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Home My WebLink About80-21RESOLUTION 80-21 RESOLUTION OF THE CITY COUNCIL OF THE TOWN OF LOS ALTOS HILLS ACCEPTING THE TOWN'S ANNUAL FINANCIAL REPORTS FOR THE YEAR ENDED JUNE 30, 2021 WHEREAS, the independent audit provides annual reports on the financial condition of the Town in accordance with Municipal Code Section 2-3.221; WHEREAS, the Town of Los Altos Hills contracted with the audit firm of Maze and Associates (Maze) to conduct an audit of the Town's financial records in accordance with Governmental Accounting Standards Board (GASB); and WHEREAS, the Comprehensive Annual Financial Report for the year ended June 30, 2021 was prepared in accordance with all relevant GASB pronouncement and best practices set by the Governmental Finance Officers Association and reviewed by Maze for fair presentation and free from material misstatement; and WHEREAS, it is recommended that the City Council accept the Town's ACFR for the year ended June 30, 2021 (Attachment A); NOW THEREFORE, resolved by the City Council of the Town of Los Altos Hills that the Council hereby accepts the Town's annual financial statements as prepared by Maze and Associates. The above and foregoing Resolution was passed and adopted by the City Council of the Town of Los Altos Hills at a regular meeting held on the 18th day of November 2021 by the following vote: AYES: Tyson, Tankha, Mok, Schmidt, Swan NOES: None ABSTAIN: None ABSENT: None ATTEST: 15eborah Padovan, City Clerk M. Resolution 80-21 Kavita Tankha, Mayor Page 1 ANNUAL COMPREHENSIVE FINANCIAL REPORT For the Fiscal Year Ended June 30, 2021 LOS ALTOS HILLS CALIFORNIA Town of Los Altos Hills, California PREPARED BY DEPARTMENT OF FINANCE AND ADMINISTRATIVE SERVICES Resolution 80-21 Page 2 INTRODUCTORY SECTION Letter of Transmittal ..................................... Town Organizational Chart ........................... TownOfficers ............................................... GFnA CPrtifirata of Arhiavamant Table of Contents --------------I........... ............................ I ...... I................... vi ............................... vii .. ............................................................. VIII FINANCIAL SECTION IndependentAuditor's Report......................................................................................................................... 1 Management's Discussion and Analysis........................................................................................................... 3 Basic Financial Statements Government -wide Financial Statements: Statementof Net Position................................................................................................................. 22 Statementof Activities.........................................................................................:............................ 23 Fund Financial Statements: Balance Sheet —Governmental Funds.............................................................................................. 26 Reconciliation of the Governmental Funds Balance Sheet to the Government -wide Statement of Net Position........................................................................ 27 Statement of Revenues, Expenditures and Changes in Fund Balances — GovernmentalFunds..................................................................................................................... 28 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Government -wide Statement of Activities and Changes in Net Position.................................................................... 29 Statement of Fund Net Position — Proprietary Funds....................................................................... 32 Statement of Revenues, Expenses and Changes in Fund Net Position — Proprietary Funds............ 33 Statement of Cash Flows — Proprietary Funds.................................................................................. 34 Statement of Fiduciary Net Position — Fiduciary Funds.................................................................... 36 Statement of Changes in Fiduciary Net Position — Fiduciary Funds .................................................. 37 Notes to Basic Financial Statements............................................................................................... 41 Resolution 80-21 Page 3 FINANCIAL SECTION (Continued) —^-------^-------------..96 Required Supplemental Information ......................................... ....................... Schedule ofRevenues, Expenditures, andChanges inFund Balance — Budget and Actual — ...... ................................. .......................... General Fund -----^--^----------^-------^---------------.—.74 _.................................................................. Schedule ofProportionate Share ofthe Net Pension Liability ............................................................. 75 Schedule of Contributions — Cost -Sharing Multiple -Employer Defined Pension Plan ......................... 76 Schedule ofChanges |nthe Town's Net OEPBLiability and Related Ratios ......................................... 77 ScheduleofOPEBContributions .......................................................................................................... 78 Notes tothe Required Supplementary Information ............................................................................ 7S Supplemental Information ..................................,~—~--.--...110 Schedule ofRevenues, Expenditures, and Changes inFund Balance — Budget and Actual: ............. .................. ................................ StreetCapital Projects Fund ............................................................................................................ 82 OtherCapital Projects Fund ............................................................................................................ 83 SewerEnterprise Fund .................................................................................................................... 84 NonmajnrGovernmental Funds: .............................. ....... .... ....................... Combining Balance Sheets .------------------------------------86 Combining Statement of Revenues, Expenditures and Changes in Fund Balances ........................ 87 Combining Schedule ofRevenues, Expenditures and Changes inFund Balances — Budgetand Actual ......................................................................................................................... 88 STATISTICAL SECTION muLrv`umxuyk-vmpm'e/u................................................. Changes inNet Position ......................................................... Fund Balances ofGovernmental Funds .............................. Changes inFund Balances ofGovernmental Funds .............. Assessed and Estimated Actual Value of Taxable Property., Property Tax Rates — Direct and Overlapping Governments Principal Taxpayers ............. .................................................. Property Tax Levies and Collections ...................................... Ratios ofOutstanding Debt bvType ...................................... Direct and Overlapping Debt ................................................. Legal Debt Margin Information ............................................. Demographics and Economic Statistics ................................. PrincipalEmployers ............................................................... Full -Time Equivalent City Government Employees bvFunot Operating Indicators byFunction .......................................... Capital Asset StotbtksbyFuncLion------------- -----------------------94 —^-------^-------------..96 ......................................... ....................... 18O ...... ................................. .......................... 102 _.................................................................. ...................................... ............................ 10S .........................................._—.----..1O6 _,__~___,_______-------1O7 ........................................__---.---108 ^... ......................... ... ........................... ... 1U9 ..................................,~—~--.--...110 ............. .................. ................................ 111 ............. ............................. ...................... 112 �...... ..... ............................. ....................... 113 .... ....... ........................... ......................... 114 .............................. ....... .... ....................... 116 oowluuv»xoa/ Page 4 INTRODUCTORY: SECTION iwsoivaon 6u -Z1 Page 5 LOS ALTOS HILLS "W,4002^10= Imt CALIFORNIA November 8, 2021 To the Residents of the Town of Los Altos Hills, Honorable Mayor and Members of the City Council Letter of Transmittal Letter of Transmittal We are pleased to submit the Annual Comprehensive Financial Report (ACFR) for the Town of Los Altos Hills, California (Town), for the fiscal year ended June 30, 2021. This report was prepared in accordance with accounting principles generally accepted in the United States of America and contains information to help readers gain a reasonable understanding of the Town's financial activities. The responsibility for the accuracy of the information and the completeness and fairness of the presentation, including all disclosures, rests on the Town's management. To the best of our knowledge, we believe that the information reported is accurate in all material respects and its presentation fairly shows the financial position and the results of the Town's operations. In providing a reasonable basis for making these representations, management has established a thorough internal control system designed to protect the government's assets from loss, theft, or misuse and to compile necessary information for preparing the Town's financial statements. The ACFR is presented in three major sections that provide introductory, financial as of June 30, 2021, and statistical information about the Town. The introductory section includes this transmittal letter, the Town's organizational chart and a list of the Town's principal officials. The financial section includes the independent auditor's report, basic financial statements, notes to basic financial statements, required supplementary information and supplementary information on nonmajor funds. The statistical section, which is unaudited, includes selected financial and demographic information. Maze & Associates, a firm of licensed certified public accountants, has issued an unmodified ("clean") opinion on the Town's financial statements for the fiscal year ended June 30, 2021. The independent auditor's report is presented as the first component of the financial section of this report. Management's discussion and analysis (MD&A) immediately follows the independent auditor's report and provides a narrative introduction, overview, and analysis of the basic financial statements. MD&A presents a comparative analysis of current and prior year results, changes in financial position, financial highlights, trends and disclosure of any known significant events or decisions that affect the financial condition of the Town. This transmittal letter complements the MD&A and should be read in conjunction with it. Town Profile The Town of Los Altos Hills is a residential community located in Santa Clara County, California. It is about 18.6 miles northwest of San Jose and 38.5 miles southeast of San Francisco. The Town was incorporated on January 27, 1956. The Town encompasses 9 square miles and has influence on an additional 5.2 square miles Resolution 80-21 Page 6 Letter of Transmittal of unincorporated land adjacent to the Town's boundaries. The "Sphere of Influence", maintains over 60 miles of pathways and 100 acres of open space. The Town operates under a Council -Manager form of government. Policy-making and legislative authority are vested in the governing City Council, which consists of five Councilmembers. City Council members are elected in overlapping four-year terms and, from amongst themselves, appoint a Mayor and Vice Mayor every December. The Council is responsible for passing ordinances, adopting the budget, appointing Planning Commission and Volunteer Committee members, and hiring the City Manager and City Attorney. The City Manager is responsible for carrying out the policies and ordinances of the City Council, overseeing the day- to-day operations of the Town, and appointing the Town staff. The Town provides a full range of essential services through a combination of in-house staff and contract services. Services provided by the Town's 26.2 full-time equivalent employees include planning, engineering, building inspection, maintenance of public infrastructure, recreation, limited parks, open space maintenance and general management. Partnership with neighboring cities, counties and special districts are utilized to provide law enforcement services, fire services, sewer conveyance and treatment, water services and technology support. The Town also entered into public-private partnership in areas of code enforcement, trash collection, payroll services, staff augmentation and Westwind Barn management. The cost to provide these essential services are reviewed annually as part of the Town's operating and capital budget process. The annual budget serves as the foundation for the Town's financial planning, monitoring and control. All departments of the Town are required to submit requests for appropriation to the City Manager each spring. The City Manager reviews these requests and develops a proposed budget. Prior to June 30 of each year, the City Manager submits to the City Council a proposed operating and capital improvement budget for review. The Council holds public hearings and a final budget is adopted on or before June 30. Budgetary reviews and controls are applied as described in the Notes to Required Supplementary Information on page 79. Budget to actual comparisons are provided in this report for each governmental fund for which an annual budget has been adopted. For the General Fund, this comparison is presented on page 74 as part of the required supplementary information. For governmental funds other than the General Fund, this comparison is presented in the Combining Statements and Individual Fund Statements section of this report, starting on page 86. Throughout the year, the Administrative Services Department monitors economic changes that may affect the Town's revenue stream, coordinates with departments in identifying changing needs and demands, and presents budget adjustments to the City Council as part of the mid -year review. Public inputs are filtered through the Town's standing committees and to staff liaisons. These inputs are considered in the development of the budget and presented to the City Council for consideration as part of the budget review and throughout the year as separate Council action items. Resolution 80-21 Page 7 Letter of Transmittal Los Altos Hills Financial Outlook As shown in the Basic Financial Statements (Government Wide), starting on page 26, the Town is financially healthy. As of June 30, 2021, the Town has no outstanding debt, the unfunded pension liability per CalPERS Actuary is estimated at .$2.5 million, and the total unrestricted fund balance is $18.5 million, of which $7.3 million is unassigned and available to meet current and future liabilities shown on page 26. With the recent hit of COVID-19 pandemic in March 2020, the Town was able to maintain a combination of strong local economy increase in assessed property value, healthy building improvement activity is a reason for the current year overall increase in total town -wide net position. In contrast to published reports about municipal finances nationwide, the Town's finances are in good condition. However, pension cost spending and pension liabilities continue to substantially increase based on updated actuarial studies by CaIPERS. These updated actuarial studies by CalPERS anticipate lower long- term investment earnings, increasing employee compensation, a longer life span, and earlier retirement. The Town has addressed these changes by complying with PEPRA new pension benefits for new employees, increasing employee participation in pension costs, and making voluntary payments to partially retire long- term pension liabilities. The Town's expectation for past service pension cost increases have not yet been included in the CalPERS published employer liabilities. The Town's OPEB liability is over funded by approximately 20% and management continues to submit reimbursements from our third -party administered OPEB in this fiscal year. The Notes to Financial Statements provide detailed information regarding the Town's pension and OPEB obligations. The Economy and Its Impact Los Altos Hills has twelve non-residential properties and approximately 3,000 single-family residential properties. The twelve non-residential properties are Fremont Country Club, Purissima Hills Water District, EI Monte Fire Station, Town Hall, Foothill College, four religious institutions, and three schools. With no commercial base, Los Altos Hills' primary revenue sources are property tax and development permit revenues from private development. Based on the most recent Property Tax Analysis performed by HdL, the local real estate market continues to improve. While home sales volume stays flat, home price continues to rise year over year. For the quarter ending September 30, 2021, the Town's median sale price of single-family residential homes increased 28 percent to $5,137,500 (from $4,006,000 for calendar year 2020). Resolution 80-21 Page 8 Letter of Transmittal $7,000,000 Single Family Homes Sales Value History $6,000,000 S5,00o,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 5- 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 —*—Median Sales Price --•Average Sales Price California home sales closed out the third quarter 2021 by reversing a four-month decline and posting the largest monthly increase in over a year. Home prices continued to exhibit strong growth from last year. The statewide median home price declined 2.3 percent to $808,890, from the prior month and increased 13.5 percent from $712,430 in September 2020. The median price in California remained above the $800,000 benchmark for the sixth consecutive month but the double-digit price year -over -year price gain was the smallest in 14 months. Property tax revenues are generally one year behind the housing market. The property valuation used to calculate tax revenues is based on price of homes sold in the previous year. The Town's FY2021-2022 net taxable assessed value is projected to be $9.1 billion based on Santa Clara County's data. As a result, the Town's property tax revenue is expected to be $7.3 million in FY2021-2022. Staff closely monitors the County Controller -Treasury Office's property tax revenue projection to ensure the Town's revenue projection incorporates the most recent data. Prior to SB 107 being established, the state shifted property tax revenues from cities, counties, and other local agencies to the State in support of schools. Starting in 2015, SB107 was established to give back the property tax revenues. The Town received approximately $470,000 in fiscal year 2021. The Town anticipates receiving $490,000 in the upcoming fiscal year. Long•Term Financial Planning and Financial Policies The Town has received $1,007,480 in American Rescue Plan Act (ARPA) Funds in FY2021-22 and will receive the same amount in July 2022, The Town staff and City Council are still in the process of determining the use of the funds. Currently, the City Council has approved $220,200 of the funds to non-profit organizations for COVID-19 relief. The remaining funds will be potentially used for qualified infrastructure projects in broadband, water or sewer projects. Town management develops a five-year financial projection for all city funds, covering all foreseeable elements of revenues and expenditures. This practice allows the Town to identify potential fiscal challenges early on and gives it time to plan strategically to weather economic cycles and provide stable and consistent services to its residents. iv Resolution 80-21 Page 9 Letter of Transmittal For capital projects, the Town maintains a five-year capital improvement plan which is updated annually. This plan provides a long-term forecast of identified capital improvement projects and serves as a tool for the town management and City Council to plan, prioritize and monitor the Town's capital projects. The Town has established a reserve policy to set aside unrestricted general fund balance for pension, operating contingency, disaster contingency and technology / equipment replacement reserves. The Town plans to expand and refine the reserve policy each fiscal year. Award and Acknowledgement The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the Town of Los Altos Hills for its Annual Comprehensive Financial Report for the fiscal year ended June 30, 2021. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized ACFR. This report must satisfy both GAAP and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current Comprehensive Annual Financial Report continues to meet the Certificate of Achievement Program's requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. Preparation of this ACFR is not possible without the hard work of the entire Finance and Administrative Services Department and the support of the other departments. In closing, we would also like to thank the City Council and the Finance and Investment Committee for their continued interest and support in planning and conducting the financial operations of the Town in a responsible and progressive manner. Respectfully submitted, Carl Cahill City Manager v Resolution 80-21 Page 10 Resolution 80-21 Page 11 b 4S b Town Officers City Council Kavita Tankha, Mayor George Tyson, Vice Mayor Stan Mok Lisa Schmidt Linda Swan Term Expires November 2022 November 2022 November 2024 November 2024 November 2024 City Council Appointed Carl Cahill, City Manager Steve Mattas, City Attorney (contract) City Manager Appointed Zachary Dahl, Planning Director Sarina Revillar, Administrative Services Director Nichol Bowersox, Public Works Director & City Engineer Deborah Padovan, City Clerk Sarah Robustelli, Community Services Supervisor vii Resolution 80-21 Page 12 Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to Town of Los Altos Hills California For its Comprehensive Annual Financial Report For the Fiscal Year Ended i June 30, 2020 Executive Director/CEO Viii Resolution 80-21 Page 13 FINANCIAL SECTION Resolution 80-21 Page 14 INDEPENDENT AUDITOR'S REPORT To the Honorable Members of the Town Council Town of Los Altos Hills, California We have audited the accompanying financial statements of the governmental activities, the business -type activities, each major fiend, and the aggregate remaining fund information of the Town of Los Altos Hills, California, as of and for the year ended June 30, 2021, and the related notes to the financial statements, which collectively comprise the Town's basic financial statements as listed in the Table of Contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Town's preparation and fair presentation of the financial statements 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 Town's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the Town as of June 30, 2021, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Accountancy Corporation 3478 Buskirk Avenue, Suite 215 Pleasant Hill, CA 94523 T 925.930.0902 F 925.930.0135 E maze@mazeassociates.com W mazeassociates.com Page 11 Resolution 80-21 Page 15 Emphasis of a Matter — Change in Accounting Principles Management adopted the provisions of Governmental Accounting Standards Board Statement No. 84 — Fiduciary Activities, which became effective during the year ended June 30, 2021. This Statement established the new fund type, Custodial Funds, and eliminated the fund type of Agency Funds as discussed in Note 1N. As discussed in Note 11K of the financial statements, the Other Post -Employment Benefit Plan Trust Fund is no longer reported as a Fiduciary Fund as of July 1, 2020. The emphasis of this matter does not constitute a modification to our opinions. Other Matters Required Supplemental Information Accounting principles generally accepted in the United States of America require that Management's Discussion and Analysis and other Required Supplemental Information as listed in the Table of Contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Town's basic financial statements as a whole. The Introductory Section, Supplemental Information, and Statistical Section as listed in the Table of Contents are presented for purposes of additional analysis and are not required parts of the basic financial statements. The Supplemental Information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The 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 underlying 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 United States of America. In our opinion, the Supplemental Information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. The Introductory and Statistical Sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Pleasant Hill, California November 8, 2021 2 1 Page Resolution 80-21 Page 16 Management's Discussion and Analysis Management's Discussion and Analysis For the Year Ended June 30, 2021 As the management of the Town of Los Altos Hills, we offer readers of the Town's financial statements this narrative overview and analysis of the financial activities of the Town of Los Altos Hills for the year ended June 30, 2021. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages i -iv of this report. FINANCIAL HIGHLIGHTS Town -Wide Financial Highlights: Net Position—The Town's total assets and deferred outflows of resources exceeded its liabilities and deferred inflows of resources at June 30, 2021 by $57.5 million (net position). Of this amount, $21.6 million was reported as unrestricted net position, which may be used to meet ongoing obligations to citizens and creditors. Changes in Net Position —The Town's total net position increased by $1.4 million as reflected in the government -wide statement of activities. Net position of governmental activities increased by $739,446, because revenue exceeded expenses. Net position of business -type activities increased by $682,790, reflecting this year's net income from the Sewer operations resulting from decreases in operating expenses and onetime transfer from General Fund to adjust allocation overcharges in the previous three years. • Cash and investments at June 30, 2021 totaled $28.4 million, of which $23.1 million was classified as government activities and $5.3 million was under the business -type activities category (Sewer). The Town's cash and investments increased $664,510, or 2.4 percent as compared to the prior year, due revenue exceeding expenses. • Accounts payable and other current liabilities at June 30, 2021 was $5.2 million. Of this amount, $1.4 million was reported in the Sewer Fund. There is $3.1 million of refundable deposits relating to property development. There is no long-term bonded debt outstanding at the close of the fiscal year. Fund Highlights: Governmental Funds — Fund Balances At the close of fiscal year, the Town's governmental funds reported a combined fund balance of $20.4 million, an increase of $786,757 or 4% from the prior year. Of the total, $7.3 million, or 36% of the fund balance is available for spending at the government's discretion (unassigned fund balance). General Fund unassigned fund balance at June 30, 2021 was $7.3 million, an increase of $163,941, or 2.3 percent over the previous year. Increasing reserves are due because the revenue exceeded expenses and reserve levels maintained were unchanged. Sewer Fund unrestricted net position at June 30, 2021 was $3.8 million, increased by $539,286 (or 16.4%) from the prior year. Charges for services decreased by $68,649, or 2% below the previous Page 13 Resolution 80-21 Page 17 Management's Discussion and Analysis year primarily due to decreases in sewer assessments charges were due primarily to reducing the rate for ADU's by one-half for the approximate 150 units. Capital Projects Funds is now a major fund due to it exceeds 10% of total Governmental Funds and 5% of total Governmental/Enterprise. The major increase was the Town purchased $2.0 million PG&E Rule 20A credit from other municipalities for undergrounding project. Other Highlights Pension — For funding purpose, the change will affect the contribution rates beginning in fiscal year 2020-21 and result in increases to the normal costs and payments for unfunded actuarial liabilities. At the close of this fiscal year, the Town's net pension liability increased from $2.2 million to $2.5 million. The unfunded liability as of June 30, 2021 was $2.5 million, an increase of $292,629 or 13.3% above the previous year. Additionally, this unfunded liability is offset by the PARS 115 Trust balance with a balance of $1.18 million at June 30, 2021. The Town made $1.0 million contribution and split the distribution equally between PARS and CalPERS. The Town has one of the highest funding ratios of municipalities in the state; Classic Miscellaneous group is at 83.5%, 2nd Tier at 91% and the PEPRA tier is at 92.6%. • OPEB — The Town's CERBT Trust is over funded and recent market gains have exceeded the assumed discount rate. Management began this year requesting reimbursements from the Trust Account to pay our current OPEB expenses in the following fiscal year. • Reserves — Each year, the City Council reviews the current committed and assigned reserves and updates the balances of these reserves as necessary. Any changes are adopted by resolution of the City Council. Committed and assigned reserves were not changed. OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis are intended to serve as an introduction to the Town's basic financial statements, which consist of three components; government -wide financial statements, fund financial statements, and notes to the financial statements. This report also contains supplementary information in addition to the basic financial statements such as this discussion and analysis. Government -wide Financial Statements The government -wide financial statements are designed to provide readers with a broad overview of the Town's finances, in a manner similar to private -sector business. The Statement of Net Position presents information on all of the Town of Los Altos Hills' assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the Town is improving or deteriorating. The Statement of Activities presents information showing how the Town's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will result in cash outflows in future fiscal periods, for example, earned but unused vacation leave. These government -wide financial statements begin on page 22 of this report. 4 1 Page Resolution 80-21 Page 18 Management's Discussion and Analysis Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The Town uses fund accounting to ensure and demonstrate compliance with finance -related legal requirements. All of the funds of the Town can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental Funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government -wide financial statements. However, unlike the government - wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in assessing a government's near-term financing requirements. Because the focus of governmental funds is narrowerthan that of the government -wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government -wide financial statements. By doing so, readers may better understand the long-term impact of the government's near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The Town maintains nine individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures and changes in fund balances for the General Fund and Street Capital Projects Fund, which are considered to be major funds. Data from the other eight governmental funds are combined into a single aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements in the combining and individual fund statements and schedules section of this report. The Town adopts an annual appropriated budget for all funds. A budgetary comparison statement has been provided for the General Fund to demonstrate compliance with this budget. The budgetary comparison schedule for the General Fund can be found on page 74. The basic governmental fund financial statements can be found on pages 26-29 of this report. Proprietary Funds. The Town. maintains two different types of proprietary funds — enterprise funds and internal service funds. Enterprise funds are used to report the same functions presented as business -type activities in the government -wide financial statements. The Town uses an enterprise fund to account for the sewer operations. Internal service funds are an accounting device used to accumulate and allocate costs internally among the Town's various functions. The Town uses an internal service fund to account for the central town services, corporation yard services, and the repair and replacement of equipment and vehicles. Because these services predominantly benefit governmental rather than business -type functions, it has been included within governmental activities in the government -wide financial statements. Proprietary funds provide the same type of information as the government -wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the sewer operations. The basic proprietary fund financial statements can be found on page 32 of this report. Page 15 Resolution 80-21 Page 19 Management's Discussion and Analysis Fiduciary Funds. Fiduciary funds are used to account for resources held for the benefit of parties outside of the government. Fiduciary funds are not reported in the government -wide financial statements because the resources of those funds are not available to support the Town's own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The Town maintains an agency fund, which is used to report resources held by the Town in a custodial capacity for the West Loyola Special Assessment District. Notes to the Financial Statements. The notes provide additional information that is essential to a full understanding of the data provided in the government -wide and fund financial statements. The notes to the financial statements can be found on pages 41-71 of this report. Other Information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the Town's progress in funding its obligation to provide pension and other post -employment benefits to its employees. Required supplementary information can be found on page 74-80 of this report. The combining statements referred to earlier in connection with nonmajor governmental funds are presented immediately following the required supplementary information. Combining and individual fund statements and schedules can be found on pages 86-91 and the Statistical Section follows on page 96. GOVERNMENT -WIDE OVERALL FINANCIAL ANALYSIS Net Position As noted above, net position may serve over time as a useful indicator of a government's financial position. In the case of the Town of Los Altos Hills, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $57.5 million at the close of the fiscal year. 6 1 Page Resolution 80-21 Page 20 Governmental Activities Business -type Activities Total 2021 2020 2021 2020 2021 2020 ASSETS Current and other assets $ 25,016,035 $ 24,168,633 $ 5,262,159 $ 4,529,570 $ 30,278,194 $ 28,698,203 Noncurrent assets 208,390 250,625 29,241 61,272 $ 237,631 $ 311,897 Capital Assets 26,253,419 26,511,993 7,717,735 7,574,231 $ 33,971,154 $ 34,086,224 Total assets 51,477,844 50,931,251 13,009,135 12,165,073 $ 64,486,979 $ 63,095,324 DEFERRED OUTFLOWS OF RESOURCES 1,568,182 1,307,243 86,193 75,094 $ 1,654,375 $ 1,382,337 LIABILITIES Current liabilities 3,854,128 3,731,190 1,374,255 1,170,695 $ 5,228,383 $ 4,901,885 Noncurrent liabilities 2,488,526 2,225,391 132,432 124,873 $ 2,620,958 $ 2,350,264 Total liabilities 6,342,654 5,956,581 1,506,687 1,295,568 $ 7,849,341 $ 7,252,149 DEFERRED INFLOWS OF RESOURCES 732,296 1,050,282 40,250 78,998 $ 772,546 $ 1,129,280 NET POSITION Net investment in capital assets 26,253,419 26,511,993 7,717,735 7,574,231 $ 33,971,154 $ 34,086,224 Restricted 1,956,700 1,354,610 - - $ 1,956,700 $ 1,354,610 Unrestricted 17,760,957 17,365,028 3,830,656 3,291,370 $21,591,613 $20,656,398 Total net position 45,971,076 45,231,631 11,548,391 10,865,601 $57,519,467 $56,097,232 6 1 Page Resolution 80-21 Page 20 Management's Discussion and Analysis The government's overall net position increased by $1,422,236, during the current fiscal year compared to an increase of $3,872,238 in the prior fiscal year. The fiscal year202O-2021 increase was due primarily to higher property and other tax revenues received that were higher than prior year and higher operational earnings. The largest portion of the Town's net position, 59 percent, reflects its investment in capital assets — land, buildings, machinery, equipment, and infrastructure. The Town uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. An additional portion of the Town's net position represents $1,956,700 of restricted resources that are subject to external restrictions as to how they may be used. These includes in -lieu fees collected on parks, grants and restricted donations. Largest portion of restricted resources is the 115 Pension Trust at $1,178,398. The remaining balance of $21,591,613 is unrestricted and may only be used to meet the government's ongoing services to citizens and operational needs. Of this amount, $3,830,656 may only be used to meet sewer related obligations. At June 30, 2021, the Town is able to report positive balances in all categories of net position, both for the government as a whole, as well as for its separate governmental and business -type activities. Total net position has increased or remained consistent over the most recent ten years for governmental activities and business -type activities as illustrated in the graph below. The Town of Los Altos Hills has maintained a stable financial position. Total Net position of Governmental Activities and Business -Type Activities 50,000,000 45,000,000 40,000,000 35,000,000 — 30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 5,0'00,000 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 ■ Governmental Activities N Business -type Activities Changes in Net Position The following schedule reflects the net changes in net position for the fiscal years 2021 and 2020. The Town's overall net position increased by $1,422,236 from the prior fiscal year. The reasons for this overall increase are discussed in the following sections for governmental activities and business -type activities. Page 1 7 Resolution 80-21 Page 21 Management's Discussion and Analysis Town of Los Altos Hills Statement of Activities and Changes in Net Position General revenues Property taxes Motor vehicle license tax Othertaxes Franchise fees Rental income Investment income Other unrestricted revenue Gain on disposal of capital assets Total general revenues Total revenues Expenses General government Public safety Community development Publicworks Parks and recreation Non -Departmental Sewer utilities Total "penes Increase (decrease) in net position before transfers Transfers Change in net position Net position at beginning of year Net position at end of year 7,315,637 Year Ended June 30, 2021 7,315,637 Year Ended June 30, 2020 6,834,083 Governmental Business -Type 60,153 Governmental Business -Type 65,821 978,527 Activities Activities Total Activities Activities Total Revenues 350,952 340,268 340,268 59,912 10,079 Program revenues 897,996 172,060 1,070,056 631,290 - 631,290 Charges forservices $ 5,852,349 $ 3,035,410 $ 8,887,759 $ 5,140,440 $ 3,104,059 $ 8,244,499 Operating grants and contributions 294,139 181,347 294,139 347,577 3,134,397 347,577 Capital grants and contributions 374,296 88,908 463,204 591,956 85,595 677,551 Total program revenues 6,520,784 3,124,318 9,645,102 6,079,973 3,189,654 9,269,627 General revenues Property taxes Motor vehicle license tax Othertaxes Franchise fees Rental income Investment income Other unrestricted revenue Gain on disposal of capital assets Total general revenues Total revenues Expenses General government Public safety Community development Publicworks Parks and recreation Non -Departmental Sewer utilities Total "penes Increase (decrease) in net position before transfers Transfers Change in net position Net position at beginning of year Net position at end of year 7,315,637 7,315,637 6,834,083 6,834,083 60,153 60,153 65,821 65,821 978,527 978,527 537,836 537,836 350,952 350,952 340,268 340,268 59,912 10,079 69,991 897,996 172,060 1,070,056 631,290 - 631,290 42,886 9,287 52,173 9,396,471 10,079 9,406,550 8,718,890 181,347 8,900,237 15,917,255 3,134,397 19,051,652 14,798,863 3,371,001 18,169,864 4,701,506 - 4,701,506 2,639,241 2,639,241 2,331,814 2,331,814 2,388,202 2,388,202 3,441,398 3,441,398 3,408,027 3,408,027 2,235,212 2,235,212 2,086,121 2,085,121 1,061,879 1,061,879 770,495 770,495 1,106,625 1,106,626 - 2,750,983 2,750,983 3,005,538 3,005,538 14,878,435 2,750,983 17,629,418 11,292,086 3,005,538 14,297,624 1,038,820 383,414 1,422,234 .3,505,777 365,463 3,872,240 (299,376) 299,376 (30,426) 30,426 739,444 682,790 1,422,234 3,476,351 395,889 3,872,240 45,231;632 10,865,501 56,097,233 41,755,281 10,469,712 52,224,993 $ 45,971,076 $ 11,548,391 $ 57,519,467 $ 45,231,632 $ 10,855,601 $ 56,097,233 Governmental Activities. During the current fiscal year, net position in governmental activities increased by $739,444 from the prior fiscal year for an ending balance of $45,971,076. Major changes in revenues and expenses of governmental activities: • Property tax totaled $7.3 million, an increase of $481,554, or 7%. The increase of property tax revenue is due to strong real estate market and increases in assessed property values. • Charges for services revenues of $5.9 million increased by $711,909, 14% due to increased community development activities primarily relating to residential development. • Other taxes increased by $440,691 or 82%, mainly from higher real property transfer tax and sale & use tax due to the increase numbers of online shopping in the COVID-19 pandemic outbreak. 8 1 Page Resolution 80-21 Page 22 Management's Discussion and Analysis • Franchise fees totaled $350,952, an increase of $10,684, or 3%, all franchise fees collected increased slightly. Solid waste franchise fees were waived this year as the second in the four-year reduction as part of the agreement signed in 2019. • Capital grants and contribution revenue decreased $214,347 primarily due to Measure B grants through VTA that were finalized in the prior fiscal year. • Total expenses of all governmental activities were $14.9 million for fiscal year 2020-2021, an increase of $3.6 million, or 32% from the prior year. This increase can be attributed to an increase in legal fees, contract services for filling employee vacancies throughout the departments, an additional pension contribution, and the new cost allocation plan was implemented in the year. • The Town's governmental activities expenses are related to 32% general government; 16% public safety; 23% community development; 15% public works; 7% parks and recreation; and 7% non - departmental. • The Town purchased $2.0 million PG&E Rule 20A credit from other municipalities to complete the Town's undergrounding project. The expense will be capitalized in fixed assets when the project is completed. The following graph depicts the expense and program revenues by governmental activities for fiscal year 2021: Parks and Non -departmental Recreation ■ Expenses ■ Program Revenues The graph below shows the revenues by source for governmental -type activities. Property taxes comprise the largest revenue source at 45.96% of total governmental revenue. Other primary revenue sources include 36.77% for charges for services and 6% for other taxes. Page 19 Resolution 80-21 Page 23 Governmental Activities Expenses and Program Revenues $5,000,000 $4,500,000 $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $ General Public safety Community Publlcworks government development Parks and Non -departmental Recreation ■ Expenses ■ Program Revenues The graph below shows the revenues by source for governmental -type activities. Property taxes comprise the largest revenue source at 45.96% of total governmental revenue. Other primary revenue sources include 36.77% for charges for services and 6% for other taxes. Page 19 Resolution 80-21 Page 23 Management's Discussion and Analysis Property taxe 45.96% Capital grants and contributions 2.35% Operating grants ani contributions Las% Governmental Type Activities Revenue by Source Motor vehicle license tax fl.RR% 36.77% as Franchise fees 2.20W�6 Ament income 0.38% er unrestricted revenue 3.97% The table below shows the governmental activities total costs of services and costs of net services for fiscal year 2021. This table identifies the cost of these services supported by charges for services, operating grants, and capital grants. Governmental activities: General government Public safety Community development Public works. Parks and recreation Pion -departmental Total governmental activities Net Cost Total Cost (Benefit) of Services of Services %of 2021 2021 Total Costs 4,701,506 2,013,719 31.60% 2,331,814 2,300,733 15.67% 3,441,398 908,353 23.13% 2,235,212 1,256,978 15.02% 1,061,879 771,242 7.140/a 1,106,626 1,106,626 7.44% 14,878,435 8,357,651. :100.O01yo Business -type Activities. Business -type activities increased the Town's net position by $682,790. Key elements of this are as follows: 10 1 Page Resolution 80-21 Page 24 Management's Discussion and Analysis The Town has one business -type activity that is related to sewer utilities and sewer capital infrastructure. Charges for services accounted for 97% of the total revenues. Below is a graph depicting the revenues by source for business -type activities. The primary source of revenue is charges for services, which amounted to $ 3,035,410, 2% decrease from fiscal year 2020. The decrease is due to sewer assessment delinquencies. Other revenue sources include capital grants and contributions and investment income for a total of $88,908. Charges for services. 96 Business Type Activities Revenues by Source Capital grants and contributions. ,...t.tt 2.84°/6 income 0.32% The business -type activities total costs of services for fiscal year 2021 was $2,750,983 and the net benefits of services was $383,414. There was $299,376 transferred from the General Fund to Sewer to account for the overhead allocation adjustment relating to sewer in the prior 3 years. FUND FINANCIAL ANALYSIS The Town uses fund accounting to ensure and demonstrate compliance with finance related legal requirements. The Town's governmental funds are accounted for using the modified accrual basis of accounting. The Town's proprietary funds provide the same type of information found in the government - wide financial statements, but in more detail. Governmental Funds The focus of the Town's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the Town's financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. As of June 30, 2021, the Town's governmental funds reported a combined ending fund balance of $20,425,535, an increase of $786,757, or an increase of 4% in comparison with the prior fiscal year. Approximately $7.3 million, or 36% of this amount constitutes unassigned fund balance, which is available for spending at the government's discretion. The remainder of the fund balance is restricted, committed, or assigned to indicate that these amounts may only be spent on the purposes designated. Page 1 11 Resolution 80-21 Page 25 Management's Discussion and Analysis Committed and assigned fund balances primarily consist of reserves for specific future uses. These reserves are approved each year by the City Council during the annual budget process. Other funds that are committed primarily consist of capital project funds. Capital projects are approved by the City Council during the annual budget process for the upcoming fiscal year. In total, restricted, committed and assigned reserves were increased $622,816 from the prior year due. primarily to the $500,000 contribution to the Pension 115 Trust (see Note 713). Governmental funds revenues, expenditures, and change in fund balances for the last ten fiscal years can be found under the Statistical Section on pages 102-103 of this report. The General Fund is the chief operating fund of the Town. At the end of the current fiscal year, unassigned fund balance of the General Fund was $7,338,881, while total fund balance increase to $20,425,535. As a measure of the General Fund's liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total General Fund expenditures. Unassigned fund balance of $7.3 million represents approximately 65 percent of total General Fund expenditures of $11.3 million, while total fund balance represents approximately 55 percent of the same amount. The ratios indicate that the Town's unassigned fund balance can support General Fund operations for most of the entire year without additional revenue sources. The fund balance of the Town's General Fund increased by $792,124 during the current fiscal year. This increase is primarily attributable to property tax, charges for services, and other taxes. General Fund Revenues for the year ended June 30, 2021 totaled $14,726,129 increased by $1,512,228, or 11.4%. The following table summarizes revenues in major categories with two-year comparison: Total general fund revenues 14,726,129 20.21 Property taxes $ 7,315,637 Taxes other than property $ 978,527 Franchise fees $ 350,952 Fines and forfeitures $ 11680 Licenses and permits $ 1,830,032 Intergovernmental $ 208,450 Investment income $ 55,161 Charges for services $ 1,190,760 interfund charges $ 1,898,349 Rental income $ 149,384 Other revenues $ 747,187 Total general fund revenues 14,726,129 The increase or decrease in revenue sources in the General fund as compared to priorfiscal year are primarily attributable to the following: • Property tax increased to $7.3 million, up 7 percent, during fiscal year 2021. This increase was driven by increase in single family home assessed value through property transfers, reversal of Proposition 12 1 Page Resolution 80-21 Page 26 Increase(Decrease) 2020 $ Variance % Variance $ 6,834,083 $ 481,554 7.05/0 $ 537,836 $ 440,691 81.941 $ 340,268 $ 10,684 3.14% $ 4,797 $ (3,117) 0.001 $ 990,768 $ 839,254 84.711 $ 62,532 $ 145,928 233.37% 787,575 $ (732,414) -93.001 1,511,483 $ (320,723) -21.22% $ 1,858,142 $ 40,207 2.16% $ 172,212 $ (22,828) -13.26% $ 11.4,205 $ 632,982 554.25% $ 13,213,901 $ 1,512,228 11.44% The increase or decrease in revenue sources in the General fund as compared to priorfiscal year are primarily attributable to the following: • Property tax increased to $7.3 million, up 7 percent, during fiscal year 2021. This increase was driven by increase in single family home assessed value through property transfers, reversal of Proposition 12 1 Page Resolution 80-21 Page 26 Management's Discussion and Analysis 8 valuation adjustment, and the shift of property tax from County of Santa Clara to the Town per the Tax Equality Allocation (SB 107). • Taxes other than property totaled $978,527, increased by $440,691 or 82 percent, as compared to the prior year. This increase is primarily attributable to other taxes (real property transfer tax and sales and use tax). The higher sales and use tax was due to the increase numbers of online shopping during the COVID-19 pandemic outbreak. • Franchise fees increased by $10,684 or 3% during the current fiscal year and thus remained consistent with the prior year. • Licenses and permits totaled $1.8 million, an increase of $839,264, or 85% from the prior year. Licenses and permits are assessed on building permits and as shown on page 114 of the Statistical Section, total valuation for new homes, additions and remodels. Dependent upon the total number of permits issued, this revenue stream can fluctuate year over year. • Intergovernmental revenue totaled $208,460, an increase of $145,928 or 233 percent from the prior year. Intergovernmental revenue includes vehicle code fines, AB 939 fees, abandoned vehicle recovery, and supplemental grant fund for law enforcement. These revenues will fluctuate based on timing of payments and the amount of fees and recovery collected duringthe year. This year increase was due to one-time COVID-19 Relief from federal government. • Investment income totaled $55,161, a decrease of $732,414, or 93 percent from prior year. Investment income includes interest earned on accounts, interest earned on investments, realized and unrealized gain / losses on investments. Significant reduction in interest rates due to COVID and associated impact on mark -to -market valuations. • Charges for services totaled $1,190,760, a decrease of $320,723 or 21%. Charges for services include various fees charged for Town services including administrative, community development, public works, parks and recreation, and engineering. Charges for services fluctuate year over year depending upon the services provided throughout the year. • Other revenue totaled $747,187, an increase of $632,982 or 554 percent from prior year. The increase was due to PARS Trust contribution. Including the additional payments to the Town's unfunded pension liability, the General Fund's expenditures increased by $2.0 million or 21.53% as compared to the prior year. General government's expenditures increased was due to legal expense. For public works, the increase was primarily due to increase in contract engineering services, part of which is billable and is covered as charges for service revenues, and filling Page 1 13 Resolution 80-21 Page 27 Increase(Decrease) 2021 2420 $ Variance % Variance General government $ 2,250,095 $ 2,126,483 $ 123;642 5.81% Publicsafety 2,424,464 1,964,494 64,374 3.481 Community development 3,445,611 2,860,410 185,201 6.4Ti6 Publicworks 1,968,848 1,724,313 244,530 14.18°06 Parks and recreation 939,565 652,562 287,003 43.98% Nondepartmental - 106,626 - 106,626 0.040/0 additional pension payments 110001000 - 1,000,000 0.44% Total general fund expenditures $ 11,331,199 $ 9,323,863 $ 2,007,336 21.53% Including the additional payments to the Town's unfunded pension liability, the General Fund's expenditures increased by $2.0 million or 21.53% as compared to the prior year. General government's expenditures increased was due to legal expense. For public works, the increase was primarily due to increase in contract engineering services, part of which is billable and is covered as charges for service revenues, and filling Page 1 13 Resolution 80-21 Page 27 Management's