to 62 with statutorily reduced benefits. For employees hired into a plan with the 1.5% at 65 formula, eligibility for service retirement is age 55 with at least five years of services. PEPRA miscellaneous members become eligible for service retirement upon attainment of age 52 with at least five years of service. All members are eligible for nonduty disability benefits after fi ve years of service. The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost-of-living adjustments for each plan are applied as specified by the Public Employees’ Retirement Law.

The Plan’s provisions and benefits in effect as of the measurement period ended June 30, 2024, are summarized as follows:
34 Victorville Water District
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

6. PENSION PLAN, Continued
A. General Information about the Pension Plans, Continued Contributions
Section 20814(c) of the California Public Employee s’ Retirement Law requires that the employer contribution rates for all public employers are determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through CalPERS’ annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The Authority is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. Authority contribution rates may change if plan contracts are amended. Payments made by the employer to satisfy contribution requirements that are identified by the pension plan terms as plan member contributions requirements are classified as plan member contributions. For the fiscal year ended June 30, 2024, the District made contributions of $1,827,835 to the plan.

B. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions Actuarial Assumptions
The total pension liability for the Miscellaneous Plan for the June 30, 2023 measurement period was determined by an actuarial valuation as of June 30, 2022, with standard update procedures used to roll forward the total pension liability to June 30, 2023. The total pension liability for the Miscellaneous Plan was based on the following assumptions:
35 Victorville Water District
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

6. PENSION PLAN, Continued
B. Pension Liabilities, Pension Expen ses, and Deferred Outflows/Inflows of Resources Related to Pensions, Continued
Long-Term Expected Rate of Return
The long-term expected rate of return on pension plan investments was determined using a building- block method in which expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class.

In determining the long-term expected rate of return, CalPERS took into account both short- term and long-term market return expectations. Using historical returns all of the funds’ asset classes, expected compound (geometric) returns were calculated over the next 20 years using a building-block approach.

The expected rate of return was then adjusted to account for assumed administrative expenses of 10 Basis points. The expected real rates of return by asset class are as follows:

6. PENSION PLAN, Continued
B. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions, Continued
Proportionate Share of Net Pension Liability – City’s Miscellaneous Agent Multiple-Employer Plan Allocation to the District
The District’s net pension liability for the Plan is measured as the proportionate share of the net pension liability. The District’s proportionate share of the net pension liability was based on a projection of the District’s long-term share of contributions to the Miscellaneous Plan relative to the projected contributions of the City, actuarially determined.

The District’s proportionate share of the net pensio n liability for the Miscellaneous Plan as of the measurement date ended June 30, 2022 and 2023, was as follows:

Pension Expense and Deferred Outflows and Inflows of Resources For the year ended June 30, 2024, the District recognized pension expense of $3,287,393 for the Miscellaneous Plan. At June 30, 2024, the District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources for the Miscellaneous Plan:
$1,827,835 reported as deferred outflows of reso urces related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ending June 30, 2025. Differences between projected and actual investment earnings are amortized on a five-year straight-line basis and all other amounts are amortized over the expected average remaining service lives of all members that are provided with benefits
37 Victorville Water District
Notes to Basic Financial Statements
For the Year Ended June 30, 2024

6. PENSION PLAN, Continued
B. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions, Continued
Pension Expense and Deferred Outflows and Inflows of Resources, Continued Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:

Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the District’s proportion ate share of the net pe nsion liability for the Miscellaneous Plan, calculated using the discount rate for the Plan, as well as what the District’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate:

Pension Plan Fiduciary Net Position
Detailed information about each pension plan’s fiduciary net position is available in the separate issued CalPERS financial reports.

Payable to the Pension Plan
At June 30, 2024, the District had no outstanding amount of contributions to the Miscellaneous Plan required for the year ended June 30, 2024.

