FINANCE/BUDGET/AUDIT COMMITTEE

1. CALL TO ORDER 2. ROLL CALL 3. PUBLIC COMMENT ON NON-AGENDA ITEMS 4. CONSENT CALENDAR 4.A. APPROVE AFFIDAVIT OF POSTING FOR THE SPECIAL FINANCE/BUDGET/AUDIT COMMITTEE MEETING OF MARCH 11, 2024 RECOMMENDATION: Approve. 5. DISCUSSION ITEMS 5.A. PRELIMINARY FISCAL YEAR 2024/25 PROJECTIONS AND BALANCING RECOMMENDATION: Receive a report from staff on the preliminary projections for fiscal year 2024/25, including preliminary revenue and expenditure estimates, and preliminary status of the General Fund balancing picture. 6. ITEMS FROM THE FINANCE BUDGET AUDIT COMMITTEE 7. ITEMS FROM STAFF 8. ADJOURNMENT Next meeting: Monday, May 6, 2024 at 6:00 p.m. in the City Council Chamber, Rolling Hills City Hall, 2 Portuguese Bend Road, Rolling Hills, California, 90274. 2 PORTUGUESE BEND ROAD ROLLING HILLS, CA 90274 (310) 377-1521 AGENDA Special Finance/Budget/Audit Committee Meeting FINANCE/BUDGET/AUDIT COMMITTEE Monday, March 11, 2024 CITY OF ROLLING HILLS 6:00 PM CL_AGN_240311_FBA_AffidavitofPosting.pdf CL_AGN_240311_FBA_Budget_Summary_FY24-25.pdf CL_AGN_240311_FBA_Prelim_GF_RevProjections_FY24-25 CL_AGN_240311_FBA_Building_Revenue_Analysis_FY 2024-25.pdf CL_AGN_240311_FBA_Prelim_FY24-25_Projections.pdf Notice: Pursuant to the Brown Act, no action will take place on any items not on the agenda. This is the appropriate 1

time for members of the public to make comments regarding items listed on this agenda. Documents pertaining to an agenda item received after the posting of the agenda are available for review in the City Clerk's office or at the meeting at which the item will be considered. In compliance with the Americans with Disabilities Act (ADA), if you need special assistance to participate in this meeting due to your disability, please contact the City Clerk at (310) 377-1521 at least 48 hours prior to the meeting to enable the City to make reasonable arrangements to ensure accessibility and accommodation for your review of this agenda and attendance at this meeting. 2

1. CALL TO ORDER 2. ROLL CALL 3. PUBLIC COMMENT ON NON-AGENDA ITEMS 4. CONSENT CALENDAR 4.A. APPROVE AFFIDAVIT OF POSTING FOR THE SPECIAL FINANCE/BUDGET/AUDIT COMMITTEE MEETING OF MARCH 11, 2024 RECOMMENDATION: Approve. 5. DISCUSSION ITEMS 5.A. PRELIMINARY FISCAL YEAR 2024/25 PROJECTIONS AND BALANCING RECOMMENDATION: Receive a report from staff on the preliminary projections for fiscal year 2024/25, including preliminary revenue and expenditure estimates, and preliminary status of the General Fund balancing picture. 6. ITEMS FROM THE FINANCE BUDGET AUDIT COMMITTEE 7. ITEMS FROM STAFF 8. ADJOURNMENT Next meeting: Monday, May 6, 2024 at 6:00 p.m. in the City Council Chamber, Rolling Hills City Hall, 2 Portuguese Bend Road, Rolling Hills, California, 90274. 2 PORTUGUESE BEND ROAD ROLLING HILLS, CA 90274 (310) 377-1521 AGENDA Special Finance/Budget/Audit Committee Meeting FINANCE/BUDGET/AUDIT COMMITTEE Monday, March 11, 2024 CITY OF ROLLING HILLS 6:00 PM CL_AGN_240311_FBA_AffidavitofPosting.pdf CL_AGN_240311_FBA_Budget_Summary_FY24-25.pdf CL_AGN_240311_FBA_Prelim_GF_RevProjections_FY24-25 CL_AGN_240311_FBA_Building_Revenue_Analysis_FY 2024-25.pdf CL_AGN_240311_FBA_Prelim_FY24-25_Projections.pdf Notice: Pursuant to the Brown Act, no action will take place on any items not on the agenda. This is the appropriate 1

time for members of the public to make comments regarding items listed on this agenda. Documents pertaining to an agenda item received after the posting of the agenda are available for review in the City Clerk's office or at the meeting at which the item will be considered. In compliance with the Americans with Disabilities Act (ADA), if you need special assistance to participate in this meeting due to your disability, please contact the City Clerk at (310) 377-1521 at least 48 hours prior to the meeting to enable the City to make reasonable arrangements to ensure accessibility and accommodation for your review of this agenda and attendance at this meeting. 2

