City of Laguna Niguel Popular Annual Financial Report 2024

CITY OF LAGUNA NIGUEL CALIFORNIA POPULAR ANNUAL FINANCIAL REPORT For Fiscal Year Ended June 30, 2024

City of Laguna Niguel Popular Annual Financial Report | Year Ended June 30, 2024 TABLE OF CONTENTS Introduction 02 About Laguna Niguel 03 04 City Organization Chart 05 Demographics and Key Statistics 06 Notable Community Events 07 Strategic Plan Executive Summary Fund Balances 09 10 General Fund Revenues 11 General Fund Expenditures General Fund Reserves 12 Capital Improvement Program 13 14 Investments GLOSSARY OF ACCOUNTING TERMS FUND: An accounting entity with a self-balancing set of accounts. Each fund operates independently almost like its own “company”. Funds are established for specific purposes, like the Gas Tax Fund, which records revenues received for gas taxes, and allowable expenditures of those revenues. FUND BALANCE: The “retained earnings” of the City since its incorporation. Each fund has its own fund balance. GENERAL FUND: The primary fund of the City used to account for all revenues and expenditures of the City not legally restricted as to use. SPECIAL REVENUE FUNDS: These funds are separately administered because revenues are restricted by the State of California, the Federal government, or other governmental agencies as to how the City may spend them. MODIFIED ACCRUAL BASIS: Revenues are recognized when both measurable and available to the City. Expenditures are recorded as they occur. cityoflagunaniguel.org 01

City of Laguna Niguel Popular Annual Financial Report | Year Ended June 30, 2024 INTRODUCTION To the Citizens of Laguna Niguel: Welcome to the City of Laguna Niguel’s first Popular Annual Financial Report (PAFR). The PAFR is intended to provide residents and stakeholders of Laguna Niguel with information in an easy-to- read format, simplifying complex financial data and using less technical language. This report contains condensed and simplified financial information from audited results contained in the City’s Annual Comprehensive Financial Report (ACFR) for the year ended June 30, 2024. The PAFR provides an overview of the City’s financial condition and brief descriptions of other areas of interest. We hope you enjoy reading the City’s PAFR and find its contents helpful and interesting. For more information on the City’s various financial reports or other financial information, please visit the Finance Department page on the City of Laguna Niguel website at www.cityoflagunaniguel.org. cityoflagunaniguel.org 02

City of Laguna Niguel Popular Annual Financial Report | Year Ended June 30, 2024 ABOUT LAGUNA NIGUEL Laguna Niguel is a 14.72 square mile planned community in South Orange County, California and is located approximately halfway between Los Angeles and San Diego. Laguna Niguel is a General Law city with municipal elections held in November of even numbered years. The City is known for fostering a strong retail and commercial environment. Over one-third of Laguna Niguel is designated as open space, making this one of the key features defining the character and urban form of the City. Approximately seventy two percent (72%) of Laguna Niguel’s 26,187 housing units are owner occupied. The name “Laguna Niguel” is derived from the Spanish word “Laguna,” which means lagoon, and the word “Nigueli,” which was the name of a Juaneno Indian village once located near what is now known as Aliso Creek. In 1821, California became Mexican territory, and many rancheros were formed in Southern California, including Rancho Niguel. Originally, Rancho Niguel was primarily used as a sheep ranch. The first private landowner of the area was Juan Avila, a resident of San Juan Capistrano, who obtained land through a Mexican land grant in 1842. Juan Avila was also successful in re-establishing his title to the land after California became a US territory in 1848 and remained the owner of “Rancho Niguel” until 1865. In 1895, the “Rancho Niguel” land became part of the Moulton Company, a company that would eventually control over 19,000 acres of local ranch land. In 1959 the Laguna Niguel Corporation was formed, and Laguna Niguel became one of the first master planned communities in California. Land sales started to occur in 1961 in the Monarch Bay and Laguna Terrace subdivisions. The City was officially incorporated on December 1, 1989, becoming the 29th city in Orange County. cityoflagunaniguel.org 03

City of Laguna Niguel Popular Annual Financial Report | Year Ended June 30, 2024 ORGANIZATION CHART LAGUNA NIGUEL RESIDENTS CITY COUNCIL Mayor Council Member Mayor Pro Tem Council Member Council Member Kelly Jennings Stephanie Winstead Stephanie Oddo Gene Johns Ray Gennawey COMMISSIONS & COMMITTEES CITY DEPARTMENTS Parks & Recreation City Attorney Commission City Manager Planning Commission Traffic & Transportation Administration Commission Investment, Banking & Audit Community Development Committee Finance Military Support Committee Parks & Recreation Senior Citizens Committee Public Safety Youth Public Works Committee cityoflagunaniguel.org 04