Deferred
Measurement Period Inflows of
Ended June 30, Resources
2024 1,272,794 $
2025 594,414
2026 1,701,930
2027 56,846
2028 -
Thereafter -
38 REQUIRED

SUPPLEMENTARY INFORMATION
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41 Victorville Water District
Required Supplementary Information
For the year ended June 30, 2024
CalPERS Cost Sharing Plan
Schedule of the Proportionate Share of the Net Pension Liability - Last Ten Fiscal Years Reporting Fiscal Year 2015 2016 2017 2018
Measurement Date 6/30/2014 6/30/2015 6/30/2016 6/30/2017 Plan's proportion of the net pension liability 24.28% 24.40% 24.63% 24.87% Plan's proportionate share of
the net pension liability 6,754,806 $ 7,425,085 $ 9,777,304 $ 11,480,941 $ Plan's covered payroll 4,707,026 $ 4,824,221 $ 4,860,190 $ 5,506,946 $ Plan's proportionate share of
the net pension liability as percentage
of its covered payroll 143.50% 153.91% 201.17% 208.48%
Fiduciary net position as a percentage of the
total pension liability 19.73% 19.55% 18.59% 18.52%
Notes to the schedule:

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

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

There were no changes in assumptions.

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

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

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

There were no significant changes in assumptions.

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

The discount rate and long-term rate of return remain the same as the prior year at 6.90%, and the inflation rate is also unchanged from the prior year at 2.30%
The discount rate and long-term rate of return decreased from 7.15% to 6.90% and the inflation rate decreased from 2.50% to 2.30%.

Benefit Changes:

There were no changes to benefit terms that applied to all members of the Public Agency Pool. However, individual employers in the Plan may have provided a benefit improvement to their employees by granting Two Years Additional Service Credit to members retiring during a specified time period (a.k.a. Golden Handshakes).

Changes in Assumptions:

24.95% 25.15% 25.07% 25.57% 23.60% 23.26%
11,526,434$ 12,996,097$ 12,569,004$ 9,263,027$ 16,156,738$ 17,610,719$ 5,598,545$ 5,546,115$ 6,177,914$ 6,148,247$ 6,657,109$ 7,424,195$ 205.88% 234.33% 203.45% 150.66% 242.70% 237.21%

18.88% 18.74% 18.47% 21.49% 16.97% 16.51%
43 Victorville Water District
Required Supplementary Information
For the year ended June 30, 2024
CalPERS Cost Sharing Plan
Schedule of Pension Plan Contributions - Last 10 Fiscal Years Fiscal Year Ended 2015 2016 2017 2018
Actuarially determined contribution 709,786$ 827,951 $ 916,742 $ 1,026,643 $ Contributions in relation to actuarially
deemed contributions (709,786) (827,951) (916,742) (1,026,643) Contribution deficiency (excess) - $ - $ - $ - $ Covered payroll 4,824,221 $ 4,860,190 $ 5,506,946 $ 5,598,545 $ Contributions as a percentage of
covered payroll 14.71% 17.04% 16.65% 18.34%
Notes to Schedule:

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

Actuarial cost method Entry age
Amortization method Level percentage of payroll, closed Asset valuation method Fair Value except for 2015 is Market Value of Assets Discount Rate 6.90%
Inflation 2.75% to 2.30%
Salary increases
Retirement age 50 and up
Annual increase vary by category, entry age and duration of service
44 2019 2020 2021 2022 2023 2024
1,221,074$ 1,459,333$ 1,520,299$ 1,591,527$ 1,773,330$ 1,827,835$ (1,221,074) (1,459,333) (1,520,299) (1,591,527) (1,773,330) (1,827,835) -$ -$ -$ -$ -$ -$ 5,546,115$ 6,177,914$ 6,148,247$ 6,657,109$ 7,424,195$ 9,139,039$

22.02% 23.62% 24.73% 23.91% 23.89% 20.00%
6/30/2016 6/30/2017 6/30/2018 6/30/2019 6/30/2020 6/30/2021 45 Victorville Water District
Required Supplementary Information
For the year ended June 30, 2024
Schedule of Changes in the Total OPEB Liability and Related Ratios - Last 10 Fiscal Years* Reporting Fiscal Year 2018 2019 2020 2021 2022 2023 2024 Measurement Date 6/30/2017 6/30/2018 6/30/2019 6/30/2020 6/30/2021 6/30/2022 6/30/2023 Total OPEB Liability
Service cost 583,831$ 494,095 $ 417,399 $ 474,890 $ 600,360 $ 626,941$ 455,359$ Interest 345,325 404,923 364,950 372,802 271,338 281,198 423,401 Changes of assumptions (1,452,630) (509,085) 601,978 1,795,864 105,768 (2,488,667) (197,575) Differences between expected
and actual experience - (1,985,311) - (904,000) - 987,796 - Benefit payments (185,817) (199,802) (216,889) (224,298) (253,227) (273,537) (313,663) Net change in the total OPEB
liability (709,291) (1,795,180) 1,167,438 1,515,258 724,239 (866,269) 367,522 Total OPEB liability - beginning 11,625,768 10,916,477 9,121,297 10,288,735 11,803,993 12,528,232 11,661,963 Total OPEB liabilty - ending (a) 10,916,477 9,121,297 10,288,735 11,803,993 12,528,232 11,661,963 12,029,485 Covered-employee payroll 4,577,527$ 6,818,328 $ 7,078,295 $ 7,618,996 $ 7,710,052 $ 7,778,497 $ 8,679,777 $ Net OPEB liability as a
percentage of covered -
employee payroll 238.48% 133.78% 145.36% 154.93% 162.49% 149.93% 138.59% Notes to Schedule:

Changes in Assumptions:

Discount Rate 3.58% 3.87% 3.50% 2.21% 2.16% 3.54% 3.65% Mortality Improvement Rates
Scale MP-2016 Scale MP-2018 Scale MP-2018 Scale MP-2020 Scale MP-2020 Scale MP-2021 Scale MP-2021 In the June 30, 2018 measurement period, the pre-65 waived retiree re-election was updated to be 10% after age 65. * Fiscal year 2018 was the 1st year of implementation.

In the June 30, 2022 measurement period, the following medical trend rates changed: Non-Medicare increased from 7.0% to 8.5%; Medicare increased from 6.1% to 7.5%; and Kaiser increased from 7.0% to 6.25%.

In the June 30, 2023 measurement period, the following medical trend rates remained unchanged: Non-Medicare increased by 8.5%, Medicare increased by 7.5%, and Kaiser increased by 6.25%.

In the June 30, 2020 measurement period, the medical trend rate for Kaiser Senior Advantage plans decreased from 6.5% to 5.0%.
46 SUPPLEMENTARY INFORMATION
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49 Victorville Water District
Combining Statement of Net Position
For the year ended June 30, 2024
(With Comparative Data for June 30, 2023)
Victorville
Wastewater
Reclamation Reclaimed
Water Facility Water Eliminations
ASSETS
Current Assets:

Cash and investments 69,640,396$ 11,951,308 $ 3,528,595 $ - $ Cash with fiscal agent 836,588 - - -
Accounts receivable 3,905,373 1,708,021 26,792 -
Interest receivable 371,279 - - -
Due from other governments 28,707 - - -
Inventory and other assets 1,604,610 - - -
Total current assets 76,386,953 13,659,329 3,555,387 -
Noncurrent:

Prepaid deposits 18,675 33,088 - -
Advances to other funds 23,713,443 - - (23,713,443 )
Capital assets:

Nondepreciable 35,813,652 942,051 299,204 -
Depreciable or amortizable, net 105,369,090 10,721,445 4,047,828 - Total noncurrent assets 164,914,860 11,696,584 4,347,032 (23,713,443 ) Total assets 241,301,813 25,355,913 7,902,419 (23,713,443)

DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows - OPEB related 2,221,178 65,97 1 --
Deferred outflow - pension related 6,157,662 147,755 - - Total deferred outflows of resources 8,378,840 213,726 - -

LIABILITIES
Current liabilities:

Accounts payable 2,156,491 650,089 51,256 -
Interest payable 153,385 - - -
Prepaid water connection fees ----
Deposits payable 1,748,554 - - -
Compensated absences - due within one year 561,302
Total OPEB liability - due within one year 338,738 - - - Long-term liabilities - due within one year 454,620 - - - Total current liabilities 5,413,090 650,089 51,256 -
Noncurrent liabilities:

Advances from other funds - 23,713,443 - (23,713,443 )
Total OPEB liability 11,444,716 246,031 --
Net pension liability 17,320,116 290,600 - -
Long-term debt 7,329,311 ---
Compensated absences 154,792 - - -
Total noncurrent liabilities 36,248,935 24,250,074 - (23,713,443 ) Total liabilities 41,662,025 24,900,163 51,256 (23,713,443)

DEFERRED INFLOWS OF RESOURCES
Deferred inflows - OPEB related 3,165,532 68,856 - -
Deferred inflows - pension related 806,554 45,045 - -
Total deferred inflows of resources 3,972,086 113,901 - -