Discussion and Analysis vacancies throught the department. Community development's expenditures increased mainly due to increases in contract services for building official and code enforcement. For parks and recreation and nondepartmental, the increases were due to the new cost allocation plan was implemented in the year. The net between revenues and expenditures was $3.4 million before $2.6 million in transfers to other funds. Transfers to other funds consist of capital projects to support capital improvement needs and increased $2.0 million from the prior year due to large transfers to purchase the PG&E credit from other agencies. The Streets Capital Project Fund is classified as a major fund for the Town. Due to the amount transferred this year, the Streets Capital Project Fund balance of $745,050 remained unchanged at June 30, 2021. Less: Capital Outlays (913,670) (1,336,307) 422,637 -31.63% Net change in Streets Capital Improvement fund $ - $ _ $ Current year revenues, excluding transfers in, totaled $733,235, a decrease of $48,982, or 6% primarily due to lower Measure B receipts. Total spending was $913,670 for the annual street rehabilitation projects. Proprietary Funds The Town proprietary funds provide the same type of information found in the government -wide financial statements, but in more detail. The proprietary funds currently include an enterprise fund (Sewer Fund) and an internal service fund. The Town's Sewer Fund provides sanitary sewer services to roughly half of the parcels within the jurisdiction. Service fees are collected annually on the property tax roll. A 3% increase for FY17-18 through FY19-20 was collected. The increase in revenues will help the Town make improvements and perform routine preventive measures on the Town's aging sewer infrastructure. In FY19-20, the City Council approved a sewer rate study to be conducted to determine the need for a rate adjustment based on the current financial status of the sewer fund and the projected O&M and capital improvement needs of the system. There was no sewer rate adjustment in FY 20-21. The Town will review the projected O&M and capital improvement needs to determine if its necessary for a rate adjustment. Unrestricted net position for the sewer utilities enterprise fund at the end of the fiscal year was $3,830,656. Total growth in net position for sewer utilities enterprise fund was $682,790. Total sewer operating revenues decreased by $77,936, or 2.5%, due to the 50% reduction in sewer rate for ADU's, while sewer operating expenses decreased by $254,555 or 8.5%. The decreased cost for contract services is related to expenses 14 1 Page Resolution 80-21 Page 28 Increase (Decrease) 2021 2020 $Variance %Variance Intergovernmental Gas taxes $ 188,808 $ 195,992 $ (7,154) -3.67% SBI Road Maintenance Rehab 155,965 162,031 (6,066) -3.74% Measure B 162,202 229,411 (67,209) ..29.30% Vehicle registration 53,983 58,868 (4,885) -8.30% Charges for services 172,277 135,915 36,362 26.75°% Transfers in 180,,435 554,090 (373,655) -67.44% Total revenues 913,670 1,336,307 (422,637) -31.63% Less: Capital Outlays (913,670) (1,336,307) 422,637 -31.63% Net change in Streets Capital Improvement fund $ - $ _ $ Current year revenues, excluding transfers in, totaled $733,235, a decrease of $48,982, or 6% primarily due to lower Measure B receipts. Total spending was $913,670 for the annual street rehabilitation projects. Proprietary Funds The Town proprietary funds provide the same type of information found in the government -wide financial statements, but in more detail. The proprietary funds currently include an enterprise fund (Sewer Fund) and an internal service fund. The Town's Sewer Fund provides sanitary sewer services to roughly half of the parcels within the jurisdiction. Service fees are collected annually on the property tax roll. A 3% increase for FY17-18 through FY19-20 was collected. The increase in revenues will help the Town make improvements and perform routine preventive measures on the Town's aging sewer infrastructure. In FY19-20, the City Council approved a sewer rate study to be conducted to determine the need for a rate adjustment based on the current financial status of the sewer fund and the projected O&M and capital improvement needs of the system. There was no sewer rate adjustment in FY 20-21. The Town will review the projected O&M and capital improvement needs to determine if its necessary for a rate adjustment. Unrestricted net position for the sewer utilities enterprise fund at the end of the fiscal year was $3,830,656. Total growth in net position for sewer utilities enterprise fund was $682,790. Total sewer operating revenues decreased by $77,936, or 2.5%, due to the 50% reduction in sewer rate for ADU's, while sewer operating expenses decreased by $254,555 or 8.5%. The decreased cost for contract services is related to expenses 14 1 Page Resolution 80-21 Page 28 Management's Discussion and Analvsis from the prior fiscal year due to a missed accrual. Included in sewer operating expenses are interfund charges for town center allocations, vehicle and equipment allocations, corporate yard allocations, and overhead allocations. Total interfund allocations decreased by $103,446 or 37.3%, as compared to the prior fiscal year due to the implementation of the overhead allocation study. Sewer connection fees increased by $3,313 or 3.9%. The positive change in net position is attributable to lower operating expenses and a one- time transfer from the General Fund of $294,316 to correct for excess overhead allocation charges in the precious three years. Sewer Utility Enterprise Fund Statement of Revenues, Expenses, and Changes in Fund Net Position lncrease(Decrease) 2021 2020 $ Variance % Variance Operating Revenues Sewer assessment charges S 3,035,410 $ 3,104,059 S (68,649) •2.21% Other 9,287 (9,287) 0.00% Total Operating Revenues 3,035,410 3,113,346 (77,936) -2.50% Operating Expenses 10,865,601 10,469,712 395,889 3.78% Salaries and benefits 115,613 210,047 (94,434) -44.96% Contract services - treatment plants 1,568,381 1,882,075 (313,694) -16.67% Professional services 141,892 106,809 35,083 32.85% Support goods and services 3,918 5,106 (1,188) -23.27% Repairs and maintenance 513,575 303,068 210,507 69.46% Utilities 7,068 6,335 733 11.57% lnterfundcharges: OAK Twvn center allocation 12,483 18,909 (6,426) -33.98% Vehicle and equipment allocation 6,356 7,966 (1,610) -20.21% Corp Yard allocation 17,342 47,505 (30,163) -63.49% Over head allocation 137,485 202,732 (65,247) -32.18% Machinery and equipment - 1,209 (1,209) 0.00% Depreciation 226,870 213,777 13,093 6.12% Total Operating Expenses 2,750,983 3,005,538 (254,555) -8.47% Earnings from operations 284,427 107,808 176,619 163.83% Nonoperating Revenues (Expenses) Investment income 10,079 172,060 (161,981) -94.14% Nonoperating Revene (Expenses), net 10,079 172,060 (161,981) -94.14% Income Before Contributions and Transfers Capital Contributions - sewer connection fees 88,908 85,595 .3,313 3.87.% Transfers In 304,825 30,426 274,399 901.865% Transfers out (5,449) (5,449) 0.00% Total. Other Financing Sources and (uses) 388,284 p 116,021 272,263 905.73% Change in net position 682,790 395,889 286,901 72.47% Net Position, beginning of year as restated 10,865,601 10,469,712 395,889 3.78% Net Position, end of year as restated S 11,548,391 S 10,865,601 S 682,790 6.281's Unrestricted net position for the internal service fund at the end of the fiscal year was $779,485. Total decrease in net position for the internal service fund was $242,828, or 5.5%, as compared with the decrease Page 1 15 Resolution 80-21 Page 29 Management's Discussion and Analysis of $157,315 in the prior fiscal year. Total operating revenues consist of interfund charges for services. These operating revenues decreased by $46,049, or 6.6% as compared to prior fiscal year. Operating expenses increased by $39,464, or 4.62%, as compared to prior year. Internal Service Fund Statement of Revenues, Expenses, and Changes in Fund Net Position Net Position, beginning of year as restated +4,441,195 4,558,546 (157,311) -:3.45% Net Position, end of year S 4,158,367 5 4,401,195 S. (242,828) -5,52% 16 1 Page Resolution 80-21 Page 30 Increase(Decrease) 2421 2424 $ Variance °lo Variance Operating Revenues InterBundCharges for Services Town Hall services $ 487,999 $ 4.35,697 52,342 12.00% Corporate Maintenance Yard services 86,749 194,422 (143,313) 54.37° Vehicle services 76,655 71,69.3 4,962 6.92% Tota[: Operating Revenues 651,36.3 697,412 (46,449) "6.60% Operating Expenses Salaries and benefits 158,572 1.18,:399 44,173 33.93% Professional services 62,500 64,745 1,795 2.96% Support g,00ds. and services 95,95:3 1.12,754 (16,797) 14.94% IT support and maintenance 135,764 173;65.2 (37,888) -21.82.' Repairs and maintenance 133,420 1.16,687 16,733 14.34% Utilities 55,942 57,541 (1,559) -2.71% Machinery and equipment 68,119 .36,798 31,321 85,12 Depreciation 193,921 178,2.31 5,694 3.19° Total operating Expenses 894,191 854,72.3 39,468 4.62` Earnings (Foss) from operations (24:2,80 (15.7,31.1) (85,517) 54.36% Nonoperating Revenues (Ex pensses) Cain on-disp-o:sal of capital assets - - 4. Other income _ _ 0.00% Nonoperating Revenues _ 0.W%_ Change in net position (242,828) (157,.311) (85,517) 54.316% Net Position, beginning of year as restated +4,441,195 4,558,546 (157,311) -:3.45% Net Position, end of year S 4,158,367 5 4,401,195 S. (242,828) -5,52% 16 1 Page Resolution 80-21 Page 30 Management's Discussion and Analysis GENERAL FUND BUDGETARY HIGHLIGHTS The Town's budget process began after the mid -year financial update presentation to the Finance and Investment Committee and the City Council. The Administrative Services Department facilitates the development and consolidates input from all Town departments. The consolidated budget inputs are reviewed by the City Manager and presented to the City Council and the Finance and Investment Committee in a joint budget study session. A balanced budget is adopted by June 30 of each year. During the year, the departments will present to the City Council for contract awards for all services exceeding $25,000. Availability of budget for this award is part of the requests presented by the departments to the City Council. Additionally, the Administrative Services Department monitors the budget during the year and prepares a mid -year financial update to the Finance and Investment Committee and the City Council. As part of this mid -year financial update, budget amendments are proposed to address any significant economic concerns and to incorporate prior City Council actions that had changed appropriation or for reallocation of budget items. The actual general fund revenues were $2,558,542 or 21.03% more than the final adopted budget for fiscal year 2021. The actual general fund expenditures were less than the final adopted budget by $80,213 or 0.7%. The Town makes a concentrated effort to control expenditures. Shown below are the expenditures by function for fiscal year 2021 as compared to the final adopted budget. General government Public safety Community development Public works Parks and recreation Nondepartmentai - additional pension payments Total general fund expenditures Capital Assets 1,00{},000 1,106,626 (106,626) $10,292,997 $11,411,412 $11,331,199 .$ 80,213 CAPITAL ASSETS AND LONG-TERM DEBT ADMINISTRATION The Town's investment in capital assets for its governmental and business -type activities as of June 30, 2021, amounts to $33,971,154 (net of accumulated depreciation), a decrease of $115,070 or 0.3%. The investment in capital assets include land, buildings, equipment, vehicles and infrastructure. Current year capital spending included $1,367,007 in infrastructure and $370,374 in the sewer collection system as compared with $1,706,371 and $523,702, respectively, in the prior year. No changes were recorded inland for the fiscal year. The table on the following page presents summarized information on capital assets net of depreciation for fiscal years 2020 and 2021. Additional information on the Town's capital assets can be found in Note 4 to the financial statements. Page 1 17 Resolution 80-21 Page 31 Variance with 2021 Final Budget - Original Final Actual Favorable Budget Budget Expenditures (Unfavorable) $ 2,490,410 $ 2,571,763 $ 2,250,085 $ 321,678 2,031,571 2,031,571 2,020,464 11,107 2,928,431 2,936,965 3,045,611 (108,646) 1,887,392 1,893,442 1,968,848 (75,406) 955,193 977,671 939,565 38,106 1,00{},000 1,106,626 (106,626) $10,292,997 $11,411,412 $11,331,199 .$ 80,213 CAPITAL ASSETS AND LONG-TERM DEBT ADMINISTRATION The Town's investment in capital assets for its governmental and business -type activities as of June 30, 2021, amounts to $33,971,154 (net of accumulated depreciation), a decrease of $115,070 or 0.3%. The investment in capital assets include land, buildings, equipment, vehicles and infrastructure. Current year capital spending included $1,367,007 in infrastructure and $370,374 in the sewer collection system as compared with $1,706,371 and $523,702, respectively, in the prior year. No changes were recorded inland for the fiscal year. The table on the following page presents summarized information on capital assets net of depreciation for fiscal years 2020 and 2021. Additional information on the Town's capital assets can be found in Note 4 to the financial statements. Page 1 17 Resolution 80-21 Page 31 Management's Discussion and Analysis Land Buildings Office equipment Vehicles Sewer collection system Infrastructure Total capital assets, net Town of Los Altos Hills Capital Assets (Net of depreciation) Year Ended June 30, 2021 Governmental Business -Type Activities Activities Total $ 250,535 $ $ 250,535 2,988,982 2,988,982 12,541 12,541 237,363 237,363 7,717,735 7,717,735 22,763,998 - 22,763,998 $ 26,253,419 $ 7,717,735 $ 33,971,154 Year Ended June 30, 2020 Governmental Business -Type Activities Activities Total $ 250,535 $ $ 250,535 3,119,621 3,119,621 16,717 16,717 286,465 286,465 7,574,231 7,574,231 22,838,655 - 22,838,655 $ 26,511,993 $ 7,574,231 $ 34,086,224 Long -Term Debt The Town has no long-term bonded debt as of and for the year ended June 30, 2021. The remainder of the Town's long-term obligations comprise pension and OPER related liabilities. According to the 2020-21 OPEB Actuarial, the liability is overfunded. ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS The Town of Los Altos Hills is a residential community. Its primary revenue sources are property tax and permit revenues from private development. The outlook for the housing market remains positive. While home sales volume stays flat, home price continues to rise year over year. The Town's assessed value grew at least 6% each year for the past eight years. Property tax revenue is projected to approximate $7.2 million in 2021-22 and permit and license revenues are estimated to increase to $1.3 million. Overall, the adopted 2021-2022 General Fund budget reflects revenue over expenditures in the amount of $1.3 million before transfers. Total revenues and transfers in are budgeted at $14.9 million, while total expenditures are budgeted at $13.6 million and transfers out are budgeted at $4.4 million, with an estimated total ending fund balance of $12.9 million. The Town expects to spend about $3.5 million on the Town Hall Addition capital project. The unfunded pension liability and payments are expected to rise substantially due to CaIPERS' plan to reduce the discount rate and certain year's lower market returns. The Town plans to explore using some of its excess general funds to prepay obligations to CaIPERS and has established a trust that may be used to fund future pension obligations where funds may be invested in instruments that historically have produced higher returns. The Town received approximately $1.0 million in American Rescue Plan Act (ARPR) funds in FY21-22 and the same amount will be distributed in July 2022, The Town will submit their projects/use to Treasury by April 2022. 18 1 Page Resolution 80-21 Page 32 Management's Discussion and Analvsis REQUESTS FOR INFORMATION This financial report is designed to provide a general overview of the Town of Los Altos Hills' finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional information should be addressed to: Town of Los Altos Hills Attn: Administrative Services Director 26379 Fremont Road Los Altos Hills, CA 94022 Page 119 Resolution 80-21 Page 33 Basic Financial Statement Government Wide Financial Statements Fund Financial Statements Notes to Basic Financial Statements Resolution 80-21 Page 34 TOWN OF LOS ALTOS HILLS STATEMENT OF NET POSITION JUNE 30, 2021 221 Page See accompanying notes to financial statements Resolution 80-21 Page 35 Governmental Business -type Activities Activities Total ASSETS Current Assets: Cash and investments $ 23,104,613 $ 5,249,175 $ 28,353,788 Restricted cash and investments 1,178,398 - 1,178,398 Accounts receivables 733,024 12,984 746,008 Total Current Assets 25,016,035 5,262,159 30,278,194 Noncurrent Assets: Loans receivable - 18,142 18,142 Net OPEB asset 201,940 11,099 213,039 Materials, parts and supplies 6,450 - 6,450 Total Noncurrent Assets 208,390 29,241 237,631 Capital Assets: Non -depreciable capital assets 250,535 - 250,535 Depreciable capital assets, net of depreciation 26,002,882 7,717,735 33,720,617 Total Capital Assets 26,253,417 7,717,735 33,971,152 Total Assets 51,477,842 13,009,135 64,486,977 DEFERRED OUTFLOWS OF RESOURCES Related to pensions 1,501,366 82,521 1,583,887 Related to OPEB 66,816 3,672 70,488 Total Deferred Outflows of Resources 1,568,182 86,193 1,654,375 Total Assets and Deferred Outflows 53,046,024 13,095,328 66,141,352 LIABILITIES Current Liabilities: Accounts payable 468,607 1,374,255 1,842,862 Other liabilities 234,279 - 234,279 Refundable deposits 3,108,303 3,108,303 Compensated absences due within one year 42,939 - 42,939 Total Current Liabilities 3,854,128 1,374,255 5,228,383 Noncurrent Liabilities: Compensated absences due in more than one year 122,776 2,402 125,178 Net pension liability 2,365,750 130,030 2,495,780 Total Noncurrent Liabilities 2,488,526 132,432 2,620,958 Total Liabilities 6,342,654 1,506,687 7,849,341 DEFERRED INFLOWS OF RESOURCES Related to pensions 470,202 25,844 496,046 Related to OPEB 262,094 14,406 276,500 Total Deferred Inflows of Resources 732,296 40,250 772,546 NET POSITION Net investment in capital assets 26,253,417 7,717,735 33,971,152 Restricted for: Parks and recreation 34,491 - 34,491 Public safety 638,578 638,578 Art donations 105,233 105,233 Pension trust 1,178,398 - 1,178,398 Unrestricted 17,760,957 3,830,656 21,591,613 Total Net Position 45,971,074 11,548,391 57,519,465 Total Liabilities, Deferred Inflows and Net Position $ 53,046,024 $ 13,095,328 $ 66,141,352 221 Page See accompanying notes to financial statements Resolution 80-21 Page 35 TOWN OF LOS ALTOS HILLS STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2021 Page 123 Resolution 80-21 Page 36 Program Revenues Net Revenue (Expense) and Change In Net Position Operating Capital Charges for Contributions Contributions Governmental Business -type Expenses Services and Grants and Grants Activities Activities Total Governmental Activities: General government $ 4,701,507 $ 2,557,408 $ 130,379 $ $ (2,013,720) $ $ (2,013,720) Public safety 2,331,814 - 31,081 (2,300,733) (2,300,733) Community development 3,441,398 2,533,045 - (908,353) (908,353) Public works 2,235,212 471,259 132,679 374,296 (1,256,978) (1,256,978) Parks and recreation 1,061,879 290,637 - (771,242) (771,242) Non -Departmental 1,106,626 - - (1,106,626) (1,106,626) Total Governmental Activities 14,878,436 5,852,349 294,139 374,296 (8,357,652) (8,357,652) Business -type Activities: Sewer 2,750,983 3,035,410 88,908 373,335 373,335 Total Business -type Activities 2,750,983 3,035,410 - 88,908 373,335 373,335 Total Primary Government $ 17,629,419 $ 8,887,759 $ 294,139 $ 463,204 (8,357,652) 373,335 (7,984,317) General Revenues: Taxes: Property taxes 7,315,637 7,315,637 Motor vehicle license tax 60,153 60,153 Othertaxes 978,527 978,527 Franchise fees 350,952 - 350,952 Investment Income 59,912 10,079 69,991 Other unrestricted revenue 631,290 - 631,290 Transfers, net (299,376) 299,376 - Total General Revenues 9,097,095 309,455 9,406,550 Change In Net Position 739,443 682,790 1,422,233 Net Position, Beginning of Year 45,231,631 10,865,601 56,097,232 Net Position, End of Year $ 45,971,074 $ 11,548,391 $ 57,519,465 See accompanying notes to financial statements Page 123 Resolution 80-21 Page 36 Governmental Fund Financial Statements General Fund accounts for financial resources traditionally associated with the governmental which are not required legally or by sound financial management to be accounted for in another fund. Street Capital Projects Fund accounts for financial resources that are necessary for the acquisition or construction of streets. Other Capital Projects Funds accounts for financial resources that are necessary for the acquisition or construction of major capital facilities. Non -Major Governmental Funds are the aggregate of all the non -major governmental funds. Page 125 Resolution 80-21 Page 37 TOWN OF LOS ALTOS HILLS GOVERNMENTAL FUNDS BALANCE SHEET JUNE 30, 2021 LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable $ 361,044 $ 560 $ 49,259 $ 345 $ 411,208 Other liabilities - - 4,073 - 4,073 Refundable deposits 3,108,303 - - 3,108,303 Retention liability - 2,481 - 2,481 Total Liabilities 3,469,347 3,041 53,332 345 3,526,065 FUND BALANCES Restricted 1,178,398 - - 778,302 1,956,700 Committed 6,371,700 745,050 1,941,704 - 9,058,454 Assigned 2,071,500 - - - 2,071,500 Unassigned 7,338,881 - - - 7,338,881 Total Fund Balances 16,960,479 745,050 1,941,704 778,302 20,425,535 TOTAL LIABILITIES AND FUND BALANCES $ 20,429,826 $ 748,091 $ 1,995,036 $ 778,647 $ 23,951,600 See accompanying notes to financial statements 261 Page Resolution 80-21 Page 38 Streets Nonmajor Capital Capital Governmental General Projects Projects Funds Total ASSETS Cash and investments $ 18,551,640 $ 719,670 $ 1,990,314 $ 778,554 $ 22,040,178 Restricted cash and investments 1,178,398 - - - 1,178,398 Receivables: Property taxes 147,518 - 147,518 Taxes other than property 207,114 - - - 207,114 Intergovernmental 3,447 28,421 4,722 - 36,590 Miscellaneous 341,709 - - 93 341,802 Total Assets $ 20,429,826 $ 748,091 $ 1,995,036 $ 778,647 $ 23,951,600 LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable $ 361,044 $ 560 $ 49,259 $ 345 $ 411,208 Other liabilities - - 4,073 - 4,073 Refundable deposits 3,108,303 - - 3,108,303 Retention liability - 2,481 - 2,481 Total Liabilities 3,469,347 3,041 53,332 345 3,526,065 FUND BALANCES Restricted 1,178,398 - - 778,302 1,956,700 Committed 6,371,700 745,050 1,941,704 - 9,058,454 Assigned 2,071,500 - - - 2,071,500 Unassigned 7,338,881 - - - 7,338,881 Total Fund Balances 16,960,479 745,050 1,941,704 778,302 20,425,535 TOTAL LIABILITIES AND FUND BALANCES $ 20,429,826 $ 748,091 $ 1,995,036 $ 778,647 $ 23,951,600 See accompanying notes to financial statements 261 Page Resolution 80-21 Page 38 TOWN OF LOS ALTOS HILLS RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE GOVERNMENT -WIDE STATEMENT OF NET POSITION JUNE 30, 2021 Fund Balances of Governmental Funds $ 20,425,535 Amounts reported for governmental activities in the Statement of Net Position are different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the governmental funds. 22,874,535 Other long-term assets are not available to pay for current -period expenditures and therefore are offset by deferred inflows of resources in the funds: Net OPEB asset 201,940 The Internal Service Fund is used by the Town to charge the cost of Town Hall, office, and corporate yard services. The assets and liabilities of the Internal Service Fund are included in the Governmental Activities in the Statement of Net Position. 