City of Laguna Niguel Popular Annual Financial Report | Year Ended June 30, 2024 DEMOGRAPHICS AND KEY STATISTICS 2 POPULATION TREND COMMUNITY DEMOGRAPHICS White 66.5% 66,748 66,748 66,689 66,689 66,142 66,142 Hispanic/Latino 16.3% 65,377 65,377 65,316 65,316 65,168 65,168 Asian 9.8% 64,702 64,702 64,316 64,291 64,316 64,291 Black 1.2% Other 6.2% 56.6% $140,605 44,811 64,291 47 BACHELOR’S DEGREE MEDIAN HOUSEHOLD 1 1 1 2 POPULATION 2 MEDIAN AGE REGISTERED VOTERS OR HIGHER INCOME HOUSING TREND 28,136 28,136 28,136 27,827 27,822 27,827 27,822 3 HOUSING UNITS 26,774 26,774 26,235 26,236 26,235 26,236 25,884 25,888 25,884 25,888 25,458 25,458 66% 2 OWNER-OCCUPIED $1,327,500 4 MEDIAN HOME VALUE EXISTING & PLANNED LAND USE Residential 46% Commercial 4% Mixed Use 2% CITY Public Facilities 2% 31 PARKS 141 MILES Parks & Open Space 46% MAINTAINED TRAIL 80MILES CITY STREETS 1 Cal State Fullerton - CDR 2 US Census Bureau 3 State Department of Finance 4 HdL, Coren & Cone cityoflagunaniguel.org 05

City of Laguna Niguel Popular Annual Financial Report | Year Ended June 30, 2024 NOTABLE COMMUNITY EVENTS SUMMER CONCERT SERIES 4TH OF JULY CELEBRATIONS JUNE - AUGUST JULY SEA COUNTRY FESTIVAL HAUNTED TRAILS AUGUST OCTOBER VETERANS DAY CEREMONY HOLIDAY PARADE NOVEMBER DECEMBER cityoflagunaniguel.org 06

City of Laguna Niguel Popular Annual Financial Report | Year Ended June 30, 2024 STRATEGIC PLAN EXECUTIVE SUMMARY LAGUNA NIGUEL 2050: STRATEGIC PLAN 2024 UPDATE EXECUTIVE SUMMARY The City of Laguna Niguel adopted its first-ever strategic plan in 2020, which included a planning process to set goals and priorities for its future. Through the strategic planning process, the City created a blueprint for the future and developed a plan to accomplish its determined direction. The Strategic Plan defines current and future needs, established goals and strategies, and the City's mission statement, vision statement, and guiding values. The City has accomplished a great deal in the first four years of the Strategic Plan, and with the City moving into year five of the plan, important updates were made to the strategies and timelines to reflect current priorities. CITY OF LAGUNA NIGUEL STRATEGIC PLAN GOALS GOAL 1: PUBLIC SAFETY GOAL 2: FISCAL SUSTAINABILITY GOAL 3: OPEN SPACE AND GOAL 4: INFRASTRUCTURE ENVIRONMENTAL PRESERVATION AND TECHNOLOGY GOAL 5: ECONOMIC AND GOAL 6: COMMUNICATION AND COMMUNITY DEVELOPMENT COMMUNITY OUTREACH A collaborative process was used to update the Strategic Plan. Throughout the process, a variety of stakeholders were involved, including City residents, business owners, Council Members, commissioners, committee members, department heads, and staff. The process included the preparation of an environmental scan, a strategic plan survey, and a workshop to discuss the City's goals for the future. The City's continued success in implementing the identified priorities outlined in the Strategic Plan has furthered the achievement of the goals established by the City Council. This 2024 Strategic Plan Update reflects new and modified strategies and timelines to ensure those goals are achieved. The 2024 Laguna Niguel Strategic Plan contains the following elements: Organizational mission, vision, and values. Six goals Strategies for each goal Implementation action plan cityoflagunaniguel.org 07