Agenda Item No.: 4.A Mtg. Date: 03/11/2024 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: CHRISTIAN HORVATH, CITY CLERK / EXECUTIVE ASSISTANT TO CITY MANAGER THRU: KARINA BAÑALES, CITY MANAGER SUBJECT: APPROVE AFFIDAVIT OF POSTING FOR THE SPECIAL FINANCE/BUDGET/AUDIT COMMITTEE MEETING OF MARCH 11, 2024 DATE: March 11, 2024 BACKGROUND: None. DISCUSSION: None. FISCAL IMPACT: None. RECOMMENDATION: Approve. ATTACHMENTS: CL_AGN_240311_FBA_AffidavitofPosting.pdf 3

Administrative Report 4.A., File # 2237 Meeting Date: 3/11/2024 STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) §§ CITY OF ROLLING HILLS ) AFFIDAVIT OF POSTING In compliance with the Brown Act, the following materials have been posted at the locations below. Legislative Body Finance/Budget/Audit Committee Posting Type Special Meeting Agenda Posting Location 2 Portuguese Bend Road, Rolling Hills, CA 90274 City Hall Window City Website: https://www.rolling-hills.org/government/agenda/index.php https://www.rolling-hills.org/government/city_council/city_council_archive_agendas/index.php Meeting Date & Time MARCH 11, 2024 6:00pm As City Clerk of the City of Rolling Hills, I declare under penalty of perjury, the document noted above was posted at the date displayed below. Christian Horvath, City Clerk Date: March 8, 2024 4

Agenda Item No.: 5.A Mtg. Date: 03/11/2024 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: ROBERT SAMARIO, FINANCE DIRECTOR THRU: KARINA BAÑALES, CITY MANAGER SUBJECT: PRELIMINARY FISCAL YEAR 2024/25 PROJECTIONS AND BALANCING DATE: March 11, 2024 BACKGROUND: The City of Rolling Hills has initiated the process of developing the annual budget for fiscal year 2024/25. One of the key steps in the process, is developing revenue estimates as this establishes the amounts of funds available to spend for the delivery of services to the community. It is still early in the process, and revenues will continue to be monitored and updated over the next few months as additional information and revenues are received. However, we are far enough in the fiscal year to be in a position to make reasonable projections to provide a preliminary sense of whether the City will be facing a structural deficit or will have adequate ongoing revenues to cover ongoing expenditures. Thus, this report aims to provide the Finance, Audit, and Budget Committee with preliminary projections of General Fund revenues and expenditures for fiscal year 2024/25. DISCUSSION: The current fiscal year 2023/24 adopted budget is balanced, meaning ongoing revenues are adequate to cover ongoing costs. In fact, the adopted budget included a surplus of $206,837, which covered almost all of the $250,000 Solar Power/Battery Back-Up Project. Based on revenues received in the current fiscal year through December 31, 2023, revenues are expected to end the year below budget by approximately $185,000. However, based on expenditure savings through December 31, 2023, due largely to staff vacancies, the savings by fiscal year-end will likely be in the $200,000 - $250,000 range. Staff used the current fiscal year revenue projections to develop preliminary revenue projections for fiscal year 2024/2025. Based on these very preliminary estimates, ongoing revenues total $2,638,137, representing an increase of $60,480 from the current fiscal year's 5