4,158,367 Deferred outflows of resources are not deemed available to pay current period expenditures and therefore are not reported as governmental fund assets: Deferred outflows related to pensions 1,501,366 Deferred outflows related to other postemployment benefits 66,816 The liabilities below are not due and payable in the current period and therefore are not reported in the governmental funds: Compensated absences (159,439) Net pension liability (2,365,750) Deferred inflows of resources are not deemed due and payable in the current period and therefore are not reported as governmental fund liabilities: Deferred inflows due to pension liabilities (470,202) Deferred inflows due to OPEB liabilities (262,094) Net Position of Governmental Activities $ 45,971,074 See accompanying notes to financial statements Page 127 Resolution 80-21 Page 39 TOWN OF LOS ALTOS HILLS GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED JUNE 30, 2021 REVENUES Property taxes Taxes other than property Intergovernmental Charges for services Licenses and permits Franchise fees Fines and forfeitures Rental income Interfund charges Investment income Other revenues Total revenues EXPENDITURES General government Public safety Community development Public works Parks and recreation Non -Departmental Capital outlay Total expenditures Excess (Deficiency) of Revenues Over Expenditures OTHER FINANCING SOURCES (USES) Streets Other Nonmajor Capital Capital Governmental General Projects Projects Funds Total $ 7,315,637 $ $ - $ - $ 7,315,637 978,527 - - - 978,527 208,460 560,958 250,000 - 1,019,418 1,190,760 172,277 151,940 - 1,514,977 1,830,032 - - - 1,830,032 350,952 - - 350,952 1,680 - - - 1,680 149,384 - 51,200 - 200,584 1,898,349 - - - 1,898,349 55,161 - 4,667 84 59,912 747,187 - - - 747,187 19,638,778 Fund Balances, End of Year $ 16,960,479 $ 14,726,129 733,235 457,807 84 15,917,255 2,250,085 2,140,689 25,000 4,415,774 2,020,464 - 14,805 2,035,269 3,045,611 - - 3,045,611 1,968,848 - - 1,968,848 939,565 - 1,177 940,742 1,106,626 - - 1,106,626 - 913,670 404,582 - 1,318,252 11,331,199 913,670 2,545,271 40,982 14,831,122 3,394,930 (180,435) (2,087,464) (40,898) 1,086,133 Transfers in 9,149 181,720 2,150,605 14,805 2,356,279 Transfers out (2,611,955) (1,285) (42,415) - (2,655,655) Total Other Financing Sources (Uses) (2,602,806) 180,435 2,108,190 14,805 (299,376) Net Change in Fund Balances 792,124 - 20,726 (26,093) 786,757 Fund Balances, Beginning of Year 16,168,355 745,050 $1,920,978 804,395 19,638,778 Fund Balances, End of Year $ 16,960,479 $ 745,050 $ 1,941,704 $ 778,302 $ 20,425,535 281 Page See accompanying notes to financial statements Resolution 80-21 Page 40 TOWN OF LOS ALTOS HILLS RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES TO THE GOVERNMENT -WIDE STATEMENT OF ACTIVITIES AND CHANGES IN NET POSITION FOR YEAR ENDED JUNE 30, 2021 Net Change in Fund Balances - Total Governmental Funds Amounts reported for governmental activities in the Statement of Activities differs from the amounts reported in the Statement of Revenues, Expenditures, and Changes in Fund Balances because: Governmental funds report capital outlays as expenditures but in the Statement of Activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense or are allocated to the appropriate functional expense when the cost is below the capitalization threshold. This activity is reconciled as follows: Capital outlays Depreciation expense charged to governmental activities Change in Compensated absences Government funds do not report pension expense as it does not require the use of current financial resources Government funds do not report OPEB expense as it does not require the use of current financial resources $ 786,757 1,318,252 (1,392,907) 5,863 201,808 62,498 Internal Service Funds are used by management to charge the costs of certain activities, such as cost of Town Hall, office, and corporate yard services to individual funds. The portion of the net revenue (expense) of these Internal Service Funds, arising out of their transactions with Governmental Funds, is reported with governmental activities, because they service those activities. (242,828) Change in Net Position of Governmental Activities $ 739,443 See accompanying notes to financial statements Page 129 Resolution 80-21 Page 41 Proprietary Fund Financial Statements Sewer Fund accounts for the activities of the wastewater collection and treatment system, which provides service to the residents of the Town and some neighboring cities. Internal Service Fund is used to account for the financing of goods and services provided by one department or agency to other departments or agencies on a cost reimbursement basis. Page 131 Resolution 80-21 Page 42 TOWN OF LOS ALTOS HILLS PROPRIETARY FUNDS STATEMENT OF FUND NET POSITION JUNE 30, 2021 ASSETS Current Assets: Cash and investments Accounts receivable Total Current Assets Noncurrent Assets: Loan receivable Net OPEB asset Materials, parts and supplies Capital assets, net of accumulated depreciation Total Noncurrent Assets Total Assets DEFERRED OUTFLOWS OF RESOURCES Related to pensions Related to OPEB Total Deferred Outflows of Resources Total Assets and Deferred Outflows LIABILITIES Current Liabilities: Accounts payable Accrued payroll and related liabilities Sewer reimbursement deposits Compensated absences due within one year Total Current Liabilities Noncurrent liabilities: Compensated absences due in more than one year Net pension liability Total noncurrent liabilities Total Liabilities DEFERRED INFLOWS OF RESOURCES Related to pensions Related to OPEB Total Deferred Inflows of Resources NET POSITION Business -type Activities Enterprise Fund Sewer Governmental Activities Internal Service Fund $ 5,249,175 $ 1,064,435 12,984 - 5,262,159 1,064,435 18,142 11,099 - - 6,450 7,717,735 3,378,882 7,746,976 3,385,332 13,009,135 4,449,767 82,521 3,672 86,193 13,095,328 4,449,767 1,374,255 57,399 - 227,725 - 92 1,374,255 285,216 2,402 6,184 130,030 - 132,432 6,184 1,506,687 291,400 25,844 14,406 40,250 Investment in Capital Assets 7,717,735 3,378,882 Unrestricted 3,830,656 779,485 Total Net Position 11,548,391 4,158,367 Total Liabilities, Deferred Inflows and Net Position $ 13,095,328 $ 4,449,767 See accompanying notes to financial statements 321 Page Resolution 80-21 Page 43 TOWN OF LOS ALTOS HILLS PROPRIETARY FUNDS STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION FOR THE YEAR ENDED JUNE 30, 2021 OPERATING REVENUES Charges for services Other income Town Hall services Corporate yard services Vehicle services Total Operating Revenues OPERATING EXPENSES Salaries and benefits Contract services - treatment plant Professional services Support goods and services IT Support and maintenance Repairs and maintenance Utilities Interfund charges Machinery and equipment Depreciation Total Operating Expenses Operating (Loss) NONOPERATING REVENUES (EXPENSES) Interest income Nonoperating Revenues (Expenses), net Net Income before Contributions and Transfers Capital Contributions - sewer connection fees Transfers in Transfers out Total Other Financing Sources and (Uses) Business -type Governmental Activities Activities Enterprise Internal Fund Service Sewer Fund $ 3,035,410 $ 487,999 86,709 76,655 3,035,410 651,363 115,613 158,572 1,568,381 - 141,892 62,500 3,918 95,953 - 135,764 513,575 133,420 7,068 55,942 173,666 - - 68,119 226,870 183,921 2,750,983 894,191 284,427 (242,828) 10,079 10,079 294,506 88,908 304,825 (5,449) 388,284 (242,828) Changes in Net Position 682,790 (242,828) Total Net Position, Beginning of Year 10,865,601 4,401,195 Total Net Position, End of Year $ 11,548,391 $ 4,158,367 See accompanying notes to financial statements Page 133 Resolution 80-21 Page 44 TOWN OF LOS ALTOS HILLS PROPRIETARY FUNDS STATEMENT OF CASH FLOWS FOR THE YEAR ENDED JUNE 30, 2021 CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Receipts from interfund services provided Payments for interfund services used Payments to suppliers Payments to employees Net Cash From (For) Operating Activities CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Interfund receipts Net Cash From (For) Noncapital Financing Activities CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition of capital assets Capital contributions received for connection fees Net Cash From (For) Capital and Related Financing Activities CASH FLOWS FROM INVESTING ACTIVITIES Principal received from loans Investment income Net cash flows from investing activities Net Increase (Decrease) in Cash and Investments Cash and Cash Equivalents, Beginning of Year Cash and Cash Equivalents, End of Year RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH FROM (FOR) OPERATING ACTIVITIES Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation (Increase) decrease in accounts receivable (Increase) decrease in OPEB asset (Increase) decrease in materials (Increase) decrease in deferred outflows related to pensions (Increase) decrease in deferred outflows related to OPEB Increase (decrease) in accounts payable Increase (decrease) in accrued payroll Increase (decrease) in other liabilities increase (decrease) in compensated absences Increase (decrease) in pension liability Increase (decrease) in deferred inflows related to pensions Increase (decrease) in deferred inflows related to OPEB NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 341 Page Business -type Activities Enterprise Fund C- Governmental :iai JC: vii.e Fund $ 2,985,499 $ - 651,363 (173,666) - (1,976,441) (531,672) (141,271) (129,587) 694,121 (9,896) 299,376 299,376 (370,374) 88,908 (281,466) 15,369 10,079 25,448 737,479 (9,896) 4,511,696 1,074,331 $ 5,249,175 $ 1,064,435 $ 284,427 $ (242,828) 226,870 183,921 4,890 - 16,662 - - 5,000 (13,587) - 2,488 - 258,393 15,026 (54,801) 30,556 (7,718) (1,571) 15,245 (12,752) (25,996) $ 694,121 $ (9,896) See accompanying notes to financial statements Resolution 80-21 Page 45 Fiduciary Fund Financial statement CUSTODIAL FUND West Loyola Special Assessment District Custodial Fund accounts for assets that the Town is holding for the West Loyola Special Assessment District No. 01 for which the Town is acting as an agent. Page 135 Resolution 80-21 Page 46 361 Page TOWN OF LOS ALTOS HILLS STATEMENT OF FIDUCIARY NET POSITION JUNE 30, 2021 ASSETS Restricted Cash and Investments Miscellaneous receivables Total Assets LIABILITIES Bonds payable Total Liabilities NET POSITION Restricted for Bond Payments West Loyola Special Assessment District #1 Custodial Fund $ 290,314 6,355 $ 296,669 $ 60,987 60,987 $ 235,682 See accompanying notes to financial statements Resolution 80-21 Page 47 TOWN OF LOS ALTOS HILLS STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FOR THE YEAR ENDED JUNE 30, 2021 ADDITIONS West Loyola Special Assessment District #1 Custodial Fund Special assessments $ 151,021 Less: administrative expenses (9,083) Total additions 141,938 DEDUCTIONS Payments to bondholders 96,868 Total deductions 96,868 Change in net position 45,070 BEGINNING NET POSITION (as restated (Note 1N)) 190,612 ENDING NET POSITION $ 235,682 See accompanying notes to financial statements Page 137 Resolution 80-21 Page 48 Notes to Basic Financial Statements - Index NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES .............................................................41 A. Reporting Entity.........................................................................................................................41 B. Basis of Presentation.................................................................................................................41 C. Basis of Accounting and Measurement Focus ...........................................................................44 D. Cash and Cash Equivalents.......................................................................................................44 E. Fair Value Measurements..........................................................................................................44 F. Receivables ................................................................................................................................45 G. Capital Assets............................................................................................................................45 H. Deferred Inflows and Deferred Outflows of Resources .............................................................45 I. Property Taxes...........................................................................................................................46 J. Accumulated Compensated Absences......................................................................................46 K. Interfund Transactions ..............................................................................................................46 L. Use of Estimates........................................................................................................................46 M. Post -Employment Benefits Other Than Pensions(OPEB)..........................................................47 N. New GASB Pronouncements....................................................................................................47 NOTE 2 — DEPOSITS AND INVESTMENTS................................................................................................48 A. Policies .......................................................................................................................................48 B. Classification ..............................................................................................................................48 C. Authorized Investments............................................................................................................49 D. Interest Rate Risk and Fair Value Hierarchy..............................................................................49 E. Credit Risk ..................................................................................................................................51 F. Concentration of Credit Risk......................................................................................................52 NOTE 3 — INTERFUND TRANSACTIONS...................................................................................................52 NOTE4 — CAPITAL ASSETS...................................................................................................................... 53 NOTE5 — LONG TERM DEBT ..................................................................................................................54 NOTE 6 —SPECIAL ASSESSMENT DEBT WITHOUT TOWN COMMITMENT..............................................54 NOTE 7 — NET POSITION/FUND BALANCES............................................................................................55 A. Net Position............................................................................................................................... 55 B. Fund Balances —Components ...................................................................................................55 Page 139 Resolution 80-21 Page 49 Notes to Basic Financial Statements NOTE8 — PENSION PLAN.................................................................................................................... 56 A. General Information About the Pension Plan.........................................................................56 B. Net Pension Liability...............................................................................................................57 C. Changes in the Net Pension Liability......................................................................................59 D. Pension Expense and Deferred Outflows/Inflows of Resources Related to Pension .............60 E. Payable to Pension Plan.........................................................................................................61 F. Reduction of CaIPERS Discount Rate......................................................................................61 NOTE9 — RISK MANAGEMENT............................................................................................................ 62 A. Risk Pool.................................................................................................................................62 NOTE 10—CONTINGENT LIABILITIES..................................................................................................63 A. Commitments and Contingencies..........................................................................................63 B. Service Concession Arrangements (SCA)................................................................................63 NOTE 11—OTHER POSTEMPLOYMENT BENEFITS(OPEB)...................................................................63 A. General Information About the OPEB Plan.............................................................................63 B. Plan Description.....................................................................................................................63 C. Benefits Provided...................................................................................................................64 D. Employees Covered by Benefit Terms....................................................................................64 E. Contributions..........................................................................................................................64 F. OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB .....................66 G. Net OPEB Liability...................................................................................................................67 H. Changes in Net OPEB Liability.................................................................................................69 I. Discount Rate.........................................................................................................................69 J. OPEB Liabilities, OPEB Expenses and Deferred Outflows/Inflows of Resources Relatedto OPEB...................................................................................................................70 K. Disclosure of the Other Post -Employment Benefit Plan Trust Fiduciary Fund .......................71 NOTE 12 — STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY......................................................71 A. Excess of Expenditures Over Appropriations..........................................................................71 B. Deficit Fund Balances.............................................................................................................71 401 Page Resolution 80-21 Page 50 Notes to Basic Financial Statements NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Reporting Entity The Town of Los Altos Hills (the Town) was incorporated in 1956, under the provisions of the State of California. The Town operates under a Council -Manager form of government and provides the following services: management, planning, code enforcement, engineering, building inspection, maintenance of public infrastructure, recreation, law enforcement, and sewer service. For financial reporting purposes, the Town's basic financial statements include all financial activities that are controlled by or are dependent upon actions taken by the Town Council. There are no component units. The financial statements may be obtained by writing to the Town of Los Altos Hills, Administrative Services Department, 26379 Fremont Road, Los Altos Hills, California 94022. The financial statements of the Town have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to government units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The more significant accounting principles of the government are described below. B. Basis of Presentation Government -wide Financial Statements The Statement of Net Position and the Statement of Activities displays information about the Town. These statements include the financial activities of the overall government except for fiduciary activities. These statements distinguish between the governmental and business -type activities of the Town. Governmental activities, which normally are supported by taxes and intergovernmental revenues and other nonexchange transactions, are reported separately from business -type activities, which rely to a significant extent on fees charged to external parties. The Statement of Net Position reports all of the financial and capital resources of the government as a whole in a format in which assets and deferred outflows of resources equal liabilities and deferred inflows of resources, plus net position. The Statement of Activities presents a comparison between direct expenses and program revenues for each segment of the business -type activities of the Town and for each function of the Town's governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Program revenues include 1) fees, fines, and charges paid by the recipients of goods and services offered by the programs and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented instead as general revenues. Certain eliminations have been made as prescribed by Governmental Accounting Standards Board (GASB) Statement No. 34 in regards to interfund activities, payable and receivables. All internal balances in the Statement of Net Position have been eliminated except those representing balances between the governmental activities and the business -type activities. These are presented as internal balances and eliminated in the total primary government column. In the Statement of Activities, interfund transactions have been eliminated. However, the transactions between governmental and business -type activities, which are presented as transfers, have not been eliminated from the Statement of Activities. Page 141 Resolution 80-21 Page 51 Notes to Basic Financial Statements NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. Basis of Presentation (Continued) Fund Financial Statements The fund financial statements provide information about the Town's funds, including fiduciary funds. Separate statements for each fund category — governmental, proprietary, and fiduciary — are presented. The emphasis of fund financial statements is on major governmental and enterprise funds, each displayed in a separate column. All remaining governmental funds are separately aggregated and reported as non - major funds. Proprietary funds distinguish operating revenues and expenses and nonoperating items. Operating revenues and expenses result from providing services in connection with the fund's principal ongoing operations. The principal operating revenues of the Town's enterprise and internal service fund are charges for customer services including: sewer service fees, equipment maintenance and usage fees, and support charges. Operating expenses for enterprise funds and internal service funds include the cost of services, administrative expenses, and depreciation of capital assets. All other revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the Town's policy to use restricted resources first, then unrestricted resources as they are needed. The Town reports the following major governmental funds: • The General Fund accounts for resources traditionally associated with governmental activities that are not required legally or by sound financial management to be accounted for in another fund. • The Street Capital Projects Fund accounts for the acquisition and construction of streets. • The Other Capital Projects Fund accounts for financial resources that are necessary for the acquisition or construction of major capital facilities. The Town reports the following major enterprise fund: • The Sewer Fund accounts for the maintenance of the Town's sewer lines and related facilities. It is a self-supporting activity that provides services on a user charge basis to residences and businesses. The Town reports the following additional funds: • Internal Service Fund accounts for goods and services provided to city departments on a cost reimbursement basis. The goods and services provided include maintenance and replacement of vehicles and equipment, costs incurred for printing, copying, and mailing services; employee benefits; and expenses related to the maintenance of Town buildings. Internal Service Fund is included in the government activities at the government -wide level. • The Custodial Fund accounts for assets held by the Town in the capacity of agent. The Town's Custodial Fund includes West Loyola Sewer Assessment District #1. • The Special Revenue Funds account for specific revenues that are legally restricted to expenditures for particular purposes. 421 Page Resolution 80-21 Page 52 Notes to Basic Financial Statements NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. Basis of Presentation (Continued) In prior years, the Town's street, storm drain and pathway maintenance and operation expenditures were reported under special revenue funds; however, the operations were largely funded by transfers from the General Fund. Special revenues, such as gas tax, storm drain in -lieu fees, and pathway construction fees, were recorded in these special revenue funds but these revenues were transferred to capital project funds at the end of the year. To minimize the number of interfund transfers between the General Fund, these special revenue funds and Capital Project Funds, the City Council authorized the Administrative Services Department to record the revenues for storm drains, pathways, and streets directly into the corresponding capital project funds and to merge the ongoing operating cost into the General Fund. Fund Balance Classification Fund balance is classified in accordance with current governmental accounting standards, which requires classification of fund balances into five different components, where applicable. The components are nonspendable, restricted, committed, assigned and unassigned. Nonspendable resources are not in spendable form or required to be maintained intact such as an endowment. Restricted resources are subject to externally enforceable legal restrictions or imposed by law through constitutional provisions or enabling legislation. Committed resources are constrained to specific purposes by a formal action of the City Council such as an ordinance or resolution. The constraint remains binding unless removed in the same formal manner by the City Council. Council action to commit fund balance must occur within the fiscal reporting period while the amount committed may be determined subsequently. All use of committed fund balance requires the City Council, which is the highest level of decision making authority, to take formal action with resolution, including budget resolutions, to modify or rescind a committed fund balance. Assigned resources are constrained by the Town's intent to be used for specific purposes, but are neither restricted nor committed. The City Council, by action, has the authority to assign amounts to be used for specific purposes. Unlike commitments, assignments generally only exist temporarily. In other words, an additional action does not normally have to be taken for the removal of an assignment. Unassigned fund balance is the residual classification and includes all amounts not contained in the other classifications. Unassigned amounts are technically available for any purpose. The general fund is the only fund that reports a positive unassigned fund balance. When expenditures are incurred for purposes for which both restricted and unrestricted (committed, assigned, or unassigned) fund balances are available, the Town's policy is to first apply restricted fund balance. When expenditures are incurred for purposes for which committed, assigned or unassigned fund balances are available, the Town's policy is to first apply committed fund balance. It is at the discretion of the Council's designee to then apply the remaining expenditures to assigned or unassigned fund balance. Page 143 Resolution 80-21 Page 53 Notes to Basic Financial Statements NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Basis of Accounting and Measurement Focus The government -wide and proprietary financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time that liabilities are incurred, regardless of when the related cash flows take place. Non-exchange transactions, in which the Town gives or receives value without directly receiving or giving equal value in exchange, include property and sales tax, grants, entitlements, franchise fees and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenues from sales tax are recognized when the underlying transactions take place. Revenues from grants, entitlements, and donations are recognized in the fiscal year in which all eligibility requirements have been satisfied. Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. Property and sales tax, interest, certain state, and federal grants, and charges for services are accrued when their receipt occurs within sixty days after the end of the accounting period so as to be both measurable and available. Expenditures are generally recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to claims and judgments, are recorded only when payment is due. General capital assets acquisitions are reported as expenditures in governmental funds. Proceeds of long-term debt and capital leases are reported as other financing sources. Fiduciary funds are custodial in nature (i.e. assets equal liabilities) and do not involve the measurement of the results of operations. The Town has one fiduciary fund for the West Loyola Sewer Assessment District. D. Cash and Cash Equivalents For purposes of the statement of cash flows, the Town considers all highly liquid investments with maturity of three months or less when purchased to be cash equivalents. E. Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Town categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The fair value hierarchy categorizes the inputs to valuation techniques used to measure fair value into three levels based on the extent to which inputs used in measuring fair value are observable in the market. — Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are inputs — other than quoted prices included within level 1— that are observable for an asset or liability, either directly or indirectly. — Level 3 inputs are unobservable inputs for an asset or liability. If the fair value of an asset or liability is measured using inputs from more than one level of the fair value hierarchy, the measurement is considered to be based on the lowest priority level input that is significant to the entire measurement. 