City of Laguna Niguel Popular Annual Financial Report | Year Ended June 30, 2024 STRATEGIC PLAN EXECUTIVE SUMMARY GOAL 1: PUBLIC SAFETY Maintain current service levels Enhance neighborhood watch programs Share resources with surrounding communities Enhance community-wide public safety public relations campaign Conduct CPR training education in partnership with the OCFA Business watch/business enhancement team Leverage technology to enhance public safety and emergency preparedness GOAL 2: FISCAL SUSTAINABILITY Analyze and monitor current fee structure Implement efficiencies for City payments Maximize returns on investments on City investments Review financial procedures to ensure efficiency Implement Laguna Niguel Aquatics Center operational enhancements GOAL 3: OPEN SPACE AND ENVIRONMENTAL PRESERVATION Take inventory of all components of open space Develop a 10-year trails and open space maintenance plan Enhance open space education Obtain a Tree City USA designation GOAL 4: INFRASTRUCTURE AND TECHNOLOGY Conduct an energy efficiency evaluation for all City facilities Evaluate the City’s infrastructure and maintenance needs Develop and implement smart cities solutions Conduct an active transportation study Complete Citywide bus shelter improvements Complete the restoration of La Paz Road with mobility enhancements Embrace emerging technologies to enhance community experience Develop a spring street banner design GOAL 5: ECONOMIC AND COMMUNITY DEVELOPMENT Update and implement the Gateway Specific Plan Complete comprehensive General Plan update Business attraction/retention/education Update: local coastal program, trail master plan, town center area specific plan, municipal code, subdivision codes and manuals, discretionary design guidelines, sign code, and triennial local building code Coordinate with the General Services Administration (GSA) for the federal building property disposal Conduct HOA engagement and education programs Implement code amendments in response to new state legislation Implementation of the housing element GOAL 6: COMMUNICATION AND COMMUNITY OUTREACH Continue to enhance public education through social media Utilize new and existing technologies to expand community outreach Update the City’s audio/visual production services and quality Enhance existing partnerships and regular communication with key stakeholders Leverage data analysis to curate Citywide messaging cityoflagunaniguel.org 08

City of Laguna Niguel Popular Annual Financial Report | Year Ended June 30, 2024 FUND BALANCES MAJOR GOVERNMENTAL FUNDS = $55,225,664 MISCELLANEOUS GRANTS CAPITAL GENERAL FUND PROJECTS FUND $(315,152) * The Miscellaneous Grants $53,308,706 $2,232,110 Fund accounts for revenues The General Fund is the primary account and expenditures related to The Capital Projects Fund accounts for for the City’s money, used to support most City projects that are fully or the City’s capital projects, including the City operations. Revenue in this fund can be partially funded by outside construction, repair, and upgrades of spent on a variety of programs and services grants, primarily from the facilities, streets, storm drains, sewers, without specific restrictions. State of California. and parks. NONMAJOR GOVERNMENTAL FUNDS = $6,416,748 AQMD FUND SENIOR TRANSPORTATION FUND $113,365 MEASURE M2 FUND The AQMD Fund is used for $524,532 air quality improvement $2,491,040 projects, supported by The Senior Transportation Fund revenue from AB 2766. The accounts for the proceeds and The Measure M2 Fund is used for street South Coast Air Quality eligible expenditures as designated improvement and maintenance, supported by Management District in the Senior Mobility Program, the City’s share of County Measure M2 funds. distributes the funds to local funded through the Orange governments based on County Transportation Authority. population. SUPPLEMENTAL COMMUNITY LAW ENFORCEMENT GAS TAX FUND DEVELOPMENT SERVICES FUND BLOCK GRANT FUND $(2,482) * $3,200,448 $89,845 The Community The Gas Tax Fund is used for general street The Supplemental Law Development Block Grant maintenance, with money coming from the City’s share Enforcement Services Fund is (CDBG) Fund accounts for of state gasoline taxes. Most of this revenue can be used used for specific law revenues received and for street maintenance and construction, but a portion enforcement and crime expenditures made for CDBG is specifically reserved for street engineering activities. prevention activities in the eligible grants and capital Police Services Department. projects. PROPRIETARY FUND = $439,047 VEHICLE REPLACEMENT FUND $439,047 The Vehicle Replacement Fund collects payments from City Departments that use the Fleet Services Division for vehicle and equipment maintenance. It also includes rental fees for vehicles assigned to specific departments. Maintenance costs are based on the vehicle’s past expenses, and rental fees are set to cover the vehicle’s future replacement costs. Grant-related negative balances reflect pending reimbursements, in accordance with accounting rules requiring revenues to be recognized only when received. * cityoflagunaniguel.org 09