projected revenue. Please refer to Attachment 2. Note that, as discussed with Council on February 26, 2024, all current-year revenues are reasonably in line with the adopted revenues, with the exception of building revenues. Attachment 3 provides some historical data related to the number and value of building permits issued by the County of Los Angeles on behalf of the City of Rolling Hills, along with the related revenues received by the City. In the current fiscal year, while the number of building permits is trending much higher than last year, the average value is almost half of the average value last year. This seems to explain why revenues through the first half of the year are trending below last year and the adopted budget. Against a budget of $600,000, building and related revenues are projected to reach $440,000, $160,000 short of budget. For fiscal year 2024/25, staff has assumed for now, pending additional revenue in the coming months, that revenues will be flat next year - that is, there is no assumed growth in order to be conservative. On the expenditure side, the "status quo" budget for fiscal year 2024/25 is $2,504,357. This is a $51,100 decrease from the current year's adopted budget of $2,555,457 due to new staff hired at a starting salary lower than their predecessors, which saves $73,862. Staff has also built into the estimate an assumed 3.5% increase to salaries starting July 1, 2024, pursuant to the existing Employee Handbook and Personnel Policy Manual, which adds $22,762 in costs. Combining preliminary projections for revenues and operating expenditures, the General Fund appears to still be in balance, producing an operating surplus of $133,780. See Attachment 1. Staff will be soliciting the Committee's feedback on the preliminary growth assumptions used to develop the fiscal year 2024/25 revenue estimates and any other recommendations for Council to consider. FISCAL IMPACT: None. RECOMMENDATION: As presented. ATTACHMENTS: CL_AGN_240311_FBA_Budget_Summary_FY24-25.pdf CL_AGN_240311_FBA_Prelim_GF_RevProjections_FY24-25 CL_AGN_240311_FBA_Building_Revenue_Analysis_FY 2024-25.pdf CL_AGN_240311_FBA_Prelim_FY24-25_Projections.pdf 6

ATTACHMENT 1 FY 2023/24 FY 2023/24 FY 2023/24 Adopted Year-End Prelim Budget Projections Projections Operating Revenues 2,762,294$ 2,576,766$ 2,638,137$ Operating Expenditures 2,555,457 2,355,457 2,504,357 Operating Surplus (Deficit) 206,837 221,309 133,780 Capital Transfers (250,000) (50,000) N/A Surplus (Deficit) (43,163)$ 171,309$ 133,780$ CITY OF ROLLINGS HILLS Preliminary Balancing General Fund 7

ATTACHMENT 2 Prelim Preliminary FY 2022/23 Adopted Year-End FY 2024/25 Projected Actuals Budget Projection Projections Growth Property Taxes 1,378,564$ 1,496,250$ 1,450,000$ 1,500,750$ 3.5% Sales Taxes 20,555 13,905 10,000 10,300 3.0% Property Transfer Tax 57,185 56,222 63,000 64,890 3.0% Other Taxes 546 1,000 1,000 1,000 0.0% Motor Vehicle In Lieu 263,988 269,267 272,374 280,545 3.0% Building & Other Permits 578,496 600,000 440,892 440,892 0.0% C&D Permits 5,750 5,600 10,000 10,000 0.0% Variance, Planning & Zoning 61,244 67,000 25,000 25,000 0.0% Animal Control Fees 353 150 300 300 0.0% Franchise Fees 14,847 13,000 13,000 13,260 2.0% Fines & Traffic Violations 4,422 3,500 4,000 4,000 0.0% Cost Recoivery - Publications 9,353 7,200 3,000 3,000 0.0% RHCA Lease Revenue 63,404 69,000 69,000 69,000 0.0% Public Safety Aug Fund 1,040 1,200 1,200 1,200 0.0% Interest on Investments 102,408 110,000 140,000 140,000 0.0% PARS Earnings 25,244 20,000 44,000 44,000 0.0% Miscellaneous Revenue 82,904 5,000 6,000 6,000 0.0% Transfers In - Refuse Fund 24,000 24,000 24,000 24,000 0.0% TOTALS 2,694,303$ 2,762,294$ 2,576,766$ 2,638,137$ CITY OF ROLLING HILLS Preliminary Fiscal Year 2024/25 Projections General Fund Revenues 8

ATTACHMENT 3 Fiscal Total Year Count Total Average Revenues 2016/17 66 5,966,218$ 90,397$ 602,149$ 2017/18 69 8,773,580 127,153 769,138 2018/19 71 8,331,370 117,343 482,048 2019/20 44 6,017,600 136,764 369,250 2020/21 34 6,037,650 177,578 184,378 2021/22 40 4,066,192 101,654 487,909 2022/23 38 4,572,111 120,319 578,496 2023/24 33 2,281,919 69,149 183,705 Valuation CITY OF ROLLING HILLS Analysis of Building Revenues 9