441 Page Resolution 80-21 Page 54 Notes to Basic Financial Statements NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) F. Receivables During the course of normal operations, the Town carries various receivable balances for taxes, franchise fees, interest, license fees, and sewerfees. As of June 30, 2021, accounts receivable are shown at $682,934 in the General Fund, $28,421 in the Street Capital Project Fund and $1,391 in the Sewer Fund. G. Capital Assets Capital assets, including infrastructure acquired prior to GASB 34, are recorded at historical cost or at estimated historical cost if actual historical cost is not available. Contributed capital assets are valued at their estimated acquisition value on the date of contribution. Capital assets include public domain (infrastructure) general capital assets consisting of certain improvements including roads, bridges, water/sewer, lighting systems, drainage systems, and flood control. The Town defines capital assets as assets with an estimated useful life in excess of three years and an initial, individual cost of $15,000. Capital assets used in the operation are depreciated using the straight-line method over their estimated useful lives in the government -wide statements and proprietary funds. The estimated useful lives are as follows: Infrastructure 20 - 50 Years Structure and Improvements 10 - 30 Years Vehicles 5 -10 Years Equipment 3 -10 Years Maintenance and repairs are charged to operations when incurred. Betterments and major improvements, which significantly increase values, change capacities, or extend useful lives, are capitalized. Upon sale or retirement of capital assets, the cost and related accumulated depreciation are removed from the respective accounts and any resulting gain or loss is included in the results of operations. H. Deferred Inflows and Deferred Outflows of Resources In addition to assets, the Statement of Net Position or balance sheet reports a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position or fund balance that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The Town has pension -related and OPER-related deferred outflows of resources arising from certain changes in the collective net pension liability and net OPEB liability. In addition to liabilities, the Statement of Net Position or balance sheet reports a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position or fund balance that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The Town has deferred inflows of resources arising from certain changes in the collective net pension liability and net OPEB liability. These amounts are deferred and amortized over a stated period. Page 145 Resolution 80-21 Page 55 Notes to Basic Financial Statements NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) I. Property Taxes Revenue is recognized in the fiscal year for which the tax and assessment are levied. The County of Santa Clara levies, bills, and collects property taxes for the Town. Under the Teeter Bill, the County remits the entire amount levied and handles the delinquencies, retaining interest and penalties. Secured property taxes attach as an enforceable lien on property as of January 1. Taxes are payable in two installments on November 1 and February 1 and become delinquent on December 10, and April 10, respectively. Unsecured property taxes are payable in one installment on or before August 31. J. Accumulated Compensated Absences The Town accrues the cost for compensated absences (vacation and comp time) when they are earned. Employees have a vested interest in accrued vacation time and all vacation hours will eventually either be used or paid by the Town. Generally, employees earn and use their current vacation hours with a small portion being accrued or unused each year. As this occurs, the Town incurs an obligation to pay for these unused hours. Sick leave benefits do not vest and no liability is recorded. All compensated absences for governmental activities are paid out of the general fund. Compensated absences as of June 30, 2021 are as follows: K. Interfund Transactions Interfund transactions are reflected as services provided, reimbursements, or transfers. Services provided, deemed to be at market, or near market rates, are treated as revenues and expenditures/expenses. Reimbursements are when one fund incurs a cost, charges the appropriate benefit fund, and reduces its related cost as a reimbursement. All other interfund transactions are treated as transfers. Transfers within governmental and proprietary funds are netted as part of the reconciliation to the government -wide presentation. L. Use of Estimates The preparation of the 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 certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. 461 Page Resolution 80-21 Page 56 Governmental Business -Type Activities Activities Total Beginning Balance $ 173,149 $ 10,120 $ 183,269 Additions 38,998 460 39,458 Reductions (46,432) (8,178) (54,610) Ending Balance $ 165,715 $ 2,402 $ 168,117 Current Portion $ 42,939 $ - $ 42,939 K. Interfund Transactions Interfund transactions are reflected as services provided, reimbursements, or transfers. Services provided, deemed to be at market, or near market rates, are treated as revenues and expenditures/expenses. Reimbursements are when one fund incurs a cost, charges the appropriate benefit fund, and reduces its related cost as a reimbursement. All other interfund transactions are treated as transfers. Transfers within governmental and proprietary funds are netted as part of the reconciliation to the government -wide presentation. L. Use of Estimates The preparation of the 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 certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. 461 Page Resolution 80-21 Page 56 Notes to Basic Financial Statements NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) M. Post -Employment Benefits Other Than Pensions (OPEB) For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, OPEB expense, information about the fiduciary net position of the California Employers' Retiree Benefit Trust (CERBT), and additions to / deductions from CERBT's fiduciary net position have been determined on the same basis as they are reported by CERBT. For this purpose, CERBT recognizes benefit payments when due and payable in accordance with the benefit terms. Investments are reported at fair value, except for money market investments and participating interest-earning investment contracts that have a maturity at the time of purchase of one year or less, which are reported at cost. N. New GASB Pronouncements Management adopted the provisions of the following Governmental Accounting Standards Board (GASB) Statements, which became effective during the year ended June 30, 2021. GASB 84 — Fiduciary Activities — The objective of this Statement is to improve guidance regarding the identification of fiduciary activities for accounting and financial reporting purposes and how those activities should be reported. This Statement describes four fiduciary funds that should be reported, if applicable: (1) pension (and other employee benefit) trust funds, (2) investment trust funds, (3) private -purpose trust funds, and (4) custodial funds. Custodial funds generally should report fiduciary activities that are not held in a trust or equivalent arrangement that meets specific criteria. The provisions of this Statement were implemented during fiscal year 2021. As part of the implementation of this Statement, it was determined that the West Loyola Sewer Assessment District #1 Agency Fund be accounted for and reported as a Custodial Fund, which required the restatement of beginning net position of the fund in the amount of $190,612. Also, the Town determined that the activities of the Other Post -Employment Benefit Trust should no longer be reported in the Other Post -Employment Benefit Trust Fund, since the District does not have control of the assets of the PARS OPEB Plan as a whole. Therefore, the Other Post -Employment Benefit Trust Fund is no longer reported in the financial statements as of July 1, 2020. Page 147 Resolution 80-21 Page 57 Notes to Basic Financial Statements NOTE 2 — DEPOSITS AND INVESTMENTS The Town pools cash from all sources and all funds so that it can be invested at the maximum yield consistent with safety and liquidity, while individual funds can make expenditures at any time. A. Policies The Town invests in individual investments and in investment pools. Individual investments are evidenced by specific identifiable securities instruments, or by an electronic entry registering the owner in the records of the institution issuing the security, called the book entry system. California Law requires banks and savings and loan institutions to pledge government securities with a market value of 110% of the Town's cash on deposit, or first trust deed mortgage notes with a market value of 150% of the deposit, as collateral for these deposits. Under California Law this collateral is held in a separate investment pool by another institution in the Town's name and places the Town ahead of general creditors of the institution. The Town's investments are carried at fair value, as required by generally accepted accounting principles. The Town adjusts the carrying value of its investments to reflect their fair value at each fiscal year end, and it includes the effects of these adjustments in income for that fiscal year. The Town shall not engage in leveraged investing, such as in margin accounts or any form of borrowing for the purpose of investment. The Town also shall not invest in instruments whose principal and interest have no backing, such as options and future contracts, nor in derivatives, outside of authorized pools. The Town's investments were in compliance with the above provisions as of and for the year ended June 30, 2021, B. Classification As of June 30, 2021, cash and investments are classified in the accompanying financial statements as follows: Cash on hand $ 1,900 Deposits with financial institutions 2,043,060 Investments with fiscal agent 1,326,889 Investments 26,450,651 Total Cash and Investments $ 29,822,500 As of June 30, 2021, cash and investments consist of the following: 481 Page Statement of Net Position: Cash and investments $ 28,353,788 Cash and investments held in Pension trust 1,178,398 Fiduciary funds: Cash and investments - West Loyola 290,314 Total Cash and Investments $ 29,822,500 Resolution 80-21 Page 58 Notes to Basic Financial Statements NOTE 2 — DEPOSITS AND INVESTMENTS (CONTINUED) C. Authorized Investments The table below identifies the investment types that are authorized for the Town by the California Government Code and are further limited by the Town's investment policy. Limitations as they relate to interest rate risk, credit risk, and concentration of credit risk are indicated in the schedules below: D. Interest Rate Risk and Fair Value Hierarchy 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. The Town manages its exposure to interest rate risk by purchasing only shorter term investments as necessary to provide the cash flow and liquidity needed for operations. As of June 30, 2021, the Town had the following investments: U.S. Treasury Bonds/Notes Federal Agency Collateralized Mortgage Obligation U.S. Agency Notes Municipal Bonds Certificates of Deposit LAW Investment Pool Money Market Corporate Notes CAMP Investment Pool Supranationals Total Investments 12 Months 13 to or less 24 Months $ 307,493 $ 1,769,685 25 to 60 Months Total $ 4,436,491 $ 6,513,669 325,883 526,225 Maximum Maximum 331,143.00 Maximum Percentage/Dollar Investment in Authorized Investment Type Maturity of Portfolio One Issuer Securities issued by the U.S. Treasury 5 years No limit No limit U.S. Agency Securities 5 years No limit No limit Municipal Securities 5 years 30% 5% State Treasury Notes/Bonds 5 years 30% 5% Bankers' Acceptances 180 days 40% 5% Asset -Backed Securities 5 years 50% 5% Negotiable Certificates of Deposit 5 years 30% 5% Local Government Investment Pools (LAIF) 5 years $75.0 mil No limit Insured savings account and bank money market accounts 5 years No limit 5% Money market mutual funds registered with SEC 5 years 20% 5% California Asset Management Program (CAMP) 5 years 20% No limit Medium-term corporate notes with A or better rating 5 years 30% 5% D. Interest Rate Risk and Fair Value Hierarchy 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. The Town manages its exposure to interest rate risk by purchasing only shorter term investments as necessary to provide the cash flow and liquidity needed for operations. As of June 30, 2021, the Town had the following investments: U.S. Treasury Bonds/Notes Federal Agency Collateralized Mortgage Obligation U.S. Agency Notes Municipal Bonds Certificates of Deposit LAW Investment Pool Money Market Corporate Notes CAMP Investment Pool Supranationals Total Investments 12 Months 13 to or less 24 Months $ 307,493 $ 1,769,685 25 to 60 Months Total $ 4,436,491 $ 6,513,669 325,883 526,225 374,905 1,227,013 331,143.00 513,381 1,523,540 2,368,064 - 331,689.00 1,832,221 2,163,910 286,504 736,374 - 1,022,878 9,779,533 - - 9,779,533 1,326,889 - - 1,326,889 173,117 782,625 1,953,627 2,909,369 105,060 - - 105,060 - 80,347.00 280,808 361,155 $ 12,635,622 $ 4,740,326 $ 10,401,592 $ 27,777,540 Page 149 Resolution 80-21 Page 59 Notes to Basic Financial Statements NOTE 2 - DEPOSITS AND INVESTMENTS (CONTINUED) D. Interest Rate Risk and Fair Value Hierarchy (Continued) The Town categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure fair value of the assets. Level 1 inputs are quoted prices in an active market for identical assets; Level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs. Investments by Fair Value Level: U.S. Treasury Bonds/Notes Federal Agency Collateralized Mortgage Obligation U.S. Agency Notes Municipal Bonds Certificates of Deposit Corporate Notes CAMP Investment Pool Supranationals Level Level Total $ 6,513,669 $ - $ 6,513,669 - 1,227,013 1,227,013 - 2,368,064 2,368,064 - 2,163,910 2,163,910 - 1,022,878 1,022,878 - 2,909,369 2,909,369 - 105,060 105,060 - 361,155 361,155 Total Investments $ 6,513,669 $ 10,157,449 16,671,118 Investments Measured at Amortized Cost: Money Market 1,326,889 Local Agency Investment Fund 9,779,533 Cash in banks and on hand 2,044,960 Total Cash and investments $ 29,822,500 U.S. Treasury Notes classified in Level 1 of the fair value hierarchy are valued using quoted prices in active markets. Federal Agency Collateralized Mortgage Obligations, U.S. Agency Notes and Corporate Notes, classified in Level 2 of the fair value hierarchy, are valued using pricing techniques of matrix pricing or market corroborated pricing, with inputs such as yield curves or indices. These prices are obtained from various pricing sources by our custodian bank. The Town does not have any Level 3 investments. The Town is a participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The Town reports its investment in LAIF at the fair value amount provided by LAIF, which is the same as the value of the pool share. The balance is available for withdrawal on demand, and is based on the accounting records maintained by LAIF. Included in LAIF's investment portfolio are collateralized mortgage obligations, mortgage-backed securities, other asset-backed securities, loans to certain state funds, and floating rate securities issued by federal agencies, government-sponsored enterprises, United States Treasury Notes and Bills, and corporations. At June 30, 2021, these investments matured in an average of 291 days. The California Local Agency Investment Fund is classified as exempt in the fair value hierarchy, as it is valued at amortized cost, which is exempt from being classified under GASB 72. 501 Page Resolution 80-21 Page 60 Notes to Basic Financial Statements NOTE 2 - DEPOSITS AND INVESTMENTS (CONTINUED) D. Interest Rate Risk and Fair Value Hierarchy (Continued) The Town is a participant in the California Asset Management Program (CAMP). CAMP is an investment pool offered by the California Asset Management Trust (the Trust), The Trust is a joint powers authority and public agency created bythe Declaration of Trust and established underthe provisions of the California Joint Exercise of Powers Act (California Government Code Sections 6500 et seq., or the "Act") for the purpose of exercising the common power of its Participants to invest certain proceeds of debt issues and surplus funds. CAMP's investments are limited to investments permitted by subdivisions (a) to (n), inclusive, of Section 53601 of the California Government Code, The Town reports its investments in CAMP at the fair value amounts provided by CAMP, which is the same as the value of the pool share in accordance with GASB 79 requirements. At June 30, 2021, the fair value approximated the Town's cost. At June 30, 2021, these investments have an average maturity of 954 days. The California Asset Management Program is exempt from the fair value hierarchy, The Town, as a CAMP shareholder, may withdraw all or any portion of the funds in its CAMP account at any time by redeeming shares. The CAMP Declaration of Trust permits the CAMP trustee to suspend the right of withdrawal from CAMP or to postpone the date of payment of redemption proceeds if the New York Stock Exchange is closed other than for customary weekend and holiday closings, if trading on the New York Stock Exchange is restricted, or if, in the opinion of the CAMP trustees, an emergency exists such that disposal of the CAMP pool securities or determination of its net asset value is not reasonably practicable. If the right of withdrawal is suspended, the Town may either withdraw its request for that withdrawal or receive payment based on the net asset value of the CAMP pool next determined after termination of the suspension of the right of withdrawal, Mutual funds are available for withdrawal on demand. At June 30, 2021, these investments have an average maturity of 52 days. E. Credit Risk 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. The state investment pool is not rated. Investment Type AAA AA+ AA AA- A+ A A- A4 AAAm BBB+ Total Federal Agency Collateralized Mortgage Obligation $ - $ 1,227,013 $ - $ - $ - $ - $ - $ - $ - $ - $ 1,227,013 U.S. Agency Notes - 2,368,064 - - - - - - 2,368,064 Municipal Bonds 362,191 765,045 489,579 175,107 371,988 - - - 2,163,910 Cerdflcates of Deposlt - - 337,431 298,473 100,470 - 286,504 - - 1,022,878 Money Market - - - - - - - - 148,491 - 148,491 CAMP Investment Pool - - - - -- 105,060 - 105,060 Corporate Notes - 76,496 139,884 412,703 686,030 478,729 866,127 - - 249,400 2,909,369 Supranationals 361,155 - 361,155 Totals -L723,346 $ 4,436,618 $ 629,463 $ 925,241 $ 1,356,491 $ 579,199 $ 866,127 $ 286,504 $ 253,551 $ 249,400 10,305,940 Not Rated; Cash and Investments held with Pension trust U.S. Treasury Notes Local Agency Investment Fund (LAIF) Total Investments 1,178,398 6,513,669 9,779,533 $ 27,777,540 Bank balances are insured up to $250,000 per bank by the Federal Deposit Insurance Company ("FDIC"). As of June 30, 2021, the Town's cash in bank exceeded the insured limit by $1,793,059. None of the Town's deposits with financial institutions in excess of FDIC limits were held in uncollateralized accounts. Page 151 Resolution 80-21 Page 61 Notes to Basic Financial Statements NOTE 2 — DEPOSITS AND INVESTMENTS (CONTINUED) F. Concentration of Credit Risk The investment policy of the Town contains limitations on the amount that can be invested in any one issuer beyond the amount stipulated by the California Government Code. As of June 30, 2021, there are no investments, other than U.S. Treasury securities, US Agency securities, and authorized pools such as Local Agency Investment Fund (LAIF) and California Asset Management Program (CAMP), that represent five percent or more of total investments at the Entity -wide level or in individual funds. NOTE 3 — INTERFUND TRANSACTIONS The following schedule briefly summarizes the Town's transfer activity for the fiscal year ended June 30, 2021: Fund Receiving Transfers Fund Making Transfers General Fund Other Capital Projects Fund Street Capital Projects Fund Sewer Street Capital Projects Fund Other Capital Projects Fund Sewer Fund General Fund Other Capital Projects Fund General Fund General Fund Amount Transferred $ 2,415 (A) 1,285 (A) 5,449 (A) 141,720 (B) 40,000 (B) 2,150,605 (B) 304,825 (C) Non -Major Governmental Funds General Fund 14,805 (B) Total Interfund Transfers $ 2,661,104 (A) To fund the Neighborhood Watch Program and the Emergency Operations. (B) To fund capital projects. (C) To reimburse the Sewer Fund for excess in the overhead allocation for the last 3 years. 52 1 Page Resolution 80-21 Page 62 Notes to Basic Financial Statements NOTE 4 — CAPITAL ASSETS Capital asset activity for the year ended June 30, 2021, was as follows: Governmental activities Capital assets not being depreciated: Land Total capital assets not being depreciated Capital assets being depreciated: Infrastructure Buildings Vehicles Office Equipment Total capital assets being depreciated Less accumulated depreciation for: Infrastructure Buildings Vehicles Office Equipment Total accumulated depreciation Net governmental -type activities Capital assets being depreciated Governmental activities capital assets, net Business -type activities Capital assets being depreciated: Sewer collection system Office equipment Total capital assets being depreciated Less accumulated depreciation for: Sewer collection system Office equipment Total accumulated depreciation Net capital assets being depreciated Business -type activities capital assets, net Balance at (226,870) Balance at June 30, 2020 Additions June 30, 2021 (3,325,922) (226,870) (3,552,792) $ 250,535 $ $ 250,535 250,535 143,504 250,535 87,083,281 1,367,008 88,450,289 5,152,825 - 5,152,825 760,716 760,716 465,307 465,307 93,462,129 1,367,008 94,829,137 (64,244,626) (1,441,666) (65,686,292) (2,033,204) (130,638) (2,163,842) (474,251) (49,104) (523,355) (448,590) (4,176) (452,766) (67,200,671) (1,625,584) (68,826,255) 26,261,458 (258,576) 26,002,882 $ 26,511,993 $ (258,576) $ 26,253,417 Balance at June 30, 2020 $ 10,898,644 $ 1,509 Balance at Ad.diH— I...,.. an In'. 370,374 $ 11,269,018 370,374 11,270,527 (3,324,413) (226,870) (3,551,283) (1,509) (1,509) (3,325,922) (226,870) (3,552,792) 7,574,231 143,504 7,717,735 $ 7,574,231 $ 143,504 $ 7,717,735 Page 153 Resolution 80-21 Page 63 Notes to Basic Financial Statements NOTE 4 — CAPITAL ASSETS (CONTINUED) Depreciation expense was charged to governmental functions as follows: Governmental Activities Amount General Government $ 361,969 Public safety 292,223 Community development 408,505 Parks and recreation 122,386 Public works 256,580 Internal service funds 183,921 Total $ 1,625,584 Business -Type Activities Amount Sewer $ 226,870 Total $ 226,870 NOTE 5 — LONG TERM DEBT The Town has no long-term debt as of and for the year ended June 30, 2021. NOTE 6 — SPECIAL ASSESSMENT DEBT WITHOUT TOWN COMMITMENT Special assessment districts are established in various parts of the Town to provide improvements to properties located in those districts. Properties are assessed for the cost of the improvements. These assessments are payable solely by the property owners over the term of the debt issued to finance the improvements. The Town acts solely as the collecting and paying agent for the District's debt which is not included in the general debt of the Town. The bonds are not general obligation of the Town. The Town is not legally obligated to pay these debts or be the purchaser of last resort of foreclosed properties in the special assessment district. At June 30, 2021, the balance of the assessment district's outstanding debt was as follows: Principal Maturities Fiscal Year Fiscal Years Outstanding Issue Issued Interest Rate Annual Amount Ended June 30, 2021 West Loyola Sewer Assessment District No. 1 2009 2.25%- 6.15% $35,000 - $775,000 2010-2040 $ 1,585,000 541 Page Resolution 80-21 Page 64 Notes to Basic Financial Statements NOTE 7 — NET POSITION/FUND BALANCES A. Net Position The government -wide and proprietary fund financial statements utilize a net position presentation. Net position is categorized as net investment in capital assets, restricted, and unrestricted. Net Investment in Capital Assets —This category presents all capital assets, including infrastructure, into one component of net position. Accumulated depreciation reduces the balance in this category. Restricted Net Position — This category presents external restrictions imposed by creditors, grantors, contributors, laws or regulations of other governments, or restrictions imposed by law through constitutional provisions or enabling legislation. Unrestricted Net Position —This category presents net position of the Town not restricted for any project or other purpose. B. Fund Balances — Components Governmental fund balances represent the net current assets of each fund. Net current assets generally represent a fund's cash and receivables less its liabilities. Portions of a fund's balance may be non -spendable, restricted, committed, assigned or unassigned. At June 30, 2021, the following represents the components of fund balance: Page 155 Resolution 80-21 Page 65 Street Other Nonmajor General Capital Projects Capital Projects Governmental Total Fund Balance Classifications Fund Fund Fund Funds Governmental Restricted for: Parks and Recreation $ $ $ $ 34,491 $ 34,491 Public Safety 638,578 638,578 Art donations 105,233 105,233 Pension Trust 1,178,398 - 1,178,398 Total Restricted Fund Balances 1,178,398 778,302 1,956,700 Committed for: Disaster Contingency Reserve 1,250,000 - 1,250,000 Pension Contributions Reserve 2,575,000 2,575,000 IT Equipment Replacement Reserve 50,000 50,000 Facilities Replacement Reserve 1,902,700 1,902,700 Equipment Relacement Reserve 594,000 594,000 Street & Road Repairs Capital Projects 745,050 1,941,704 2,686,754 All other Capital Projects _ - Total Committed Fund Balances 6,371,700 745,050 1,941,704 9,058,454 Assigned for: Operating Contingency Reserve 2,071,500 - 2,071,500 Total Assigned Fund Balances 2,071,500 2,071,500 Unassigned: 7,338,881 7,338,881 Total Unassigned Fund Balances 7,338,881 7,338,881 Total Fund Balances $ 16,960,479 $ 745,050 $ 1,941,704 $ 778,302 $ 20,425,535 Page 155 Resolution 80-21 Page 65 Notes to Basic Financial Statements NOTE 8 - PENSION PLAN A. General Information About the Pension Plan The Town participates in the Cost -Sharing Multiple -Employer Defined Benefit Pension Plan (Cost Sharing) for its Miscellaneous employees. It is administered by the California Public Employees Retirement System (CalPERS). A cost-sharing multiple -employer defined benefit pension plan is a plan in which the pension obligations to the employees of more than one employer are pooled and pension plan assets can be used to pay benefits of the employees of any employer that provides pensions through the plan. The Town's pension plan and its financial position is measured and reported on the same basis as the Plan's fiduciary net position reported by CaIPERS. This includes the measurement of the Plan's fiduciary net position and additions to/deductions, as well as the Town's share of the Plan's net pension liability, deferred outflows/inflows of resources related to pensions, and pension expense. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. Plan Descriptions — All qualified permanent employees are eligible to participate in the Town's Miscellaneous cost-sharing Plans administered by CalPERS. The Town's Miscellaneous Plans are a cost- sharing multiple -employer defined benefit pension plan administered by CaIPERS since the plan has less than 100 active members, commonly referred to as risk pool. The Town has three retirement benefit tiers in the Miscellaneous Plans. Tier 1 is for employees hired prior to September 1, 2011. Tier 2 is for employees hired after September 1, 2011 and enrolled as a member of CalPERS prior to January 1, 2013. Tier 3 is for employees hired on or after January 1, 2013. Benefits Provided — CalPERS provides retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees, and their beneficiaries. Benefits are based on years of credited service, equal to one year of full time employment, age and the average of the final 3 years' compensation. Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for non -duty disability benefits after 10 years of service. The death benefit is one of the following: the Basic Death Benefit, the 1959 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. 561 Page Resolution 80-21 Page 66 Notes to Basic Financial Statements NOTE 8 - PENSION PLAN (CONTINUED) A. General Information about the Pension Plan (Continued) Benefit provisions under the Plans are established by State statute and Town resolution. CalPERS issues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumptions and membership information can be found on the CalPERS website at: http://www.calpers.ca.gov/index.jsp?bc=/about/forms-pubs/calpers-reports/actuarial-reports/home.xml. The plans' provisions and benefits in effect at June 30, 2021, are summarized as follows: Hire date Benefit formula Benefit vesting schedule Benefit payments Retirement age Monthly benefits, as a % of eligible compensation Required employee contribution rates Required employer contribution rates Tier I Prior to September 1, 2011 2.0% @ 55 5 years service monthly for life 50-63+ 1.426% - 2.418% 7.00% 11.199% Miscellaneous Tier II Starting September 1, 2011 2.0% @ 60 5 years service monthly for life 50-63+ 1.092%-2.418% 7.00% 9.442% Tier III On or after January 1, 2013 2.0% @ 62 5 years service monthly for life 52-67+ 1.0%-2.5% 7.25% 7.874% Beginning in fiscal year 2016, CalPERS collects employer contributions for the Plan as a percentage of payroll for the normal cost portion as noted in the rates above and as a dollar amount for contributions toward the unfunded liability (UAL). The dollar amounts are billed on a monthly basis or can be paid in a lump sum at a reduced amount. The Town elected to make the lump sum contribution for the unfunded liability in the amount of $702,859 in fiscal year 2021. Contributions — Section 20814(c) of the California Public Employees' 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 change in the rate. Funding contributions for the Plans are determined annually on an actuarial basis as of June 30 by CalPERS. 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 Town is required to contribute the difference between the actuarially determined rate and the contribution rates of employees. For the year ended June 30, 2021, the contribution recognized as part of pension expense for the Plans were as follows: Miscellaneous Plans Contributions - employer $ 949,129 B. Net Pension Liability The Town's net pension liability for each Miscellaneous Plan is measured as the proportionate share of the net pension liability. The net pension liability of each of the Plans is measured as of June 30, 2020, using an actuarial valuation as of June 30, 2019 rolled forward to June 30, 2020 using standard update procedures. The Town's proportion of the net pension liability was based on a projection of the Town's long-term share of contributions of all participating employers, actuarially determined. Page 157 Resolution 80-21 Page 67 Notes to Basic Financial Statements NOTE 8 — PENSION PLAN (CONTINUED) B. Net Pension Liability (Continued) Actuarial Methods and Assumptions—The total pension liabilities in June 30, 2021 actuarial valuations were determined using the following actuarial assumptions for Miscellaneous Plan: Valuation Date Measurement Date Actuarial Cost Method Actuarial Assumptions: Discount Rate Inflation Payroll Growth Projected Salary Increase Investment Rate of Return Mortality Rate Table All CalPERS Plans June 30, 2019 June 30, 2020 Entry -Age Normal Cost Method 7.15% 2.50% (1) Varies by Entry Age and Service 7.15%(2) Derived using CalPERS Membership Data for all Funds (3) (1) Depending on age, service, and type of employment (2) Net of pension plan investment expenses, including inflation (3) The mortality table used was developed based on CalPERS' specitic data. The probabilities of mortality are based on the 2017 CaIPERS Experience Study for the period from 1997 to 2015. Pre- retirement and Post-retirement mortality rates include 15 years of projected mortality improvement using 90% of Scale MP -2016 published by the Society of Actuaries. For more details on this table, please refer to the CaIPERS Experience Study and Review of Actuarial Assumptions report from December 2017 that can be found on the CalPERS website. Discount Rate — The discount rate used to measure the total pension liability for the Plan was 7.15 percent. The projection of cash flows used to determine the discount rate for the Plan assumed that contributions from all plan members in the Public Employees Retirement Fund (PERF) will be made at the current member contribution rates and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on those assumptions, the Plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of protected benefit payments to determine the total pension liability. 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. 581 Page Resolution 80-21 Page 68 Notes to Basic Financial Statements NOTE 8 — PENSION PLAN (CONTINUED) B. Net Pension Liability (Continued) In determining the long-term expected rate of return, CalPERS took into account both short-term and long- term market return expectations as well as the expected pension fund (PERF) cash flows. Using historical and forecasted information for of all the Public Employees Retirement Funds' asset classes (which includes the agent plan and two cost-sharing plans or PERF A, B, and C funds), expected compound (geometric) returns were calculated over the short-term (first 10 years) and the long term (11+ years) using a building- block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the rounded single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equal to the single equivalent rate calculated above and adjusted to account for assumed administrative expenses. The table below reflects the expected real rates of return by asset. Asset Class New Strategic Allocation Real Return Real Return Years 1- 10(b) Years 11+(c) Global Equity 50.00% 4.80% 5.98% Global Fixed Income 28.00% 1.00% 2.62% Inflation Sensitive 0.00% 0.77% 1.81% Private Equity 8.00% 6.30% 7.23% Real Assets 13.00% 3.75% 4.93% Liquidity 1.00% 0.00% -0.92% Total 100.00% (a) In the CaIPERS Comprehensive Annual Financial Reports, Fixed Income is included in Global Debt Securities; Liquidity is included in Short-term Investment; Inflation Assets are included in both Global Equity Securites and Global Debt Securities. (b) An expected inflation of 2.00% is used this period. (c) An expected inflation of 2.92% is used this period. C. Changes in the Net Pension Liability As of June 30, 2021, the Town's reported net pension liabilities for its proportionate share of the net pension liability of the Miscellaneous Plan as follows: Miscellaneous Plans Total Net Pension Liability Proportionate Share of Net Pension Liabili $ 2,495,780 $ 2,495,780 Page 159 Resolution 80-21 Page 69 Notes to Basic Financial Statements NOTE 8 — PENSION PLAN (CONTINUED) C. Changes in the Net Pension Liability (Continued) The Town's proportionate share of the net pension liability for each Miscellaneous Plan as of June 30, 2019 and 2020 is as follows: Proportion - June 30, 2019 Proportion -June 30, 2020 Change - Increase (Decrease) Miscellaneous Plans 0.05502% 0.05917 0.0.0415 Sensitivity of the Proportionate Share of the Net Pension Liability for Miscellaneous Plans to Changes in the Discount Rate — The following presents the net pension liability of the Town's proportionate share of the net pension liability for Miscellaneous Plans, calculated using the discount rate as well as what the Town's net pension liability would be if it were calculated using a discount rate that is 1- percentage point lower or 1- percentage point higher than the current rate: Miscellaneous Plans 1% Decrease 6.15% Net Pension Liability $ 4,7061955 Current Discount Rate 7.15% Net Pension Liability $ 2,495,780 1% Increase 8.15% Net Pension Liability $ 668,756 Pension Plan Fiduciary Net Position - Detailed information about the pension plans' fiduciary net position is available in the separately issued CalPERS financial reports. D. Pension Expense and Deferred Outflows/Inflows of Resources Related to Pension For the year ended June 30, 2021, the Town's recognized pension expense of negative $212,903 for the Miscellaneous Plans. At June 30, 2021, the Town reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources for Miscellaneous Plans: Pension contributions subsequent to measurement date Differences between actual and expected experience Changes in assumptions Difference between proportional and actual contributions Net differences between projected and actual earnings on plan investments Adjustment due to differences in proportion Total 601 Page Deferred Outflows Deferred Inflows of Resources of Resources $ 949,129 $ 128,615 - - (17,801) 242,472 (271,190) 74,141 189,530 $ 1,583,887 (207,055) $ (496,046) Resolution 80-21 Page 70 Notes to Basic Financial Statements NOTE 8 — PENSION PLAN (CONTINUED) D. Pension Expense and Deferred Outflows/Inflows of Resources Related to Pension (Continued) The $949,129 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 ended June 30, 2022. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows: Years Ending June 30 2022 $ 30,550 2023 36,172 2024 36,431 2025 35,559 $ 138,712 E. Payable to Pension Plan As of June 30, 2021, the Town reported a payable of $19,258 for the outstanding amount of contributions to the pension plan required for the year ended June 30, 2021. F. Reduction of CalPERS Discount Rate In July 2021, CaIPERS reported a preliminary 21.3% net return on investments for the 12 -month period that ended June 30, 2021. Under the Funding Risk Mitigation Policy, approved by the CaIPERS Board of Administration in 2015, the 21.3% net return will trigger a reduction in the discount rate used to calculate employer and Public Employees' Pension Reform Act (PEPRA) member contributions. The Funding Risk Mitigation Policy seeks to reduce CaIPERS funding risk over time, in which CaIPERS investment performance that significantly outperforms the discount rate will trigger adjustments to the discount rate, expected investment return, and strategic asset allocation targets. This is the first time it has been triggered. The discount rate, or assumed rate of return, will drop to 6.8%, from its current level of 7%. Based on these preliminary fiscal year returns, the CaIPERS has announced the funded status of the overall Public Employees Retirement Fund (PERF) is an estimated 82%. This estimate is based on a 7% discount rate. Under the new 6.8% discount rate, however, CalPERS indicated the funded status of the overall PERF drops to 80%. This is because existing assets are assumed to grow at a slightly slower rate annually into the future. As intended under the Funding Risk Mitigation Policy, the lower discount rate increases the likelihood that CAPERS can reach its target over the longer term. The CaIPERS Board of Administration will continue to review the discount rate through its Asset Liability Management process during the rest of the calendar year and has planned to address this topic at its November 2021 meeting. CaIPERS' final fiscal year 2021 investment performance will be calculated based on audited figures and will be reflected in contribution levels for contracting cities, counties, and special districts in fiscal year 2024. Page 161 Resolution 80-21 Page 71 Notes to Basic Financial Statements NOTE 9 - RISK MANAGEMENT A. Risk Pool The Town is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The Town participates in the Pooled Liability Assurance Network Joint Powers Authority (PLAN JPA), a self- insurance pool. The PLAN JPA Plan provides certain levels of liability insurance coverage, claims management, risk management services and legal defense to each participant. The Town's general liability claims are insured up to $5 million per occurrence and $30 million per year. The Town's property claims are insured for up to $30 million per year. The Town has a deductible or uninsured liability of up to $25,000 per claim. Once the Town's deductible is met, PLAN JPA becomes responsible for payment of all claims up to the I.imit. During the fiscal year ended June 30, 2021, the Town contributed $196,939 for current year coverage plus settlement payments. Part of the contribution is to maintain the Plan's reserve at 60 percent confidence funding level, per the annual actuarial report, to meet future claim liabilities. Settlement amounts did not exceed insurance coverage for the past three years. The Town also received $1,448 in insurance recoveries during fiscal year 2021. The Town's insurance costs will increase/decrease based on its own adverse claims experience and the adverse claims experience of other agencies in the Town's risk pool. The Shared Agency Risk Pool Joint Powers Agency (SHARP JPA) Shared Risk Pool (Pool) covers workers' compensation claims up to $250,000 each and has coverage above that limit to the statutory maximum. The Town has no deductible for these claims. During the fiscal year ended June 30, 2021, the Town contributed $79,820 for current year coverage. As of June 30, 2021, the Town does not have earthquake insurance. Each risk pool is governed by a Board consisting of representatives from member municipalities. The Board controls the operations of each risk pool, including selections of management and approval of operating budgets, independent of any influence by member municipalities beyond their representation on the Board. The Town's contribution to each risk pool is generally equal to the ratio of the Town's payroll to the total payrolls of all entities participating in the same layer of each program further adjusted for adverse claims experience, in each program year. Actual surpluses or losses are shared according to a formula developed from overall loss costs and spread to member entities on a percentage basis after a retrospective rating. Financial statements for each agency can be obtained from PLAN, 1750 Creekside Oaks Drive, Suite 200, Sacramento, CA, 95833. • For PLAN JPA and SHARP JPA, all participating members are responsible for their weighted share of claim liability and to replenish the Plan/Pool reserve fund as necessary. 621 Page Resolution 80-21 Page 72 Notes to Basic Financial Statements NOTE 10 - CONTINGENT LIABILITIES A. Commitments and Contingencies The Town is subject to litigation arising in the normal course of business. In the opinion of the Town Attorney, there is no pending litigation that is likely to have a material adverse effect on the financial position of the Town. B. Service Concession Arrangements (SCA) In February 2014, the Town and Victoria Dye Equestrian, LLC (VDE) entered into an agreement to operate the Westwind Community Barn (Westwind) which is owned by the Town. VIDE provides horse boarding and equestrian classes to the community. The Town provides a monthly subsidy to VIDE to defray costs related to managing barn operations and shares in certain utility costs. VDE remits 25% of all equestrian class revenues to the Town and the Town keeps 25% of revenues it collects for equestrian camps the Town offers operated by VDE. Westwind activity is included in the Town's General Fund. NOTE 11— OTHER POSTEMPLOYMENT BENEFITS (OPEB) A. General Information About the OPER Plan Town employees are provided with other postemployment benefits (OPER) through the Town's agent multi- employer defined benefit postemployment healthcare plan (the "Plan") administered by the California Public Employees' Retirement System (CaIPERS). The Plan consists of participating employers of the State of California and public agencies. During fiscal year 2008, the Town elected to prefund its OPEB liabilities through an irrevocable trust, the California Employers' Retiree Benefit Trust (CERBT). CERBT is administered by CalPERS. CERBT is a tax qualified irrevocable trust organized under the Internal Revenue Code (IRC) Section 115, The CERBT was established by Chapter 331 of the 1988 California Statues, and employers elect to participate in the CERBT to pre -fund health, dental, and other non -pension postemployment benefits for their retirees and survivors. B. Plan Description The Plan provides postemployment healthcare benefits to eligible employees who retire directly from the Town under CalPERS at the minimum age of 50 with at least 5 years of WIPERS service or disability. Retirees must make a retirement election with CalPERS within 120 days following the date of separation from the Town. Benefit provisions are established, and may be amended, by the City Council. The following Note 11C below is a summary of Plan benefits by employee group as of June 30, 2021. Page 163 Resolution 80-21 Page 73 Notes to Basic Financial Statements NOTE 11— OTHER POSTEMPLOYMENT BENEFITS (OPER) (CONTINUED) C. Benefits Provided The Town participates in the CalPERS healthcare program (PEMHCA) and allow retirees to continue participation in the medical insurance program after retirement. Under the Plan, the Town reimburses a portion of the premium for retiree medical coverage as follows: • Retirees from the Town and employees receiving Town medical benefits as of October 11, 2007 are eligible for a Town contribution up to an amount that is equal to what active employees receive in the cafeteria plan. As stated above, an individual must also qualify as a CalPERS annuitant in orderto receive this benefit. • Employees hired or first receiving Town medical benefits after October 11, 2007 are only eligible to receive a Town contribution equal to the PEMHCA minimum upon retirement from the Town. As stated above, retirees must qualify as a CalPERS annuitant and meet all statutory and legal requirements necessary to receive this benefit. D. Employees Covered by Benefit Terms Membership in the plan consisted of the following at the measurement date of June 30, 2021: Inactive employees or beneficiaries currently receiving benefits Inactive employees entitled to but not yet receiving benefits Active employees Total E. Contributions Count 14 25 39 Town contributions to the Plan occur as benefits are paid to retirees and/or to the CERBT. Benefit payments may occur in the form of direct payments for premiums and taxes ("explicit subsidies") and/or indirect payments to retirees in the form of higher premiums for active employees ("implicit subsidies"). Benefits and other contributions paid by the Town during the measurement period and those expected to be made in the following the measurement period but prior to the end of the fiscal year are shown below. For fiscal year ending June 30, 2021, Town contributions totaled $60,918. 641 Page Resolution 80-21 Page 74 Notes to Basic Financial Statements NOTE 11 a OTHER POSTEMPLOYMENT BENEFITS (OPER) (CONTINUED) E. Contributions (Continued) Benefit Payments during the Measurement Period (July 1, 2019 through June 30, 2020) Benefits Paid by Trust $ 142,864 Benefits Paid by Employer (not reimbursed by Trust) Implicit benefit payments _ Total Benefit Payments During the Measurement Period $ 142,864 Employer Contributions During the Measurement Period (July 1, 2019 through June 30, 2020) Employer Contributions to the Trust $ 59,226 Employer Contributions in the Form of Direct Benefit Payments (not reimbursed by the Trust) _ Implicit Contributions _ Total Employer Contributions During the Measurement Date $ 59,226 Employer Contributions Subsequent to the Measurement Period (July 1, 2020 through June 30, 2021) Employer Contributions to the Trust $ 60,918 Employer Contributions in the Form of Direct Benefit Payments (not reimbursed by the Trust) _ Implicit Contributions _ Total Employer Contributions Subsequent to the Measurement Date $ 60,918 Page 165 Resolution 80-21 Page 75 Notes to Basic Financial Statements NOTE 11— OTHER POSTEMPLOYMENT BENEFITS (OPEB) (CONTINUED) E. Contributions (Continued) The Town prefunds its OPEB liability by contributing 100% or more of the Actuarily Determined Contribution ("ADC") each year. The ADC consists of two components, which has been adjusted with interest, to the Town's fiscal year ending June 30, 2021: • The amounts attributed to service performed in the current fiscal year (the normal cost); and • Amortization of the unfunded actuarial accrued liability (UAAL). Expected contributions, relative to the ADC, for the fiscal year ending June 30, 2021 are as follows: Actuarially determined contribution $ 60,918 Contributions in relation to the actuarially determined contributions (60,918) Contribution deficiency (excess) $ _ Covered payroll $ 2,929,250 F. OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB For the year ending June 30, 2020, the Town recognized OPEB expense of negative $55,290. At June 30, 2021, the Town reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: OPEB contributions subsequent to the measurement date Changes of assumptions Differences between expected and actual experience Net difference between projected and actual earnings on OPEB plan investments Total Deferred Outflows of Resources $ 60,918 9,570 Deferred Inflows of Resources (18,645) (257,855) $ 70,488 $ (276,500) The $60,918 reported as deferred outflows of resources related to OPEB resulting from Town contributions subsequent to the measurement date will be recognized as a reduction of the net OPEB liability in the year ended June 30, 2022. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows: 661 Page Fiscal Year Ended June 30 2022 $ (62,727) 2023 (44,947) 2024 (36,317) 2025 (35,499) 2026 (47,265) Thereafter (40,175) Total $ (266,930) Resolution 80-21 Page 76 Notes to Basic Financial Statements NOTE 11— OTHER POSTEMPLOYMENT BENEFITS (OPER) (CONTINUED) G. Net OPEB Liability Actuarial Methods and Assumptions The Town's net OPEB liability was measured as of June 30, 2020 and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation dated June 30, 2020 that was rolled forward using standard update procedures to determine the total OPEB liability as of June 30, 2021, based on the following actuarial methods and assumptions: Actuarial Assumptions: Actuarial Valuation Date June 30, 2019 Measurement Date June 30, 2020 Actuarial Cost Method Entry -Age Normal Cost Method, level percent of pay Asset Valuation Method Market Value of Assets Long Term Return on Assets 6% as of June 30, 2020 and June 30, 2019 net of plan investment expenses and including inflation. Discount Rate 6.00% Participants Valued Only current active employees and retired participants and covered dependents are valued. No future entrants are considered in this valuation. Salary Increase 3% per year, used only to allocate the cost of benefits between service years. General Inflation 2.5% per year Healthcare Trend Rate 5.40% in 2021, reducing a tenth of a percent per year in 2026 & later. Mortality rates were based on the CalPERS published rates and adjusted to back out 20 years of Scale BB to central year 2017 and then projected by medical plan premiums and claims costs by age that are assumed to increase once each year. The required PEMHCA minimum employer contribution (MEC) is assumed to increase annually by 4.5%. The demographic actuarial assumptions used in the June 30, 2020 valuation were based on the 2017 experience study of the CalPERS system using data from 1997 to 2015, except for a different basis used to project future mortality improvements. The long-term expected rate of return on OPEB plan investments was determined using a building-block method in which best -estimate ranges of expected future real rates of return (expected returns, net of OPEB plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Page 167 Resolution 80-21 Page 77 Notes to Basic Financial Statements NOTE 11— OTHER POSTEMPLOYMENT BENEFITS (OPEB) (CONTINUED) G. Net OPEB Liability (Continued) The Town has elected CERBT Strategy Risk Level 1. This portfolio consists of assets management internally by CalPERS and/or external advisors. The CalPERS Investment Committee and Board of Administration directs the investment strategy and investments of the CERBT. As the CERBT is not a defined benefit plan, there is no guarantee that the portfolio will achieve its investment objectives nor provide sufficient funding to meet these employer obligations. CalPERS will not make up the difference between the employer's CERBT assets and the actual cost of OPEB provided to the employer's plan members. These investments are not insured by FDIC, CaIPERS, the State of California, or any other government agency. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table. Asset Class Global Equity Fixed Income Real Estate Investment Trusts Treasury Inflation Protection Securities Commodities Total 681 Page Target Allocation Resolution 80-21 Benchmarks 59.0% MSCI All Country World Indez IMI (net) 25.0% Bloomberg Barclays Long Liability Index 8.0% FTSE EPRA/NAREIT Developed Liquid Index (net) 5.0% Bloomberg Barclays Barclays US TIPS Index 3.0% S&P GSCI Total Return Index 100.0% Page 78 Notes to Basic Financial Statements NOTE 11- OTHER POSTEMPL OYMENT BENEFITS (OPEB) (CONTINUED) H. Changes in Net OPEB Liability The changes in the net OPEB liability follows: Balance at June 30, 2020 (Measurement Date 6/30/2019) Changes for the year: Service Cost Interest on the Total OPEB Liability Differences between Expected and Actual Experience Contributions Employer Net Investment Income Benefit payments, including Refunds of Employee Contributions Administrative Expense Changes of assumptions Net changes Balance at June 30, 2021 (Measurement Date 6/30/2020) Increase (Decrease) Total OPEB Plan Fiduciary Net OPEB Liability Net Position Liability (Asset) $ 2,246,201 $ 2,513,137 $ (266,936) 66,829 - 66,829 134,496 - 134,496 - 59,226 (59,226) - 89,421 (89,421) (142,864) (142,864) - - (1,219) 1,219 58,461 4,564 53,897 $ 2,304,662 $ 2,517,701 $ (213,039) Detailed information about the OPEB plan's fiduciary net position is available through CalPERS for the Schedule of Changes in Fiduciary Net Position by Employer as of the measurement date at https://www.caIpers. ca.gov/docs/forms-publications/gasb-75-schedule-changes-fiduciary-net-position- 2019.pdf. I. Discount Rate The discount rate used to measure the total OPEB liability was 6.0%. The projection of cash flows used to determine the discount rate assumed that contributions from the Town will be made at contractually required rates, actuarially determined. Based on this assumption, the OPEB plan's fiduciary net position was projected to be available to make all projected OPER payments for current and inactive employees. Therefore, the long-term expected rate of return on OPEB plan investments was applied to all periods of projected benefit payments to determine the total OPEB liability. There has not been a change in the discount rate since the prior measurement date. Page 169 Resolution 80-21 Page 79 Notes to Basic Financial Statements NOTE 11— OTHER POSTEMPLOYMENT BENEFITS (OPEB) (CONTINUED) I. Discount Rate (Continued) Sensitivity of the Town's proportionate share of the net OPEB liability to changes in the discount rate. The following presents the Town's proportionate share of the net OPEB liability, as well as what the Town's proportionate share of the net OPEB liability would be if it were calculated using a discount rate that is 1 - percentage -point lower (5.0%) or 1 -percentage -point higher (7.0%) than the current discount rate: 1% Decrease 5.00% Net OPEB Li a bi I ity (Asset) $ 49,315 Current Discount Rate 6.00% Net OPEB Liability (Asset) $ (213,039) 1% Increase 7.00% NetOPEB Liability (Asset) $ (434,026) Sensitivity of the Town's proportionate share of the net OPEB liability to changes in the healthcare cost trend rates. The following presents the Town's proportionate share of the net OPEB liability, as well as what the Town's proportionate share of the net OPEB liability would be if it were calculated using healthcare cost trend rates that are 1 -percentage -point (5.4% decreasing to 4.4%) or 1 -percentage point higher (6.4% decreasing to 5.5%) than the current healthcare cost trend rates: 1% Decrease 4.40% Net OPEB Liability (Asset) $ (446,897) Trend Rate 5.40% Net OPEB Liability (Asset) $ (213,039) 1% Increase 6.40% Net OPEB Liability (Asset) $ 65,879 J. OPEB Liabilities, OPEB Expenses and Deferred Outflows/Inflows of Resources Related to OPER For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPER expense, information about the fiduciary net position of the Town's OPEB Plan and additions to/deductions from the OPEB Plan's fiduciary net position have been determined on the same basis as they are reported by CERBT. For this purpose, benefit payments are recognized when currently due and payable in accordance with the benefit terms. Investments are reported at fair value. At June 30, 2021, the City reported a payable of $166,338 for the outstanding amount of contributions to the OPEB plan required for the year ended June 30, 2021. 