City of Laguna Niguel Popular Annual Financial Report | Year Ended June 30, 2024 GENERAL FUND REVENUES General Fund Revenues have continued to remain stable and resilient from the period of time preceding the pandemic through the most recent period of heightened inflation. While the City has experienced growth in the revenue categories of property tax, sales tax revenues have remained relatively flat. The Fiscal Year 2023-24 General Fund Revenues were $55.8 million. ALL OTHER SOURCES REVENUE FISCAL YEAR 7% COM. DEV. REVENUE 8% SUMMARY 2023-24 SALES TAXES $14,209,464 INTEREST INCOME 4% SALES TAX PROPERTY TAXES $28,371,584 FRANCHISE FEES 25% 5% FRANCHISE FEES $2,657,013 INTEREST INCOME $2,462,778 COM. DEV. REVENUE $4,554,662 ALL OTHER SOURCES $3,572,203 PROPERTY TAX TOTAL REVENUE $55,827,704 51% MAJOR SOURCES OF REVENUE Property Tax: Property Tax revenues remain the City’s largest source of funding, representing over 50% of total General Fund revenues in Fiscal Year 2023-24. The City received $28.4 million in property taxes in Fiscal Year 2023- 24, representing an increase of 4.8% over the prior year. Sales Tax: While Sales Tax revenue has steadily increased over the past five years, the City saw a reduction in revenues in Fiscal Year 2023-24. Total sales tax revenues were $14.2 million, down 4.1% as compared to the prior year. The City anticipates a 2% increase in sales tax in Fiscal Year 2024-25. (IN MILLIONS) REVENUE TRENDS - LAST 5 YEARS $55.8 $53.4 Total Revenues & Transfers In $48.3 $45.8 $44.2 Other Revenues Community Development Revenue Interest Income Franchise Fees Property Taxes Sales Taxes cityoflagunaniguel.org 10

City of Laguna Niguel Popular Annual Financial Report | Year Ended June 30, 2024 GENERAL FUND EXPENDITURES The Fiscal Year 2023-24 activities included the continuation and implementation of many important projects and programs that positively impacted the community and met the goals and objectives set forth in the updated Strategic Plan. Additionally, the FY 2023-24 General Fund expenditures supported the City’s building and facility maintenance, street and traffic signal maintenance, parks maintenance, trail maintenance, landscaping, engineering, and environmental services. PARKS & FISCAL YEAR RECREATION EXPENDITURE SUMMARY 8% TRANSFERS OUT 2023-24 7% GENERAL GOVERNMENT $6,599,799 PUBLIC SAFETY $17,643,906 GENERAL GOVERNMENT 12% COMMUNITY DEVELOPMENT $4,473,842 PARKS & RECREATION $4,186,111 PUBLIC SAFETY CAPITAL OUTLAY PUBLIC WORKS $15,453,835 33% 3% CAPITAL OUTLAY $856,064 TRANSFERS OUT $3,625,099 COMMUNITY DEVELOPMENT PUBLIC 8% TOTAL EXPENDITURES & WORKS $52,838,656 TRANSFERS OUT 29% SUMMARY OF FULL TIME PERSONNEL (LESS CITY COUNCIL) TOTAL FULL TIME POSITIONS - LAST 5 YEARS ADMINISTRATION 69 70 7 66 64 63 CITY CLERK 62 2 60 FINANCE PARKS & 6 RECREATION 50 18 40 66 30 COMMUNITY DEVELOPMENT TOTAL 12 20 PUBLIC 10 WORKS 21 0 FY 2019-20 FY 2020-21 FY 2021-22 FY 2022-23 FY 2023-24 Parks & Recreation Public Works Community Development Public Safety FISCAL YEAR 2023-24 Finance City Clerk Administration FULL TIME POSITIONS cityoflagunaniguel.org 11