CITY OF ROLLING HILLS PRELIMINARY REVENUE PROJECTIONS FISCAL YEAR 2024/25 10

Purpose of Report ▪To provide preliminary revenue projections for FY 2024/25 ▪ Projections largely based on revenues through 12/31/23 and projections for FY 2023/24 ▪ Revenues will continue to be monitored through the next few months and will be refined further ▪To provide a preliminary glimpse of the balancing of revenues and expenditures ▪ Do we have a projected deficit or surplus? 11

GENERAL FUND REVENUES 12

General Fund RevenuesActuals Variance Adopted Pro-Rata Thru Favorable Budget Budget 12/31/23 (Unfavorable) 401 Property Taxes 1,496,250$ 659,846$ * 641,750$ (18,096)$ 405 Sales Taxes 13,905 6,953 5,000 (1,953) 410 Property Transfer Tax 56,222 28,111 31,782 3,671 415 Other Taxes 1,000 500 - (500) 420 Motor Vehicle In Lieu 269,267 134,634 136,187 1,553 440 Building & Other Permits 600,000 300,000 183,705 (116,295) 441 C&D Permits 5,600 2,800 5,200 2,400 450 Variance, Planning & Zoning 67,000 33,500 12,542 (20,958) 455 Animal Control Fees 150 75 289 214 460 Franchise Fees 13,000 6,500 4,615 (1,885) 480 Fines & Traffic Violations 3,500 1,750 2,019 269 482 Cost Recoivery - Publications 7,200 3,600 750 (2,850) 600 RHCA Lease Revenue 69,000 34,500 34,496 (5) 650 Public Safety Aug Fund 1,200 600 620 20 670 Interest on Investments 110,000 55,000 72,130 17,130 671 PARS Earnings 20,000 10,000 22,880 12,880 675 Miscellaneous Revenue 5,000 2,500 5,556 3,056 699 Transfers In - Refuse Fund 24,000 12,000 12,000 - TOTALS 2,762,294$ 1,292,868$ 1,171,520$ (121,348)$ 13

Property Taxes Projected $1,425,000 Budget $1,496,000 $1,500,672Actual $1,380,891 Projected $1,449,935 $500,000 $700,000 $900,000 $1,100,000 $1,300,000 $1,500,000 $1,700,000 FY 2023 FY 2024 FY 2025 5% of FY 2023 Actual 3.5% of FY 2023 Projected Need 8.3% Growth To Meet FY 23 Budget 5% of FY 2023 Projected 14

Property Taxes ▪3 components to P/T growth ▪ Annual CPI (2% max) ▪ Supplemental assessments ▪ Re-assessments from P/Y sales to MV ▪Growth from re-assessments generally the largest component ▪Dramatic reduction in sales due to sharp increase in interest rates ▪Overall growth expected to be muted ▪Consultant from neighboring City projected 3.5% for their client for next two yearsProperty % Taxes Growth 2017 1,007,250 Actual 2018 1,089,838 8.2% Actual 2019 1,189,613 9.2% Actual 2020 1,201,368 1.0% Actual 2021 1,222,948 1.8% Actual 2022 1,323,001 8.2% Actual 2023 1,380,891 4.4% Actual 2024 1,450,000 5.0% Projected 2025 1,500,750 3.5% Prelim. Est. 15

Real Property Transfer Tax ▪FY 2021 - $132,888 ▪FY 2022 - $80,719 ▪FY 2023 $57,185 ▪FY 2024 Adopted Budget - $56,222 ▪FY 2024 through December 31, 2023 = $31,782 ▪FY 2024 YE Projection = $63,000 ▪FY 2025 Projection = $64,890 (3%) 16

Building & Other Permit RevenueTotal Fiscal Year Count Total Average Revenues 2016/17 66 5,966,218.00$ 90,397.24$ 602,148.95$ 2017/18 69 8,773,580.00 127,153.33 769,138.01 2018/19 71 8,331,370.00 117,343.24 482,047.62 2019/20 44 6,017,600.00 136,763.64 369,250.33 2020/21 34 6,037,650.00 177,577.94 184,378.48 2021/22 40 4,066,192.00 101,654.80 487,909.09 2022/23 38 4,572,111.00 120,318.71 578,496.07 2023/24 33 2,281,919.00 69,149.06 183,704.81 Valuation 17