70 1 Page Resolution 80-21 Page 80 Notes to Basic Financial Statements NOTE 11— OTHER POSTEMPLOYMENT BENEFITS (OPEB) (CONTINUED) K. Disclosure of the Other Post -Employment Benefit Plan Trust Fiduciary Fund The Town implemented the provisions of Governmental Accounting Standards Board Statement No. 84 — Fiduciary Activities during the year ended June 30, 2021. As a result, the Town determined that the activities of the California Employer's Retiree Benefit Trust (CERBT) should no longer be reported in the Other Post - Employment Benefits Trust Fund, since the town does not have control of the assets of the California Employer's Retiree Benefit Trust (CERBT) as a whole. Therefore the Other Post -Employment Benefits Trust Fund is no longer reported in the financial statements as a fiduciary fund as of July 1, 2020. NOTE 12 — STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY A. Excess of Expenditures Over Appropriations The Parks and Recreation in -lieu Fee and the Special Donations Special Revenue Funds had expenditures over appropriations at June 30, 2021 in the amount of $1,177 and $25,000, respectively. B. Deficit Fund Balances No individual funds had a deficit fund balance at June 30, 2021. Remainder of this page left intentionally blank. Resolution 80-21 Page 171 Page 81 Supplemental Information Page 173 Resolution 80-21 Page 82 TOWN OF LOS ALTOS HILLS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL GENERALFUND FOR THE FISCAL YEAR ENDED JUNE 30, 2021 REVENUES Property taxes Taxes other than property Franchise fees Licenses and permits Intergovernmental Use of money and property Charges for services Rental income Fines and forfeitures Interfund charges Miscellaneous Total revenues EXPENDITURES Current: General government Public safety Community development Public works Parks and recreation Nondepartmental: Additional pension payments Total expenditures Excess (Deficiency) of Revenues Over Expenditures 1,874,590 756,175 3,394,930 2,638,755 OTHER FINANCING SOURCES (USES) Variance with Transfers in - Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) Total Other Financing Sources (Uses) (4,000,000) (4,686,716) (2,602,806) $ 6,759,608 $ 6,759,608 $ 7,315,637 $ 556,029 440,200 440,200 978,527 538,327 319,190 319,190 350,952 31,762 1,119,566 1,119,566 1,830,032 710,466 152,300 152,300 208,460 56,160 298,900 298,900 55,161 (243,739) 923,893 923,893 1,190,760 266,867 114,466 114,466 149,384 34,918 - - 1,680 1,680 2,025,324 2,025,324 1,898,349 (126,975) 14,140 14,140 747,187 733,047 12,167,587 12,167,587 14,726,129 2,558,542 2,490,410 2,571,763 2,250,085 321,678 2,031,571 2,031,571 2,020,464 11,107 2,928,431 2,936,965 3,045,611 (108,646) 1,887,392 1,893,442 1,968,848 (75,406) 955,193 977,671 939,565 38,106 - 1,000,000 1,106,626 (106,626) 10,292,997 11,411,412 11,331,199 80,213 1,874,590 756,175 3,394,930 2,638,755 OTHER FINANCING SOURCES (USES) Transfers in - - 9,149 9,149 Transfers out (4,000,000) (4,686,716) (2,611,955) 2,074,761 Total Other Financing Sources (Uses) (4,000,000) (4,686,716) (2,602,806) 2,083,910 Net Change in Fund Balances (2,125,410) (3,930,541) 792,124 4,722,665 Fund Balances, Beginning of Year 16,168,355 16,168,355 16,168,355 - Fund Balances, End of Year $ 14,042,945 $ 12,237,814 $ 16,960,479 $ 4,722,665 See notes to required supplementary information 74 1 Page Resolution 80-21 Page 83 Required Supplemental Information Measurement Date Plan's Proportion of the Net Pension Liability (Asset) Plan's Proportionate Share of the Net Pension Liability (Asset) Plan's Covered Payroll Plan's Proportionate Share of the Net Pension Liability (Asset) as a Percentage of It's Covered Payroll Plan's Fiduciary Net Position as a Percentage of the Total Pension Liability Cost -Sharing Multiple -Employer Defined Pension Plan Last 10 Years* SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY Miscellaneous Plan 6/30/2014 6/30/2015 6/30/2016 6/30/2017 6/30/2018 6/30/2019 6/30/2020 0.03226% 0.07776% 0.08293% 0.08630% 0.05018% 0.05502% 0.05917% $ 2,007,540 $ 2,133,424 $ 2,881,005 $ 3,400,941 $ 1,891,026 $ 2,203,151 $ 2,495,780 $ 1,607,595 $ 1,624,334 $ 1,641,880 $ 1,786,436 $ 1,877,689 $ 2,381,293 $2,603,667 * Fiscal year 2015 was the 1st year of implementation. 124.88% 131.34% 79.82% 78.40% 175.47% 190.38% 100.71% 74.06% 73.31% 77.69% 92.52% 95.86% 77.73% 77.71% Page 175 Resolution 80-21 Page 84 Required Supplemental Information Fiscal Year Actuarially determined contribution Contributions in relation to the actuarially determined contributions Contribution deficiency (excess) Covered payroll Contributions as a percentage of covered payroll Valuation date: Fiscal Year Actuarially determined contribution Contributions in relation to the actuarially determined contributions Contribution deficiency (excess) Covered payroll Contributions as a percentage of covered payroll Valuation date: Notes to Schedule Cost -Sharing Multiple -Employer Defined Pension Plan Last 10 Years* SCHEDULE OF CONTRIBUTIONS Miscellaneous Plan 2015 2016 2017 2018 2019 $ 181,280 $ 221,507 $ 250,340 $ 1,640,692 $ 345,118 (181,280) (221,507) (250,340) (1,640,692) (345,118) $ 1,624,334 $ 1,641,880 $ 1,786,436 $ 1,877,689 $ 2,381,293 11.16% 13.49% 14.01% 87.38% 14.49% 6/30/2013 6/30/2014 6/30/2015 6/30/2016 6/30/2017 Miscellaneous Plan 2020 2021 $ 397,870 $ 949,129 (397,870) (949,129) $ 2,603,667 $ 2,696,540 15.28% 35.20% 6/30/2018 6/30/2019 Methods and assumptions used to determine contribution rates: Actuarial cost method Entry age normal Amortization method Level percentage of payroll, closed Remaining amortization period 30 years Asset valuation method 5 -year smoothed market Inflation 2.50% Salary increases Varies by Entry Age and Service Investment rate of return 7.15%, net of pension plan investment and administrative expenses, including inflation Retirement age 55 years Tier 1 60 years Tier 2 62 years Tier 3 Mortality Tier 1 -The mortality table used was developed based on CalPERS' specific data. The probabilities of mortality are based on the 2017 CaIPERS Experience Study for the period from 1997 to 2015. Pre -retirement and Post-retirement mortality rates Include 15 years of projected mortality improvement using 90% of Scale MP -2016 published by the Society of Actuaries. For more details on this table, please refer to the CalPERS Experience Study and Review of Actuarial Assumptions report from December 2017 that can be found on the CaIPERS website. Tier 2 - The mortality table used was developed based on CaIPERS' specific data. The probabilities of mortality are based on the 2017 CaIPERS Experience Study for the period from 1997 to 2015. Pre -retirement and Post-retirement mortality rates include 15 years of projected mortality Improvement using 90% of Scale MP -2016 published by the Society of Actuaries. For more details on this table, please refer to the CAPERS Experience Study and Review of Actuarial Assumptions report from December 2017 that can be found on the CaIPERS website. Tier 3 -The mortality table used was developed based on CAPERS' specific data. The probabilities of mortality are based on the 2017 CaIPERS Experience Study for the period from 1997 to 2015. Pre -retirement and Post-retirement mortality rates include 15 years of projected mortality improvement using 90% of Scale MP -2016 published by the Society of Actuaries. For more details on this table, please refer to the CalPERS Experience Study and Review of Actuarial Assumptions report from December 2017 that can be found on the CaIPERS website. * Fiscal year 2015 was the 1st year of implementation, therefore only four years are shown. 761 Page M Resolution 80-21 Page 85 Required Supplemental Information Prepared for Town of Los Altos Hills For the measurement year ending June 30 Last 10 Years* SCHEDULE OF CHANGES IN THE TOWN'S NET OPEB LIABILITY AND RELATED RATIOS Measurement Date 2017 2018 2019 Total OPEB Liability Service Cost Interest on the total OPEB Liability Changes in benefit terms Differences between expected and actual experience Changes of assumptions Benefit Payments Net change in total OPEB liability Total OPEB liability - beginning Total OPEB liability - ending (a) Plan fiduciary net position Contributions - employer -Town's contribution Contributions - employer -implicit subsidy Net investment income Benefit payments Implicit rate subsidy fulfilled Administrative expense Other Expenses Net change in plan fiduciary net position Plan fiduciary net position - beginning Plan fiduciary net position - ending (b) Net OPEB liability/(Asset) - ending (a) - (b) 2020 $ 57,272 $ 59,133 $ 61,054 $ 66,829 145,306 148,769 152,261 134,496 (346,011) (25,019) (135,645) (157,788) (145,442) (142,864) 66,933 50,114 (303,157) 58,461 2,432,311 2,499,244 2,549,358 2,246,201 $ 2,499,244 $ 2,549,358 $ 2,246,201 $ 2,304,662 $ 403,645 $ 157,788 $ 145,442 $ 59,226 200,657 174,834 146,116 89,421 (135,645) (157,788) (145,442) (142,864) (1,019) (1,171) (507) (1,219) - (2,906) - - 467,638 170,757 145,609 4,564 1,729,133 2,196,771 2,367,528 2,513,137 $ 2,196,771 $ 2,367,528 $ 2,513,137 $ 2,517,701 $ 302,473 $ 181,830 $ (266,936) $ (213,039) Town's covered payroll $ 1,856,292 $ 2,082,980 $ 2,364,255 $ 2,829,032 Town's proportionate share of the net OPEB liability (asset) as a percentage of its covered -employee payroll 16.29% 8.73% -11.29% -7.53% Notes to Schedule: Historical information is required only for measurement periods for which GASB 75 is applicable. Future year's information will be displayed up to 10 years as information becomes available. * Fiscal year 2018 was the first year of implementation Page 177 Resolution 80-21 Page 86 Required Supplemental Information Fiscal Year Ending Actuarially determined contribution Contributions in relation to the actuarially determined contributions Contribution deficiency (excess) Covered payroll Prepared for Town of Los Altos Hills For the fiscal year ending June 30 Last 10 Years* SCHEDULE OF OPEB CONTRIBUTIONS 2018 2019 2020 2021 $ 103,483 $ 100,051 $ 59,226 $ 60,918 (157,788) (145,442) (59,226) (60,918) $ (54,305) $ (451391) $ - $ - $ 2,082,980 $ 2,364,255 $ 2,829,032 $ 2,929,250 Contributions as a percentage of covered payroll 7.58% Notes to Schedule Valuation date: 6/30/2018 Methods and assumptions used to determine contribution rates: Actuarial cost method Asset valuation method Inflation Assumed Rate of Payroll Growth Healthcare trend rates Rate of return on assets Retirement Age Mortality rate Other information (1) Mortality rate is based on assumption data of 20 years of projected on-going mortality improvement using Society of * - Fiscal year 2018 was the 1st year of implementation. 781 Page Resolution 80-21 6.15% 2.09% 6/30/2018 6/30/2019 2.08% 6/30/2019 Entry age normal, level percent of pay Market value of assets 2.50% 3.00% 5.40% in 2021, fluctuates until ultimate rate of 4% in 2076. 6.00% Age 50 and 5 years of service CaIPERS Rates (1) The ADC takes into account the implicit subsidy Page 87 Required Supplemental Information NOTE 1 - BUDGETARY BASIS OF ACCOUNTING The Town follows these procedures in establishing the budgetary data reflected in the required supplementary information: 1. The City Manager submits to the City Council a proposed operating budget for the fiscal year commencing the following July 1. The operating budget includes proposed expenditures and the means of financing them. 2. Public hearings are held to obtain taxpayer comments. 3. The budget is legally enacted through passage of a minute order. 4. The City Manager is authorized to transfer budgeted amounts between departments within any fund. However, any revisions that increase total expenditures of any fund must be approved by the City Council. Expenditures may not legally exceed budgeted appropriations at the fund level without City Council approval. 5. Budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America. Amounts presented include amendments approved by the City Council. NOTE 2 - PENSION LIABILITY AND RELATED CONTRIBUTIONS These schedules present information that shows the Town's proportionate share of the pension liability in the cost sharing pools, actuarial information, and contributions. The proportionate share information is useful in determining the Town's liability in relation to all other entities in the pool. NOTE 3 - SCHEDULE OF CHANGES IN THE TOWN'S NET OPEB LIABILITY AND RELATED RATIOS This schedule shows the funding progress for the Town's Other Postemployment Benefits whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits as required by current standards. There are no factors that significantly affect the identification of trends in the amount reported. Only years when actuarial valuations were performed are shown. Additional years will be included as subsequent valuations are performed. Page 179 Resolution 80-21 Page 88 Supplemental Information Page 181 Resolution 80-21 Page 89 TOWN OF LOS ALTOS HILLS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL STREET CAPITAL PROJECTS FUND FOR THE FISCAL YEAR ENDED JUNE 30, 2021 REVENUES Intergovernmental Charges for services Total revenues EXPENDITURES Capital outlay Total expenditures Excess (Deficiency) of Revenues Over Expenditures OTHER FINANCING SOURCES (USES) Transfers in Transfers (out) Total Other Financing Sources (Uses) Net Change in Fund Balances Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) $ 309,715 $ 309,715 $ 560,958 $ 251,243 200,285 111,983 172,277 60,294 510,000 421,698 733,235 311,537 717,629 1,200,000 913,670 286,330 717,629 1,200,000 913,670 286,330 (207,629) (778,302) (180,435) 597,867 - 690,000 181,720 (508,280) - - (1,285) (1,285) - 690,000 180,435 (509,565) (207,629) (88,302) - 88,302 Fund Balances, Beginning of Year 745,050 745,050 745,050 - Fund Balances, End of Year $ 537,421 $ 656,748 $ 745,050 $ 88,302 82 1 Page Resolution 80-21 Page 90 TOWN OF LOS ALTOS HILLS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL OTHER CAPITAL PROJECTS FUND FOR THE FISCAL YEAR ENDED JUNE 30, 2021 REVENUES Intergovernmental Use of money and property Rental Income Charges for services Total revenues EXPENDITURES General government Capital outlay Total expenditures Excess (Deficiency) of Revenues Over Expenditures OTHER FINANCING SOURCES (USES) Transfers in Transfers (out) Total Other Financing Sources (Uses) Net Change in Fund Balances Fund Balances, Beginning of Year Fund Balances, End of Year Budgeted Amounts Original Final $ 2,462,240 $ 2,462,240 $ 12,000 12,000 50,000 50,000 89,000 89,000 Variance with Final Budget - Actual Positive Amounts (Negative) 250,000 $ (2,212,240) 4,667 (7,333) 51,200 1,200 1 C9 nAn 11 nnn 2,613,240 2,613,240 457,807 (2,155,433) - - 2,140,689 (2,140,689) 4,863,029 4,863,029 404,582 4,458,447 4,863,029 4,863,029 2,545,271 2,317,758 (2,249,789) (2,249,789) (2,087,464) 162,325 4,100,000 4,100,000 2,150,605 (1,949,395) (40,000) (40,000) (42,415) (2,415) 4,060,000 4,060,000 2,108,190 (1,951,810) 1,810,211 1,810,211 20,726 (1,789,485) 1,920,978 1,920,978 $1,920,978 - $ 3,731,189 $ 3,731,189 $ 1,941,704 $ (1,789,485) Resolution 80-21 Page 183 Page 91 TOWN OF LOS ALTOS HILLS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL SEWER ENTERPRISE FUND FOR THE FISCAL YEAR ENDED JUNE 30, 2021 OPERATING REVENUES Charges for services Total Operating Revenues OPERATING EXPENSES Salaries and benefits Contract services - treatment plant Professional services Support goods and services Repairs and maintenance Utilities Interfund charges Depreciation Total Operating Expenditures Operating income NONOPERATING REVENUES (EXPENSES) Capital Contributions - sewer connection fees Interest income Nonoperating Revenues (Expenses), net NET INCOME (LOSS) BEFORE OPERATING TRANSFERS Transfers in Transfers out Changes in Net Position Fund Balances, Beginning of Year Fund Balances, End of Year 84 1 Page Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) $ 3,123,204 $ 3,123,204 $ 3,035,410 $ (87,794) 3,123,204 3,123,204 3,035,410 (87,794) 155,083 156,003 115,613 40,390 1,306,540 1,306,540 1,568,381 (261,841) 10,500 10,500 141,892 (131,392) 15,200 15,200 3,918 11,282 515,132 515,132 513,575 1,557 6,300 6,300 7,068 (768) 176,925 176,924 173,666 3,258 - - 226,870 (226,870) 2,185,680 2,186,599 2,750,983 (564,384) 937,524 936,605 284,427 (652,178) 67,575 67,575 88,908 21,333 27,578 27,578 10,079 (17,499) 95,153 95,153 98,987 3,834 294,316 304,825 10,509 - - (5,449) (5,449) 1,032,677 1,326,074 682,790 (643,284) 10,865,601 10,865,601 10,865,601 - $ 11,898,278 $ 12,191,675 $ 11,548,391 $ (643,284) Resolution 80-21 Page 92 Non -Major Governmental Funds SPECIAL REVENUE FUNDS Special revenue Funds account for specific revenues that are legally restricted to expenditures for particular purposes. Parks and Recreation In -Lieu Fee Fund accounts for revenues from parks and recreation in -lieu fees, which are designated for park maintenance, improvement and construction. Citizens' Option for Public Safety (COPS) Fund accounts for revenues from the Citizens' Option for Public Safety Program, which are designated for public safety. Special Donations Fund accounts for donations. Page 185 Resolution 80-21 Page 93 TOWN OF LOS ALTOS HILLS NONMAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEETS JUNE 30, 2021 SPECIAL REVENUE FUNDS Total Parks and Nonmajor Recreation Special Governmental In -Lieu --Fee COPS Donations Funds ASSETS Cash and investments $ 34,398 $ 638,923 $ 105,233 $ 778,554 Accounts receivable 93 - - 93 Total Assets LIABILITIES Accounts payable Total Liabilities FUND BALANCES Restricted Total Fund Balances (Deficit) TOTAL LIABILITIES AND FUND BALANCES 861 Page $ 34,491 $ 638,923 $ 105,233 $ 778,647 $ - $ 345 $ - $ 345 345 - 345 34,491 638,578 105,233 778,302 34,491 638,578 105,233 778,302 $ 34,491 $ 638,923 $ 105,233 $ 778,647 Resolution 80-21 Page 94 TOWN OF LOS ALTOS HILLS NONMAJOR GOVERNMENTAL FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED JUNE 30, 2021 REVENUES Investment income Total Revenues EXPENDITURES General government Public safety Park and recreation Total Expenditures EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES OTHER FINANCING SOURCES (USES) Transfers in Total Other Financing Sources (Uses) NET CHANGE IN FUND BALANCES BEGINNING FUND BALANCES ENDING FUND BALANCES SPECIAL REVENUE FUNDS Total Parks and Nonmajor Recreation Special Governmental In -Lieu Fund COPS Donations Funds $ 84 $ - $ - $ 84 84 - - 84 - - 25,000 25,000 - 14,805 - 14,805 1,177 - - 1,177 1,177 14,805 25,000 40,982 (1,093) (14,805) (25,000) (40,898) - 14,805 - 14,805 - 14,805 - 14,805 (1,093) - (25,000) (26,093) 35,584 638,578 130,233 804,395 $ 34,491 $ 638,578 $ 105,233 $ 778,302 Page 187 Resolution 80-21 Page 95 TOWN OF LOS ALTOS HILLS BUDGETED NONMAJOR FUNDS COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2021 SPECIAL REVENUE FUNDS PARKS AND RECREATION IN -LIEU FEE COPS Variance Variance Positive Positive Budget Actual (Negative) Budget Actual (Negative) GOVERNMENTAL REVENUES Charges for services $ $ $ $ $ $ Intergovernmental - Rental income Investment income 84 84 Other revenues _ _ Total Revenues - 84 84 EXPENDITURES General government - _ _ - - Public safety - 153,673 14,805 138,868 Capital outlay _ - _ - Park and recreation - 1,177 (1,177) Total Expenditures - 1,177 (1,177) 153,673 14,805 138,868 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (1,093) 1,261 (153,673) (14,805) (138,868) OTHER FINANCING SOURCES (USES) Transfers in - - 14,805 (14,805) Transfers out Total Other Financing Sources (Uses) - - 14,805 (14,805) NET CHANGES IN FUND BALANCES $ (1,093) $ 1,261 $ (153,673) - $ (153,673) BEGINNING FUND BALANCES $35,584 $638,578 ENDING FUND BALANCES $ 34,491 $ 638,578 (Continued) 881 Page Resolution 80-21 Page 96 TOWN OF LOS ALTOS HILLS BUDGETED NONMAJOR FUNDS COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2021 SPECIAL REVENUE FUNDS SPECIAL DONATIONS Variance Positive Budget Actual (Negative) GOVERNMENTAL REVENUES Charges for services $ - $ $ _ Intergovernmental - _ Rental income _ _ Investment Income _ Other revenues - Total Revenues _ EXPENDITURES General government - 25,000 (25,000) Public safety _ Capital outlay _ Park and recreation _ Total Expenditures - 25,000 (25,000) EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES - (25,000) 25,000 OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total Other Financing Sources (Uses) - _ NET CHANGE IN FUND BALANCES $ (25,000) $ 25,000 BEGINNING FUND BALANCES 130,233 ENDING FUND BALANCES $ 105,233 Page 189 Resolution 80-21 Page 97 Resolution 80-21 Page 98 Statistical Section This part of the Town of Los Altos Hills Comprehensive Annual Financial Report presents the detailed information as a context for understand what the information in the financial statements, note disclosures, and required supplementary information says about the Town's overall financial health. Contents Page Financial Trends - These schedules contain trend information to help the reader 94 understand how Town's financial performance and well-being have changed over time. Revenue Capacity - These schedules contain information to help the reader assess one of 104 the Town's most significant local revenue source, the property tax. Debt Capacity - These schedules present information to help the reader assess the 108 affordability of the Town's current levels of outstanding debt and its ability to issue additional debt in the future. Demographic and Economic Information - These schedules offer demographic and 111 economic indicators to help the reader understand the environment within which the Town's financial activities take place. Operating Information - These schedules contain service and infrastructure data to help 114 the reader understand how the information in the Town's CAFR relates to the services the Town provides and activities it performs. Page 193 Resolution 80-21 Page 99 Statistical Section Net Position by Component Last Ten Fiscal Years (Accrual Basis of Accounting) Business -type activities: Invested in capital assets, net $ 4,452,208 $ 4,312,151 $ 4,774,920 $ 5,022,034 Restricted - - Unrestricted 2,915,748 3,227,161 3,075,429 2,774,135 Total business -type activities net position 2012 2013 2014 2015 Governmental activities: Primary government: Invested in capital assets, net $ 25,681,352 $ 26,654,599 $ 25,535,393 $ 25,370,209 Restricted 1,507,673 1,787,750 1,520,545 1,666,812 Unrestricted 4,582,714 4,349,494 7,124,524 7,064,274 7,576,655 10,199,953 Total governmental activities net position $ 31,771,739 $ 32,791,843 $ 34,180,462 $ 34,101,295 Business -type activities: Invested in capital assets, net $ 4,452,208 $ 4,312,151 $ 4,774,920 $ 5,022,034 Restricted - - Unrestricted 2,915,748 3,227,161 3,075,429 2,774,135 Total business -type activities net position $ 7,367,956 $ 7,539,312 $ 7,850,349 $ 7,796,169 Primary government: Invested in capital assets, net $ 30,133,560 $ 30,966,750 $ 30,310,313 $ 30,392,243 Restricted 1,507,673 1,787,750 1,520,545 1,666,812 Unrestricted 7,498,462 7,576,655 10,199,953 9,838,409 Total net position $ 39,139,695 $ 40,331,155 $ 42,030,811 $ 41,897,464 Source: Audited Financial Statements 941 Page Resolution 80-21 Page 100 2016 2017 2018 Statistical Section 2019 2020 2021 $ 24,700,834 $ 24,739,048 $ 25,898,305 $ 26,305,865 $ 26,511,993 $ 26,253,419 1,706,954 115,275 192,287 1,229,812 1,354,610 1,956,700 9,687,552 13,377,599 13,052,174 14,219,604 17,365,028 17,760,957 9,351,530 $ 10,469,712 $ 10,865,601 $ 11,548,391 $ 36,095,340 $ 38,231,922 $ 39,142,766 $ 41,755,281 $ 45,231,631 $ 45,971,076 $ 5,244,525 $ 5,831,322 $ 6,704,180 $ 7,264,306 $ 7,574,231 $ 7,717,735 2,582,858 2,607,749 2,647,350 3,205,406 3,291,370 3,830,656 12,270,410 15,985,348 15,699,524 17,425,010 $ 7,827,383 $ 8,439,071 $ 9,351,530 $ 10,469,712 $ 10,865,601 $ 11,548,391 $ 43,922,723 $ $ 29,945,359 $ 30,570,370 $ 32,602,485 $ 33,570,171 $ 34,086,224 $ 33,971,154 1,706,954 115,275 192,287 1,229,812 1,354,610 1,956,700 12,270,410 15,985,348 15,699,524 17,425,010 20,656,398 21,591,613 $ 43,922,723 $ 46,670,993 $ 48,494,296 $ 52,224,993 $ 56,097,232 $ 57,519,467 Page 195 Resolution 80-21 Page 101 Statistical Section Changes in Net Position Last Ten Fiscal Years (Accrual Basis of Accounting) Governmental activities*: Expenses: Administration Public safety Community development Parks and recreation Drainage and street operations Public works Non -Departmental Interest on long-term debt Total governmental activities expenses Program revenues: Charges for services: Administration Public safety Community development Parks and recreation Drainage and street operations Public works Operating contributions and grants Capital contributions and grants Total governmental activities program revenues Total governmental activities net program expenses General revenues and other changes in net position: Governmental revenues: Taxes Property taxes Othertaxes Franchise taxes Use of money and property Rental income *** Investment Income *** Other unrestricted revenue Sale of Capital Assets -net Other intergovernmental revenue Special Item** Transfers Total governmental activities general revenues and other changes in net position Total governmental activities changes in net position 2012 2013 2014 2015 $ 2,046,868 $ 1,837,120 $ 639,350 $ 538,004 1,345,461 1,440, 002 1,555,955 1,567,747 2,437,335 2,448,821 3,224,490 3,324,935 1,300,211 1,314,872 1,479,822 1,358,479 700,017 627,512 842,532 839,577 44,305 4,526 3,955 3,304 7,874,197 7,672,853 7,746,104 7,632,046 - 3,200 1,843,682 1,768,740 476,599 433,785 340,010 169,526 - 1,302 1,871,118 2,623,027 281,886 316,391 186,631 340,110 531,671 1,267,777 500,245 338,453 - - 266,736 246,533 3,191,962 3,643,028 3,106,616 3,865,816 (4,682,235) (4,029,825) (4,639,488) (3,766,230) 3,543,231 3,785,652 4,153,331 4,606,184 427,826 594,656 626,479 649,542 430,149 421,634 463,598 513,997 156,743 142,931 199,609 208,776 39,448 34,057 585,089 174,469 (1,250,000) - 69,243 71,000 - - 3,416,640 5,049,930 6,028,106 6,152,968 (1,265,595) 1,020,105 1,388,618 2,386,738 * Governmental Activities