City of Laguna Niguel Popular Annual Financial Report | Year Ended June 30, 2024 GENERAL FUND RESERVES The City of Laguna Niguel’s Financial Reserves Policy requires maintaining a reserve for financial and economic uncertainty of at least 50% of General Fund operating expenditures. Based on the $53.3 million reserve balance on June 30, 2024, the City has 108.3% of General Fund operating expenditures in reserves, easily meeting the policy. Net changes to fund balance was $3.0 million, representing a 5.9% increase over the prior year total. The City has also designated portions of its fund balance for other categories, as identified below. Each of these categories are identified in the Financial Reserves Policy. The City Council reviews the Financial Reserves Policy annually. FISCAL YEAR DESCRIPTION OF RESERVES/FUND BALANCE 2023-24 NON-SPENDABLE - DEPOSITS AND PREPAID ITEMS $173,938 RESTRICTED FOR SECTION 115 PENSION TRUST $2,179,843 ASSIGNED FOR DEPARTMENTAL OPERATIONS $222,223 COMMITTED: FINANCIAL AND ECONOMIC UNCERTAINTY $26,289,809 108.3% COMPENSABLE ACCRUED UNUSED VACATION AND SICK LEAVE $148,916 OF GENERAL FUND OPERATING OTHER POST-EMPLOYMENT BENEFITS (OPEB) $1,154,625 EXPENDITURES IN RESERVES INFRASTRUCTURE REPLACEMENT AND DEFERRED MAINTENANCE $23,139,352 TOTALS $53,308,706 5-YEAR RESERVES TREND (IN MILLIONS) $53.3 $50.3 $48.5 $46.3 $41.7 Non-spendable - Deposits and Prepaid Items Assigned for Departmental Operations Restricted for Section 115 Pension Trust Compensable Accrued Unused Vacation and Sick Leave Financial and Economic Uncertainty Other Post-Employment Benefits (OPEB) Infrastructure Replacement and Deferred Maintenance General Reserves Totals cityoflagunaniguel.org 12

City of Laguna Niguel Popular Annual Financial Report | Year Ended June 30, 2024 CAPITAL IMPROVEMENT PROGRAM The City of Laguna Niguel invested $9.8 million in Fiscal Year 2023-24 towards maintaining and improving the City’s infrastructure, as identified in the Strategic Plan. It is critical that the City continues to provide appropriately designed and well-maintained infrastructure and amenities. A variety of funding sources support the capital plan, including funds such as Measure M2, AQMD, Gas Tax, CDBG, other grants, the General Fund, and the City’s infrastructure reserves. NOTABLE COMPLETED CAPITAL IMPROVEMENT PROJECTS ACTIVE TRANSPORTATION STUDY & MARINA HILLS PARK LA PAZ ROAD LONG-TERM PHASE II PLAN BICYCLE GREEN ZONE PILOT PROJECT IMPROVEMENTS PROJECT CAPITAL IMPROVEMENT PROGRAM FUNDING SOURCES OTHER FISCAL YEAR CDBG FUND 3% FUNDING SOURCES 3% 2023-24 CDBG FUND $274,740 MEASURE M2 MEASURE M2 $2,234,899 AMERICAN 23% RESCUE PLAN ACT GAS TAX $2,560,490 25% AQMD FUND $175,168 GENERAL FUND $1,788,948 GENERAL AMERICAN RESCUE PLAN ACT $2,475,599 GAS TAX FUND 26% 18% OTHER GRANTS $315,153 AQMD FUND TOTAL $9,824,997 2% cityoflagunaniguel.org 13

City of Laguna Niguel Popular Annual Financial Report | Year Ended June 30, 2024 INVESTMENTS The City of Laguna Niguel’s Investment Policy provides a framework for managing its investment portfolio. The policy’s primary objectives, in order of priority, are: 1) Safety - the City intends to preserve its investment; 2) Liquidity - the portfolio should remain liquid enough to meet all operating needs; and 3) Return on Investment - the portfolio should be designed with the objective of attaining a market rate of return, while taking into account investment risk constraints and cash flow characteristics. The average return of the State Treasurer's Local Agency Investment Fund (LAIF) is used as benchmark for the City's portfolio. $68.3 3.1% $2.9 AVG YIELD MILLION MILLION TOTAL PORTFOLIO FOR THE YEAR EARNED FOR THE YEAR CITY & LAIF PORTFOLIO YIELDS - 5 YEAR HISTORY The Local Agency Investment Fund (LAIF), managed by the State Treasurer, serves as an alternative investment pool for public agencies. The LAIF yield is used as benchmark for the City's portfolio. The graph on the right compares the City’s portfolio yields with the LAIF portfolio yields over the past five years. City LAIF PORTFOLIO DIVERSIFICATION 5-YEAR PORTFOLIO SIZE TREND (IN MILLIONS) $68.3 $67.1 $65.7 $59.3 $51.3 Agency Securities 52% US Treasuries 26% Certificate of Deposits 7% Money Market 15% cityoflagunaniguel.org 14

CONTACT US Phone: 949-362-4300 Email: [email protected] Address: Laguna Niguel City Hall 30111 Crown Valley Parkway Laguna Niguel, CA 92677