INTEREST ON INVESTMENTS ▪ Recent trends ▪ FY 2021/22 – $26,187 ▪ FY 2022/23 – $96,821 ▪FY 2023/24 Adopted Budget - $110,000 ▪FY 2023/24 thru 12/31/23 - $72,130 ▪Two main reasons: ▪ Shifted $1.25M from LAIF to short-term CDs ▪ LAIF was earning less than ½% ▪ Yields on short-term CDs was/is in the 4-5% range ▪ General increase in yields at LAIF (FY 2023 yield up to 2.17%) 18

FY 2024/25 Preliminary Revenue ProjectionsPrelim Preliminary FY 2022/23 Adopted Year-End FY 2024/25 Projected Actuals Budget Projection Projections Growth Property Taxes 1,378,564$ 1,496,250$ 1,450,000$ 1,500,750$ 3.5% Sales Taxes 20,555 13,905 10,000 10,300 3.0% Property Transfer Tax 57,185 56,222 63,000 64,890 3.0% Other Taxes 546 1,000 1,000 1,000 0.0% Motor Vehicle In Lieu 263,988 269,267 272,374 280,545 3.0% Building & Other Permits 578,496 600,000 440,892 440,892 0.0% C&D Permits 5,750 5,600 10,000 10,000 0.0% Variance, Planning & Zoning 61,244 67,000 25,000 25,000 0.0% Animal Control Fees 353 150 300 300 0.0% Franchise Fees 14,847 13,000 13,000 13,260 2.0% Fines & Traffic Violations 4,422 3,500 4,000 4,000 0.0% Cost Recoivery - Publications 9,353 7,200 3,000 3,000 0.0% RHCA Lease Revenue 63,404 69,000 69,000 69,000 0.0% Public Safety Aug Fund 1,040 1,200 1,200 1,200 0.0% Interest on Investments 102,408 110,000 140,000 140,000 0.0% PARS Earnings 25,244 20,000 44,000 44,000 0.0% Miscellaneous Revenue 82,904 5,000 6,000 6,000 0.0% Transfers In - Refuse Fund 24,000 24,000 24,000 24,000 0.0% TOTALS 2,694,303$ 2,762,294$ 2,576,766$ 2,638,137$ 19

GENERAL FUND EXPENDITURES 20

General Fund Expenditures by DepartmentActuals Variance Amended Pro-Rated Thru Favorable Department Budget Budget Budget 12/31/23 (Unfav) City Administrator 957,138$ 1,063,827$ 531,914$ 378,401$ 153,513$ Finance 154,400 154,400 77,200 66,833 10,367 Planning & Development 858,801 858,801 429,401 408,493 20,908 Public Safety 270,000 270,000 135,000 127,671 7,329 Non-Departmental 134,018 141,618 70,809 110,772 (39,963) City Properties 181,100 181,100 90,550 81,492 9,058 Total Operations 2,555,457 2,669,746 1,334,873 1,173,660 161,213 Capital Transfers 250,000 1,072,244 536,122 233,355 302,767 GENERAL FUND TOTALS 2,805,457$ 3,741,990$ 1,870,995$ 1,407,015$ 463,980$ Adopted 21

CITY ADMINISTRATOR ▪Total favorable variance - $153k ▪Salary/Benefit Savings - $93k ▪Vacancies in 3 of 4 positions during 1st six months ▪Consulting Fees (Project Management) - $21k ▪Many costs charged to project in CIP Fund (40) ▪Records Management - $21k ▪Lots of work completed in 1st half of FY; invoices pending 22

NON-DEPARTMENTAL ▪Unfavorable Variance - $39,963 ▪Insurance Premiums – Variance of $21,756 ▪Premiums paid in July ▪Emergency Preparedness – Variance of $19,087 ▪Majority of costs paid in 1st half of the year 23

BUDGET SUMMARYFY 2023/24 FY 2023/24 FY 2023/24 Adopted Year-End Prelim Budget Projections Projections Operating Revenues 2,762,294$ 2,576,766$ 2,638,137$ Operating Expenditures 2,555,457 2,355,457 2,504,357 Operating Surplus (Deficit) 206,837 221,309 133,780 Capital Transfers (250,000) (50,000) N/A 24

Conclusion ▪Revenues could end the year up to $200k below budget ▪Revenue shortfall will likely be offset by expenditure savings (excluding capital) ▪General Fund budget remains structurally balanced and is expected to remain so for next fiscal year 25

QUESTIONS/DISCUSSION 26