affected by implementation of cost allocation plan in 2014. ** Special item is related to provision for one-time refund of Roadway Impact Fee *** Change in Financial Reporting in 2018 Note 1: In fiscal year 2015-16, there are changes to the account groupings between programs. For comparison purpose, we added an additional column for fiscal year 2014-15, in which the 2014-15 audited numbers are regrouped to be consistent with the new grouping in 2015-16. One main difference in the 2014-15 numbers is in the treatment of overhead allocation paid by the sewer fund. The original 2014-15 audited charges for services included $46,860 overhead allocation to sewer operations. The new grouping records this as "transfers". Source: Audited Financial Statements 961 Page Resolution 80-21 Page 102 Statistical Section Statistical Section 2015 (Note 1) 2016 2017 2018 2019 2020 2021 $ 1,923,816 $ 2,339,474 $ 2,119,990 $ 2,459,576 $ 2,477,572 $ 2,639,241 $ 4,701,506 1,379,621 1,601,654 1,817,299 2,194,391 2,388,908 2,388,202 2,331,814 2,289,743 2,167,702 2,210,748 2,894,119 2,768,476 3,408,027 3,441,398 621,974 738,495 680,522 1,157,213 851,096 770,495 1,061,879 1,413,588 1,252,271 1,461,155 1,669,907 2,001,602 2,086,121 2,235,212 - - - - - - 1,106,626 3,304 1,492 - - - - - 7,632,046 8,101,088 8,289,714 10,375,206 10,487,654 11,292,086 14,878,435 29,038 72,566 27,615 1,804,216 1,970,336 2,108,477 2,557,408 1,302 - - 156,083 132,138 185,743 1,038,680 2,433,038 2,217,874 2,219,769 1,792,025 1,546,016 2,028,933 2,533,045 269,295 199,241 222,834 394,729 255,128 224,853 290,637 548,157 388,931 549,729 513,771 476,146 592,434 471,259 291,593 303,292 343,107 194,053 230,351 347,577 294,139 246,533 398,990 69,635 94,031 185,744 591,956 374,296 3,818,956 3,580,894 3,432,689 4,948,908 4,795,859 6,079,973 6,520,784 (3,813,090) (4,520,194) (4,857,025) (5,426,298) (5,691,795) (5,212,113) (8,357,651) 4,606,184 4,960,016 5,302,028 5,721,224 6,385,652 6,834,083 7,315,637 649,542 565,055 666,631 724,609 522,946 603,657 1,038,680 513,997 474,732 573,336 579,333 530,991 340,268 350,952 208,776 356,479 222,688 - - - - - - 218,816 - - - - - - 32,349 530,582 897,996 59,912 174,469 4,538 13,747 39,051 334,139 42,885 631,290 - - 5,500 5,885 - - - 46,860 153,419 209,677 (30,426) (299,376) 6,199,828 6,514,239 6,993,607 7,321,267 8,304,310 8,688,463 9,097,095 2,386,738 1,994,045 2,136,582 1,894,969 2,612,515 3,476,350 739,444 Page 197 Resolution 80-21 Page 103 Statistical Section Changes in Net Position (continued) Last Ten Fiscal Years (Accrual Basis of Accounting) Business -type activities: Expenses: Sewer Solid waste Total business -type activities expenses Program revenues: Charges for services: Sewer Solid waste Operating contributions and grants Capital contributions and grants Total business -type activities program revenues Total business -type activities net program revenue (expenses) General revenues and other changes in net position: Use of money and property Investment Income *** Other unrestricted revenue Transfers Total business -type activities general revenues and other changes in net position Total business -type activities changes in net position Total primary government change in net position 2012 2013 2014 2015 $ 1,328,856 $ 1,242,885 $ 1,271,651 $ 1,591,743 1,526,622 1,484,521 1,557,969 1,626,368 1,328,856 1,242,885 1,271,651 1,591,743 1,355,667 1,359,338 1,382,472 1,392,029 170,955 125,183 175,497 234,339 1,526,622 1,484,521 1,557,969 1,626,368 197,766 241,636 286,318 34,625 14,001 720 24,719 19,533 (69,243) (71,000) (55,242) (70,280) 24,719 19,533 142,524 171,356 311,037 54,158 $ (1,123,071) $ 1,191,461 $ 1,699,655 $ 2,440,896 * Governmental Activities affected by implementation of cost allocation plan in 2014. ** Special item is related to provision for one-time refund of Roadway Impact Fee *** Change in Financial Reporting in 2018 Note 1: In fiscal year 2015-16, there are changes to the account groupings between programs. For comparison purpose, we added an additional column for fiscal year 2014-15, in which the 2014-15 audited numbers are regrouped to be consistent with the new grouping in 2015-16. One main difference in the 2014-15 numbers is in the treatment of overhead allocation paid by the sewer fund. The original 2014-15 audited charges for services included $46,860 overhead allocation to sewer operations. The new grouping records this as "transfers". Source: Audited Financial Statements 981 Page Resolution 80-21 Page 104 Statistical Section 2015 (Note 1) 2016 2017 2018 2019 2020 2021 234,339 221,010 185,369 130,930 98,183 85,595 88,908 $ 1,544,883 $ 1,997,399 $ 2,129,895 $ 2,114,609 $ 2,061,261 $ 3,005,538 $ 2,750,983 81,485 149,247 814,761 933,749 1,041,972 184,116 373,335 1,544,883 1,997,399 2,129,895 2,114,609 2,061,261 3,005,538 2,750,983 1,392,029 1,925,636 2,759,287 2,917,428 3,005,050 3,104,059 3,035,410 234,339 221,010 185,369 130,930 98,183 85,595 88,908 1,626,368 2,146,646 2,944,656 3,048,358 3,103,233 3,189,654 3,124,318 81,485 149,247 814,761 933,749 1,041,972 184,116 373,335 19,533 32,557 4,134 - - - - - - - 6,642 76,210 172,060 10,079 2,829 2,470 3,220 - 9,287 - (46,860) (153,419) (209,677) - - 30,426 299,376 (27,327) (118,033) (203,073) 9,862 76,210 211,773 309,455 54,158 31,214 611,688 943,611 1,118,182 395,889 682,790 $ 2,440,896 $ 2,025,259 $ 2,748,270 $ 2,838,580 $ 3,730,697 $ 3,872,239 $ 1,422,234 Page 199 Resolution 80-21 Page 105 Statistical Section Fund Balances of Governmental Funds Last Ten Fiscal Years (Modified Accrual Basis of Accounting) General Fund Restricted Committed Assigned Unassigned Total General Fund All other governmental funds Restricted Committed Unassigned Total all other governmental funds Source: Audited Financial Statements 1001 Page 2012 2013 2014 2015 $ 240,000 $ 286,150 $ 285,000 $ 360,000 3,063,979 2,990,283 5,420,162 7,048,964 $ 3,303,979 $ 3,276,433 $ 5,705,162 $ 7,408,964 $ 1,507,673 $ 1,787,750 $ 1,520,545 $ 1,691,286 75,112 354,495 519,059 934,569 (184,268) - (435) - $ 1,398,517 $ 2,142,245 $ 2,039,169 $ 2,625,855 Resolution 80-21 Page 106 2016 2017 Statistical Section 2018 2019 2020 2021 $ 1,706,954 $ 1,086,413 115,275 $ 2,050,545 192,287 $ 2,041,192 701,089 $ 2,449,411 550,215 $ 1,178,398 6,371,700 6,371,700 $ 528,723 $ $ 1,765,000 $ 1,840,000 $ 3,125,000 3,155,000 350,000 350,000 350,000 350,000 7,606,176 10,267,874 8,254,294 8,841,955 $ 9,721,176 $ 12,457,874 $ 11,729,294 $ 12,875,678 $ $ 1,706,954 $ 1,086,413 115,275 $ 2,050,545 192,287 $ 2,041,192 701,089 $ 2,449,411 550,215 $ 1,178,398 6,371,700 6,371,700 2,071,500 2,071,500 7,174,940 7,338,881 16,168,355 $ 16,960,479 804,395 $ 778,302 2,666,028 2,686,754 $ 2,793,367 $ 2,165,820 $ 2,233,479 $ 3,150,500 $ 3,470,423 $ 3,465,056 Page 1 101 Resolution 80-21 Page 107 Statistical Section Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (Modified Accrual Basis of Accounting) Expenditures 2012 2013 2014 2015 Revenues: Property taxes $ 3,543,251 $ 3,785,652 $ 4,153,332 $ 4,606,184 Taxes other than property 423,353 545,228 524,763 645,836 Franchise fees 430,149 421,634 463,598 513,997 Licenses and permits 651,476 754,460 1,006,907 1,485,394 Intergovernmental 457,952 1,264,716 610,850 397,470 Use of money and property 196,891 200,937 281,583 295,447 Investment Income ** _ _ Charges for services 1,836,621 1,407,987 1,411,082 1,858,220 Interfund charges _ _ _ 16,212 Rental income 62,725 4,536 3,966 3,372 Fines and forfeitures -- _ _ _ Miscellaneous 249,686 241,344 599,992 175,380 Total revenues 7,789,379 8,621,958 9,052,107 9,977,928 Expenditures Current: Administration 1,580,902 1,363,140 276,162 447,843 Public safety 1,057,330 1,131,772 1,209,028 1,205,913 Community development 1,992,581 1,918,408 2,581,031 2,557,545 Parks and recreation 1,049,563 1,033,239 1,178,463 1,044,944 Drainage and street operation 549,782 492,889 678,195 645,804 Public works _ _ Non -Departmental Debt service: _ _ Principal 1,377,532 15,048 15,618 16,212 Interest 62,725 4,536 3,966 3,372 Additional pension and OPEB payments _ _ _ _ Capital outlay 1,584,367 2,719,447 783,990 1,765,807 Total expenditures 9,254,782 8,678,479 6,726,453 7,687,440 Excess (deficiency) of revenues over (under) expenditures (1,465,403) (56,521) 2,325,654 2,290,488 Other financing sources (uses) Transfers in 2,900,401 2,178,543 1,490,019 2,790,955 Transfers out (2,831,158) (2,107,543) (1,490,019) (2,790,955) Sale of assets Proceeds from debt Special Item* (1,250,000) - Otherfinancingsources(uses) (1,180,757) 71,000 - - Net change in fund balances $ (2,646,160) $ 14,479 $ 2,325,654 $ 2,290,488 Debt service as a percentage of noncapital expenditures 23.1% 0.3% 0.3% 0.3% * Special item is related to provision for one-time refund of Roadway Impact Fee ** Change in Financial Reporting in 2018 Note 1: In fiscal year 2015-16, there are changes to the account groupings between programs. For comparison purpose, we added an additional column for fiscal year 2014-15, in which the 2014-15 audited expenditures were regrouped to be consistent with the new grouping in 2015-16. One major difference in the 2014-15 numbers is the treatment of overhead allocation. The original 2014-15 audited expenditures for Administration was reduced due to overhead charges to other programs. Under the 2015-16 new groupings, overhead allocation was eliminated within General Fund and overhead charges to other governmental funds and sewer funds are reported as "transfers" rather than "expenditures" /"expenses". Source: Audited Financial Statements 1021 Page Resolution 80-21 Page 108 Statistical Section 2015 (Note 1) 2016 2017 2018 2019 2020 2021 1,075,160 1,255,198 1,560,295 1,781,425 1,974,021 2,084,618 2,035,269 $ 4,606,184 $ 4,960,016 $ 5,302,028 $ 5,721,224 $ 6,385,652 $ 6,834,083 $ 7,315,637 645,836 511,091 610,337 667,037 466,062 537,836 978,527 513,997 474,732 573,336 579,333 530,991 340,268 350,952 1,485,394 1,334,953 1,544,996 1,246,623 1,060,772 990,768 1,830,032 397,470 752,717 412,855 489,392 574,257 894,577 1,019,418 295,447 356,479 222,688 - - _ _ - - - 32,349 530,582 897,996 59,912 1,811,360 1,449,127 1,482,830 1,625,306 1,282,436 1,878, 256 1,S14,977 - - - 1,632,812 1,748,699 1,858,142 1,898,349 218,816 155,719 222,534 200,584 - - - 381 - 4,797 1,680 175,380 102,599 62,048 56,902 364,999 339,605 747,187 9,931,068 9,941,714 10,211,118 12,270,175 13,100,169 14,798,862 15,917,255 1,557,773 1,859,492 1,813,551 1,983,939 2,113,083 2,127,557 4,415,774 1,075,160 1,255,198 1,560,295 1,781,425 1,974,021 2,084,618 2,035,269 1,725,877 1,641,631 1,833,654 2,540,121 2,642,159 2,860,410 3,045,611 466,881 565,440 575,594 722,696 742,986 652,562 940,742 1,066,943 951,786 1,214,072 1,678,516 1,632,329 1,724,318 1,968,848 - - - - - - 1,106,626 16,212 81,360 3,372 1,492 - - - - 1,660,209 - - _ 1,765,807 1,259,010 1,314,478 2,564,189 1,932,186 1,706,371 1,318,252 7,678,025 7,615,409 8,311,644 12,931,095 11,036,764 11,155,836 14,831,122 2,253,043 2,326,305 1,899,474 (660,920) 2,063,405 3,643,026 1,086,133 3,097,282 2,299,774 2,988,073 2,215,434 2,113,748 781,527 2,356,279 (3,059,837) (2,146,355) (2,778,396) (2,215,434) (2,113,748) (811,953) (2,655,655) (30,426) (299,376) 37,445 153,419 209,677 - $ 2,290,488 $ 2,479,724 $ 2,109,151 $ (660,920) $ 2,063,405 $ 3,612,600 $ 786,757 0.3% 1.3% 0.0% 0.0% 0.0% 0.0% 0.0% Resolution 80-21 Page 1 103 Page 109 Statistical Section Assessed and Estimated Actual Value of Taxable Property Last Ten Fiscal Years Fiscal Year Taxable Total % change Property tax Ended Less Assessed Direct Tax in assessed revenue per June 30 Secured Roll Unsecured Roll Exemptions Value Rate value fin stmt 2012 $ 5,083,703,530 $ 6,024,790 $ 15,283,800 $ 5,074,444,520 0.074% 3.79% $ 3,543,251 2013 5,329,042,601 5,859,024 15,300,600 5,319,601,025 0.078% 4.82% 3,785,652 2014 5,850,746,460 5,041,770 15,632,400 5,840,155,830 0.079% 9.76% 4,153,332 2015 6,220,950,601 3,384,189 14,732,200 6,209,602,590 0.074% 6.33% 4,606,184 2016 6,668,595,288 3,162,336 14,589,400 6,657,168,224 0.075% 7.21% 4,960,016 2017 7,103,893,376 3,727,197 14,357,000 7,093,263,573 0.075% 6.55% 5,302,028 2018 7,557,427,113 3,513,572 14,109,200 7,546,831,485 0.076% 6.39% 5,721,224 2019 8,089,462,808 3,773,145 13,935,660 8,079,300,293 0.079% 7.06% 6,385,652 2020 8,527,137,778 3,724,990 13,869,800 8,516,992,968 0.080% 5.42% 6,834,083 2021 8,940,832,568 3,318,142 37,796,178 8,906,354,532 0.082% 4.57% 7,315,637 The total direct tax rate is computed by dividing the amount of property tax revenue recognized in the financial statements by the taxable assessed value. Source: Santa Clara County Assessor 0/ - 2020/21 Combined Tax Rolls 1041 Page Resolution 80-21 Page 110 Statistical Section Property Tax Rates - Direct and Overlapping Governments Last Ten Fiscal Years Source: Santa Clara County Assessor 2011/12 - 2020/21 Tax Rate Table Page 1 105 Resolution 80-21 Page 111 Basic EI Camino School/College Santa Clara County Mid- Per Fiscal County -wide Hospital District Valley and Library Peninsula Hundred $ Year Levy Levy Levy Water District Retirement Open Space Total 2012 1.0000 0.01290 0.1495 0.0064 0.0459 1.2147 2013 1.0000 0.01290 0.1956 0.0069 0.0463 1.2617 2014 1.0000 0.01290 0.1859 0.0070 0.0447 - 1.2505 2015 1.0000 0.00910 0.1784 0.0065 0.0503 - 1.2481 2016 1.0000 0.01290 0.1704 0.0057 0.0500 0.0008 1.2398 2017 1.0000 0.01290 0.1618 0.0086 0,0498 0.0006 1.2337 2018 1.0000 0.01000 0.1583 0.0062 0.0621 0.0009 1.2375 2019 1,0000 0.01000 0.1895 0.0042 0.0589 0.0018 1.2644 2020 1.0000 0.01000 0.1940 0.0082 0.0581 0.0032 1.2735 2021 1.0000 0.01000 0.2280 0.0037 0.0481 0.0015 1.2913 Source: Santa Clara County Assessor 2011/12 - 2020/21 Tax Rate Table Page 1 105 Resolution 80-21 Page 111 Statistical Section Principal Taxpayers Current Year And Ten Years Ago 2021 2012 Percentage Percentage of Net of Net Assessed Assessed Assessed Assessed Taxpayer Type of Property Value Valuation Value Valuation La Paloma Property LLC Single family residential $ 60,122,148 0.68% $ 28,541,639 0.56% Campo Vista Lane Vacant 37,357,243 0.42% - 0.00% Douglas M Leone Trustee and Et Al Single family residential 31,746,923 0.36% 25,000,000 0.49% Westwind LAH LLC Vacant 26,010,000 0.29% - 0.00% Weijin Dai Trustee Single family residential 25,709,301 0.29% 0.00% Homa Natoma LLC Single family residential 25,615,016 0.29% 0.00% Northfork Vineyards LLC Single family residential 25,020,710 0.28% 0.00% Energy Efficient Sustainable Single family residential 22,762,253 0.26% 0.00% Amit Singh Trustee and Et Al Single family residential 21,972,468 0.25% - 0.00% Kumar Malavalli Trustee and Et Al Single family residential 20,345,515 0.23% 17,343,917 0.34% SUTARDJA SEHAT AND DAI WEILI Single family residential - 0.00% 16,415,183 0.32% DAVID HITZ TRUSTEE Single family residential 0.00% 16,030,717 0.32% BOOK LLC Vacant 0.00% 15,477,097 0.31% LARGE HOUSE LLC Single family residential 0.00% 14,990,000 0.30% MARK JUNG Single family residential 0.00% 13,287,481 0.26% ASHISH K. BHARDWAJ AND BALI TANUJA Single family residential 0.00% 12,799,976 0.25% NEARY-VIDOVICH Single family residential 0.00% 12,426,188 0.25% Totals $ 296,661,577 3.33% $ 172,312,198 3.40% Note: Information is not available for 2011 Source: Santa Clara County Assessor 2020/21 Combined Tax Rolls and the SBE Non Unitary Tax Roll 1061 Page Resolution 80-21 Page 112 Property Tax Levies and Collections Last Ten Fiscal Years Fiscal Year Tax Levy 2012 $ 3,543,251 2013 3,785,652 2014 4,153,332 2015 4,606,184 2016 4,960,016 2017 5,302,028 2018 5,721,224 2019 6,385,652 2020 6,834,083 2021 7,315,637 Statistical Section Value of property subject to local tax rate $ 5,074,444,520 5,319,601,025 5,840,155,830 6, 209, 602, 590 6,657,168,224 7,093,263,573 7,546,831,485 8,079,300,293 8,516,992,968 8,906,354,532 The County of Santa Clara levies, bills, and collects property taxes for the Town. Under the Teeter Bill, the County remits the entire amount levied and handles the delinquencies, retaining interest and penalties. Sources: Santa Clara County Assessor Office 2020-2021 Combined Tax Rolls Town of Los Altos Hills financial reports Page 1 107 Resolution 80-21 Page 113 Collected within FY Total Collections % of Chg Amount % of Levy Amount % of Levy 4% $ 3,543,251 100% $ 3,543,251 100% 7% 3,785,652 100% 3,785,652 100% 10% 4,153,332 100% 4,153,332 100% 11% 4,606,184 100% 4,606,184 100% 8% 4,960,016 100% 4,960,016 100% 7% 5,302,028 100% 5,302,028 100% 8% 5,721,224 100% 5,721,224 100% 12% 6,385,652 100% 6,385,652 100% 7% 6,834,083 100% 6,834,083 100% 7% 7,315,637 100% 7,315,637 100% Statistical Section Value of property subject to local tax rate $ 5,074,444,520 5,319,601,025 5,840,155,830 6, 209, 602, 590 6,657,168,224 7,093,263,573 7,546,831,485 8,079,300,293 8,516,992,968 8,906,354,532 The County of Santa Clara levies, bills, and collects property taxes for the Town. Under the Teeter Bill, the County remits the entire amount levied and handles the delinquencies, retaining interest and penalties. Sources: Santa Clara County Assessor Office 2020-2021 Combined Tax Rolls Town of Los Altos Hills financial reports Page 1 107 Resolution 80-21 Page 113 Statistical Section Ratios of Outstanding Debt by Type Last Ten Fiscal Years Total Governmental Debt to Debt Fiscal Capital Activities and Personal per Year Lease Loan Primary Government Income Capita 2012 $ $ 128,239 $ 128,239 14% 16 2013 - 113,191 113,191 13% 14 2014 97,572 97,572 12% 12 2015 - 81,360 81,360 9% 10 2016 _ 2017 2018 2019 _ 2020 2021 The Town entered into a lease agreement in the amount of $2,000,000 in September, 2004 to finance the new Town Hall project. In Fiscal Year 2011-12, Town paid -off outstanding loan amount of $1363,047. In fiscal year 2010-11, Town received loan in the amount of $47,000 for another energy efficiency project. During Fiscal Year 2015-16, the Town paid off the loan balance. Source: Debt Data - Town of Los Altos Hills Financial Statements Population: California Department of Finance 1081 Page Resolution 80-21 Page 114 Direct and Overlapping Debt For the Year Ended June 30, 2021 TOWN OF LOS ALTOS HILLS 2020-21 Assessed Valuation: $8,906,354,532 DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT• Santa Clara County Foothill-DeAnza Community College District Palo Alto Unified School District Mountain View -Los Altos Union High School District Los Altos School District EI Camino Hospital District Midpeninsula Regional Open Space District Santa Clara Valley Water District Benefit Assessment District Town of Los Altos Hills Town of Los Altos Hills 1915 Act Bonds TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT OVERLAPPING GENERAL FUND DEBT: Santa Clara County General Fund Obligations Santa Clara County Pension Obligation Bonds Santa Clara County Board of Education Certificates of Participation Foothill-DeAnza Community College District Certificates of Participation Mountain View -Los Altos Union High School District General Fund Obligations Los Altos School District General Fund Obligations Santa Clara County Vector Control District Certificates of Participation Midpeninsula Regional Open Space District General Fund Obligations TOTAL GROSS OVERLAPPING GENERAL FUND DEBT Less: Santa Clara County supported obligations TOTAL NET OVERLAPPING GENERAL FUND DEBT TOTAL DIRECT DEBT TOTAL GROSS OVERLAPPING DEBT TOTAL NET OVERLAPPING DEBT GROSS COMBINED TOTAL DEBT NET COMBINED TOTAL DEBT Statistical Section Total Debt 1.617% Town's Share of 6/30/2021 %Applicable (1) Debt 6/30/21 $ 812,685,000 1.617% $ 13,141,116 707,932,142 4.610 32,635,672 241,738,172 6.898 16,675,099 207,011,101 9.463 19,589,460 164,070,000 20.665 33,905,066 116,290,000 7.807 9,078,760 86,400,000 2.646 2,286,144 57,010,000 1.617 921,852 0 100 0 1,585,000 100 1.SRs.nnn � 1.G9,ti1ti;169 $ 914,957,860 1.617% $ 14,794,869 341,399,194 1.617 5,520,425 2,670,000 1.617 43,174 22,085,000 4.61 1,018,119 2,489,970 9.463 235,626 1,954,070 20.665 403,809 1,765,000 1.617 28,540 106,000,600 2.646 2,804,776 $ 24,849,338 408,734 24,440,604 $ 154,667,507 $ 154,258,773 $ 154,667,507 (2) $ 154,258,773 (1) The percentage of overlapping debt applicable to the city is estimated using taxable assessed property value. Applicable percentages were estimated by determining the portion of the overlapping district's assessed value that is within the boundaries of the city divided by the district's total taxable assessed value. (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non -bonded capital lease obligations. Ratios to 2020-21 Assessed Valuation: Direct Debt 0.00% Total Direct and Overlapping Tax and Assessment Debt 1.46% Gross Combined Total Debt 1.74% Net Combined Total Debt 1.73% AB:($500) Source: California Municipal Statistics Resolution 80-21 Page 1 109 Page 115 Statistical Section Legal Debt Margin Information Last Ten Fiscal Years Fiscal Year Total Bonded Debt Amount of Ended Assessed Limit -15% of Debt Subject to June 30 Valuation Assessed Valuation Limit 2012 $ 5,074,444,520 $ 761,166,678 $ - 2013 5,319,601,025 797,940,154 - 2014 5,840,155,830 876,023,375 - 2015 6,209,602,590 931,440,389 - 2016 6,657,168,224 998,575,234 - 2017 7,093,263,573 1,063,989,536 - 2018 7,546,831,485 1,132,024,723 - 2019 8,079,300,293 1,211,895,044 - 2020 8,516,992,968 1,277,548,945 - 2021 8,906,354,532 1,335,953,180 - The Government Code of the State of California limits the amount of general bonded indebtedness for public improvements to 15% of the assessed valuation of all real and personal property of the Town. The Town of Los Altos Hills has no general bonded indebtedness. Source: Santa Clara County Assessor 2020/21 Combined Tax Rolls 1101 Page Legal Debt Margin $ 761,166,678 797, 940,154 876,023,375 931,440,389 998,575,234 1,063,989,536 1,132,024,723 1, 211, 895, 044 1,277,548,945 1,335,953,180 Resolution 80-21 Page 116 Demographics and Economic Statistics Last Ten Years Personal Per Capita Town Income Personal Year Population (in thousands) Income Statistical Section % of % of Pop 25+ with Pop 25+ with Unemployment Median High School Bachelor's Rate Age Degree Degree 2011 8,027 $ 933,355 $ 116,277 4.9% 48.8 98.6% 82.2°% 2012 8,264 867,894 105,021 3.2% 48.5 98.3% 83.3% 2013 8,354 843,253 100,940 2.6% 48.9 98.1°% 84.2% 2014 8,330 930,261 111,676 3.4% 49.3 97.9% 84.7% 2015 8,658 1,015,063 117,239 2.7% 50.3 98.1% 82.8°% 2016 8,634 1,028,190 $119,086 2.4% 51.1 98.0% 83.7% 2017 8,580 1,214,396 $141,538 2.2% 51.4 97.1% 83.5% 2018 8,559 1,211,424 $141,538 2.6% 51.4 97.1% 83.5% 2019 8,413 1,234,482 $146,735 14.9% 52.3 97.3% 84.3% 2020 8,390 1,302,757 $155,274 4.2% 51.1 97.3% 85.3% Sources: Population: California State Department of Finance. Unemployment Data: California Employment Development Department Income, Age, and Education Data - US Census Bureau Page 1 111 Resolution 80-21 Page 117 Statistical Section Principal Employers Current Year And Ten Years Ago The agencies listed above have operated in the Town during the past ten years; however, employment information for prior years is not available. There are no commercial or industrial employers in the Town. Note: Information was not available in 2012 Source: Information available from employers and websites. 1 Foothill Community College has 155.5 part-time teachers and employees who work a couple hours a week & 197 are working from Foothill De Anza District Office located in Los Altos Hills 2 Congregation Beth Am has 48 part-time teachers and employees who work a couple hours a week 3 Daughters of Charity has 30 part-time employees who work a couple hours a week 1121 Page Resolution 80-21 Page 118 2021 2012 Percent of Percent of Number of Total Number of Total Employer Employees Employment Employees Employment Foothill Community College 870 1 74.04% Pinewood School 70 5.96% Saint Nicholas School 33 2.81% Fremont Hills Country Club 30 2.55% - Congregation Beth Am 60 2 5.11% _ Town of Los Altos Hills 26 2.21% Los Altos School District 33 2.81% Daughters of Charity 40 3 3.40% Purissima Hills Water District 13 1.11% _ Totals 1,175 100.00% - 0.00% The agencies listed above have operated in the Town during the past ten years; however, employment information for prior years is not available. There are no commercial or industrial employers in the Town. Note: Information was not available in 2012 Source: Information available from employers and websites. 1 Foothill Community College has 155.5 part-time teachers and employees who work a couple hours a week & 197 are working from Foothill De Anza District Office located in Los Altos Hills 2 Congregation Beth Am has 48 part-time teachers and employees who work a couple hours a week 3 Daughters of Charity has 30 part-time employees who work a couple hours a week 1121 Page Resolution 80-21 Page 118 Statistical Section Full Time Equivalent City Government Employees by Function Last Ten Fiscal Years Administration Public safety Community development Town center and corpyard Parks and recreation Pathways Drainage and street Sewer Solid waste 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 3.30 3.42 3.42 5.92 6.12 6.32 6.32 6.32 6.79 8.43 1.00 0.60 - - - - - - 0.18 0.29 8.90 9.36 9.16 7.66 7.61 7.61 7.61 7.61 7.88 7.25 1.12 1.50 2.09 1.00 0.85 0.85 0.85 0.85 0.94 1.23 2.00 2.54 0.75 0.60 0.60 1.65 1.65 1.65 1.45 2.65 1.69 1.25 1.25 1.39 1.39 1.69 1.69 1.69 1.95 2.07 2.46 1.92 2.02 1.70 1.70 2.15 2.15 2.15 4.41 2.91 0.53 0.41 0.51 0.93 1.93 1.93 2.93 2.93 1.00 1.42 21.00 21.00 19.20 19.20 20.20 22.20 23.20 23.20 24.60 26.25 Source: Town of Los Altos Hills Personnel Records Page 1 113 Resolution 80-21 Page 119 Statistical Section Operating Indicators by Function Last Ten Fiscal Years *FV2014 decrease in recreation and activities offered resulted from outsourcing of Town's Barn operations ** 2018 data is currently unavailable due to implementation of new permitting software Source: Town of Los Altos Hills 1141 Page Resolution 80-21 Page 120 2012 2013 2014 2015 Building permits issued: New homes 16 20 21 37 Valuation $ 14,446,905 $ 20,970,084 $ 25,266,696 $ 32,021,811 Additions and remodels 92 88 116 132 Valuation $ 9,004,645 $ 10,623,625 $ 13,485,643 $ 13,479,448 Planning permits approved 152 76 162 193 Streets resurfaced/rehabilitated 1.48 4.13 7.00 8.12 Recreation classes and activities offered* 177 131 * 72 92 *FV2014 decrease in recreation and activities offered resulted from outsourcing of Town's Barn operations ** 2018 data is currently unavailable due to implementation of new permitting software Source: Town of Los Altos Hills 1141 Page Resolution 80-21 Page 120 Statistical Section 2016 2017 2018 2019 2020 2021 39 33 20 17 10 15 $ 27,158,677 $ 27,718,202 $ 22,404,203 $ 20,854,456 $ 12,451,026 $ 18,835,335 109 113 254 249 20 17 $ 10,014,195 $ 17,247,476 $ - $ 19,960,217 $ 7,628,104 $ 6,178,882 159 152 74 54 168 199 8.50 6.30 6.30 5.08 4.30 2.50 100 133 116 157 154 129 Page 1 115 Resolution 80-21 Page 121 Statistical Section Capital Asset Statistics By Function Last Ten Fiscal Years Source: Town of Los Altos Hills 1161 Page Resolution 80-21 Page 122 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Parks and Recreation Baseball fields 4 4 4 4 4 4 4 4 4 4 Playground 1 1 1 1 1 1 1 1 1 1 Park 2 2 2 2 2 2 2 2 2 2 Riding Ring 1 1 1 1 1 1 1 1 1 1 Westwind Barn 1 1 1 1 1 1 1 1 1 1 Pathways - miles 80 82 85 85 85 85 85 85 85 85 Open space - acres 55 55 55 55 55 55 55 55 55 55 Drainage and Street Operations Street lights 6 6 6 6 6 6 6 6 6 6 Traffic lights 3 3 3 3 3 3 3 3 3 3 Paved roadway.- miles 58 58 60 60 60 65 65 65 65 65 Storm drains - miles 20 20 20 20 20 20 20 20 20 20 Sewer Operations Sanitary sewers - miles 54 55 56 56 56 56 56 56 57 57 Source: Town of Los Altos Hills 1161 Page Resolution 80-21 Page 122 Resolution 80-21 Page 123