NET POSITION
Net investment in capital assets 133,160,545 11,663,496 4,347,032 - Unrestricted 70,885,997 (11,107,921) 3,504,131 - Total net position 204,046,542$ 555,575$ 7,851,163$ -$ 50 2024 2023
85,120,299$ 78,986,581$
836,588 836,639
5,640,186 5,176,78 1
371,279 248,870
28,707 19,946
1,604,610 866,934
93,601,669 86,135,751
51,763 28,306
--
37,054,907 40,643,195
120,138,363 119,672,824
157,245,033 160,344,325
250,846,702 246,480,076
2,287,149 2,707,614
6,305,417 6,095,478
8,592,566 8,803,092
2,857,836 4,376,617
153,385 161,029
- 217,489
1,748,554 1,700,469
561,302 527,666
338,738 273,537
454,620 434,428
6,114,435 7,691,235
--
11,690,747 11,388,426
17,610,716 16,156,738
7,329,311 7,790,160
154,792 145,516
36,785,566 35,480,840
42,900,001 43,172,075
3,234,388 3,985,338
851,599 1,029,80 1
4,085,987 5,015,139
149,171,073 151,942,967
63,282,207 55,152,987
212,453,280$ 207,095,954 $
51 Victorville Water District
Combining Statement of Revenues, Expenses and Changes in Net Position For the year ended June 30, 2024
(With Comparative Data for the Year Ended June 30, 2023) Victorville
Wastewater
Reclamation Reclaimed
Water Facility Water Eliminations
OPERATING REVENUES:

Utility sales 20,801,733$ 8,737,426 $ 332,32 1$ -$ Meter and service fees 11,326,765 - - -
Pass-thru charges for services 1,149,312 - - -
Fines and forfeitures 386,446 - - -
Arsenic surcharge 301,506 - - -
Other 243,233 - - -
Total operating revenues 34,208,995 8,737,426 332,321 - OPERATING EXPENSES:

Personnel services 12,262,415 270,709 204,769 - Maintenance and operations 10,779,044 8,582,566 170,497 - Production costs and pass-thru production costs 6,405,146 - 6,485 - Pass-thru production costs 1,178,512 - - -
Depreciation and amortization 6,071,690 337,751 161,064 - Total operating expenses 36,696,807 9,191,026 542,815 - Operating income (loss) (2,487,812) (453,600) (210,494) - NONOPERATING REVENUES (EXPENSES):

Taxes 1,567,817 - - -
Investment income 4,272,348 583,426 157,689 -
Interest expense (363,799) (1,024,061) --
Gain on disposal of assets ----
Other nonoperating expenses (2,180,570) 156,513 - -
Total nonoperating revenues (expenses) 3,295,796 (284,122) 157,689 - Income before contributions and transfers 807,984 (737,722) (52,805) - CONTRIBUTIONS AND TRANSFERS:

Connection fees 1,904,448 2,338,212 - -
Alternate water source fees 484,220 - - -
Capital restricted use fees - 587,276 - -
Capital contributions ----
Transfers in 25,713 - - -
Contributions to the City of Victorville ----
Total contributions and transfers 2,414,381 2,925,488 - - Change in net position 3,222,365 2,187,766 (52,805) - NET POSITION:

Beginning of year 200,824,177 (1,632,191) 7,903,968 -
End of year 204,046,542$ 555,575$ 7,851,163$ -$ 52 2024 2023
29,871,480$ 30,269,489$
11,326,765 9,801,678
1,149,312 1,211,013
386,446 485,824
301,506 285,035
243,233 242,429
43,278,742 42,295,468
12,737,893 11,648,542
19,532,107 19,228,008
6,411,631 5,434,263
1,178,512 1,211,013
6,570,505 6,524,962
46,430,648 44,046,788
(3,151,906) (1,751,320)
1,567,817 1,335,019
5,013,463 1,898,079
(1,387,860) (381,764)
- 338,923
(2,024,057) (220,750)
3,169,363 2,969,507
17,457 1,218,187
4,242,660 3,749,915
484,220 528,412
587,276 586,68 1
- 10,000
25,713 -
-( 73,125)
5,339,869 4,801,883
5,357,326 6,020,070
207,095,954 201,075,884
212,453,280$ 207,095,954 $
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Victorville City CouncilApril 15, 2025

Victorville City Council
April 15, 2025