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60-20
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11/20/2020 11:01:26 AM
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11/20/2020 10:58:04 AM
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Resolutions
Number
60-20
Date
11/19/2020
Description
Accepting the Town's Annual Financial Reports for the Year Ended June 30, 2020
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Letter of Transmittal <br />iii <br />Los Altos Hills Financial Outlook <br />As shown in the Basic Financial Statements, starting on page 22, the Town is financially healthy. As of June <br />30, 2020, the Town has no outstanding debt, the unfunded pension liability per CalPERS Actuary is estimated <br />at $2.2 million, and the total unrestricted fund balance is $18.3 million, of which $7.2 million is unassigned <br />and available to meet current and future liabilities. With the recent hit of COVID‐19 pandemic in March 2020, <br />the Town was able to maintain a combination of strong local economy increase in assessed property value, <br />healthy building improvement activity, and reduced spending are the reasons for the current year overall <br />increase in total town‐wide net position. <br />In contrast to published reports about municipal finances nationwide, the Town’s finances are in good <br />condition. However, pension cost spending and pension liabilities continue to substantially increase based <br />on updated actuarial studies by CalPERS. These updated actuarial studies by CalPERS anticipate lower long‐ <br />term investment earnings, increasing employee compensation, a longer life span, and earlier retirement. The <br />Town has addressed these changes by complying with PEPRA new pension benefits for new employees, <br />increasing employee participation in pension costs, and making voluntary payments to partially retire long‐ <br />term pension liabilities. The Town’s expectation for past service pension cost increases have not yet been <br />included in the CalPERS published employer liabilities. The Town’s OPEB liability is fully funded and <br />management submitted reimbursements from our third‐party administered OPEB in this fiscal year. The <br />Notes to Financial Statements provide detailed information regarding the Town’s pension and OPEB <br />obligations. <br />The Economy and Its Impact <br />Los Altos Hills has twelve non‐residential properties and approximately 3,000 single‐family residential <br />properties. The twelve non‐residential properties are Fremont Country Club, Purissima Hills Water District, <br />El Monte Fire Station, Town Hall, Foothill College, four religious institutions, and three schools. With no <br />commercial base, Los Altos Hills’ primary revenue sources are property tax and development permit revenues <br />from private development. <br />Based on the most recent Property Tax Analysis performed by HdL, the local real estate market continues to <br />improve. While home sales volume stays flat, home price continues to rise year over year. During the first <br />2 months of 2020, the Town’s median sale price of single‐family residential homes decreased 3.25 percent <br />to $4,006,000 (from $4,140,500 for calendar year 2019). This is a 62 percent increase over the median price <br />reported in the peak of the real estate bubble in 2008 ($2,500,000). <br />Resolution 60-20 Page 12
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